Donald Trump promised to take a hacksaw to the forest of federal regulations through which companies stumble. But while his administration fells some trees--last week, for example, it canceled a rule requiring employers to collect data on employees by race, gender, and ethnicity--the underbrush of state and local laws is thickening at an unprecedented rate.

"We have never seen as many [new rules] or as much rate of change as we've seen in the last three to five years," says Ashley Kaplan, senior employment law attorney at ComplyRight, a company that helps businesses manage regulatory compliance. "It's exploding."

Kaplan attributes the dramatic increase to inaction by the federal government on issues like paid sick leave and the minimum wage. "Under the Obama administration the government was not getting new laws passed," she says. "With the Trump administration there is a deliberate effort to deregulate."

States, cities, and counties are stepping up to fill those gaps. From the beginning of 2016 through June 2017, there were 89 changes to state laws and 87 changes to city and county laws, according to ComplyRight's research. Changes to federal laws: four.

Pay laws (though not always pay) on the rise

The most common changes tracked by ComplyRight affected the minimum wage. The federal minimum was set at $7.25 in 2009 and hasn't budged since. By contrast, the number of U.S. cities and states with their own minimum wage laws rose to 71 as of June 30 of this year from 15 at the end of 2015, with more on the horizon. Some changes are tied to the Consumer Price Index. Others will increase gradually over time at different rates. Surprisingly, not all wage changes point up. Last week the governor of Missouri signed a bill knocking St. Louis's minimum wage back to $7.70 from $10.

Paid sick leave, a hot subject during the presidential campaign that has since cooled, is also being tackled downstream. Leave laws have been enacted by 45 states and localities, including Connecticut, Massachusetts, Arizona, and Oregon. Several additional states are considering laws that would allow employees to accrue paid sick leave or manage it through insurance-type or other programs.

The patchwork effect of localized wage and leave policies complicates expansion. Companies with operations in more than one city or state are forced to make a choice, says Kaplan. "Do you just go ahead and put in place one uniform policy for simplicity? If you do that, legally you have got to go with the law that is most generous to employees. That can really add up."

Equal pay laws also have significant local momentum, according to Paychex, which manages payroll, HR, and other services for small and midsize businesses. States including Maryland, California, Oregon, Massachusetts, and New York are raising employer obligations and penalties for violating the pay-equity laws that now exist in almost every state. Other states are considering bills to double down on the right of employees to share salary information, which is already part of the National Labor Relations Act.

Frank Fiorille, vice president of risk, compliance, and data analytics at Paychex, predicts that rules supporting pay equity will remain popular at the state and local level for some time. He hopes those rules will be less burdensome than the federal data-collection rule revoked this week. Halting that one "made a lot of sense," he says. "It was a big nuisance for [companies] to deal with, and the value-add was pretty limited."

New types of laws

Local regulations are not only growing more plentiful but also more varied. In the past year or so, several new categories have emerged. This year, for example, Massachusetts, Oregon, Delaware, and several cities prohibited employers from asking job candidates about their salary histories until a certain stage of the recruiting process. Similar laws are pending in other states. Those restrictions serve the same equity-in-hiring goals as laws banning questions about past criminal convictions, now on the books in 28 states and 150 cities and counties.

Another new type of law requires companies to demonstrate that they offered additional hours to existing part-time employees before hiring new workers. San Francisco passed a version targeting a few industries in 2015. This year, San Jose adopted a broader one. "That was a real tough one for employers because you have to keep track of who qualifies," says Kaplan. "Have they met the requisite hours? Do they even qualify for these other jobs?"

And last month the governor of Oregon signed a law requiring retail, restaurant, and hospitality companies with 100-plus employees to provide employees with estimated work schedules and on-call shifts at time of hiring. That law, and others like it being weighed in states like New York and California, is a response to news stories about hourly employees not getting adequate notice about changes--particularly working mothers scrambling to arrange child care, says Mike Zorn, vice president of workplace strategy at WorkJam, an hourly employee management company.

"Having to have a posted stand-by list is going to be hard for a lot of companies," says Zorn. "Particularly small- to medium-size employers that are part of a much larger company, like Domino's."

In some instances the proliferation of state and local rules may create more of a burden for small companies than the reduction of federal ones removes. "It introduces much more complexity and makes for a much more dynamic nature of legislation," says Paychex's Fiorille. "As we see more and more of it coming at us, it's hard for these businesses to keep track."

Published on: Sep 4, 2017