Tag: legal

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Paid Sick Leave in Missouri: What Employers Need to Know as Repeal Efforts Loom

Summary

  • Paid sick leave in Missouri will take effect on May 1, 2025. However, some groups and state lawmakers are currently opposing it.
  • Under the law, employees can accrue an hour of paid sick leave for every 30 hours worked.
  • More than a compliance plan, employers need an all-in-one system that adapts as the law evolves.

Paid sick leave in Missouri is set to take effect on May 1, 2025. Proposition A, approved by Missouri voters in November 2024, introduces significant changes to the state’s labor laws, including mandatory paid sick leave for many workers. 

Under the new law, employees will accrue one hour of paid sick leave for every 30 hours worked. Businesses with fewer than 15 employees must offer up to 40 hours of paid sick leave per year, while larger employers must provide up to 56 hours annually. Exceptions apply to certain workers, like government employees and businesses making less than $500,000 in annual revenue. 

In addition to paid sick leave, Proposition A also increases the minimum wage to $15 by January 1, 2026.

Efforts to repeal Proposition A

Proposition A faces pushback from business advocacy groups and state lawmakers who argue the law is flawed and burdensome for employers. 

The Missouri Chamber of Commerce and Industry, the Missouri Grocers Association, the Missouri Restaurant Association, the National Federation of Independent Businesses, and three individuals linked to these organizations have filed a lawsuit challenging Proposition A with the Missouri Supreme Court. 

The plaintiffs claim the ballot summary and fiscal note were misleading and argue that Proposition A violates the state constitution’s single subject rule by combining minimum wage and sick leave provisions into one measure. 

Lawmakers are also moving to repeal Proposition A. House Bill 567 pushes to overturn paid sick leave rules and remove inflation-based minimum wage adjustments. The bill has passed the Missouri House and is currently being considered by the Senate. However, it doesn’t have an emergency clause, which means that even if it’s enacted, it would not become effective until August 28, 2025.

Tips for managing Missouri’s paid sick leave law

Missouri’s new paid sick leave law isn’t just a challenge for policymakers. It also puts employers in a tough spot. Businesses must balance compliance with labor laws while staying agile in case of legal or legislative changes. Here’s how employers can stay ahead. 

Focus on the facts and prepare accordingly

Proposition A will take effect on May 1, 2025. Therefore, employers should be ready to implement paid sick leave policies by that date. 

  • Notify employees in writing about the earned paid sick time policy by April 15, 2025, as mandated by the law. 
  • Ensure payroll and scheduling systems are updated to track sick leave accrual and usage. 
  • Train managers on policy changes to avoid confusion and ensure employee questions can be addressed.

Monitor any legal developments 

Labor laws are constantly changing, and Proposition A remains a pressing issue in Missouri courts and legislature. Rules can change at any time, and employers must always be updated about developments.

Check the Missouri Department of Labor for official updates and guidance, monitor senate discussions, and review bill statutes and amendments to stay on top of changes that could impact compliance.

Be prepared to adjust

Missouri’s paid sick leave laws can change at any time. With lawsuits and legislative challenges underway, they could be amended, repealed, or upheld. A flexible system allows employers to adjust quickly, regardless of the outcome. 

Workforce.com helps organizations stay compliant and adapt to potential changes by:  

  • Automatically tracking sick leave accrual based on hours worked. 
  • Providing employees real-time access to their leave balances via a mobile app. 
  • Calculating accurate sick leave payouts and preventing payroll errors.
  • Employees can check their leave balances anytime through the employee mobile app. 
  • Offering real-time visibility into who’s out sick, helping managers fill vacant shifts with available and qualified staff. 
  • Enabling HR teams to instantly adjust policies and ensure staff have easy access to updated rules. 

Missouri businesses need more than just a plan. They need a system that adapts as Proposition A evolves. A flexible, all-in-one system for time and attendance, employee scheduling, HR, and payroll is vital to keeping up. Workforce.com simplifies compliance and helps you adapt to legislative changes with ease. Book a call to learn how. 

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California Pay Transparency Law: How to Comply and Promote Fair Pay

Summary

  • California has strict pay transparency laws that require employers to include pay ranges in job postings. Current employees also have the right to request pay scale information at any time.
  • While these laws promote fairness and build trust, they can also create challenges, particularly with recordkeeping and other administrative tasks.
  • HR and payroll software can simplify compliance and help businesses stay organized.

