with Lia Elliott and Joanna Monroe of Staffing GC.
A new year brings new opportunities for staffing agencies — but it can also bring new rules, increased enforcement, and more ways to get caught off guard. In this episode of Staffing Made Simple, we sit down with legal experts Lia Elliott and Joanna Monroe of Staffing GC to break down the toughest states for staffing agencies, emerging compliance pressure points, and the legal landmines tied to immigration changes, I-9 requirements, and non-competes as 2026 gets underway.
We also take a clear-eyed look at AI — where tools meant to improve hiring speed can quietly introduce bias and legal exposure if they’re not governed properly. If you own, lead, sell for, or recruit in staffing, this episode lays out what’s changed, what’s coming, and where to focus before small issues turn into big risks.
Casey Wagonfield: What if the contract you just signed with that dream client is quietly killing your margin, or the state you’re operating in is a legal minefield you didn’t even know you were walking through, or, here’s another one, what if AI, the tool of ranking your candidates is quietly baking bias into every shortlist, putting your clients and your firm at risk.
On this episode of Staffing Made Simple, we’re digging into the states that are the toughest on staffing firms and potential legal landmines, the latest shifts on immigration and I-9 risk, and how AI and non-competes could quietly trip up your business. If you own, run, sell for, or recruit in a staffing firm, this might be a stop and take notes kind of episode.
Welcome back to Staffing Made Simple, brought to you by SimpleVMS, the most agency-friendly VMS in the universe. If you’re new to this podcast, we cut through the noise and talk about what’s really going on in the staffing and recruiting industry, and we try to leave you with actionable tips and tricks that you can apply to your business.
This is a special episode today, because one of our guests was the first-ever Staffing Made Simple guest almost one year ago when we kicked this show off. So, we’re super excited to have her back on and hear what’s new since then. And of course, I’m Casey Wagonfield, one of your co-hosts, senior Sales Executive at SimpleVMS, 16 years in the staffing industry, below average golfer, and occasional karaoke enthusiast.
And, as always, joining me is my co-host, Rob Geist, the Senior Vice President at Simple, staffing vet, also a below-average golfer. but we have fun doing it. What’s up, Rob?
Rob Geist: Casey, how’s it going? Really appreciate the intro today. We’re going to talk about something a lot of folks try to avoid, but they absolutely can’t – it’s the legal side of running a staffing firm: state landmines, immigration, and non-competes.
We’re joined by Joanna Monroe and Lia Elliott from Staffing GC. They’re outsourced general counsel built specifically for the staffing industry. Joanna has spent more than 25 years in the staffing industry as a senior legal executive and advisor. She’s led compliance and risk at billion-dollar organizations and helped grow large workforce solution businesses. She sat in the C-suite helping companies scale without stepping on those legal landmines we mentioned.
And, as Casey mentioned, Lia was our first ever guest. She spent years as a general counsel for one of the largest light industrial staffing firms in the US, helping steer it towards the billion-dollar mark across hundreds of branches and tens of thousands of contingent workers, all while keeping the organization disciplined and compliant.
They’ve seen all the stuff from inside and out, and now they help staffing firms of all sizes try to avoid all those things. Joanna, Lia, thanks for hanging out with us.
Joanna Monroe: It’s a pleasure to be here.
Lia Elliott: Thanks, guys. Happy to be back.
Casey Wagonfield: Yeah, we’ve come full circle, and obviously, Lia, you are our first episode, but this is also the first episode where we’ve ever had two guests on the episode.
Joanna Monroe: So, double trouble here.
Casey Wagonfield: I know, right? But hey, it’s going to be fun. We always enjoy hanging out with you guys. Now, before we jump into the fun landmines and the legal nightmares, for our listeners who don’t know you yet, can you tell them a little bit about Staffing GC: what it is, who you serve, and how this whole thing got started?
