Why State Level Laws Challenge Staffing Agencies | DCR Workforce Blog

Why State Level Laws Challenge Staffing Agencies

State LawsTo paraphrase Lewis Carroll, ‘All are equal but some are more equal’! Among other things, this applies to the employment laws promulgated by certain states when compared to the rest.

Unemployment rates, upcoming elections and other considerations impel states to pass more and more laws to control different aspects of employment and worker relations. When determining where to open or close offices, most companies consider each state’s position on employment tax rates, lay-offs, unions, insurance, and other factors affecting permanent workers. Staffing agencies, whose business is based on providing temporary workers to other companies, face additional challenges that require a strong understanding of state-specific regulations.

When staffing companies expand their businesses to new locations, or take on clients with a broad national footprint, the risk could be very high if they assume that the same processes and business policies can be enacted at all locations.

Let us look at some aspects of workforce sourcing and management which are impacted by laws which are specific to only a few states (in an indicative, though not exhaustive) list:

  • e-Verifying Candidates: Usually, federal contractors depend upon e-Verify to validate a worker’s credentials and eligibility to work in the United States by checking the worker’s information against data from Social Security Administration and Department of Homeland Security. But, many state laws and even local laws could specify the need to e-Verify candidates; which requires them to make sure that they know the local law before deciding to forgo the need it. As we entered 2013, a total of 20 states required the use of E-Verify for at least some public and/or private employers: Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Louisiana, Michigan, Mississippi, Missouri, Nebraska, North Carolina, Oklahoma, Pennsylvania, South Carolina, Tennessee, Utah, Virginia, and West Virginia.  Two states, California and Illinois, currently limit the use of E-Verify.  Other states are exploring alternatives to E-Verify or identifying safe harbor provisions.
  • Criminal Background Checks: It all depends on whether the state (or the location) has ‘banned the box’! When employers are required to ban the box, it means that they are not legally allowed to ask candidates if there is any criminal activity in their backgrounds. More than 9 states (and some 50 localities) ban the box in the United States, till date. However, each state and municipality that has enacted a ‘ban the box’ regulation has specified the regulation’s applicability. In some cases, it applies only to state jobs. In others, it extends to any county or municipality position. Four states have extended the ban to include private employers. Some cities have followed suit. Other variations on this regulation address the size of the workforce, with regulations in some locations restricting ‘ban the box’ to companies with 10 or more employees.
  • Drug Screenings: Drug screenings are also controlled by local laws, which set restrictions on conducting tests, unless the employer can prove that the impaired faculties of the worker endanger the safety of the worker, other workers or the public. Regulations determining drug screenings have just gotten more complicated as states pass medical and recreational marijuana laws, and attempt to determine how to apply these new statutes to the workplace.
  • Paid Sick Leave: Some states like Washington, New Jersey and New York have mandated paid sick leave, while more states are planning to join the list. The rules governing the accrual of paid sick leave are complex, and the eligibility criteria are even more so. Tracking the laws, and the leave to properly administer the program is a challenge most employers are still grappling with. While benefits such as paid holidays, vacation or sick days are not normally offered to contract workers, staffing agencies must carefully examine the applicability of these regulations to their temporary employees when placed on assignment with clients.
  • Not Hiring Unemployed Applicants: It is necessary for recruiters to make sure that the candidate they refused to select will not come back and sue them for discrimination against their unemployed status, at the time of applying for the job. New Jersey and New York prohibit this while more states could join the list.
  • Minimum Wages: All states have different minimum wage limits. With the recent increase in the federal minimum wage, there is tremendous volatility in the administration of the limits. Many states plan to adopt a graded approach to increase the wages over a period of 2 to 3 years; making it even harder to stay in compliance.
  • Overtime: Employees need to be paid overtime if they work for more than 40 hours in a week or six days in a workweek; unless their job description and duties exempt them from overtime. The complex laws governing the payment of overtime, double-time and payments to non-exempt workers at federal as well as state levels encourage the matter to become one of the most litigated topics in worker relations.
  • Written Intimation: States like New York and Massachusetts mandate that information about job duties, wages, overtime, payday and other issues must be formally included in job offers and explained to a potential new worker before a position is accepted. Staffing agencies must ensure that the job duties and work environment is clearly understood and agreed upon with its client before extending an offer to a contingent worker.

There is little doubt that such unique rules render managing a staffing agency, with the business spread across different locations, tantamount to navigating a minefield – with similar attendant risks.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.