Compliance Corner [February 2025]

compliance
Written By Hennrietta Smith

Here is what is new in
February 2025

  • DC Paid Family Leave Rates Increasing

  • Affordable Care Act Reporting Eased

  • New State Regulations for 2025

  • Connecticut Paid Sick Leave Law Coverage Expanding 

  • AAP Caution

  • Common Recruiting-related Compliance Shortcomings on the Part of Employers 

  • DOL Violations & Settlements for December 

  • EEOC Violations & Settlements for December 

  • Quick Ways to Get in Trouble 

  • Overview of State Requirements Regarding Vacation or PTO 

  • Supreme Court Rules against DOL 

  • New Year’s Precautions

  • California Laws

DC Paid Family Leave Rates Increasing 

For all payments due in 2025, the tax rate for DC PFL will remain at the 0.75% rate to which it moved last October.  The rate increase was mandated by the “Revised Local Budget Emergency Act of 2024” as one means of addressing the DC budget shortfall in 2024. The rate structure for 2025 is as follows: 

The figures for the last payment of 2024, due January 31, 2025, are the same as “Quarter 1,” below.

Affordable Care Act Reporting Eased

The Paperwork Burden Reduction Act has actually lowered the paperwork burden for employers who provide health coverage for employees. As long as a plan sponsor [usually the employer] provides “clear, conspicuous and accessible” notice to employees about the particulars of their coverage, the sponsor does NOT also have to provide the Form 1095-C (or 1095-B for non-profits) to the employee. Employees who wish to do so may still request their version of the Form 1095 by January 31 or within 30 days after the request. 

Note that employers must still submit forms 1095-C and 1094-C to the IRS by March 31, 2025.

New State Regulations for 2025 

The state governments have around 140 new regulations coming into effect with the new year. Naturally, California (25) and Illinois (13) lead the pack.  If you have questions about what is going on in a particular state, please check with your VBS team representative. 

At this time, 30 states have regulations either that ban prospective employers from asking about applicants’ salary history or that have such regulations in the works. 

As part of this trend, new privacy laws are effective in January in Delaware, Iowa, Nebraska, New Hampshire and New Jersey. None of these laws has a provision for a private lawsuit; they are state-enforced. 

Connecticut Paid Sick Leave Law Coverage Expanding 

Effective January 1, 2025, coverage under the Paid Sick Leave (PSL) Law in Connecticut is extended to virtually all employers with 25 or more employees. Previous exemptions for certain industries and non-profits are cancelled. The accrual rate has also been increased to 1 hour of PSL for every 30 worked, up to a maximum of 40 in a given year, with almost no exceptions. The definition of “family member” is expanded from immediate to extended family members. Another change is that PSL records are now to be retained for 3 years (there was no prior requirement). Notices of the new requirements must be posted in English and Spanish in “a conspicuous, accessible space.” Effective January 1, 2026, employers with 11 or more employees will be covered; and all employers with 1 or more employee will be covered effective January 1, 2027. 

AAP Caution 

Federal contractors are limited in what they can ask about employee disabilities. The only avenue available is the self-ID form (CC-305). This form can – and should – be provided before and after hire and at least once every 5 years. Employers who deem it necessary may survey their employees using that form more often than every 5 years, but only that form. Using it can also serve to educate employees about what qualifies as a disability under the law. 

Common Recruiting-related Compliance Shortcomings on the Part of Employers 

No one’s pointing fingers, but here are some areas in which scrutiny is advisable, just in case: 

  • Federal contractors (and many state contractors) must make – and document – proactive efforts to recruit both veterans and disabled individuals 

  • Inadequate affirmative action plans – either failing to prepare a plan; preparing an inadequate plan or failing to update an existing plan annually are problem areas. OFCCP provides helpful documentation on several pages in their website, starting at https://www.dol.gov/agencies/OFCCP. 

  • Pay discrimination: States and localities have been getting most of the press coverage in this area recently, but EEOC still enforces the Equal Pay Act, making it very wise for all employers to avoid pay discrimination. 

