‍Each month, Mployer Advisor collects and presents some of the most relevant and most pressing recent changes in law, compliance, and policy in areas related to employee benefits, health care, and human resources. 

Employee vs. Independent Contractor Classification

Beginning on March 11, 2024, the Department of Labor will effectively revert back to ‘the economic reality’ test for determining whether a given worker should be classified as an employee or as an independent contractor.

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The economic reality test will take into account the following 6 factors when evaluating a workers employment status and classification:

• Whether it is possible for the worker to either profit or lose money as a result of the arrangement;
• What investments have the employer and worker each made toward completing the work;
• Is the work relationship a more permanent arrangement or more temporary;
• How much control does the employer exert over the worker’s process;
• How crucial is the worker’s output to the employer’s business; and
• The levels of skill and initiative possessed by the worker.

You can find more information from the DOL on determining employee and contractor status here.

Employers Rejecting Job Applicants Due to Credit Reports Must Provide Credit Rating Agency Info 

Beginning March 20, 2024 enforcement begins for Consumer Protection Bureau’s rule requiring Employers that reject job applicants due to information obtained through a credit report to provide the rejected applicant with information about the credit reporting agency from which the report was obtained, including name, address, and telephone number.

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This rule, which went into effect in April of 2023, is an update to 2018’s Summary of Your Rights Under The Fair Credit Reporting Act.

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You can read more about the new rule, its impact, and enforcement here. 

New Safety Reporting Regulations

There are a number of changes to Federal Law including updated mileage reimbursement rates and workplace safety standards that took effect when the new year began, January 1st, 2024. 

• IRS Mileage Reimbursement Rate Increase: The Internal Revenue Service raised the rate at which miles driven for business purposes are reimbursed up to $0.67 per mile for 2024, which is an increase of 1 and a half cents per mile over the 2023 mileage reimbursement rate of $0.65. As a reminder, this reimbursement rate is a recommendation and sets a generalized standard but is not required or enforceable.
• OSHA Electronic Submission Reporting Requirements: In addition to submitting form 300A, firms that have at least 100 employees and operate in industries that have been designated as hazardous must electronically submit data from their injury and illness logs. According to the general submission timeline, submissions regarding incidents that occurred during the calendar year of 2023 will be due on March 2, 2024.
• Minimum Wage Increase for Federal Contractors: For federal contracts that fall under Executive Order 13658, which were entered into on or after January 1, 2015, employees must now be paid a minimum of $12.90 per hour for wage workers and $9.05 per hour for tipped workers. Minimum wage for employees servicing contracts that fall under Executive Order 14026, which were entered into on or after January 30, 2022, is now set at $17.20 per hour for all employees, and contractors are no longer permitted to pay a lower rate to tipped workers under contracts governed by this Order. You can click here for an additional resource from the Department of Labor to help differentiate and distinguish between federal contracts that fall under Executive Order 13658 and Executive Order 14026.

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You can find additional information about the new IRS mileage reimbursement rate changes, OSHA electronic submission requirements, and minimum wage increases for federal contractors, including frequently asked questions about Executive Order 13658 and Executive Order 14026, in the embedded links.

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Secure Act 2.0 Takes Effect January 1, 2024

The Secure Act 2.0, which was signed into law in the closing days of 2022 and will take effect at the beginning of the new year, ushers in some sweeping changes to retirement planning and savings administration in the US, including: 

