Employers Navigate Various State, Local Laws to Stay Compliant

Businesses risk employment practices claims if they don’t stay on top of changing state and municipal employment laws, according to Chris Williams, Employment Practices product manager for Travelers.

In an interview with Claims Journal, Williams says firms with multiple locations face different laws on minimum wage, family medical leave and even limits on interview questions that could be deemed discriminatory.

Williams cites examples of the various laws employers face.

In certain counties, employers that have a certain threshold of employees can’t ask job applicants during their initial interview if they have been convicted of a crime.

“The premise behind those statutes is asking for criminal backgrounds is potentially discriminatory to minority workers,” said Williams.

Another example are minimum wage laws. The federal minimum wage is $7.25 per hour. However, California employers with 25 employers or fewer have a $10.00 per hour minimum wage, employers with more than 25 employees are subject to a $10.50 per hour minimum wage.

There is also the federal Family Medical Leave Act. According to Williams, it obligates covered employers to provide eligible employees with up to 12 weeks of unpaid leave.

“That raises the question…who is a covered employer. It’s an employer with 50 or more employees and 20 or more work weeks in the preceding year,” said Williams.

Federal law is pretty straight forward, he said. Employers have a harder time dealing with different state and municipal laws.

“There’s different standards and different thresholds that apply which can make operating as a larger employer across state lines particularly challenging,” said Williams.

He said certain states provide more protections for workers. For example, the state of Massachusetts doesn’t allow employers to ask job applicants for salary history.

“The notion behind that is that if employers rely on salary history, if a woman or a minority worker was paid less historically then a male, that would just perpetuate that discriminatory pay practice,” Williams explained.

Other states are passing laws preventing the passage of local ordinances. Arkansas and Tennessee passed state statutes preventing cities and towns from passing laws protecting LGBT workers.

One reason businesses need to stay on top of changing employment laws is to avoid costly litigation.

“If an employer is sued for a violation of an employment practices liability issue, like discrimination, retaliation or wrongful termination, it’s not uncommon for the legal fees, the defense expenses alone to reach $200,000,” Williams said.

The Employment Practices Liability Jury Awards Trends and Statistics study examined verdicts between 2009-2013. It found that the average verdict for these types of cases was $397,132. That doesn’t include plaintiffs’ fees or defense expenses, Williams added.

Plaintiffs’ fees are typically more than defense expenses, he said.

“It’s not uncommon to get a verdict that’s close to a million dollars,” Williams said.

Besides cost, he added that employment practices litigation is an arduous process.

Williams recommends employers have a monitoring system in place to review changes in local and state laws. In addition, internal policies need to be reviewed as laws change to ensure compliance. Lastly, employers need to focus on risk when expanding into new states and municipalities.