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Employment Laws in the US

Updated on:
16 Jan, 2024
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Table of Content

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Building a remote team?

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As the tech industry thrives, more companies are turning to the wealth of tech talent in the US to build effective remote and distributed teams. This shift not only unlocks global talent but also ensures innovation and growth within businesses. However, while enjoying these benefits, it's essential to understand and comply with the intricacies of US employment regulations, including federal employment laws. This article provides an informative guide on the main sources, worker types protected, contract specifics, minimum terms, anti-discrimination laws such as the Civil Rights Act, data privacy, and contract termination under US employment laws.

Main Sources of Employment Law in the US

The United States does not have a single employment law that is applicable to every company or employer in the nation because it is a 50-state nation with various municipal governments. The employment relationship between an employer and employee in the US is nevertheless governed by three pieces of legislation, which manage a variety of aspects, such as workers' compensation and safety and health.

The federal, state, and local statutes make up these three governing laws, influencing the structure and conditions of employment relationships.

Federal statutes

The federal laws of the United States apply to employers and organizations that engage in businesses that operate across multiple states. Therefore, they are subject to the minimum employment standards and protection of the federal statutes. Standards such as living wage requirements, work hours, leave policies, trade union agreements, and anti-discrimination laws are addressed under federal statutes. These laws include critical points such as child labor regulations and uniformed services employment protections. Also, policies such as work permits provisions and immigration are governed by federal law. This includes specific provisions like the Fair Labor Standards Act, which governs matters like overtime pay and the current federal living wage, and the Federal Arbitration Act, which governs the resolution of disputes.

State statutes

Each of the fifty states in the United States has enforceable laws whose jurisdiction is only within the state borders. These state laws stipulate codes and rights that are not under the protection of federal statutes. These laws often detail stipulations like worker's compensation and child labor regulations. An example is California's independent contractor laws which provide specific guidelines around independent contractor hiring. The state laws govern unemployment insurance benefits and workers' compensation for employees in the state. Also, employees' health through the Health Act when they suffer a serious illness. This requires employers to consider their responsibilities seriously.

Local statutes

The United States has countless municipalities and cities, and they often implement employment regulations that provide more protection to employees asides from the provisions of federal and state law. For instance, while the state and federal statutes have no provision against employment discrimination based on natural origin or gender identity in the private sector, the local statutes make provisions for such issues, including protecting employees from sexual harassment.

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Types of Workers Protected by the Employment Laws

The type of workers protected by the employment regulations in the United States are employees and independent contractors, subject to the terms of their employment contract.

Employees

The laws that govern employment in the United States are enacted to protect full-time employees and part-time employees too. While the laws govern both the employers and employees, it also safeguards the employees from unfair and illegal conditions. Many employers understand the importance of these regulations. The United States employment laws govern and or make decrees that cover the health and safety of workers, a living wage, overtime pay, employee benefits, the establishment of regulated work hours, workplace discrimination, and so on. Also, it makes governs employers' obligation to make social security contributions and the reporting and filing of taxes on behalf of the organization and their employees. It has even been a subject of discussions at the Supreme Court. Additionally, under certain federal employment laws, employees may be entitled to job-protected leave.

Independent contractors

Independent contractors are usually self-employed workers that provide services to organizations but are not contractually bound to the organization like full-time employees. They remain in full charge of the time, place, and mode of carrying out their services unless included in the contractual agreement or collective bargaining agreement. While contractors are not protected by employment regulations that govern overtime compensation, base pay and workplace safety, they have an obligation to handle, file and report taxes as mandated by the US labor laws.

Discover how to fill out a 1099 form in this article.

Employment Contracts in the United States

In the US, employment relationship is typically "at-will," meaning an employer or employee can terminate the relationship at any time, for any lawful reason. However, federal employment law contracts or collective bargaining can modify these terms in some employment relationships. It's essential to understand the terms of any contract before signing.

Minimum Employment Terms and Conditions

Employment or labor laws in the United States stipulate a series of minimum terms and conditions that both employers and employees must adhere to. These form the baseline of every working relationship, establishing a fair and legal foundation for employment practices:

  • Minimum Wage: The Federal Labor Standards Act (FLSA) set the federal minimum wage for employees in the US at 7.25 USD per hour. However, the various states are free to set a higher minimum wage rate under their state law. As a result most of the states in the US have higher minimum wage than the federal stipulated wage rate.
  • Work Hours: The United States does not have any limitations regarding the amount of work hours due to employees. However, many state statutes mandate one day in a week for rest.
  • Overtime: Employees in the US must receive 1.5 times their regular wage for every hour of work beyond the stipulated weekly 40 hours. It is important to remember that federal laws stipulate these requirements.

