Whether it be AI and data privacy, wage and hour laws, mandated retirement programs, or any number of other federal, state, and local laws and regulations, employers have a lot to juggle in the coming months. Small business owners with already full plates may find it overwhelming to track all that’s changing and how it may impact their day-to-day operations.
With a presidential election on the horizon, and workplace trends changing on the dime, here are three areas small business leaders need to keep an eye on in the current regulatory landscape:
The business impact of artificial intelligence and data privacy
It is safe to say every industry has been altered by digitalization with some small changes (e.g., switching from manual time tracking to electronic) and big changes too (e.g., integrating generative AI to help streamline the way the entire business operates). To stay ahead, business owners must stay abreast of the latest technology trends and, more importantly, understand which of these new technologies could add value to their business.
As AI continues to seep into our work lives, regulators will likely heighten efforts to set appropriate guidance and governance for the use of AI. In some instances, they already have.
In October 2023, the Biden Administration issued an Executive Order (EO) on AI, which aims to establish standards for developing and utilizing this emerging technology. The EO establishes a variety of baseline standards for AI use, designed to:
- Promote AI safety and security.
- Protect Americans’ privacy.
- Advance equity and civil rights.
- Safeguard consumers and workers.
- Promote innovation and competition.
- Position America as a leader in the field.
Additionally, this type of legislation and regulation is expected to increase as we continue learning more about AI, its uses, and its drawbacks. Congress and state-level officials have also indicated an interest in establishing guardrails for the responsible use of AI in 2024, with specific attention paid to its use in recruitment and potential to contribute to biases in hiring practices.
In the same vein, data privacy and cybersecurity will remain a hot topic for legislators. Regulations to help ensure American businesses, employers, and employees are protected from the threat of cyberattacks continue to be a high priority. In 2023 alone, we saw five state-level consumer data privacy laws enacted in California, Colorado, Connecticut, Utah, and Virginia. The list continues in 2024, with at least four more states — Florida, Montana, Oregon, and Texas — passing privacy laws that are expected to take effect this year. In 2025, an additional five state privacy laws – Delaware, Iowa, New Hampshire, New Jersey, Tennessee – are also expected to take effect.
What’s new in wage and hour laws?
Following a stream of new minimum wage increases, which took effect on Jan. 1, 2024, and the March 11 update to the U.S. Department of Labor’s (DOL’s) worker classification guidance, wage and hour laws remain a hot-button issue for businesses across the country.
The U.S. DOL is also expected to issue a final rule on the Fair Labor and Standards Act’s overtime provisions this year, increasing the Act’s minimum salary threshold for exemption from overtime. Once the final rule has been released, business owners will be tasked with understanding the business impact, implementing changes, and communicating those changes to their employees by the effective date. Even after it takes effect, business owners must continue monitoring the topic as it’s likely to face challenges and in the coming months.
Businesses of every size must stay up to date on wage and hour laws and regulations in all jurisdictions where their employees are working, as employer responsibilities may vary across states and even localities. While the federal minimum wage remains at $7.25 an hour, at the start of 2024, 22 states made minimum wage increases. Of those, 12 states made increases due to inflation-indexing practices. Further, Maryland and New York State raised their minimum wage threshold to $15.00 an hour (and New York City and the surrounding counties went up to $16.00).
Minimum wage legislation is also expected to appear on ballot measures across the country this election cycle including in Alaska and California. Business owners should continue tracking the progress of these developments, as failure to comply could result in costly consequences.
Advancing retirement programs
In 2019, Congress passed the Setting Every Community Up for Retirement Enhancement Act (SECURE Act) to help Americans better prepare for retirement. Since then, the legislation has evolved, and in late 2022, the SECURE Act 2.0 was signed into law. As of 2024, the SECURE Act and SECURE Act 2.0 are expected to introduce new provisions taking effect this year, with additional guidance on specific provisions, including student loan matching contributions.
Pooled Employer Plans (PEPs) will also continue to be a popular retirement savings plan option implemented by small and mid-sized businesses. PEPs pool the assets of many employers into one large plan, helping save employers time and money as many of the administrative tasks are managed by the plan provider.
Finally, many states, including Maine, New York, and New Mexico, are taking retirement plans into their own hands as they plan to launch state-mandated workplace retirement programs in 2024. As state-by-state legislation is introduced and evolves, employers should monitor what their specific states of operation are implementing and what they must do to comply.
Keeping a pulse on business legislation
Employers, especially small business owners, often wear many hats. Monitoring local, state, and national legislation and regulation is one piece of a much larger puzzle and while the above are listed as some of the most notable changes, new regulatory developments are likely to continue popping up throughout 2024.
To keep up with changing regulations, business owners should aim to understand the nuances of upcoming rules, and recognize how they impact their business, acting proactively to identify the changes needed to remain compliant and engaging a trusted financial or legal partner as necessary to help offset some of that burden.
Laurie Savage, senior compliance professional, Paychex.
White House stock image by Andrea Izzotti/Shutterstock
