Employment Law Changes a Necessary Component to Economic Growth

In 2011, the U.S. Chamber of Commerce prepared a report titled “The Impact of State Employment Policies on Job Growth.” The review covered all 50 states and unfortunately, Wisconsin was ranked in the worst tier with 14 other states. Wisconsin joined California, New York, Illinois and Michigan as a state where employment laws are considered a barrier to economic growth.

This will not come as a shock to our members. Most are well aware of the regulatory burden that exists because Wisconsin enacted employment regulations prior, or in addition to, the federal government. This creates the need to comply with two separate regulatory structures, which adds significantly to the cost of doing business and exposes businesses to additional levels of litigation. Because of this, WMC has always made changing Wisconsin employment laws a priority.

The U.S. Chamber report explained if all the states could remove excess regulation in this area of law, the net effect could be as high as 746,000 new jobs and the rate of new business start-ups would increase by over 12 percent. The report goes on to say states like Wisconsin receiving the rating of “poor” have policies that inhibit job creation and have the potential to substantially increase job growth by adopting less burdensome policies.

There are areas we can clearly identify for improvement. The biggest burden for HR departments is navigating the difference between the state and federal family medical leave acts (FMLA).

Wisconsin passed its own FMLA in 1988 prior to President Clinton signing the federal law in 1993. A harmonization of the laws never occurred and businesses have been left to deal with the differences of the two laws. Each law has unique requirements for the number of hours worked needed in the preceding year to qualify, substitution of leave, use of intermittent leave, and definition of calendar year.

The state and federal Worker Adjustment and Retraining Notification (WARN) Acts, the directive for employers to provide advance notice of plant closings or mass layoffs, are also not the same. Each law contains different triggers necessitating who needs to be notified and how to count a covered employee. 

State and federal law also vary in a variety of wage and hour requirements. There are differences in what constitutes a white collar exemption, the definition of work time and obligations for time recordkeeping.

Wisconsin receives a poor grade for its treatment of covenants not to compete, commonly known as non-compete clauses. Employers use these contracts to clarify how a former employee utilizes information that could be used to compete against the employer in the future. Wisconsin judges have few options other than to throw out an entire contract if one provision is deemed excessive.

At WMC’s State of Wisconsin Business event in November, J.P. Donlon, Editor-in-Chief of Chief Executive Magazine, thought simplifying excessive rules and regulations is crucial to Wisconsin becoming the most pro-business state in the nation. Governor Walker and the legislature have signaled they want to build on the successes of last session and continue moving Wisconsin in the right direction. Based on the findings of the U.S. Chamber’s 2011 report, it seems there would be a significant economic benefit by reforming Wisconsin’s state employment laws.

These reforms will be a priority for WMC this legislative session, and it will be important for employers and human resources professionals to join us as we advocate for these changes.

Rebecca Hogan, WMC Director of Health & Human Resources Policy
Follow Rebecca on Twitter @Rebecca_Hogan