Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent

MTG - EP 126 - Mary Simmons - 2025 Employment Law updates
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Mike: [00:00:00] We should just assume based on how that election went. There's going to be more enforcement on immigration topics in general, which means whether it's ice raids or however it manifests, we should expect, whether you like it or not, we should expect there's gonna be more inspection in this area.

So, I'd say business owners, this is an area that's not hard to get right, but you have to be deliberate about getting it right and train on it. [00:01:00] 2025 HR laws that are changing that every business owner needs to understand. Welcome to the show. If you're a regular watcher, you know, my guest, vice president of HR consulting and compliance. Mary Simmons. Welcome to the show, Mary.

Mary: Thanks Mike

Mike: All right. So you and I talked before the show, we're going to kind of unpack a list.

There's tons of changes. We're not going to be super granular. I think we want to focus on maybe the five ish biggies and kind of big themes that people need to be paying attention to for someone who only was on here for the first couple of minutes. takeaway that you would want people to walk out of this show, understand this episode, understanding about HR laws changing in 2025.

Mary: I think what I want everybody to understand is when those laws change, there is definitely an action that every employer needs to take. I would also say that some of these laws have a [00:02:00] threshold of a certain amount of employees that it affects, but it affects everyone. even those employers that don't have maybe the 15 employees needed for a particular law, because if your competitors, if there's a new law, the competitors have to offer that new, benefit, you know, that, new policy and you're not offering it, you're not going to be able to win that, talent.

You're not going to be able to attract the best people. So. Everybody needs to listen to the changes that are coming, and a lot of which we're going to talk about happened in 2024. We want you to start the new year prepared.

Mike: Yeah. Yeah. Agree completely. Agree completely. All right. Let's take on the big one. Um, you and I have done, I think, two, uh, episodes on this. Uh, I know our attorney friend, Brian Shanker, and I have done one or two on this topic. It was like the, the granddaddy of mall [00:03:00] for 2024, the, the major changes in FLSA, where it was changes to overtime changes to the biggie was the minimum salary for exempt employees was going way, way, way, way up, uh, And, uh, you know, here we are, we're going to, we're going to talk about this.

And all of a sudden last week, Friday, the 15th, the fifth circuit court dropped a bomb on us. So let's, let's maybe before we talk about the bomb, uh, just really high level recap, what was the major FLSA change that was happening? And then we'll talk about the bomb.

Mary: Yeah. So, um, I'm constantly talking to employers and saying, everybody understands that minimum wage, um, you know, changes a lot. It's different. You know, federal is different from the states, uh, but what a lot of employers don't realize is there is also a [00:04:00] salary threshold, meaning that a salaried employee, an exempt employee has a minimum salary that you have to give them if you're not going to give them overtime.

And, um, After many, many years of it not changing, it was going up. Now, unfortunately it was going up twice the amount that it currently is, which is 6. 84 a week. So it went up July of this year and the second installation of the increase was going to happen January of 2025. And as of Friday, um, we found out that, that, uh, the Texas courts have struck it down.

Now it is not definitive. So I just need everybody to, um, not make any immediate changes. We're going to give you and walk through exactly what to do because a lot of employers. Obviously, already took action, like, [00:05:00] in July, so we're going to walk through everything as soon as this is definitive, and we know that from the federal government, from the federal DOL, they say it is no longer, uh, moving forward, and they're, they're pulling back, uh, what they had done in July as well.

Mike: Mary, remind me, uh, the old minimum salary for an exempt employee, someone who did not have to punch in and punch out and they wouldn't get, uh, overtime. What was the old minimum at you gave a weekly? Do you remember the,

Mary: Yeah, you're going to tax my memory. Uh, well, the old was 684. Uh, a week, and then it went up in July, and then it went up in January again. So the net effect is instead of, you know, 35, 000 and change a year being the minimum salary, it was going up to [00:06:00] 68, 000 and change. So almost twice as much, which is a lot for a small business owner.

Mike: yeah, yeah, yeah. So, so, uh, we don't even, we don't have to unpack the details. And I, I, I put you on the spot. I'm sorry. We don't have internet in front of you. I know. Um, but it was, it was like Mid thirties to upper fifties, pushing 60, 000. It was a massive change that many small businesses simply couldn't afford.

And it was, it was going to put people in a position where either I'd have to give massive raises. Which then can create compensation compression for my other management jobs above that, or I'm going to reclassify, um, exempt employees to all of a sudden be hourly, which kind of creates a problem because I probably classified them wrong in the first place.

