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Strategic Approaches to Wage And Hour Compliance In Multi-State Operations

In 2022, the World Economic Forum (WEF) attempted to determine which US states were most attractive for business operations. The WEF considered things like the cost of doing business, the local workforce, and access to capital. The organization concluded that New York ranked 36th, while states like North Carolina and Washington topped the list. This analysis shows how advantageous multi-state operations can be, especially for companies in New York. However, expanding into different states presents its fair share of challenges – and an obvious example is wage and hour compliance. The variation between states is a source of both opportunity and complexity – and it can be difficult to manage varying wage laws across multiple jurisdictions. A consultation with an experienced business law attorney in New York may help companies planning transnational expansion. A conversation with Schwab & Gasparini could offer further insights. Consider calling (315) 422-1333 for the Syracuse law office, (518) 591-4664 for the Albany office, (914) 304-4353 for the White Plains office, or (914) 304-4353 for the Hudson Valley office. 

Consider Going Above and Beyond State Guidelines

One strategic approach is to go above and beyond state guidelines and minimum requirements. This ensures that the company will always be compliant, regardless of which state they may be in. For example, the state with the highest minimum wage is the District of Columbia ($17 per hour). The minimum wage in New York is around $15 per hour. Companies operating across the entire nation may wish to set a policy of paying at least $17 per hour. This ensures that no matter which state the company operates in, it will never face issues related to minimum wage violations. Of course, this may not be feasible or profitable for some companies – especially with the federal minimum wage at $7.25 per hour according to the Fair Labor Standards Act (FLSA). This may be less of an issue for companies that hire professionals with higher annual earnings. In addition, starting new hires at $17 per hour – regardless of location – may attract more qualified and motivated applicants. 

Companies may also go above and beyond other regulations aside from minimum wage requirements. Companies might consider creating generous overtime rules, worker classification rules, tax withholding requirements, sick leave requirements, recordkeeping rules, and rest break requirements. For example, California is the only US state that requires employers to pay their workers double-time after they log a certain number of hours per week – and companies may wish to adopt this rule across multi-state operations to ensure easy compliance. The Golden State also has different rules regarding independent contractors, potentially raising challenges for companies that operate in the transnational “gig economy.” Texas has no rest break requirements, but employers operating in this jurisdiction might still want to provide regular breaks in line with more lenient states. One particularly controversial subject is “heat protections” for farm workers. Florida and California have taken drastically different approaches in this area, and this could create complexities for agricultural companies operating in both states. To discuss the relevant requirements and rules when expanding into different states, company leaders may want to speak with Schwab & Gasparini.  

Consult With a Local Business Law Attorney

Company leaders may wish to speak with local business law attorneys before expanding into a particular state. While internet research can help familiarize human resource (HR) professionals with different wage and hour compliance regulations, a consultation with a legal professional may offer more targeted guidance. Often, lawyers are aware of important details that online articles miss. One should be wary of outdated online articles that may not be accurate. States pass new wage and hour laws every year, and company leaders may need to remain in close contact with local lawyers to ensure compliance. Business law attorneys may also be aware of upcoming changes, and they may help companies make the necessary adjustments before new laws go into effect. 

Be Wary of Inflation Adjustments

The rate of inflation has a direct effect on wage and hour laws in many states. While the federal minimum wage has remained the same since 2009, various jurisdictions adjust their minimum wages on a continual basis to keep pace with inflation. As the Economic Policy Institute notes, over a dozen states have “tethered” their minimum wages to inflation using metrics such as the Consumer Price Index (CPI). Companies planning to expand into these states may need to create systems to automatically increase their minimum wage based on the CPI and other relevant metrics. With new software solutions, this might be easier than many HR professionals realize. 

Some Cities Set Their Own Minimum Wages

Companies should consider municipal minimum wage laws as well as state regulations. Two notable cities are Seattle and San Francisco, which have different minimum wages compared to their respective states. 

Be Aware of Federal Wage and Hour Compliance Guidelines

At the bare minimum, company leaders should become aware of federal wage and hour guidelines before expanding into new states. In addition to the $7.25 minimum wage, the FLSA also requires overtime pay (time-and-a-half) after 40 logged hours in a single workweek. 

In addition, companies should review FLSA recordkeeping requirements. When recording the hours worked by a specific employee, companies should list their name, social security number, address, gender, occupation, and pay rate. The time sheet should clearly indicate any deductions, the method of payment, daily earnings, overtime earnings, and total wages. 

Contact Our Experienced Business Attorneys at Schwab & Gasparini To Learn Your Legal Options as You Expand Your Business

While an online article can help illustrate some of the challenges associated with multi-state wage and hour compliance, a consultation with an experienced business law attorney in New York could provide more targeted insights and guidance. If a company leader is targeting one specific state for expansion, it may make sense to have a more detailed discussion about the specific labor laws, tax implications, and trends associated with that jurisdiction. Of course, wage and hour compliance is only one potential challenge for companies engaging in transnational expansion – and legal professionals may be able to help with other steps in this process. Company leaders may wish to continue this discussion alongside Schwab & Gasparini. Consider calling (315) 422-1333 for the Syracuse law office, (518) 591-4664 for the Albany office, (914) 304-4353 for the White Plains office, or (914) 304-4353 for the Hudson Valley office. 

Sun Nov 24 2024, 12:00am