NAPEO
Just as the pandemic seems to be at a manageable point and you think you can breathe easy for a bit, it’s time for you to gear up for the next wave of workplace troubles. A confluence of several events will likely lead workplaces across the country to face a wave of employment litigation at the end of 2022 and well into 2023. What forces are leading to this inevitable future, what will it look like, and what should PEOs do to prepare?
The Supreme Court of the United States (SCOTUS) has certainly received much attention in recent weeks, but PEOs need to keep their eyes on the highest court in the land for an altogether different reason: The decisions we have already seen—and soon expect to see—from SCOTUS in 2022 will alter the landscape of workplace law. We’ve seen two big workplace law decisions already this year, we expect another one in the next month, and the court just accepted review of another case we will most likely see decided around the end of the year.
Although the tax credit and tax deferral parts of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and subsequent legislation expanding certain parts of the CARES Act have expired,1 some of its effects (some advantageous and others not) on PEOs continue through 2022. This article discusses the opportunities that remain for PEOs and their clients, as well as the risks not to be forgotten.
Just like every major disaster leaves a lasting imprint on the landscape that it touches, COVID has forever left its indelible mark on the workplace safety landscape. How can PEOs help employers rebuild and move forward? On the safety front, it still will mean providing employers with different and sometimes conflicting information. However, a roadmap may be emerging through the evolution and devolution of COVID regulations and policies.
When I was a kid, optical illusions were popular. You would put your face up close to the image, un-focus your eyes, and slowly pull back. What was once swirling colors or thousands of dots would soon form an image hiding in plain sight. Or so, that’s how it was supposed to work. I think that is how compliance can be. We all want to do an excellent job with compliance, but there is an art to doing it well. As PEOs, we want to help our clients implement new laws so they become embedded, workable parts of their businesses.
Since now-President Joseph R. Biden Jr.’s announcement that he was running for office, one thing has been clear: He intends to be the most pro-union president and promoting labor organizing is a cornerstone of his agenda. On February 4, 2021, House and Senate Democrats gave President Biden his wish through the introduction of the Protecting the Right to Organize (PRO) Act.
Since 2018, NAPEO has found itself caught up in a series of federal legislative and regulatory issues.
As an industry, we gather every year in May at the Ritz-Carlton, Pentagon City, for what I consider to be the best event NAPEO presents: the PEO Capitol Summit. The information shared during the PEO Capitol Summit is always timely and activities and events are second to none.
Among the biggest landmines for PEOs is the misclassification of co-employees. This has become increasingly pressing as the Biden administration focuses heavily on the misclassification of exempt employees, as well as the misclassification of independent contractors. This article discusses common pitfalls of classification, best practices to minimize PEO liability when misclassification occurs, and how to navigate issues when they arise.
It’s 2023. You manage compliance for a PEO with clients in California. You receive a request from a California worksite employee asking for a copy of all personal information collected from or about him or her in the last 12 months. Where do you start? Is the PEO even obligated to comply with such a request?
During his candidacy, President Biden promised help for individual workers. The agencies under the president’s control, and even Congress in some instances, have worked to further that broad agenda, particularly with respect to retaliation against workers. These actions, in turn, require attention by PEOs and their client companies.
The Employee Retention Tax Credit (ERTC) was designed to give relief to employers that retained their employees, whether working or not, by paying them throughout COVID. Initially, employers could get $5,000 total per employee for the whole year of 2020. The parameters changed in 2021, giving employers the opportunity to claim $7,000 per employee, per quarter, for the first three quarters of 2021. While this is a great idea in theory, the mechanics of administering it are very burdensome for PEOs.
As the industry has grown over the years, PEOs have evolved naturally in the direction of multi-state operations. This has always been true, but the pace or scope of this effect accelerated with the rise of remote work during the pandemic. The PEO client service agreement (CSA) is a challenging document. The complexities and ambiguities of the PEO arrangement require a lengthy contract to reasonably address the risks and to protect the PEO. These challenges are magnified by the need to address state-by-state issues.
Despite being described as more deeply divided than ever, Congress found a way to pass the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFASASHA). President Biden has said he will will sign the bill into law, and may have already done so by the time this article goes to press. This means all employees subject to arbitration agreements will have the right to choose whether to bring covered claims in arbitration or in court, even if they previously signed a PEO’s mandatory arbitration agreement. This development significantly impacts PEOs from both an operational standpoint and a liability standpoint.
NAPEO’s Regulatory Database (RDB) is at the very core of the NAPEO value proposition and is positioned to become even more so with the increased prevalence of remote work. Since the pandemic accelerated the disruption of traditional office life, NAPEO has begun receiving panicked questions from regional PEOs facing a common, recurring issue: a client employer has a remote-work employee in a state where the PEO is not licensed. If your PEO faces a similar issue, your first stop should likely be the RDB, followed closely by a frank conversation with your compliance advisor.
The success of any organization lies in its ability to adapt and grow profitably. Without being able to shift focus and direction, a company can lose its edge, then its market share. Ultimately, it will no longer be viable in the marketplace. Sears, Kmart, and Blockbuster will forever be remembered—not for their greatness for decades, but for their unwillingness to see the changes in the marketplace and adapt.
At the NAPEO Annual Conference & Marketplace in late September 2021, there was a buzz in the air about national retirement policy. Only a few weeks earlier, on September 9, the House Ways and Means Committee had just approved, on a straight party-line vote, an ambitious plan to remake the national private retirement system as part of the Democrat’s broader Build Back Better Act agenda. This proposal would have required all employers, except the very newest and very smallest, to offer retirement savings vehicles to virtually all employees. NAPEO staff and I were fielding questions non-stop about the opportunities and challenges this bill would create for PEOs. It really felt as if a new retirement plan mandate on employers was on the verge of becoming law.
As employers begin transitioning away from pandemic mode and toward management mode, they also are trying to navigate the changes to the legal landscape governing the workplace. The government has made this all the more difficult with its ever-shifting rules designed to both address the pandemic and reflect the changes in philosophy in transitioning from the Trump to the Biden administrations. Below are just a few of the recent changes that PEOs should be aware of to better service their clients.
Laying to rest any doubt that employers would continue to enjoy a business-friendly interpretation of the standard to determine joint employment status, a federal appeals court recently put the final nail in the coffin of the Trump-era attempt to shield businesses from being considered joint employers in a wide spectrum of circumstances. This move clears the way for the current administration to cement into place a broad standard that captures a wide swath of business arrangements into the “joint employer” category.