Prohibited Employment Practices in the US

The US employment law, molded by federal statutes, landscape mandates strict prohibitions on certain practices to ensure a fair and safe work environment. Both private-sector employers and employees need to be cognizant of these to avoid any potential legal disputes, especially with the federal government Department of Labor involved.

One common prohibited practice is the misclassification of employees as contractors. This illegal practice, in defiance of labor regulations, can rob employees of essential benefits and protections such as base pay, overtime compensation, unemployment insurance, and safe workplaces. Thus, it's crucial for businesses to understand the key differences between an employee and an independent contractor, ensuring appropriate classification and treatment under the law. Employers should also prioritize occupational safety and health to avoid any workers' compensation claims.

Moreover, employers are not allowed to retaliate against employees for asserting their rights under the law. This includes whistleblowing on illegal activities, participating in investigations or lawsuits, or claiming their right to benefits and overtime. The Department of Labor regulates and enforces these provisions

Anti-discrimination Laws

The United States law postulates that it is an illegal action to discriminate against an employee based on their race, sexual orientation, religion, gender identity, origin, or disability. This prohibition of employment discrimination is enforced by the Equal Employment Opportunity Commission. If an employee harasses another on the basis of the aforementioned characteristics, they are obliged to file a discrimination charge against the employee. Also, it is illegal to retaliate against an employee if they complained about discrimination. This law applies to employers or organizations with at least 15 employees.

The Age Discrimination in Employment Act (ADEA): This Act forbids discrimination against people 40 years old or older in employment.

Title VII and Title II of the Civil Rights Act of 1964: This Act disallows discrimination against employees and job applicants based on their sex, race, religion, or sexual orientation.

Pregnancy Discrimination Act (PDA): The PDA prohibits discrimination against employees due to their pregnancy state.

Americans with Disabilities Act (ADA): The ADA is a Federal law that prohibits against discrimination of employees or anybody in employment with a disability. The Act also makes enables the provision of accommodation for disabled employees.

Data Privacy in the US

One of the most essential acts is the Stored Communications Act (SCA). The SCA prohibits accessing another individual's online account without their consent. This Act is typically applicable in the work setting. The SCA can be interpreted to enable organizations to access employee information or communication via company-owned communication platforms such as the company's email. However, this is also permissible if it is agreed upon by the employee and employer. This is a key area of concern when onboarding remote employees.

Termination of Employment Contracts

Unless otherwise stated, employment contracts in the United States are typically "at will". What this means is that the employment provided is not for any specific period of time, and both the employer and employee are within their legal rights to terminate the employment relationship at any time. As a result, notice may or may not be provided before terminating employment.

Despite that the "at will" affords both parties the legal right to provide cause or reason, employers in the US cannot terminate an employee's contract for reasons that are illegal or discriminatory under the federal law purview. In states like Montana, after six months, the at-will employment becomes invalid. in such states as Montana, after the six months or the agreed probationary period has elapsed, employees can only be terminated by the employer or organization for a "good cause". Good cause is typically any justifiable grounds for dismissal or termination of the employment contract.

Ensure Compliance in the United States with Skuad

Maintaining compliance with the United States employment laws not only helps your organization avoid needless fines and penalties but also cultivates a conducive work atmosphere.

Skuad, as an exceptional Employer of Record solution, enables organizations to compliantly hire contractors and employees across over 160 countries, the US included. Legal liabilities and fines are no longer a concern with Skuad, as the platform guarantees your organization's full compliance with the respective laws and norms of each country.

Schedule a demo with Skuad to learn more.

FAQs

What is the basic US employment law?

The basic or primary federal employment law in the United States is the Title VII of the Civil Rights Act of 1991. This Act prohibits employment discrimination based on race, color, sexual orientation, and religion. It is regarded as the fundamental employment law in the United States.

What are examples of wrongful termination?

Wrongful termination includes termination based on discriminatory practices in the workplace, sexual harassment, wage and hour violations, whistleblower retaliation, etc.

