Labor Market Legislation That Will Affect Your Business in 2020

As if the labor market isn’t complicated enough, here comes another wave of legislation to complicate matters even more. But rest easy, because this article will help you understand things. We’ll explain the new legislation, discuss some things that you and your staffing partner should consider, and provide you with some helpful links along the way.


Note – First up are two California laws (although laws similar to AB5 are passing in other states), so if you don’t do business in California, feel free to skip to the minimum wages section.

Defining California Assembly Bill 5 (AB5)

AB5, informally known as the “gig worker law,” went into effect January 1, 2020. This law reaffirms that most workers in California are employees, and that includes the majority of gig workers. Many employers had been characterizing gig workers as independent contractors, but the law clarified that in order to classify someone as an independent contractor, the following criteria must be met:

  1. The worker is free to perform services without the control or direction of the company.
  2. The worker is performing work tasks that are outside of the usual course of the company’s business activities.
  3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed.

It’s a safe bet that many independent contractors will either move into employee roles or will be adjusting the way they operate their business to better comply with the AB5 law.

How Your Business—and Staffing Partner—Should Respond to AB5

Consider how this will affect your payroll and benefits costs and overall workforce planning approach. How many independent contractors will be reclassified as employees? How many of these workers will you lose and need to replace? And most important of all, how much will this cost you? These expenses must be absorbed and/or offset somehow.

Defining the California Consumer Privacy Act (CCPA)

Another California-specific law is the CCPA, which also went into effect at the beginning of 2020. It’s intended to do exactly what it seems: protect personal data. It was proposed largely as an American follow-up to the European Union’s General Data Protection Regulation (GDPR). In short, it mandates that organizations be transparent regarding the personal data that is collected from individuals and provides California residents with certain rights regarding their personal information (e.g. the right to have an organization delete their personal data)—from basic data like name and email, to advanced data like biometric information and geolocation.

For more on CCPA, visit CSO.

How should your business—and staffing partner—respond to CCPA?

Organizations and their staffing partners must both be transparent, fair, and responsible when it comes to their personal data handling practices. It is now the law to have good data handling practices. Ask yourself these questions: Do you have a handle on where all your data is and who has access to it? Is it centralized? Do you have data management technology in place? Are your employees or partners properly trained to handle data and deal with data incidents? Penalties can be steep if your handling practices or those of your business partners are not in order.

The Current Affairs of Minimum Wages

There is no hotter topic out there than wages, and in this case, minimum wage. Is it high enough to live a decent quality of life? Should the federal government raise minimum wage? Since it’s so geographic-sensitive, should we leave it up to cities and states to continue to manage? So many questions and so many opinions.

Regardless, here’s what is actually happening. Essentially, many states and even some cities are taking the initiative to raise wages, trying to strike the right balance so that workers can improve their lives and businesses can remain profitable. And when it comes to minimum wages, state laws supersede federal laws. Also, some large and influential companies are raising their own minimum wages, causing competing and nearby companies to react in order to remain competitive.

For specifics, here are some helpful, up-to-date sources:

National Conference of State Legislatures (NCSL) – State Minimum Wage Changes in 2018, 2019

Paycor – Minimum Wage by State and 2020 Increases

Note – See how strong the correlation is between hourly wages and turnover.

How should your business—and staffing partner—respond to developments in minimum wage?

Closely monitor your state minimum wage, and in some cases, even your city’s or county’s minimum wages. Take this as an opportunity to assess your pay across the board, both within your industry and your local area. Is it marginally competitive? More than competitive? How is it affecting your recruiting and retention efforts? Can you increase pay for certain positions—both temp and perm—by a noticeable amount and remain just as profitable? You must pay local minimum wage to remain compliant, but the wage discussion gives you an opportunity to stand out from your competitors when vying for talent in the market.

The Current Affairs of Marijuana

Let’s talk about another hot topic, marijuana, which has seen considerable state legislation in recent years. Many questions are being asked by employers: Is it legal here? Will it be legal here? Do we continue to drug screen for marijuana, or do we drop it? How do we treat it in the workplace? Legally, how must we evolve? It’s a complex matter to say the least.

Today, more and more states are gradually legalizing cannabis, both for medical and recreational use, while some in the federal government are attempting to pass new legislation to remove it as a “Schedule 1 substance.” But even in those states where there is more legalization happening, states are still keeping marijuana out of the workplace, and most still allow pre-employment screening for it, especially when safety-sensitive positions are involved. Employers are also still allowed to screen for marijuana in the case of reasonable suspicion and post-accident situations.

Here are some sources to help you and your team stay abreast with the latest development around the legalization—or not—of marijuana:

Forbes – Marijuana on the 2020 Ballot: These States Could Vote

Business Insider – States Where Marijuana is Legal

How should your business—and staffing partner—respond to developments in marijuana laws?

Follow your state laws closely. And remember, it’s not always as simple as cannabis being legal or illegal; sometimes it’s legal medically but not recreationally, or vice versa. Consider whether or not changes need to be made in your pre-employment screening practices. Work with your staffing partner to get a process in place that will best satisfy the needs of your organization, remaining compliant yet more closely aligned with the workforce of today.

There will always be a steady flow of new legislation that forces you to evolve. But in 2020, that rate of flow will increase. Stay current, react carefully, and rely on your staffing partner to be the expert resource they should be. That way, you’ll continue to position your business for success regardless of what comes your way.

Note – We discussed what we feel is the most relevant legislation to your business, but there’s more, and Employers Council breaks it down—from the Fair Labor Standards Act to more state-specific changes.

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