Besides an hourly or annual salary, many workers also have employee benefits such as employer-sponsored health care coverage, paid vacation, sick leave, and other fringe benefits.
By Lisa Burden, J.D. | Legally reviewed by Melissa Bender, Esq. | Last reviewed April 14, 2025
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Compensation and benefits are a top reason why people choose to join and stay with an employer. But, disputes over wages and benefits happen and often lead to lawsuits.
FindLaw’s Wages and Benefits section helps you understand the legal implications of wages and employee benefits. This section explores wage laws, retirement benefits regulations, unions, and more.
Use the menus below to navigate to the most relevant topic, or scroll down to keep reading about legal protections for wages, benefits, and work hours.
State and federal laws determine minimum wage, the maximum number of hours an employee may work in a single shift, collective bargaining rights, overtime laws, and other rules for how employees work and get paid. These requirements are "wage and hour" laws.
The Fair Labor Standards Act (FLSA) sets federal standards for the minimum wage, overtime pay, employee record-keeping, and child labor. The federal minimum wage rate is $7.25 an hour.
But, the FLSA grants states the right to set their own state minimum wage rate, and many have done so.
For example, California, New York, and New Jersey have their own minimum wage laws. The required minimum wage in California for 2024 is $16 per hour for all employers. As of Jan.1, 2024, New York's minimum wage is $16 per hour in New York City and $15 per hour in the rest of the state. New Jersey's minimum wage for 2024 is $15.13 per hour for most employees.
Another important law for employer wage-and-hour compliance is the Equal Pay Act. This federal law mandates equal pay for equal work, regardless of gender, and bans pay discrimination based on sex.
State and federal rules on the rate of pay and equal pay do not apply to independent contractors.
Some state laws provide extra employee protections, including mandated meal periods and limits on required work hours.
The U.S. Department of Labor enforces the federal laws. States have their own labor departments that enforce state employment and labor laws.
The term "benefits" is broad. It covers everything an employee receives besides cash wages. The federal government requires that employers offer certain benefits, such as family and medical leave. These benefits generally do not cost an employer anything. The laws do not require other benefits, such as sick leave and health care.
Workers negotiate with their employer for these optional benefits. These benefits include:
Typically, the higher an employee's compensation, the more optional benefits they'll receive. Companies tend to value higher-paid employees since they are in critical roles. They are more willing to offer extensive benefits to entice these workers to join their team.
Although some benefits are optional, employers must follow specific federal regulations. These regulations are often complex and challenging to understand.
Most health benefits and pension plans fall under a federal law called the Employee Retirement Income Security Act of 1974 (ERISA). Among other things, ERISA regulations require that employees receive notice of the terms of any employee benefit plan.
These terms include, but are not limited to:
If you are part of a plan, ensure you receive this information. If you don't, contact your company's human resources department.
Not all workers receive benefits from their employer. For the most part, the state and federal laws only protect employees. There is a difference between a worker and an employee. Anybody who provides services to a company in exchange for pay is a worker. But, only certain people are legal employees.
Wage laws and other employment regulations protect eligible employees. The same is true for laws that govern employee benefits. They do not cover specific categories of workers, such as independent contractors. You must know how your employer classifies you.
If you fall into any of the below categories, the wage and hour laws may not fully protect you:
Either way, you must consider this when looking at an employment opportunity.
Many U.S. employees offer health insurance, although it's not a requirement. But once an employer offers such a benefit, federal discrimination laws and health care plan regulations apply. For instance, employers that offer health care coverage may not refuse this coverage to individual employees.
Since so many U.S. workers get subsidized health benefits through their employers, the federal government enacted the Consolidated Omnibus Budget Reconciliation Act (COBRA) to help them after a job loss. The law allows employees to maintain their employer-sponsored health care plan for up to 18 months after leaving their jobs, at their own expense.
Workers' compensation insurance provides financial and medical benefits to employees who are injured or become ill due to their work. It typically covers eligible workers' medical expenses, lost wages, and rehabilitation costs.
The federal Employee Retirement Income Security Act (ERISA) governs how employment benefits — including health care coverage — get handled.
ERISA's main purpose is to ensure that retirement funds and other such benefits get managed for the "exclusive benefit" of the participants, not simply to enrich the fund managers. This law also makes the process much more transparent with notification requirements for retirement plan changes.
The Family and Medical Leave Act (FMLA) protects workers who need time off for a family emergency or medical necessity. Under the FMLA, employers may not terminate or otherwise retaliate against an employee with a valid leave request.
Other common types of leave include vacation and holidays. Government employers must give employees a paid day off on legal holidays, not private-sector employers. Also, employers don't have to offer paid vacation time to their employees.
Unemployment benefits are financial payments provided to employees who have involuntarily lost jobs and meet certain eligibility criteria. These benefits temporarily help unemployed people cover basic living expenses while they search for a new job. The amount and duration of benefits vary depending on factors such as prior earnings and state regulations.
Those are just some of the topics covered in this section. Be sure to speak with an employment law attorney if you have any legal questions about wages and benefits.
Federal and state laws determine the minimum wage workers must receive. These laws also identify when employers must pay overtime for employees who work longer hours. Unfortunately, some employers fail to comply with these legal requirements.
Common violations of the wage and hour laws include:
Regulators set wage and hour laws to protect employees and ensure employers pay them fairly. If this doesn't happen, you may have a potential legal claim.
Payroll taxes are withheld or paid by an employer on behalf of their employees and may include:
Independent contractors or the self-employed may be required to make estimated tax payments periodically in the course of the year. These estimated tax payments are intended to serve the same purpose as the payroll tax withholding employers apply to their payment of employees. Estimated tax payments take place quarterly.
Employers must provide each employee with a Form W2. This form is the annual summary of the wages paid and taxes withheld. An employer must issue this document to their employees before January 31 of the year following that for which taxes will be filed.
In some situations an employer can be compelled to withhold a portion of an employee's earnings to repay a debt the employee owes another party. Wage garnishment may be required in situations involving:
There are some limited protections provided to employees who are subject to wage garnishment. The Consumer Credit Protection Act (CCPA) limits the garnishment sought in federal court, which limits the amount to 25% of the debtor's disposable earnings each week. But, back payment for child support may result in garnishment of as much as 60% of disposable income.
Also, employees cannot be fired because their wages are garnished. But, those garnished for two or more debts can be fired without repercussion from their employer.
U.S. Department of Labor and state laws concerning wages and fair pay have evolved over the years, and the rules governing employee benefit plans can be challenging to understand. Exemptions apply to salaried workers and other types of workers.
Because this area of law can get tricky, it may be in your best interest to talk to a local employment law attorney. An experienced lawyer can help you understand your obligations and rights.
