McDonald’s, Microsoft, Nike, Colgate, Google, Apple, and Facebook… These are just some of the most popular companies in the world. All of them, too, were founded in the United States.
As the most well-known country in the world, the U.S. is a very promising market for practically all types of businesses. As one of the most developed nations in the world, it is home to more than 330 million people. It’s also a melting pot of cultures. After all, it has the highest number of immigrants (foreign-born people) among all countries.
Thus, starting a business in this country can be very exciting. But before you dive in, it’s important to be aware of the employment laws that exist in this country. After all, human capital is one of the top factors that influence the success of any business. Following employment laws will help you build and sustain your brand in “the land of the free and the home of the brave”.
Setting the Context on U.S. Employment Laws
Federal employment laws apply to businesses that have a certain number of employees, which is based on the type of business and any alleged discrimination. Meanwhile, state and local laws would apply to smaller businesses that don’t meet the minimum number of employees that are set for federal laws.
Employees are described as people who have an employment contract (or collective-bargaining agreement) or those with employment-at-will. At-will employment is presumed for every employee — provided that there’s no existing contract that specifies otherwise.
As of this time of writing (September 2020), there are over 180 federal employment laws, which the Department of Labor (DOL) regulates and executes. On top of these, different states also have their own employment laws.
Many businesses (especially startups) feel overwhelmed upon learning this fact. They not only have to know but also to ensure compliance with all of those laws. The good news is that these employment laws are enacted to protect not only employees but also employers. Thus, it would be to your business’s benefit to be aware of and follow these laws.
To guide you, we’ve rounded up the most important employment laws for businesses in the United States.
1) The Fair Labor Standards Act (FLSA)
Wages are often the biggest expense for businesses. This is covered by the FLSA, which demands that all U.S. workers should receive fair compensation. This is true whether they work on a full-time or part-time basis.
The FLSA established the federal minimum wage: $7.25 per hour beginning on July 24, 2009). However, workers who are subject to both state and federal minimum wage laws are entitled to receive whichever of the two amounts is higher.
Many states also follow their own minimum wage laws, which can go from as low as $5.15 (in Wyoming and Georgia) to as high as $13.50 (in Washington) per hour.
The FLSA also sets the standards for work hours, overtime pay, recordkeeping, child labor, and so on. For example, exempt employees are not protected by the FLSA. Thus, they are not entitled to receive overtime pay.
2) Employment Discrimination Laws
As home to the largest number of immigrants across the globe, the U.S. has established stringent anti-discrimination laws in terms of hiring, promoting, referring, discharging, and so on. According to Title VII of the Civil Right Acts of 1964, it is illegal to discriminate both applicants as well as employees according to their color, race, sex, religion, or national origin.
The Age Discrimination in Employment Act of 1967 (ADEA) helps protect applicants and employees that are aged 40 and above from age discrimination in different aspects of employment. This law is enforced by the Equal Employment Opportunity Commission.
Workers with the same job content deserve the same salary, based on The Equal Pay Act of 1963. The Americans With Disabilities Act (ADA) of 1990, on the other hand, deems it illegal for businesses to refuse to employ qualified applicants due to their disability.
To avoid being slapped with penalties and/or lawsuits, it’s a must for any business in the U.S. to thoroughly know its workers. Some businesses are unable to adhere to the laws because they don’t have the right information about applicants and/or employees. It’s also good practice for your employees to know about these laws and their repercussions to your business. Consider them as your ally in abiding by employment laws.
3) The Employment Retirement Income Security Act of 1974 (ERISA)
Hiring the right people alone is a huge feat. However, it is even more difficult to keep them in your business for many years. Millennials in particular (those born from 1980 to 1996), which comprise the bulk of today’s workforce, are notorious for jumping from one employer to another in just a few years.
To promote loyalty to their company, many businesses offer attractive welfare plans to workers. While these benefits are not mandated by the ERISA, it dictates the minimum standards in providing such benefits. So if your business is thinking of offering health, disability, or life benefits to your employees, make sure you read the ERISA.
Also, remember that most employment laws (including the ERISA) are constantly being updated. Hence, you need to constantly stay informed about changes in order to stay on the right side of the law.
An essential amendment to the ERISA is the Consolidated Omnibus Budget Reconciliation Act (COBRA), which enables select workers and their families to continue their health coverage for some time even after a job loss or other circumstances.
On the other hand, the Health Insurance Portability and Accountability Act (HIPAA), another ERISA amendment, safeguards workers and their families from discrimination in health coverage due to their health condition.
Businesses should also look into these other ERISA amendments: the Affordable Care Act, the Mental Health Parity Act, the Women’s Health and Cancer Rights Act, the Newborns’ and Mothers’ Health Protection Act, and the Mental Health Parity and Addiction Equity Act.
4) The Occupational Safety and Health Act of 1970 (OSHA)
It goes without saying that it’s your obligation as an employer to keep your workplace physically safe. The OSHA lays down safety provisions, which include industry-specific guidelines for businesses.
A fundamental part of the OSHA is the “General Duty Clause”. This states that workers should never be exposed to practice that poses an apparent danger to their safety.
No matter how careful your business is, there’s always the risk that injury, sickness, disability, and even death will take place in your workplace. If any of such terrible incidents occur, your employees and/or their dependents can submit claims for Workers Compensation Benefit. If you need guidance about workers’ compensation for work-related injuries, the best course of action is to consult experts in this field, such as the Friend, Levinson, and Turner Law firm.
If you violate U.S. employment laws (whether intentionally or inadvertently), you can face not just penalties but also bad PR for your business. It’s important to learn as much as possible about the laws, stay updated on amendments, and hold everyone accountable in following them.