Compliance Checklist For Companies With Employees In Multiple States
Opening a Location in Another State? Pay Attention to Differences in Workplace Laws
Congratulations to all business owners who are expanding this year. You are driving economic growth, providing jobs, and investing in communities. We wish you continued success. If you are opening your first out-of-state location, you can pat yourself on the back for reaching a milestone most businesses never reach.
There are many reasons to open locations in multiple areas. Some companies seek a larger hiring pool. Perhaps you want to tap into a more lucrative market for your products or services. Local real estate rates and tax incentives impact your overhead. You may be relocating your headquarters because you want to live somewhere else. Or perhaps the reason for opening another location is because of reduced (or different) workplace regulations.
There are many compliance considerations when operating a multi-location enterprise. Employers are obligated to the laws where employees are working—not just the laws where the business is based. If you have telecommuters or mobile employees that travel interstate, things get even more complicated. Let’s look at the issues at play.
How Do I Know Which Law To Follow?
You are most likely familiar with the Fair Labor Standards Act (FLSA). Many state laws differ from the FLSA. And cities and counties have their own laws which address issues not covered in the FLSA or provide additional protections. This multi-layered patchwork of legislation is a challenge for business owners.
Federal law takes precedence where it has a higher standard. This includes the FLSA, Family Medical Leave Act (FMLA), and the Affordable Care Act (ACA).
If a state, county, or city regulates something not addressed in the FLSA, you are obligated to comply with it.
When a jurisdiction has a higher standard than the Federal law, you must follow the higher standard along with all provisions of the Federal law.
Get Professional Guidance
Businesses of any size need legal counsel for workplace regulations. Employment attorneys and Human Resources professionals can minimize your legal exposure. When performing due diligence for a new location, seek counsel familiar with the state and local regulations for your new office. If you are in a highly-regulated industry, you may need industry experts as well.
Use Workforce Management Software
Workforce management software and hardware is a must when operating in multiple locations. Set rules for employee classification, overtime, scheduling, accruals, pay rules, job roles, union contracts, and industry regulations. Use software equipped to handle the logistics of multi-state businesses.
Let’s look at some tools that streamline compliance:
- Biometric time clocks: Ensure accurate timekeeping for minimum wage, overtime, Fair Scheduling, meals/breaks, ACA part-time or full-time status.
- Schedule adherence: Prevent early punch in from mandated breaks, restrict unauthorized punch outs that could affect overtime and minimum wage.
- Push notifications: Set overtime and unauthorized punch alerts.
- Employee scheduling: Set rules for Predictive Scheduling regulations, overtime, meals, and breaks.
- Records management: Compile documents in searchable databases to simplify recordkeeping requirements. (If using a workforce management vendor, ensure that they meet data security regulations.)
Document Compliance Policies In Your Employee Handbook
Your employee handbook should include far more information than compliance policies alone. But for the purposes of this article, we will focus only on compliance content.
Start with a thorough core section that applies to all employees. This will include policies related to Federal laws. Explain both the employer’s and employee’s responsibilities under the laws. You will need additional sections for each regulated jurisdiction in which you have employees.
Multi-state Employer Compliance Checklist
We have covered many of these topics in previous SwipeClock blog posts. Follow the links for more detailed information.
- FMLA: Many states (and some cities) have family leave laws that differ from the Federal law.
- Minimum Wage: Numerous states and cities have their own minimum wage regulations.
- Fair Scheduling
- State Withholding
- State Withholding for Remote Employees: The “physical presence” rule requires employers to withhold at the rate for the state in which the work is performed, even if the business is headquartered in another state. However, some states require withholding for both locations.
- Benefits Administration
- Seasonal Worker Exemptions (Including the definition of a seasonal business)
- Meals and Breaks: California, Colorado, Illinois, Kentucky, Minnesota, Nevada, Oregon, Vermont, and Washington have regulations.
- Uniform Expenses: Some states allow employers to deduct for uniforms if compensation doesn’t fall below minimum wage. Other states restrict employers from deducting for any type of uniform.
- Unemployment Tax
- PTO Policies
- Unearned Paid Leave Upon Termination: Some states restrict employers requiring employees to pay back unearned leave.
- Final Paycheck: 45 states mandate time limits. Some states limit the practice of withholding the paycheck until company property is returned.
- Marijuana Use: If you open a location where marijuana is legal, you may need to modify your drug-testing or drug-free workplace policies.
- Jury Duty Leave: New York and Massachusetts have special protections.
- Personnel File Access: Some states limit what employers have to allow access to. Some states require employees to submit a written request.
- Short-Term Disability: California, Hawaii, New Jersey, New York, and Rhode Island require it. Puerto Rico mandates business insurance.
- Accommodations for Nursing Mothers: 29 states have laws which address breastfeeding in the workplace.
- Cell Phone Use While Driving: Employers with mobile employees should ensure workers follow state law while driving on the job.
- Interview Questions: 10 states (and Puerto Rico) and 8 cities prohibit asking salary history. 31 states and 150 cities ban questions about criminal history. Note that employers are not necessarily restricted from running background checks later in the hiring process.
- Non-compete Agreements: Many states have restrictions and others are considering proposals.
- Tip Pooling: In March 2018 the FLSA was clarified regarding tip pooling. California, New York, and Oregon have additional regulations.
- Harassment and Discrimination Training For Supervisors
- Concealed Carry
- Biometric Time Clock Data Security: Some states regulate how biometric data can be used.
- Payroll Transparency: New Hampshire has special rules.
- Paycheck Direct Deposit: Utah allows employers to require that employees use direct deposit if the employer’s federal employment tax deposits are equal to or greater than $250,000, or at least two-thirds of the workers are paid by direct deposit.
By Liz Strikwerda
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