Key Trends in Employee Regulatory Matters for Consulting Firms

For consulting firms, their workforce is often their greatest asset. They must therefore stay vigilant about evolving employee regulatory matters. These regulations not only impact compliance, but also influence the overall work environment and employee satisfaction.

Staying informed about key trends and adapting to new requirements can help consulting firms remain competitive, attract top talent, and foster a positive workplace culture. Explore the latest developments and practical insights to help your firm navigate these challenges effectively.

Regulations on DEIB and pay equity

Enhanced regulations to prevent discrimination based on race, gender, sexual orientation, and other protected characteristics are becoming more prevalent. Firms should align their policies and practices to promote diversity, equity, inclusion, and belonging.

Additionally, there is a focus on pay equity, with increasing regulations aimed at closing the gender pay gap and promoting equitable compensation practices. For example, New York became a pioneering jurisdiction by mandating employers disclose the minimum and maximum potential salaries for open positions in job postings.

Changes in wage and hour laws are also impacting consulting firms, with many jurisdictions raising minimum wage levels and altering overtime eligibility and compensation rules.

Compliance with equity guidelines can help maintain a positive and productive work environment, as well as reducing potential legal and reputational risks.

The hidden costs of remote work

The shift to remote work brought significant regulatory changes, requiring firms to develop comprehensive telecommuting policies and navigate cross-jurisdictional compliance.

When employees work remotely from different states, businesses may be required to withhold state income taxes for each state where employees reside. Businesses may need to file state tax returns in multiple states where remote employees are located. This increases the complexity and cost of tax compliance and administrative burdens.

Staying informed and proactive is key. Consider consulting a tax professional to verify you’re meeting all state requirements, and explore software solutions to help streamline your compliance processes.

Navigating data privacy regulations

Data privacy regulations, such as the General Data Protection Regulation (GDPR) in Europe and the California Consumer Privacy Act (CCPA) in the United States, are affecting how employee data is collected, stored, and used. The SEC fined a wealth management firm for not capturing and archiving business-related text messages on personal devices, highlighting the importance of compliance.

U.S. data privacy regulations continue to evolve, with some states implementing comprehensive laws providing broad privacy rights for residents. Other legislation focuses on reducing data breaches and mandates timely notification to affected consumers, or requiring entities to establish a written, accessible information security program.

To navigate the complexities of monitoring employee communications — especially in remote work settings — consulting firms may want to consider implementing a comprehensive and accessible information security program to help protect sensitive data and reduce the risk of data breaches. Regular cybersecurity audits and risk assessments can help identify vulnerabilities and keep security measures up to date.

Gig worker classification, taxes, and benefits

The classification of gig workers remains a contentious issue, with ongoing legal battles and regulatory changes. Consulting firms using independent contractors must navigate these complexities for proper classification and compliance with labor rights.

An employer's tax liability is determined by the worker's employment status. Some courts look at the economic realities or right to control tests to interpret the Fair Labor Standards Act. If a person gains a large portion of their salary from a business, chances are that person qualifies as an employee.

When the hiring party controls the way work is carried out and a product is delivered, the relationship between the parties is employer/employee. If an employer doesn’t have authority over how a party accomplishes their work but simply give requests an outline, the relationship between the parties is that of hiring party/independent contractor.

Additionally, there is a trend towards more comprehensive family and medical leave policies, including paid leave for parental, medical, and caregiving responsibilities, which vary significantly across states.

Using PEOs to reduce health insurance costs

The rising costs of health insurance are a significant concern for consulting firms, as providing competitive health benefits is crucial for attracting and retaining top talent — but it can also strain budgets.

To manage these costs and human resources (HR) complexities, some firms are partnering with professional employer organizations (PEOs). PEOs can negotiate better rates for benefits and insurance, reducing the need for an in-house HR team and maintaining compliance with labor laws. However, firms must consider the potential loss of control over HR functions and whether the PEO’s standardized strategies align with their specific culture and needs.

How CLA can help you navigate employee regulatory matters

As your organization grows, so can your workforce challenges. Whether you need help attracting and motivating employees, staying compliant with labor laws, or managing your day-to-day HR needs, we can help you simplify administrative HR tasks so you can focus on strategic initiatives and growing your people.

CLA’s certified HR consulting professionals can advise you on a wide range of workforce issues, from establishing policies and procedures to reorganizing leadership structure. With the right HR processes in place, you can align workplace strategies with your business goals while building an inspiring culture for your people.

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