Joanna Monroe: You bet. First of all, it’s great to partner with you guys. We intersect with a lot of your clients. Staffing GC was really built on the principle that we want to help staffing firms achieve their dreams, and we want to help them grow their business, and make legal issues simple.
Lia and I both spent 100+ years inside large companies trying to help with that vision. And we thought, you know, there are many staffing firms out there that could really use that expertise, can use that practical in-house focus. And we’d like to bring that to them.
And so, we launched Staffing GC in 2021, and since then, we’ve served over 350 staffing firms, helping them navigate the multi-state environment, helping protect them through contracting, and really just helping them grow their business. And it’s really a passion of ours. So, we are a legal services firm that exclusively serves the staffing industry.
Casey Wagonfield: And I’ll say personally, I’ve had the pleasure of working with Staffing GC. I came from 16 years in staffing, and I had worked with several lawyers over that time, having managed the contract process, and a lot of the lawyers I had worked with had no staffing experience, didn’t really know the industry, and would rewrite a whole contract when it wasn’t necessary.
So, when I first started working with staffing GC, primarily with Lia, it was a breath of fresh air to have somebody who not only knows the industry, but has lived in the industry, and knows what to look for in contracts, knows how to keep your agency safe. And I can’t express how easy it is to work with them as well.
Rob Geist: Absolutely. And we deal with a ton of staffing firms, and one thing I hear over and over again is, “I have a client that wants us to grow with them, and we have to move into one of these states that are hard to do business in.”
And it feels like every time a staffing firm figures out the rules, the rules change. From your seats, what are the biggest landmines agencies need to know and look for when they’re looking to do business in these states, specifically in the light industrial commercial space?
Lia Elliot: I think that’s something we hear quite frequently as well, Rob is, folks heading into new states. They’ve seen kind of the headlines on the news. Maybe they’ve got a client that once will give them a lot of business, and that’s a great ramp into a new state, but it’s important to go in in a thoughtful fashion.
So, states like Illinois, New Jersey, California, anywhere in the Pacific Northwest, the far northeast, and there’s a smattering in the middle with California, Minnesota – and really, from my perspective, the biggest landmines right now are those that are uninsured and potentially catastrophic. Most staffing firms have liability insurance.
That safety net is an awful lot of the potential liability out there. It’s not that we want our insurance rates to go up because we make a bunch of claims, but we can at least sleep a little bit better at night knowing that that protection is there if something were to happen.
But going into those new states, understanding that items like class action litigation are normally excluded from policies, or understanding the regulatory environment that that state is operating within, is really important. And particularly in today’s environment, with the federal government taking a little bit more of its foot off the gas, we see a lot less regulation and legislation coming at the federal level.
And so, in response to that, you see states starting to take that on themselves. And so, states having various minimum wage rates, for example, or different triggers for whether you can or can’t ask an employee to sign a non-compete, or what sort of notice do you need to provide them? Do you need to pay for sick leave?
It’s those types of things that we just like to get our arms around – the big, high-key risk issues before launching in those states. Just to make sure that staffing firms are set up for success right out of the gate.
Casey Wagonfield: And Lia, how would you coach a multi-state agency on prioritizing that stuff? Because most people listening probably don’t have unlimited legal budgets. Do you say, “Hey, start with your top revenue states,” or do you say, “Start with the states that are most aggressive on enforcement?” Or is there another way to rank where to focus first?
Lia Elliot: I think geographically, something that’s interesting to me is that I don’t always assume that staffing firms know what states they have employees within, particularly with remote workforces. So, one of the first things to just check off the list is to say, “Do we know what states we have folks working in?”
Once we have that information, assuming we know we’re in a state, I do like to look at the higher-risk states first. Now, if you have one or two people, maybe that’s not worth a whole lot of time and effort, but with the things that are repeatable for a staffing firm, those processes that we repeat systemically across the organization, like capturing hours worked, calculating overtime, paying wages, and administering the form I-9, those are the types of things we want to look at before entering into that new state to see do they handle any of these things differently? Do I need to take that background question off? Do I need to do this? Do I need to do that?
