Employment law is the all-important connection between organizational compliance, human resources management, and ensuring that employees are treated equitably.
A broad area of law, with federal, state and local aspects, employment law needs to be understood and implemented by HR professionals. Nevertheless, due in part to its scope and complexity, interpreting employment law can be extremely challenging.
Whether you’re building your HR department, have an experienced setup in place or somewhere in between, this guide takes you through everything you need to know about employment law — from why it’s important, what is covered, examples of employment law, and how to use it at work to keep your organization free of legal challenges and fines.
What is employment law?
Employment law governs the relationship between employers and employees, which is achieved by setting legal standards to ensure they’re treated safely, fairly, and in accordance with mutual obligations.
It covers a wide range of topics (including wages, working hours, conditions, discrimination, termination and employee benefits), and aims to thoroughly protect employee rights while at the same time being fair to the business, balancing their interests.
Employment law varies by country, and in the US, it can also vary by state and locally too. It can also evolve with societal and economic changes. Employers must comply with employment law to avoid penalties as a result of legal challenges from employees if their rights are violated.
Why HR professionals need to understand employment law
Employment law knowledge is not a nice-to-have for HR professionals.
Understanding employment law can mean that HR teams are able to provide advice and support that is legally sound. And it also means they can stay developed by keeping on top of employment trends.
Below we explore the main reasons HR professionals need to understand employment law:
Drafting and enforcing employment policies
The writing and execution of employment policies are an HR professional’s bread and butter, and can include areas such as codes of conduct, grievance procedures and leave entitlements. These must align with federal employment laws to be correct.
HR professionals, therefore, need to understand these laws to better ensure workplace rules and regulations are legally compliant and enforceable; otherwise, gaps or contradictions can lead to a variety of legal challenges — like an attendance policy that penalizes employees for taking legally mandated sick leave.
HR’s ability to create policies that reflect legal obligations ensures, ultimately, fairness for employees and protection for the organization.
Ensuring compliance with legal standards
HR professionals are custodians of their workplace culture, and they must ensure that their organization complies with all employment laws. This relates to all stages of the employee lifecycle, such as hiring, wages, workplace safety, working hours and discrimination protection.
Understanding all regulations relevant to these areas guarantees that HR professionals avoid any legal pitfalls that can result in, among other things, fines, lawsuits or reputational damage to the organization.
Some examples include understanding minimum wage laws to ensure employees are compensated fairly, and understanding anti-discrimination laws to prevent unlawful hiring practices. HR professionals essentially need to understand these areas to partner with managers on ensuring day-to-day people operations are legally compliant.
Handling workplace disputes effectively
HR professionals routinely have to deal with workplace conflicts such as harassment, discrimination or disagreements regarding employment contracts. These situations must be handled in line with employment law and with a solid understanding of the risks to the organization if due process is not followed.
By understanding and adhering to the relevant laws, HR can effectively mediate disputes, investigate complaints, as well as recommend appropriate actions all the while safeguarding the rights of everyone involved.
As an example, knowing the legal definition of workplace harassment will enable HR to address complaints in the right way, showing care to the affected employees and mitigating any risk of legal action to the organization.
Managing termination processes
Employee terminations are sensitive and emotional processes, as well as being legally complex. HR professionals need to thoroughly understand employment laws related to this, including unfair dismissals, redundancy, notice periods, as well as severance pay.
Engaging in non-compliance, such as dismissing an employee without a valid reason, can lead to substantial legal penalties. Therefore, HR professionals need to be aware of all the relevant processes so they can maintain a fair and transparent termination process that’s fair to the business as well as the employee.
Supporting organizational growth and stability
When expanding or restructuring a business, employment law knowledge is essential. HR professionals need to navigate legal requirements relating to hiring, contracts and employee rights to ensure smooth expansion or restructuring processes.
During mergers or acquisitions, HR might need to adjust employment terms while adhering to complex labor laws. Similarly, understanding immigration as well as labor laws is crucial when hiring talent from overseas.
Understanding the basics of employment law
US employment law has been carefully established to provide a sound legal framework for, at its core, governing the relationship between employers and employees. It aims to protect workers’ rights, ensure fair treatment as well as set correct standards for workplace conduct.
