Are States & Municipalities the New Frontier in Employment Law?

By Robert G. Chadwick, Jr., Managing Member, Seltzer Chadwick Soefje & Ladik, PLLC.

For decades, federal employment laws largely defined the obligations of private employers to their employees. Today, the U.S. Department of Labor (“DOL”) administers and enforces more than 180 federal laws. The Equal Employment Opportunity Commission enforces seven federal laws.

Recently, the pace of new federal employment legislation has slowed significantly. It’s been nearly a decade since the enactments of (1) the Genetic Information Non-Discrimination Act of 2008, (2) the Fair Minimum Wage Act of 2007 (which raised the federal minimum wage to $7.25 per hour), (3) the Americans with Disabilities Amendments Act of 2008, and (4) the 2009 amendments to the Family & Medical Leave Act (“FMLA”) regarding military caregiver leave and qualifying exigency leave. Since that time the Affordable Care Act was passed, but legislative efforts to increase the minimum wage, expand employment discrimination laws to new protected classes and enact paid sick leave have failed. The prospect that such legislation will be any more successful with Republicans currently controlling both Congress and the White House is slim.

To be sure, federal labor agencies have promulgated new administrative regulations in the past decade. These regulations, however, have met with mixed results in the courts. Most recently, a federal court blocked DOL regulations which would have significantly increased the salary threshold for overtime pay exemptions under the Fair Labor Standards Act. Legislation is also already before Congress to roll back some of these regulations. Even the implementation of DOL’s “fiduciary rule” has been delayed. Accordingly, contraction, not expansion, of administrative regulations is the prediction for the foreseeable future.

In sharp contrast to the federal government, states and municipalities have successfully expanded, in recent years, the legal rights of employees in the private sector. In many locations, employees now enjoy greater rights under state and municipal laws than they do under federal law.

MINIMUM WAGES: As of January 1, 2017, 29 states have higher minimum wages than $7.25 per hour. In many states, municipalities have ordinances with higher minimum wages than those prescribed by federal or even state law. For instance, Seattle’s minimum wage is currently $15.00 per hour, which is higher than the Washington State prescribed minimum wage of $11.00 per hour.

OVERTIME PAY: Although DOL was unsuccessful in its efforts to raise the salary thresholds for overtime pay exemptions, California and New York have successfully raised such thresholds under their respective state wage laws. California law provides for daily overtime pay for work in excess of 8 hours.

MEAL AND REST PERIODS: 19 states direct employers to provide, under certain circumstances, a minimum meal period. A handful of states require paid rest periods during the work day.

PROTECTED CLASSES: Many states and municipalities have also enacted legislation barring discrimination against protected classes not otherwise expressly protected by federal law, including:

* Sexual orientation
* Gender identity and expression
* Familial or marital status
* Arrest and conviction records
* Credit history
* Off-duty lawful conduct
* AIDS/HIV
* Hepatitis C
* Domestic violence victims
* Height or weight
* Any age
* Political activities or affiliations

HARASSMENT AND DISCRIMINATION POLICIES AND TRAINING: California regulations specify the information which must be included in an employer’s harassment and discrimination policies, the methods by which the policies must be distributed, and the circumstances under which multilingual policies are required. California law also mandates supervisory training for employers with 50 or more employees.

LEAVE FROM WORK: Many states have enacted leave legislation which is more generous or inclusive than the Family & Medical Leave Act. A few states mandate leave for parents to attend school-related events and activities for their children. Some states have paid family leave and/or sick leave requirements.

UNIONIZATION: In 2015, Seattle passed an ordinance which gives Uber and Lyft drivers within the city the right to form a union.

For private employers, keeping up with fast-changing federal employment laws has historically been a challenge in and of itself. The onset of fast-changing state and municipal employment laws which are more restrictive than their federal counterparts, however, presents even greater challenges.

First, state and municipal developments do not necessarily receive the publicity afforded federal developments.  It is thus easier for a change at the state or local level to escape an employer’s notice, especially if the employer is headquartered elsewhere.

Second, the proliferation of employment laws at the state and municipal level presents a unique challenge not presented by federal laws for employers with establishments in multiple states or municipalities.  For such employers, compliance and risk strategies must account for the different legal obligations which may be applicable to each establishment.

So, are states and municipalities the new frontier in employment law? It appears that the answer to this question is yes.  For this reason, it is crucial that compliance and risk strategies, including employee handbooks, be reviewed annually to account for fast-changing state and municipal employment laws.  Otherwise, the price may be liability for fines, damages or worse.