But those systemic items are the ones that can potentially create the most risk. Typically, we see that in and around the wage and hour space. And I would preface that with, it can sound overwhelming, but perfection is absolutely not the goal here. We’re really just trying to reduce risk where we can do so and to mitigate as much as reasonably possible.
The elimination of risk is not possible. Business engages in risk every day. We all engage in risk every day. Every time I get in my car, I know that I could get hit by another car, but I make a cost-benefit analysis. And the benefit of not having to hop, skip, and jump my way to the grocery store is worth the risk of getting in the car.
And when I get in that car, I take steps to mitigate risk. I don’t text while I drive. I put on my seatbelt. I have a car with airbags. I sort of follow the speed limit. And it’s the same for business, right? We’re equipping ourselves with seat belts, airbags, speed limit signs, and traffic signals, helping to reduce risk where we can do so.
Rob Geist: Love it. And Joanna, not naming any real names or anything, but can you give us some real world examples where staffing firms got caught by a state specific rule in one of these places and what you wish they had done six months earlier?
Joanna Monroe: You bet. And I think, first, to Lia’s point, risk assessment is critical. Staffing firms are faced with so much regulation, and it’s constantly changing – and that’s really accelerated over the last 10 years: this localization of regulation.
And so, if we tried to comply with every single thing, you’re not going to be able to make it. So, you really do have to prioritize and look at where your highest revenue is, where your people are. And then the most regulated states, which we talked about, it’s the Pacific Northwest, California, Washington, Oregon, New York, New Jersey, Illinois, and now probably Colorado, and maybe Minnesota, I think, are probably the highest risk states.
So, start there. Now we have two states that are particularly tough: Illinois and New Jersey, with statutes in the books that were designed to have you fall into a trap. In those states, we have special laws that are designed to protect temporary workers but are really meant to put staffing firm owners into a trap.
And, unfortunately, I did have a client who fell into a trap there. In Illinois, you are required to pay your temporary employees the same wages and benefits as your client’s employees doing substantially similar work. In Illinois, that’s after 720 hours on assignment.
If you can’t pay the same benefits, you have to calculate the cost of the benefits, add that onto the hourly rate, and then pay that. And I had a client who was very conscientious about compliance. They did all the right things. They went to the client, they said, “Do you have these employees? What are you paying them? Let’s make sure we match them.”
And it was all great until it wasn’t. Because change is the enemy of compliance. Something changes, and you don’t know about it. And what happened is, in that instance, you have to look at the client’s comparator employee in terms of getting that wage rate.
Well, it was the end of the year that the comparator employee, as part of the annual raises at the client site, got a raise that was never communicated to the staffing company. And now they were not paying the same wages, and it was discovered. They had to do a back pay and a back bill. So that was a case where even with the best intentions and doing all the right things, there was a miss.
So, you have to be really diligent and have internal controls in place to check for those sorts of things.
Casey Wagonfield: I would imagine, too, Joanna, that when you look at a high-volume company with low margins, and it’s industrial. When you have to match the same rates and benefits, it probably just kills your margins, especially when you’re matching the benefits of the full-time employer. When you’re already running low margins because it’s a volume business, that’s got to just cripple a company.
Joanna Monroe: Oh, it’s highly problematic, because when you’re comparing against the client’s employee, they’re taking that wage, but then the cost of benefits is coming to them as the form of benefits for the staffing firm, that’s actually the wage.
So, the overtime rate is higher, whereas if they were paying it in benefits, that would be tax deferred. So, it’s really expensive and kind of a depressant, I guess, on the use of staffing in Illinois.
Fortunately, at least in Illinois, you have 720 hours before that comes into play. In New Jersey, that requirement comes into play on day one. So, it’s really made an impact on light industrial. In New Jersey, you’re seeing a lot more direct hire, or you’re seeing clients of staffing firms eliminating comparator positions entirely.
