Labor and Employment Law Overview: Federal

Labor and Employment Law Overview requirements by state

Author: XpertHR Editorial Team

Summary

  • Federal law prohibits an employer from discriminating and retaliating against employees who fall into a variety of protected classes. These restrictions apply to nearly every aspect of employment. It also requires employers to provide disability and religious accommodations, as well as provide men and women equal pay for equal work. In addition, federal law protects the rights of employees to form unions. See EEO, Diversity and Employee Relations.
  • Employers are restricted by federal law in the use of credit checks and drug testing in hiring, and are required to verify employees' eligibility and authorization to work in the United States. See Recruiting and Hiring.
  • The federal Fair Labor Standards Act imposes employer requirements regarding the payment of a minimum wage and overtime; the provision of breaks for meals, rest and breastfeeding; and child labor. See Wage and Hour.
  • Employers must comply with federal, state and local laws when paying employees and reporting and remitting amounts withheld from employees' wages to taxing agencies. In addition, employers that provide certain health care benefit and retirement plans must comply with minimum federal standards for most retirement and health plans set up by private employers to protect the interests of participating employees. See Pay and Benefits.
  • Federal law requires an employer to provide employees with certain leaves, including family and medical leave and military leave. See Attendance and Leaves.
  • Employers are required by federal law to provide a safe working environment for their employees. For certain employers, this includes maintaining a drug-free workplace. See Health and Safety.
  • Certain employers are required to provide notice to employees in the event of a plant closing or mass layoff. See Organizational Exit.

Introduction to Federal Employment Law

Employment law governs the duties, rights and obligations within the employer-employee relationship. While some laws are designed to protect employees, others make it possible for employers to effectively manage their workforce. Federal employment law is composed of a complex set of rules made up of various components, such as:

  • Executive Orders;
  • Statutes;
  • Regulations;
  • Agency interpretive materials and opinions; and
  • Case law.

However, not all federal laws necessarily apply to every employer. A law's applicability depends on a variety of factors including the employer's size, the location of its business and employees and the industry in which the employer operates.

In addition, an employer must also comply with state and local laws. If the applicable federal, state and local laws conflict, an employer should comply with the law that provides the greatest benefit to the employee.

Employee and Employer Rights and Responsibilities

Various employment laws provide employees with certain rights, such as the right to:

  • Be paid fair wages;
  • A safe workplace;
  • A workplace free from discrimination and harassment; and
  • File complaints against an employer without fear of retaliation.

Along with these rights come certain responsibilities. For example, employees should:

  • Perform their work in the employer's best interests;
  • Perform their work to the employer's high standards; and
  • Not disclose the employer's trade secrets.

Employers, on the other hand, must follow the letter and spirit of the law throughout the employment life cycle. An employer's responsibility in this regard applies not only to current employees but also to prospective and former employees.

Select federal employment requirements are summarized below to help an employer understand the range of employment laws affecting the employer-employee relationship.

EEO, Diversity and Employee Relations

Fair Employment Practices

Fair employment practice laws are designed to ensure equal employment opportunity. Such laws protect employees from discrimination and require employers to treat employees equally.

Title VII of the Civil Rights Act of 1964 (Title VII) prohibits employment discrimination based on race, color, national origin, sex and religion. The law applies to:

  • Private and public employers with 15 or more employees;
  • The federal government;
  • Employment agencies; and
  • Labor organizations.

Enforced by the Equal Employment Opportunity Commission (EEOC), Title VII prohibits discrimination in almost every aspect of employment including:

  • Recruitment;
  • Hiring;
  • Pay and benefits;
  • Assignments;
  • Promotions;
  • Discipline; and
  • Discharge.

The EEOC published the Uniform Guidelines on Employee Selection Procedures to help employers, including federal contractors, comply with federal laws prohibiting discrimination based on race, color, national origin, sex and religion. The guidelines apply to all aspects of the selection process including recruiting, interviewing, testing and performance evaluations, to the extent they are used as a basis for employment decisions. The guidelines provide employers with guidance to help determine if their selection procedures have a disparate (or adverse) impact on a protected class.

