Three Critical Considerations When Changing or Expanding Business Locations
Expansion of your business or your team is an exciting time for a business. There are clients to serve and new energy infused into the team and nothing but opportunities in sight. Few small to medium sized businesses owners (and a few corporations) truly understand the worker compliance implications of hiring in new or multiple locations.
To better illustrate, allow me to reunite us with Brandon Business-Owner. He thought he had this employee compliance thing all figured out.
Offering competitive salaries was his forte and he prided himself on it. But when he expanded his business to a new city, he was caught off guard. Despite being in the same state and just a couple of hours away, the new location had entirely different wage standards and overtime regulations.
Don’t let Brandon’s story mirror your own cautionary tale. If you’re planning to open a new business location or move an existing one, here are four compliance factors you need to consider.
1. Minimum Wage Laws Vary by Location
At first glance, minimum wage seems straightforward. However, it’s essential to understand that different states and even localities (such as counties, cities, and townships) can have their own minimum wage laws. Always pay your employees the highest applicable rate as oftentimes the federal wage is substantially less than a state or city minimum wage..
In recent years, the trend of cities setting their own minimum wages has accelerated. For instance, in 2010, only three cities had their own minimum wages exceeding state or federal standards. By 2020, that number had jumped to 42.
Pro Tip: Stay updated on federal, state, and local minimum wage laws to ensure your business remains compliant and competitive. Check out our Minimum Wage Cheat Sheet for more information. We update them twice a year as this information changes.
Overtime eligibility can vary based on local regulations and changes. For example, in August 2023, the U.S. Department of Labor announced a proposal for an extension of overtime protections to 3.6 million salaried workers, guaranteeing overtime pay for those earning less than $55,000 per year.
Failing to pay eligible employees overtime is a wage violation that can land you in hot water. Some states even have stricter laws, offering overtime pay for working beyond a certain number of hours in a day or for working a number consecutive days.
Four states—Colorado, Nevada, California, and Alaska—track overtime based on hours worked in a day. California’s overtime law is especially intricate, requiring employers to provide overtime for any time worked beyond 40 hours in a workweek, eight hours in a workday, or six days in a workweek. California also requires double-time pay for hours worked over 12 in one day.
Pro Tip: If you have remote employees, be aware that they are generally subject to the laws of the city and state where they are physically located.
As an additional consideration, it’s important to understand that the wage compliance is not based on your physical location but rather the location of the employee that you are engaging. With the growth of the remote and flexible workforce it’s vital to recognize that employee compliance is about the employee and not the business.
Remember that compensation isn’t just about equity or competitive talent retention; it’s about legal compliance. Ensuring that every employee is compensated correctly while complying with local regulations is both a moral and legal obligation for businesses. So, before you make your next move or remote hire, make sure you’re prepared to be fully compliant. Your future self will thank you.
Contact us to guide you through the maze of regulations, so you can concentrate on growing your expansion with confidence.
ClearPath is a leading Human Resources Outsourcing company focusing on assisting employers to leverage the independent contractor labor market. We’re committed to helping business owners stay compliant and minimize the risks associated with their contingent labor requirements.
No Legal Advice Intended. This article includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal issues.