Published December 2001

Get ready for changes
to minimum wage, 401(k)

By Jack Goldberg
Columnist

As the year comes to an end, this column outlines a few of the changes that recently affected employers and looks ahead to a few that are coming soon.

Non-union employees allowed representatives
In late 2000, the National Labor Relations Board ruled that all employees, including non-union employees, are entitled to have a representative present at any interview conducted by an employer that might result in disciplinary action. Employers with non-union employees need to be aware of this ruling to avoid inadvertent unfair labor practices.

Before the NLRB’s ruling, only unionized employees had the right to have a representative present during an investigatory interview. Now, whenever an employer decides to conduct an investigation and interview an employee, the employer must grant the employee’s request to have a representative present, so long as the employee reasonably believes the interview might result in disciplinary action.

401(k) vesting accelerates
On June 7, 2001, President Bush signed the Economic Growth and Tax Relief Reconciliation Act, providing many positive changes for defined contribution plan participants.

One example of these changes is the acceleration of 401(k) vesting. 401(k) plans have vesting schedules specifying when matching contributions made by an employer must become fully available to the plan participant.

Currently, plans may use one of two vesting schedules. One schedule requires 100 percent vesting after five years of service, the other allows graduated vesting — 20 percent vesting after three years of service and additional 20 percent vesting each year up to 100 percent after seven years.

Beginning in 2002, vesting is shortened from five years to three years, and the seven-year graded schedule is reduced to six years.

Minimum wage increases
Although the federal minimum wage is $5.15 per hour and has not changed since Sept. 1, 1997, states may specify their own minimum wage, and state requirements change more frequently.

For example, Washington’s minimum wage will be $6.90 per hour effective Jan. 1, 2002. This is an 18-cent increase over the current rate of $6.72. When the new rate goes into effect, Washington will have the highest minimum wage in the nation.

Affirmative-action plans
The Office of Federal Contract Compliance Programs issued new regulations, effective Dec. 13, 2000, relating to affirmative-action plans. Among other provisions, the regulation requires government contractors to record the gender, race and ethnicity of each employee. Further, when possible, the contractor must also record the gender, race and ethnicity of each applicant.

The regulations also change the manner in which an employer submits work-force data, revises the definition of job groups and changes the determination of the availability of qualified minorities and women.

There are other significant changes. Employers who produce and maintain affirmative-action plans must revisit their procedures and revise them according to the new requirements.

Jack Goldberg is President of Personnel Management Systems Inc., with offices in Everett, Kirkland and Tacoma. The PMSI Web site is www.hrpmsi.com.

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