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AI and Personal Data – Ready for the Great Reset Yet?

A finger presses a mesh of glowing lights from which the profile of a women's face is emerging on the other side. Artificial Intelligence concept.

You don’t need to answer that question. You do have a right to privacy. Trouble is, New York City and California are transforming their concerns about privacy (not yours, employer), into new laws that will come into effect on 01 January, 2023.

The new laws concern Automated Employment Decision Tools (AEDTs).

And even though the “good news” is that total confusion over the laws and the “high volume of public comments” has led to a delay in enforcement – April 15, 2023 for New York City and July 01, 2023 for California – legal eagles are advising employers to get prepared now. Inviting a couple of lawyers round for Christmas dinner is something to consider.

No? OK – let’s look into it.

Automated Employment Decision Tools – and You

For a non-comprehensive list of tools in use by employers, we’ll point out:

  • Resume scanners using specific content to prioritize job applications.
  • Video tech used to analyze candidate characteristics or mannerisms.
  • Software used to monitor employees to analyze performance.
  • “Job Fit” tech generally if used in the evaluation of a candidate/employee.

Under the new law In New York City, requirements will include: 

  • Implementing a “bias audit” of AEDTs within one year prior to use.
  • Informing candidates or employees about AEDT use for hiring or promotion.
  • Inform same about the job qualifications and characteristics the AI tech will use.

“Violations of the provisions of the bill would be subject to a civil penalty.” — NYC

Well, that part is pretty clear, even if they did neglect to add “Happy new year!”. Touted fines for NYC are $500 for first violations and up to $1,500 for each subsequent violation.

Just to be perfectly unclear on what AEDTs are, according to the NYC law, here’s a quote:

“The term “automated employment decision tool” (or “AEDT”) is broadly defined as “any computational process, derived from machine learning, statistical modeling, data analytics, or artificial intelligence, that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for making employment decisions that impact natural persons.”

In California, Attorney General, Rob Bonta, was thinking along these lines in November:

  • A business commits an unfair business act or practice if it uses artificial intelligence or other automated decision-making tools in such a way as to have a disproportionate, adverse impact on or causes disproportionate, adverse treatment of a consumer or a class of consumers on the basis of protected characteristics.
  •  It can be an unfair business act or practice for a developer to sell or a business to utilize AIA without testing, auditing, monitoring, disclosures, and transparency. Transparency measures could include disseminating data and source code for independent review and testing, and disseminating the results of internal and independent audits. It is an unfair business act for an entity to refuse transparency, audit, or monitoring measures. 

Try to bear in mind that he’s only trying to help.

Burdens of Souring, Hiring, Retention – And Help!

As an employer or hiring team, your motives for using AEDTs is to improve the process of identifying, interviewing, and ultimately hiring the best fit candidates for open positions, with a view to enhancing productivity, retention and growth.

Increasingly easy online job applications means potentially massive response to advertised positions, with possibly many more fake-it-’till-you-make-it hopefuls than highly qualified experts in the relevant field. What to do? Enter Applicant Tracking Systems and any other automated help that becomes available to support analysis, assessment, and hiring the best.

And now, as you eagerly endeavor to optimize these complex AI assistants to achieve optimal outcomes, you find yourself needing legal assistance just to start pushing the buttons.

Still, progress.

With that in mind, related or similar local, state and even federal mandates are looming over the new year and our collective festive cheer, so getting on top of this one may be the first step to being capable of protecting yourself from the next one(s).

Unfortunately, getting on top of this one could be an uphill battle, even for the lawyered-up. That “high volume of public comments” mentioned above includes complaints about how vague many of the key terms actually are, and how many questions have been left unanswered. 

So the cynical could think that the delay in enforcement may be more for the people writing those “key terms” to figure out what they actually mean than it is for the employers who must start abiding by them as soon as humanely possible.

In September, the Department of Consumer and worker Protection (DCWP), proffered what it calls “Proposed Rules” to help employers get to grips with the question of how to comply with the new law, which is a nice gesture during the season of giving (and taking). Apparently, they’re still not finalized, but have been stated in this article already and can be found in greater depth here.

What’s the Point?

