In-house legal teams are facing a complex landscape of labor and employment issues as federal agencies race to finalize rules ahead of the presidential election. States are taking varied approaches with new laws affecting the workplace. Here are some of the intricacies of these challenges and how they are impacting in-house labor strategies.

The Federal-State Division

While Biden administration regulators update nationwide requirements for matters such as overtime and anti-discrimination protections, state and local lawmakers are stitching together a patchwork of mandates for paid leave, pay transparency, and noncompete agreements. This dichotomy between federal rules and state actions is creating a challenging environment for in-house legal teams.

The Challenges of Compliance

The number-one concern for many in-house counsel is the differences and managing those differences between states’ employment laws. The growing number of different laws “just makes it exponentially more challenging every year,” says Marni Helfand, General Counsel and Chief Human Resources Officer at The Planet Group, a recruiting and staffing company.

New regulations go directly to deciding whether a business has an employment relationship with a worker—which triggers job rights and corresponding compliance obligations. On March 11, a new rule was implemented by the U.S. Labor Department. This rule has increased the difficulty for companies to label their workers as independent contractors instead of employees, according to the Fair Labor Standards Act.

The Impact on Various Industries

Employment classification is a crucial issue for the gig economy and more traditional industries such as construction, trucking, hospitality, health care, education, and information technology. Companies that have avoided unionization by keeping labor at arm’s length—particularly franchisers and companies that rely on workers obtained via staffing firms and other business-to-business arrangements—have the most at stake from a lowered bar for joint employment.

Navigating the Complexities

In-house legal teams must navigate these complexities and ensure compliance with rapidly changing requirements. Failing to comply carries a high risk of financial and reputational damage that in-house counsel seek to avoid for their companies.

In-house legal teams are overcoming these obstacles by implementing effective solutions; such as prioritizing risks, delegating responsibilities where possible, leveraging technology and automation to optimize workflows, and providing ongoing training to ensure the team remains up-to-date with the latest legal developments.

The complexities of federal rules and state actions are indeed complicating in-house labor strategies. However, with a proactive approach, effective strategies, and a commitment to staying informed about evolving laws and regulations, in-house legal teams can successfully navigate this challenging landscape.