That doesn’t work in Illinois, but it does in New Jersey.
Rob Geist: So, Lia, one thing we’ve talked about offline is that a lot of staffing agencies just take whatever new law or regulation comes at them, and they scramble to react, instead of having a voice in the process. From your perspective, where do staffing firms need to do a better job of advocating for themselves, whether it’s with state lawmakers, regulators, or even big clients pushing one-sided terms?
Lia Elliott: Yeah, I think now is definitely the time to really make the industry’s voice heard. And maybe 10 years ago, most of us probably felt comfortable relying on some of the big trade groups speaking for us, and they do an excellent job in doing that, but they simply can’t cover it all.
All politics is local, and so, those politicians and representatives in the districts where your staffing firms have business, where they have locations, where they employ people, where they’re headquartered, those representatives want to hear from the business owners, and they want to know what’s important to their voters in their districts.
And you can rest assured that the labor organizations and pro-employee groups are very skilled and very chatty with those representatives, and they make their side known every day, all day long, right? And so, if our legislators, our senators, our representatives, even at the state, county, city levels, if the only messaging they’re receiving is from groups whose interests are probably not very well aligned with the staffing industry’s interests, they don’t have anything to counterbalance it against.
The legislators and representatives don’t have an endless amount of time to do research into every business sector and industry, and so they really do rely on hearing from their constituents, so that grassroots activity could be as simple as writing letters, making a couple of phone calls, hosting a fundraiser during election season, right? Those kinds of things really go a long way.
And, if nothing else, don’t wait until some sort of bill is pending, because we saw that in Illinois and New Jersey, where it was a tidal wave all of a sudden, just like, where did this come from, and how did we get here? You want to be proactive in communicating the benefits of the industry and the jobs you create, and the contributions you make to your community.
And the difference you make in so many people’s lives who are voters in those districts. And that way, if and when a bill starts to get talked about, potentially there’s mutterings about a new bill in your state or in your city. Representatives will say, “You know what? I remember talking to Joanna about this a couple of months ago at that fundraiser about the staffing industry, and I’m going to call and pick her brain and see what she thinks the impact of this might be.” And that’s what happens.
And so, this is always the easiest can to kick down the road because I think all of us are a little exhausted with news feeds and politics, but it really is so important to prioritize and advocate for ourselves, to avoid these bills that ultimately pass. And then you’re scrambling to get amendments plugged in, and it’s never a good fit. It’s very, very messy.
And so, every opportunity a staffing firm has – whether it’s an owner or a leader, or an executive within the organization – to talk about staffing, they should absolutely jump at it.
And then, obviously, always advocate for yourselves with contracts. I mean, you asked about nasty contract terms coming from clients, and we see those every single day. We have a lot of client contracts we go through, and if I could say one thing, it is that we can dispel to anyone listening that when a client tells you that every other staffing provider is signing this agreement, it’s not true. They’re not, I promise. You’re not the only one who’s pushing back on incredibly one-sided indemnity or terms that are going to sink your business if something goes wrong.
It’s a very common kind of response that we hear from those end-using facilities, but at the end of the day, there are plenty of discussions around contracts. It’s reasonable to have those, and I really feel strongly about staffing firms building confidence and competence within their sales professionals and recruiters to facilitate having those discussions professionally, obviously, with those end-user clients.
Casey Wagonfield: It’s like everybody’s got an opinion on laws and regulations, and they hate them, but very few people actually do anything about it, or call their state, or do anything. And I know that agencies have to speak up and have to take action for change to really happen.
Rob Geist: Joanna, let’s switch gears a little bit. I’ve heard you both talk about arbitration agreements as we’ve prepared for this. I know you’ve mentioned that every staffing firm should have one in place. For people who think maybe only that arbitration is when you already have a problem, why is it so important to have this in place ahead of time?