The point of all this is essentially to assess potential bias against anybody in a protected category: race, ethnicity, sex, for example. Those selected to move forward or given a classification by a AEDT would be analyzed with a view to identifying bias or lack of it. In New York City the following questions can tentatively be answered here (next steps: ask your lawyer):

Independent Auditors?

The audit would require an “independent auditor” – person or group not connected to the development or use of an AEDT responsible for an audit. Potentially, this would allow for consultants/contractors to be brought in and could mean legitimately using an in-house compliance team, if independent in the way mandated.

Informing Candidates and/or Employees?

Giving notice would or could entail posting the notice of AEDT use on the careers or jobs (as applicable in each instance), section of the company website, job posting, or email to candidates or employees.

Plan of attack?

  • Don’t limit your evaluations to your own AEDTs: Study vendors used by your company and AEDT tech used on your behalf, as legal responsibility could be open to question, probably depending on a slew of variants.
  • Figure out the “Independent Auditor” question and conduct an audit of your AEDT(s) and look into:
    • Related data collected and why
    • Full analysis of protected groups and comparative results
    • Methods and goals of data analysis
    • Criteria in place to decide success
    • Transparency of these and related processes 
    • Give notice as described and provide alternatives/opt-out
    • Find your own alternative if negative outcomes are identified

In October, the Biden administration published: Blueprint for an AI Bill of Rights. Here’s a quote to get you in the festive mood:

“Among the great challenges posed to democracy today is the use of technology, data, and automated systems in ways that threaten the rights of the American public. Too often, these tools are used to limit our opportunities and prevent our access to critical resources or services. These problems are well documented. In America and around the world, systems supposed to help with patient care have proven unsafe, ineffective, or biased. Algorithms used in hiring and credit decisions have been found to reflect and reproduce existing unwanted inequities or embed new harmful bias and discrimination. Unchecked social media data collection has been used to threaten people’s opportunities, undermine their privacy, or pervasively track their activity—often without their knowledge or consent.”

After all the cynicism prevalent in 2022, doesn’t that remind you of the final scene of A Christmas Carol?

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FTE Meaning — Full-Time Equivalent

Colorful drawing showing "FTE" in a circle with lines and icon images saying "Full" "Time" "Equivalent"

Understanding more about full-time equivalent (FTE) will help your business with budgeting issues or meet certain legal requirements. You may need to determine how much you will spend on a project so you can have the right resources. In this case, knowing the FTE meaning will aid you as you prepare the budget. It will also keep you on track with the Affordable Care Act requirements for paying out benefits.

Understanding FTE

The FTE meaning is full-time equivalent but is also sometimes called whole-time equivalent. It represents the number of hours one full-time employee works in a week. It provides a unit of measurement by which management can project costs, time, and personnel for various tasks. It provides a standardized way to assess employee hours and measurements.

An FTE provides a metric for your business to calculate stats such as profits or expenses spent per employee. It also helps management keep on top of the hours they are paying for versus only how many employees they have working for them. Simply knowing the number of employees that you have doesn’t tell the whole story. Instead, knowing the FTE provides more information.

FTE Employee

As the acronym implies, an FTE employee is the equivalent of a full-time employee. What does that mean exactly? If your business considers 40 hours a full week of work, then an employee who works 40 hours would be equivalent to one FTE. If an employee only worked 20 hours in a full week, this employee would be equivalent to 0.5 FTE. This is how you would count an FTE for internal purposes, but when it involves compliance with other agencies, such as the Affordable Care Act (ACA), other guidelines must be followed (more on that below).

Why You May Need to Use FTE

There are various reasons you may need or want to use FTE for your business. Some companies need to track FTEs because of laws such as the Patient Protection and Affordable Care Act (ACA). Laws stipulate that companies with 50 or more FTEs must offer group health insurance. Keep in mind that the ACA considers 30 hours one FTE. Even if your business counts 40 hours a week per FTE, it’s 30 hours in the eyes of the ACA.

You may also want to use FTE for the following:

  • Calculate personnel requirements for projects you’re working on
  • Budgeting your resources
  • Salary calculation
  • Accrual of paid time off for employees
  • Analysis of staffing

Steps to Calculate FTE

As noted above, FTE is expressed as a unit of measurement that directly relates to how many hours a week the employee works. You can calculate FTE by taking the total number of hours worked by part-time employees in a week, month, or year plus the total number of hours worked by full-time employees and dividing by the average number of hours worked by full-time employees. (For a year, that is 2,080 hours with 40-hour workweeks and 1,560 hours with 30-hour workweeks, which is considered full-time for ACA reporting).