Your Tax Dollars at Work #1: DOL Violations & Settlements for December 

FLSA

10 Violations in 8 states, mostly for overtime violations and back wages for unpaid compensation due 

OSHA

6 safety violations in 5 states, plus one jail term for contractor who defrauded government 

EO 11246

to resolve a DOL lawsuit, DISH Network has agreed to submit AAP documents for compliance review 

NOTE: DOL conducted 736 investigations in 2024 that found child labor violations covering 4,030 children. Penalties assessed came to more than $15 million. This included subcontractors employing children to clean client sites, including in hazardous conditions. 

Your Tax Dollars at Work #2: EEOC Violations & Settlements for December 

  • Disability Discrimination: 4 cases in separate states for the following: (1) a welder applicant who had completely recovered from a prior injury and did NOT need accommodation was denied reemployment; (2) multiple refusals to hire personal driver applicants who were deaf/hard-of-hearing, sometimes placing them in car-washing positions instead; (3) a pattern of discrimination against employees who have taken medical leave, punishing them or refusing any accommodations; and (4) failure by a company already under a conciliation agreement to comply with terms of the agreement. 

  • Sexual Harassment/Discrimination/Retaliation: 8 cases in separate states: (1) A female employee of Pizza Hut (apparently the manager of an individual store) who had been in a personal relationship with her supervisor tried to break off that relationship and was consequently subjected to harassment and denial of product for her store. She complained to HR and was assigned to a different supervisor, but then received multiple write-ups and terminated two weeks later. EEOC has charged the employer with retaliation and unlawful discrimination. (2) A manager harassed and then at a party sexually assaulted a teenage employee. That employer failed to discipline the manager despite – even despite a criminal charge being filed. The company was then purchased, and now the acquiring company is liable for the charge. (3) A facility of the Maryland Department of Health is sued for sex discrimination because it paid a less-experienced male more than female employees with more experience and tenure. (4) A female applicant for a gym receptionist was denied a follow-up interview because she had to postpone it due to menstrual cramps. A male with less experience was hired instead. (5) A counselor at a medical treatment center was denied a reasonable accommodation and instead was terminated. (6) A delivery driver with lupus was denied accommodation and terminated. (7) An auto service company failed to engage in accommodation and to maintain medical records separately, per the ADA. (8) A property management company denied accommodation to a pregnant employee because she was not eligible for FMLA or STD benefits. The first 4 are in progress; the last 4 all resulted in 5-figure settlements.

Quick Ways to Get in Trouble 

  • Publix markets is being sued by a pregnant employee on the grounds that they fired her so they would not have to give her maternity leave. (She worked in inventory control, not as a floor employee.) After the Pregnant Workers Fairness Act (PWFA) was passed in 2023, she was allowed to work from home. However, according to the lawsuit, not long before her due date, she was terminated, allegedly for completing work without being logged in. According to the lawsuit, however, (1) she was not told that was a problem, and (2) other employees were not disciplined for doing the same thing. Recent EEOC suits and settlements do not bode well for Publix in this case. 

  • It pays to know state laws: Southwest Airlines has allegedly been ignoring a New York law that requires weekly pay for manual labor workers – in this case, baggage and cargo handlers. They are effectively being sued for $100,000 twice – (1) under the New York labor law and (2) under the FLSA. Around 100 workers are affected by this violation. 

Overview of State Requirements Regarding Vacation or PTO 

There are about as many various requirements as there are states. The following is a quick overview of state requirements, but if there is any question regarding a specific situation, employers should be sure to check the specific requirements of the state involved.

States with Requirements Regarding Vacation Pay or PTO: 

California, Colorado, District of Columbia, Illinois, Indiana, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Montana, Nebraska, Nevada, New Mexico, New York, North Carolina, North Dakota, Ohio, Rhode Island, West Virginia, Wyoming 

States with “Use It or Lose It” Policy: 

Alaska: No (but considered a vested right); California: Yes (accrual cap permitted); Colorado: Yes (accrual cap permitted); Illinois: Yes (mandates policy education for employees, allows cap on carryover); Indiana: allowed by courts but not specified in state law; Kansas: yes; Louisiana: permitted by state law; Massachusetts: state law allows cap on carryover and mandates employee education; Montana; no prohibition on carryover allowed, but employers may cap accrual; Nevada: Allowed, but employers must educate employees on policy;  New York: Allowed, but employers must educate employees on policy; North Carolina: Yes, but policy must be posted if loss of vacation could result; North Dakota: Allowed, but employers must educate employees on policy; Ohio: allowed by courts but not specified in state law; Wyoming: allowed as long as employer provides full opportunity for employees to use vacation time and doesn’t deny requests. 