Joanna Monroe: So, just to clarify for folks who may not know what arbitration agreements are, when somebody wants to pursue a staffing firm, like for a wrongful termination claim, or maybe because they haven’t been paid correctly, or think they haven’t, they would go and sue you in court.
And what an arbitration agreement does, if we have an agreement with our temporary workers in place, then we can require them not to sue us in court but take their claims into private arbitration. And that’s a really great benefit for staffing firms for a million reasons, just on individual claims.
But we also advocate for the use of arbitration agreements that contain class action waivers. What that does is if a staffing firm is being sued by a plaintiff’s attorney because of a systemic error – maybe they had an issue that was replicated over time – and you’re dealing with not just one person suing you, but a class of everybody who worked for you at that site for the last three years, you can use that arbitration agreement and class action waiver and take it out of court and take it away from being a mass action with all these people and make it just an individual action.
And what that does from the plaintiff’s attorney’s perspective, they lose all interest. So, you can take what is potentially a $10 million problem down to maybe a $10 thousand problem.
So, that’s what arbitration agreements are, and with class action waivers, they can really protect the business from catastrophic uninsured risk. So, I would guess that most staffing firms have these in place, but the trick now is keeping them updated, because for the plaintiffs, this is a huge source of revenue for them. And now that they’re losing that source of revenue, they keep chipping away at them. And the courts, especially courts in California and more liberal states, keep finding reasons not to put these things into arbitration. And so, you have to have those arbitration agreements updated annually to make sure that they have the best language to make sure that they’re enforceable to protect the company.
The beauty of this is that arbitration agreements give you the opportunity to have some grace so that if you do have one of those mistakes, it’s just a mistake vis-à-vis an individual worker and not 10,000 workers over the last three years.
Casey Wagonfield: Yep. I remember that being a big deal. And Lia, I’m going to kind of switch over to immigration and I-9. Last time you were on as the first-ever guest, we spent a lot of time on I-9s and immigration compliance. It was a huge topic at the time, right? It was right after the election. Everybody was wondering what was going to happen.
So, since that episode a year ago, what’s changed? Are there any new enforcement priorities, policy shifts, or any gotchas that staffing firms should have on their radar next year?
Lia Elliott: Man, it’s crazy to think that it’s only been a year, right? It feels like it’s been a long time since we’ve been talking about immigration and compliance, and just that entire environment has been turned on its head.
We all see it on the feeds. There’s a lot of activity around raids and detentions. That’s still happening. Temporary protected status is being removed, lawsuits are being filed, court decisions are being made, and appeals are happening. I mean, it’s this constant nonstop.
What I would say from the employer perspective is, and this doesn’t make the news, but I-9 audits are also up. And so, even just three years ago, on the priority and risk matrix, I-9s would’ve been a little bit low for me. They’re important. You have to have them for every employee. You can go in and audit and make certain corrections from year to year if you find mistakes. But I wouldn’t lose sleep over them as much.
Today, I feel like it’s more important to make sure your I-9s are being completed in a timely manner, being completed correctly. Because there really is this buzz around immigration and this desire to make examples of companies, of people, of states, right? We’re seeing specific states being targeted, so it’s become a little more important in my mind that Form I-9 compliance be fine-tuned and put in place.
Typically, a staffing firm won’t necessarily be a target of an I-9 audit from ICE as the primary. We usually get brought along with our client companies, right? So usually, your big client company has a location. They’re responding to ICE and the Department of Homeland Security, providing their I-9s.
And the federal agents are asking who else works here and who do they work for. And so, that’s how they get the name of the staffing firm. And so, we typically are in a little bit of a better situation, at least, least worst, in the sense that we can probably negotiate the production of I-9s only related to the employees at that client company and within a certain timeframe, and that type of thing.
But still, pretty important to keep eyes and ears open and listen for cues from clients who are being the subject of an audit or a demand letter. And just keeping those I-9s tight and in place. That’s a big one.
