National Employer Gets Tangled up by Differing State Standards
Recent headlines involving Buzzfeed News highlighted the challenges that multi-state employers can have when some of their employees are subject to more employee-friendly state laws than others. When Buzzfeed recently laid off 15% of its workforce, it initially announced that, consistent with applicable local laws, it would only pay out unused but accrued vacation time for those employees located in states that required such payment. When some employees learned that they were not going to receive their earned unused vacation because they worked in a state where the payout was not required, they drafted a letter to Buzzfeed’s CEO and published it on a different website. Buzzfeed quickly did an about-face and promised to compensate all laid off employees for accrued but unused vacation time, regardless of employee location.
The issue faced by Buzzfeed is one that confronts many national employers: should a company aim for consistent policies applicable to all of its workforce, even if it means exceeding state and local requirements with respect to some employees? Or should it apply different standards consistent with site-specific laws, even if it means different benefits for different employees? Going above and beyond local law requirements can sometimes be costly. However, as Buzzfeed learned, employees today are in frequent contact with their colleagues in other states and may question differential treatment.
While most employees understand why their employers might pay higher salaries to employees who work in locations with a high cost of living, tailoring employment policies on a state-by-state basis can sometimes be a harder sell to employees. While an employer may not be legally required to provide a certain benefit to employees in one state, there sometimes is an advantage in doing so. Whether to implement national policies or to stick with locally differentiated policies should be carefully considered.
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This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.