Title VII also prohibits:

  • Harassment against an individual based on or motivated by an individual's membership in a legally protected class;
  • Retaliation against an employee for engaging in activity protected under the law, such as complaining about discrimination or harassment, filing a complaint with the EEOC or participating in a discrimination investigation or lawsuit; and
  • Discrimination on the basis of pregnancy, childbirth or related conditions (including failure to treat pregnant employees equally, not preferentially).

While Title VII does not explicitly include sexual orientation or gender identity in its list of protected classes, the US Supreme Court has ruled that the statute's sex discrimination provision prohibits discrimination against employees on the basis of sexual orientation or gender identity.

Executive Order 11246 prohibits federal contractors and certain federally assisted construction contractors and subcontractors from discriminating in employment decisions on the basis of protected characteristics. It also requires government contractors to take affirmative action to ensure that equal opportunity is provided in all aspects of employment.

The Age Discrimination in Employment Act (ADEA) prohibits employers from treating an applicant or employee less favorably because of their age. It applies to:

  • Private employers with 20 or more employees;
  • Federal, state and local governments and employment agencies, no matter how many employees; and
  • Labor unions that operate a hiring hall or have at least 25 members.

The ADEA prohibits employers from discriminating against or harassing an employee who is age 40 or older with respect to all aspects of employment such as hiring, firing, promotions, pay and benefits and training. The ADEA does not protect individuals aged under 40, and does not prohibit an employer from providing more favorable treatment to older individual's within the same protected class (e.g., an employer may provide more generous benefits to employees aged 50 or above than it does to employees aged 40 or over).

The Older Workers Benefit Protection Act (OWBPA) amended the ADEA to prohibit age discrimination in the provision of employment benefits. The OWBPA also imposes certain restrictions on employers seeking releases relating to age discrimination claims.

In addition, the Genetic Information Nondiscrimination Act (GINA) prohibits employers from:

  • Harassing or discriminating or retaliating against employees and applicants based on genetic information;
  • The use of genetic information in making employment decisions, such as hiring or firing an employee or classifying workers in a way that would deprive them of employment opportunities; or
  • Requesting, requiring or purchasing genetic information except under specific circumstances and includes strict limitations on their ability to disclose genetic information.

Disability Accommodation

The Americans with Disabilities Act (ADA) and its amendments prohibit discrimination against an individual with a disability with respect to:

  • Job application procedures;
  • Hiring and advancement;
  • Termination;
  • Compensation;
  • Job training; and
  • Other terms, conditions and privileges of employment.

The law also requires an employer to provide a reasonable accommodation to an individual with a disability who is qualified for the job the individual holds or desires.

Under the ADA an individual with a disability is one who has a physical or mental impairment that substantially limits one or more of the individual's major life activities. This includes individuals who have a record of such impairment and individuals who are regarding as having such an impairment.

When an employer becomes aware that an employee has a disability under the ADA, it is required to engage in an interactive discussion with the employee to determine if a reasonable accommodation can be made that enables the employee to perform the essential functions of the job.

The ADA applies to employers of 15 or more individuals during a 20-week period.

Equal Pay

All employers are required to comply with the Equal Pay Act (EPA). The EPA:

  • Prohibits discrimination in the payment of wages on the basis of sex;
  • Requires that men and women receive equal pay for equal work in the same establishment; and
  • If there is an inequality in wages between men and women, prohibits reducing the wages of either sex to equalize their pay.

Equal work is defined as work that requires equal skill, effort and responsibility, and that is performed under similar working conditions. In other words, the jobs do not need to be identical, but they must be substantially equal.

The EPA defines pay broadly to include salary, overtime, bonuses, vacation and holiday pay, stock options, life insurance and all other benefits and compensation.

The Lilly Ledbetter Fair Pay Act amended the EPA's 180-day statute of limitations for filing a discriminatory pay charge to allow the limitations period to reset with each new discriminatory action. Accordingly, every time an employee receives a discriminatory payment, the employee has a new period of 180 days in which to file a claim.