Pay transparency is a strategy to attract talent and retain current staff. In California, pay transparency is backed by a series of regulations, one of the most recent being Senate Bill 1162. 

With the bill’s enactment, employers in California must be upfront about pay scales and clearly communicate them to candidates and current employees. While the bill intends to promote transparency, retention, and engagement, putting it into practice isn’t always straightforward, especially for employers who handle various job positions, locations, and levels of expertise. 

​​So, what does the bill require, and how can hourly workforces implement these rules? Let’s take a closer look.

What is California Senate Bill 1162?

California SB 1162 is legislation that aims to promote transparency in pay scale disclosure. It requires employers to reveal pay ranges in job postings, submit pay data reports, and take steps to uphold pay transparency in the state. It went into effect on January 1, 2023.

Essentially, this bill encompasses transparency with job listings, current employees’ right to know, and recordkeeping and applies to California employers with 15 or more employees. Here are some fundamental points that the bill entails:

  • Employers must disclose the pay range for a position in any job listing. If you employ a third-party recruitment agency, they should also include pay information in their job descriptions and job posts. 
  • Should current employees request it, employers must provide the pay scale of their position. 
  • Employers must keep records of each employee’s job title and wage history for the duration of the employee’s employment and three years after the end of employment. This information must always be ready for inspection by the Labor Commissioner’s Office. 
  • If an employee files a complaint and pay records are not available, it could be a point against the employer in court. 
  • Failure to comply can result in investigations by the Labor Commissioner. If violations are proven, penalties can be imposed. 
  • If someone is “harmed” based on this legislation, meaning they didn’t get any pay information as stated in the law, they can sue the company or seek legal remedies by taking them to court.

SB 1162 basically makes pay information more transparent and accessible, helps employees understand how much they can earn, and ensures that companies have the pay records and information to justify their pay decisions.

Other California Laws on Pay Transparency

California is known for having some of the most comprehensive employment laws, such as overtime pay and cell phone usage laws. The state takes the same thorough approach to pay transparency and disclosure requirements. Aside from SB 1162, here are other relevant state laws.

Pay Data Reporting

Under Senate Bill 973, private employers with 100 or more employees must submit an annual report on pay data to the California Civil Rights Department. SB 1162 expanded this and included rules on pay scale transparency and record keeping. The annual pay data report must cover pay information by race, ethnicity, and gender with specific job categories and is due every second Wednesday of May.

Salary History Ban

Aside from pay transparency and reporting, California Assembly Bill 168 also prohibits employers from asking about an applicant’s salary history or using their past pay information to make a salary offer. Employers, however, can ask applicants for their expected salary.

Wage Theft Protection Act

This act requires employers to provide a notice that contains specific information once they hire an employee. It should include:

  • Rate or rates of pay and if it’s paid by the hour, shift, day, week, salary, piece, or commission. 
  • Overtime rate
  • Applicable allowances that count toward minimum wage, such as for meals or lodging
  • Regular payday
  • Employer details such as name and other names they do business under, physical and mailing address, telephone number
  • Contact details of employer’s worker’s compensation insurance carrier
  • Any other necessary information deemed by the Labor Commissioner

Should the said notice change, employees must be notified in writing within seven calendar days unless the changes are reflected on the next pay stub or another legal notice with the updated details is issued within seven days. 

Whistleblower Protection and Anti-Retaliation Law

California offers another layer of protection for employees who report disparities in pay information. Under this law, an employer cannot retaliate against an employee who discloses information to law enforcement, an investigative body, or someone with authority to address the issue about a law violation, a regulation not being followed, or unsafe working conditions. 

Employees are also protected if they refuse to participate in activities they believe would break the law. Even if an employee hasn’t reported anything but the employer suspects they did, that employee is still protected under whistleblower laws. 

If an employer retaliates against a whistleblower, they may be required to reinstate the employee’s employment and work benefits, pay lost wages and civil penalties, and take other actions to comply with the law. 

The Impact of Pay Transparency Laws on Hourly Teams

Pay transparency laws can pose both advantages and challenges for hourly workforces. Such legislation helps enhance the employee experience, promote retention, and build trust. However, it can also come with administrative challenges, especially with recordkeeping and managing pay scales for each role. 

Benefits

Greater wage transparency

Employees value transparency, especially with pay ranges and information. Pay transparency laws promote fairness and avoid any wage disparities. Such regulations also open the floor for better wage discussions, which can lead to higher morale and increased job satisfaction.

