It’s never been a good idea to allow your organization’s compensation strategy to go stale, but today’s economic upheaval has made this subject a focal point in a historically competitive job market.
If your organization hasn’t already felt the effects of the current labor shortage, you’ve certainly heard about it. Resignations are currently at the highest rate ever recorded, up 13% compared to pre-pandemic levels. According to the Labor Department, most industries across the nation currently have more job openings than there are people with prior experience in that sector.
At the end of the day, employees often weigh their level of compensation above any other factor in their employment decisions. An organization can have an incredible culture, mission, and benefits package, and still hemorrhage talent if pay isn’t keeping pace with the market. Most employers think their employees are fairly compensated (73% of them according to data from PayScale). Meanwhile, 64% of employees report that they’re being paid below average market value. It isn’t enough to trust your gut on this.
Aside from staying competitive through this economic turmoil, there are a myriad reasons for organizations to clear off that dust, reasons that have been with us for a while. Poorly maintained compensation strategies can leave even the most well-meaning of organizations susceptible to fines and/or lawsuits if they’re found to be discriminating in pay on the basis of race, gender, or any other protected class (intentionally or not). Productivity can suffer from poorly devised or outdated incentive programs. Inefficiencies in timekeeping can reduce revenue. The list goes on and on, and they can all add up to impact engagement, retention, and ultimately your bottom line.
Organizations are often reluctant to dive into these potential issues because they’re overwhelmed by the number and complexity of things that need to be taken into consideration. What’s needed is a little clarity and guidance.
We’ve taken the time to put together a Compensation Strategy Checklist that breaks all of this down into its component parts: policies, strategy, management, and compliance. This checklist will allow you to quickly assess your situation so that you can either act on areas of weakness, or rest easy knowing that everything is good to go.
Download the Complete Compensation Strategy Checklist Today!
- Ensure that 100% of their workforce is vaccinated against the COVID-19 virus, with any of the emergency or fully FDA-approved vaccines; OR
- Receive a weekly negative COVID-19 test result from all unvaccinated employees prior to coming to work.
In addition to this vaccination and/or weekly testing requirement, employers must also provide paid-time off benefits for the time needed to get tested and post-vaccination recovery, if necessary. OHSA should release its ETS in the coming weeks, outlining the specifics of this new ruling and how to comply with its requirements, including information on payment responsibility for vaccinations and testing and the timeline for implementation.
There are many compliance concerns raised by this plan under ERISA, HIPAA, certain wellness program rules, and other regulations that will need to be contemplated by employers. Upon OSHA’s issuance of the ETS, we will provide further guidance and information on compliance with the requirements. We also recommend you reach out to your legal counsel for assistance. If you are a large employer and would like to discuss the above requirement in more detail or if you are a healthcare entity, federal contractor, or federal government employer and would like information on how the other pieces of this plan apply to you, please visit https://www.whitehouse.gov/covidplan/ or contact Launchways directly for additional HR and compliance support.
On July 26th, the 31st anniversary of the Americans with Disabilities Act (ADA), President Joe Biden announced that individuals coping with long-term symptoms from COVID-19 may be eligible for disability protections under the ADA and the Family and Medical Leave Act (FMLA), so what does this mean for employers?
Health experts are still learning about “long-COVID”, officially dubbed Post-Acute Sequelae of Sars-Cov-2 Infection, and the medical community’s understanding of the condition is continuing to evolve as more information comes in. The CDC website lists the following as the most common post-COVID symptoms:
- Difficulty breathing or shortness of breath
- Tiredness or fatigue
- Symptoms that get worse after physical or mental activities
- Difficulty thinking or concentrating (sometimes referred to as “brain fog”)
- Chest or stomach pain
- Fast-beating or pounding heart (also known as heart palpitations)
- Joint or muscle pain
- Pins-and-needles feeling
- Sleep problems
- Dizziness on standing (lightheadedness)
- Mood changes
- Change in smell or taste
- Changes in period cycles
In his July 26th announcement, Biden said that “many Americans who seemingly recover from the virus still face lingering challenges like breathing problems, brain fog, chronic pain and fatigue. These conditions can sometimes…rise to the level of a disability.”
