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The COVID-19 pandemic brought tectonic shifts to the way we work. After more than three years of this unplanned workplace experiment, employers have realized both the benefits and challenges of a remote or hybrid workforce. Universities are no exception. In the wake of the pandemic, many higher education institutions found themselves employing out-of-state employees for the first time.
HR professionals in higher education face many challenges when recruiting and hiring top talent from across the country. As universities continue to reach, recruit, and retain employees in a changing labor market, managing the hiring process across multiple states can become a complex and time-consuming task. Instead of simply complying with their home state’s employment laws, universities now have to parse, understand, and comply with employment laws of every state where they have employees. In this article we’ll discuss what higher education employers need to know when hiring employees in new states and how to ensure they stay compliant in every jurisdiction where they have employees.
What State’s Employment Laws Apply?
In this era of remote work and dispersed workforces, one of the questions we see most often from universities is: which state’s employment laws do we have to comply with? If the university is located in Texas with employees in Texas, California, Arkansas, and Oregon, which state’s laws do we need to comply with? Do we have to register to do business in all those states? Which states’ meal and rest break laws do we have to follow?
The answer to those questions can be tricky, and it can vary depending on the specific area of law universities are dealing with and the types of agreements they have with their employees. It can get really complicated if universities have employees who work in multiple states, or who live in a different state from the main campus and split their time between onsite and remote work. So, if a university asks a lawyer, “Which state’s employment laws apply to our university?” it’ll get the technically correct (but unhelpful) answer: “It depends.” The good news is that there’s a general rule of thumb employers can follow to make sure that they’re in compliance with the right laws.
Universities should comply with the law of the states where their employees work. So, in the example we gave above, if the university is in Texas with employees in Texas, California, Arkansas, and Oregon, it should be prepared to comply with the laws of all four of those states, even if it has only one employee in each state. But the state laws only apply to the employees working in those states. For instance, you don’t need to apply California law to your Texas employee.
We often get the follow-up question, “What if we include a governing law provision in our employment contracts that lets us choose which state’s laws will govern the contract? Will that let us cut down on the number of state laws we need to comply with?”
Unfortunately, the short answer is: probably not. If the university includes a governing law provision in an employment contract that specifies a state other than the state where the employee works and a dispute arises, there’s a real risk that a court won’t enforce the governing law provision and will, instead, apply the law of the state where the employee works.
So, while it’s definitely a best practice to include a choice of law provision in employment contracts, the general rule is that employers should write the provision so that the law of the state where the employee works governs the contract. Because courts almost always uphold choice of law provisions that select the state where the employee works, this practice will give the university some valuable certainty about which laws will apply to its employment relationships.
This rule becomes a bit more complicated if an employee works in multiple states. However, the governing law in this situation is likely the state where the employee performs the most substantial part of their services. If the employee splits their time evenly between multiple states, universities should consider complying with the state whose employment law is most strict (meaning the one that gives the most benefit to the employee). That way it will be compliant no matter which state law applies.
Important Steps When Hiring and Maintaining a Remote Workforce
Given that a university needs to comply with the law of the state where the employee works, there are several steps higher education employers hiring out-of-state employees should consider taking:
- Know where the university’s employees are located. Having a strong relocation policy in the employee handbook is more important than ever. Knowing where employees are located is a prerequisite for ensuring legal compliance. There are several options when it comes to relocation policies. At minimum, universities should require employees to provide notice if they are moving to a new state. At the other end of the spectrum, the policy could require prior consent of the university for all relocations. Alternatively, universities could have a pre-approved list of states where employees are permitted to relocate.
- Know what is permissible to ask in the application and interview process. States have been active in regulating the types of inquiries employers can make in the hiring process. State laws differ wildly in regulating questions about salary history, medical history, age, criminal history, and credit history. For example, if a university is located in Indiana, it’s free to ask Indiana job applicants about their salary history. But if the university is interviewing an employee in Illinois who will work remotely from that state, the university could run afoul of Illinois law by asking the applicant the same question.
- Understand payroll processing. The intricacies of payroll processing — recordkeeping, withholding, and taxation — can vary from state to state. Universities need to know what’s required in each place its employees reside.
- Research employer registration requirements. Universities will likely need to register to do business in any state they have an employee. They will also need to research and understand workers’ compensation, unemployment insurance, and other registration requirements.
- Comply with applicable wage and hour laws. State laws regarding wages, working hours, breaks, and many other areas can vary dramatically. For example, some states don’t have any rules for meal breaks, while others’ rules only apply to minors. Universities must know the rules of each state and adjust the policies accordingly.
- Know what policies other states require. For example, if a university is located in Ohio, it may be confident that its employee handbook covers all the policies that Ohio requires. But if it hires a remote employee in Colorado, its current handbook may not meet Colorado’s requirements. Colorado requires several policies that Ohio doesn’t, including paid family leave, paid sick leave, and domestic violence leave.
- Ensure that employment agreements contain required state-specific language. States continue to regulate what employers must include and what may not be included in employment agreement. Take invention assignment agreements as an example. Most universities require faculty to sign invention assignment agreements to ensure that any intellectual property faculty members develop is the property of the university — not the faculty member. Many states have laws that require employers to include specific language in those agreements that specify what inventions an employer — including universities — can’t require employees to assign to the employer. Other employment agreements that may require state-specific language are non-disclosure/confidentiality agreements, arbitration agreements, and non-competition/non-solicitation agreements, among others.
- Understand employee training requirements. Training requirements continue to expand at the state level — especially sexual harassment training. If a university is hiring an employee in a new state, it needs to understand whether the state has any employee training requirements and, if so, what those requirements are.
- Don’t rely on home state exemptions. Public universities may enjoy exemptions from certain employment laws in their home state. Those universities shouldn’t expect the same exemptions to apply when hiring out-of-state employees. Another state will likely treat an out-of-state public university as any other employer when hiring employees in the state.
How Institutions Can Comply
All employers must adhere to various state guidelines on how to recruit and hire. Knowing the rules and regulations in your institution’s home state is one thing, but if your campus is moving further toward remote work and hiring out-of-state employees, it is trickier to keep up with — and ensure you are complying to — guidelines that vary widely by state. What’s more, you must be aware of any laws that change in each state you have employees. SixFifty has solutions, though. Our employment tools can produce state-specific employment offers, agreements, employee handbooks, and more. We want to see all institutions be successful in their hiring, easily manage their remote workforces, and remain in compliance.