Employ contractors and employees in 160+ countries
Get started
limited-offer-banner
EOR in 
Monthly
Annually
(Save upto 15%)
$
/month
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Start Hiring Now
Employ contractors and employees in 160+ countries
limited-offer-banner
EOR in 
$
/month
(billed annually)
$
/month
(billed monthly)

Table of Content

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Employment Laws in the US

Employment Laws in the US

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

As the tech industry thrives, more companies are turning to the wealth of tech talent in the US to build effective remote and distributed teams. This shift not only unlocks global talent but also ensures innovation and growth within businesses. However, while enjoying these benefits, it's essential to understand and comply with the intricacies of US employment regulations, including federal employment laws. This article provides an informative guide on the main sources, worker types protected, contract specifics, minimum terms, anti-discrimination laws such as the Civil Rights Act, data privacy, and contract termination under US employment laws.

Main Sources of Employment Law in the US

The United States does not have a single employment law that is applicable to every company or employer in the nation because it is a 50-state nation with various municipal governments. The employment relationship between an employer and employee in the US is nevertheless governed by three pieces of legislation, which manage a variety of aspects, such as workers' compensation and safety and health.

The federal, state, and local statutes make up these three governing laws, influencing the structure and conditions of employment relationships.

Federal statutes

The federal laws of the United States apply to employers and organizations that engage in businesses that operate across multiple states. Therefore, they are subject to the minimum employment standards and protection of the federal statutes. Standards such as living wage requirements, work hours, leave policies, trade union agreements, and anti-discrimination laws are addressed under federal statutes. These laws include critical points such as child labor regulations and uniformed services employment protections. Also, policies such as work permits provisions and immigration are governed by federal law. This includes specific provisions like the Fair Labor Standards Act, which governs matters like overtime pay and the current federal living wage, and the Federal Arbitration Act, which governs the resolution of disputes.

State statutes

Each of the fifty states in the United States has enforceable laws whose jurisdiction is only within the state borders. These state laws stipulate codes and rights that are not under the protection of federal statutes. These laws often detail stipulations like worker's compensation and child labor regulations. An example is California's independent contractor laws which provide specific guidelines around independent contractor hiring. The state laws govern unemployment insurance benefits and workers' compensation for employees in the state. Also, employees' health through the Health Act when they suffer a serious illness. This requires employers to consider their responsibilities seriously.

Local statutes

The United States has countless municipalities and cities, and they often implement employment regulations that provide more protection to employees asides from the provisions of federal and state law. For instance, while the state and federal statutes have no provision against employment discrimination based on natural origin or gender identity in the private sector, the local statutes make provisions for such issues, including protecting employees from sexual harassment.

One platform to grow your global team

Hire and pay talent globally, the
hassle-free way

Talk to an expert

Types of Workers Protected by the Employment Laws

The type of workers protected by the employment regulations in the United States are employees and independent contractors, subject to the terms of their employment contract.

Employees

The laws that govern employment in the United States are enacted to protect full-time employees and part-time employees too. While the laws govern both the employers and employees, it also safeguards the employees from unfair and illegal conditions. Many employers understand the importance of these regulations. The United States employment laws govern and or make decrees that cover the health and safety of workers, a living wage, overtime pay, employee benefits, the establishment of regulated work hours, workplace discrimination, and so on. Also, it makes governs employers' obligation to make social security contributions and the reporting and filing of taxes on behalf of the organization and their employees. It has even been a subject of discussions at the Supreme Court. Additionally, under certain federal employment laws, employees may be entitled to job-protected leave.

Independent contractors

Independent contractors are usually self-employed workers that provide services to organizations but are not contractually bound to the organization like full-time employees. They remain in full charge of the time, place, and mode of carrying out their services unless included in the contractual agreement or collective bargaining agreement. While contractors are not protected by employment regulations that govern overtime compensation, base pay and workplace safety, they have an obligation to handle, file and report taxes as mandated by the US labor laws.

Discover how to fill out a 1099 form in this article.

Employment Contracts in the United States

In the US, employment relationship is typically "at-will," meaning an employer or employee can terminate the relationship at any time, for any lawful reason. However, federal employment law contracts or collective bargaining can modify these terms in some employment relationships. It's essential to understand the terms of any contract before signing.

Minimum Employment Terms and Conditions

Employment or labor laws in the United States stipulate a series of minimum terms and conditions that both employers and employees must adhere to. These form the baseline of every working relationship, establishing a fair and legal foundation for employment practices:

  • Minimum Wage: The Federal Labor Standards Act (FLSA) set the federal minimum wage for employees in the US at 7.25 USD per hour. However, the various states are free to set a higher minimum wage rate under their state law. As a result most of the states in the US have higher minimum wage than the federal stipulated wage rate.
  • Work Hours: The United States does not have any limitations regarding the amount of work hours due to employees. However, many state statutes mandate one day in a week for rest.
  • Overtime: Employees in the US must receive 1.5 times their regular wage for every hour of work beyond the stipulated weekly 40 hours. It is important to remember that federal laws stipulate these requirements.

