Human Resources and Employment Law

Human resources and employment are regulated by both federal and state statutes and regulations. U.S. employment laws cover almost every aspect of the employment relationship, from hiring to firing and beyond. There are rules regarding recruiting, hiring, pay, leaves of absence, safety, taxes, immigration, background checks, testing, employment records retention, workplace posters, employee illnesses, injuries, terminations, and other matters. Below, I review the laws that are applicable to any workplace irrespectively of the industry.

 

Employment At Will

 

In the U.S., employment is generally presumed to be at will. This means an employer has the right to discharge an employee at any time for any reason—or even no reason at all. An employee is equally free to resign at any time, with no requirement for an explanation. The existence of a written employment agreement or an employee handbook may limit the application of the at-will principle. Those documents may specify that employment will be for a certain period of time, termination may be for cause only, include an advance notice requirement, and/or other provisions. If an employee files a lawsuit for wrongful discharge, courts will examine these written documents, in conjunction with the conduct of the parties to determine whether the employee reasonably relied on the employer’s representation to the contrary. Employers must be careful what they promise to prospective employees in pre-hire negotiations. Employment at will doctrine does not protect employees against claims for unlawful termination based on discrimination, retaliation, or in violation of other public policies (e.g. if an employee is absent from the job due to jury service).

 

Equal Employment Opportunity

 

There are federal and state laws in place that expressly prohibit employment discrimination based on race, creed, national origin, gender, religion, age, disability, sexual orientation, or marital status. Employers’ decisions—not only in relation to hiring and firing employees, but also in relation to promoting, demoting, providing additional training, pay, fringe benefits, job assignments, and increasing or decreasing workload—cannot be based on membership in any of the protected classes. Workplace harassment of the protected class is also illegal. Individual defendants, as well as the organization as a whole, can be held liable for discriminative acts. 

 

Employers are also prohibited from retaliating against employees or applicants who exercise their right to oppose unlawful employment practices or who participate in a discrimination investigation or lawsuit. For example, it would be illegal for an employer to refuse to hire a qualified employee simply because he or she previously filed a claim against another employer or to refuse to promote an employee who testifies in a discrimination lawsuit. 

 

The Family and Medical Leave Act (FMLA) is applicable to the organizations that employ fifty or more people. The Act states that eligible employees are entitled to up to twelve weeks of unpaid leave during any twelve-month period for certain medical and family situations (birth and childcare or adoption, to care for immediate family member who has a serious health condition, or for the employee’s own serious health condition). Once the situation no longer exists, the employer must restore the employee to the same or an equivalent position. Under the Act, eligible employees are those who have worked for an employer for a total of 12 months (does not need to be consecutive) and a minimum of 1,250 hours during the previous 12 months. The allowable serious conditions for FMLA are those that would result in incapacity if not timely treated. Common colds, headaches, and routine dental procedures are not considered to be a serious health condition. The employer cannot discriminate against any employee who exercises his right to take leave; however, an employer can terminate that employee regardless of leave status if there is a legitimate, nondiscriminatory reason for termination (e.g. a massive layoff).

 

Hiring

 

Under both federal and state law, it is illegal for an employer to publish a job advertisement or use a recruiting practice that shows preference or discourages any member of the protected class from applying. As such, employers must be careful about word choice and language in their job postings. Employers should identify the basic tasks and qualifications needed for the specific advertised position, and there must be a justifiable, nondiscriminatory reason for including each requirement. During the interview process, the employer should concentrate on gathering information, which is necessary to judge prospective employee’s professional competence. Some examples of inquiries that may indicate intent to discriminate are childbearing plans, marital status, applicant’s national origin, religion, and age.

 

Employers must complete an Employment Eligibility Verification Form for each employee and examine acceptable forms of documentation supplied by the employee in order to confirm the employee’s eligibility to work in the U.S. Since employers cannot discriminate based on nationality, employers should not ask whether an applicant is a U.S. citizen; however, you can (and probably should) ask whether an applicant has a legal right to work in the United States.

 

Evaluation

 

Employers should make their expectations clear to employees from the very start of the working relationship. As time progresses, employees should be provided with regular feedback as to their strengths and weaknesses, their successes and shortfalls within the position they hold. Employers should apply the same evaluation factors to all employees in similar positions and keep thorough, accurate records of all facts of discipline and termination. During the evaluation process, employers should specify the particulars of employee’s conduct without making generalizations about the employee’s personality. Management should make sure each employee signs every performance review. If an employee refuses to sign, managers should document this fact by asking two witnesses to sign off a statement of the employee’s refusal. In any case, employers must be consistent in applying review and discipline methods to all employees.