Religious Accommodation

Title VII requires employers to provide reasonable accommodations for an employee's sincerely held religious practices or beliefs, unless doing so would create an undue hardship (i.e., more than a de minimis cost or burden on the employer). A sincerely held religious belief is a religious principle that is truly believed by the individual and includes moral and ethical beliefs that assume the function of a religion in the person's life.

Reasonable accommodations may include permitting employees to participate in religious activities (such as prayers) at the workplace, allowing attire that does not conform to a workplace dress code or allowing reasonable scheduling changes or time off to attend religious events.

An accommodation may be considered to create an undue hardship if it:

  • Requires more than basic administrative costs;
  • Decreases job efficiency or productivity;
  • Infringes on other employees' job rights or benefits;
  • Threatens workplace safety;
  • Imposes on co-workers to share burdensome work; or
  • Conflicts with another law or regulation.

Labor Relations

The National Labor Relations Act (NLRA) is the principle federal law governing labor relations; the National Labor Relations Board (NLRB) enforces it. All employers, whether unionized or not, are subject to the NLRA, except for government employers and railroads or airlines that are subject to the Railway Labor Act.

The NLRA grants employees the right to engage in concerted activity for mutual aid and protection, as well as the right to refrain from such activities. This includes activities such as:

In addition, the NLRA prohibits unfair labor practices (ULPs) by employers, including interfering with, restraining or coercing employees who exercise their rights under the NLRA. Unions also are prohibited from certain ULPs, including threatening or coercing employees to support the union, taking adverse action against an employee who has not joined or does not support the union or causing an employer to discriminate against an employee for union-related activity.

Whistleblower Protections

Numerous federal statutes include provisions that prohibit employers from taking adverse or negative employment actions against whistleblowers, including the:

  • Fair Labor Standards Act (FLSA);
  • Family and Medical Leave Act (FMLA);
  • Affordable Care Act (ACA); and
  • Occupational Safety and Health Act (OSH Act).

Whistleblowing occurs when an employee reports information or makes a complaint of employer mismanagement, corruption, violation of law or other wrongdoing or misconduct.

Policies and practices should be implemented to provide adequate means for employees to make whistleblowing complaints internally and protect whistleblowers from retaliation.

If an employee engages in protected whistleblowing activity, an employer has an obligation to ensure that the employee is not subject to threats, harassment or other forms of discrimination or retaliation because of the protected activity. Any disciplinary action, demotion, suspension or discharge should be reviewed to make sure the decision is based on conduct unrelated to the employee's protected activity.

Recruiting and Hiring

Credit Checks

The Fair Credit Reporting Act (FCRA) governs how credit information is accessed and may be used in making employment decisions making employment decisions. Although the FCRA provides the national standards for employment screening performed by a consumer reporting agency, it does not apply when an employer conducts its own background checks.

An employer must make a clear and conspicuous written disclosure to an applicant or employee and obtain their prior written authorization before acquiring a consumer report. In addition, an employer must certify to the consumer reporting agency that the report will not be used in violation of any federal or state equal opportunity laws.

Before taking any adverse action based on a consumer credit report obtained from a consumer reporting agency, an employer is required to provide an applicant or employee with:

  • A summary of FCRA rights;
  • The name, address and telephone number of the consumer reporting agency making the report;
  • A copy of the credit report; and
  • Information on how to dispute the contents of the report.

Drug Testing

Generally, an employer may require applicants to undergo pre-employment drug testing, so long as the testing is nondiscriminatory and the accuracy of the drug-testing program can be confirmed. An employer may test current employees for drug use, provided the employer demonstrates a legitimate need for requiring the test.

Before extending a job offer, an employer may ask questions concerning whether the applicant is currently using, or has previously used, alcohol or drugs illegally. But the employer cannot ask how frequently or in what quantities the applicant used drugs or alcohol or any question likely to elicit information about a past addiction.

