The Legal Impact of Remote Work on State Labor Laws

You have certainly heard about the massive changes in the world of work, often referred to as the "Great Resignation" or the "Big Exit." This "professional pandemic" affects millions of employees and employers across the country. The demand for labor remains high, yet the supply of skilled workers—especially in the technology sector—is scarce. The increasing competition for candidates with the necessary qualifications for successful business management means that the "Great Resignation" presents HR managers with significant recruitment challenges almost everywhere.

Given this difficult situation, your company cannot afford to waste time with violations of labor laws. Knowledge of and compliance with fair working conditions is therefore essential to keep your company legally on track and to continue providing your employees with a positive working environment.

The debate over President Biden's "Build Back Better" (BBB) bill has reignited interest in the Fair Labor Standards Act (FLSA). The goal of the BBB framework is to "put the United States on track to meet its climate goals, create millions of well-paying jobs, enable more Americans to enter and remain in the workforce, and strengthen our economy from the bottom up and the middle out."  

Time will tell what results the BBB plan will bring. In the meantime, fair labor standards continue to affect many businesses. We have closely examined how the FLSA impacts the workplace and how companies can adapt.

How fair working conditions affect the employee experience

First of all, to clarify: What does “fair labor” mean and why is it so important today? The U.S. Congress passes labor laws to protect the interests and well-being of employers and employees. The federal Fair Labor Standards Act (FLSA) sets out the responsibilities of private and public employers regarding the payment of their employees and ensures the protection of workers' rights so that they are fairly compensated for their work.

However, many states and municipalities have their own labor standards that supplement or expand upon the FLSA. Depending on where your employees live and work, these state labor standards may include higher wage requirements, stricter overtime regulations, and different provisions for child labor protection.

What does this mean for employers? As telecommuting becomes increasingly common, employers and HR managers must adapt their labor law practices to the different state and local laws. Therefore, it is important for employees to be informed about the impact of labor laws in the various federal states.

New penalties that employers should be aware of

The National Labor Relations Act (NLRA), passed by the U.S. Congress in 1935, also influences best practices for fair labor conditions. The aim of the NLRA is to protect the rights of employees and employers, promote collective bargaining, and restrict certain labor practices that can harm the welfare of workers, businesses, and the U.S. economy.

Examples of violations of the NLRA include:

• Threatening employees with the loss of employment or social benefits if they join a union, vote for it, or participate in protected collective actions.
• Threatening to close the plant if employees choose a union.
• Promising employees benefits to discourage them from joining a union.
• Transferring, dismissing, firing, assigning more difficult tasks, or otherwise punishing employees because they have participated in union activities or protected collective actions.

President Biden's "Build Back Better" bill proposes significant new penalties for employers who violate the National Labor Relations Act (NLRA). In addition to the usual penalties, the bill also introduces new civil sanctions in the form of fines. According to the bill, any violation of the Unfair Labor Practice (ULP) law could result in an additional penalty of up to $50,000 per violation.

Furthermore, the bill would introduce personal liability for employees. Since personal liability has not previously been part of the NLRA, this represents an unprecedented step. The bill still has to overcome several hurdles in Congress, but companies should prepare for adjustments if it is passed.

What should employers do?

Regardless of the outcome of the BBB decision, this will be neither the first nor the last change in labor law. So what should employers do now, and what fair labor practices should they implement?

We recommend conducting an FLSA compliance audit. Companies should carry out an internal audit annually to ensure regulatory compliance, especially in light of the increasing number of employees working from home. The audit should include a review of company policies, procedures, and documentation, and ensure that aspects such as payroll, working hours, employee wages, and any exemptions are accurate.

Keep in mind that a comprehensive audit must include guidelines for contractors and external employees, documentation, and, if necessary, exemptions for overtime.

More than just fair employment practices

While fair working conditions ensure equal treatment of employees and protect the company from legal issues, they are not the only aspect that concerns employee development. To retain your employees despite the competitive job market, you need to treat them as your most valuable asset.

The current landscape of high labor demand and widespread remote work makes strict FLSA and NLRA compliance more critical—and complex—than ever, particularly due to the patchwork of state and local labor laws. The proposed intensification of penalties, including personal liability under the "Build Back Better" bill, turns compliance from a procedural necessity into a crucial risk management strategy. For organizations seeking to navigate this complexity while retaining talent, IceHrm offers an indispensable solution. Its features for Payroll, Time and Attendance, and Policy Management are designed to streamline the necessary annual FLSA compliance audits. By ensuring accurate tracking of working hours, wages, and exemptions across diverse remote locations, IceHrm helps companies mitigate legal risk, maintain fair working conditions, and reinforce the positive, trustworthy work environment essential for retaining employees in today's competitive market.