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March 17, 2003 Issue

Pending HR Legislation You Need to Know

Controversial legislation pending at federal and state levels could spell far-reaching changes impacting HR programs. In some states, the transformations are already under way.

A heightened awareness and concern regarding the impact pending state and federal legislation will have on current and future human resource programs is essential. This issue of Astronology highlights three areas of primary concern. Subsequent issues of Astronology will explore each topic in more depth.

MINIMUM WAGE INCREASES

From Alaska, whose $7.15 per hour minimum wage is at the vanguard of living-wage legislation, to Kansas, whose $2.65 per hour is dollars behind the federal minimum of $5.15, opinions are strong throughout the nation about the effects of minimum wage increases.

The conflict concerns whether an increase in minimum wage can lift the working poor above the poverty line, or would result in economic effects damaging to the population it's intended to aid.

Pundits on both sides back up their arguments with statistical data showing, on one hand, that no jobs were lost as a result of 1997's wage increase, and, on the other, that 3 out of 4 of the poorest workers would suffer as a result of inflation and job losses caused by another increase.

Businesses are more concerned about the headaches wage hikes could cause in their payroll and human resources departments. A federal increase to $6.65, currently pending, would affect employers paying any amount between the current and proposed hourly wages. The attendant compression could make matters more complicated.

Labor and pay markets in many regions may make this issue moot. Anyone who has had a Wal-Mart distribution center open in their area is keenly aware of the impact this has on their ability to remain competitive for entry-level positions. However, for those organizations with seasonal workers, or those who are the prime employer in an economically depressed region, the impact of raising the minimum wage can lead to reduced employment.

PAID FAMILY/MEDICAL LEAVE

A 1998 study claimed that 82% of women and 75% of men in America favor paid family/medical leave. Beginning January 1, 2004, California will put these statistics to the test: Californian employees will pay an average of $27 per year into the Family Temporary Disability Insurance (FTDI) fund. Six months thereafter, employees will be entitled to a disability benefit rate of 55% of their weekly salary for six weeks per year, under circumstances outlined by the Family Medical Leave Act (FMLA): birth, adoption, or serious medical condition of an employee or employee’s family member.

Similar legislation is pending in nearly 30 states. Supporters are quick to point out that, among the industrialized nations, only Australia and the U.S. are without federally funded parental leave. A 2000 Labor Department survey found that 77.6% of those who wanted to use FMLA leave, which allows for 12 unpaid weeks per year, could not afford to.

FTDI's detractors call it a "job killer," predicting that employees will take advantage of the benefit in droves. Other issues of concern to employers include the movement in numerous states to grant non-disabled employees disability benefits, increase the number of days off for special issues (e.g., bereavement, school visits, etc.), eliminate normal waiting periods before disability benefits begin, and extend leave to small businesses.

COMPARABLE WORTH

2001 census data shows that women still earn 75 cents to each man's dollar. Proponents of comparable worth attribute the gap to discrimination against female-dominated jobs; opponents insist that life choices and such factors as experience, time in the workforce, and willingness to relocate keep women's pay low.

The Equal Pay Act of 1963 requires men and women in similar jobs to be paid equitably. Comparable worth, on the other hand, requires unlike jobs to be evaluated according to their inherent worth, and compensated appropriately. While comparable worth is most widespread in the private sector, in 2001 it became the legal standard in Maine.

Pending legislation would require the widespread establishment of job-worth hierarchies to protect employers against discrimination claims, forcing many organizations to radically rethink the way they handle compensation.

Organizations with Canadian facilities in either Ontario or Quebec province are familiar with the impact of pay equity legislation. There are far-reaching implications that directly impact and strain already limited human resource budgets and the effective use of human resource staff.

The next three issues of Astronology will be devoted to these legislative issues and their impact on HR programs in greater depth.

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ISSN Number 1549-0467