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Print articleFive Considerations for Employers at the Close of 2021
November, 2021 - Carrie H. Grundmann
The end of the year is both a busy and a celebratory time. As employers close out 2021 and look forward to 2022, here are five issues for employers to consider to prepare for success in the year ahead:
1. Holiday Bonuses - If you are considering a year-end payment to employees, make sure you know the tax and wage and hour rules and the difference between discretionary and nondiscretionary bonuses. A true holiday bonus is purely discretionary — meaning it is not tied to performance. While taxable to the employee, it is not "wages" for purposes of minimum wage and overtime. In contrast, if the payment is tied to performance or some other metric, it is not discretionary and is considered "wages" for minimum wage and overtime. This bonus is also taxed.
2. Holiday Parties - Plan in advance if you are throwing a holiday party, considering the following:
4. Noncompetes and Restrictive Covenants - Ensure noncompete, nonsolicitation, confidentiality and other similar agreements are enforceable, which includes making sure only those employees who can be subject to restrictive covenants are, and the scope of those restrictions are within legal limits. The law changes often, and we have recently seen the federal government and several states addressing and/or restricting such agreements.
In July 2021, President Biden enacted an Executive Order directing the FTC to enact a rulemaking to ban or limit "noncompete agreements and other clauses or agreements that may unfairly limit worker mobility." The Commonwealth of Virginia enacted legislation on July 1, 2020, banning noncompetes for "low wage employees," which is any employee making less than the Commonwealth's average weekly wage, which was $58,500 annually in 2020.
5. Decide if COVID Policies Should Sunset or Become Permanent - Many employers made substantial changes to the workplace in response to the COVID-19 pandemic because they had no other choice. Some of those changes — like teleworking — may still be in place today. The question is whether those changes are truly what is best for the business. Now is the time to evaluate whether those pandemic policies remain part of your business in 2022 and beyond.
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1. Holiday Bonuses - If you are considering a year-end payment to employees, make sure you know the tax and wage and hour rules and the difference between discretionary and nondiscretionary bonuses. A true holiday bonus is purely discretionary — meaning it is not tied to performance. While taxable to the employee, it is not "wages" for purposes of minimum wage and overtime. In contrast, if the payment is tied to performance or some other metric, it is not discretionary and is considered "wages" for minimum wage and overtime. This bonus is also taxed.
2. Holiday Parties - Plan in advance if you are throwing a holiday party, considering the following:
- Be inclusive.
- Remind employees of the workplace rules that apply. Your harassment policies and standards of conduct apply equally at the company holiday party as on a normal workday.
- Implement safeguards if serving alcohol, such as drink limits, food and transportation (Uber/Lyft/taxi) options.
- If you have been enforcing COVID-19 protocols all year, do not throw them out at the holiday party. It will make it that much harder to have employees abide by them after the holidays.
4. Noncompetes and Restrictive Covenants - Ensure noncompete, nonsolicitation, confidentiality and other similar agreements are enforceable, which includes making sure only those employees who can be subject to restrictive covenants are, and the scope of those restrictions are within legal limits. The law changes often, and we have recently seen the federal government and several states addressing and/or restricting such agreements.
In July 2021, President Biden enacted an Executive Order directing the FTC to enact a rulemaking to ban or limit "noncompete agreements and other clauses or agreements that may unfairly limit worker mobility." The Commonwealth of Virginia enacted legislation on July 1, 2020, banning noncompetes for "low wage employees," which is any employee making less than the Commonwealth's average weekly wage, which was $58,500 annually in 2020.
5. Decide if COVID Policies Should Sunset or Become Permanent - Many employers made substantial changes to the workplace in response to the COVID-19 pandemic because they had no other choice. Some of those changes — like teleworking — may still be in place today. The question is whether those changes are truly what is best for the business. Now is the time to evaluate whether those pandemic policies remain part of your business in 2022 and beyond.
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