With the new year fast approaching, there are a multitude of issues that will continue to impact the workplace and require HR professionals and business leaders to stay ahead of the curve. Whether through technology, legislative changes, or the ever-evolving workforce; what has always worked in the past may not be effective (or legal) any longer. Keeping abreast of these changes and designing strategies to address them may make the difference between retaining your workforce or losing them to the competition.
Equal Pay & Unconscious Biases
Equal pay for women will continue to be an important issue going into 2019. According to Reuters (an international news agency headquartered in London, United Kingdom):
- Females make only 80 cents for every dollar earned by men
- Woman graduates make 82% as much as their male counterparts
- Women on US Corporate Board of Directors is only 12%
- Women owned companies average 60% lower revenues than male owned companies
In a recent Harvard Global Online Research study, including over 200,000 participants, it showed that 76% of people (BOTH men AND women) are gender biased and tend to think of men as better suited for careers and women as better suited as homemakers. This bias spills over into the workplace every day.
- Evaluate compensation practices and review employee compensation to determine if there’s pay inequity in your organization.
- Review employment practices to minimize the impact of any hidden or overt biases that would be holding women back and/or paying them less for their skills than deserved.
- Look for ways in your organization to help grow and develop female employees into leadership roles.
- Implement training programs for employees to understand how biases can affect employees and the company’s success.
Salary History Ban
Many states have legislated a ban on asking job candidates about their salary history as a means to prevent current or previous pay inequality from following a person throughout their career. Determining a candidate’s compensation based on their salary history can perpetuate existing wage inequalities that are the result of gender bias or discrimination.
- Even if you’re not in a state where the ban is in place, its best to start focusing away from salary history and instead find avenues to better identify the candidate’s expectations, how they align with the need and expectations of the position you’re trying to fill, and the potential career path the job has to offer. Some things to consider:
- Instead of asking for salary history, tell the candidate outright what the salary range is for the role, and then see if they want to continue the conversation.
- Take a data-driven approach. Research compensation standards for the role you’d like to fill and consider their skills, background, and education to determine a final offer.
- Review your hiring practices. Implement strategies to help you identify the key skills and experience needed for the job and develop interview questions to objectively measure candidates against that criteria. Standardized interview questions, candidate evaluation forms and training everyone involved in the interview process can help ensure a more objective selection process where the best candidate is selected based on critical skills and experience versus where they are salary-wise at the time of hire.
The Tight Labor Market & Lower Retention
According to the June Job Openings and Labor Turnover Survey, there were just shy of 6.7 million open positions in April. The number of vacancies is pulling well ahead of the number the Bureau of Labor Statistics counts as unemployed. This year is the first time the level of the jobs available exceeds unemployed since the BLS started tracking these numbers in 2000. (Source: HR Today, August 2018)
According to recent studies, 3.4 million Americans quit their jobs so far in 2018, which is twice the amount of those who were laid off from jobs, costing employers millions. (Source Wall Street Journal, July 2018)
- If you want to solve the skills gap for your company specifically, start investing in training, goal-setting, performance metrics and learning. Apprenticeships are on the rise in the US, consider hiring entry-level staff you can mold into the right employee.
- Flexibility in the workplace is no longer a request by moms and/or Gen Xers. Both genders and every generation are looking for workplace flexibility for their own reasons. To stay competitive, organizations will need to figure out how to accommodate these requests for flexibility such as flexible starting and ending times and options to work from home as needed—perhaps even adjusting the normal work day to a 5 – 6 hour day.
- Instead of agonizing over a wage increase you can’t afford, consider looking to intangible benefits like flex-scheduling, financial wellness programs or workplace collaboration opportunities. A 2016 Aflac Workforces Report found 60% of employees are likely to accept a lower salary in exchange for better benefits.
- Ensure you have a structured and effective onboarding program. Research links effective onboarding to reduced turnover and increased retention. In one study, employees were 60% more likely to remain with the organization for more than three years when there is a structured onboarding program.1
(1Source: Gillespie Associates. (2016). Why onboarding that new hire will increase your bottom line. Strategic Onboarding.)
According to a report by Gallup, “The Gig Economy and Alternative Work Arrangements”, approximately 36% of U.S. workers participate in the gig economy through either their primary or secondary jobs. According to Freelancing in America more than 55 million Americans do freelance work, and 79% of them prefer freelance work to a traditional job.
To attract and retain the gig workforce, you’ll need to make shifts in how you handle these freelancers all while staying in compliance with the laws around employee versus contractor. An added complication can be determining whether this individual is truly a contractor, or should they be classified as an employee. It’s a fine line and the Department of Labor has been watching closely.
