KNOWLEDGE BASE US Employment Law
The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.
Employment Law In The US
Employment law in the United States is regulated and governed by the federal and state governments. Because it is a complex, ever-changing area of law, it is imperative you stay up-to-day on your obligations and responsibilities under both federal and state law. Your employment obligations include, but are not limited to, wage and hour requirements, safety and work condition standards, employment discrimination protection, and workers’ compensation.
Because employment law is one of the most complicated areas of law, you should consult an expert, such as an attorney, an accountant, or a HR professional, for advice about your obligations and responsibilities. Many attorneys specialize in specific areas in employment law such as unemployment insurance claims, workers’ compensation claims, sexual harassment, etc., so it is important to find an attorney with the right training to assist in your case.
Federal Laws and Regulations
Fair Labor Standards Act
The Fair Labor Standards Act of 1938 (FLSA) establishes minimum wage, overtime pay, recordkeeping, and employment of children. It governs employees in the private sector and in federal, state, and local governments.
Many states also have minimum wage laws, many of which are higher than the federal minimum wage rate. In cases where there is both an applicable federal and state minimum wage law, the employee is entitled to the higher minimum wage rate.
Minimum Wage: As of October, 2023, all employees covered under the FLSA are entitled to a minimum wage of not less than $7.25 per hour. This rate applies to covered nonexempt workers. The minimum wage for employees who receive tips is $2.13 per hour. The amount of tips plus the $2.13 must reach at least $7.25 per hour.Many states also have minimum wage laws. In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.
Overtime Pay: An employee’s overtime pay rate cannot be less than one and one-half times his regular rate of pay. Overtime pay is required after an employee works 40 hours in a workweek. There is no limit to the number of hours an employee 16 years or older can work in any workweek. Furthermore, overtime pay is not required for work on weekends, holidays, or regular days of rest, unless an employee does work overtime.
Hours Worked: For purposes of the FLSA, hours worked generally include the time an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace.
Recordkeeping: Employers are required to display an official poster outlining the requirements of the FLSA. Employers are also required to keep employee time and pay records.
Child Labor: The FLSA protects minors by prohibiting their employment in jobs and under conditions that are detrimental to their health, well-being, or educational opportunities.
Employment Benefits
Employment benefits refers to compensation provided to employees, by their employers, to supplement their wages or salaries. Employment benefits play an important role in the lives of employees, and their families, in the US. Because of that, the benefits you offer can be a deciding factor for an employee’s decision to work for you. Employment benefits include health insurance, life insurance, disability insurance, sick leave, paid vacation, pensions, tuition reimbursement, relocation expenses, housing, profit sharing, child care benefits, and other perks.
There are very few employment benefits that are required by law in the US. However, federal and state governments may set minimum standards for benefits employers voluntarily provide to their employees. Furthermore, legally required and voluntary benefits have legal and tax implications for you.
In the United States today, there is generally no accepted practice relating to employment benefits. Employment benefits vary from employer to employer based on location, industry, company size, etc.
The two federally required benefits are Social Security and workers’ compensation.
Social Security: You must pay Social Security taxes at the same rate your employees pay. Here are some websites to help you understand your Social Security obligations:
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Social Security Administration: information and resources for employers
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Instructions for Hiring Employees Not Covered by Social Security
Workers’ Compensation: If you have employees, you are required to carry workers’ compensation insurance coverage through a commercial carrier, on a self-insured basis, or through a state workers’ compensation insurance program. Workers’ compensation is designed to help pay the expenses of employees who are harmed while performing job-related duties. Expenses available generally include: wages, medical expenses, disability payments, and costs associated with rehabilitation and retraining. Workers’ compensation programs are administered by each individual state and financed by mandatory employer contributions.
Unemployment Insurance: You may be required, by state law, to pay unemployment insurance taxes. If you are required to pay these taxes, you must register with your state’s workforce agency.
Disability Insurance: Some states require that businesses provide partial wage replacement insurance coverage to eligible employees for non-work related sickness or injury. These state include:
Leave Benefits: Most leave benefits offered by employers are not required by federal law, rather, they are offered to employees as part of an overall compensation and benefits plan. Leave benefits include: holiday/vacation, jury duty, personal leave, sick leave, and funeral/bereavement leave.
Some employers are required to provide leave under the Family and Medical Leave Act of 1993 (FMLA). FMLA entitles employees to have up to 12 weeks of job-protected, unpaid leave during a 12-month period for the birth and care of a child, the adoption or foster care of a child, care of an immediate family member with a serious health condition, and care of the employee’s own serious health condition.
The FMLA does not apply to the vast majority of small and medium sized businesses. The FMLA applies to all public agencies, including state and local agencies throughout the US, and to private sector employers who have 50 or more employees each working day during at least 20 calendar weeks in the current or preceding calendar year.
