Inside the Exclusive: Sorting Out Multistate Compliance Amid Shifting Federal Priorities

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Dee Anna Hays: Hello, everyone. This is Dee Anna Hays. I am a shareholder in Ogletree’s Tampa office, and I am also a co-chair of Ogletree’s Multistate Advice and Counseling Practice Group. This is a special episode of our Multistate Monday podcast. We are coming to you live from Colorado Springs as part of Ogletree’s in-house Counsel Exclusive. And we actually just finished our multistate session here at the conference, and I’m joined by one of my co-panelists, Sarah Kuehnel. Sarah, you want to say hello and introduce yourself?

Sarah Kuehnel: Yes, thank you for the introduction. As Dee Anna said, my name is Sarah Kuehnel. I am a shareholder in our Tampa office, and I started with our St. Louis office, and we just presented on multistate issues.

Dee Anna Hays: Perfect. And what we focused on in our session today was how to sort out multistate compliance amid shifting federal priorities. So, we all probably know at this point that there has been a significant shift in federal enforcement priorities now that President Trump’s administration is in place. And where the federal government has pulled back in some areas and regulations, we have seen states and localities jump in and issue more specific local laws and regulations when it comes to those issues. One of the questions that we asked the attendees in our session today is, “What keeps you up at night when it comes to these various subtopics with multistate compliance?” And the number one answer was wage and hour issues. So, I thought we would start there. So, Sarah, what are some things that you have seen in the wage and hour space that are becoming legal trends or issues that employers might want to be aware of?

Sarah Kuehnel: There are three areas that come to mind. First, we have minimum wage and overtime requirements. There are more than 30 states that have higher minimum wage rates than federal law. And many of our multistate employers have to manage that across the organization when they’re operating in various states. Another area that is becoming increasingly disparate across the different states are the exempt status salary threshold. And there are currently six states that have higher minimum salary than federal, in the current federal law. And those states are Alaska, Colorado, California, Maine, New York, and Washington. And then the last one are exemption categories and duties. I think for a good part of my career, the standard presumption was that most of the federal law exemptions applied across the states. And that trend is changing. And there are many states that have either different exemptions in federal law or the tests are slightly different, or they don’t recognize the exemption. For example, some states just don’t recognize the highly compensated exemption. So, employers need to be increasingly aware of state law variations and exemption categories.

Dee Anna Hays: Great points. And some of the questions that we got from the attendees in these areas were, okay, what happens if we have an hourly employee, let’s say, that regularly works in three different states that have three different minimum wage requirements? What should we do there, Sarah?

Sarah Kuehnel: Well, the typical advice that I would give in that situation is it’s probably the best practice to go with the state that’s most generous to the employee. So, it’s better to pay the employee a dollar more per hour, even in states that don’t require it, than to defend a very costly FLSA litigation.

Dee Anna Hays: Absolutely. And when it comes to looking at job descriptions, let’s say, I know that is part of many employers’ annual compliance strategy. So, in addition to looking at handbooks and policies, you might have a team in HR or in the legal department that are taking a look at job descriptions, or perhaps those might be reviewed when you’re creating a new position or hiring new employees. So, what are some things that employers might want to be on the lookout for when it comes to reviewing those in light of the state requirements?

Sarah Kuehnel: In terms of wage and hour policies, we certainly want to make sure that they don’t have blanket descriptions that violate any state or federal laws. And I know you do a lot of multistate handbooks, so maybe I’m going to ask you that question. What are your red flags when you’re reviewing policies?

Dee Anna Hays: I would say I have seen in some instances where clients maybe have been using the same checklist for several years or sometimes even longer than that. And so those checklists don’t yet reflect the variances in job duties requirements, let’s say. So, if you know that you are hiring a director-level position in Connecticut, for example, Connecticut has a different set of requirements when it comes to the computer exemption. And there’s a question of whether employers can even take advantage of the computer exemption at all. So, hopefully, you’re thinking about that as you’re using that checklist and also adding any state or local considerations that might come into play.
So, the other area that our attendees said keeps them up at night would be leave requirements, right? So particularly when it comes to state paid sick leave and state mandatory family medical leave programs. Anything you want to highlight there, Sarah?