And then just start paying them hourly, all kinds of potential pitfalls for small businesses. So

Mary: Oh, huge, huge. I went, I just went over it with somebody on Thursday, and when I did the math, they were like, wait a minute, [00:07:00] they have, you know, only two to three hours of overtime a week. If I change them to non exempt because I can't afford the raise, Net, net, you know, it's, it's almost the same. What do I do?

So it is a big deal. I think it is a little bit of a relief to a lot of business owners, but we're going to walk through, uh, as soon as we have to, you know, the courts have decided definitively we'll walk through exactly what to do. If you raised somebody, if you change their exemption, what should you do?

Mike: yeah, and I, and I'm just pulling up. So we're talking about a jump going from like 43, 000 and change up to 58, 000 and change. Massive jump. Super disruptive for wage compression of your managers. Super disruptive about reclassification of employees. Um, and here it's, here it's blown up. So I would say, you know, what, what's, what's the guidance for folks?

So I think you and I are of the opinion. That it will probably stay [00:08:00] struck down. When I, when I read a few articles on this, uh, uh, today, the reasons behind it, I won't get into it, but the reasons behind it being struck down seem legally sound, which means this thing's probably going to stick, but we don't know for sure in January one is like right around the corner from now.

So what's your advice to business owners in preparation for a law change that might not change?

Mary: I would still continue. We've been advising employers to do that, uh, an FLSA audit. So I still give that same advice. Listen, I, I've given that advice forever, right? You're also making sure that you don't have anybody, you, you have to do the math anyway, right? If you have somebody that's making, you know, a ton of overtime, you may want to make them exempt, right?

You know, if they fulfill the duties test. So what we [00:09:00] always also talk about is, are they exempt? And, and remember, these are the, um, white collar exemptions were the ones that were changing. So it's executive, administrative, and professional exemptions. So those duties tests are pretty tight, pretty easy. I guess pretty easy for me to understand, but, you know, we do walk through that with, with employers.

So I still think you want to do your FLSA audit. I still think you want to review your job descriptions. They need to be updated every year anyway, so that's another thing you should be doing at year end to prepare for, for next year. And really look at them and say, is, can I defend an exempt versus a non exempt, um, classification?

Um, usually the onus is on the employer to defend an exempt, um, classification because the DOLs say. [00:10:00] They deserve overtime unless they meet the duties test to not get overtime. So you really, that, that's where the onus is.

Mike: Well, I, think we know, that one of the most common places business owners, especially small businesses get in trouble is misclassification exempt versus non exempt. I think, you know, we've said on the show many times, this isn't your opinion or it's, not what you want. It's not what the employee wants Hey, just pay me hourly.

Or, you know what, just smooth it out and just pay me salary. That's not how this works. The Department of Labor. This is spelled out as part of the Fair Labor Standards Act, the FLSA of what is, what legally it classifies as exempt versus legally classifies as non exempt. You got to follow the law here. So, I, agree with you completely.

No matter what washes out with this fifth circuit court, if it gets flushed there, if their decision gets flushed or the original rule change gets flushed, um, there's never a bad time to be accurate and have a good [00:11:00] understanding of your, your classifications, and then the job descriptions that underpin those.

If you want to make a change, you can make a change to the underlying job descriptions and therefore the duties that do or don't pass the duties test. Right.

Mary: Correct. That perfectly said.

Mike: Yeah. Yeah. Yeah. Um, okay. Um, anything else on FLSA, these changes that boy, we've talked a lot about this year and now it's even up in the air more, anything else you want to add on here?

Mary: Not on this one point, but you know, look for our webinar on, on more on this.

Mike: Yeah. Yeah. Um, This is something, if you haven't caught any of our blogs or podcast episodes on this topic, man, just, just Google it. Fair Labor Standards Act, FLSA changes 2024. That'll, that'll get you, you'll find a ton of articles from law firms and very accessible. You've got to get smart on this topic.

If you haven't heard of [00:12:00] this yet, and I'd say, Most small business owners are just busy running their darn business and trying to live their life. They don't know all this stuff. There's nobody that taps them on the shoulder and says, Hey, here's the law changes you've got to comply with. Because if this does stick, this is, this is really, really big money.

Very disruptive if you're not on top of it and proactive. Okay. Let's move to the next one. Uh, our, our mutual friend, Brian and I, we did an episode on this topic, the Pregnant Workers Fairness Act, the PWFA. What does this mean for employers in 2025?