Employers are advised to treat all requests for accommodation or leave involving long-term COVID-19 symptoms in the same manner they would for any other non-obvious impairment or disability.
If an employee is seeking FMLA leave – either intermittent or as an interval of time, employers should take the following steps to decide how to proceed:
- Determine if the employer covered by FMLA
- If so, determine if the employee qualifies for FMLA. Consider that the employer must have 50 employees within 75 miles of the employee’s worksite, and the employee must have been employed at least 12 months and must have worked a minimum of 1250 hours in the past 12 months.
- Provide the employee with a Notice of Eligibility and Rights & Responsibilities, Form WH-381, even if they are not eligible for FMLA leave.
- If the employee is determined to be eligible for FMLA leave, the employer should request healthcare certification showing that the claimed disability qualifies the employee for FMLA protection.
- Employees seeking leave due to their own symptoms should be provided with Form WH-380-E, and employees seeking leave to care for a family member should be provided with form WH-380-F.
- A Designation Notice, Form WH-382, should be used to either denominate the leave as FMLA leave or to serve as notice to the employee that the leave is unapproved or additional information is required.
If the individual is seeking ADA Accommodations for long-haul COVID-19 symptoms, the employer should consult with the individual to determine what their exact limitations are and what accommodations are being sought. Keep in mind that the ADA requires the employer to make reasonable accommodations for employees, as well as applicants for employment, who have disabilities.
The ADA does not provide a checklist of conditions that are covered, so instead the employer will need to conduct an individualized assessment to determine if the person has a disability as defined by the ADA. In this context a disability is defined as any impairment that substantially limits major life functions.
Guidance issued by the Department of Justice (DOJ) and Health and Human Services (HHS) on July 26th stated that the phrase “substantially limits” should be interpreted broadly and should not require in-depth analysis.
The employer should then request the individual to have their healthcare provider submit written confirmation of:
- The extent that a disability will substantially limit the individual’s major life functions, including the nature of the disability, its severity, and the anticipated duration of the disability.
- Their assessment of the individual’s ability to perform the essential functions of the position, with or without reasonable accommodation.
- What accommodations the provider believes should be provided that would allow the individual to perform the essential functions of the position safely.
If it becomes clear that the individual does have a disability, the employer should continue to engage with the individual to determine appropriate accommodations. The individual is not granted the ability to dictate which accommodations are provided under the ADA, but it is in the best interest of all parties that they reach an agreement on this subject.
Employers should also keep in mind that reasonable accommodations are not required under the ADA if they would cause an undue hardship on the business, and that long-term effects from COVID-19 don’t always qualify as a disability under the ADA.
It is important employers fully understand the scope of the laws’ coverage in order to be prepared to handle any potential situation. No matter the outcome, employers should always carefully document every step throughout this process and be sure to communicate clearly with the individual seeking accommodations.
In observance of LGBTQ+ Pride Month and the one-year anniversary of the landmark Supreme Court ruling over Bostock vs. Clayton County, the U.S. Employment Opportunity Commission (EEOC) has announced new resources to help employers understand the protection of applicants and workers against discrimination regarding sexual orientation and gender identity. Along with a new landing page summarizing information pertaining to sexual orientation and gender identity discrimination, they’ve released a new technical assistance document to “help educate employees, applicants and employers about the rights of all employees, including lesbian, gay, bisexual and transgender workers, to be free from sexual orientation and gender identity discrimination in employment.”
The EEOC’s new resources taken together with the Bostock ruling present wide-ranging implications for employers across the U.S. Before we dive into the key points of these changes, we need to take a closer look at how we got here.
Bostock v. Clayton County, a Brief Overview
The significance of the EEOC’s new guidance documents cannot be fully appreciated without understanding the consequences of last June’s Bostock v. Clayton County Supreme Court ruling. That 6-3 decision added discrimination on the basis of sexual orientation and gender identity to the list of practices deemed in violation of Title VII of the Civil Rights Act of 1964.
