Employers struggling to keep up with changing compliance issues

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Between efforts to repeal and replace the Affordable Care Act to a hodgepodge of federal, state and local laws, most employers are preparing for big changes that will influence their benefits policies going forward.

That’s according to an annual survey from law firm Littler Mendelson, which found that the shifting, fragmented patchwork of state and local labor and employment requirements has created some compliance challenges for the majority of employers.

As a result, companies are taking action to keep up, including updating policies, handbooks and HR procedures (85%); providing additional employee training (54%); and conducting internal audits (50%).

Of the array of changes at the state and local levels, employers say they have been most impacted by paid leave mandates (59%), background check restrictions (48%) and minimum wage increases (47%), according to Littler Mendelson.

“As states and municipalities continue to propose and enact a dizzying array of rules and regulations, it’s no wonder employers are struggling with the increasingly fragmented landscape,” says Michael Lotito, co-chairman of Littler’s Workplace Policy Institute. “With the Trump administration working to reduce federal regulations, employers can expect a growing patchwork of employment regulations as states and municipalities look to fill a perceived void at the federal level.”

Meanwhile, 89% of employers expect the Trump administration to prioritize reforming healthcare and employee benefits law, as well as immigration policies (85%) throughout 2017.

For most regulatory issues, the percentage of respondents who anticipate an impact on their workplace over the next year remains relatively unchanged from last year’s survey, including:

· The Affordable Care Act (85% in 2016 to 83% in 2017)
· Enforcement by the Equal Employment Opportunity Commission (78% to 76%)
· Enforcement by the National Labor Relations Board (56% to 55%)
· Enforcement by the Department of Labor (82% to 81%).

“With the profound changes in Washington, D.C., it may be initially surprising that respondents do not anticipate more of a near-term impact on their businesses,” Lotito says. “However, given the general climate of uncertainty and delays in appointments to government agencies, employers likely expect it to take time before they start to see how the president’s agenda is carried out and personally feel an impact in their workplaces.”

Immigration reform was the exception as 63% said they expect an impact in 2017, up from 40% in 2016.

Although the survey was conducted before Republicans withdrew the American Health Care Act in late March, the law firm says employers were already feeling a great deal of uncertainty regarding the impact of repealing the ACA’s employer mandate. More than a quarter of employers indicated that they did not anticipate an impact at all, according the survey, and another 27% said they did not know what the impact would be.

As Republicans continue to work to pass a healthcare bill, Littler Mendelson notes, the administration might also take steps to weaken the employer mandate through the administrative process. For instance, President Trump’s Executive Order 13765 was intended to scale back aspects of the ACA that may fiscally burden states, individuals, healthcare providers and insurers, among others.

“Employers face even more questions about the future of the ACA, as well as the extent to which the administrative process can and will be used to change aspects of the law, than when they responded to our survey,” adds Ilyse Schuman co-chair of Littler’s Workplace Policy Institute. “In this environment, employers can continue to expect a certain level of uncertainty surrounding employer-sponsored health coverage in the months ahead.”

Technology headaches

It isn’t just regulatory compliance that employers anticipate future concerns about. As the big-data revolution sweeps through every corner of industry, many employers are coming to the realization that while they may possess large amounts of data, extracting insights that inform and improve decision making requires significant investment.

Although some respondents expressed concern with the legal risks in violating discrimination laws and employee privacy, as the use of big data continues to grow, employers are becoming increasingly comfortable with utilizing data analytics in workforce management in a way that complies with relevant laws.

Data breaches that stem from employees is a concern to 63% of respondents, and has sparked HR and IT departments to work on new security policies. Additionally, more than half said new employees are receiving new training and some (29%) say they are using “cyber-incident response plans and updating employee contracts to cover confidentiality obligations (23%).

Still, Littler Mendelson notes, it’s critical that employers ensure compliance with the myriad of laws that govern workplace data analytics to avoid the risk of costly litigation. Employers can also limit their risk and gain the protection of attorney-client privilege by working with outside law firms that have the substantive expertise and technological capabilities to provide data analytics services.

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