A recent comparative analysis rendered by the U.S. Chamber of Commerce placed Pennsylvaniain the Tier III category, ranking states from “good” to “fair” to “poor”, in terms of how a state’s employment policies impacted on job and economic growth.

Tier I (“good”) states include Alabama, Florida, Georgia, Idaho, Kansas, Missouri, North Carolina, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, and Virginia.

Tier II (“fair”) states include Alaska, Arkansas, Arizona, Colorado, Delaware, Indiana, Iowa, Kentucky, Louisiana, Maryland, Minnesota, Missouri, Nebraska, New Mexico, Ohio, Rhode Island, Vermont, West Virginia, and Wyoming.

Tier III (“poor”) states include California, Connecticut, Hawaii, Illinois, Maine, Massachusetts, Michigan, Montana, Nevada, New Jersey, New York, Oregon, Pennsylvania, Washington, and Wisconsin.

The 50 state review published by the U.S. Chamber of Commerce was titled as “The Impact of State Employment Policies on Job Growth”.

The COC study analyzed several policy factors, to include minimum wage loss, unemployment insurance loss, wage and hour policies, collective bargaining issues, employment litigation climate, costs associated with employment separation factors. It also evaluated employment regulation policies of the individual states, to generate the comparative ranking, with the study available at www.uschamber.com estimating the effects of individual state employment policies on job and business growth.

Under the COC index, South Dakota ranked as the most favorable state, in terms of its employment policies and regulations being the most favorable for job and business growth, with California receiving the poorest scores. The lowest scoring states were New Jersey, Pennsylvania, Texas, Illinois, and New York, with California bringing up the rear.

Factors evaluated by the COC include:

(1) Employment relationships and the costs of separation;

(2) Layoff notification requirements beyond Federal law;

(3) Treatment of employment at-will doctrines;

(4) Whether employeehandbook is converted to enforceable contract;

(5) Treatment of covenants not to compete;

(6) Timely requirements for last paycheck; and,

(7) Treatment of independent contractor relationships.

Employment relationships and costs of separation on the minimum wage living wage loss:

(1) Amount of state minimum wage beyond Federal requirements;

(2) Existence of state prevailing wage laws;

(3) Existence of existing wage laws in major city in the state.

Unemployment insurance and workers’ compensation:

(1) Maximum regular unemployment benefits (no extension);

(2) Wage ceiling subject to unemployment insurance tax;

(3) Waiting period to receive unemployment benefits;

(4) Workers’ compensation benefits per $100.00 of covered wages;

(5) Waiting time for workers’ compensation benefits;

(6) Workers’ compensation premium rate index; and,

(7) Whether workers’ compensation self insurance is permitted.

Wage and hour policies:

(1) Minimum wage unemployment acceptance;

(2) Additional state overtime requirements;

(3) Meal/rest requirements;

(4) Additional state leave requirements;

(5) Complexity of pay out of vacation accruals;

(6) State posting and notice requirements; and,

(7) State record retention requirements.

Collective bargaining issues:

(1) Private-sector union membership percentage;

(2) Right-to-work state;

(3) Availability of unemployment benefits to lock-out employee/strikes; and,

(4) State laws that affect labor organizing efforts.

Litigation enforcement:

(1) Enforcement of employment-law;

(2) Enforcement posture of state department of labor;

(3) Structure of state human/employment rights commission;

(4) Number of federal employment and labor lawsuits per 10,000 employees;

(5) Strength of protection for employers providing references;

(6) Restrictions on employer inquiries into applicant history; and,

(7) Complexity of state-based employment discrimination laws beyond Federal requirements.


Receiving a Tier III (“poor”) ranking from the COC, Pennsylvania was found to have a very difficult labor and employment-law climate, with Pennsylvania’s economy being dependent upon agriculture, tourism, metals production, chemicals, and steel.

In 2010, the state unemployment rate on Pennsylvania was found to have been 8.6%.

The COC found that the factors contributing to Pennsylvania’s “poor” ranking included:

(1) State wage and hour laws exceeded Federal standards;

(2) State leave laws differed from Federal standards;

(3) State WARN-type law and severance mandates for acquisitions;

(4) Significant limitations on the employment at-will doctrine; and,

(5) State and local anti-discrimination laws more expansive than Federal laws.


Measuring specific economic factors impacted by individual state-adopted labor and employment policies and regulations, the COC has statistically documented a number of factors that tie into business growth in Pennsylvania being impeded versus being stimulated by Pennsylvania’s labor laws and policies.

– By Kevin L. Connors

ConnorsLaw LLP

Any clients or contacts seeking information about our workers’ compensation practice group, kindly contact Kevin Connorsat 610-524-2100 Ext. 112, or at [email protected], and kindly consider asking us to provide you with a practical update on the latest trends and developments in Pennsylvania Workers’ Compensation practice and procedure.