New Overtime Rules, Compliance Complexities, and More: What Does 2020 Hold for Workforce Management?
With the new year underway, business leaders are pondering what the next decade might have in store for them. The world of workforce management in particular has much to look forward to, with promising new technologies, developments, and reforms on the horizon.
Whether it qualifies as the start of a new “Roaring Twenties” or not, 2020 will undoubtedly be an exciting year in the dynamic landscape of workforce management systems. Here’s what businesses should expect in the coming year:
Even More Gig Economy Growth
Judging by the on-demand workforce’s impressive increase over the past few years, it may be accurate to say the thriving gig economy is just getting started. Moving forward, we may see even more innovation, choice, and (hopefully) profitability.
This popular new workforce model is influencing the physical workplace, too, as many organizations must now manage a surge of freelance and remote workers spread across states and time zones. As more workers are drawn to the flexibility of the gig economy, employers will have to assess the impact a larger, shorter-term workforce will have on hiring, communication, training, and more.
However, on-demand businesses — and businesses that leverage on-demand workers — should remain vigilant as new legislation enters the picture to challenge gig worker classification. California’s Assembly Bill 5 (AB5), which came into effect on January 1, 2020, is a prime example. AB5 severely narrows the definition of “independent contractor,” meaning companies may have to reclassify their gig workers as employees — or face significant legal consequences.
Despite some dissent from the business and gig worker communities, this new rule has already inspired the drafting of similar bills in New Jersey, New York, and Illinois. Meanwhile, several companies are dismissing freelancers based in California or reclassifying them as employees. As the bill only recently became law, no one is quite certain what to expect, and businesses must be prepared no matter the resolution.
Companies can protect themselves by ensuring they have detailed visibility into their resources. What are people working on, and how much time do they spend on it? Access to this data can help intelligently inform decisions on hiring, letting go, or reclassifying workers before bigger problems arise.
New Overtime Considerations
By now, many are familiar with the US Department of Labor’s new salary threshold for overtime eligibility, but we’re only beginning to see the impact of this change. More than a million American workers will likely be reclassified as nonexempt employees, while others may have their pay raised to meet the new exempt threshold of $35,568.
In addition to these obvious changes in status and wages, employers should be aware of more subtle shifts the new threshold might cause. That includes how the ruling may affect employee morale. For example, some workers may jump at the chance to receive overtime pay, but others could consider exemption an indicator of status and resent the reclassification.
An open and transparent communication process will be critical here. This may also be an opportunity for employers to review their systems for errors. Were workers classified correctly in the first place? Are wages accurate? Is compliance up to date? Businesses can refresh their current setups while making the necessary changes and building a safeguard against legal repercussions.
For more expert HR insights, check out the latest issue of Recruiter.com Magazine:
Artificial Intelligence Everywhere
Workforce management systems have been among the most eager to experiment with artificial intelligence (AI) to improve efficiency and enhance the employee experience, but AI’s penetration into workforce management (and everything else) is far from over.
Just about every company seems to boast AI capabilities these days, if only to stay relevant. And relevant it is: More and more AI-powered technologies are being used to modernize basic workplace functions through intelligent scheduling, machine learning, geofencing, and more. AI has shown it can deliver faster adoption, heightened security, and improved data-capture accuracy.
Despite concerns about AI’s potential to replace human workers, it’s the workers who may actually stand to benefit the most. The automation of mundane tasks will only serve to strengthen the workforce, not remove the human element. Ultimately, AI is now an irreplaceable contribution to organizations across the globe. It’s time for everyone to learn how to grow alongside it.
Labor Compliance Takes the Center Stage Globally
Global organizations are beginning to realize they cannot rely on manual processes to handle the complexities of cross-border compliance. Unpredictable developments like Brexit and new overtime rules are only the tip of the iceberg. With businesses regularly paying out millions for their mistakes, workforce management systems need to graduate from offering compliance as a simple feature to providing it as a full-fledged product. Both the people and technologies in an organization should be equipped with flexibility and agility to keep up with compliance changes and challenges as they happen.
Workforce management is a dynamic process by nature, and the huge leaps in progress year after year only confirm its vivacity. The coming year — and decade — will undoubtedly hold numerous challenges, opportunities, and more for workforce management systems. Organizations can plan strategically for success by recognizing the above trends and preparing to meet them head-on.
Raj Narayanaswamy is CEO of Replicon.