Staffing shortages and the constantly evolving landscape of employment laws are current complicating factors with respect to employee retention. Many employers have become increasingly creative in their efforts toward employee retention. Below are some ideas to keep in mind when facing shortages or retention issues.
- Benefits such as mental health days, unlimited PTO, and
four-day workweeks are becoming more common. Employers are also
using monetary incentives – such as rolling retention bonuses
(i.e., retention payment every quarter or every month), instant
reward apps and on-demand wage payments – to increase
retention. However, employers should seek counsel before rolling
out these types of benefits and incentives, as they may implicate
state or federal laws related to wages, hours, paid time off,
- Many employers turn to the engagement of independent
contractors when struggling to fill positions, but doing so can be
risky. Some states – such as California, Illinois and
Massachusetts – have stringent requirements to properly
classify a worker as an independent contractor. Also, the U.S.
Department of Labor (DOL) has issued a proposed rule to rescind the
DOL's current independent contractor rule adopted under the
Trump administration. The proposed rule would restore the DOL's
prior multi-factor test, a more stringent rule when analyzing the
classification of independent contractors. Legal review of any
proposed engagement of an independent contractor may be helpful in
avoiding potential liability, especially a wage and hour collective
- Employers are using contractual obligations to combat turnover.
One example is entering into an employment agreement with an
employee that includes a liquidated damages provision in the event
the employee fails to provide a certain notice period (i.e., 30
days, 60 days, etc.) upon resignation. Such provision provides the
employer with an adequate transition period upon a resignation to
recruit a replacement and engage in an orderly transition of
duties. Another example is adding a liquidated damages provision to
an employee non-solicitation provision in an employment agreement
or restrictive covenant agreement. The goal is to prevent employee
raiding by employees who leave the employer and go to work
elsewhere. However, the use of these types of contractual
provisions must be reviewed by legal counsel to ensure compliance
with any applicable laws governing liquidated damages and
restrictive covenants, which vary widely on a state-by-state
- As more states follow the trend of passing stringent non-compete laws (and as the Federal Trade Commission continues to consider the passage of its proposed ban on employment-related noncompete agreements), some employers are foregoing non-compete provisions for non-executive employees and are, instead, focusing on non-solicitation and non-interference provisions. The goal is to reduce situations in which the non-compete hinders recruitment, especially in those states in which enforcement of a non-compete would be an uphill battle and not likely worth the employer's time and resources.
There is no question that employers today must be creative and flexible in order to recruit and maintain a stable workforce, but employers should take care to do so in a manner that does not run afoul of local, state and federal employment laws.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.