Criminal Background Checks

While federal law does not prohibit pre-employment inquiries about arrest and conviction records, the EEOC takes the position that disqualifying applicants strictly on the basis of criminal records may have a disparate impact on certain racial and ethnic groups.

The EEOC recommends that employers make an individualized assessment of job requirements and applicants, including, if possible, an interview with the applicant, before rejecting them based on their criminal history. An employer should not reject an applicant based on a criminal conviction unless the conviction is relevant to the job or there is another legitimate business reason.

Consider the following factors before making any decision based on criminal history:

  • The nature of the job sought;
  • The nature and seriousness of the offense; and
  • The amount of time that has passed between the offense and the job application.

Employment Eligibility and Work Authorization

The Immigration Reform and Control Act (IRCA) makes it unlawful to knowingly hire, recruit or continue to employ an individual not authorized to work in the United States. IRCA requires all employers to verify an employee's identity and employment eligibility. In order to do so, employers and employees are required to complete Form I-9, Employment Eligibility Verification, to verify an employee's identity and employment eligibility. An employer is subject to federal civil and criminal sanctions for IRCA violations.

An employer may use E-Verify to confirm an employees' work eligibility. E-Verify compares the information provided on Form I-9 against data in various federal government databases, and advises employers whether the information submitted matches government records and whether the new hire is authorized to work in the US. Participation in E-Verify is free of charge and voluntary for most employers in most states. However, employers are required to use it in some states and under some federal contracts.

An employer that uses E-Verify must comply with notice posting requirements.

Wage and Hour

Minimum Wage

The federal Fair Labor Standards Act (FLSA) requires covered employers to pay nonexempt employees the federal hourly federal minimum wage rate for every hour they work. In addition to federal minimum wage requirements, an employer must comply with state and local minimum wage requirements, which may differ from the federal minimum wage. When these rates conflict, an employer must pay covered employees the rate that is most beneficial to the employee.

Complying with minimum wage requirements goes beyond paying employees the correct hourly rate. For example:

  • Deductions that reduce an employee's net pay below the minimum wage are generally prohibited, with some exceptions.
  • Certain employees, such as students, workers with disabilities, apprentices and messengers, may be paid a subminimum wage.
  • Employers may pay workers aged under 20 a rate that is lower than the minimum wage for the first 90 days of their employment.

Overtime

Most private employers must pay nonexempt employees overtime pay when they work more than a certain number of hours, usually 40 in a workweek, which is defined as a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods. The workweek does not have to coincide with the calendar week.

Overtime hours are paid at one and one-half times an employee's regular rate of pay. Most often, calculating the amount of an employee's overtime pay is as simple as multiplying the employee's regular rate of pay by one and one-half for each hour of overtime. However, there are many situations that are more complicated.

Rest Breaks

Although an employer is not required to provide rest breaks to employees under the FLSA, if an employer does provide rest breaks it must comply with the FLSA regarding compensability of such time. In general, short rest breaks of 20 minutes or less are counted as hours worked and are usually paid. Breaks lasting longer than 20 minutes do not count as hours worked and are usually not compensated.

Meal Breaks

The FLSA also does not require an employer to provide meal breaks. But if an employer chooses to provide them, the employees must be completely relieved from duty for the purpose of eating regular meals. Employers that do provide meal breaks usually allow at least 30 minutes. The time employees are on the break does not constitute working time. An employee is not completely relieved from duty if they are required to perform any work, whether active or inactive, while eating.

Breastfeeding Breaks

The FLSA requires employers to provide nonexempt female employees with reasonable break time to express breast milk for a nursing child for one year after the child's birth. The frequency of the breastfeeding breaks may vary. However, the US Department of Labor's basic benchmark is two or three 15 to 20 minute breaks  per eight-hour shift. Additional time should be permitted for the employee to walk to and from the dedicated lactation space, retrieve a pump and other supplies, store the expressed milk in the refrigerator or take other actions necessary to express milk.

