2015 HR Budget Considerations

It's hard to believe Thanksgiving is already here and the holiday season is about to begin. There's just 6 weeks left in 2014. I'm sure you have a long list of things to do before the end of the year. Preparing your budgets for 2015 may be among them. Here are potential HR items to take into account for the budget.

Starting Wage Increases

There are 24 states increasing their minimum wage in 2015. Companies that hire at or near the minimum wage will have to account for wage rate changes in their budgets. In addition to the increased wage rates, companies may also want to develop a strategy to deal with wage compression issues. Wage compression occurs when new employee wages are at or near the wages being paid to existing employees. Tenured employees may expect compensation adjustments if they are now making the same as or not much more than new, entry level employees.

States increasing the minimum wage are as follows:

New York: $8.75 per hour
West Virginia: $8.00 per hour
Alaska: $8.75 per hour
Arizona: $8.05 per hour
Arkansas: $7.50 per hour
Colorado: $8.23 per hour
Connecticut: $9.15 per hour
Florida: $8.05 per hour
Hawaii: $7.75 per hour
Maryland: $8.00 per hour
Massachusetts: $9.00 per hour
Missouri: $7.65 per hour
Montana: $8.05 per hour
Nebraska: $8.00 per hour
New Jersey: $8.38 per hour
Ohio: $8.10 per hour for businesses making more than $297,000 per year
Oregon: $9.25 per hour
Rhode Island: $9.00 per hour
South Dakota: $8.50 per hour
Vermont: $9.15 per hour
Washington: $9.47 per hour
Delaware: $8.25 per hour
Washington D.C: $10.50 per hour
Minnesota: $9.00 per hour for large employers; $7.25 per hour for small employers

Keep in mind several states have also planned increases in 2016 and beyond as well. Check your state for the date that increases will go into effect. Source: HR.BLR.COM

New Paid Sick Time Laws

Several cities and states have either passed or are considering paid sick time laws. New York City enacted one this year and San Francisco has had one for some time now. California passed a paid sick time law going into effect in 2015 and San Diego passed one as well. Yes, California will have a state sick time law along with separate laws in two cities in the state. Chicago is also considering a paid sick time law. It appears as if most of the paid sick time laws that have passed or are being considered are following a similar accrual rate (1 hr of sick time earned for every 30 hrs worked). But eligibility, amount that can be used annually, and rollover rules vary by location. Companies will want to check if there are any paid sick time laws passed or pending where they have a presence and compare the requirements to their current paid time polices for compliance.

Affordable Care Act (ACA)

Beginning on January 1, 2015, the ACA will apply to companies with 100+ full time employees and full time equivalents (full time equivalents are determined by taking the total number of part time hours worked in a week and dividing by 30). Companies may be subject to steep fines if they do not follow the ACA requirements to include extending coverage to at least 95% of eligible employees, paying for at least 60% of plan coverage costs, and passing the affordability test (coverage costs to employee cannot be more than 9.5 times their annual income). As you may know, the ACA defines full time employees as working 30 or more hours on average per week. For many employers, this will cause many part time employees to be classified as full time for benefit purposes, which could also impact medical costs. 2015 budgets should take into account the expanded healthcare requirements under the ACA. For companies with 50-99 employees, you have 1 more year to get ready for the ACA. It will apply to you in 2016. The ACA does not apply to companies with less than 50 employees. Visit https://www.healthcare.gov/small-businesses/ for more information.

The Economy

The economy is expected to improve and unemployment continues to inch down. Unemployment fell to 5.8% in October and is down .8 percentage points for the year, representing 1.2 million jobs. While there's room for lots of improvement, continued progress may increase the competition for talent in 2015. This may impact salaries, merit increase amounts, and other strategies to attract and retain quality employees. Companies should anticipate higher payroll and hiring costs due to the improving economic conditions. Source: US DOL Bureau of Labor Statistics.

Happy Thanksgiving

We wish you and your families a happy and healthy Thanksgiving!

Excelerator Consulting helps people and businesses grow. We offer unique packages that are affordable and right sized for businesses of any size. Contact us to find out more about how we can help you.

Stay Informed

When you subscribe to the blog, we will send you an e-mail when there are new updates on the site so you wouldn't miss them.

Ban the Box
Obama’s Administration New Family Friendly Workpla...

© Excelerator® Consulting, Inc 2024.
All Rights Reserved