Mary: So the first, uh, case that has been brought, uh, to the DOL on this law, and I, as soon as one law is brought to, to court, you see a lot more, um, and listen on its surface, I'm sure that you uncovered that. Pregnancy is always a protected class federally. Many states pull it out as an extra protected [00:13:00] class, but it's always been a protected class federally.

This law goes one step further. It does apply to employees, employers with 15 or more employees, but, I would say to you that nobody can discriminate, against a pregnant worker. I think, probably what I want everybody to think about is that this is a very specific piece of legislation. So protected class, there's a lot of protected classes, but the DOL and the EEOC don't give prescriptive items that you have to do for those particular, protected classes.

This law does. It pulls out pregnancy as a protected class, which is protected under sex as a protected class federally, and it has a lot of [00:14:00] Stipulations and a lot of protections that employers need to know about. It is so specific, Mike, I would say, that employers must train their managers on on P W F A, and the reason for that is because the managers are working with the employees on a day to day basis.

So, this follows very closely with ADA, Americans with Disabilities Act, where employers are going to need to make accommodations for the employee. It goes one step further. Uh, and it does follow the interactive process, right? So I interactively discuss, and this is something my team does, somebody trained needs to do the interactive process with the employee.

So we don't say, uh, inappropriate things, but the interact, this takes it even a little step further where you, um, [00:15:00] if the employee brings it to you. And they don't ask, they're like, I don't know what accommodation I, I need, but this is the issue that the employer should be thinking about accommodations.

You don't offer those accommodations until the employee says that they would like an accommodation. but you should be thinking about them. So the reason that I think the training is so important is because a, you don't want a manager saying, Oh Mary, I see you're pregnant. Why don't you sit down the rest of the day?

Or why don't you go out early on leave those sound like accommodations. I think to a manager and I'm probably meant in the best

Mike: Yeah,

Mary: you know, intentions. Um, unfortunately that employee might say, well, I don't need, I need to sit down for 20 minutes, not the rest of the day. And I'm judged on, let's say, how many widgets I make.

Now you're going to give [00:16:00] me a bad evaluation, which leads to a bad raise. Now I feel like I'm being retaliated against because I'm pregnant.

Mike: yeah,

Mary: Many case, lots of case law on that. Um, so really, when we do this training with managers, it's, I'm not training a manager to be an HR specialist, I'm training them to know when to refer it to a CMO.

To a human resource expert to talk to the employee about it and to work with the manager as well, right? It has to be in unison.

Mike: I'm going to ask our producer to stick the link in the show notes for this one. So our mutual friend Brian Shanker and I, we did episodes, episode number 118, Navigating Accommodations under the PWFA, uh, back in September it was. And so, Walk through all the details, an entire hour dedicated just to this.

But I think you hit on one of the really big key points [00:17:00] is I think we're trained so much to not ask discriminatory type questions, right? You, so you don't discriminate against someone because they're pregnant, but this law requires you to make specific. accommodations once you become aware or have knowledge that this person is pregnant, no matter how you found out, right?

So you hear people talking in the break room, Oh, uh, Susie's pregnant. It's like, now you have a legal obligation to approach Susie. Hey, that's what I heard. Are there any accommodate? Now you don't make the proactive say, Oh, you take a, take a load off, honey. And I mean, it's not that that's discriminatory, but you know, Hey, Susie, this is what I've learned.

Uh, I just want to make sure, do you need any accommodations? And you must seek this out. So this is kind of counterintuitive for a lot of folks who have been, I'd say, HR trained. Would you agree?

Mary: I agree. And, [00:18:00] and you know, this, this is really a conversation that should be, um, had with, with an HR professional. So the training with the managers, again, it's, it's also interviewing. It's not just an employee. How are they interviewing somebody that. Openly says I'm, I'm pregnant. Right? What, what are we doing there?

What are we doing? Um, when it comes to promotions, you know, um, you know, I, I've done this a very long time and, uh, I can tell you managers can use a lot of training in this area, and you don't want them to make a mistake that's costly to the organization.

Mike: Yeah. Okay. Anything else on the Pregnant Workers Fairness Act, the PWFA?

Mary: I would just, the other thing is a handbook. Make sure that you put it, uh, put the policy in your handbook as well. You want the employees [00:19:00] to know about the policy. It's not like something that you want to hide, um, from your employees. So it's, I absolutely think that the manager should be trained on it.

Obviously it is part of your posting requirements and I would make sure that it's an update that we've put in all the handbooks.

Mike: Yeah. Yeah. Um, you can add handbook to the recommendations for probably every single category we're talking here, right? Yeah. Yeah.

Mary: We're busy right now.

