How the Workplace Will Change in 2018

How the Workplace Will Change in 2018

Over the past few years, we have witnessed a marked acceleration in the pace of change in the workplace. Each year brings with it new innovations, ideas, and passing fads, as well as social, political, and economic events that affect employers all across the world. 2017 was no exception: Tight labor markets driving competition for talent, concerns over automation and displacement amid the growing embrace of new technologies, the first year of the Trump administration, and the rise of the #MeToo movement were just a few of the many events and trends that impacted the working world last year. In 2018, we anticipate that some of these developments will continue to reverberate, while new challenges and opportunities will arrive.

Here are some of the major developments that employers can expect to see this year, in the US and around the world:

The Sexual Harassment Reckoning Will Only Grow

In the second half of 2017, revelations of sexual harassment, misconduct, and assault poured out of Silicon Valley and Hollywood, sparking a long-overdue conversation about the treatment of women and the harboring of known abusers in these male-dominated industries, as well as in politics, media, and other fields. Powerful men, from Hollywood moguls to tech CEOs to members of the US Congress, were toppled by multiple allegations of sexual misconduct ranging from inappropriate workplace behavior to outright assault. Organizations in all sectors are facing unprecedented public attention to their sexual harassment policies, how diligently they enforce them, and whether they uphold an inclusive and respectful work environment. If the reckoning didn’t come to your industry in the past few months, it likely will this year. Business leaders in corporate America and around the world will have their past and present behavior scrutinized, and some will be exposed as abusers and face strong public and investor pressure to step down. Addressing toxic workplace cultures that enable sexual harassment will become an issue of even greater concern for directors and HR leaders. Companies can ill afford to close their eyes and hope for this problem to go away on its own; time really is up.

The Private Sector Will Lead the Way on Raising the Minimum Wage

Congress is unlikely to take action to increase the federal minimum wage in 2018. Some states will raise their minimum wages, as will some cities, while other states will take action to preempt local hikes. Meanwhile, companies will take it upon themselves to increase their pay floors in order to attract and retain talent in a tight labor market. As large employers of low-wage hourly workers like Walmart and Target increase their own minimum wages, other companies will need to follow suit to remain competitive.

Technology, Social Media, and Journalists Will Continue to Bring Transparency into Company Culture

Companies’ cultures and employer brands are in the spotlight now more than ever before. The decisions, approaches, policies, and beliefs through which companies manage their employees will play a dramatically larger role in how consumers and investors (not just candidates and employees) view the company. In 2018, this will put pressure on companies to manage their employer brands through HR as aggressively as they protect their consumer brands through PR.

CEOs Will Be Forced to Take Stands on Political And Social Issues

Throughout 2018, the political polarization and dysfunction that has prevailed in Washington, D.C. recently will almost certainly persist, while gender equality, diversity, immigration, LGBT rights, and other issues with major workplace implications will remain hot-button topics. While some CEOs have already found their voices when it comes to responding to the news of the day, others will feel pressure this year from customers, employees, and investors alike to be more vocal about their beliefs and to back them up with concrete actions within their companies.

AI Will Play a Bigger Role In Hiring, Raising the Risk of Algorithmic Bias

The use of AI and algorithms in hiring decisions has already grown dramatically. In 2018, companies will continue to adopt these technologies, but many will also begin to recognize the danger of algorithmic bias. While these automated solutions have shown promise in terms of improving quality, efficiency, and even fairness in the recruiting process, they also run the risk of harming diversity in the workforce by replicating biases that already exist within the company.

Adoption of Wearables in the Workplace Will Increase

In 2017, 3 percent of companies introduced wearable technology in the workplace, giving employees smart badges to monitor their behavior in order to track productivity and identify inefficiencies in the use of office space. In 2018, as more companies adopt technology that can track the location and behavioral data of employees, companies will begin to use this data to redesign workspaces, schedules, and workflows to maximize employee productivity. As these technologies become more mainstream, employers may not have to worry as much as they think about employees resisting their implementation, but should think carefully about how much actionable insight they are gaining by monitoring their employees.

More Employees Will Change Jobs Due to a Lack of Respect

While compensation continues to be the top driver of attraction for candidates globally, respect was the the fourth most important driver in our Global Talent Monitor Report for Q3 2017. In 2018, the labor market will continue to remain tight and employees will feel that they have enough control to speak openly about the lack of respect or appreciation. If companies aren’t able to provide increased compensation or opportunities for growth, they should look at ways to improve employees’ sense of respect in order to retain talent.