• Mandatory 401k Enrollment: Most companies with more than 10 employees that have been in operation for at least 3 years will be required to automatically enroll employees into their 401k plan with between 3% and 10% automatic contributions. There’s also a tax credit available for many companies to cover the additional administrative burden of automatic enrollment.
• Starter 401ks With No Employer Match Requirement: The expense of matching employee contributions has deprived many employees over the years of the benefits of having a 401k account even in the absence of matching employer contributions, which should no longer be an issue under the new law. 
• Increased Catch-up Contributions: The amount of annual contributions that employees can begin putting into their 401ks at age 50 is being increased by 50% from $6,500 to $10,000, and that limit is now indexed to inflation to ensure it keeps up with the cost of living.
• Increased Emergency Savings Account Flexibility: Despite more than 4 in 10 US workers expressing a desire to be automatically enrolled in an emergency savings account program through their employer, only about 1 in 10 employers offered such an opportunity as of 2022. The Secure Act increases the flexibility and ease with which employers can now offer such account via withholding as much as 3% of opting-in employees’ paychecks up to $2,500 to be placed into said emergency savings accounts, from which employees can then withdraw their money untaxed up to four times a year with no penalties whatsoever. 

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My mom was an airline stewardess in the glory days of PanAm. People would dress up to go on the plane. That is a distant memory if you have flown in the past two decades. The rise of hybrid work has been well-documented both here and elsewhere, but often less publicized is the massive effect that the proliferation of off-site work arrangements has had on work attire expectations, taking an already occurring evolutionary trend and massively accelerating it.

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Where a worker is conducting their work can make a substantial difference in how they dress, of course, and it is no surprise that nearly 4 out of 5 employees (79%) who work hybrid schedules dress differently depending on their work location - whether that be at home, on-site, or in a third place.

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Perhaps more interesting, however, is how on-site and in-office dress codes are becoming increasingly more casual at the same time. For example, the most recent polling data from Gallup indicates that only about 3% of US workers wear a suit to work - down 4% from the 7% of respondents who did so in 2019. 

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Another survey indicates that the proportion of offices with formal dress codes in the US has fallen from 1.2% to just 0.2% over the last 4 years.

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What was once a widely observed professional standard across an array of industries has now become an outlier, and the trend lines for business casual wear in the workplace, while not nearly as drastic, may ultimately lead to a similar fate. 

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This recent piece from BizWomen takes a broad look at some of those trends that are emerging with regard to workplace attire:

Work Attire By The Numbers

• Current Work Attire Breakdown: As of the most recent data from Gallup, about 41% of US workers currently dress in business casual attire, while about 31% wear casual clothing, and 23% wear uniforms on the job. 
• Employee Perspective: Nearly 3 out of 4 employees believe flexibility in dress code expectations is vital, which includes just about the entire respondent pool if you exclude employees who wear uniforms at work. Further, in a separate poll almost 1 in 4 workers claimed that they would be willing to accept a cut in salary or wages in exchange for the loosening of attire-related restrictions and a more informal dress code generally.
• Talent Attraction: There was a 20% swing in the number of job postings that mentioned business-casual work attire between 2019 and 2022. In January of 2019, about 40% of job postings referenced business-casual attire, but only 3 years later in January of 2022, just under 20% of job listings did so. Over that same time period, the percentage of job postings that referenced casual attire climbed from about 60% to nearly 80%. 
• Dress Code Evolution By Gender: 85% of men respondents reported noticing a casual evolution in their professional in-office work attire while 77% of women said the same.
• Back-to-Office Perk: Nearly a quarter of respondents (24%) claimed that their resistance to spending more time in the office would be reduced significantly if they could wear the clothing of their choosing within reason.

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You can read more about this topic and find additional insight on the subject from industry professionals here.

In the digital age, where transparency and corporate reputation are increasingly scrutinized, the significance of an employer's Glassdoor rating has become a topic of much debate. Glassdoor, a platform where current and former employees anonymously review companies, has transformed into a crucial tool for job seekers and a barometer for companies' workplace cultures. But does this rating genuinely matter, especially in the context of hiring new people and retaining current employees? Moreover, how does it compare with other metrics like the 'Best Places to Work' awards in the United States, which, intriguingly, have shown a strong correlation with organizational success?