Rob Geist: So, Lia, a follow-up question… when you get a new client, and you dig in and start looking at their I-9 and immigration practices, what are the top red flags you see people making the same mistakes with over and over again? What comes up most often with you guys?
Lia Elliott: Yeah, I think it’s the lack of a written process on something that’s so repeatable across the organization. This is something I’m surprised at that a lot of firms will have if they don’t have a centralized vendor that is tied into their ATS, and it’s automatically engaging in this process for that.
If they’re not using automation, and you’ve got humans in the mix there, having a defined, simple process is important, because the I-9 really is the most complicated form, in my opinion, in the country. I mean, I think I could fill out my tax returns easier.
Just the employer guide alone for the Form I-9 is like 200 pages long to tell you how to fill out what was a one-page form. So, there is just a lot baked into those things. And so, developing that process and having one in place is important.
And then the other thing I would caution folks on is we’re seeing a lot of knee-jerk reactions from end-using clients in response to a lot of the executive orders, the temporary protected statuses expiring, the ASEE status being revoked, all the things we’re hearing about. And so staffing firms want to be cautious and really serve as a partner and an expert resource to their end-using clients to help them from stepping in it.
When those clients ask for a list of every employee working here who’s not a citizen, or I want you to give me a copy of all your I-9s, they start to make requests that we can get around in different ways and help to get to what they’re actually looking for.
But they might be asking for unlawful information, right? They might be asking for personally identifiable information. And so, remaining cautious of client requests that might increase risk for both is important.
Casey Wagonfield: I remember being scared to death when I first got into staffing with I-9s because it was like, “Oh, if one letter’s wrong on their last name, that could be a $10,000 fine.”
Joanne, I want to ask you, a lot of firms are not trying to cut corners, but maybe they just think things are just messy and confusing. So, if a staffing firm wanted to do a quick 30-day mini-immigration audit, what are a couple of things they could do to move the needle? Before they call you, of course.
Joanna Monroe: Yeah. So, I think to Lia’s point, under the Biden administration, it was all about making sure you didn’t have over-documentation and discrimination of folks. And under this administration, it’s all about not having undocumented people on your payroll. And so, I think if you’re going to do a mini- audit, you would want to focus on your highest risk areas, states where you know you might have some issues that you want to remediate, or maybe sites that you have issues and want to remediate, and you would focus on that.
If you’re going to do an I-9 audit, you don’t have to go back two years. I’d focus on the people who are currently on assignment because those are your high-risk people. You don’t need to boil the ocean here. Let’s just make sure that everybody who is out today is authorized to work, that we have the documentation to prove it, and that we have a good process going forward.
Rob Geist: So, Lia, let’s talk about AI in recruiting. It’s the hot topic right now. Sourcing tools, chatbots, all the things. We’ve already seen places like New York City require bias audits and public disclosure for automated employment decision tools, and state and local regulators stepping into the AI void with their own rules.
From a legal and risk standpoint, how should staffing leaders be thinking about AI and their tech stack?
Lia Elliott: Yeah, they should absolutely be focused on it, right? I mean, it’s what we’re all talking about. It’s the topic of the year for sure.
Your employees are using it every single day, whether you’ve approved them to or not. So, we need to really come to terms with the fact that it’s here. It has a lot of really great benefits. It can parse resumes, it can recruit, it can serve to automate, answering and routing phone calls, and giving responses in some instances.
So, really helping to drive accuracy, automation, efficiency, all of the things that are good. What staffing firms want to be cautious of are state by state, to the extent that there are regulations and laws coming into play. And, obviously, there’s some conflict there between the federal government and states.
But what folks want to be cautious about with AI at a 30,000-foot level is to make sure that, if it is being utilized in any way to make decisions, that you’re reviewing and ensuring that those decisions are not inadvertently discriminating against individuals, or have any built-in bias.