Walmart Raises Entry-Level Wages, Expands Parental Leave

Walmart Raises Entry-Level Wages, Expands Parental Leave

Walmart, the world’s largest private employer, announced on Thursday that it was raising its starting hourly wage from $9 to $11 per hour, introducing a more generous parental leave policy, and offering one-time cash bonuses based on length of service for its US workforce. CEO Doug McMillon revealed the changes in a note to employees:

[W]e’re raising our starting wage to $11 an hour for Walmart U.S., Sam’s Club, Supply Chain, eCommerce and Home Office hourly associates effective in February. We’re also providing a one-time bonus to hourly associates that pays a larger amount the longer you’ve been with our company. Associates that don’t benefit from the new starting wage increase are eligible for the bonus and it will range from $200 to $1,000 depending on your length of service. …

I’m also excited to tell you that we’re making an important change to benefits by expanding our paid leave policy to provide full-time hourly associates with 10 weeks of paid maternity leave and six weeks of paid parental leave. This expanded parental leave also applies to salaried associates and to parents who adopt. We will also contribute $5,000 to the cost of adoption.

McMillon cited the corporate tax cut passed by the US Congress in December as part of what prompted the company’s decision. Several other major US employers, including AT&T, Wells Fargo, and Boeing, have also announced plans to invest part of their tax savings in raises or bonuses, though most companies have said these savings will mainly be spent on debt repayment, dividends, and stock buybacks.

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Florida Court Overturns Minimum Wage Hike in Miami Beach

Florida Court Overturns Minimum Wage Hike in Miami Beach

In 2016, a year that saw a wave of ballot initiatives raising the minimum wage in various states and localities, the city of Miami Beach, Florida, passed an ordinance to raise the local pay floor to $10.31 per hour at the start of this year and gradually raise it further to $13.31 by 2021—well above Florida’s state minimum wage, which currently stands at $8.10. Local political leaders said at the time that the higher pay floor was meant to help workers cope with the high cost of living in the city, among the highest in the state.

The Florida Retail Federation, Florida Restaurant & Lodging Association and Florida Chamber of Commerce sued the city in December 2016 to prevent the law from going into effect, arguing that it was preempted by state law. Last March, a state circuit court ruled against the city, which appealed to a higher district court.

In December, that court upheld the judgment against Miami Beach, finding that a state law enacted in 2003 preventing local governments from establishing a higher minimum wage than the state or federal standard was still in force despite a later decision by voters in the state to raise the minimum wage statewide. Sarah Smith Kuehnel, an attorney with Ogletree Deakins in St. Louis, went over the court’s reasoning when that ruling was handed down last month:

In 2004, Florida voters passed a citizens’ initiative to amend the Florida Constitution, establishing a higher, statewide minimum wage. The amendment expressly allowed “the state legislature [and] any other public body,” to increase the minimum hourly rate above the federal standard, but it left subsection two of section 218.077 intact, without addressing whether local governments can establish their own wage floors. …

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New Year Brings Many Changes to Employment Laws in US States

New Year Brings Many Changes to Employment Laws in US States

Even as the Trump administration rolled back numerous Obama-era regulations at the federal level and took more employer-friendly stances on a number of hot-button labor issues, 2017 also witnessed the continued proliferation of new laws and regulations in states and localities, particularly those whose legislatures are dominated by Democrats. Many of these policy changes came into force on January 1, while others will become effective later in 2018, meaning countless US organizations will have to adjust to a new and more complex regulatory landscape this year.

Minimum Wages Rise for Millions of Workers

To begin with, minimum wages rose on Monday in 18 states, including several that passed referenda to that effect in 2016. Arizona, California, Colorado, Hawaii, Maine, Michigan, New York, Rhode Island, Vermont, and Washington saw increases ranging from 35¢ to $1.00 per hour due to legislative or ballot measures, while the pay floors in Alaska, Florida, Minnesota, Missouri, Montana, New Jersey, Ohio, and South Dakota, which are pegged to inflation, rose automatically. The left-leaning Economic Policy Institute calculates that 4.5 million employees in total will see their pay increase thanks to these measures—though opponents of minimum wage hikes would argue that some of these employees will be laid off as their employers can no longer afford to pay them at the new rate.

California Keeps on Being California

With its huge labor market, diverse economy, and liberal government, California is a longstanding laboratory of progressive legislation, which serves as a bellwether for emerging regulatory trends and has an impact beyond the state’s borders as multi-state employers often opt to comply with California’s stricter rules nationwide for simplicity’s sake. A number of new laws came into effect in the Golden State this week that employers there need to be aware of. Mark S. Spring, a partner at Carothers DiSante & Freudenberger LLP, breaks down all of these changes at TLNT. Here are the changes in brief:

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Is Walmart Raising the Minimum Wage in the US?

Is Walmart Raising the Minimum Wage in the US?

