New year, new laws: The biggest employment policy changes coming in 2023

January 31, 2023 10:50 AM

It's a new year, and a new series of laws are poised to potentially change the relationship employees have with work. Are employers prepared?

In the wake of a turbulent few years, employees expect more support from work, in support of both their personal and professional lives. As a result, over a dozen new labor laws, rules and regulations will impact 2023, including policies surrounding wage equity and expanded healthcare benefits.

"Employers change for two reasons: because they're required to by law, or to recruit and retain people," says Marjory Robertson, a senior counsel at Sun Life Financial. "And employees are getting bolder about asking for things. If employers won't support them, they won't work for them — and that's going to impact regulations."

The pandemic was a key driver behind many of the laws and regulations proposed this year, according to Robertson. The crisis highlighted the challenges employees have long faced at work, and pushed them to the forefront of policy conversations. The election of a democratic president in 2020 and the current makeup of the Supreme Court also contributed to the nature of the new laws, as well as when and how they will go into effect.

"A lot of special leave laws were adopted during COVID-19 to address the challenges employees were facing with child care, family care and even their own mental health," Robertson says. "Those are no longer in effect, but it really opened the pathway for there to be more laws around paid leave or public health emergencies."

Robertson shared with Employee Benefit News a few of the bigger changes employers may face in the new year:

Pregnant Workers Fairness Act

The Pregnant Workers Fairness Act prohibits employers from denying reasonable accommodations — such as a lighter workload, intermittent breaks or even seating changes — for employees experiencing pregnancy, childbirth recovery and related medical conditions.

"There was a real gap in the laws because a routine pregnancy was not considered a disability under the Americans with Disabilities Act — even if you had serious complications, none of the protections applied," Robertson says. "The new federal law goes further than the ADA."

Under the ADA, if a pregnant employee needed an accommodation that would impede them from doing an essential function at work, the employer had every right to deny the accommodation. But under the Pregnant Workers Fairness Act, an employer must meet a temporary accommodation unless they can show undue hardship.

The new law could also prohibit employers from putting in place any accommodation that wasn't agreed upon with the employee, such as forcing the employee to take temporary leave if a requested accommodation wasn't being provided by the employer.

"It's a great protection for pregnant women or women with pregnancy-related conditions," Robertson says. "One that could also spill into regular ADA cases, as well."

A proposed ban on non-compete clauses

The Federal Trade Commission proposed a new rule that would ban employers from imposing non-compete clauses that are meant to keep employees from entering into a similar role with their employer's direct competitor. Non-competes have historically restricted employees' career mobility and salary growth.

So far, California, North Dakota and Oklahoma are the only states that have active bans on all non-competes. Oregon, Illinois, Colorado and Washington, D.C., have banned non-competes for employees who make between $75,000 and $150,000. Maine, Maryland, Massachusetts, Nevada, New Hampshire, Rhode Island and Washington all prohibit non-competes for low wage-workers or non-exempt workers, which is anyone that works a regular, 40-hour workweek without an employment contract.

Should the new rule pass, employers across the country would have to make significant changes to employees' contracts.

"If that goes into effect it will be pretty radical," Robertson says. "Employers will be required to send a formal notice of rescindment to employees who have non-competes without exceptions. It applies to all workers and it applies to both express non-competes and de facto non-competes, which are [agreements] meant to limit employees even though they're not called non-competes."

In trying to reverse a practice that has been allowed for years, the FTC is venturing into territory it's never explored before, where there's already a very strong dissent to the proposed rule. Still, it could be worth it: if enacted, the proposal could add an estimated $300 billion to workers' annual earnings.

"This is not something that the FTC has ever done," Robertson says. "It would have a profound impact but a lot of businesses could sue over this."

Expanded family leave benefits

The list of states that offer paid family leave is limited, but the new year has brought with it expansions to some of those existing policies.

New York State Paid Family Leave expanded its definition of "family member" to include "sibling," extending benefits and leave opportunities to those caring for siblings. Previously, the law covered spouses, domestic partners, children, stepchildren, parents, parents-in-law, grandparents and grandchildren. "Sibling" is defined as a biological or adopted sibling, a half-sibling or a stepsibling. The new law went into effect on Jan. 1, 2023.

Vermont also announced a voluntary program, by working with an insurance company, to provide paid family and medical leave benefits on behalf of employers who purchase a policy. The program rolls out for state employees in July of 2023 and July 2024 for private companies. Under the new law, employees will have access to up to six weeks of leave for birth, adoption, or placement of a foster child within one year of birth or placement; or caring for a spouse, child, or parent who has a serious health condition.

Virginia expanded its access to paid family leave by establishing the benefit as a class of insurance that private insurers can offer to employers. This means employers can purchase paid family leave for their employees in the same way they do disability and life insurance.

"Adopting a company-sponsored paid family leave program can offer employees up to 16 weeks of 100% of their pay for reasons like bonding with a child or taking care of a family member," Robertson says. "It's profound, the impact that that can have on people's lives."

More pay transparency

California, Washington and Rhode Island's pay transparency laws went into effect at the beginning of 2023. Employers in those states will now be forced to be more transparent about their wages for both filled and available positions within their companies, and may face a new set of challenges as the year unfolds.

New York City, which had already made significant changes to its compensation laws in 2022, also expanded its regulation to require that postings include a general statement that compensation is based on commissions, if applicable. Employers must maintain records documenting the history of compensation ranges for each job, promotion or transfer opportunity, as well as the associated job descriptions — an amendment also made by California.

"This is going to have the effect of increasing compensation overall," Robertson says. "Pay transparency laws go hand-in-hand with pay equity laws. We still see that women are paid less than men and minorities are often paid less than their white counterparts. And so having the pay transparency really helps to make sure those pay equity laws get enforced."

But for all the good they do for large businesses, they could also have negative side-effects for smaller, under-resourced companies. Small businesses often do not have the budget to make any significant adjustments to their payroll, which means means that should current or prospective employees feel unsatisfied with their pay or the listed salary on a job opening, small business owners will have to get creative with how they plan to keep employees happy with what they're making.