States Requiring Payment of Accrued Vacation upon Separation: 

Arizona: “All wages due” must be paid per state law, but PTO is not specifically addressed. California: All must be paid. Colorado: All must be paid. Louisiana: Accrued, unused vacation time must be paid to the employee. Maine: Employers with 11 or more employees must pay out any unused PTO, regardless of employer policies. Maryland: Unless written policy concerning forfeiture of vacation is in place, all earned and unused vacation must be paid. Massachusetts: All earned, unused vacation must be paid out. Missouri: “Final wages do not include vacation pay.” Montana: Distinction between Vacation and PTO: vacation must be paid out at separation, while PTO is determined by employer policy or contract. Nebraska: Earned, unused vacation must be paid out. New Jersey: Earned, unused vacation is NOT considered wages and therefore does not have to be paid out, UNLESS a contract or labor agreement stipulates otherwise. New Mexico: State supreme court determined vacation to be considered wages, so must be paid out upon separation. North Carolina: Unused vacation must be paid out unless a “clear forfeiture clause” is included in the governing policy statement. North Dakota: For involuntary separations, earned, unused vacation must be paid out. For voluntary separations, payment is due unless (1) employee was notified of limitation at time of hire, (2) employee has been employed for less that 1 year, and (3) employee gave less than 5 days’ notice. Ohio: Unused vacation is payable unless employer’s established policy says otherwise. Rhode Island: employees with one year of service or more must be paid for unused vacation.   

States that do NOT have penalties for failure to pay earned vacation or PTO are the following: 

Alabama, Florida, Georgia, and South Dakota. 

All the rest have varying penalties or liabilities – sometimes very substantial, including jail time – for non-payment of earned vacation or PTO.

Supreme Court Rules against DOL 

The Supreme Court ruled unanimously that the DOL’s attempt to enforce a higher standard of exemption for some employees was not proper. The verdict stated that “employers need only to show that workers are more likely than not exempt from these overtime protections under the Fair Labor Standards Act.” 

New Year’s Precautions 

Advice from various published sources: 

  • Be ready for an I-9 Audit. With the new emphasis on legal immigration, having valid I-9 forms for all employees will be essential for any company that is audited. 

  • If employee classifications and/or compensation were changed to comply with the now-defunct change in exemption criteria, think twice about changing salaries or classifications before actually taking action. Loss of employee morale could be more costly than the payroll cost. Also, if an employee was reclassified from exempt to non-exempt and there might have been a question about the validity of their original exempt status, it may be better/safer to continue their non-exempt status. 

California Laws 

Following is a quick summary of new laws or emphases that will affect California employers: 

  • Local enforcement of discrimination claims. The state is not the only enforcer. 

  • “Intersectional” nondiscrimination to be enforced. If a person has two or more protected characteristics, even if they do not experience discrimination based on one, the presence of two may be held against the employer – who must prove themselves innocent. 

  • Tighter criteria for requiring a driver’s license in a job posting; employers have to prove that alternate transportation (e.g., bus, bicycle, walking, ride-share, etc.) is not satisfactory for performance of the job. 

  • More protection for victims of violence, including time off for remediation. 

  • Written contracts for any freelancers being paid at least $250 for a job. 

  • Protection for employees who decline to attend “captive audience” meetings, such as those held for political or religious purposes or regarding union drives. 

  • Employees no longer required to use up to 2 weeks of company paid leave prior to receiving state benefits. 

  • Companies that voluntarily submit to social compliance audits are required to post the results. 

  • Display of new poster regarding whistleblower rights is required. 

  • Check on current state minimum wage: increase was in progress at the end of 2024. 

  • Minimum salary for overtime exemption increased to $68,640 effective January 1, 2025. 

Hennrietta Smith
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Federal Employment Losing Its Invulnerability?