The Supreme Court consolidated 3 separate cases into this historic decision: two centered upon the firing of gay men due to their sexual orientation (Bostock v. Clayton County and Altitude Express Inc. v. Zarda) and another on the firing of a transgender woman due to her gender identity (R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment and Opportunity Commission). The question at hand was “whether an employer can fire someone simply for being homosexual or transgender.” The opinion of the court, authored by Justice Neil Gorsuch, was unambiguous: “An employer who fires an individual merely for being gay or transgender defies the law”. Gorsuch also noted that various caveats regarding religious liberty issues stemming from the First Amendment, exemptions provided to religious employers in Title VII, and the Religious Freedom Restoration Act were not addressed.
Bostock v. Clayton County has since been interpreted by the EEOC and other courts to prohibit all forms of harassment and discrimination based on sexual orientation and gender identity.
The EEOC’s New Guidance Explained
The new resources provided by the EEOC consolidate critical information concerning sexual orientation and gender identity discrimination along with links to fact sheets regarding recent EEOC litigation on this topic. Also included is a new Technical Assistance Document explaining the implications of the Bostock decision and reiterating that employers cannot:
- Discriminate against individuals based on sexual orientation or gender identity with respect to terms, conditions, or privileges of employment, including hiring, firing, furloughs, reductions in force, promotions, demotions, discipline, training, work assignments, pay, overtime, other compensation, or fringe benefits.
- Create or tolerate harassment based on sexual orientation or gender identity, including harassment by customers or clients. This may include intentionally and repeatedly using the wrong name and pronouns to refer to a transgender employee.
- Use customer preference to fire, refuse to hire, or assign work.
- Discriminate because an individual does not conform to a sex-based stereotype about feminine or masculine behavior (whether or not an employer knows the individual’s sexual orientation or gender identity).
- Require a transgender employee to dress or use a bathroom in accordance with the employee’s sex assigned at birth. However, employers may have separate bathrooms, locker rooms, and showers for men and women, or may have unisex or single-use bathrooms, locker rooms, and showers.
- Retaliate against any employee for opposing employment discrimination that the employee reasonably believes is unlawful; filing an EEOC charge or complaint; or participating in any investigation, hearing, or other proceeding connected to Title VII enforcement.
The Technical Assistance Document also notes that employers are prohibited from creating, or tolerating, harassment, or discriminating against straight or cisgender (those who identify with the sex assigned at birth) individuals. Additionally, the EEOC addresses the tension between protections provided to employers and employees with sincerely held religious beliefs and LGBTQ+ applicants and employees by noting, “Courts and the EEOC consider and apply, on a case by case basis, any religious defenses to discrimination claims, under Title VII and other applicable laws.”
5 Key Points for Employers
Title VII of the Civil Rights Act of 1964 now prohibits discrimination on the basis of sexual orientation or gender identity nationally, regardless of state and local laws. Many recurring questions regarding protections for LGBTQ+ employees have been clarified by the EEOC’s new guidance, and here are the 5 key points for U.S. employers to take away:
- Discriminatory action cannot be justified by customer or client preferences. “An employer covered by Title VII is not allowed to fire, refuse to hire, or take assignments away from someone (or discriminate in any other way) because customers or clients would prefer to work with people who have a different sexual orientation or gender identity.”
- Whether or not an employer knows an employee’s sexual orientation or gender identity, employers are not permitted to discriminate against an employee because that employee does not conform to sex-based stereotypes about traditional feminine or masculine behavior.
- Employers requiring transgender employees to dress in accordance with the employee’s sex assigned at birth constitutes sex discrimination.
- Employers may have separate bathrooms, locker rooms, and showers for men and women. However, “all men (including transgender men) should be allowed to use the men’s facilities and all women (including transgender women) should be allowed to use the women’s facilities.” Because the Supreme Court left this issue unaddressed in the Bostock ruling, stating: “Under Title VII… we do not purport to address bathrooms, locker rooms, or anything else of the kind,” this is a controversial issue that is still developing.
- Accidental misuse of a transgendered employee’s preferred name and pronouns does not violate Title VII. However, “intentionally and repeatedly using the wrong name and pronouns to refer to a transgender employee could contribute to an unlawful hostile work environment.”
