Bank Employers Take Note!

September 3, 2014

By Mary M. Krakow

Banks, like all employers, must keep up with the ever-changing federal and state employment laws and requirements. Several important changes that banks must not miss have taken effect or will take effect soon. Examples of the changes are discussed below, but banks are strongly encouraged to work with their advisors to ensure compliance with the full scope of the significant changes highlighted in this article.

New Federal Affirmative Action Requirements

On March 24, 2014, new federal affirmative action (AA) regulations governing the employment of individuals with disabilities and protected veterans became final and now apply to all federal affirmative action plans (AAP’s) that begin after that date.

The Office of Federal Contract Compliance Programs (OFCCP), which enforces the federal AA requirements, has long maintained that banks with 50 or more employees and that have a contract with the Federal Deposit Insurance Corporation (FDIC) for deposit insurance protection must comply with all the federal AA requirements. The AA requirements also apply to any bank with 50 or more employees if it serves as a depository of Government funds in any amount or is an issuing and paying agent for U.S. savings bonds and savings notes in any amount. The federal AA requirements apply to the employment and advancement in employment of women, minorities, individuals with disabilities, and protected veterans.

The AA program requirements for women and minorities continue much the same as they have for several years: create and maintain the required written AAP narrative and statistical analyses, implement good faith efforts to attract, hire and retain qualified women and minority applicants, collect voluntary gender and race/ ethnicity self-identification information from applicants, and ensure nondiscrimination in compensation, among other requirements.

The new March 2014 AA regulations applicable to individuals with disabilities and protected veterans also continue the long-established requirement to create and maintain a written AAP narrative. But the March 2014 regulations also implement many new requirements for these two protected groups.

One new requirement is that AA contractors must solicit from applicants voluntary self-identification of disability and veteran status and solicit again from new hires. Additionally, AA contractors must invite all current employees to voluntarily self-identify their disability status at three different times: when the contractor implements its first AAP after March 24, 2014, again five years thereafter, and once in-between those two requests.

Another new requirement is that an AA contractor with more than 100 employees must set an “aspirational” goal to have 7% or more disabled employees in each of the company’s “job groups” (an AA method of combining job titles with similar content, wage rates, and opportunities). If the AA contractor has 100 or fewer total employees, the 7% “aspirational” goal for the employment of the disabled applies to the total workforce. The new regulations emphasize that the “aspirational” goal is “not a rigid and inflexible quota that must be met” and that quotas are prohibited. The “aspirational” goal also is not a floor or a ceiling for the hiring of disabled individuals.

For veterans, the new regulations set a hiring “benchmark” applicable company-wide. AA contractors have the choice of using the OFCCP’s published benchmark, currently 8%, or establishing their own benchmark based on factors identified in the regulations.

Consult your advisors regarding additional, new AA requirements.

New Minimum Wage Requirements

Earlier this year President Obama issued an Executive Order (E.O.) that will require federal contractors and subcontractors to pay a minimum hourly rate of $10.10 beginning January 1, 2015. The federal Department of Labor is to issue regulations by October 1, 2014 implementing this new minimum wage and providing clarification regarding applicability, exclusions, etc. Banks are strongly encouraged to stay tuned for updated information.

Even if the DOL’s regulations exclude banks from the new $10.10 minimum, which is yet to be determined, all banks must continue to pay their nonexempt employees (generally those employees whose duties do not require management, the supervision of others or a professional degree) no less than the higher applicable minimum under federal and state wage law.

The current federal minimum wage is $7.25, but that is not the highest minimum in several upper Midwest states as follows:

FEDERAL/STATE

CURRENT

SCHEDULED INCREASE

Federal

$7.25

Effective 1/1/15, per the Obama E.O., federal contractors and subcontractors must pay $10.10 per hour unless excluded by the DOL regulations to be published no later than 10/1/14.

Iowa

$7.25

NA

Minnesota

Through July 31, 2014:

Companies with annual gross sales or business done of $625,000 or greater: $6.15

Companies with annual sales or business done of less than $625,000: $5.25

Regardless of the total of annual gross sales or business done, any employee whose job duties cause the employee to be engaged in commerce or in the production of goods or services for commerce (this is most employees): Follow federal law: $7.25.

For banks, “gross volume of sales made or business done” will include at least the following: interest on loans and securities, income from services, rental fees, and any other revenues.

Beginning August 1, 2014:

Companies with less than $500,000 annual gross sales or business done: $6.50 (increases to $7.25 on 8/1/15; $7.75 on 8/1/16; and as determined by the Comm’r of Labor on 1/1/18).

Companies with $500,000 or more annual gross sales or business done: $8.00 (increases to $9.00 on 8/1/15; $9.50 on 8/1/16; and as determined by the Comm’r of Labor on 1/1/18).

Regardless of the total annual gross sales or business done, any employee whose job duties cause the employee to be engaged in commerce or in the production of goods or services for commerce (this is most employees): Follow federal law of $7.25 or the higher applicable Minnesota minimum wage.

Montana

$7.90

Adjusted annually for inflation.

Nebraska

$7.25

NA

North Dakota

$7.25

NA

South Dakota

$7.25

NA

Wisconsin

$7.25

NA


Minnesota’s Women’s Economic Security Act

Minnesota’s new Women’s Economic Security Act (WESA), as its name implies, is designed to improve work opportunities for women. Several of its provisions apply to the workplace:

  1. Requires companies with 40 or more full-time employees in any state and a contract of $500,000 or more with a Minnesota department or state agency to submit specified data to obtain from the Minnesota Department of Human Rights an “equal pay certificate.” Upon issue, a certificate is valid for four years.

  2. Redefines “employment misconduct” for purposes of unemployment to exclude conduct that is a consequence of the employee or an immediate family member being a victim of domestic abuse, sexual assault, or stalking.

  3. Revises the Minnesota Parenting Leave Act to provide 12 workweeks (up from the prior six weeks) of job-protected leave following the birth or adoption of a child, and extends the leave to absences for prenatal care, incapacity due to pregnancy, childbirth or other health conditions.

  4. Adds “familial status” as a protected class under the Minnesota Human Rights Act’s employment provisions. “Familial status” generally means one or more minors living with their parent(s) and also women who are pregnant and those in the process of securing legal custody of a minor. An example of prohibited “familial status” discrimination would include not hiring an applicant because he has sole custody of minor children that may require frequent absences for illness or child activities.

  5. Requires employers with 21 or more employees to allow employees to use up to 160 hours of their personal accrued sick leave benefits for the care of a mother-in-law, father-in-law, and grandchild and for “safety leave.” Employers already were required to allow such use for the care of the employee’s sick or injured adult child, spouse, sibling, parent, grandparent, or stepparent and to allow unlimited use of personal accrued sick leave benefits for the care of a sick or injured minor child. “Safety leave” is for the employee or one of the named relatives to receive assistance because of sexual assault, domestic abuse, or stalking.

  6. Requires employers with 21 or more employees to provide reasonable accommodation to pregnant employees if not an undue hardship to the employer.

  7. Requires all employers to make a reasonable effort to provide a break room for nursing mothers in close proximity to the employee’s work area (cannot be a bathroom or toilet stall), shielded from view and intrusion by the public and coworkers, and with an electrical outlet.

  8. Requires all employers to publish in their employee handbook/personnel manual a written policy telling employees they have the right to disclose their wages to others.

TAKEAWAY

Many important changes to the federal affirmative action regulations, Minnesota’s minimum wage, and other statutory requirements affecting the workplace take effect in 2014. Bankers should become well versed in the full extent of these changes to remain in compliance.