Employee Handbooks: 4 Strategies for Multistate Employers

The rise of remote and hybrid work models has transformed today’s modern workplace and presents significant challenges for multistate employers, particularly when it comes to compliance and managing employee handbooks.

Staying up to date with constantly changing labor laws is a daunting task as federal, state and local laws vary significantly. Brightmine’s Employee Handbooks 2024: Survey Report found that more than two-thirds (67%) of organizations find it somewhat or very difficult to remain compliant with state laws, and 57% say the same about local laws.

Navigating the challenges of multistate compliance and keeping policies aligned with evolving regulations is no easy feat. However, maintaining compliant employee handbooks is essential to mitigate legal risks and ensure consistency across operations.

Here are common pitfalls to avoid and key strategies to help you tackle multistate compliance with confidence.

The Challenge of Compliance for Multistate Employers

Navigating a patchwork of employment laws has made managing employee handbooks an overwhelming and complex challenge for multistate employers – regardless of whether these employees are remote, hybrid or on-site.

This is largely due to the regulatory landscape constantly shifting, with new rules and amendments affecting policies at the federal, state and local levels.

HR leaders are tasked with keeping handbook policies current and ensuring they meet the unique requirements of each jurisdiction where they have physical operations and where employees work.

By the end of 2024, more than 350 regulatory changes will have taken effect across various jurisdictions, with over 40 specifically impacting employee handbooks. Failing to update a handbook in response to these changes could lead to serious compliance issues.

In fact, Brightmine’s survey shows 71% of companies surveyed find it at least somewhat difficult to keep handbooks in compliance with federal law; more than half also struggle to stay in compliance with state or local laws. This highlights the degree to which the maintenance of employee handbooks poses a challenge for employers.

The consequences of non-compliance are far-reaching and can be costly. For example, in the case of EEOC v. Frontier Airlines, the airline failed to offer reasonable accommodations for pregnant or lactating pilots, instead forcing them to take unpaid leave. As a result of the lawsuit, Frontier Airlines agreed to adopt new pregnancy and lactation policies.

In another case, Rengan v. FX Direct Dealer, a court ruled in favor of an employee who was terminated after her FMLA and maternity leave ran out, as the handbook failed to clearly specify that the leaves would run concurrently.

These examples demonstrate the legal, financial and reputational risks companies could potentially face when employee handbooks fall out of compliance. For multistate employers, the stakes are even higher, as they must be diligent in maintaining compliance with a wide array of different regulations.

Pitfalls Employers Should Avoid

Maintaining an employee handbook is a complex process and even small mistakes can have significant consequences. According to Brightmine data, 12% of companies reported that an error in the employee handbook had caused monetary repercussions to the organization, for instance through legal fees, settlements or fines.

There are several common mistakes that multistate employers typically make when managing their handbooks, including:

• Vague or inaccurate information about benefits or insurance
• Miscommunication about compensation practices
• Unclear expense or reimbursement policies
• Policies out of compliance with federal law
• Missing state-specific legal requirements
• Minor syntax or spelling errors

By being aware of these pitfalls, employers can take proactive steps to avoid costly mistakes and ensure their handbooks remain compliant.

Why Employee Handbooks Matter & How Multistate Employers Can Keep Them Up to Date

Employee handbooks serve as essential resources for both employees and managers, helping HR leaders navigate the constantly evolving legal landscape, ensure compliance and mitigate risk.

At most organizations (78%), the responsibility for creating an employee handbook falls on the HR department, according to a Brightmine survey. But with so many responsibilities on their shoulders, it’s often challenging for HR teams to keep up with the frequent legal updates.

Some companies also enlist the help of in-house counsel (7%), consulting firms (4%), outside law firms (2%), or professional employer organizations (1%) to ensure that the handbook is comprehensive and accurate. However, this adds significant additional costs to HR departments that are already being tasked to make efficiencies and cost savings.

To structure an effective multistate employee handbook, employers should consider the following strategies:

1. Identify Handbook Structure: While there are multiple ways in which to structure an employee handbook, one common approach is to create a national handbook that applies to all employees and separate state supplements that include all state and local policies that differ from the national handbook. The benefit of this approach is that it allows companies to maintain consistency across their workforce while ensuring compliance with state and local laws.
2. Frequent Policy Reviews: Regularly review and update handbook policies to keep pace with changes in the legal landscape. Being proactive can help HR leaders prepare for future regulatory changes and avoid falling out of compliance.
3. Clear Communication: Ensure that updated policies are distributed to employees and that they understand the updates. Clear and timely communication is key to ensuring that employees are aware of their rights and protections, and company expectations.
4. Use of Technology: Leverage software solutions to manage updates and automate compliance tracking. This can streamline the handbook revision process and reduce the need for external legal counsel.

The key to keeping handbooks compliant while allowing HR teams to accomplish their goals is efficiency — and technology is critical. In fact, Brightmine data shows that 42% of organizations already use software to build employee handbooks, and 35% use it to revise them. By automating the identification and updating of content that has fallen out of compliance, employers can not only improve efficiency but also cut costs.

Consistency Is Key

For multistate employers, maintaining compliant employee handbooks is an ongoing challenge, but it is a critical aspect of protecting their organization from legal and reputational risks. HR leaders must remain proactive in updating their handbook policies to reflect the evolving legal landscape while ensuring that the tone and messaging are consistent so that all employees have the same experience.

With the right strategies and tools in place, companies can successfully navigate the complexities of compliance and maintain a well-structured, up-to-date handbook that supports both their workforce and their business.