It covers areas such as wages, discrimination, safety and leave entitlements. Compliance is mandatory, and violations can potentially result in severe penalties such as litigation or fines.
Employment laws are enforced at federal, state and local levels, with federal laws serving as the baseline. Key US-wide employment laws include:
- Americans with Disabilities Act: Prohibits discrimination against individuals with physical or mental disabilities in every aspect of employment.
- Fair Labor Standards Act: This act establishes minimum wage, overtime pay, recordkeeping, as well as child labor standards.
- Family and Medical Leave Act: Entitles eligible employees to unpaid leave for specific family and medical reasons, with job protection included.
- Occupational Safety and Health Act: Requires employers to maintain a safe work environment, including training and reporting of accidents.
- Title VII of the Civil Rights Act of 1964: Sometimes shortened to simply Title VII, this law forbids discrimination in employment practices based on, among other things, race, color, religion, sex or national origin.
What HR professionals need to know about employment law
While not being legal professionals, HR plays a vital role in ensuring legislative compliance in the workplace.
Many HR responsibilities cover a wide array of topics under US employment law. Below are some areas of employment law that HR professionals need to understand, along with insights, relevant laws and employer responsibilities.
Background checks
Background checks represent a clear risk area for employers, as they can create unfairness and encourage bias in an organization’s recruitment processes, as well as creating privacy risks for employees.
Employers must ensure that all background checks comply with all legal restrictions, as per the Fair Credit Reporting Act and state “ban the box” laws. Employers must obtain written consent for background checks, use the results fairly, store the information correctly, and also ensure that all background check processes comply with applicable state regulations.
Child labor laws
It goes without saying that employment law goes some way to address the potential illegal employment of minors. Restrictions in doing so aim to protect their welfare and access to education, as well as address the risk of child trafficking, a sadly common issue worldwide.
Child labor law is governed by FLSA child labor provisions, and ensures compliance with working hour restrictions, sets minimum age requirements, and also prohibits children from undertaking certain tasks or types of work.
Compliance
Employment laws are not advisory. They lay out the base protections for employees to make sure they’re treated fairly in the workplace under established legislation that has been finetuned over decades. Employees have a right to this.
Employers benefit from employment law regulatory compliance by working to standardized processes that can protect the business through fair play and equal competition across workplaces. Non-compliance can be exceptionally damaging, through fines, litigation, embarrassment, flight of talent, as well as damaged reputations.
Disability accommodation
The laws around disability accommodation can be a little vague to interpret at first, but non-compliance with these requirements pose significant legal risk. Essentially, as per ADA legislation, employers must provide reasonable accommodation for employees with disabilities, provided doing so doesn’t impose undue hardship.
This means that employers must engage in a communicative and interactive process to determine reasonable accommodations, such as provisions for an interview, adjustments to workspaces or added flexibility to schedules.
Diversity and inclusion
DEI is a broad topic and has numerous practical applications far beyond the necessities of legal compliance. Embracing DEI goes a long way to ensuring engaged employees and a happy and healthy workplace culture.
Workplace diversity is legally governed by Title VII and EEOC guidelines. To ensure that legal compliance goes hand in hand with DEI, employers must go out of their way to foster inclusive hiring practices, track diversity metrics and report them accordingly, and take proactive steps to address conscious and unconscious bias at all stages of the employee lifecycle.
Drug-free workplace
It’s in everyone’s interests to enjoy a drug-free workplace. Employers have a duty to provide one, and doing so means that employees will have a safe place to work, and instances of crime around the workplace will be kept to a minimum.
Employers are allowed to implement drug-free workplace policies, but these must comply with state-specific marijuana laws and the Drug-Free Workplace Act. Employers must develop clear and fair drug policies, conduct testing lawfully, and promptly and proactively address substance abuse through workplace programs and training interventions.
Employee benefits
Employees who receive benefits can expect that these perks are administered in the right way. Employers who offer benefits, therefore, must comply with the Employee Retirement Income Security Act and Consolidated Omnibus Budget Reconciliation Act, federal regulations that govern their administration.