The implications of the Bostock ruling and the EEOC’s new guidance are far-reaching and consequential, and they make it clear that any discrimination on the basis of sexual orientation or gender identity is now prohibited under Title VII. However, some matters remain unresolved, such as gendered bathrooms/locker rooms and potential conflicts with protections provided to private employers and employees with sincerely held religious beliefs. It is paramount for all U.S. employers to review the EEOC resources, assess their policies and practices to ensure that they are in compliance, and remain attentive to further developments regarding LGBTQ+ workplace discrimination law.
The coronavirus pandemic has proven a broad and nearly universal view that American’s relationship with technology will deepen, including their ability to work from almost anywhere.
If you work remotely in the same state as your business location, you can follow the same state laws for income taxes and employment taxes. But as a remote employee, you need to weigh in the tax implications of cross-border work arrangements.
Below are the laws and taxes considerations to make as a remote employee working abroad:
Be Aware of Your Tax Obligations
You will want to consider your current tax situation and see how it may change if you leave the country. While the U.S. tax code applies to all tax citizens and green card holders no matter how long they live and work remotely outside the United States, some exclusions are available.
You may qualify for a foreign tax credit or the Foreign Earned Income Exclusion (FEIE), which lets you reduce or eliminate all or a portion of your foreign earned income (up to $108,700 from U.S. taxes). This exclusion is not valid for passive, or investment income such as interest and dividend and only includes earned income, such as:
- Self-employed income
Generally, many countries have bilateral tax treaties which prevent you from paying tax on the same thing twice.
Determine Your Primary Residence or Tax Home
Before you qualify using the credit or FEIE, it’s crucial to make sure your tax home is outside the United States.
For instance, countries like Portugal will let you claim to be their tax resident if your primary residence is registered there, and you stay for 183 days or more in any tax year. On the other hand, the U.K. implements a “Statutory Residence Test,” which considers the amount of time you spend and work in each tax year, separately.
According to the IRS,
- Your tax home is the general area of your principal place of business, employment, or post of duty, regardless of where you maintain your family home
- Your tax home is the place where you are permanently or indefinitely engaged to work as an employee or self-employed individual.
- Having a “tax home” in a given location does not necessarily mean that the given location is your residence or domicile for tax purposes.
- If you do not have a regular or main place of business because of the nature of your work, your tax home may be the place where you regularly live.
- If you have neither a regular or main place of business nor a place where you regularly live, you are considered an itinerant, and your tax home is wherever you work.
As U.S. citizens, the foreign income exclusion comes into effect only if you spend at least 330 days of the tax year abroad, not including time on planes. Then, if you qualify, you can use Form 2555 to figure your foreign earned income exclusion and your housing exclusion or deduction.
Comply With Foreign Reporting Requirements
Many digital nomads and expats may also be subject to additional tax reporting, such as filing a Foreign Bank Account Report (FBAR).
An FBAR reports your money that resides in offshore bank accounts. Any U.S. tax resident with a foreign account balance of $10,000 or more during a specific tax year needs to file an FBAR.
This account balance is calculated in its totality, which means it is a sum of all your foreign bank accounts. Individuals who have signing authority for an overseas account or a joint account also need to file an FBAR.
FBAR is filed individually to the Dept. of Treasury and submitted electronically through the BSA e-filing site.
Know Regulations Around State Taxes
Certain U.S. states require ‘verified’ state residents who work outside to pay state taxes, or they have to prove they are no longer state residents. For example, the state of Colorado requires proof of non-resident status, and other places such as California need you to pay state taxes even if the federal government has certified you as a foreign resident.
If you plan to work abroad, this can be a problem for many reasons. In some cases, owning personal property such as a car or even a library card can make you liable to pay state income tax.
That’s why know more about state taxes and/or relocate to a low or no-tax state before you depart, rather than being caught unaware by years of unpaid penalties.
Whether in the U.S. or abroad, if you have an employer, they are required to pay social security and Medicare for you. But as a self-employed digital nomad, you may be liable for SECA (Self-Employed Contributions Act), based on your country of residence.
However, you may be exempt from SECA tax if the U.S. has a Totalization Agreement with the country you are residing in. Under this agreement, SSA will account for your periods of U.S. coverage that qualify for benefits under the social security program of an agreement country.
Depending on your situation and the period spent in a foreign country, you may have freed yourself of commutes, but knowing your tax obligations will help you navigate through the complexities of U.S. taxes no matter where your work takes you.