Mike: And let's, yeah, I'm sure you are, but let's maybe come back to that. Cause it's a, it's a closing, uh, you know, why everybody should be thinking about a handbook, especially in light of some of these big changes.

All right, let's move to, uh, I 9. So you and I did an episode on this earlier this year. Uh, the, there's a new I 9 form. Um, but I think, you know, elections have consequences and the new administration You know, immigration was a big topic in this, in this [00:20:00] elect presidential election. I think it's reasonable to assume there's going to be, there's going to be changes to enforcement, which means I 9s and inspections and whatnot.

Um, so let's maybe take, take this from two angles. First of all, remind folks, what is the new I 9 form? What are the, what are the form changes from an administrative perspective that everybody needs to understand? Let's take, tackle that one first.

Mary: Yeah. So it's a little confusing because the, the, um, prior I 9 form didn't expire until July 31st of 2026. So if you just looked at it and you didn't know any better, you'd think that form was fine. Um, and I find this error a lot when we do I 9 audits and they're just making a copy. of an I 9 form that they downloaded, and they're like, well, it doesn't expire till 2026.

I'm sure I have the most up to date form. [00:21:00] Unfortunately, there's a new form, um, that has, you have to start using it, uh, in January. which expires May of 2027. So that form, we need to switch to that form. They made very small edits to the previous form. You know, one thing is they shortened the instructions.

The instructions were 15 pages. They needed to be shortened to eight pages. Um, so, very minimal changes to the form, to be honest with you. That's the biggest change. Um, couple little changes in other areas. But I would say, uh, as, as you were saying, We already have past information about our new administration.

So they did 6, 500 I 9 audits a year on average. And the current [00:22:00] administration did half that many. So we have that information to go on so that we can make a very educated guess that I 9 audits are going to double. Um, but I would also say that, uh, because administration is such, um, a milestone that the new administration has talked about over and over and over again, I would guess, uh, uh, raids by ICE will be going up.

Um, and those raids, you have no notice. The employer, the ICE goes in, um, very strongly. Um. And it's usually because they've been tipped off. They usually don't do just a random

Mike: Mary, do you, do you have any data? Like how many, how many ice raids year over year? Like,

Mary: I don't have the number of, of raids. I'm sure it's public record. [00:23:00] Um, you know, I just, I just had the information on the audits, but it's going to increase. So what does that mean for employers next year? So we're always talking about I 9 audits. You cannot audit your own work. So please have. an HR expert do that audit on your I 9s to just look for, you know, small mistakes or big mistakes, whatever it is.

If you are audited, it looks much better if you did your own self audit, you know, through, you know, assistance and you make a note to the file about what you found. and you make those corrections. Don't try and hide your corrections. Uh, white out will be an automatic fine. Um, so you don't, you're very evident about the changes that you make.

You list those changes, um, on a form stating when [00:24:00] you did the I 9 audit and who did the I 9 audit for you. Obviously we take care of all of that when we do an I 9 audit. But I'd say let's be proactive. Anybody who does, uh, I 9s, anybody at the organization who completes I 9s, a lot of my employers take it, be it a restaurant or landscaping, people are doing the I 9s, managers are doing the I 9s in a truck.

They're doing it, you know, before a shift. you know, a busy shift at a restaurant. Um, it's hard to pay attention. You know, they don't want to all have the benefit of having somebody like me doing it for them. So those managers have to be trained and you know, these fines can be very big. I would train them every year, especially because there's, there's change in management and they forget.

It seems like such a simple form and it is Mike, but the mistakes. Can be [00:25:00] very, very costly. They can be 250 a mistake. And if, if they're doing one thing, they're doing it repetitively, probably.

Mike: I once saw a quote, uh, from someone in the industry, one simple form, over 300 possible ways to make a mistake. It's that it's crazy. Cause when you look at it, you're like, how, this is just no big deal.

Mary: Right.

Mike: the ways people get pinched are kind of unexpected and this is just one of those things It's too simple to do it wrong But you've got to train.

You've got to follow the instructions. You got to retain the records in the right kind of way um I mean We should just assume based on how that election went. There's going to be more enforcement on immigration topics in general, which means whether it's ice raids or however it manifests, we should expect, whether you like it or not, we should expect there's gonna be more [00:26:00] inspection in this area.

So, I'd say business owners, this is an area that's not hard to get right, but you have to be deliberate about getting it right and train on it.

Mary: 100%. And then, you know, there's E Verify in many, many states. It's up, it's north of 25 states that now mandate E Verify, uh, and it's a pretty simple system to use, um, but in those states, you have to use them if, you know, they all have different thresholds, um, of employee count, but the E Verify, again, Kind of keeps you honest, and the audit's going to go better if you're using E Verify, but you can still make mistakes there.

