Various factors go into an employer’s decision about whether to hire a new employee. Chief among them is the employee’s qualification for the position. Close behind that are the responsibilities the employer has for making the hire—from gathering W-4 information to determining whether the employee must be paid overtime. The situation is further complicated by the lasting impact of COVID-19, which introduced widespread remote work. As a result, employers are now obligated to adhere to regulations not only in their own state, but also in the states where their remote employees are located.
While some business and tax registration hurdles can be cumbersome, they are largely similar across states. Where many of the most important differences crop up is in leave policy maintenance, required trainings, and other state-mandated fringe benefits.
Using those three metrics, we created a list of the top three most burdensome states for hiring new employees: gold, silver, and bronze.
California leave policies
Not surprisingly, California takes the gold in our list of toughest states to hire new employees. California has 15 statewide leave policies and another one specific to San Francisco (Paid Parental Leave). Some of these policies apply to all employers while others only apply when the employer has a certain employee headcount. Further, that headcount can vary from five employees to 50. Finally, California has two unique leave policies employers need to provide. The first is Alcohol and Drug Rehabilitation Leave, and the other is Adult Illiteracy Leave.
Alcohol and Drug Rehabilitation Leave is required for employers with at least 25 employees and must be provided to employees who voluntarily enter a rehabilitation program as long as it doesn’t cause undue hardship for the employer. The law is not clear whether the employee threshold applies only to California employees or total employees.
Employers with a workforce of 25 or more employees must provide Adult Illiteracy Leave when an employee seeks the employer’s support in enrolling for an adult literacy program. This provision applies as long as granting the leave does not create an unreasonable burden for the employer. Again, it’s unclear to what employees that threshold applies.
California required training
California requires employers to provide specific training to their employees. Sexual harassment training must be provided to both supervisory and non-supervisory personnel. Every two years, non-supervisory employees need to have at least one hour of training, and supervisors must receive at least two.
Further, California requires hotel and motel employers to provide human trafficking training at least every two years to any employee who is likely to interact with human trafficking victims. That training needs to cover the five topics described in California Government Code § 12950.3(c), which covers everything from what human trafficking is to what employees need to do if they see it.
California fringe benefits
Most states leave the decision to provide a retirement plan to employees up to the employer. California is one of the few states that requires employers to provide some form of retirement plan to their employees, be that a private plan like a 401(k), or the state-run CalSavers program. Regardless of the plan choice, employers are required to provide official notice through CalSavers that they offer a qualified retirement plan.
As with retirement plans, there are only a handful of states that require employers to provide disability insurance and California is one of them. California provides employers to register either with the state-run program or request to opt out of the state plan and provide coverage through a voluntary plan approved by the California Employment Development Department. Approved plans must all provide at least the same benefits level as the state plan.
#2 New York
New York leave policies
Following close behind California, and coming in with the silver, is New York. In addition to requiring employers to have specific employment and health policies, like a whistleblower policy or a plan under the HERO act, New York has robust requirements for employers to maintain leave policies for their employees. Those requirements are made murkier due to the additional complexity arising from many individual counties and cities having their own, more stringent requirements. For instance, Westchester County requires a separate Domestic Violence Leave Policy and Sick Leave Policy. Not only are employers required to comply with leave allowances, they also are responsible for actively notifying each employee in writing about those policies.
New York required training
Like California, New York also requires employers to provide both sexual harassment and human trafficking training. As with leave policies, the training requirements in New York are made more complicated by the differences in state and city requirements. New York employers are generally required to provide sexual harassment training, but New York City employers with 15 or more employees have the additional obligation to provide specific, annual, interactive sexual harassment training.
Recently, New York passed legislation requiring all employers operating a “lodging facility” to provide human trafficking recognition training to all employees who might interact with guests. The new law went into effect July 30, 2023, and employers are now expected to be training all new hires in human trafficking recognition. Employers have until November 20, 2023 to train all existing employees.
New York fringe benefits
Once again hot on California’s heels, New York requires employers to both establish a retirement plan and provide short-term disability insurance to their employees. New York employers with at least ten NY employees and that have been in business for at least two years must provide a retirement plan, which can either be a private option like a 401(k) or through the state’s New York State Secure Choice Savings Program. The program is still being implemented, but is expected to be up by August 9, 2023. Once again complicating matters is New York City, which lowers the threshold of New York employees from ten to five for employers that must provide a retirement plan.
Finally, New York employers are required to provide disability benefits for an injury or illness sustained off the job equal to 50% of employees’ weekly wages for up to 26 weeks of disability leave. Employers can get disability insurance either through an approved private insurance carrier, through self insurance, or through a state-funded program.
Illinois leave policies
Rounding out the podium is Illinois with the bronze. While Illinois doesn’t have unique leave requirements, it does have 13 of them, some of which are quite rare among the states. Only 10 states require employers to provide School Visitation Leave, 14 require Civil Air Patrol Leave, and 15 require Blood Donor Leave. Illinois requires all three. Like New York, there are some complications added to the mix by counties and cities. Both Cook County and Chicago require their own Paid Sick Leave Policy.
Illinois required training
As with NY and CA, Illinois requires sexual harassment and human trafficking training. Illinois takes the sexual harassment training requirement further than either of the other states though, by requiring that if an employer has even one employee in Illinois, all employees must receive sexual harassment training. Further, all bar and restaurant employers are required to provide supplemental training aimed at sexual harassment prevention at least yearly.
Chicago makes the training requirement greatly more burdensome. If an employee even works partially in Chicago, that employee must receive at least one hour of sexual harassment training annually. Additionally, those employees’ supervisors are required to receive two hours of annual training, even if the supervisor never works in Chicago and even if the employee only works remotely from the City.
For human trafficking training, all lodging establishments, restaurants, and truck stop employers are required to provide human trafficking training at least once every two years to all employees.
Illinois fringe benefits
Regarding fringe benefits, Illinois only requires that employers provide a retirement plan. Employers that have been in business for at least two years and have five or more employees in the state must have a private retirement plan like a 401(k) or use the state-run Illinois Secure Choice plan. Employers with 16-24 employees in the state were required to register by November 1, 2022, with Illinois Secure Choice either to sign up for the program or to inform the state that they were exempt based on their participation in a private program. By November 1, 2023, employers with 5-15 employees are required to do the same.
SixFifty can help
SixFifty’s 50-State Hiring Kit helps organizations comply with the patchwork of state laws when deciding whether to hire an employee in a new state. If you decide to make the hire, our Hiring Docs can easily and effectively generate the customized legal documents written by top legal experts and required by varying employment laws around the country. As new laws pass, we update our tools to include them so your documents are always up to date.
If you’d like to make informed decisions around hiring in new states and ensure compliance in a rapidly changing landscape, schedule a demo with SixFifty today.