Improved hiring and retentionIncluding pay ranges in job listings helps attract job seekers who are not only interested in the role but also comfortable with the offered compensation. This speeds up the hiring process by filtering out those with mismatched salary expectations. It also helps with retention because when employees know the pay range upfront, they’re less likely to feel blindsided or dissatisfied later on.

Challenges

Consistency with pay scales

Staying on top of pay ranges can quickly become complicated when wages vary by location or experience level. 

For example, the cost of living across cities can impact salary ranges. Typically, pay rates are higher in cities like San Francisco due to the higher cost of living compared to smaller towns, making it challenging to balance out pay ranges across multiple locations. 

Roles can also differ significantly, even if they share the same title. The same position might carry different responsibilities depending on the team or location. Additionally, ensuring pay equity between new hires and existing employees can be tricky.

With all of these factors in play, employers must carefully document pay ranges, justify their pay decisions, and comply with pay transparency regulations.

Wage increases and bigger budget allocations

Employers may have to allocate bigger wage budgets to maintain pay equity. Pay transparency laws may also prompt current employees to request wage adjustments if they find that their current pay is on the lower end of the scale. 

Recordkeeping

Complying with pay transparency laws involves meticulous recordkeeping. This can be especially true for big workforces that need to keep detailed records of all job titles and wage histories of employees across multiple locations. 

Employees’ preferences for specific shifts

For employers offering shift differential pay, transparency can influence employee preferences. Once pay differences are made clear, less popular shifts might become more desirable, leading to imbalances in shift coverage. Employers may need to rethink their differential pay strategies to ensure all shifts are adequately staffed.

How to Avoid Non-Compliance with Pay Transparency Laws

California’s pay transparency laws come with a lot of fine print, and it’s easy to unintentionally slip into non-compliance. To help you navigate these regulations, here are practical strategies to keep you on the right track:

Implement smart recruitment practices

Never forget to include pay ranges and other components of employee compensation on your job listings. This level of transparency not only keeps you compliant but also helps you attract job applicants who are comfortable with the pay offered, speeding up the hiring process.

Workforce.com’s applicant tracking system simplifies this by allowing you to use in-store QR codes to attract local talent. When candidates scan the code, they can instantly view the job opening and pay range. You can even add a follow-up question to confirm that they’re aware of the compensation package before proceeding with the application.

Optimize recordkeeping for audits 

Managing multiple pay rates is complex, and manual processes can quickly lead to errors and compliance issues. Automating recordkeeping is vital to staying organized and compliant. With the right system, you can easily store, retrieve, and sort pay data. No need to scramble to gather information during audits or employee requests. 

An automated solution keeps all pay info in one place, making it simple to pull up details anytime. If the Labor Commissioner knocks or an employee asks for their records, you’ll be ready.

Workforce.com makes it easy to keep employee records and pay data organized. Staff can access their information, and management can quickly pull reports for audits or compliance checks.

Keep employees informed of any pay-related information

Pay transparency isn’t just about disclosing wage ranges—it’s about keeping employees consistently informed. In addition to providing access to their wage details, make sure to issue regular pay stubs. Automating this process reduces administrative work and ensures compliance.

Pay stubs should clearly outline their wage rates, earnings, overtime, deductions, and withholdings. Workforce.com’s payroll software automatically generates detailed pay stubs each payday, giving employees easy access to their payment breakdowns and salary information.

Define pay criteria for pay variations

You need to keep a record of pay data and justify assigning pay ranges to a particular role. Establish a clear policy that defines your pay scale criteria, such as experience, location, shift differentials, and team assignments. Communicate these criteria to employees so they understand how pay ranges are determined.

Provide training and support to HR and managers

Pay discussions can be sensitive, and managers must know how to handle them appropriately. Provide training and guidance on how to effectively address pay scale inquiries and manage pay adjustment requests. Equip them with the information and talking points that will allow them to explain company decisions clearly. 

Simplify compliance with Workforce.com

Complying with pay transparency involves handling data and keeping its integrity intact. Workforce.com is an end-to-end HR, payroll, and scheduling system designed for the needs of hourly teams, including labor compliance. It helps eliminate the administrative burden that can come with complying with intricate laws such as California’s pay transparency laws. It has one source of information, which means that the chances of errors or things falling through the cracks are minimized. 

Discover how different businesses stay on top of labor laws while keeping their teams efficient with Workforce.com. Book a call today. 