Sarah Kuehnel: Yes. The state sick leave patchwork continues to evolve. And by October 1st of 2025, there are 20 states and Washington, D.C., that will have paid sick law in effect. And there have been even recent additions as of July 1st and October 1st. And one of the examples that came up during our presentation was actually the recent issue in Missouri where the voters passed a proposition to put sick leave in place. And it went in place for about three months before the governor repealed it. And we have employers that are increasingly asking questions about how to manage this because it’s so disparate. You have states like California that give ample leave and then you have plenty of states that don’t give any. So, we are seeing different trends in handbooks. So, I know, again, since you do so many handbooks, what are you seeing in that area?

Dee Anna Hays: Sure. I think that’s a really good question. And I personally have seen a shift. I think at first, clients were really struggling to decide, “Should we apply the most generous laws across the board for administrative ease, even though we’re giving more than we legally have to in some states? Or should we take the approach where we have a state law addendum that would have different provisions for each of the states that have a paid sick leave requirement?” And those choices still work for some employers. For example, if you’re headquartered in California and you have 100 employees there and maybe two employees in Texas and three employees in Florida, it may make sense just to go ahead and apply that California requirement across the board because there’s only a handful of employees in these other states that have less stringent requirements.
Also, some clients really want to do the minimum to make sure they’re compliant, but they don’t want to do extra. However, I have noticed a growing trend where especially the HR teams are saying, “It’s administratively difficult for us to have 13 different paid sick leave policies. So, we’d like to kind of go middle of the road and have one core policy that is compliant in almost all of the states.” But for the outliers like California and New York, where there really is a larger bucket of time available, they’ll have separate policies for those. But then, instead of having 13 variations, you only have a few.

Sarah Kuehnel: And how, if at all, does the new patchwork of mandatory leave laws come into play with that?

Dee Anna Hays: So, great question. And I think it can come into play. These mandatory family medical leave programs are a little different than paid sick leave. So, usually, with paid sick leave, there is a specific accrual requirement, such as one hour of paid sick leave for every 30 or 40 hours worked. There are also specific parameters on whether employees are entitled to carry over that time if they don’t use it. Most states, I think all states, allow an accrual cap on usage, but those are things that can cause issues making sure that policies are consistent.
With paid family medical leave, if you’re in the 10 mandatory states that require participation, you basically pay into that system that’s run by the state. So, it’s almost similar to unemployment compensation insurance. So, employers aren’t paying out employees directly, but they have to make sure that they’re paying into the system when required and that employees are allowed to take leave when it’s eligible under those programs. And there are four states that are going live starting in 2026. So just to keep that on your radar, Delaware, Minnesota, Maine, and Maryland are going to have programs in the near future, so you may want to keep an eye on those if you have employees working in those jurisdictions.

Sarah Kuehnel: And another area that came up today on our presentation where multistate issues seem to be overshadowing federal issues are non-compete agreements and the patchwork of states there. So, what are the trends that you’re noticing there?

Dee Anna Hays: So, that’s a really interesting area. And I think there are several specific issues that come into play with non-compete agreements. So, starting with the beginning, in certain states, you have to present those to employees before they’re hired or within a certain amount of time, like seven days after hire, in order for them to be enforceable. In some states, employment is enough consideration, sometimes paired with access to confidential information. In other states, you actually have to give employees something of monetary value to make those agreements binding.
Another issue that we often see are some states and localities require a minimum salary for employees to be held to non-compete requirements. So there really are a whole lot of issues that you need to consider. And I think, Sarah, employers can even be subject to penalties, right, in some states if they get it wrong?

Sarah Kuehnel: That is correct. So, in Colorado, for example, if an employer doesn’t comply with the law, there are civil penalties that can be several thousand dollars. And this is an area that, increasingly, one-size-fits-all does not work because then you have other states like Colorado that ban all post-employment restrictive covenant agreements. And you have other states that are on the other end of the spectrum, like Florida, where we practice on a regular basis. And one of the points that you mentioned that I think is worth emphasizing about high earners are the only people that are allowed to sign non-competes. The states that pass those types of restrictions often have different formulas to reach those numbers. So, not only are the numbers different by different states, but the way they update them are different. So, each year, employers need to look at their agreements to make sure they’re not running afoul of the high-earner status to make sure that they can still enforce those agreements.

Dee Anna Hays: And in addition to talking about some of these multistate issues that employers might want to keep on their radar, we also talked about some compliance strategies that some of our attendees and clients are using to make sure that they’re keeping up with all of these changes. And we talked a little bit about how AI might help with that. Sarah, you want to share some examples?

