compensation

2023 Compensation Check Up: Legal Updates

LPLeave a comment

Authors Laura Friedel, Becky Canary-King

Compensation is always a top-of-mind issue for employers, but on the heels of the “Great Resignation,” and amidst ongoing labor shortages, economic uncertainties and evolving legal requirements, many employers are reassessing their compensation practices.

In addition to compensation best practices to assist with attracting and retaining talent, employers must make sure to comply with state-specific legal requirements. Here we share new legal requirements for employers.

  1. Prepare to Apply for Illinois Equal Pay Registration Certificate. Employers with 100 or more employees in Illinois must apply for the Certificate between March 24, 2022, and March 23, 2024, and recertify every two years after that. Companies will be notified by the Department of Labor when it is time for them to register and will be given at least 120 days’ notice of their individual deadline. Employers will need to provide certain pay, demographic, and other data as part of the application process. If you have not received the notice from the Department of Labor yet, get started now by considering how you will answer the questions in the compliance statement and report the necessary information.
  2. Ensure Job Postings Comply with New Pay Disclosure Requirements. California, New York City, and Washington State have joined Colorado in requiring some or all employers to disclose wage ranges in job postings. Notably, these requirements include jobs that may be performed remotely in these states. Additionally, Rhode Island joins a growing list of states that require disclosure of the salary range for a position upon request. Employers must understand what information needs to be included in job postings to avoid inadvertently violating these laws. Employers that don’t currently practice pay transparency should also think about how they might get in front of requirements as pay disclosure laws continue to spread. Companies should also consider wage transparency and equal pay laws’ impact on the due diligence process in M&A transactions. 
  3. Be Aware of Minimum Wage and Minimum Salary Increases. 2023 brings minimum wage increases in many states and localities, as well as increases to the minimum salary that employees must receive to be eligible to be exempt from overtime requirements. Make sure that you are aware of – and complying with – the minimum wage and minimum salary requirements in the jurisdictions where your employees perform work, including the requirements in the locations where you have any remote employees.

For additional information on employment-related best practices, refer to LP’s 2023 Employment Law Checklist.

2023 Compensation Check-Up: Four Questions to Ask About Your Compensation Practices

LPLeave a comment

Authors Laura Friedel, Becky Canary-King

Compensation is always a top-of-mind issue for employers, but on the heels of the “Great Resignation,” and amidst ongoing labor shortages, economic uncertainties, and evolving legal requirements, many employers are reassessing their compensation practices.

Here we share some questions to help guide you.

  1. Is Our Compensation Competitive? Pay isn’t the be-all, end-all to employee recruitment and retention, but it’s important. Employees who feel that they are underpaid are far more likely to entertain another opportunity. If you haven’t done so recently, look closely at how you compensate your employees to ensure that they are being paid appropriately – both inside the company and in the industry/marketplace. If you cannot offer higher salaries, there are other ways to remain competitive. Many employers offer new hire signing bonuses, home office allowances, bonus opportunities, paid professional development opportunities, and generous paid time-off policies.
  2. Are Our Compensation Practices Fair? Employers should ensure that they have a solid rationale for compensation determinations and that there aren’t inappropriate pay disparities that appear to be linked to gender, race, ethnicity, or other protected classes. If a self-audit uncovers any areas for concern, employers should make necessary changes. This is particularly important for Illinois employers preparing to apply for their Equal Pay Registration Certification.
  3. Does Our Compensation Boost Retention? Research shows that helping employees feel valued and part of something bigger is vital to boosting retention. While there are non-monetary ways employers can do this, employers should also consider different compensation arrangements that help put the company’s proverbial “money where its mouth is.” Some examples of ways to help employees feel more invested in their work aside from salary increases are profitability-based bonus pools, phantom equity programs, and long-term bonus programs that allow employees to share in the company’s growth, or transaction bonus programs that enable employees to share in sale proceeds if the company is sold. These kinds of deferred compensation programs can present potential complications so they must be documented in writing with clear terms and crafted with the help of an attorney who understands the applicable tax requirements. When done properly, such programs can create a stronger link for employees between their work and the success of the company.
  4. Are our Compensation Practices Compliant? Many states have new compensation based legal requirements. Employers should ensure they are complying with any state-specific laws that may impact minimum wage and overtime compliance, equal pay reporting, and pay transparency in recruiting/hiring.

For additional information on employment-related best practices, refer to LP’s 2023 Employment Law Checklist.