Since Walmart began a push to raise wages for its legion of store employees last year, leaders at the big box chain have attributed its solid performance to the greater investment they were making in their staff. And because Walmart is such an enormous actor in the US economy, its choices have ripple effects in the retail sector. Over at Quartz, Oliver Staley argues that while some see the company’s size as being a “malign force,” that doesn’t take into account how Walmart’s choices can be also be beneficial:

The company also has used its massive buying power to eliminate waste in packaged goods and to drive down the cost of energy-efficient light bulbs, speeding their widespread adoption. Raising wages can have an even bigger impact. Walmart employs one in 10 US retail workers, and one out of every 100 US private-sector employees. Just as the company forced competitors to hold the line on wages, increasing its pay is now pressuring rivals to match it.

Walmart also raised salaries for entry-level managers in response to the Obama administration’s now-defunct overtime rule last year, but at the bottom of the pay scale, seemingly small increases, say from $10 to $11 an hour, can make a big difference in the lives of the working poor. Walmart is such a huge employer, Staley points out, that its pay practices effectively set a benchmark for the rest of the retail industry, pressuring other retail giants like Target to commit to adopting a $15 minimum wage by 2020:

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Target to Adopt $15 Minimum Wage by 2020

Target to Adopt $15 Minimum Wage by 2020

Target announced on Monday that it would raise the minimum hourly wage for store employees to $11 next month, with an aim to raise its pay floor to $15 an hour by the end of 2020. The move reflects the retail giant’s efforts to turn around its sales performance and compete for talent in a tight market with high turnover, Fortune’s Phil Wahba reports:

“Making this investment in our Target team will allow us to continue to recruit and retain strong team members to serve our guests,” Target CEO Brian Cornell told reporters on a media call last week. Target said the raises would affect “thousands” of workers but remained vague on specifics. The company employs some 323,000 people year round and this year, is ramping up its holiday period hiring with 100,000 seasonal staff for the run up to Christmas, a 43% increase over last year. The higher wages will apply to seasonal workers as well.

In its most recent quarter, Target said comparable sales rose 1.3%, better than expected, and shopper store visits rose 2.1% even as e-commerce grew 32%, suggesting its strategy of blending stores and digital sales is working. Target has invested heavily in new store areas for pickup of online orders, parts of the store that require dedicated staff, as does the section of the store that fills online orders with that store’s inventory. Target has also assigned dedicated staff for its apparel and beauty areas so they can give better informed advice to shoppers, part of its efforts to improve the shopping experience in its stores.

These moves reflect broader trends in the big-box retail market, with industry leader Walmart making similar moves. Walmart has also been investing heavily in online shopping, acquiring the e-tail startup Jet.com last summer and hiring Jet CEO Marc Lore to run its entire e-commerce operation. It likewise aims to leverage its army of store employees to improve efficiency and customer service in its e-commerce business, and has credited its strong performance in recent years to investments it has made in its workforce.

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How Should Employers Respond When the Minimum Wage Falls?

How Should Employers Respond When the Minimum Wage Falls?

It’s not every day that minimum wages decrease, but at a moment when multiple US states are passing preemption laws to prevent localities from creating their own employment regulations, some employers are facing a situation in which they were forced to raise wages for their lowest-paid employees when the pay floor went up, only for it later to be brought back down. Such was the case in St. Louis, Missouri, which raised its local minimum wage to $10 an hour this May, but was undercut by a state law that overrides local hikes and forces cities to adhere to Missouri’s state minimum wage of $7.70.

That law went into effect earlier this week, so many St. Louis employers now have to decide what to do about the employees whose wages they raised in May in response to the now-defunct local ordinance. Steve Boese considers their options, all of which have downsides:

  1. Cut everyone who was bumped up to $10 back to their wage level as of May.
  2. Keep everyone at $10 who was given the bump in May.
  3. Pick and choose who gets to stay at $10, (the better performers, more essential folks), and bump others back to their May hourly rate, or some other rate less than $10 that better reflects their performance, value, and position relative to their peers.

Options 1 and 2 are the easiest to implement, and for different reasons, the easiest to justify back to the employees. Which is why I would expect that the vast majority of employers will opt for one of these approaches.

The differentiating strategy of Option 3, Boese argues, “could possibly drive better overall performance, as better workers feel more rewarded, and the others see a way to work towards the wages they desire.” It would also, however, be much trickier to implement, requiring organizations to precisely gauge the value of individual low-level employees and communicate its reasoning clearly and convincingly. For that reason, he suspects most organizations won’t opt for it.

Indeed, after Missouri’s preemption law was passed, some St. Louis businesses said they planned to go with Boese’s second option and keep the raises in place, at least for current employees, though they may pay new entry-level hires the lower minimum wage. A pressure campaign by local pro-labor activists, called “Save the Raise,” has threatened to picket and boycott businesses that revert to the state-mandated wage floor, but also plans to publicly laud those employers that choose to stick with the $10 minimum.

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