Multi-State Businesses: Which State’s Wage and Hour Laws Must be Followed?

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Question Request:

Our company headquarters is located in California. However, the company has retail stores in other states. Is the company allow to implement the California meal break law to stores not residing in the state? The stores in others states would be require to fulfill their current state meal break laws and not California ?

Great question. Which state’s wage/hour/meal/rest break laws must be followed by businesses with offices or stores in several states?

The answer to this question is twofold.

 

Federal / FLSA Requirements

As a preliminary matter, every business must comply with federal/FLSA requirements that establish wage and hour minimums, such as minimum wage, overtime, and other matters. FLSA requirements apply to every state, and all employers, anywhere they are located, as long as there located within the United States.

State Law

In addition, your business is required to comply with the state law requirements of every state in which it is doing business. So, to the extent that your business has operations in another state, the employees in that state will be subject to that state’s law.

For example:

If your businesses incorporated and primarily based out of California, but has 3 locations in New York, Texas, and Florida, then:

  • Your California employees would be subject to California wage and hour rules
  • Your Texas employees would be subject to Texas wage and hour rules
  • Your Florida employees are subject to Florida wage and hour rules
  • Your New York employees are subject to New York wage and hour rules

What if Employees Travel Between State Locations?

A common question that arises is how to deal with employees that travel back and forth to multiple locations. Usually, as much travel as there may be, the employee does have a home state, or home domicile, or home residence that is primarily their location. Usually, this is the state whose law applies to that employee.

Using California to set Minimum Requirements

Some employers find that it may be too hard to keep track of what each employee in a multitude of states is entitled to. For some employers, it is easier to simply establish one set of rules, and then apply those to all employees in all states.

If your business does not want to use state specific wage and hour policies, including for meal breaks, rest breaks, and other labor law matters, then what you would do would be to locate the State in which your businesses operations, which is the most liberal and favorable to the employee, and has the most requirements for employers, and then adopt that state’s law and apply it to all the other states in which your business has operations. Although this can simplify things, you may decide that you are losing too much productivity or giving away too many benefits to employees, without actually being required to do so.

Also, to the extent that a state like California is picked, which is constantly undergoing employment law updates and revisions, you may end up spending a lot of time updating and re-updating policies nationwide for all of your store locations, simply because of how often the law changes in states like California.

 

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