An employer is also required to provide a place to express breast milk, other than a bathroom, that is shielded from the view or intrusion of coworkers and the public.

While an employer is not required to pay nursing employees for time spent in breastfeeding breaks, if an employer provides other types of paid rest breaks (e.g., smoking or coffee breaks), it must compensate employees who use that break time to express milk.

An employer with fewer than 50 employees is not subject to FLSA breastfeeding break requirements if compliance would impose an undue hardship.

Many states and localities have enacted similar laws, which may provide greater employee protections and rights than federal law.

Child Labor

The FLSA's child labor provisions govern the number of hours and the type of work performed by minors. Restrictions may vary depending on the age of the minor. For example, different rules apply to minors under age 18, 16 and 14 regarding the number of hours and the times of day and/or year they may work and the types of work they may be perform.

Although not required, an employer may obtain an age certificate showing that an employee meets the age requirements established by the FLSA to help shield itself from liability.

Pay and Benefits

Payment of Wages

Employers must comply with federal, state and local laws when paying employees. The federal FLSA only generally requires that employees be paid by their regular payday and prohibits employers from changing pay frequencies to avoid paying overtime pay. The vast majority of the wage payment laws and regulations that employers must comply with are at the state level and they are more specific than the FLSA.

Wage Withholding

Employers are required to make deductions from employees' wages for federal, state and local income taxes and employment taxes (i.e., Social Security and Medicare taxes and unemployment taxes). In addition, employers must withhold these taxes on the value of the fringe benefits and health insurance benefits they provide to employees. In addition, an employer may be required to withhold and remit payments for child support, creditor garnishments, student loans, tax liens or other employee debts.

Payroll Tax Reports and Deposits

As part of their payroll obligations, employers that withhold federal income and employment taxes from employees' pay are required to timely file reports reflecting the total amount of taxable wages paid to employees and the income and employment taxes withheld from those wages. These reports must be on required forms and filed with the Internal Revenue Service, the Social Security Administration and state and local tax agencies. Employers are also required to make deposits of the amounts withheld according to certain schedules, depending on the amount of deposits and other factors. All these amounts must be periodically reconciled.

In addition, all employers must report information about newly hired and rehired employees to state new hire reporting agencies within a certain time period.

Benefits Plan Administration

Employers that provide certain health care benefit and retirement plans must comply with the Employee Retirement Income Security Act (ERISA). ERISA sets minimum standards for most retirement plans and health plans set up by private employers in order to protect the interests of the employees who participate in such plans.

For example, ERISA:

  • Requires plans to provide participants with plan information;
  • Sets minimum standards for participation, vesting, benefits accrual and funding;
  • Sets out fiduciary responsibilities for managing and controlling plan assets; and
  • Regulates and sets standards for reporting requirements.

Health Care Benefits

Employer-sponsored health care benefits are an important part of the overall compensation package used by an employer to attract and retain workers. Employers must comply with several federal laws when designing and administering such benefits.

The Affordable Care Act (ACA) imposes a number of requirements that apply to employer-sponsored group health plans. These requirements have a large influence on health benefit plan design and strategy, touching on issues ranging from required health benefits to bans on benefit limits. Certain employers also may be subject to penalties for failure to offer employees affordable coverage.

Health Information and Privacy

The Health Insurance Portability and Accountability Act (HIPAA) affects the administration of group health plans. The law is designed to:

  • Better protect employees' health insurance when they change or leave a job (i.e., provide them with portability);
  • Prohibit discrimination based on individual health factors; and
  • Ensure the privacy and security of individuals' protected health information (PHI).

HIPAA does not require group health plans to provide any particular benefits, but it does require that any benefits provided be made available to similarly situated individuals. HIPAA also requires employers to provide employees and their dependents an opportunity to enroll in the employer's health plan during a special enrollment period following certain qualifying events, such as when an individual becomes a new dependent through marriage, birth or adoption.