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What is FUTA and how to calculate it

Summary:

  • FUTA is a payroll tax used for unemployment benefits. Unlike FICA taxes, it’s solely covered by the employer.

  • FUTA can be as low as $42 per employee annually, but it can quickly become significant for bigger workforces spanning different states.

  • Payroll software simplifies and automates FUTA calculations, ensuring timely payments and accurate filing.

The Federal Unemployment Tax Act (FUTA) is a key component of payroll taxes and a critical responsibility of employers. It funds unemployment benefits and provides a safety net for unemployed workers. 

A clear understanding of FUTA and other payroll taxes is vital for business owners. This guide will explain what employers need to know about FUTA, how to calculate it, and practical tips to simplify the process.

What is FUTA?

Administered by the Department of Labor, FUTA is a payroll tax intended to fund unemployment insurance and job programs across the United States. Unlike the Federal Insurance Contributions Act taxes (Social Security and Medicare), FUTA is solely the employer’s responsibility. There is no employee contribution or employer match. However, the FUTA amount an employer owes is directly tied to employee wages. 

Generally, employers are obligated to pay FUTA if they:

  • Paid wages of $1,500 or more to employees in any calendar quarter during the last two years. 
  • Had at least one employee for part of a day in 20 or more different weeks during the previous two years.

The Internal Revenue Service (IRS) uses a rolling assessment model for the above criteria, which looks at current operations and recent employment patterns. As we transition to 2025, the reference years for calculation are 2023 and 2024.

FUTA rules for agriculture and household employers
Because of their work patterns and employment relationships, there are specific rules for household and agricultural employers. For instance, agricultural work is seasonal, while household employees are often hired in small-scale settings. 

Household: 

Employers must pay FUTA taxes for household employees who perform work in a private home, local college club, fraternity or sorority chapter if they pay a total of $1,000 or more in cash wages during any calendar quarter in the current or preceding two calendar years.

Agriculture:

Employers who have farmworkers must pay FUTA taxes if they:

  • Paid cash wages of $20,000 or more to farmworkers during any calendar quarter in the current or preceding two calendar years
  • Employed 10 or more farmworkers working at any time during 20 or more different weeks in the current or previous two years.

Are there FUTA exemptions for small businesses and self-employed individuals?

If you’re running a small business and don’t meet the IRS criteria, you are exempt from FUTA tax. The same goes if you hire independent contractors instead of full-time employees.

Self-employed individuals are generally exempt from FUTA tax liabilities. 

Also read: How to Manage Compliance for Contractors

FUTA credit reduction

The FUTA tax rate is 6% and applies to the first $7,000 of an employee’s annual wages. This is known as the federal wage base. Most employers can qualify for a 5.4% tax credit, bringing the FUTA tax rate down to just 0.6% per employee. That’s only $42 per employee per year if all conditions are met. 

Employers can qualify for the tax credit under the following conditions: 

  • The State Unemployment Tax Act (SUTA) tax must be fully paid by the Form 940 deadline, before January 31.
  • The FUTA applies to the same $7,000 wage base. You automatically meet this condition if your state’s wage base is higher. If it’s lower, you may not qualify for the full tax credit. 
  • The state is not a credit reduction state. A state is considered a credit reduction state if it received a loan from the federal government to fund its unemployment benefits and failed to pay it back within two years. If the state has an outstanding loan balance from the federal government on January 1 for two consecutive years and fails to repay it in full by November 10 of the second year, the FUTA tax credit for employers in that state is reduced by 0.3% each year, and the loan remains unpaid.

How to calculate FUTA tax liability

FUTA tax is calculated quarterly for deposit purposes. The tax report, on the other hand, is filed annually through the Form 940. 

Here are two example methods of FUTA calculations, assuming that the employer is eligible for the maximum credit (5.4%): 

Example 1: 

  1. Subtract the maximum allowable state credit (5.4%) from the FUTA rate (6.0% in 2024).
  2. Multiply each employee’s wages, up to the $7,000 wage base, by 0.6%.
  3. Total these amounts for your net quarterly FUTA tax liability.

Example 2:

  1. Calculate the gross FUTA tax liability by multiplying each employee’s taxable wages (up to $7,000) by the full FUTA rate of 6.0%.
  2. Determine the maximum allowable credit by multiplying the same taxable wages by 5.4%.
  3. Subtract the credit amount from the gross liability to get the net liability.

