Published in Business NH Magazine (6/2/2017)
Increasingly, businesses of all types and sizes employ workers in multiple states. That means staying abreast of legal and compliance issues on a number of fronts and maneuvering through inconsistent rules and laws. Even smaller companies, with more limited legal and human resource bandwidth, often have someone who works remotely and struggle with difficult compliance issues.
Wage and Hour
The federal Fair Labor Standards Act (FLSA) is the overriding concern for all but the smallest of businesses that have limited gross receipts and do not engage in interstate commerce. The FLSA is interpreted by a complex set of regulations, which govern, among other things, minimum wage, overtime, travel time and breaks for breastfeeding mothers.
Many important issues related to compensation of employees and work conditions, however, are not covered by federal law, requiring employers to be fully conversant in the laws of the states in which their employees work and are paid. In the six New England states alone there are five different requirements regarding the number of hours an employee can work before being entitled to a meal break. There are similar inconsistencies concerning rules for final pay for terminated employees, required minimum pay for employees who show up for work and are sent home, permissible deductions from pay, mandatory use of direct deposit or employee pay cards and, of course, minimum wage.
The statutes and regulations alone are difficult to manage especially for large national organizations whose human resource departments might reside thousands of miles from most of the workforce. When the unwritten rules and common practices of the various state agencies are added to the mix, compliance becomes a nightmare.
Consider the simple issue of whether an employer has to provide a uniform to an employee free of charge. In Maine, employers may not deduct from employee wages the cost of uniforms that include shirts or clothing that bear the company’s name or logo when the apparel is to be used “primarily for the benefit or convenience of the employer.” In NH, an employer is prohibited from even charging an employee a fee for any apparel bearing the company name or logo unless the apparel is also made available for sale to the general public. Massachusetts requires that employers bear the cost of laundering and maintaining actual uniforms.
Staying on top of these regulations, many of which change frequently or are the subject of unwritten rules and interpretations, would be a challenge for the most well-equipped human resource department.
Leaves of Absence
The Family and Medical Leave Act (FMLA), state parental leave law, workers’ compensation and the Americans with Disabilities Act (ADA) form a vortex of leave laws that can be perilous to maneuver even for those conducting business in just one state.
The standard for FMLA seems simple and straightforward: 12 weeks of unpaid leave for certain conditions must be provided to employees who work for a company with 50 or more employees within a 75 mile radius. Consider the issue, however, of employees who work from home. Those employees may work much farther away than 75 miles from a bricks and mortar company office or plant. Nevertheless, a remote employee working from home is likely eligible for FMLA depending on where the company considers her home office to be. If she is assigned and reports to a location that employs 50 or more, she is covered. That same employee, however, may or may not be eligible for more generous parental or medical leave in the state in which she lives depending on the thresholds for eligibility in those states.
Contrast this with employees who work for the same company at a small location that does not house 50 workers. Those employees are likely not eligible for FMLA, but may be eligible for state leave and leave as a reasonable accommodation under the ADA, assuming there are enough workers to meet the thresholds for those laws.
Add to the types of leave typically associated with health or injury, the variety of leave available for crime victims, victims of domestic violence, first responders, parents of small children and military personnel, and the headache grows. It is critical for employers to be conversant in the various provisions of state and federal leave law, including the thresholds for eligibility, the qualifying reasons for the leave, whether time off must be paid or unpaid and the duration of the leave.
When it comes to protecting themselves, companies profess to have fairly simple objectives: protect my intellectual property, prevent someone from stealing my customers and employees and don’t let the guy I trained open up across the street in a competitive business. Many have responded to these concerns by creating a one size fits all non-compete agreement that they have all employees sign, regardless of job or location. Such a casual approach to these agreements may leave a business with no protection at all.
The law of restrictive covenants continues to evolve. Legislation seeking to curtail the enforceability of the agreements is introduced frequently, and sometimes, it passes.
In addition, the case law continues to evolve. Some state courts rarely enforce pure non-competition provisions in employment agreements while others do as long as they are reasonably tailored to protect a company’s legitimate business objectives. In other states, it is much more difficult to enforce such limitations, and companies are better off confining their agreements to non-solicitation and confidentiality terms.
It is important for companies that wish to rely on restrictive covenants to stay abreast of legal developments in the states in which they do business. Particular attention should also be paid to choice of law provisions and jurisdiction clauses in the agreements themselves.
Paid Sick Leave/Minimum Wage
Just when employers thought managing state law requirements was the worst of it, there came a rash of cities and counties passing their own paid sick leave and minimum wage laws. These laws are more difficult to stay abreast of than state mandates. Businesses and their attorneys can generally check one or two sources for the latest laws in each state in which a company operates. Now that cities such as Seattle, Washington, St. Paul, Minnesota and San Jose, California are passing their own workplace laws, life in the HR department has become even more complicated.
• Maintain a relationship with a good employment lawyer. Rely on your attorney not only in times of trouble but to be proactive and forward looking. Most law firms can provide timely information to clients through client alerts, seminars and blogs about changes in the law or perilous traps for the unwary. Subscribe to them and read them. Similarly, keep your attorney informed of new ventures you intend to pursue. If your company is going into a new state, your attorney might have good advice about the pitfalls of doing business there.
• Involve local counsel early if you have a legal issue. This is especially important if it involves a state in which you do not have a strong management presence. Your general counsel is not going to have the connections or the knowledge of local practice to help you avoid a problem. Local attorneys will understand unwritten rules and will have experience predicting outcomes and risk.
• Ensure your HR department is well connected and well educated. They are the front lines of risk management for you. Support their memberships in local and national professional organizations, such as the Society for Human Resource Management (SHRM). Consider paying the cost of their professional certification. Send your HR professionals to conferences where they can share best practices with people from other states. Occasionally attend with them. It shows you are committed to their professional development and to getting these important issues right.
• Invest in 50-state survey publications or access SHRM’s online information about a particular issue. SHRM and other professional societies publish compilations of each state’s law on a particular topic. For example, if you intend to have a firearms policy at your locations, review the summary SHRM provides to make sure you are aware of what each state’s law requires.