 

Termination

 

When evaluating whether or not to terminate an employee, fairness is the most important consideration. Grounds for termination must be objectively provable. Red flags that may indicate improper motives in the discipline process or termination of an employee include: decisions made in the heat of the moment, varying treatment of similar employees, excused by law absence from the workplace (medical leave, for example), complaints made by an employee, and other hidden reasons irrelevant to the employee’s professional qualifications.

 

Employment Contracts

 

The importance of properly drafted contracts is paramount. These will help you avoid misunderstandings, pitfalls, potential administrative proceedings, claims, and lawsuits. If an issue arises, the written agreement will provide a strong, affirmative defense. Contracts will protect the rights and interests of both parties (employee and employer, in this case) and clearly state expectations, obligations, and responsibilities of the parties. Employment contracts are drafted according to the preferences of the parties involved and include various clauses depending on what the parties hope to achieve by starting their professional relationship. The most common clauses that an employer may wish to include in an employment contract are non-disclosure/confidentiality agreement, non-compete agreement, and intellectual property assignment agreement.

 

Within the realm of work duties, an employee may have access to the company’s internal information. The employer is entitled to protect its trade secrets and proprietary business information, and prohibit employees from using or disclosing the company’s confidential information during the period of their employment, as well as after its termination. 

 

A non-compete covenant is an agreement by an employee not to compete with his or her employer in certain ways for a period of time after the employment relationship ends. These covenants are strictly construed by the courts and can be enforced only if they are in writing, supported by consideration, reasonable as to the duration of the restriction and the territory, and do not violate any public policies.

 

Intellectual property assignment agreement is an agreement of the employee stating that everything he or she creates during the course of employment, as pertaining to the company, will become the property of the company. 

 

Employers should require all employees to sign a written agreement before the commencement of employment, and the content of these agreements can be incorporated into an employee handbook by reference.

 

Minimum Wage

 

The Fair Labor Standards Act (FLSA) is the primary law that regulates minimum wage, overtime pay, child labor, and working conditions and prohibits salary discrimination based on gender. The FLSA is administered and enforced by the United States Department of Labor. Each state has its own laws similar to the FLSA. Currently, at the time of this publication, pursuant to the federal law the required minimum wage is $7.25 per hour. This amount may be modified in certain states. State laws may not offer lower than the federal minimum wage requirement, but they may increase it within their boarders. There are numerous exemption and exceptions from the FLSA minimum wage and overtime requirements. The most common is the white-collar exemption, which applies to executive and administrative employees, as well as to learned and artistic professionals. Various exceptions also apply to full-time students, employees under the age of twenty, employees who earn tips, and so on. 

 

Fringe Benefits

 

Fringe benefits typically include healthcare (medical, dental, and vision), pensions, paid vacations and holidays, disability, life insurance, and other benefits. Employers are not required to offer any of these benefits, but they may choose to do so voluntarily as an additional incentive for employees.  

 

Workers’ Compensation Insurance

 

In certain industries, companies are required to purchase workers’ compensation insurance. This is typical in industries in which the risk of injury during the job performance is high (construction and manufacturing, for example). Workers’ compensation insurance provides compensation for medical care expenses incurred by employees who are injured on the job. 

 

Disability Insurance

 

Some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work-related sickness or injury. Disability benefits include cash payments only. Medical care is the responsibility of the claimant. Employers in certain states (New York, New Jersey, California, Rhode Island, and Hawaii) are required to purchase disability insurance if they have one or more employees. There are a number of exceptions relieving the employers from this obligation.

 

Payroll and Employment Taxes

 

Federal and state regulations require employers towithhold and remit incomeand Social Security taxes tothe appropriate government agencies and to file regular payroll tax returns. Federal and state penalties may be assessed for failure to properly withhold tax and report wages paid to employees. Employers may be personally liable for unpaid payroll taxes.

 

It is much more convenient, time efficient, and preferable from legal perspective to set up personnel systems that comply with applicable federal and state laws, either at the earliest stage of establishing a business entity or before hiring employees. It is more cost effective to implement good practices and forms before any issue arises than to deal with law enforcement agencies or complaining parties later.

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