Sarah Kuehnel: Yes, absolutely. While those can be effective strategies, we talked about being mindful of the potential downside and we are recommending more and more employers have some form of AI policy, whether it’s one sentence, “Do not use it,” or it’s more expansive of explaining when employees should use it and how they should use it. It’s certainly important to be mindful of employees putting confidential information on an AI platform that’s open source. And one of the things that we are doing at Ogletree is we are using AI and automation to help clients automate key agreements that their HR teams could use over and over again, or their legal teams. For example, separation agreements, restrictive covenant agreements, even employment agreements. And I think that as employers start to use AI, it will help their legal team have more time.

Dee Anna Hays: That sounds amazing. Can you just give a brief overview of how I might take my separation agreement and use automation so that my internal HR team can create their own document from there?

Sarah Kuehnel: Yes. So, it can be either a one- or two-part process depending on if there is a compliant template for all jurisdictions. So, let’s just say an employer has 50 state operations and they want to have one template that everyone uses. The first step would be making sure that the agreement is in fact compliant with all 50 states or all of the locations where the client operates. And then, once we have a compliant template, we can customize it to the client’s needs. And we basically build in coding and questions and templates that say, where is this employee located? If it’s a separation agreement, what kind of separation are we paying them? Will it be a lump sum? Will it be paid over periodic installments? Is the employee over 40? And then, based on the answers to those questions, it pops out a compliant agreement.
And what the feedback we’re hearing from our clients is that this is a huge time saver, but in addition, it ensures compliance and consistency across the organization. Because what came up today multiple times during your presentation is, when you have HR team leaders that are using either different agreements or an agreement gets modified and then that modification becomes the standard, using a document automation platform really makes sure that it’s consistent and prevents that from happening.

Dee Anna Hays: That’s really a great tool. I know a lot of our attendees were excited to hear about that as an option. And we heard that internally, some of them with more sophisticated IT departments might be able to develop something similar from an internal software perspective as well.

Sarah Kuehnel: I think one of the other things they were excited to hear about today was the handbook options in terms of how we can update and streamline those either on their own or in collaboration. Why don’t you tell our listeners about that?

Dee Anna Hays: Sure, absolutely. So, one thing that was shared was the concept of using a sheet to track policy changes. And you may even have the ability to share that with your outside legal counsel so that both the internal team and the outside counsel can see the changes being made in real time. And it would be tracked who made the changes and when. So, if there’s ever a question about when the policy was updated, you could easily go back to the smart sheet and have that as a resource. So, that was a really popular idea.
We also talked a little bit about Ogletree’s client portal. So, if you’re listening and you’re an Ogletree client, that is complimentary at the basic level. And there’s a ton of information on there that can be useful, such as law summaries, you can see maps. And what I think is, honestly, one of the most beneficial tools is that we have a monthly summary that comes out of changes that were made due to updates in the law. And it can be really helpful just to skim that list to see if there’s any change that you might want to have on your radar in a state where you have employees. And then, of course, at a subscription level, we also have a way to generate a compliant handbook using a tool called the Handbook Builder, where kind of like the agreement automation that you were talking about, Sarah, the user could input information about the business, and then the system would generate a compliant handbook addendum in any state where you had employees.

Sarah Kuehnel: I am very excited that technology is developing at such a rapid pace to give our clients access to streamline policies and procedures and document automation. And I hope that it will continue to grow.

Dee Anna Hays: Absolutely. And I think another strategy that we heard clients and attendees share today would just be making sure that you have clear designation of who’s going to own what in the organization. So, how are your HR teams organized? Is it geographically so that only one person needs to be concerned about updates to California law per se or Florida law? Or did the business decide, “No, we’re going to do this across business lines because we think that makes more sense operationally,” in which case you may have a larger team that needs to receive those updates when there are changes in the law? So, just being mindful of that and making sure that you’re including those folks when you’re having strategy meetings or huddles so that everyone stays on the same page when it comes to the updates.

Sarah Kuehnel: And with that, making sure that they have access to the appropriate technology and resources that they need to do their jobs, and only that. Because one of the other themes that came up today is making sure the legal documents are walled off and not accessible to everyone. But then you want the people who need access to have appropriate access, and technology’s advancements are really making that possible.

Dee Anna Hays: Well, Sarah, thank you so much for joining me today, and thank you to everyone who’s listening. We appreciate you spending some time with us, and we hope that you will check out our other episodes of the Multistate Monday podcast.

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