Businesses have been dealing not only with inflation and rising interest rates, but also new requirements for family leave, minimum wage increases, and pay transparency rules.
Sixteen states have enacted paid family leave requirements, according to payroll giant ADP, while 20 states and over 40 local jurisdictions have increased minimum wages, and 20 states have enacted rules around pay transparency.
"There's been a significant uptick in these laws across the country," said Max Pearlstein, division vice president of the channel sales organization at ADP's small business services business unit. "A lot of it is around ensuring pay equity. Some laws attempt to do this by prohibiting employers from banning discussions about pay, and others go a step further by requiring employers to affirmatively provide pay info to applicants and employees."
While many employers may object to pay transparency laws, they can help small businesses in their efforts to find talent, but also alienate current employees who discover they're less well compensated than their coworkers and peers.
"It's really an opportunity for small business owners to become an employer of choice in today's very challenging talent market by providing as much insight into what they're paying their employees as possible," said Pearlstein. "But there's a complication to that. When you start to disclose what you're going to pay future employees, you also have current employees who could have questions. It's important, however, once it's out there in the open and you're transparent about it, an employer could potentially have employees feeling really good knowing where they're at against other peers at the organization, and therefore help build a positive impact to their organization's culture."
Paid family leave requirements have also been growing in states across the country. "Typically, it's a requirement for employers to be crystal clear about what they're offering their employees," said Pearlstein. "At the beginning of this year, there were 13 states that basically created a paid-for-leave program. It's different across all the different states that offer it, but a lot of them we're seeing around medical events like the birth or adoption of a child."
Employers have different options when it comes to how they roll out a paid family leave program. "Some of them require contributions from an employee," Pearlstein explained. "Some of them are 100% covered by the employer. But most important is that the employer is crystal clear, and provides a ton of notice to their employees about what they're eligible for and what their rights are in the workplace."
Minimum wage requirements change in various states and cities nearly every year, and the rules can be complex. "You'll have employees that work somewhere where there's multiple minimum wage implications, whether it's city, state or federal," said Pearlstein. "What's important for small-business owners to know is typically the best practice is to follow the most generous minimum wage that they may be [subject to]."
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Accountants often hear questions from their small business clients about such requirements.
"What's most important is that accountants look at all of these changes as an opportunity," said Pearlstein. "The profession has changed from just tax preparation to advisory services, and when an accountant is a trusted advisor to their client, it helps them attract more new clients, and also deepen their relationships with their existing clients."