Health Plans: Whether or not you offer your employees access to a group health plan through your company is optional. However, if you offer a group health plan to your employees, you must comply with federal law.
Retirement Plans: Retirement plans are also an option benefit you can provide to your employees. Below are several resources to help small businesses determine whether and what type of retirement plan you would like to offer your employees:
Employee Incentive Programs
Many employers in the US understand the benefits of providing incentive programs for employees. Incentive programs can boost the morale of employees through engagement and reward. The following are a few of the many incentive programs that are offered by small businesses across the US:
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Flex time: Offering employees the opportunity for flexible work hours can be a great incentive for attracting and retaining high performing and motivated employees.
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Company functions and events: Planning and hosting company functions and events is a great way to encourage your employees to interact with each other outside the workplace. Family friendly functions and events are particularly rewarding for many employees.
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Workplace wellness programs: Investing in your employees’ wellness is a great way to show your investment in your employees. Workplace wellness programs do not have to involve a great deal of money or administrative work. Examples include wellness presentations and challenges, including weight loss and quit smoking initiatives, and lunchtime team walks.
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Corporate memberships: Discounted or free memberships help promote employee well being while enabling and promoting company goals. These memberships include: gym memberships and recreational or entertainment memberships.
Employment Contracts and “At Will” Employment
In the United States, employment contracts are generally not required, and are less common than many other countries. In fact, in almost every state, the law presumes that employment relationships are at will. An at will relationship means employers and employees are free to terminate the employment relationship at any time and for any reason.
In the US it is common, and often expected, that an employee gives his employer two weeks’ notice when he intends to quit his job. This practice however, is not reciprocated. Most employers do not give their employees notice when they terminate their employment.
There are several exceptions to the at will employment presumption. The most common exceptions involve matters of public policy. Public policy matters include but are not limited to discrimination and retaliation (e.g., for an employee filing a workers’ compensation claim, or whistleblowing). A minority of US states prohibit employers from terminating employees in bad faith, e.g., firing an employee to avoid paying a bonus or other benefit.
Employers and employees are free to enter into an employment contract. Often employment contracts describe the length of employment, compensation, including bonuses and benefits, disciplinary procedures, noncompete and non-disclosure clauses, acceptable reasons for termination, and severance package arrangements. As long as the employment contract is otherwise legal, it will be enforced and upheld by the courts in lieu of the at will presumption. Employment contracts do not have to be in writing, they can be created by implication, based on oral assurances or other conduct of the parties.
Civil Rights Act of 1964
The Civil Rights Act of 1964 makes it illegal to treat your employees differently based on certain attributes unrelated to job performance, including ethnicity, religious beliefs, gender or pregnancy, age, or disability. In some cases, it is also illegal for employers to discriminate against an employee based on marital status, political affiliations, and sexual orientation. Types of conduct that can be discriminatory under the Civil Rights Act are hiring, termination, and promotion decisions, the imposition of working conditions or privileges,and the determination of pay, bonus, and time off. Workplace discrimination can also be harassment or retaliation for reporting improprieties or exercising a legal right.
Title VII is the most significant source of anti-discrimination law for employees in the US. Title VII applies to all companies with 15 or more employees and other public and private entities.
The Equal Pay Act (EPA), the Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and the Civil Rights Act of 1991 also protect employees from various forms of employment discrimination.
The Occupational Safety and Health Act of 1970
The (OSHA) regulates workplace safety and applies to most employees working in the United States. OSHA has two regulatory functions: 1) setting workplace safety standards; and 2) conducting inspections to ensure employers are providing safe and healthful workplaces to their employees. OSHA standards may require that you adopt practices, methods, and processes reasonably necessary and appropriate to protect your employees on the job. You, as an employer, must become familiar with the standards applicable to your workplace and eliminate hazards.
State Laws and Regulations
Because state employment laws and regulations vary widely, you should make sure you understand your obligations and resonsibilities in each state in which you have employees. Many companies that have employees in multiple states set company policies, methods, and processes that comply with the most strict state, therefore, generally ensuring they will be in compliance nationwide.
California: California Labor Code
Colorado: Colorado Revised Statutes Sections 8-1-101—8-83-226: Labor and Industry
Georgia: Georgia Code Title 34: Labor and Industrial Relations
Illinois: Illinois Compiled Statutes Chapter 820
Massachusetts: Massachusetts Law About Employment
New York: New York Labor Law
Texas: Texas Statutes: Texas Labor Code
United States Department of Labor: Major Laws of the Department of Labor
Federal Labor Standards Act of 1938
Code of Federal Regulations Title 29: Labor
Title VII of the Civil Rights Act of 1964
Age Discrimination in Employment Act of 1967
Americans with Disabilities Act
KNOWLEDGE BASE US Employment Law