You can still make mistakes, you know, in your record keeping, et cetera.

Mike: Yeah, right, right. Um, okay. So I 9s, uh, it's a new form. You got to be aware of that first and foremost. [00:27:00] Um, And, uh, one form of 300 ways to get it wrong. So you've got to train on it, uh, train your managers. You got to read the new instructions. There's there there's simpler, it's less than 15 pages that shrunk down, but it's still, It's there's still a lot of instruction to follow, especially when it comes to record retention, people get in trouble there.

Um, and then maybe lastly is just expect there to be audits, expect there to be government inspection in one form or another, whether that means an ICE raid, uh, or some other, some other method, but don't get this one wrong. It's too easy to get right.

Mary: Perfect.

Mike: All right. Um, minimum wage changes on the rise. This is a, uh, This one just continues to sweep the land.

Um, 12, 14 years ago, you had one federal minimum wage and all of a sudden states started having minimum wages and then counties and [00:28:00] local municipalities and then, uh, local municipality for over this number of employees under that number of employees, different industries. This has just exploded. I want to say we're over 150 different minimum wages now.

Um, Um, that, that overlap each other and it's gotten super complex. What's, what are some of the big things that employers, how should employers be thinking about minimum wage in 2025?

Mary: I mean, I still think you have that compression issue because some of these rates go up, exponentially, right? So if you're not giving your current employees, the same rate, you're going to have a mass exodus. So you have to think about that long and hard. You can't, you have to give the employee the best of any employment law.

So even if federal is $7.50 if the new minimum wage in your area is 15, you don't [00:29:00] have a choice. You have to give them 15 an hour. And then don't forget that increases the overtime rate as well. So with minimum wage increases, you definitely have compression issues. You definitely have, um, you know, the onus on the employer in states that have pay transparency laws, then you have to change your ads as well.

So don't forget if you're in a state with pay transparency, and you need to put the range for the position that you're hiring, you have to put that new 15 an hour. If you know, you've got people still making, you know, 12 an hour, you, you, you don't have a choice. You have to increase their salary as well.

They can't make less than, than minimum wage. So, This is kind of the best time for you to be looking at this and readying yourself. Many of them changed [00:30:00] January 1st, 2025. Obviously that's, or maybe not obvious, that's a posting requirement. Minimum wages is always a posting requirement. You have to post the minimum wage in your area for your employees.

And I think you can guess why so that they know what the salary is.

Mike: feel like, like I know the increase in minimum wage, depending where you are, what state in what industry, uh, it's hitting some employers a lot harder than others. Um, But I also think people are probably fairly in tune to what their local minimum wage is or isn't. Um, I think what probably catches especially small business owners Who maybe not, don't have like years of HR, kind of big company experience.

It's this wage compression topic you're talking about. So, you know, if I've got, if I've got a group of employees and I'm just going to do this for simple math, it might not apply, but you'll get [00:31:00] the, you get the concept if I got frontline employees making a minimum of 7. 25 federal, I got my first level supervisors making 10 an hour.

And I've got my, uh, uh, senior supervisors making 15 an hour, right? I mean, big jump, uh, you know, call it 50 percent jumps, uh, to each of those three levels, all of a sudden local law says, uh, minimum wage is 12 bucks an hour. Okay. Now my, now my 7. 25 has got to go to 12. My 10's got to go to 12. And all of a sudden my senior, most managers are only making 3 more than everybody else.

I'm just telling you, you got problems on your hands, psychologically, the morale of a team. What, what's, what's your advice for business owners to deal with that compression? Cause they might not be able to afford to pay any more than 15 for the senior positions right now.

Mary: Right. Agreed. I mean, I think that's why you have to address it ahead of time, [00:32:00] right? You need to sit down with them, uh, and explain, you know, the, the, the real issues. I think you have to be transparent. They need to know that the people underneath them are getting increased. They're going to know it anyway.

There's going to be a big poster in the break room that says, you know, the minimum wage is 12 an hour. So they can figure it out. So I think it's really important to get ahead of these things and to communicate openly and honestly with your staff, um, to let them know, and then you need to plan and, and do some budgeting.

Can I give this person a bonus? Uh, this, this senior manager, right? Uh, can I give them some stretch, um, assignments because I know that that's, that's gonna fulfill them. Uh, even though I can't give them salaries. So you need to get ahead of this, um, so you don't have a mass exodus in January. I can tell you that by [00:33:00] saying nothing, uh, will hurt your culture and probably significantly hurt your turnover, increase the turnover, uh, if you will.