Firstly, Glassdoor ratings play a pivotal role in shaping a company's image in the eyes of potential hires. In an era where candidates often research a company as rigorously as their potential employers scrutinize them, a low Glassdoor rating can be a red flag. It can deter top talent from applying, as these ratings are perceived as reflections of employee satisfaction, management style, and company culture. Conversely, a high rating can enhance an employer's brand, making it more attractive in a competitive job market. This aspect is particularly crucial in industries where talent is scarce and highly sought after.

However, it's essential to approach these ratings with a nuanced understanding. They can be subject to bias, as disgruntled employees might be more inclined to leave reviews than satisfied ones. Therefore, while these ratings offer valuable insights, they should be considered alongside other factors like company achievements, industry reputation, and direct feedback from current employees.

Regarding employee retention, Glassdoor ratings can serve as a useful barometer for internal health. A sudden drop in ratings can be an early warning sign of underlying issues, such as poor management practices or declining job satisfaction. Proactive companies monitor these ratings not just for external branding but also to gauge internal sentiment and address potential problems before they escalate.

Interestingly, when it comes to predicting a company's success, the 'Best Places to Work' awards in the United States offer a surprisingly accurate metric. These awards, determined through comprehensive employee surveys and an audit of company policies and practices, provide a more holistic view of an organization. They consider factors like employee engagement, job satisfaction, benefits, and work-life balance, which are crucial for long-term organizational success.

Companies that consistently rank high in these awards often demonstrate strong financial performance, lower employee turnover, and higher levels of innovation. This correlation suggests that a positive work environment is not just beneficial for employee morale but is also a critical driver of business success. For potential employees, these awards offer a reliable insight into a company's culture and values, often more so than standalone reviews on platforms like Glassdoor.

In conclusion, while an employer's Glassdoor rating is an important metric in the modern job market, influencing both hiring and retention, it should be viewed in context and supplemented with other information. The 'Best Places to Work' awards, on the other hand, provide a more comprehensive overview of a company's workplace environment and are a surprisingly effective predictor of organizational success. As the corporate world evolves, these tools and metrics will continue to shape the landscape of employment, emphasizing the growing importance of transparency and employee satisfaction in the quest for business excellence.

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Editor's Note: This report is based on survey data from December 2023 that was published in January 2024. This is the most recent data available. (Source: Bureau of Labor Statistics)

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Payroll figures nationwide held steady last month, as did the unemployment rate average at 3.7% for the second month in a row.

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Most of the states were similarly unchanged from the month prior, with 34 states plus Washington DC seeing no significant month-to-month movement in their unemployment rate.

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At the same time however, 15 states saw an unemployment rate increase while only 1 state saw its unemployment rate decrease last month -  Minnesota at minus 0.2%.

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In total, 16 states currently have a lower unemployment rate than the US average of 3.7%, while 5 states plus Washington DC have an unemployment rate above the national average.

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One year ago the national unemployment rate was at 3.5% (one month before hitting a 50-year record low), and in the time since the rate has remained fairly balanced, with 18 states plus Washington DC registering an unemployment rate increases and 15 states reporting unemployment a rate decreases over the past 12 months, with the other 17 states essentially remaining stable. 

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Below is the breakdown of the Bureau of Labor Statistics’ (BLS) market employment summary for January 2024.

States With the Highest Unemployment Rates

Nevada had the highest unemployment rate for most of 2023 and that trend has continued in the latest report with Nevada recording an unemployment rate of 5.4%, followed by Washington DC and California at 5.1% each.

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The only other states with unemployment rates above the national average are Illinois, New Jersey, and New York.

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In total, however, 15 states saw their unemployment rates increase last month - plus 0.3% increases for Massachusetts and Rhode Island, 0.2% increases for Alabama,  California, Connecticut, Louisiana, Maine, Montana, New Hampshire, New York, and Washington state, and 0.1% increases for Arkansas, Florida, Maryland, Virginia,

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There are 18 states that have seen their unemployment rates increase over the last 12 months, led by New Jersey at plus 1.5%, followed by California at plus 1.0% and Alaska at plus 0.8%.