Under these laws, employers must ensure that benefit plans meet legal requirements, provide clear communications regarding the benefits on offer and, where applicable, offer COBRA coverage. This all ensures the provision of benefits is fair and equitable for all.
Employee classification
Classifying employees correctly is vital, as it directly impacts an organization’s legal compliance and its financial obligations — and, most critically, is directly correlated with the rights of the employees.
Employee classification is covered by FLSA and is also connected to IRS regulations. To ensure classification compliance, employers must regularly review their employee lists to check classifications and ensure they align with all legal definitions.
Misclassification can result in penalties and back pay, and whereas mistakes can happen, demonstration of auditing procedures and swift correction and follow-up is essential.
Employee training
Learning and development is useful for a number of reasons, such as keeping employees motivated and upskilled, but there’s also an employment law aspect to this too. Ongoing training ensures compliance with workplace laws and reduces liability risk, as well.
Laws related to this include OSHA and harassment prevention legislation. Under these regulations, employers have to provide regular training sessions on safety, discrimination, harassment and company policies. They must also ensure that access to these trainings is fair and equitable.
Employment contracts
The employment contract is a vital document for many different reasons and serves as the legal safeguard for both employer and employee.
It’s no surprise that contracts are a vital part of employment law. They must comply with all applicable laws and clearly outline terms of employment in line with state and federal employment laws. HR teams must draft clear and legally compliant contracts, include non-compete and confidentiality clauses where needed, and review templates regularly.
Equal pay
It’s a fundamental right that everyone in the workplace, regardless of their gender, is paid fairly and equally. This contributes to a workplace free from discrimination and also immeasurably helps morale and drives a positive work culture.
Wage disparities based on gender are prohibited under federal law, through the Equal Pay Act and the Lily Ledbetter Fair Pay Act. Under this legislation, organizations are mandated to conduct regular pay audits to ensure equal pay, promptly and accurately address disparities, and implement transparent pay structures.
Health and safety
By law, employers must provide a safe working environment that is free from hazards. This is mandated by OSHA. Another law related to this requirement is the Mine Safety and Health Act.
Under this requirement, employers must conduct regular workplace safety audits, provide the right training, provide personal protective equipment, and comply with industry-specific safety regulations.
There’s an added mandate that employers must address safety complaints and report workplace illnesses and accidents in a timely manner, with financial and legal repercussions if this doesn’t happen.
Immigration compliance
The US has strict immigration guidelines, and anyone seeking work in the country must have the legal right to do so. It’s also the legal responsibility of organizations to verify their employees’ legal authorization to work in the US.
The legislative framework in place to safeguard this is the Immigration Reform and Control Act. The IRCA has many stipulations; the most important ones that employers have to follow are to complete, maintain and record I-9 forms for all employees, avoid discriminatory practices in verifying employment eligibility, and ensure accurate reporting, tracking and follow-up when it comes to visa and immigration.
Layoff and reductions in force
Layoffs and reductions in force are difficult times for employees, employers and the organization as a whole. They’re emotional and challenging to administer, and on top of this, HR teams must ensure they’re handled both compassionately and lawfully, as per the Worker Adjustment and Retraining Notification Act.
Under WARN, employers are obligated to provide notice of mass layoffs, offer severance packages where possible, and comply with state-specific regulations. Doing so ensures a fair and just RIF process, keeps the business legally compliant, and shows care and respect to the affected employees as well.
Military leave
A common workplace challenge in the US is how military personnel and veterans are treated with respect to returning to the workforce after service in the forces. Discrimination against military personnel is sadly common, and the Uniformed Services Employment and Reemployment Rights Act aims to address this by guaranteeing job protection and benefits under federal law to employees serving in the military.
Under this law, HR teams and managers must ensure that employees who are returning from military service are reinstated to their previous positions (if they so wish) and have their benefits protected.
Overtime pay
In the US, overtime pay is strictly governed to ensure it is administered fairly and transparently. As per the FLSA, non-exempt employees are entitled to overtime pay for hours worked above forty in a week. Because of this, employers must ensure they take time to establish comprehensive overtime policies.
This will include tracking employee hours consistently and diligently, calculating overtime pay correctly, and ensuring overtime is paid accurately and on time. HR teams must also communicate and train these obligations to managers so they know what to do as well.