Mike: If you don't, if you don't fill in the void with an explanation, it might not be an explanation that they even like. But if you don't provide the explanation, they're going to fill in the blank with their own version. And I guarantee it's going to be worse than the one that you want them to have. So, uh, I say, don't shy from difficult news, difficult conversations here, because that could really blow up on you.

Any advice for how to have these difficult conversations?

Mary: Yeah, I mean, I think that was stated perfectly. I mean, I think you want to stick to the business needs, um, and, and let them understand, you know, what the, what's the data. The data is that this is non negotiable. You have to give this minimum wage. Um, and right now because of budgetary restraints, if this is the [00:34:00] case, uh, you know, we're going to keep you, you know, where you are, but maybe, maybe you can, you know, Work out a plan where there's a bonus or they can get an increase six months from now.

Uh, so there's there's different with every organization's going to be a little bit differently, but you want to have the conversation. Again, I think exactly what you're saying is they're going to make something up and you don't want them to think I'm not appreciated. They don't like me here, so I'm just going to leave.

That's, that's not the, the actions that you want them to take. So what, what are you going to communicate? How are you going to, um, you know, work with these issues so that you retain your staff, uh, and keep them engaged?

Mike: I had a conversation probably a week or two ago with a small business owner, um, and I really liked what she did. So her concern, so like simply couldn't afford, there wasn't, there [00:35:00] wasn't enough margin in the business to give all these massive raises to everybody and kind of keep that, keep that equity and avoid that compression.

And, uh, also she feared that sharing the full P& L was just too much information for the employees. Like they, like, I hate to say it this way, like maybe they just couldn't handle that. Like they, they wouldn't understand the context of, Oh, they're making so much money or that does cause, I mean, and so just kind of carved out almost like a mini P& L.

Just to show the gross margin on say a particular service or product that would, this employee's group was, it was responsible for. So, so basically to say, okay, here's how much revenue comes from this product in this area. Here's our labor expense by following this law. It takes it to here. If I was going to give everybody the raise it takes in there.

There's no, there's like nothing left. So I have to make hard choices. Do you want to sign up for. [00:36:00] Getting more from your people and maybe we pay at the higher end of our scale, but everyone has to produce more and we demand higher productivity from everyone, including yourself. You become an individual contributor as part of your time.

Or do we want to take more of a shared sacrifice approach where we have more pay compression here? Uh, and we all understand the law. We understand why this is happening, but this kind of is what it is. And, and, and I think, uh, I shouldn't say, I think I know some of those conversations with some mid manager folks, I think really helped to open their eyes to, I think, frankly, how hard it is to run a business.

It brought context to some of these decisions that business owners are faced with. Uh,

Mary: I think that's a perfect way. And like I said, I think it's, um, I think it's, uh, going to be different for every business owner. Right? Professional services is going to be different than a super small business versus manufacturing, et cetera.

Mike: [00:37:00] one more, let's talk about sick leave policies. You and I have said it many times, probably the fastest growing area of HR law. Um, probably the most complex area of HR law, because it kind of deviates a little bit from say, just straightforward FLSA, where. You know, FLSA, I think, uh, exempt, not exempt, uh, classifications.

I think overtime, I think minimum wage. And so states, counties, municipalities, they have their own minimum wage. They have their own overtime rules. Um, but it's kind of extensions modeling the federal laws. Sick leave seems to have taken a life of its own. Um, paid versus not paid exempt versus non-exempt, full-time versus part-time.

This just seems to be really fragmented. Um, way too many [00:38:00] changes state by state, municipality by municipality to even talk about on this episode. What are, what should, what do business owners need to understand in 2025 about this? I'll call it a sea change for sick leave policies.

Mary: Yeah. So, so most of the ones that we're seeing are paid. And remember, federally, you are not mandated. So, the Fair Labor Standards Act, governs how we pay employees. So, we already talked about the classification, but it also governs, of course, overtime. What it does not govern, on the federal level is that it doesn't mandate we have to give vacation, and it doesn't mandate that we have to give sick time.

So many states have taken it upon themselves to say, but wait a minute, we value sick time. sick time for employees. We know people can't take it off if they don't get paid and there's no mandate to give vacation. Let's mandate that there is some sick leave. Now [00:39:00] these sick leaves, many of them are not just for the employee sick leave.

