Finding the facts Featured

8:00pm EDT September 25, 2009

Several amendments have been made this year to employment law that have a significant impact on your business. Employers need to be aware of changes to minimum wage and COBRA insurance, along with other proposed changes regarding sick leave pay. Employees can lose out on additional benefits if you do not inform them of these new rules in a timely manner.

“Many individuals on COBRA were not aware that they could reduce their premium once the new law went into effect,” says Melissa Hulsey, president and CEO of Ashton. “Lawsuits can also be filed and fines assessed if you do not comply with the new laws.”

Smart Business spoke with Hulsey about recent changes made in employment law and how to make sure your company is prepared.

What were the recent changes made to minimum wage?

The federal minimum wage was raised to $7.25 an hour on July 24. This was part of a Fair Labor Standards Act amendment passed in 2007 to incrementally increase the minimum wage over a three-year period. The act establishes minimum wage, overtime pay, record keeping, and youth employment standards for public and private sector employees.

Minimum wage employers need to update their official postings of FLSA requirements due to this change. Some states also have their own minimum wage laws, so check with your state to see if the higher wage prevails.

What should employers know about the recent changes made to COBRA?

The American Recovery and Reinvestment Act of 2009 included premium reductions and additional election opportunities for health benefits under COBRA. Eligible individuals will now pay only 35 percent of the premium, while the remaining 65 percent will be reimbursed through a tax credit. Previously, individuals with COBRA paid up to 102 percent of the premium: 100 percent of the cost, and a two percent administrative fee.

This adjustment will last for nine months, half of the 18-month COBRA eligibility period. Although businesses are reimbursed, this has created a burden for some, as premiums are generally due before the tax credit is issued.

What other employment laws should businesses be aware of?

The U.S. Department of Homeland Security has postponed regulations requiring federal contractors to use E-Verify, the DHS’s electronic employment eligibility verifications system, effective Sept. 8. E-verify is an online system operated jointly by the Department of Homeland Security and the Social Security Administration. Employers can check the work status of new hires to make sure they are eligible to work for the company.

The Healthy Families Act was recently introduced in the U.S. House of Representatives, requiring businesses with 15 or more employees to provide paid sick leave. Similar legislation was introduced in 2007 but was not acted on. Recent flu concerns have given this bill a boost of public support, as people are encouraged to stay home if they are feeling ill. Business groups are opposed to the legislation, arguing that employers cannot afford additional costs in this economic climate.

The Lilly Ledbetter Fair Pay Act of 2009 was signed into law by President Barack Obama on January 29. The bill amends the Civil Rights Act of 1964, stating that the 180-day statute of limitations for filing an equal pay lawsuit regarding pay discrimination resets with each new discriminatory paycheck.

The Employee Free Choice Act, or card check bill, would allow unions to be certified without a secret ballot election if a majority of workers signed authorization cards. Labor organizations are pushing hard to pass this legislation, while the business community publicly opposes it.

How do you ensure your corporate policies are in compliance?

You need to be clear about what the changes are and how they affect your company. Make sure that all policy changes are in writing and have been appropriately reviewed prior to going public. Small businesses may need to plan ahead for any additional expenses required for these changes, such as the COBRA premiums.

Make sure your human resources department has resources available to always stay abreast of the latest changes in employment law. Staffing partners can also keep you updated on any employment law changes that occur.

How can you best communicate changes to your employees?

Give employees as much notice and information as possible of any policy changes that will affect them. Communicate the changes in writing, post them in a public area and designate someone to speak directly with employees who may have concerns regarding the changes. Make sure you also have current contact information for all current and former employees to be able to send proper notifications out. Change is scary, and having information easily accessible will help ease tensions and make for a smooth transition.

Why should companies make this a priority?

Everyone can benefit by creating a culture of information surrounding labor changes. Proudly promote the fact that your company is in compliance with all new federal or state labor laws. Be on the cutting edge of labor changes and let your employees hear it from you before they hear about it on the news.

Melissa Hulsey is the president and CEO of Ashton. Reach her at (770) 419-1776 or