Employment Law Overview

All employers in the United States, from small businesses to large corporations, must follow federal laws about employment. Some laws only apply to businesses of certain sizes, such as the Family and Medical Leave Act. Some apply to all companies, no matter the size.

This article provides an overview of what small business owners can expect. But, employment and labor laws are complex. For help ensuring your business complies with local laws, it's best to consult with an attorney in your area.

Pre-Employment Laws

Both employees and employers have rights and responsibilities in the workplace. In fact, employees' rights begin even before employment. Employers must abide by federal and state laws about job postings, interviews, and wages and hours.

Employers must follow anti-discrimination laws when hiring, including when creating a job posting. Most federal laws state employers may not “refuse to hire" otherwise qualified employees based on protected enumerated rights.

In pre-employment terms, this means employers must:

• List “essential job functions" according to ADA requirements. If there are essential duties that an applicant must perform, you must put them in the job description.

• Avoid language that tends to discourage applicants protected by Title VII of the Civil Rights Act. For example, avoid overt discrimination against individuals by race or indirect, such as “ideal for a young single male."

• Avoid discriminatory practices during hiring. Discriminatory practices include discarding a resume based on someone's name sounding “foreign," asking candidates if they're “young enough" to keep up with the pace, or steering female applicants into clerical jobs.

Although most federal and state labor laws affect businesses with more than a few employees, discriminatory hiring practices are unlawful for employers of any size. It is as illegal for a one-person office hiring their first employee to violate Title VII as it is for a multinational corporation.

Notice and Posting Laws

The U.S. Department of Labor (DOL) requires employers to display notices of applicable laws at the workplace where they are visible to all employees. Not all businesses must display all posters, but they must have the ones that apply. You must also display state notices.

The Equal Employment Opportunity Commission (EEOC) has enforcement authority over notice compliance. State agencies may also enforce their own laws about violations of notice.

Notices that apply to most businesses include:

• Employee Rights Under the Fair Labor Standards Act (FLSA), which discusses equal pay and minimum wage laws.

• “Job Safety and Health: It's the Law" is required by the Occupational Safety and Health Administration (OSHA). It explains OSHA reporting regulations and safe work environment laws.

• “Know Your Rights" is required by the EEOC. It lists anti-discrimination laws and facts.

• Notice of the Employee Polygraph Protection Act (EPPA). Federal law and most states prohibit the use of lie detectors in employment settings, with exemptions for security and armored transport.

You can download federal and state posters free of charge from your state labor board.

Wage and Hour Laws

The Fair Labor Standards Act (FLSA) sets minimum wage, workweek hours, overtime, and child labor laws throughout the United States. The FLSA standards are the “floor." States can have higher minimum wages, but not lower. For instance, the federal minimum wage is $7.25 per hour. At present, 30 states have minimum wages above the federal minimum.

The FLSA distinguishes between “exempt" and “nonexempt" workers. Nonexempt employees are those who must receive minimum wage and overtime pay. Exempt employees are generally salaried employees who are not entitled to overtime pay.

Child labor is strictly enforced in the United States. Minors cannot work in hazardous occupations. Minors under 16 cannot work more than 18 hours per week during school. Talk to an employment law attorney or consult Department of Labor resources for more information on child labor.

Workplace Health and Safety Laws

Employers are responsible for workplace safety and the health of their workers. The Occupational Safety and Health Act created OSHA. The agency has enforcement powers to investigate and regulate workplaces and job sites.

OSHA sets basic standards for workplace safety. These incorporate rules from other agencies, such as the Environmental Protection Agency (EPA). These guidelines are not specific since each state has its own workplace hazards. For instance, Texas is more concerned with heat exposure, while Minnesota needs to worry about cold exposure. States can use the federal OSHA standards or have their own OSHA-approved plans.

Anti-Discrimination Laws

Perhaps no laws in the modern workplace are as important as those intended to prevent employment discrimination. Four federal labor laws apply to all employers regardless of size. These have to do with fair wages and the right to unionize.

Federal anti-discrimination laws affect small businesses with over 15 employees. But that does not permit smaller businesses to discriminate at will. State laws often pick up where federal laws leave off. The EEOC investigates all claims of discrimination or harassment against individuals by individuals.

Title VII is the most important of the anti-discrimination laws and prohibits discrimination based on race, religion, gender, or national origin. In 2020, the U.S. Supreme Court ruled in Bostock v. Clayton County that Title VII applied to LGBTQ+ rights as well.

Other critical anti-discrimination laws for small businesses to keep in mind include:

• The Age Discrimination in Employment Act (ADEA) applies to employers with over 20 employees. It protects workers over 40 from termination in favor of younger workers.

• The Family and Medical Leave Act (FMLA) grants eligible employees up to 12 weeks unpaid leave to care for family or personal medical emergencies.

• The Americans with Disabilities Act (ADA) requires employers with more than 15 employees to make reasonable accommodations for workers with disabilities.

Other Federal Employment Laws

The National Labor Relations Act (NLRA) protects the rights of employees to improve their working conditions, collective bargaining, and union activities. The National Labor Relations Board oversees employee rights under this law.

Workers' Compensation Insurance is required in every state except Texas. Employers with even one employee must carry workers' compensation insurance for workers injured on the job.

Many of the laws and rules discussed above also contain anti-retaliation clauses known as “whistleblower" protection or anti-retaliation laws. These laws protect workers who report wrongdoing or regulatory violations by their company. Most laws give whistleblowers legal protection against wrongful termination.

Getting Legal Help with an Employment Law Issue

Employers have workplace obligations under federal and state laws. If you or your business face a potential legal dispute over an employment law issue, talk to an experienced small business attorney.