The Regulatory Environment

Soon states began passing laws against requesting or requiring access to worker social media accounts, prohibiting "use it or lose it" vacation time policies and the like. Many local governments soon followed suit, addressing not only these issues in their own way, but legislating in entirely new areas—for example, so-called "ban the box" laws that prohibit employers from asking a job applicant about prior criminal convictions on a job application.

The result? An increasing volume of legislation focusing on evermore specific employment issues as lawmakers seek to fill perceived gaps in the law. The sheer number and specialized nature of the laws applicable to a given employer certainly can make compliance a difficult task.

This continued trend of regulatory localization has also created a confusing—and often conflicting—patchwork of obligations for the multi-state employer. So what is an employer operating in Boston, Biloxi and Boulder to do? One strategy is to manage and reward employees differently depending on their office location; however, this can lead to administrative challenges and employee concerns about fairness. Another is to adopt across the organization a uniform set of practices and benefits that comply with the most progressive of the state and local mandates; but although this could be administratively simpler and perceived as more equitable, it could also necessitate frequent changes to organizational policies as new and ever more generous state and local minimums are enacted.

Add to the complexity those situations where local, state or federal regulations are in stark conflict, and compliance with one exposes an organization to liability based on another. This conflict is very real for some employers, as articulated by a 2013 letter to the U.S. Equal Employment Opportunity Commission (EEOC) signed by nine state attorneys general. 

This letter noted the Catch-22 that the EEOC's enforcement guidance on the use of criminal background checks in hiring causes for many employers: if an employer complies with a state law that requires the exclusion of all job candidates with certain criminal convictions (such as when hiring in certain medical or legal jobs, child care centers), such employers that apply the state-mandated rule may face EEOC allegations of race or ethnicity discrimination under a disparate impact theory of federal law. Unfortunately, the EEOC's response to the attorneys general did not help resolve this regulatory conflict for employers, although it implied that federal law very well may trump—sometimes.

New Sources of Regulation

Of course, HR professionals in those organizations that operate both in the U.S. and abroad are increasingly facing compliance challenges from global sources and in some cases are dealing with regulatory issues that have not traditionally been a core component of HR's portfolio. One case in point: global data privacy laws.

Often considered an issue under the auspices of security, IT, marketing or other business compliance functions, data privacy laws such as those from the European Union have dramatic implications for HR as well. Under the EU Directive on Data Protection, organizations generally cannot send personal data—for example, employee information—from a location in Europe to other countries that do not have comparable privacy protections, such as the United States.

There are a handful of exceptions to this cross-border ban on information sharing. But absent such an exception, the impact of these rules is that a manager in a company's Paris office may not be able to enter employee data into an organizationwide HRIS system or relay employee health information by phone to his or her HR business partner in Chicago. As one can imagine, this can lead to incredible challenges in managing a global workforce.

It is critical that HR professionals understand, communicate and collaborate with stakeholders and leaders across the business regarding the impact of global regulations like these on their organization's operations and the ability to source, reward and manage a global workforce.

Uncharted Regulatory Waters: The Uber Effect

In 2014, the SHRM Foundation's and Economist Intelligence Unit's report titled Evolution of Work and the Worker identified an emerging trend that perhaps poses the biggest challenge yet to the current employment regulatory model: crowdsourcing.

Described by the SHRM Foundation and EIU as "enlisting the sporadic services of a large number of people, either paid or unpaid, typically via the internet," crowdsourcing enables organizations to remotely tap into a global network of skilled or unskilled workers via technology, pay them (or not) based on the tasks performed or skills required, and use their services on an as-needed, on-call basis. In turn, these often-anonymous contributors often provide their own equipment; work if, when and where they want; work for as many organizations as they wish; and avoid the headaches of a daily commute.

What remains to be seen is how the traditional regulatory strictures, built for 1930s to 1960s brick-and-mortar-based workforces, will react to this radically new approach to how work is performed—particularly if implemented on a large scale. Are individuals who perform tasks or create works employees, independent contractors or volunteers? Do the plethora of global, federal, state and local workforce protections apply to them? Are they entitled to overtime or benefits?

Some of these questions are front and center in a handful of court cases now pending in U.S. federal and state courts involving drivers for ridesharing services Uber and Lyft. Under these services, drivers can choose when and how much they work, fitting the work into their schedule and earning a bit of extra income as needed. In these lawsuits, however, drivers have alleged that under traditional wage and hour laws, they are entitled to tips, minimum wages, expense reimbursement or other legal workplace protections that traditional employees receive.

The outcome, of course, will depend on whether individuals who provide crowdsourced services are found to be "employees" at all—particularly in extreme crowdsourcing situations where a contributor may work for dozens of different organizations in the same day or week.

The answer is yet to be decided and will depend heavily on the facts of the arrangement at issue. However, the court in one of these cases has already acknowledged the incredible challenge in applying an outmoded regulatory scheme to this emerging employment model: "[T]he jury in this case will be handed a square peg and asked to choose between two round holes. The test the…courts have developed over the 20th Century for classifying workers isn't very helpful in addressing this 21st Century problem….Or perhaps the Lyft drivers should be considered a new category of worker altogether, requiring a different set of protections. But absent legislative intervention, California's outmoded test for classifying workers will apply in cases like this. And because the test provides nothing remotely close to a clear answer, it will often be for juries to decide." (Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1081-82 (N.D.Cal. 2015).)

Let's hope that there are HR professionals on those juries to help navigate these issues.