Protected leave
Protected leave ensures employees are offered leave for extenuating circumstances such as maternity leave. Employers must ensure they adhere to the FMLA, which ensures provisions for leave entitlement for specific family and medical reasons are in place and communicated appropriately. This entitlement is also covered by the Pregnancy Discrimination Act.
The details of this provision stipulate that eligible employees are provided with up to 12 weeks of unpaid leave, and that their job status is maintained and not changed or removed if they elect to take this leave. Employers and HR teams must also ensure that the employee is subjected to no retaliation if they elect to take their leave entitlement.
Remote work policies
Whereas the provision of remote work policies is not legally enforced in their own right, remote working can present some compliance challenges for employers that need to be addressed to avoid litigation and fines, even if the non-compliance is inadvertent. Some common challenges in this regard include wage and hour tracking and cross-state regulations, governed by the FLSA and applicable state laws.
Employers must administer remote working arrangements correctly by establishing clear remote working policies, tracking hours diligently, and understanding tax implications for employees who undertake remote working in different states and in different countries.
Union rights and collective bargaining
Unions and the associated right to be part of one carry a lot of legal weight in the US, and it’s vital to understand the details of this. Under the National Labor Relations Act, employees have the right to form unions and negotiate collectively.
Employers must comply with the NRLA by not interfering with union activities, recognizing union representatives, and not discriminating or retaliating against them, and engaging in collective bargaining in good faith at all times. Doing this not only keeps the legal risk low but also demonstrates a willingness to work positively with employees, leading to additional workplace benefits.
Wage and hour laws
The FLSA sets the federal standard for minimum wage, overtime and working hours. Whereas state laws might provide supplementary guidelines, the federal standard is the expectation.
Employers are expected to pay their employees at least the federal or state-required minimum wage at all times, as well as provide overtime pay for eligible employees. They’re also expected to track working hours correctly and store records of this in the right manner.
In terms of these laws, employees are classified as either “exempt” or “non-exempt”, and misclassification of this can lead to violations of wage and hours law.
Workplace discrimination
Discrimination based on protected characteristics is illegal under a few different laws, such as Title VII of the Civil Rights Act, the ADA and the ADEA, and there can be severe penalties for non-compliance. This is also an obvious ethical mandate to ensure discrimination doesn’t occur in the workplace.
Employers are duty-bound to develop anti-discrimination policies, provide training on these to managers and employees, and ensure that HR practices are fair, equitable and unbiased, such as hiring processes, selection for training and promotion, and disciplinary procedures.
Workplace harassment
Employers are obligated to respond to all harassment complaints promptly and do all they can to prevent a hostile work environment. Governing this important responsibility is Title VII of the Civil Rights Act, which covers many aspects of anti-harassment behavior.
Employers must do everything within their power and awareness to respond to and minimize the risk of harassment in the workplace. This includes implementation of clear reporting procedures, investigating complaints promptly, and taking proportionate corrective action. Employers must also ensure anti-harassment training is in place.
Workplace privacy
As is the case in many areas of life, people have a reasonable expectation of privacy while they are at work. Whereas these expectations are a little limited in the workplace, employers must ensure their personal data is handled responsibly. This responsibility is covered by the Electronic Communications Privacy Act and the Health Insurance Portability and Accountability Act.
Employers must ensure lawful and transparent data monitoring, data collection and storage. Employers also have a specific duty to protect sensitive employee information, such as health data.
Workplace retaliation
Some employees are fearful of raising complaints or concerns in the workplace out of fear of reprisal or retaliation against them if they do so, for example being disciplined or even fired. Because of the risk of this, and the rights of employees to speak out, retaliating against employees for exercising their legal rights is prohibited, covered by Title VII, the FMLA and the Whistleblower Protection Act.
Employers are duty-bound to establish and implement anti-retaliation policies, investigate claims impartially, and avoid punitive actions against complainants. They must also address instances of retaliation immediately.
Wrongful termination
Every employee, regardless of the way or reason for their termination, is entitled to a fair process and justification of the decision. Termination of employees without lawful justification can result in expensive lawsuits and can contribute to a toxic workplace.