Rising Health Care Costs
The rise of employer sponsored health plan costs will continue in 2019 and expected to approach $15,000 per EE in 2019*. Expect total cost of providing medical and pharmacy benefits will rise 5% for the 6th consecutive year. According to a National Business Group on Health Survey (NBGH) health benefit costs are still rising at two times the rate of wage increases and three times general inflation. “…Making this cost trend unaffordable and unsustainable over the long term”.
- Many large employers are holding down costs by steering employees towards cost-effective service providers such as telehealth options and high-value in-plan provider networks.
- Offering more choices in plan offerings like PPOs (preferred-provider organizations) allow employees to select plans that best fit their needs (and their pocket books).
- Spousal surcharges. Next year, 33 percent of large employers will impose a surcharge for spouses who can obtain coverage through their own employer, and the average annual spousal surcharge will be $1,200. Only six percent of respondents will exclude spouses entirely when similar health coverage is available through the spouse’s own employer.
- Behavioral health benefits.Three in 10 large employers will conduct in-house campaigns next year to reduce the stigma around mental health conditions and treatment. More than half will offer self-directed online resources.
- Opioid restrictions.A majority of large employers (55 percent) are greatly concerned about the impact of prescription opioid abuse in the workforce. Employers are working with their partners to implement multiple strategies to change prescribing patterns and increase access to alternative therapies, such as acupuncture, physical therapy and chiropractic care.
(*Source: By Stephen Miller, CEBS August 13, 2018 SHRM Article “For 2019, Employers Adjust Health Benefits as Costs Near $15,000 per Employee”
HR technology companies are developing and promoting more and more Artificial Intelligence (AI) capabilities. Some of the technologies being developed can help HR professionals track and reveal troubling patterns in real-time to address such issues as employee engagement, turnover, and absenteeism (to name a few). Automating repetitive tasks and improving workforce productivity are two of the top potential outcomes from implementing AI technology.
As with any technical solution, careful consideration should be given on the pro’s and con’s of different programs and have a clear purpose in mind before implementing. Establish clear goals and how AI can enhance the employee experience and benefit the organization before implementing it.
Other important compliance and legal updates to be aware of in 2019:
Mandatory E-Verify Included in Trump’s 2019 Budget Proposal
In his proposal, President Trump allocates $23 million to be invested in expanding the E-Verify program to mandatory nationwide use. Since 1996, E-Verify has been voluntary for most employers. It also has become mandatory for federal contractors, certain state contractors, and employers that want to implement science, technology, engineering and mathematics (STEM) when hiring foreign graduates of U.S. universities. Although it is not currently required at a federal level, many states have laws that either require or encourage some employers to use E-Verify. We may see other states follow-suit in 2019.
New FLSA Rule
The U.S. Department of Labor (DOL) intends to issue a Notice of Proposed Rulemaking to announce a new proposed salary threshold for the Fair Labor Standard Act’s (FLSA’s) white-collar exemption from overtime pay—but likely not until January 2019.
Under the current Act, salaried employees who are managers and those with certain “specialized skills” like a professional degree or training in a specific field are exempt from being able to earn overtime pay if they make:
- More than $455 per week; or
- Over $23,660 a year
A halted 2016 rule would have doubled the salary threshold, requiring employers to pay overtime to salaried employees unless they make:
- More than $913 per week; or
- Over $47,476 a year
That raised cap would have made over 4 million more salaried workers eligible for overtime.
In 2018, the US Labor Department Secretary R. Alexander Acosta suggested during his confirmation hearing that the maximum for mandatory overtime pay should be increased to around $33,000. it’s unclear what the new rule will look like, but the new proposal is expected to be less sweeping. Lawmakers are expected to begin the ruling process in January 2019.
IRS Raises HSA, HDHP Dollar Limits for 2019
The annual contribution limits for health savings accounts (HSAs) are going up in 2019, the Internal Revenue Service (IRS) announced May 10. The maximum out-of-pocket limits for an HSA-eligible high-deductible health plan (HDHP) also will be increased for inflation, according to Revenue Procedure 2018-30. For self-only plans, the contribution limit (employer + employee) for calendar year 2019 is $3,500; this represents a $50 increase over the 2018 limit. For family plans, the 2019 limit is $7,000, a $100 increase from 2018.
This is just a sampling of some of the key trends we have in store for us in 2019. As HR professionals, it is going to be imperative for us stay alert and informed about the continued changes to our workforce, recruitment and retention policies, and legalities in order to be competitive and in compliance.
Terry Salo is the Senior HR Consultant at strategic HR inc. (strategicHRinc.com). If you have any questions or would like to share your comments, contact Terry@strategicHRinc.com.