As we look at the way the human resource trends are shaping up in 2023, let’s review some of the hot topics that will affect the workforce from a pay perspective. Understanding how these trends may affect your business and your hiring strategies, and ultimately figuring out how to navigate evolving state and federal regulations will be the crux of your compliance and successes. Here are 7 trends that are currently influencing HR business practices.

  1. WA Pay Transparency Changes- As part of the Equal Pay and Opportunities Act Pay Transparency- (See RCW 49.58.010 and RCW 49.58.110) effective 01/01/2023, employers with 15 employees or more, are required to:
    • Upon request of an employee offered an internal transfer to a new position or promotion, the employer must provide the wage scale or salary range for the employee’s new position.
    • Access to wage or salary range, general description of benefits, and other compensation on job postings.
  2. WA Salary (Overtime Exempt) Salary Threshold Rises- For employers with 50 or fewer employees, the 2023 salary threshold is 1.75 times the minimum wage: $1,101.80/week, which equals $57,293.60/year. For employers with 51 or more employees, the threshold is double the minimum wage, $1,259.20/week, which comes to an annual salary of $65,478.40/year. Further increases will be seen in coming years as well.
  3. Washington Minimum Wage Increase- As of Jan. 1, 2023, Washington state’s minimum wage is $15.74 per hour. The state minimum wage for 2022 was $14.49 per hour.  Workers 14 or 15 years old may be paid $12.32 per hour.  The federal minimum wage is slated to increase to $9.50 per hour as of 07/01/2023.
  4. Seattle, Tukwila, and SeaTac Minimum Wage Increase- Seattle’s minimum wage increases to $18.69 per hour for businesses that employ 501 or more people. For smaller employers, the minimum wage is $18.69 per hour, or $16.50 per hour, depending on whether they pay $2.19 per hour toward medical benefits, or the employee earns $2.19 in tips per hour. Tukwila and SeaTac’s minimum wages will be even higher. Tukwila’s minimum wage starting in July 2023 will be about $18.99. SeaTac’s minimum wage for 2023 is $19.06.
  5. Federal- IRS Issues Increase to Standard Mileage for 2023- Up 3 cents from the midyear increase setting the rate for the second half of 2022, 65.5 cents per mile driven for business use. (https://www.irs.gov/newsroom/irs-issues-standard-mileage-rates-for-2023-business-use-increases-3-cents-per-mile)
    • WA State PFML Rates Increase- The total premium rate will be 0.8%.
    • Employers will pay 27.24% of the total premium and employees will pay 72.76%.
    • Employers will continue to report each employee’s total gross wages, not including tips, and collect premiums up to the Social Security cap ($160,200 in 2023). Once an employee meets the Social Security cap, you must stop collecting premiums but continue to report their wages.
    • Businesses classified by the Employment Security Department as having fewer than 50 employees are not required to pay the employer portion of the premium. However, they must still collect the employee premium or pay the employees’ premiums on their behalf.
  6. Federal- Classification of Workers: Employee or Independent Contractor- The DOL announced at the beginning of this year that there will be a final rule scheduled for publication in May 2023 after previously proposing and taking public comment. The proposed rule would rescind the 2021 Independent Contractor Rule issued by the DOL, which emphasized the factors of control and opportunity for profit to determine classification and would use a six-factor test and would consider other factors that may be relevant. Each of these factors is skewed towards classifying the worker as an employee. Looking ahead, the results of the new DOL rule are that more workers will be classified as employees and some who have already been classified as independent contractors may have to be reclassified as employees.
  7. Federal- Noncompetes in the New Year- The Federal Trade Commission (FTC) proposed a rule on January 5, 2023, prohibiting non-competition provisions in employment agreements. The FTC rule proposed to ban agreements that are written so broadly as to effectively ban working in the same field post-employment and ban clauses that require paying unreasonable training costs if the employment terminates within a specified period. If implemented the rule as proposed, would stop employers from entering into or requiring noncompete agreements with employees or independent contractors. The proposed rule would also abolish any existing agreements within six months from the date the rule takes effect. The public has an opportunity to submit its comments to the proposed rule through March 6, 2023.

 

Familiarizing yourself with these changes will better allow you to make strategic decisions this year.  From compliance to implementing best practices, or simply answering any questions you may have, our team of consultants can help. If you are unsure and would like to speak to one of our HR experts for assistance, please Contact Us for more information. If you feel like chatting, give us a call at (800) 317-1378 x14.