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Major regulatory changes from OSHA and DOL rile many employers

In May, the Department of Labor (DOL) released two new rules that will have a significant impact on employers of all sizes and from all industries.

OSHA's controversial final injury data submission rule worries many employers

OSHA's stated objective in issuing the Improve Tracking of Workplace Injuries and Illnesses final rule that requires employers to electronically submit worker injury and illness data, which will be made public, is to "nudge" employers to focus on safety. However, employers worry about privacy, unwarranted adverse publicity, misinterpretation of data, damaging use of information by competitors, public shaming, underreporting, and a usurpation of Congressional authority.

What the rule means

Timeline of effective dates

Then, beginning in 2019 and every subsequent year, the information must be submitted by March 2nd each year.

The volume of data collected will be staggering and some doubt the ability of an agency the size of OSHA to manage it properly and the cost will be significant. While estimates vary as to the number of employers affected, most figures are in the half to three-quarter of million range.

What has employers worried?

What employers should do

While critics are actively voicing their concerns to Congress and there likely will be legal challenges, employers must begin to prepare now to comply with the new rule. Eric Conn, Chair of OSHA Workplace Practice Group, Conn Maciel Carey, advises:

Final rule revising the current White Collar Exemption regulations

The long-expected final rule revising the current White Collar Exemption regulations raises the minimum threshold salary required to qualify as an exempt employee to $47,476, which is slightly lower than that proposed in 2015, but more than double the current salary threshold of $23,660. All employers throughout the country must meet the same mandatory salary level, $913 per week, to classify an employee as exempt.

The new rule also implements an automatic increase in the threshold salary level every three years based on the 40th percentile for salaried workers in the lowest-wage region.The rule also permits bonuses and incentive payments to count toward up to 10% of the new salary level. The updated rule, which will take effect Dec. 1, 2016, will affect 4.2 million workers, according to the department. It makes no changes to the current duties test.

Employers have a variety of ways to comply:

In addition to the financial impact of increased payroll, employers must consider the effect on employees. Salaried workers who are reclassified as non-exempt workers may perceive this shift as a demotion in pay and status, as well as a threat to the reliability of their take home pay and flexibility to come in late or leave early. And what about answering emails and phone calls after hours? And will company phones and laptops mean an employee logs more OT? Telecommuters may feel Big Brother is watching. Moreover, benefits often differ for salaried and hourly workers.

Impact on Workers' Compensation

Under the new rule, there is the potential for increased premiums, especially for small employers, given the role payroll plays in workers' comp calculations. Raising wages or increasing overtime results in a gross increase in payroll, which is a factor in calculating workers' comp premiums. The greater the payroll, the greater the premium paid. Claim costs may increase as well.

However, in most states (Pennsylvania and Delaware are exceptions) the premium portion of overtime pay is excluded from remuneration so the additional amount a worker earns for each hour of labor during overtime hours is not included. For example, if a worker who makes $20/hr. logs in 10 hours of overtime, only $200 of the $300 earned is included in the calculation.

It's important to be sure there are clear records, breaking out the overtime paid. Also, let underwriters know the added payroll does not increase exposure because employees were already working overtime hours beyond 40 a week before the new rule but they were receiving a salary and not compensated for the overtime.

Take the time to plan

With less than six months until the effective date, employers should begin planning now:

The DOL website includes a video explaining the need for the change, as well as detailed "FAQs," "fact sheets," and guidance publications targeting some employers who will be particularly affected by the final rule - including non-profits, educational institutions, small businesses, and state and local governments.