UK employers are accustomed to complying with employment laws which are broadly uniform across the UK. However, in the United States, employers must become familiar with federal employment laws which apply across the US, as well as with laws which apply in each state in which the employer has employees. Over the past decade, legislative changes to US employment laws have been made primarily at the state level, such as the recent trends discussed below, resulting in a patchwork of laws and the likelihood that an employer with remote employees must juggle compliance with multiple states’ often inconsistent laws.

Restrictive Covenants

Certain states have recently enacted laws severely limiting the ability of companies to restrict their employees from competing with their businesses or from soliciting away key employees and customers. For example, Colorado, Illinois and Oregon have all passed laws making it unlawful to enter into non-competes with employees unless those employees are highly compensated (usually earning in excess of $100,000 annually) and unless the employer follows certain prescribed steps. They joined states with preexisting restrictions, such as California which already prohibits all non-competes except under limited circumstance such as related to the sale of a business. Accordingly, employers may not be able to re-use UK-style restrictive covenants and must, instead, become familiar with the law of the states in which their employees are based.

Pay Transparency

Several states have recently enacted laws requiring disclosure of wage ranges on job postings or upon request. These laws are designed to combat wage disparity between genders and races under the rationale that the market suppresses wages, particularly of certain categories of employees, when wages are confidential. But each state’s law works slightly differently, making multi-state compliance difficult. For example, Maryland only requires disclosure of wage range upon an applicant’s request, whereas Colorado requires publication of wage range in the job posting. California only requires disclosure on a job posting after an employer has exceeded a certain workforce size, and other states have yet different requirements. Employers should become familiar with current pay transparency laws in the states in which they operate before commencing new recruitment, as these laws are constantly in flux.

Paid Time Off Expansion

One of the biggest differences between UK and US employment protections is the absence in the US of any obligation at the federal level to provide paid time off to employees. Some states have sought to fill this gap by enacting laws mandating paid time off, typically for sick leave. Most states with these obligations only require up to 40 hours of paid time off each year, which is well below the UK holiday requirement. However, although still rare, some states have provided for wage protection for longer periods of absences, such as for parental leave, often funded via mandatory employee payroll deductions. UK employers may already provide sufficient paid time off to comply with the spirit of many of these laws but should educate themselves on individual state obligations to ensure compliance with the detail, such as implementing any required payroll deductions or allowing for rollover of unused paid time off at the end of each year.

Employing people in multiple US states is increasingly common with the proliferation of remote work and increasingly difficult with the patchwork style of state specific employment laws. MBM will continue to monitor these and other US employment law trends and is ready to assist with any US employment law issues your business may have.

Our team of US-qualified attorneys, including our Senior US Employment Attorney Michelle Bush, regularly advises clients on employment implications of US transactions, US employment law compliance, and managing all stages of the employment relationship, including recruitment and onboarding processes, offer letters and restrictive covenant agreements, and termination decisions and separation agreements.