January 25, 2023 | By Questco
As most Human Resources (HR) staff know, creating compliant multi-state employee handbooks is never easy. Sadly, 2023 is poised to turn drafting employee handbook revisions into an even bigger HR migraine.
That’s right: state laws have changed since January 1, 2023.
Some legislative initiatives amend existing laws, while others implement new legal requirements.
These changes include:
As if that were not enough, multi-state employers must pay attention to local employment laws and the various state laws.
For example, upstate New York has a minimum wage of $14.20 compared to New York City’s minimum wage rate of $15.
The following briefly describes legislative initiatives that employee handbooks must address and how to handle conflicts between state and federal rules.
You will also learn why a professional employer organization (PEO) is an invaluable partner for multi-state employers.
No federal or state employment laws mandate a legal requirement that employers create an employee handbook.
However, if you do publish one, it must comply with all the laws applicable to your business and your employees. That means federal employment laws as well as state and local laws.
How much do these state laws vary?
For example, let’s look at the different employment law regulations applied to Utah, New York, and California.
Recognizing the protected characteristics of federal anti-discrimination laws is paramount to an employee handbook’s compliance. These laws include:
In addition, Utah also requires the following policies:
If you have employees covered by New York state laws, your employee handbook must include all the requirements shown above in the Utah handbook, plus the following:
If your payroll includes employees covered by California’s employment laws, your employee handbook must contain all the above-noted requirements that apply to Utah and New York, plus the following:
As a multi-state employer, you may face conflicts between the different state employment laws that cover your employees. Employers usually handle these conflicts by drafting generic handbooks with addenda or umbrella handbooks.
Generic employee handbooks cover the common areas between state and federal employment laws. Then, HR departments add state-specific addenda for each state where HR compliance comes into play.
Unfortunately, generic handbooks may lead to the employee perception of unfairness in those instances where employees in one state receive more favorable leave policies than in other states.
On the other hand, umbrella employee handbooks apply the most generous state and federal laws to all employees regardless of where they live. This creates a feeling of equity among employees but does mean you are offering benefits in states where they aren’t legally required.
While HR may look for conflicts among state laws, it is also vital to track differences between state and federal employment laws.
For example, the Fair Labor Standards Act (FLSA) mandates that employers keep employee records for a certain period. Some states have passed additional employee protections:
Remote workers are ubiquitous in today’s workplace.
But which state’s employment laws apply to out-of-state remote workers?
Each state creates the rules that impact:
These regulations may include various tax laws, employment applications, immigration, and employment verification, employment interview restrictions, and document retention, just to name a few.
In general, out-of-state remote workers are subject to the laws of the city and state where they have a physical work location and where they perform work.
It is easy to see why tracking evolving state and federal legislation is a major headache for multi-state employers.
Some companies turn to employment lawyers to handle multi-state compliance, an expensive proposition!
That’s why so many multi-state employers are outsourcing specific HR tasks to professional employer organizations (PEOs).
Unlike lawyers, PEOs provide holistic HR support for multi-state employers.
For one thing, employers do not have to register with accounts in each state where an employee resides.
PEOs staff experts in multi-state payroll processing so in-house HR can focus on core priorities.
Medical benefits are a breeze as the PEO maintains national group health coverage that usually surpasses coverage that may otherwise be available to your employees.
Concerning workers’ compensation insurance, the PEO coverage does not require an upfront deposit which saves you money and helps with cash flow. You join the PEO’s workers comp policy, meaning you adopt their experience modifier rate (EMR). If your company has a history of claims, this could reduce your payroll premiums.
Perhaps most importantly, the PEO staff are experts in the field of multi-state HR compliance and know how to track and comply with each state’s requirements.