January 17, 2024

Executive Summary

2023 presented employers with many new and difficult compliance challenges, including federal and state laws and regulations expanding worker protections, widespread adoption of artificial intelligence (AI) in the workplace and increased enforcement actions by federal agencies. Employers have had to respond as courts and federal agencies addressed several hot-button issues. In addition to these novel and growing compliance challenges, employers have also had to navigate record-high inflation, economic slowdown and an unusually resilient labor market. For many employers, these challenges made it more difficult to prioritize compliance or establish successful mitigation strategies because they lacked sufficient time, proper resources or trained personnel. Entering 2024, employers will continue to face the challenge of responding to new legal requirements and increased enforcement efforts.

COVID-19

While the COVID-19 pandemic may be considered a thing of the past for many organizations, employers continue to struggle with the pandemic’s lingering effects on their compliance efforts and obligations. The pandemic has and continues to shape many facets of employers’ compliance efforts. In many ways, the pandemic acted as a catalyst for addressing certain employment issues that have been simmering for years and bringing to light novel concerns. For instance, it highlighted issues like workplace religious discrimination as employees requested to be exempted from vaccine mandates due to religious reasons. The focus on religious accommodations has continued in 2023 and will likely continue well beyond due to the U.S. Supreme Court’s decision in Groff v. DeJoy, which clarified the standard when denying religious accommodation requests under Title VII of the Civil Rights Act (Title VII). The pandemic also added a new dimension to the types of accommodations sought by employees under the Americans with Disabilities Act (ADA), including remote and flexible work arrangements. Additionally, large segments of the workforce continued to be impacted by long-haul COVID-19, triggering employers’ accommodation obligations under the ADA.

Remote and flexible work arrangements, which became commonplace and proliferated during the pandemic, have also created compliance and operational challenges for employers, especially when it comes to accurately tracking hours. The widespread adoption of remote and flexible work arrangements has led to an increasing number of states and localities passing laws, such as pay transparency and equity and paid leave, to better regulate these arrangements. While trends like pay transparency and paid leave gained a stronger foothold in 2023, more state and local governments are likely to enact similar legislation in 2024, meaning more employers will be subject to these burdensome requirements. Additionally, in 2023, student loan repayments resumed after a three-year pause during the pandemic. With new federal legislation taking effect in 2024 (SECURE 2.0), employers will have the ability to help employees who may be struggling with student debt.

New Technologies

Preparing for and responding to new legal requirements, increased enforcement efforts by government agencies and the incorporation of new technologies is critical for a successful 2024. Employers must ensure their organizations are adequately prepared for any new compliance requirements that might apply to their organizations. This may include responding to a new overtime rule for white-collar employees, a new standard for independent contractors and the National Labor Relations Board (NLRB)’s new joint-employer rule. If enacted, these regulations will have major implications for employers. For example, if the new overtime rule becomes final, many employees may have to be reclassified from exempt to nonexempt. Not only will this create general compliance issues with the Fair Labor Standards Act (FLSA), but it will also force employers to raise employees’ salaries to keep them exempt from overtime requirements or start paying them an overtime premium for all hours worked over 40 in a workweek. While there remains a lot of uncertainty surrounding the timing of several anticipated rule changes, acting proactively—by implementing compliant workplace practices, updating policies and training personnel on any new requirements or changes—can greatly enhance employers’ compliance efforts and limit their potential liability and legal risks.

Employee Benefits

Complying with employee benefits requirements will likely be more difficult in 2024 as well. In the wake of the Supreme Court’s decision in Dobbs v. Jackson, which ended the federal constitutional right to abortion care, reproductive, fertility and family-planning benefits are expanding in a growing number of states. However, there remain many unresolved questions regarding reproductive health benefits that employers must monitor in the upcoming year. Employers may also need to respond to several coverage changes under the Affordable Care Act (ACA), such as covering oral contraceptives, certain medications to treat HIV and common preventive care screening as well as improving access to mental health and substance use disorder care.

Understanding and responding to these challenges will be essential for employers’ success in 2024 and beyond. In the upcoming year, many employers will face the difficult task of addressing new compliance requirements with reduced budgets or staff. As employers contend with inflation and budget constraints, they must consider compliance costs as part of a complete cost management strategy. Employers will need to find ways to do more with less. This will include finding creative solutions in response to new compliance rules and regulations; otherwise, they may be faced with increased investigations, enforcement actions and costly lawsuits. Organizations must remain vigilant, monitor for updates and remain flexible as they implement any changes.

As you consider the information presented in the Compliance Outlook, evaluate which changes and trends you may be susceptible to in the upcoming year. Then, reach out to us to discuss the next steps and request valuable resources to help evaluate potential solutions and meet 2024’s compliance challenges. Together, we can rise to the challenges and identify opportunities presented in the new year.

 

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