States With The Lowest Unemployment Rates

Maryland retained the top spot on the list of states with the lowest unemployment rates for the 5th month in a row - this time joined by North Dakota at 1.9% unemployment each.

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South Dakota wasn’t far behind at 2.0%, followed by Vermont at 2.2% and Nebraska at 2.3%.

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Minnesota was the only state that recorded a decrease in unemployment over the month at minus 0.2%, over the course of the last year, however, 15 states in total ave seen their unemployment rates go down, led by Maryland and Oregon at minus 1.1% each.

States With New Job Losses

No states saw statistically significant job losses last month/year.

States With New Job Gains

No states saw statistically significant job gains last month, although 30 states did see their in-state payroll entries increase over the last year.Of those 30 states, Nevada has seen the largest percentage increase (3.8%), followed by Idaho and South Dakota at plus 3.0% each, whereas Texas, California, and Florda had the largest net number of job additions over the year, at about 370, 212, and 240 thousand net job increase, respectively.

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This month’s report was pulled from the last data of 2023 - a year that began with an unseasonably warm economically active January coupled with the lowest national  unemployment since the 1960s.

Mployer Advisor’s Take 

In a year during which most economists had predicted recession and interest rates remain the highest they’ve been in decades, it is fairly remarkable that instead, nearly 3 million jobs were added over the course of 2023 and inflation has fallen below the 30 year average. 

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With the markets currently hitting all time highs and the Federal Reserve expected to begin cutting interest rates in the next few months, the prospects for the coming certainly look better at the outset of this year than they did at this point last year.

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While a significant economic downturn in the next 12 months is still very possible, of course, the balance has tipped in favor of that possibility being less likely than more likely at this point. 

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Looking for more exclusive content? Check out the Mployer Advisor blog.

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One recent survey from Nationwide highlights some of the financial realities that many retired people are currently facing - realities that will soon similarly affect many a great many more people, with an estimated 12 thousand US workers reaching the age of 65 every single day throughout 2024, many of whom are far from financially prepared to leave their work life and career in the past. 

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According to survey results gathered from more than 1 thousand US seniors between the ages of 60 and 65, about 64% of respondents had retired earlier than originally planned with an average retirement age of 60 years old, and of the respondents who are already retired, more than 1 in 3 are currently considering returning to work again.

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Among those retired respondents who are considering returning to work, about half of the group lists concerns of running out of money as their primary motivation for returning to the workforce.

What’s Causing Retirees To Cut Their Retirements Short

Some of the most common factors that respondents fear may result in a premature end to their early retirement include: 

• Inflation, which was cited by more respondents than any other factor, with 90% of retired respondents listing inflation as one of the primary reasons they may return to work;
• Social Security Cuts and/or the threat of cuts in the future, which was listed as a main factor by 84% of retired respondents; and
• Medicare Cuts, which were listed by 83% of retired respondents as one of the top concerns that was inspiring them to get back to work.

Retirement Expectations vs. Reality

One thing the data makes clear is that overestimated income plus underestimated expenses will equal reduced retirement security, which is an equation that has become all too relevant for the majority of retired respondents. 

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Some of the biggest gaps between the retirement conditions that retired respondents expected to find and the actual retirement conditions they are experiencing include:

• Overestimating Income: About 36% of retired respondents reported receiving smaller social security checks than they had anticipated, for example.
• Underestimating Expenses: Many retirement budgets allocate about 42% of monthly income toward food, housing, and other basic needs, but that percentage has often ended up being closer to about 53%, which is an 11% difference that can add up quickly.
• Underestimated Retirement Security: Only 68% of responding retirees claimed that they feel financially comfortable, which contrasts sharply with the 77% of respondents who are currently still working but expect to feel financially comfortable throughout their retirement.

How Can Employers Help Bridge These Divides

One of the main factors leading to retirement disillusionment is a lack of education on the matter among the workforce, and only about 37% of respondents have received any retirement information or guidance from a financial advisor.