You can follow these steps to calculate it accurately:

Start by creating a list of all your employees and the hours they worked.

Now, you can separate your employees into two lists, which include full-time and part-time employees. Be sure to keep the hours they worked next to their names.

Add up all the employees that work full-time and the number of hours they work in one column and do the same for the part-time employees in another column. It will look like this:

  • Full-Time Employees: 15
  • Hours worked per week: 40
  • Part-time Employees: 20
  • Hours worked per week: 15

Accounting for vacation and holiday time, let’s assume the employees work 40 weeks a year. The next step is to multiply the number of employees by the hours by the number of weeks (40). Using the example above, you would have the following:

  • Full-time employees: 15 x 40 x 40 = 24,000
  • Part-time employees: 20 x 15 x 40 = 12,000

In some instances, your employees won’t all work the same number of hours. So, you may have several columns of information that you’ll need to multiply for the FTEs.

This provides the total number of FTE hours per year. You may want to determine the monthly amount or even the weekly amount. You can easily adjust this by multiplying the appropriate monthly hours or weekly hours versus yearly hours.

If you want to find out more about the FTE value for a specific position, you can divide the number of hours worked by the number of hours considered to be full-time. If you use 40 hours as full-time, someone who works 35 hours has a 0.875 FTE. Someone who works 30 hours has a 0.75 FTE.

Some businesses may realize that they are getting more benefit or production out of full-time employees, or it could be the other way around.

FTE Calculation Example

Let’s examine a sample company to see how an FTE would work. Here is an example:

The Fusion Company is bidding on a contract and needs to ensure they charge the right amount. They need to know the appropriate number of employees to do the job. The job is estimated to take about 750 hours of work, and the bid calls for you to complete the work in 60 hours. Here is the FTE calculation that management can use:

750 (total hours) / 60 (hours in the workweek) = 12.5 FTE

This indicates that the company will require 12.5 employees to work a full-time shift each day to fulfill the requirement. The company can select eight full-time (40 hours a week) employees and four part-time (20 hours a week) employees or any other combination that equals 12.5 FTE. Keep in mind that two part-time employees who work 20 hours a week will equal one FTE.

Understanding FTE can assist management with many aspects of business operations. Whether it’s for project management or ACA compliance, knowing how to calculate it will be an asset.

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NYC: A New Era in Pay Transparency Has Begun

Employment law book in a court. Labor code concept.

Even somebody living under a rock for the last few months can’t have missed the pay transparency one gathering momentum as it sped toward business reality in New York City. As of today, November 1, 2022, most employers in the big city are mandated to publish their salary-range lists on all posted job ads.

For full transparency on this news (of course), here’s a direct quote from the new law: 

“…employers advertising jobs in New York City must include a good faith salary range for every job, promotion, and transfer opportunity advertised.”

It isn’t hard to imagine some sharp-eyed people focusing in on the term “good faith”, but that’s duly covered by the New York City Commision on Human Rights. The phrase is to be interpreted as a salary-range that the employer “honesty believes at the time they are listing the job advertisement that they are willing to pay the successful applicant(s).”

Anybody want to use that as a loophole? We’d advise against.

Who the New Law Applies to

Any business with four or more employees, including the owner or individual employer, in which at least one person works in New York City. This incorporates full- or part-time employees, interns, domestic workers, independent contractors or any other category of worker under the protection of the New York City Human Rights Law.

Getting down to it, salary range must be included for any position to be performed, in whole or in part, in New York City, whether that work is performed from an office setting, in the field, or from an employee’s home.

NOTE: This will include businesses that exist outside of New York City posting job ads for remote work that can be performed anywhere in the US, which would include, of course, New York City. Conversely, an employer based in New York City will be exempt from the law if advertising a job that will be performed outside of the city.

Simple, right?

How the New Law Breaks Down

The requirement for affected employers is that they post the minimum and maximum salary for any role when listed on internal job boards or external sites like LinkedIn, Glassdoor, Ladders, Indeed or other job search platforms. Further, the law includes any written description of an open role that is printed on a flyer, distributed at a job fair, or used in newspaper classifieds.