Protection against wrongful termination is covered by Title VII and state wrongful termination statutes. They require employers to follow proper termination procedures, diligently document performance issues, and avoid terminations based on protected characteristics.
Managing local, state and federal law
As mentioned, US employment law is governed at the federal, state and local levels. This can present challenges for HR professionals, as it will require them to navigate overlapping and sometimes conflicting regulations.
Federal laws like the FLSA or Title VII provide baseline protections across the nation. States have the freedom to enhance or expand these rights, such as higher minimum wages or additional leave entitlements. Local laws can add further specifications such as city-mandated paid sick leave.
It’s the duty of HR professionals to understand how these laws interact and apply the most employee-friendly standard when conflicts arise. For example, if a state offers enhanced paid leave above FMLA requirements, then HR must follow state guidelines.
HR professionals can stay on top of these issues through legal updates, consulting legal experts, and utilizing compliance tools. By balancing multi-jurisdictional laws, HR ensures the organization remains compliant while driving trust and fairness in the workplace.
Staying up to date on legal changes
Staying up to date on federal, state and local employment laws is critical for every HR professional to prioritize. This ensures ongoing legal compliance, avoids costly disputes, and maintains a positive and fair workplace.
Employment laws change frequently due to new legislation, court rulings and regulatory updates. Failure to stay up to date on these updates can result in lawsuits, fines and reputational damage.
HR teams can stay updated through subscribing to legal updates from reliable resources, such as the Department of Labor or the Equal Employment Opportunity Commission. Furthermore, following or becoming a member of organizations such as the Society for Human Resource Management or the Chartered Institute of Personnel and Development can provide HR professionals with access to resources, networking events and training.
Regularly reviewing employee handbooks, policies and conducting internal audits will ensure alignment with current laws.
Frequently asked questions
If you’re wondering where to start with deep diving into the complexities of employment law, here are a few frequently asked questions that we haven’t yet covered in this guide:
Q: Are employers required to accommodate religious practices in the workplace?
This protection is guaranteed under Title VII of the Civil Rights Act. Employers must provide reasonable accommodations for employees’ sincerely held religious beliefs or practices, unless doing so would create undue hardship (examples can include flexible scheduling for religious observances or variations in dress code).
Q: Are non-exempt employees entitled to pay for travel time?
Under the FLSA, non-exempt employees are entitled to be paid for travel time if it occurs during their regular working hours or if it’s part of their job duties. Regular commuting is not covered. HR needs to establish clear travel time policies in accordance with the relevant state and federal laws.
Q: Can employers enforce mandatory retirement ages?
In general, mandatory retirement policies are prohibited under the Age Discrimination in Employment Act, which protects employees aged 40 and above from discrimination. There are certain exemptions, for example: for pilots or executives in specific high-policy roles, where age limits are legally allowed.
Q: Can employers legally ask about a candidate’s criminal history during the hiring process?
Under federal law, employers can ask about a candidate’s criminal history, but in doing so they must comply with the EEOC guidelines to avoid the risk of discrimination. Many states supersede the EEOC through “ban the box” laws that restrict how and when employers can ask about criminal records.
Q: Can employers legally classify workers as independent contractors?
Employers can only classify workers as independent contractors if they meet the specific criteria specified by federal laws such as the FLSA and any state laws that offer additional guidance. Additionally, the DOL’s economic realities test and the IRS’s common law assess factors that influence this classification.
Key takeaways
Employment is the gatekeeper to operational compliance. With so much to think about when ensuring your organization is operating in line with employment law, keep in mind these key takeaways:
- Whereas employment law is owned by HR professionals, it’s the responsibility of the whole organization to ensure it’s followed.
- There are federal, state and local levels of employment law; organizations should follow the law that offers the greatest protection to employees.
- Not adhering to employment law can result in severe penalties and loss of reputation.
- HR professionals should constantly stay up to date with employment law changes so their workplace remains compliant.
Keep in mind these points when considering how to approach employment law in the workplace. Remember that it’s not all about compliance; employment law is about showing care to employees and maintaining a positive work culture.
Got a question? Let us know in the comments below.