As technology makes it easier to work from anywhere, companies can hire employees based on their skills without concern for where they are. But for employment law, geography matters.
The law of the state where your employees are physically working is the law that applies to them, no matter where your company is located or based.
And even though federal laws apply in all 50 states, all states, and some cities, have additional laws that also apply. The general rule is if the Federal government enacts an employment law, then every State has to follow it. But state and local governments can enact additional protections that are consistent with the purpose of the federal laws.
For example, California has many laws that go beyond Federal and other states’ employment protections.
Federal Law prohibits discrimination in employment based on race, color, religion, national origin, sex, age, disability, military status, and genetic information. California protects all of those plus, sexual orientation, ancestry, marital status, and pregnancy, including childbirth, lactation or any related conditions. California also provides broader medical condition protections.
Federal Law and most states provide for overtime after 40 hours a week. California provides for overtime after 8 hours worked in any single day, no matter what the weekly total is.
Many states recognize noncompete and nonsolicitation contracts with employees. Although each state has its own rules on what consideration is required and the geographical and time limits allowed. Under California law, both noncompete and nonsolicitation clauses are against public policy and completely unenforceable for all employees working in California.
Many cities like San Francisco and Minneapolis have their own requirements regarding benefits, discrimination, wages and hours. So employers need to understand that laws of the places where their employees work.
The main areas to double check are:
- EEO and Discrimination Protections, including who is disabled- Many states have broader protections;
- Minimum Wage and Overtime- how it is calculated, when it must be paid and whether comp. time is permitted;
- Termination Paychecks and Notice-Is notice required? Does the employer have to give a reason? Does the employer have to give a final paycheck and vested vacation immediately on termination? How long does the employer have to send a final check when the employee quits? When and how are commissions paid after termination?;
- Privacy of data and other information and when/how employers can monitor employees at work and on their mobile devices;
- Free speech- At least one state, Connecticut, provides some free speech protections for employees. Federal and governmental employees also have limited free speech rights;
- Benefits and health insurance coverage requirements;
- Vacation and PTO– some states prohibit use-it-or-lose-it policies and have requirements for vesting and payment;
- Commissions and Bonuses- how they are calculated, especially bonuses based on profit- some states exclude certain expenses like workers’ compensation in profit calculations;
- Noncompete and Nondisclosure Agreements- There are widely different state requirements on NDA’s and NCA’s and whether they are enforceable at all;
- Trade Secrets- what constitutes a trade secret for nondisclosure agreements- client lists are quickly losing protection because contact information is so easily available;
- Layoff and RIF notice requirements under state WARN acts- many states have different conditions for notice, different requirements of the notice itself, and harsher penalties;
- Off-duty conduct- some states generally prohibit discipline or termination for off duty conduct, including posts on social media.
If your company has employees working in multiple locations, make sure you check with attorneys who know and can help you comply with all the laws that affect your company. If you have employees working in several states, there are probably some you don’t know about. And it’s always easier to prevent problems than fix them.