Managing risk efficiently with a multistate workforce

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What to watch out for, and tips of the trade

By Charla Bizios Stevens,
Dolan Media Newswires

Companies with a multistate workforce have the daunting task of staying abreast of legal and compliance issues on a number of fronts.

Even smaller companies, with more limited legal and human resources bandwidth, are faced with difficult compliance issues on a frequent basis.

Companies that operate only in one state are challenged to comply with all federal laws as well as state laws related to payment of wages, nondiscrimination, leaves of absence, taxation and restrictive covenants. Those that operate in a number of states are required to maneuver through often inconsistent rules and laws.

Among the many issues employers face, and some suggested strategies to help in-house counsel take control, include:

Wage and hour: the sleeping giant

Complying with the Fair Labor Standards Act is only the beginning. The fact is that many important issues related to compensation of employees and work conditions are not covered by the FLSA, which, in and of itself, is a complex set of regulations.

Apart from overtime and white-collar exemptions, most of the mundane day-to-day compliance is in accordance with state law.

That can lead to confusing inconsistincies regarding, for example, rules on 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 organizations whose human resources departments are thousands of miles from the far flung workplaces under their watch. When the “unwritten rules” and “common practices” of the various state agencies are added to the mix, compliance becomes a nightmare.

Leaves of absence: the Bermuda Triangle

Family and Medical Leave Act, state maternity leave law, workers’ compensation and the Americans with Disabilities Act all combine to form a vortex of leave laws that can be perilous to maneuver.

The standard for the 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.

But 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, keeping in mind the thresholds for eligibility, the qualifying reasons for the leave, whether time off is paid or unpaid, and the duration of the leave.

Restrictive covenants: the shifting sands

Most employers profess to have fairly simple objectives when it comes to their employment terms: protect my intellectual property, prevent someone from stealing my customers and employees, and don’t let the guy I trained open up a competitive business across the street. All reasonable protections.

However, many employers attempt to deal with all those concerns by creating a blanket noncompetition agreement they regularly have all employees sign, regardless of the employee’s job or location. Often, when challenged, the one-size-fits-all agreements fail to hold up in court, leaving 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.

It is important for employers who 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.

Tips of the trade

So how does a company with a multistate workforce manage risk as efficiently as possible?

• Maintain a relationship with a good employment lawyer. Rely on your attorney not only in times of trouble but on a proactive and forward-looking basis. Most law firms have ways of providing timely information to clients about changes in the law or particularly perilous traps for the unwary: client alerts, seminars, blogs. Subscribe to them; 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 some good advice about the pitfalls of doing business there.
• Make sure you have your bases covered at every level. If you have a legal problem in a state in which you do not have a strong management presence, make sure you involve local counsel early on in the process. Your national counsel is not going to have the connections or the knowledge of local practice to help you avoid a problem. On the other hand, hiring local counsel to handle an appeal of an adverse ruling at the state Department of Labor is probably not the best strategy.
• Make sure your HR department is well connected and well educated. Its members are the front lines of risk management for you. Support their membership in local and national professional organizations such as the Society for Human Resource Management, or SHRM. Consider paying for their professional certification. Send them to some conferences where they can share best practices with people from other states.
• 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. 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.
• Stay active and involved in legislative advocacy. Admittedly, it is hard enough to stay up to date on current law. However, it is just as critical to make sure the voice of your business is heard when new legislation is being considered.

Charla Bizios Stevens is a shareholder in the employment law practice group at McLane, Graf, Raulerson & Middleton, which has offices in Massachusetts and New Hampshire.