And so, all very important in order to remain compliant is for firms to conduct those audits and reviews themselves so that those things can be fixed proactively. The last thing you want is for a state regulator to come in, do the audit, find the problem, and then give you the big penalty bill.
So, mapping out where does AI exist in our organization? Because every vendor and every supplier has it plugged in somewhere. It’s like, everything you know now has an app. Everything we use now has AI somewhere within it. So, just understanding and mapping out where the AI’s being used, and then really ensuring that the bias and discrimination piece is taken care of.
Casey Wagonfield: I know you both see a lot of vendor contracts and a lot of cool tools that agencies want to plug in.
What are the biggest mistakes staffing firms make when they adopt AI-driven tools, especially around, like you mentioned, hidden bias or lack of documentation and business continuity, if that tool suddenly disappears or becomes noncompliant?
Joanna Monroe: I think you discussed a couple of them, but number one, most important is: we can’t do AI in a vacuum.
Companies need to really take this brave new world seriously and have some sort of governing board to make sure that all AI that is being used by the company is sanctioned. And they need to have a very strong policy, train on it, and take discipline if people are using unsanctioned tools. So that’s number one.
The second is, we have to work with vendors, and I know there are a lot of new folks in the space, and they’re wonderful, but we have to make sure we’re working with vendors who are going to be around. They’re not fly-by-night; they’ve got good backing, and they can stand behind the protections that they’re promising you.
In terms of the contract, we should be asking for them to do two really important things. Number one, warrant and represent that this tool is not going to break the law. We can’t promise that. We don’t know what they’re doing in terms of how the algorithms are working. They have to do the bias testing and then promise it to us.
So, we need to rely on the vendors, that they are going to comply with all the different laws and that they’re going to protect our data. That there’s going to be protection in the case of a data breach. And if the vendor’s not willing to put that in the contract and indemnify the staffing for that, I’d really question whether or not they’re a good partner.
Rob Geist: And Lia, we’re all watching the headlines, and the federal government’s talking about trying to preempt state AI laws. We talk about an executive order that would effectively block most state-level AI regulations for a decade and create a national framework.
If something like this actually does land, what does it change for staffing firms that are trying to stay compliant? Does it make life easier? Or do you still plan on trying to work around a patchwork of the different state expectations as well?
Lia Elliott: Yeah. Who knows, right? I mean, it’s a little bit of anybody’s guess right now. Just a few days ago we saw an executive order come out to restrict and prohibit states from regulating in the AI space.
We know that 36 states, their Attorneys General objected to that prohibition before it was signed. It’s not clear constitutionally if that’s going to withstand. So, we’re getting into this cycle of litigation again.
And we’ve got states that have AI regulations in place. We’ve got a little patchwork going on. Then we have an executive order that may or may not withstand the test of legal scrutiny. So, we have to wait and kind of watch these legal challenges take place.
And depending on when this airs, everything could be a complete 180. If it airs tomorrow or in an hour, we’re in this fire hydrant type scenario where things are just coming left and right and changing day to day.
I do feel like, and I feel like this around a lot of things, if there were a federal standard, it would be simpler operationally for every company to comply with and to meet that. Otherwise, you’re just always going to be stuck having to comply with the strictest version, because how else can you possibly control this digital world we live in? It doesn’t recognize geographic borders.
So, I do think it would be simpler in that sense, just like I would say the same thing about paid sick leave or minimum wage. And, so, it’ll be interesting to see where that lands. Right now, if I’m sitting in New York, I’m probably going to comply with New York’s AI law, or if I’m in California, I’m going to comply with it because I think they’re going to be the most aggressive about enforcing, regardless of whether or not there’s an executive order.
And so, if the executive orders withstand scrutiny, I think we might see some of the states drop their AI regulation, because they’re going to lose federal funding. Who knows, right? I wish I could magic eight ball that.