Uh, many are for human trafficking, um, or abuse. Many are to take care of, of children, uh, or if the school has an emergency closing. So you're right. The handbook policies have to be very specific. Every one of the ones, um, that's paid has a mandate that your employees get the policy in their hand, which means we put it in the handbook.

But then there's like this other layer that employers, you know, don't always understand because they're, they're not in the HR business. And this is where I think we add value is that they say, Well, I give employees time off for any reason they want. You're, you're not, that's not going to satisfy the law in many of the states.

So there's, you know, about 15 states that now have sick leaves. This is on the rise. And [00:40:00] again, like you said, different in every state. Some have, you have to have five employees or more, some you have to have 15 employees or more to have the sick leave. What I want employers. who may not meet those requirements.

What I need them to think about is, Hey, if I don't have a paid sick leave policy, Should I? You need to know what's going on in the market. You need to know what your competitors are doing so that you can attract the best talent, as I said earlier. So, you know, you want your employees to be engaged and productive.

But if you don't have any employees because you don't have a good policy that most companies do, that's a bigger problem. So make sure that you're thinking about some of the trends that we're talking about. You know, talk to, you know, whomever is helping you with your handbook. I think that's where, you know, we [00:41:00] add a lot of value with 2200 clients and we're doing handbooks for everybody.

Uh, we can talk about best practices as well as laws, and this is definitely a trend as well as paid advertising. Family leave, which 24 states have right now. Um, and there's been talk that it may go to, uh, the federal level, right? Family Medical Leave Act, which is federal, is unpaid, but there has been a lot of talk about it being paid at some point.

Mike: Yeah. Yeah. This is, this is an area that, you know, so like I, I live in Missouri, um, and you know, we just passed Prop A, uh, which raised minimum wage to 15 an hour. Also we'll, we'll mandate, uh, businesses of all sizes. So there is no, like a lot of the times these laws pass, it's only the larger employers have to comply, recognizing there's an administrative burden for small businesses, but in this case, [00:42:00] companies of all sizes.

Full time and part time. Every 30 hours worked is an hour of paid sick leave that employers are going to have to provide. So this is going to be administratively very difficult for employers. I'd say you got to have a good handbook process. Certainly this is the kind of thing that needs to live in handbook.

But you need a hand good handbook discovery process to understand what those laws even are. You know, it's one thing to see it on a ballot measure for Prop A and read it, but quite another thing to put this into a handbook in a way to explain to employees what the, their legal rights are. And you have to do that.

So whether it's Assure, we'd love it if it was Assure in Mayor's team, or you find, find other help, legal help to get this done. Don't rely on Google. Um, don't rely on CHAT GPT cause that the, the, the, the, the, the knowledge base there is not reliable. Um, you need an [00:43:00] expert opinion, getting this into your handbook so that you can administer this law in a legal way.

This is just, you know, I gave the Missouri example, but this is, this is just exploding across the country. Not just, not just, uh, New York and California, middle of America is passing these types of laws at an increasing rate.

Mary: Yeah. It's. It's a big deal.

Mike: Something else you said, Mary, that I, that. And I would maybe ask you to comment. Um, so obviously your handbook needs to be, I'd say, I'd say in a very large way, it's a compliance tool, right? It's so that you can teach your employees the laws. You can stay and then therefore follow those laws. You're being communicative that you're not just doing this because this is your policy.

Hey, this is the government requires us to do this. But a document like that and a play handbook also serves as an opportunity to help define and create [00:44:00] culture of trust and respect and explaining these things. And you said something earlier about. Even if you're, maybe you live in a state that doesn't have paid leave, or maybe you live in a state that, or a county that, uh, has a paid leave law, but it's only for employers over 25 employees and you have 19 employees, so therefore it doesn't apply to you.

That doesn't mean you're not competing against those same firms who will now offer paid sick leave. Now they might hate it. They might've voted against it, but you're competing against companies that are going to offer paid sick leave. So just cause the law doesn't require you to, doesn't mean you should put your head into the sand and what this means for recruiting and retaining talent.

Right.

Mary: Yeah. Agreed.

Mike: And so, so how, how should employ other than the obvious, Oh, we'll just match it, we'll just do it. What, what guidance do you have for businesses who are in this [00:45:00] situation?

Mary: Well, because if you're not, um, you know, you don't have to do the exact law that's put forth by your state or municipality. Maybe you do a little bit and maybe instead of one hour for every 30 hours work, you give two or three days a year and, you know, just think about it. But I think you probably want to give something, um, rather than nothing.