Basically, if you’re advertising a job, you are publishing the salary range you are prepared to pay for that position. And, as stated, the range must be complete, not open-ended.

What the New Law Excludes

The new law is specific to base salary (annual or hourly), so it does not require the listing of elements like overtime pay, commissions, bonuses, tips, stock, 401(k) matching, health insurance, time off, severance pay or other types of compensation.

Listing any of those elements is a matter of the employer’s discretion, and something that should be considered from a competitive standpoint. (More later.)

The “Salary Expectations” Question

Asking potential employees about their current or past salaries has been a definite no-no since Labor Law Section 194-a became effective on January 6, 2020. Current or past salary isn’t to be talked about, either directly or indirectly, and certainly not put in writing anywhere.

However, this does not prevent employers asking about a potential employees salary expectations. The question for today, then, is simple: “Is this question now defunct?” In other words, if a candidate responds to a job post with a definite salary range, the question only really covers what place in that range would be acceptable, based on qualifications, experience, and so on.

If the question is still to be asked, orally or in writing, the new law creates a water-tight context for the question.

“Given the salary range offered for this position, what specific salary would you expect?”

Fair question?

What Happens Now?

Some companies are ahead of the game and have been including their salary-ranges prior to the law taking effect November 1. Of course, these are likely companies with the resources to solidify these ranges and channel them through their systems ahead of time. For other companies, this is not so simple – legal deadline or not.

Job seekers and workers have the right post-deadline to file complaints against non-compliant companies, including anonymous tips to NYC’s Commission on Human Rights, who then have the right to initiate an investigation. Individuals who feel they have a claim against a current employer are free to file a lawsuit in civil court.

The end result can be monetary damages paid by companies to wronged individuals and all kinds of jumping through potentially expensive hoops to update the areas in which they are judged to be lacking.

GOOD NEWS? There is a grace period. A first complaint will not result in a civil penalty as long as the employer can show they have corrected the violation within 30 days. Beyond that, “noncompliant” businesses could pay civil penalties up to $250,000 a pop.

Where Else Is This Happening?

A pay-range law currently exists in Colorado and should be in place in the rest of New York State and in California by the end of the year. Most experts are in agreement that pay-range laws will become the norm across the US at some point in the near future, driven by the sheer popularity of the laws among workers and despite the administrative headaches caused to many businesses. 

What About Competition?

If your pay-range isn’t particularly competitive, you should look into areas you can choose to highlight in your job posts. Let’s say a competitor has a better pay-range beyond the budget you have available, but the competitor is advertising for an in-office position, whereas you are open to a remote option. That’s to your advantage.

In a survey conducted in July 2022 by economists Jose Maria Barrero, Nicholas Bloom, Steven J. Davis, Brent H. Meyer, and Emil Mihaylov, it was found that 38 percent of companies surveyed (over 500), said they expanded remote work opportunities over the past year “to keep employees happy and to moderate wage-growth pressures.” And a similar percentage stated that they intend to follow this example.

Another method of competition is to highlight all your compensations and benefits that could be of great value to talent, then target the best fit candidates aggressively. One way to do this successfully is to take advantage of Promoted Job Posts from Ladders Hiring Teams, keeping you at the top of search results for highly targeted professionals and essentially starting out with a qualified candidate pool, rather than attempting to build one.

As with anything else, it’s up to businesses to embrace the changes, find ways to make them work, and come out ahead.

So let’s do that, then.

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Exempt Employee – Meaning and Guide

Exempt employee concept written on a paper.

If you are in charge of determining compensation for full-time employees, it will be important for you to understand the difference between an exempt employee and a non-exempt employee. This classification plays a critical role in how you are legally required to pay your employees in the U.S., particularly in relation to overtime pay.

In this guide, we’ll answer the question, “what is an exempt employee,” and we’ll talk about what exempt status means, as well as help you determine when an employee becomes exempt.

What is an Exempt Employee?

