Check employer ‘instructional manuals’ for state law compliance 

Packages with “some assembly required” usually contain instruction manuals with few words and lots of pictures. Employers’ collections of written policies, documents, and notices (collectively, the “employee handbook”) cannot follow a similar path. Pictures are not worth 1,000 words. With most year-end activities concluded, February provides a chance to revisit those documents, especially given legislative and regulatory changes that occurred in 2025. They might pay particular attention toward less considered state mandates that may have outsized impacts on employee experience.

So, get out your red pen and yellow highlighter, or put on your track changes, and consider revisions in these areas:

• Paid leaves. About 20 states have laws mandating Paid Sick and Safe Leave or paid leave for any reason. Even though many employers describe vacation/Paid Time Off programs in their employee handbooks, they may not meet the eligibility accrual, carryover, notice, and other requirements of a particular state law. A side-by-side comparison is essential in the applicable PSSL states. Do not neglect some localities. New York City, Pittsburgh, and Chicago have made changes to their PSSL ordinances in recent years. In addition, more than a dozen states have paid family and medical leave mandates that need attention. If the employer chooses to administer the benefit as an equivalent plan, state approval is required. Again, state-specific notices are commonplace. One size does not fit all. States are regularly tweaking these laws, like adding new qualifying reasons or expanding definitions of covered employer and covered employee. A January New Jersey decision is a foreboding tale to employers. The court found several employer violations of the earned sick leave law and went the extra step for determining damages for similarly situated employees.
• Other leaves. Even in states without a PSSL or paid family medical leave mandate, states may require employers to provide other types of paid or unpaid leaves that encompass reasons beyond what is required in the federal Family and Medical Leave Act. Examples include bereavement, domestic violence, and organ donation.
• Vacation/PTO payout. When an employee terminates employment, the employee handbook should comply with state requirements as to payout of unused, accrued vacation/PTO, including the timing of the reimbursement. A relevant chart is in this GRIST.
• Lactation breaks. The Providing Urgent Maternal Protections for Nursing Mothers Act requires employers to provide workplace accommodations for breastfeeding. Some states have gone beyond the PUMP Act to require the breaks to be compensated for nonexempt employees. For example, starting this year an Illinois law requires paid breaks for nursing mothers.
• Summary plan description. For ERISA-governed health benefits, SPDs are the primary source of truth. Existing regulations have extensive content requirements. All too often, a multistate employer may be caught flat-footed if the SPD does not address specific state nuances for fully insured coverage. A complete and accurate SPD should address state variations. Three examples are worth noting.

First, COBRA applies to most employers (e.g., those with an average workforce of at least 20 full-time employees and full-time equivalents). A fully insured employer below 20 will likely have to comply with state continuation laws. Also, four states –California, Connecticut, New York, and Texas – have post-COBRA continuation requirements.

Second, some states extend fully insured coverage beyond COBRA in circumstances like divorce, death, and the age of the employee’s spouse.

Third, a handful of states require fully insured plans to cover a participant’s children beyond the federal mandate of 26 if certain conditions are met. Florida (age 30) and New Jersey (age 31) are two examples.

Finally, back to PFML, most states require health benefit continuation during paid leave. Review the SPD to ensure that eligibility is consistent with this job protection.

• COVID-19 issues. During this employee handbook redline exercise, it would not be a bad idea to review provisions implemented during the COVID-19 outbreak and its aftermath. Could policies on issues like remote work, dress codes, scheduling, accommodations, and other pre-pandemic norms be improved by taking into account the changed landscape?
• Other mandates. Space does not permit a review of other state and local requirements that might need an employee handbook alteration. Areas include payroll, employment, and other HR-related issues.

A familiar credit card commercial asks the question: What’s in your wallet? Employers should be ready to answer a similar question: What state laws are in your employee handbook?