Employers were left scrambling in 2023 with compliance challenges, marked by expanded worker protections, AI integration and labor market difficulties. Moving into 2024, employers are urged to prepare for impending legal changes, including potential overtime rule shifts and evolving employee benefits requirements. It’s imperative that organizations employ proactive strategies, update policies and closely monitor the following compliance challenges forecasted for 2024.
State-Specific Paid Leave Advancements
Numerous states have expanded or introduced paid leave mandates, including provisions such as mental health days and unique scenarios like bereavement. Closing out 2023, 11 states and the District of Columbia had implemented paid family and medical leave programs. Your organization must understand the complexities of these mandates, including coverage, eligibility, funding and intersections with other leave provisions. Proactive employers can also benefit from the competitive advantages of offering paid leave, such as attracting top talent, reducing burnout and increasing retention.
Redefining Employee Classification
Significant changes in employee classification are expected in 2024. The distinction between employees and independent contractors will draw intense scrutiny due to its impact on labor laws, benefits and tax rules. The U.S. Department of Labor's (DOL) proposed revisions to overtime exemptions and contractor classifications may potentially reclassify more workers as nonexempt and escalate employer legal challenges. Additionally, the DOL has redefined employee-contractor criteria, offering more worker protection under the Fair Labor Standards Act (FLSA). Further, National Labor Relations Board (NLRB) revisions to joint-employer standards could redefine relationships in sectors like franchises and technology. With these imminent changes, your organization should carefully review its classification practices and compliance strategies.
New Religious Accommodations Standards
Under Title VII, employers with 15 or more employees must accommodate workers' sincerely held religious beliefs unless it causes undue hardship. The 2023 Groff v. DeJoy Supreme Court decision altered this standard. Employers now must demonstrate that granting a religious accommodation would result in substantially increased costs specific to their business. The ruling also clarified that employers can’t use coworker morale or disruption as undue hardships.
As a result of the Bostock v. Clayton County decision, the EEOC is prioritizing LGBTQI+ protections, which could increase religious accommodations and subsequent legal challenges. In 2024, employers must navigate the complex relationship between religious freedom, inclusivity and evolving state and local laws. Your company can maintain compliance and promote respect for diverse beliefs and identities by updating policies, taking proactive measures and fostering inclusive workplace cultures.
Expanding Pregnancy-Related Workplace Protections
The recent federal PUMP Act and Pregnant Workers Fairness Act (PWFA) enhance workplace rights for pregnant and postpartum employees. The PUMP Act mandates employers offer paid break time and private spaces for expressing breast milk. The PWFA makes it mandatory for employers with 15 or more employees to provide reasonable accommodations for pregnancy-related conditions unless it imposes an undue hardship. With these laws extending rights and protections, your business should prepare for greater compliance demands, potential litigation risks and the challenge of navigating diverse state-specific regulations on pregnancy and postpartum accommodations.
AI Integration: Ethical & Regulatory Considerations
Artificial intelligence (AI) integration, while transformative, requires rigorous oversight to mitigate biases and ethical concerns. This is especially true in areas like recruitment and HR processes. Signaling heightened oversight in 2024, many government entities are addressing AI's impact on employment. Initiatives from the White House, EEOC and various agencies highlight responsible AI utilization, particularly concerning discrimination and algorithmic decision-making. While AI offers transformative potential for your business, you should prioritize responsible AI adoption and utilization, ensuring transparency and ethical governance.
SEC’s Cybersecurity Disclosures
The U.S. Securities and Exchange Commission’s (SEC) new regulations mandate public companies to standardize cybersecurity risk disclosures. Companies must submit a Form 8-K within four business days of discovering a significant cybersecurity incident, including important details such as incident timing, nature, impact on data, and operations and remediation actions. Your company is encouraged to bolster cybersecurity practices and consult with a cyber expert to maintain compliance and anticipate potential enforcement actions and future legislation impacts.
OSHA’s Enhanced Safety Transparency
Starting Jan. 1, 2024, OSHA requires certain high-hazard industry employers to electronically submit Form 300 and Form 301. The submitted data will be publicly displayed to inform various stakeholders about a company's safety record. The rule doesn’t introduce new obligations for injury and illness record-keeping but rather builds upon existing obligations. Companies should anticipate OSHA to intensify inspection and enforcement activities, potentially leading to more targeted and frequent inspections. Consequently, affected employers should update their compliance strategies by the specified deadline to mitigate citation or penalty risks.
NCCI Experience Modification Updates
The National Council on Compensation Insurance (NCCI), overseeing workers' compensation in 36 states, has updated its experience modification factor (EMF) to include state-specific adjustments to the split point and state accident limitations (SALs). While the fundamental formula remains unchanged, it better aligns with state-specific claim costs and reduces the impact of large claims, resulting in a fairer and more efficient rating system. Despite these modifications, NCCI assures an overall "premium-neutral" outcome, though specific impacts will vary among businesses. Consult with your trusted insurance advisor for personalized insights and impacts on coverage.
ACA’s Dynamic Preventive Care Coverage
Employers should brace for notable changes and considerations of Affordable Care Act (ACA) mandates, including:
- The COVID-19 public health emergency conclusion means health plans no longer universally cover COVID-19 diagnostic tests without cost sharing. Immunizations remain covered but can be restricted to in-network providers.
- A U.S. District Court decision has challenged aspects of the ACA's preventive care mandate, specifically targeting coverage based on certain U.S. Preventive Services Task Force ratings and preexposure prophylaxis (PrEP) drugs for HIV prevention. Employers should stay on top of potential changes.
- Expansion of the ACA's preventive care mandate on contraceptives could expand due to the FDA's approval of Opill, the first over-the-counter daily oral contraceptive. Employers should monitor evolving guidelines, especially concerning the coverage of OTC preventive products and contraceptives.
Federal Focus on Mental Health Care
The federal government’s concerted efforts to elevate mental health awareness underscores your business’ responsibility to foster a supportive environment and access to care. Federal laws, including the Mental Health Parity and Addiction Equity Act (MHPAEA), Family and Medical Leave Act (FMLA) and ADA mandates offer protections against discrimination, job-protected leaves and reasonable mental health accommodations.
In 2024, employers should focus on ensuring MHPAEA compliance, particularly on nonquantitative treatment limitations (NQTLs). This involves confirming compliance with health plan issuers or administrators, remaining informed on regulatory shifts, identifying potential NQTL issues and considering parity requirements when adjusting coverage. While employers often rely on third parties for compliance, they have a fiduciary responsibility to ensure adherence to laws like MHPAEA. Your company should proactively comply to avoid legal consequences and foster a more supportive workplace culture.
Rising Emphasis on Family Planning Benefits
Several states have enacted reproductive health regulations following the Supreme Court's overturn of Roe v. Wade. This resulted in a growing emphasis on fertility care coverage. Historically, infertility treatments have been costly and often excluded from insurance coverage. While not federally mandated, nearly 20 states now require insurers to offer some fertility care coverage. Controversy has arisen over the definition of infertility, particularly its implications for same-sex couples seeking treatment. This has led to notable litigation, such as Murphy v. Health Care Serv. Corp. As regulations evolve, your business must navigate state-specific requirements and monitor legal developments, particularly around the definition of infertility and ACA Section 1557.
We’re Here to Help You Navigate 2024 Compliance Challenges
In the current dynamic compliance landscape, you need a trusted partner to guide your organization through the complexities. Connect with a member of our team for innovative strategies to ensure your business remains compliant and resilient in the year ahead.