‘Toggle’ to Ensure Compliance with Laws

By Joanne Deschenaux Apr 23, 2008

Employers faced with a complex array of workplace regulations must do the “toggle” and go back and forth between federal, state and local laws to ensure that they are complying with all three, Camille Olsen, an attorney with Seyfarth Shaw LLP in Chicago, told attendees March 10 at the 2008 SHRM Employment Law & Legislative Conference in Washington, D.C.

Although certain federal laws, such as the National Labor Relations Act and the Employee Retirement Income Security Act, will pre-empt state laws operating in the same areas, Congress did not intend most federal employment laws to occupy the field, Olsen said. Therefore, even a single-state employer is subject to state as well as federal regulation of its nondiscrimination obligations, wage and hour responsibilities, and leave and privacy policies. And, in addition, many municipalities have passed employment ordinances, further muddying the waters.

To complicate matters even more, in recent years, federal and state employment laws have been subject to increasing scrutiny by Congress and the state legislatures, as well as the courts. “The status quo is dynamic,” Olsen noted. “It changes daily,” HR professionals therefore must have some mechanism in place to ensure that the organization’s policies and practices are up to date.

“Do we need a local expert or local expertise? I believe the answer is ‘yes,’ ” she said.

Changing Federal Employment Laws

2007 saw a great deal of congressional activity with regard to the regulation of employment. On May 25, H.R. 2 became law, raising the federal minimum wage of $5.15 by $2.10 in three steps within two years and two months of enactment.

Legislation to expand the Family and Medical Leave Act (FMLA) to cover family members who need time off to care for injured soldiers passed both the House and the Senate before it was initially vetoed by the president. However, it resurrected weeks later and was signed into law on Jan. 28, 2008.

In addition, although the Employee Free Choice Act did not pass in 2007, and legislation aimed at discrimination based on sexual orientation stalled, Olsen noted that most experts agree that “we have not heard the last of these laws.”

In addition, bills are presently pending in Congress that would:

  • Make use of the E-Verify system mandatory. E-Verify is designed to determine whether applicants for employment are authorized to work in the United States.
  • Amend Title VII, the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Rehabilitation Act to provide that a discriminatory compensation decision occurs each time compensation is paid, not when a supervisor first establishes the compensation rate.
  • Amend the ADA to expand the definition of a disability for purposes of protection against discrimination.
  • Prohibit the collection, dissemination or use of genetic information by health insurers and employers.
  • Increase employers’ obligation with regard to accommodating employees’ religious practices.

Many of these proposals are based on laws already operating in the states, Olsen said. However, there has been little litigation under a number of these laws, she noted, and so it is not all together clear what changes would occur were the laws to be implemented on the federal level.

State Laws May Grant More Protection

In 2007, a record number of states increased their minimum wage level above the new federal standards, and a number of state legislatures passed protections for military families and those claiming sexual orientation discrimination.

In addition, in 2007, multiple states passed laws regulating in areas including:

  • Child labor.
  • Workplace drug and alcohol testing.
  • Prevailing wages.
  • Time off.
  • Timing and method of wage payment.
  • Equal employment opportunity.
  • Privacy.

The most active states were Hawaii, Illinois, Maine, New York, North Carolina, Oregon Texas and Virginia, Olsen said. In fact, only four states did not pass any labor legislation in 2007: Arkansas, Mississippi, Pennsylvania and South Carolina.

In addition to the sheer numbers of state laws, employers and HR must be mindful of all the ways that these laws may differ from their federal counterparts, Olsen emphasized.

For example:

  • Many states have minimum wages higher than the federal minimum.
  • Several states, including California, Maine, Maryland and Washington, define disability more broadly than it is defined in the federal ADA.
  • Twenty states prohibit sexual orientation discrimination, and 15 bar gender identity bias.
  • Equal pay laws vary greatly, with some states requiring equal pay for “comparable” work.
  • Small employers, not covered by Title VII, may be subject to the equal employment laws of 34 states and the District of Columbia, which require fewer employees for coverage than does the federal law.
  • State nondiscrimination laws may prohibit bias on grounds not mentioned in Title VII. In addition to sexual orientation, some states bar discrimination based on—just to mention a few—smoking outside of the workplace, an employee’s status as a nursing mother and an employee’s genetic makeup.
  • The age group protected by the age discrimination law may not be the same as the ADEA’s protected class. Some states protect everyone over 18.
  • While only two states (Washington and California) currently require paid family leave, a number of others, including New York and New Jersey are close to passing similar proposals.
  • Although there is no federal data breach notification law, 38 states require some sort of notification to employees if their private information has been disclosed.

This all makes it essential for an employer to do the “toggle”—check federal, state and local laws and consistently comply with all three. Not an easy task, Olsen conceded.

Multistate Employers Seek Consistency

And what about the multistate employer? Not only must that company ensure compliance with a myriad of overlapping laws, it is likely to strive for some consistency across its workplaces.

Such an employer has two choices, Olsen said. It can adopt universal policies as far as possible but carve out specific rules for each state in which it does business. Or it can take the laws of the most liberal or “employee-friendly” state and apply them across the board. This is not a legal question, she noted, but a human resources question that each organization must answer for itself.

Joanne Deschenaux, J.D., is SHRM’s senior legal editor.

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