FUTA calculations can be straightforward if operating in a non-credit reduction state that matches the federal wage base. However, it can become more complicated when you operate in states considered credit reduction states or states where the wage base is different from the federal one. 

When are FUTA liabilities paid?

FUTA tax payments are typically due quarterly, but whether you need to pay each quarter depends on how much FUTA tax you owe. 

Quarterly payment due dates

If you owe FUTA taxes for the quarter, payments are due by:

  • April 30 for the first quarter
  • July 31 for the  second quarter
  • October 31 for the  third quarter
  • January 31 for the fourth quarter of the previous calendar year

Do you need to pay this quarter? 

Here are general guidelines in terms of timing your FUTA deposits:

  • If you have $500 or more in FUTA liability in a calendar year, you should pay by the next quarterly deadline. 
  • If it’s less than $500 in a quarter, you can roll it over to the next quarter and continue doing so until your cumulative amount due is more than $500. 
  • If your liability for the entire year is less than $500, you can wait and pay it when filing Form 940, due by January 31.

What if the deadline falls on a non-business day (weekend or legal holiday)? You can make your payments on the next business day, which will still be considered on time.

How to pay FUTA tax liabilities

FUTA taxes are primarily paid to the U.S. government via the Electronic Federal Tax Payment System (EFTPS). This 24/7 free service offered by the U.S. Department of Treasury, allows employers to make payments, track payment history, schedule a payment in advance, and get support when making tax payments. 

An alternative method is same-day wire transfers, where the employer makes direct payments via bank, but this can incur transaction fees. Another option is to delegate tax payments through a payroll service provider or tax professional.

Reporting FUTA Tax Payments

FUTA taxes are reported annually using Form 940, the Employer’s Annual Federal Unemployment Tax Return. In this IRS form, employers document all FUTA tax payments made during the year and disclose any remaining amounts due.

The filing deadline is January 31, but if all FUTA tax deposits are paid on time, employers get a grace period until February 10 to submit the form. While Form 940 focuses exclusively on federal unemployment taxes, it’s often compared to Form 941, which covers payroll taxes like Social Security and federal income tax withheld from employees’ wages.

FUTA and SUTA: What sets them apart?

FUTA and SUTA are similar because they have the same overarching purpose: to fund unemployment programs. However, there are some operational differences. The most obvious difference is that FUTA is imposed on a federal level, while SUTA is a state-specific tax that goes to unemployment insurance programs for eligible workers in the state. 

Another key difference is the FUTA tax credit. Employers who make timely SUTA payments can qualify for up to a 5.4% credit, which can reduce their FUTA liability. On the other hand, SUTA is strictly a state-imposed tax and doesn’t have a tax credit system. 

Like FUTA, SUTA tax is also imposed on a wage base. However, FUTA uses a uniform base of $7,000, while SUTA wage bases vary. Some states like Arkansas and California follow the same $7,000 base as the federal government. While states like Washington and New York impose higher bases. Specific industries have additional assessments or alternate rates, so it’s always good pratice to review your state’s latest guidelines. 

Another key difference between FUTA and SUTA is who foots the bill. FUTA is entirely paid by the employer. In the case of SUTA, some states like Pennsylvania and New Jersey, require both employers and employees to contribute.

Simplify FUTA calculations with Workforce.com

FUTA tax liabilities may seem small at just $42 per employee annually, but, it can quickly increase as your workforce grows and spans multiple states. As a result, managing FUTA and other payroll taxes can become more complex. 

Workforce.com can help you stay on top of FUTA tax liabilities and other employment taxes. Here are some of the ways the platform can help streamline your process.

Automated payroll calculations and reporting

Workforce.com’s payroll system automatically calculates wages when you reach the FUTA wage base. It helps ensure timely tax payments and handles overtime, payroll taxes , and deductions. 

Accurate time and attendance tracking

Since FUTA calculations are tied to wages, accurate time and attendance tracking is essential. Wokforce.com ensures that employee hours are recorded in real-time so that hourly wages are always precise and tax calculation errors are avoided. 

Unified employee data

Employee information, such as pay rates and employment status, is centralized in a single profile, eliminating redundant data entry. This single source of information powers payroll computations and includes FUTA tax liabilities. 

If you run an hourly workforce, discover how Workforce.com can help you comply with FUTA obligations and other payroll or labor regulations. Want to see it in action? Get a demo and learn how it can simplify HR, scheduling, and payroll for your hourly team.