Trending: The Rise of the City State

October 31, 2016 Doug Devlin

United States labor law was created to balance the relationship between employees and employers. General laws protect employees and set basic standards of fair labor. Minimum wage, the 40-hour work week, Family and Medical Leave, occupational safety, and many more labor laws have been set, and enforced, at a federal level.

Individual states create more specific labor laws to address their own unique demographics, industries, and work requirements. California has their own unique farm labor laws, for example, and Alaska has labor laws specific to their commercial fishing industry.

Now however, we’re seeing a new trend: city councils around the U.S. are beginning to create their own labor laws and requiring employers adhere to the type of standards which have historically been imposed by federal or state agencies. Cities are increasing their role in establishing employment regulations.

This is a fundamental shift in the U.S. and will affect business owners, even those not headquartered in one of the cities passing its own laws. In some cases, you only have to have employees in that city to be required to comply. Where you once had to worry about being in compliance with federal and state labor laws—a big enough job with 50 different unique sets of laws—now you need to be aware of, and try to comply with, hundreds or even thousands of unique and specific laws based on municipality locations.

Coming to a City Near You

According to the UC Berkeley Labor Law Center, prior to 2012, only five cities had living wage ordinances. Now 42 cities or counties have living wage ordinances and that number is expected to go up. Living wage ordinances, sick leave ordinances and other job or employer ordinances are meant to protect a lower wage workforce in high-cost areas of the country—at its core, a good thing.

In 2014, San Francisco passed the fair chance ordinance prohibiting employers from asking certain questions about an applicant’s criminal history on a written application. While this allows candidates who would have been disqualified at the application stage to get a face-to-face interview and explain their history in person, it also puts a huge and complicated burden of documenting compliance on the employer. Nationwide, over 150 cities and counties have adopted what is widely known as “ban the box” so that employers consider a job candidate’s qualifications first, without the stigma of a criminal record.

In May 2016, New York City announced new guidelines employers must take to accommodate pregnant employees, strengthening protections under the New York City Human Rights Law. These guidelines go beyond many U.S. municipalities in protecting the rights of pregnant individuals in the workplace, including state and federal law. 

The Work and Family Legal Center reports that five states, 29 cities and two counties in the United States have or will soon have sick leave ordinances. San Francisco is becoming the first US city to mandate employer paid parental leave beginning in 2017. 

Implications For Employers

While these new laws do much to protect employees and level the playing field so everyone who wants to work has a fair chance at a good paying job, there is a burden of reporting and compliance that falls to the employer.

To comply with San Francisco’s Fair Chance ordinance, employers have unique, and complex record keeping requirements for all applicants, must display Fair Chance Ordinance posters in work places, and provide yearly compliance reports.  

Whether you’re a large or small employer, maintaining employment compliance can be  a Herculean task. For companies with branch offices across the country, the burden of documentation and retention multiplies.

To compound the problem, keeping up with the cascade of new labor laws and ordinances will become a full time job; one that even the most dedicated HR professional will have a hard time keeping up with. It’s one thing to comply with laws from the federal government and as many as 50 different states, but now, there’s potential for hundreds or thousands of ordinances on a city by city basis.

The Future

Cities acting as their own regulatory body is a trend that is not going to reverse. While these laws benefit employees, they create, not just an increased amount of work for HR departments, but the amount of work and attention to detail that will be nearly impossible to maintain without outside help. Employers will increasingly turn to outsourcing from dedicated experts who only focus on the ever-changing landscape of labor laws in this country, in the various states, and even at the city level.

One thing is certain: the complexity of being an employer continues to dramatically increase.

That’s why I founded Zuman. With over 20 years in the HR outsourcing industry, I’ve seen firsthand the growing complexity small to medium-sized business owners face. Our cloud-based technology combined with our experienced staff sets us apart from every other HR outsourcing company. We help small to medium size businesses navigate the complexities of labor law and remain compliant while they grow their business.

About the Author

Doug Devlin

Doug is the Chief Executive Officer of Zuman. He co-founded Zuman after serving the past 17 years as Chief Financial Officer and Chief Operating Officer at TriNet (NYSE: TNET). Doug graduated from California State University at Chico with a BS in Business Administration, and received his MBA from Golden Gate University.

More Content by Doug Devlin
Previous Video
Transitioning from a PEO - A Case Study Featuring ChargePoint
Transitioning from a PEO - A Case Study Featuring ChargePoint

ChargePoint is the world's largest network of electric vehicle (EV) charging stations in the US, Europe, Au...

Next Article
What Does Outsourcing HR do to Align HR with Business Strategy?
What Does Outsourcing HR do to Align HR with Business Strategy?

With HR outsourcing, companies gain help and guidance, but also must wonder what this new support does for ...