In the U.S., employee compensation is regulated by the Fair Labor Standards Act (FLSA). This act establishes parameters around minimum wage, overtime pay, and the standards for employing youth. According to the FLSA, employees in the U.S. must be paid at least the federal minimum wage for all hours worked. However, once an employee reaches 40 hours of work in a single workweek, the FLSA dictates that they must be paid overtime pay equal to not less than time and one-half the regular pay rate.

In some cases, state laws actually provide greater employee protections, such as offering a higher state minimum wage. In these cases, an employer must follow state regulations along with federal regulations.

However, all of the above guidelines apply to what is considered a non-exempt employee. An exempt employee’s pay is regulated differently. The question “What is exempt employee status?”, is best answered by the exempt employee definition as outlined by the U.S. Department of Labor (DOL):

“Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees.”

Essentially, once an employee is considered exempt, their employer is no longer required to abide by the same minimum wage and overtime pay as they must for a non-exempt employee. Exempt employees are often referred to as salaried employees. These employees might work more or less than 40 hours a week, but their compensation remains the same.

Types of Exempt Employees

When determining whether or not an employee is exempt or non-exempt, it is important to first understand the types of exempt employees under federal law. Each type of exempt employee must meet a set of criteria in order to qualify for exempt status. For all exemptions, note that the salary compensation must not be at a rate of less than $684 per week.

Executive Exemption

To qualify for an executive employee exemption, an employee must meet the following requirements:

  • They must be compensated on a salary basis
  • Their primary work must be managing a department of an enterprise or the entire enterprise
  • They must be in charge of directing the work of at least two or more full-time employees
  • They must have the authority to hire or fire and/or the ability to provide recommendations regarding hiring, firing, promotions, and employment status changes of other employees

Administrative Exemptions

To qualify for an administrative employee exemption, an employee must meet the following criteria:

  • They must be compensated on a salary basis
  • Their primary work must include office or non-manual work that is directly tied to business operations or management
  • Their work must allow for independent judgment relating to matters in the business of significance

Professional Exemption

To qualify for a professional employee exemption, an employee must meet the following guidelines:

  • They must be compensated on a salary basis
  • Their work must require advanced knowledge, primarily considered intellectual in nature
  • Their advanced knowledge must be in a field of science or learning
  • Their advanced knowledge must be information that would generally be learned through specialized coursework

Creative Professional Exemption

To qualify for a creative professional exemption, an employee must meet the following criteria:

  • They must be compensated on a salary basis
  • Their primary work must require imagination, invention, or originality of talent in a field that is considered artistic or creative

Computer Employee Exemption

To meet the computer employee exemption, an employee must meet the following standards:

  • They must be compensated on a salary basis
  • The employee must be working as a computer programmer, software engineer, computer systems analyst, or another skilled job in the field of computers

Outside Sales Exemption

To qualify for the outside sales employee exemption, an employee must meet the following criteria:

  • Their work must be defined as making sales
  • They must be regularly working away from their employer’s place of business

It is worth noting that the above exemptions do not apply to blue-collar workers, police, firefighters, paramedics, and other first responders.

How to Determine if an Employee is Exempt or Non-Exempt

As you classify your employees and determine their compensation, it is important to make sure that if you do consider an employee exempt, they meet the criteria outlined by the DOL. Generally, an employee can only be considered exempt if:

  • They receive a salary equivalent to more than $684 per week
  • They are paid this salary regardless of the total hours worked in a week
  • They have duties that align with one of the above exemption statuses, such as professional, administrative, creative, etc.

Frequently Asked Questions

If you still have questions about exempt employees, here’s some additional information.

What does “exempt employee” mean?

An exempt employee is an employee that, due to their status, is exempt from normal overtime wage laws as outlined by the FLSA.

Does an exempt employee have to work a set number of hours?

An exempt employee is not required to work a set number of hours. These employees are paid a salary at a regular interval, regardless of the hours worked. However, many companies have policies requiring that an exempt employee works 40 hours a week. While employees cannot withhold pay if an exempt employee does not work 40 hours a week, they can take disciplinary action.

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Understanding the CASDI (California State Disability Insurance) Program

Employment law book on an office table.

In the state of California, for those who are unable to work due to a non-work-related injury or illness, there is a program that will help replace lost wages called the California State Disability Insurance (CASDI) program. Under the CASDI program, eligible workers can continue to earn a portion of their wages when they are incapable of returning to work.

