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New State, Local Laws Challenge Multistate Employers

A group of women sitting in a conference room.
​Attendees listen during the 2019 Society for Human Resource Management Employment Law & Legislative Conference.

​In recent years, much of the legal action impacting the employer-employee relationship has been at the state and local—not the federal—level, said Jonathan A. Segal, an attorney with Duane Morris in Philadelphia, speaking to attendees at the 2019 Society for Human Resource Management Employment Law & Legislative Conference on March 19.

Segal outlined several recent trends in state and local legislatures and discussed how HR can ensure that employers comply with new employment laws. Compliance can be quite complicated for multistate employers, he cautioned, listing practical ways to address the challenges these employers may face. 

Minimum-Wage Laws

While the federal minimum wage remains at $7.25 an hour, 29 states plus Washington, D.C., have higher wage floors. Forty local jurisdictions have minimum wages that are higher than the federal minimum, and, in some cases, the local minimum wage is higher than the state's own mandated wage rate. Two states, Arkansas and Missouri, through 2018 ballot measures, are raising their minimum wages over time to $11 and $12 an hour, respectively.

There are currently bills pending in state legislatures that would raise the wage floor in several additional states. "This is not a partisan issue," Segal noted. Raises are being contemplated in red, blue and purple states. Five states—California, Illinois, Massachusetts, New Jersey and New York—plus Washington, D.C., will eventually reach $15 an hour, Segal said.

Bans on Asking About Prior Compensation

Numerous states, including California, Connecticut, Delaware, Hawaii, Massachusetts, Oregon and Vermont, ban employers from asking applicants for information about their compensation at their previous jobs. Illinois, New Jersey, New York and Washington state are currently considering such bans. And a number of municipalities, including New Orleans, New York City, Philadelphia, San Francisco and Albany, N.Y., have also enacted their own laws prohibiting such inquiries.

But these laws are not all the same, making compliance even more difficult for multistate employers. They differ as to:

  • Whether current employees are covered, in addition to job applicants.
  • What compensation is covered by the prohibition, whether salary only or other compensation as well.
  • What the appropriate action is if an applicant voluntarily discloses his or her previous compensation. 

These laws should force HR to consider whether the company "really needs prior compensation in deciding what to pay new employees," Segal said.

He noted some options HR could consider:

  • Remove the question from at least the job application, if not from the entire recruiting process.
  • Post or otherwise share employer salary ranges.
  • Make, document and monitor special exceptions. 

"Exceptions will happen," Segal said. What is important is that HR documents the exceptions at the time they are made, he added.

Pay-Equity Laws

States are also passing pay-equity laws, which go beyond the federal Equal Pay Act. While the federal law mandates equal pay for equal work, the state laws require equal pay for comparable work, Segal said. States that have recently passed such laws include California, Maryland, Massachusetts, New Jersey, New York, Oregon and Washington.

The states' pay-equity laws differ from one another, creating additional challenges for multistate employers, Segal said. For example, while the Massachusetts, New York and Washington state laws apply only to differences in pay between men and women, the laws in California, Maryland, Oregon and New Jersey take into account other protected factors as well.

The laws generally provide the same defenses to a claim of unequal pay, Segal said:

  • Seniority.
  • Performance.
  • Experience.
  • Location (except in New Jersey).

"Employers should expect more of these laws, and not only in blue states," Segal said, noting that Indiana, Pennsylvania and South Carolina currently have pay-equity bills pending.

The emergence of these laws raises the question of whether an employer should undertake a pay-equity analysis, Segal said.

But what test do you use, he asked, noting that the state laws use different standards for comparing jobs. Must the jobs be "comparable" or "substantially similar"? Are the workers "similarly employed"?

Segal advised that, if an employer decides to do a pay-equity analysis, it should use an expert so that "it is done right, and the expert can testify in the event of a lawsuit."

LGBTQ Issues

Current federal law provides no explicit employment protection for sexual orientation or gender identity for lesbian, gay, bisexual, transgender and queer (LGBTQ) employees, Segal noted. However, 24 states, plus Washington, D.C., and Puerto Rico, offer employment protections based on sexual orientation, and 22 states offer protections based on gender identity.

In addition, at least 200 municipalities have passed laws providing employment protections based on applicants' and employees' sexual orientation and gender identity.

Segal recommended that multistate employers maximize inclusion, even in states that have not passed their own laws. "You don't say, 'We reserve the right to discriminate in Ohio,' for example," he said.

Mandatory Paid Sick Leave

Currently, numerous states, including Arizona, California, Connecticut, Maryland, Massachusetts, Michigan, New Jersey, Oregon, Rhode Island, Vermont and Washington state, as well as Washington, D.C., and Puerto Rico, require employers to provide some paid sick leave.

We will see more ballot initiatives on this topic, especially in purple states, Segal predicted.

Once again, these laws vary from state to state. The differences include:

  • Accrual rate.
  • Carryover obligation.
  • Minimum increments.

Because of these differing laws, Segal said, employers may want to make handbooks "a thing of the past … [and] have separate libraries for each state." 

Joanne Deschenaux, J.D., is a freelance writer in Annapolis, Md. 


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