Casey Wagonfield: Going back to what you originally said, just focus on the most at-risk states first, right? If you got a lot of states you’re in, look at the AI laws in California first. That’s the state that they’re going to knock on your door first if you’re breaking anything.
So, Joanna, let’s pretend I’m a staffing owner. I’m listening to this in my car. I’m using at least one AI-powered sourcing or ranking tool. and now I’m wondering, are we exposed?
So, are there a couple of practical guardrails that you would want in place as far as policies, audits, contract language, so that if a regulator or plaintiff’s lawyer, or a big client comes knocking, they can show they weren’t just blindly trusting the algorithm?
Joanna Monroe: I think there are two main things. Well, three. One is having a policy in place, a governing committee, and not using unsanctioned AI. And then, in addition to that, doing some auditing or requiring the vendor to produce auditing to show that the decision-making does not have a disparate impact on protected classes.
And, number three, making sure that you have access to the data if and when a claim comes. That’s a real big question mark. If an algorithm is making decisions about who moves forward in a recruiting process, and we get an EEOC claim, is the vendor going to be able to pull the data and be able to demonstrate why it ranked one candidate higher than another?
So, we want to make sure that we have access to that information. Those are three really important things you can do to protect yourself.
Rob Geist: So, Lia, in our industry, people jump around a lot. And I think if we ask 10 different staffing employees, we will probably get 10 different answers on this – and it all relates to non-competes. And we’ve seen the rollercoaster with the FTC, its attempt to have a nationwide ban, and then the courts stepping in.
From your vantage point, where are we now on non-competes with staffing firms?
Lia Elliott: You know, I feel a little bit like they’re going the way of the fax machine. They’re dated now. There is such a state-by-state patchwork of regulations, restrictions, and prohibitions.
You have to create one for every state. They all have different notice requirements. They might have different salary requirements. Colorado criminalizes it in some instances. Some are limited by professions. Sometimes you can’t enforce them until you hit a certain tenure.
And a lot of firms have realigned and focused on what’s most important to them, which is the protection of their confidential information and the non-solicitation of their employees and their customers.
Most clients I have experiences with in and around the non-compete space now are to strengthen those two provisions, because they feel, and correctly so, that that will help enhance the enforceability of the restrictive agreement. Whereas if you lop in that non-compete on top of that, they are still strongly, strongly disfavored.
I don’t care what state you’re in; judges don’t like non-competes. That’s who you have to go to to enforce them. The only time we see these non-competes enforced is when it’s accompanied by bad acts, which are the non-solicitation or the stealing, or the misappropriation of confidential information. So, that’s really where you can build a document that is as enforceable as possible and can look like the more reasonable party when you go to try to enforce it.
Casey Wagonfield: Awesome. Well, I can’t say how much we loved having you both on the first episode with two guests, and I couldn’t think of two better guests to have on. We appreciate the way you really take complicated, scary stuff and turn it into, “Okay, here’s what to do next.”
So, for folks who are listening and thinking we need this kind of brain in our corner, what’s the best way they can get in touch with you both and learn more about Staffing GC?
Lia Elliott: Thank you so much for having us, and we’d love to connect with your listeners at any time. And feel free to find either one of us on LinkedIn, connect with us there, whether you want to send a message and talk now or not, but get on our LinkedIn page to get up-to-date information.
You can also go through our website, which is staffinggc.com, and there’s a Contact Us section there. Get us an email, and we’re more than happy to connect with people.
Casey Wagonfield: And for everybody else listening, if this episode helped you out, do us a favor. Share it with your other staffing leaders, somebody who needs a little legal reality check. And make sure you’re subscribed to not miss out on future episodes.
You can also connect with us on LinkedIn. Check out the Staffing Made Simple group, where we keep these conversations going. See how you can partner with SimpleVMS to differentiate your agency, grow sales, and add new revenue streams.
Thanks for hanging out with us today, and we’ll see you on the next episode of Staffing Made Simple.
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