For employers, it is important to understand the CASDI program, what it is, what employees are eligible for this program, and how it is funded. This can help employers assist their employees in navigating the system. Learn more about CASDI below.

What Is CASDI?

If you employ workers in the state of California, CASDI is a program that can benefit your employees during a period of time in which they cannot perform their normal work duties. CASDI stands for California State Disability Insurance and is a state-specific, short-term disability insurance and paid family leave wage replacement program.

Through CASDI, when a worker needs time off — not due to a work-related injury or illness — they may be eligible to receive state-sponsored disability insurance that will help to replace lost wages.

It is important to note that CASDI only provides monetary benefits to workers. It does not protect their job. However, in the state of California, an employee’s job might still be protected based on the Family and Medical Leave Act or the California Family Rights Act.

Who Is Covered by CASDI?

According to the state of California, there are currently more than 18 million workers who are covered by the CASDI program. This partial wage-replacement plan is available to those who cannot work due to non-work-related illness or injury, pregnancy, or childbirth.

Common reasons for an employee being covered by CASDI include the following:

  • They are missing work due to caring for a seriously ill family member.
  • They are bonding with a new child.
  • They are participating in a qualifying event that is due to a family member’s military deployment to a foreign country.

It is important to note that the state of California outlines detailed requirements to ensure eligibility, which are as follows:

  • An employee must be unable to do their regular work for at least eight days. CASDI does not kick in until the eighth day.
  • An employee must be losing wages due to their disability.
  • They must be actively employed or looking for work at the time their disability began.
  • An employee must have earned at least $300 from which CASDI deductions were withheld.
  • They must be under the care and treatment of a qualifying practitioner.
  • They must complete and submit a claim no earlier than nine days after their first day of disability but no later than 49 days after.
  • Their qualifying practitioner must complete a portion of their application.

When an employee applies for CASDI benefits, their citizenship or immigration status will not affect their eligibility. Additionally, while their employer will be notified that they have submitted a CASDI claim, all medical information will remain confidential.

How is CASDI funded?

CASDI is a state-run disability insurance program that is funded through deductions. These deductions are taken out of an employee’s paycheck automatically. Currently, every time an employee is paid, 1.1% of their wages will contribute toward the CASDI program.

However, CASDI deductions are only paid on income of up to $145,600 a year. This means that any money earned above this amount is not subject to the 1.1% tax. This creates a limit on the total amount an employee will pay annually toward the CASDI program.

How Much Will an Employee Receive from CASDI?

When an employee applies for CASDI, if they are eligible for benefits, their total weekly pay will be calculated based on the wages they were previously earning. A weekly CASDI benefit is equivalent to around 60% to 70% of wages earned in the 5 to 18 months leading up to the claim start date.

However, for wages to qualify, an employee must have been paying CASDI taxes on those wages. This deduction is usually noted as CASDI on a pay stub.

How Can an Employee Apply for CASDI?

If an employee wants to apply for CASDI, they can use the SDI Online Portal provided by the State of California. To complete their application, they will need to verify their identity and have their qualified practitioner submit documentation regarding their inability to work.

What is the Purpose of CASDI?

The CASDI program is designed to offer wage replacement for California workers who are incapable of performing their normal work resulting in the loss of wages. CASDI, similar to other disability insurance programs, aims to ensure that when someone is incapable of working, they can still meet their basic needs.

For example, if an employee becomes too ill to perform their normal work, in California, CASDI will help make sure that during their illness, they can still pay their bills and afford standard necessities. This is a critical stopgap for those who are facing long periods of time during which they are not capable of earning their regular wages.

How Should I Notify Employees about the CASDI Program?

If you are an employer in the state of California, you can help your employees understand the potential benefits they could receive from CASDI in two key ways:

  1. Post notices: The state of California offers posters that will provide detailed information about the CASDI program. If you have a physical office or retail location, be sure to place these posters in an area where employees can easily access them.
  2. Add information to your employee handbook: When designing your employee handbook, include links to the California disability insurance portal. This will allow employees to explore critical information regarding all disability insurance programs.

The CASDI program can help your employees navigate a period of time in which they are incapable of performing their normal job duties. Be sure to check back with the California Employment Development Department for updates to state-specific programs.