Health Care Continuation

Employers of 20 or more employees that provide group health insurance coverage are required to comply with Consolidated Omnibus Budget Reconciliation Act (COBRA) requirements to provide continued health insurance coverage to employees and certain family members for a limited time after certain qualifying events, such as the loss of a job. COBRA contains strict rules for:

  • How and when continuation coverage must be offered and provided;
  • How employees and their families may elect continuation coverage; and
  • The circumstances that justify terminating continuation coverage.

Social Security and Medicare

The Social Security Act provides workers and their families with income replacement upon retirement, the death of a spouse and permanent disability. Social Security is administered by the Social Security Administration and is split into two programs: (1) Social Security and (2) Medicare.

Benefits provided under Social Security include retirement benefits, disability benefits, death benefits and survivor benefits. Medicare is a federal health insurance program that covers individuals age 65 or over, disabled workers under age 65 and individuals with end-stage renal disease.

Attendance and Leave

Family and Medical Leave

The Family and Medical Leave Act (FMLA) entitles eligible employees of covered employers to unpaid, job-protected leave for the following reasons:

  • The employee's inability to work due to a serious health condition;
  • To care for an immediate family member with a serious health condition;
  • The birth, adoption or foster care of the employee's child; and
  • To address a military exigency arising from a family member's military duty or call to military duty.

While an employee is out on FMLA leave, an employer must maintain the employee's health benefits and follow certain rules regarding other employee benefits and compensation. An employee also must be reinstated to their same position (or an equivalent position) when they return from FMLA leave.

Because the FMLA protects employees from discrimination or retaliation based on exercising their FMLA rights, an employer cannot use an employee's use of FMLA leave as a factor in deciding to take an adverse employment action against the employee.

Military Leave

All employers, regardless of size, are required to comply with the Uniformed Services Employment and Reemployment Rights Act (USERRA), which protects the job rights of individuals who voluntarily or involuntarily leave employment to undertake military service or certain types of service in the National Disaster Medical System.

USERRA prohibits an employer from discriminating against past and present members of and applicants to the uniformed services. USERRA also prohibits an employer, based on an individual's past, present or future military status, from denying:

  • Initial employment;
  • Reemployment;
  • Retention in employment;
  • Promotion; or
  • Any benefit of employment.

In addition, employers may not retaliate against employees for exercising their military leave rights or for participating in USERRA's enforcement process.

Health and Safety

Occupational Safety and Health

The Occupational Safety and Health Act (OSH Act) imposes on all employers a general duty to provide a workplace free from recognized safety and health hazards that could cause death or serious physical harm. In particular, the OSH Act requires employers to:

OSHA is empowered to conduct workplace inspections and require employers to fix safety problems.

As part of providing a safe working environment, a workplace safety program should be established and maintained. Such programs may include safety training, emergency preparation and accident resolution policies and procedures. Policies and practices regarding safe on-the-job driving also should be implemented and enforced.

Drug-Free Workplace

Employers that receive federal grants or contracts and private organizations that do business with the federal government are required by the Drug-Free Workplace Act to maintain a drug-free workplace. Steps that covered employers are required to take include:

  • Publishing and providing employees with a policy statement of the employer's drug-free program;
  • Notifying employees of mandatory compliance with the policy;
  • Establishing a substance awareness program, including counseling and rehabilitation programs;
  • Notifying the federal contracting or granting agency if an employee has been convicted of a criminal drug violation in the workplace; and
  • Imposing penalties on employees convicted of a reportable workplace drug conviction.

Organizational Exit

Mass Layoff Notifications

Most employers that employ 100 or more employees must comply with the Worker Adjustment and Retraining Notification Act (WARN Act). The WARN Act requires covered employers to give employees 60 days' advance notice before a plant closure or mass layoff. Employers that fail to give the required notice may be responsible for providing wages and benefits to those employees and may be subject to civil fines and penalties.

In addition to complying with the WARN Act, employers initiating a reduction in force or plant closing must perform due diligence to ensure that company policies (including those prohibiting discrimination and retaliation) and provisions of any collective bargaining agreements are carefully followed.