By not only providing retirement savings structure and making matching contributions but also by imparting education about retirement planing and best best practices, employers have the opportunity to help their workers avoid costly and all too common retirement pitfalls, including:

• Drawing Down Social Security Before Hitting Retirement Age, which 58% of respondents had done;
• Accessing Retirement Accounts Prematurely, which 34% of respondents had done; and
• Taking Out 401k Loans, which 17% of respondents had done despite the taxes and penalties risked.

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You can read more about this research and the accompanying analysis here. 

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Education debt in the US has risen by more than 50% in the last 10 plus years and now amounts to more than $1.7 trillion, which is a larger total burden on American borrowers than either car payments or home mortgages.

Given that about 25% of the US workforce have outstanding student loans, the issue is nearly unavoidable among all but the smallest companies and most specialized trades, and the problem isn’t likely to improve in the near term given that more than half of all graduates of 4-year collegiate institutions paid for those educations at least partly through loans - averaging about $29 thousand per student.

_{Source: Education Data Initiative, https://educationdata.org/student-loan-debt-statistics}

_‍Worse, when federal loan repayments resumed in the fall of 2023 after a multi-year pandemic-inspired pause, about 40% of borrowers have so far not recommenced making these loan payments as expected.

Because federal student loan payments must be delinquent for 270 days before they formally go into default, however, there’s a considerable lag before the repercussions of non-payment will really begin to be realized.

It’s important to note that from the borrower perspective, there are a lot of short-term benefits to not paying student loans and instead prioritizing housing, healthcare, or whatever other expenses they’ve got that sit above student loans on their hierarchy of needs. The lag between when borrowers stop making payments and when the consequences of default set is a reprieve in which their economic position seems to improve, if only temporarily.

That lag is our current reality and is what makes the maintenance of the status quo possible, but this reality has an expiration date set sometime as early as this coming summer when millions of borrowers enter formal default and start seeing their wages and Social Security checks automatically garnished without the need for a court order.

While the current administration has put into place some programs that will allow borrowers to continue to pause their payments (though not the accrual of interest on their debt) through the Fall of 2024, that really only adds 9 additional months to the clock while the larger problem still looms.

The federal government, specifically via actions taken by the executive branch, has attempted to address the student loan crisis more directly in recent years, and despite the fact that the Supreme Court ruled against their initial broader plan, the current administration has nonetheless successfully canceled more than 130 billion in federal student loan debt for more than 3 million borrowers.

Also, just a few days ago, there was an announcement that they would be seeking to cancel another chunk of debt in February for people who borrowed less than $12 thousand dollars and have been paying off those loans for at least 10 years, so efforts clearly remain ongoing for addressing the growing mountain of debt and its potential weight on the economy as a whole.

For government initiatives that seek to alleviate some of that burden, however, one of the major obstacles they face beyond passing judicial review is simply getting the word out to borrowers who may be most in need of the assistance and support. Borrowers in default are less likely to update their contact information, for one, and may have given up opening any correspondence related to their loans.

For example, while almost 7 million federal student loan borrowers have signed up for the federal student loan debt relief initiative known as the SAVE plan, more than 30 million borrowers are eligible, so there is still substantial room to increase adoption rates, to say the least.

This awareness gap highlights one of the opportunities that exists for employers to step in and help keep their employees informed about the programs that may be available to them, as well as helping them navigate the options they have available to them.

Even better, offering student loan repayment assistance with a matching contribution in lieu of retirement contribution matching may soon be a much more valuable benefit to a much larger portion of the workforce.

While it remains to be seen what will happen when the pause extensions expire and mass default - including the accompanying wage garnishments - becomes the new normal, the economic shockwaves seem likely to extend well beyond the financial concerns of individual borrowers.

For decades, borrowers, employers, and the US economy as a whole have all been benefiting from the existence of a highly educated labor pool, and that bill is likely going to be coming due for everyone involved sooner than later.

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