And look, it, it is proven. I think a lot of employers I talked to go, Oh, Mary, they're just going to take that time, whether they're sick or not. And I say, Okay, you know, but for the people that are really sick, A, you don't want them in the office, um, and B, you're being competitive and I think you're engaging staff.

But the statistics will tell you, not everybody's going to take the time. So it's not always, you know, a cost to the organization. I think the benefit far outweighs the negative. [00:46:00] Impact.

Mike: Mary, any other, those are the big ones. I think I suggested that we close on handbooks and maybe just share, share the context of why handbooks are so important in the context of these five big, big sweeping changes in HR law. Um, and then what's some practical steps for folks to implement handbook changes?

Mary: So the handbook for, in many of these cases, you have to have a policy, as I said earlier, so it just makes sense to have it in a handbook. Uh, and it, and it just makes it easier. But I'd also say that for those policies that aren't mandated to have a policy in your employee's hands, um. it will engage your staff.

And I always say, you know, it saves you time if you have policies in your, in [00:47:00] your handbook, right? I had a business owner say, um, we were, you know, just talking about, you know, what kind of policies do you have? And he goes, I don't even know what my vacation policy is. And he screams across the room and he's like, Hey, Joe, what do we give for vacation?

And nobody could come up with something definitive. He said, he said, you know, come to think about it. Every time somebody comes to me, and he has about 20 employees. It's not like it's a super small company. He goes, every time somebody comes to me, I have to think about it. I said, wouldn't it be easier if it was written down?

Wouldn't that save you time? If they had one and you had one document to go to, to look it up. And he said. Yeah, that makes a lot of sense. Yeah. You know, and, and he was like, yeah, that, that seems so obvious. I don't know why I did it. You know why? Because it takes a lot of time. And we say all the time, and we, we do understand business owners, right?

Big, small, or medium size. They don't have time to do the [00:48:00] HR tasks, right? That's why, um, we exist, right? And, and many organizations exist. So, um, yeah. I think that it is culturally sound. It is, there's a lot of mandated policies, but really, I think one of the most important things is it saves a business owner a lot of time because it's in one place and they can say, Mike, why don't you read the handbook?

And if you still have a question, you know, I'm in the middle of a client. You know, issue, come back to me and we'll go over it together or call Mary, you know, whatever it is, um, these things are meant to be compliant, but also to save business owners a lot of time.

Mike: Yeah. Yeah. All right, Mary, those are the big ones. Um, the war for talent is real. We've talked about this a million times. We don't need to go into all the details and the reasons why, but it is, and this is no longer [00:49:00] just a big enterprise, large company thing. This war for talent is here to stay for at least a few decades, uh, based on the supply of labor and the demand of labor.

Uh, so you've got to get your order, your house in order to be able to attract and retain people and then do it in a way that is compliant with ever changing laws. We talked about the five big ones that still a massive question mark about this FLSA change and the minimum salary requirements, uh, for exempt employees.

Uh, we think we have some clear direction, but that one's just changed so much this year. The PWFA, the, uh, Pregnant Workers Fairness Act, lots of changes, what was already a protracted class, but much more specific law around pregnant workers and what is required of employers for accommodations and the like.

The new I 9. There's a new I 9. I 9 was always a fairly simple one page form, but lots of different ways to make a mistake. That you got to follow the instructions. You got to get up to speed on that. And with a new [00:50:00] administration and all the talk around, uh, the topic of immigration, just know it, we have to assume there's going to be enforcement in this area, you can't afford to not be prepared.

Uh, number four, minimum wage changes. It's on the rise across the country. This is, this isn't just a federal thing anymore. The states, the cities, the local municipalities, they're all in the game, uh, and it's changing like crazy. The only thing that might be changing slightly faster is sick leave policies, whether it's paid leave, sick leave, family leave, individual leave, uh, big companies, small companies.

Uh, increasingly this is becoming more and more complex. All of these things together scream You gotta have an employee handbook and you need an expert to put the thing together to know whether you're doing it right or you're doing it wrong. Cause if you use Google and you get the thing wrong, you could literally be making your problems worse.

I'll give you the last word, Mary.

Mary: Yeah. I would agree with that. And I would just add that a lot of these [00:51:00] policies need manager training. Because your managers are working with your employees and we don't want, uh, them to miss the opportunity to offer these policies where they're applicable because that will lead to a lawsuit as well.

So to protect yourself, you really want to have the handbook and to train managers in a lot of these policies.

Mike: Yeah. Enjoy it as always, Mary. Thanks for joining me today

Mary: Thank you, Mike.

Mike: and to everyone else until next week. Thank you for letting us be part of your mission to grow.

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