Prohibited Employment Practices in the US

The US employment law, molded by federal statutes, landscape mandates strict prohibitions on certain practices to ensure a fair and safe work environment. Both private-sector employers and employees need to be cognizant of these to avoid any potential legal disputes, especially with the federal government Department of Labor involved.

One common prohibited practice is the misclassification of employees as contractors. This illegal practice, in defiance of labor regulations, can rob employees of essential benefits and protections such as base pay, overtime compensation, unemployment insurance, and safe workplaces. Thus, it's crucial for businesses to understand the key differences between an employee and an independent contractor, ensuring appropriate classification and treatment under the law. Employers should also prioritize occupational safety and health to avoid any workers' compensation claims.

Moreover, employers are not allowed to retaliate against employees for asserting their rights under the law. This includes whistleblowing on illegal activities, participating in investigations or lawsuits, or claiming their right to benefits and overtime. The Department of Labor regulates and enforces these provisions

Anti-discrimination Laws

The United States law postulates that it is an illegal action to discriminate against an employee based on their race, sexual orientation, religion, gender identity, origin, or disability. This prohibition of employment discrimination is enforced by the Equal Employment Opportunity Commission. If an employee harasses another on the basis of the aforementioned characteristics, they are obliged to file a discrimination charge against the employee. Also, it is illegal to retaliate against an employee if they complained about discrimination. This law applies to employers or organizations with at least 15 employees.

The Age Discrimination in Employment Act (ADEA): This Act forbids discrimination against people 40 years old or older in employment.

Title VII and Title II of the Civil Rights Act of 1964: This Act disallows discrimination against employees and job applicants based on their sex, race, religion, or sexual orientation.

Pregnancy Discrimination Act (PDA): The PDA prohibits discrimination against employees due to their pregnancy state.

Americans with Disabilities Act (ADA): The ADA is a Federal law that prohibits against discrimination of employees or anybody in employment with a disability. The Act also makes enables the provision of accommodation for disabled employees.

Data Privacy in the US

One of the most essential acts is the Stored Communications Act (SCA). The SCA prohibits accessing another individual's online account without their consent. This Act is typically applicable in the work setting. The SCA can be interpreted to enable organizations to access employee information or communication via company-owned communication platforms such as the company's email. However, this is also permissible if it is agreed upon by the employee and employer. This is a key area of concern when onboarding remote employees.

Termination of Employment Contracts

Unless otherwise stated, employment contracts in the United States are typically "at will". What this means is that the employment provided is not for any specific period of time, and both the employer and employee are within their legal rights to terminate the employment relationship at any time. As a result, notice may or may not be provided before terminating employment.

Despite that the "at will" affords both parties the legal right to provide cause or reason, employers in the US cannot terminate an employee's contract for reasons that are illegal or discriminatory under the federal law purview. In states like Montana, after six months, the at-will employment becomes invalid. in such states as Montana, after the six months or the agreed probationary period has elapsed, employees can only be terminated by the employer or organization for a "good cause". Good cause is typically any justifiable grounds for dismissal or termination of the employment contract.

Ensure Compliance in the United States with Skuad

Maintaining compliance with the United States employment laws not only helps your organization avoid needless fines and penalties but also cultivates a conducive work atmosphere.

Skuad, as an exceptional Employer of Record solution, enables organizations to compliantly hire contractors and employees across over 160 countries, the US included. Legal liabilities and fines are no longer a concern with Skuad, as the platform guarantees your organization's full compliance with the respective laws and norms of each country.

Schedule a demo with Skuad to learn more.

FAQs

What is the basic US employment law?

The basic or primary federal employment law in the United States is the Title VII of the Civil Rights Act of 1991. This Act prohibits employment discrimination based on race, color, sexual orientation, and religion. It is regarded as the fundamental employment law in the United States.

What are examples of wrongful termination?

Wrongful termination includes termination based on discriminatory practices in the workplace, sexual harassment, wage and hour violations, whistleblower retaliation, etc.

Building a remote team?

Employ exceptional talent, anywhere, anytime!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

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