Employment law governs every detail of the relationship between employee and employer. It is designed to protect employees and their employers through regulations that guarantee workplace safety, protect against child labor, ensure a fair and equitable hiring process, and address family and medical leave. Employment law also regulates the hours an employee can work and sets wages. 

It is important that employees and employers understand the basic elements of employment law in order to avoid legal action. For example, if an employee makes false statements that harm an employer’s business or reputation, they may face a lawsuit — even if their statement doesn’t cause any monetary loss.

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Why Is Employment Law Important?

If an employer breaks an employment law, they may fall under investigation or incur penalties including extensive fines. Examples of employer misconduct include failing to pay mandatory overtime, denying paid leave, wrongful termination or asking prohibited questions on job applications. Employment law is structured so that both employer and employee are treated fairly, which in turn keeps a business running properly. These regulations ensure that businesses can focus on productivity instead of directing resources to resolving disputes.

For example, employers have the right to terminate an employee if they are not properly performing their duties. They also have the right to terminate an employee if the company can no longer afford to keep them on staff, or for more obvious reasons such as theft or defamation. Employment laws ensure that employees fulfill their contract with their employer, thereby protecting employers from bad faith actors.


Harassment in the Workplace

There are limits to the protections offered by employment laws. For example, harassment is illegal, but “petty teasing” is not. According to the U.S. Equal Employment Opportunity Commission (EEOC), harassment is unwelcome conduct that is based on race, color, religion, sex, national origin, older age, disability or genetic information. Harassment becomes unlawful when enduring the offensive conduct becomes a condition of continued employment, or the conduct is severe or pervasive enough to create a work environment that a reasonable person would consider intimidating, hostile or abusive. 

Petty teasing doesn’t qualify as unlawful, unless it creates a work environment that is intimidating, hostile or offensive. Offensive conduct may include, but is not limited to, offensive jokes, slurs, epithets or name calling, physical assaults or threats, intimidation, ridicule or mockery, insults or put-downs, offensive objects or pictures, and interference with work performance.


Who Is Exempt From Employment Laws?

Employment law also doesn’t protect all businesses equally. For example, some small businesses may be exempt from certain requirements, and managers may not have all the same wage protections as hourly workers. Additionally, most states offer “at-will” employment, which means an employer can terminate your employment for any reason as long as it’s not unlawful. 

While employment laws don’t fully protect against all manner of workplace abuse, they do protect against many areas that were historically difficult to regulate. The Fair Labor Standards Act of 1938 restricts the hours that children under age 16 are allowed to work, placing limits on child labor. However, children 12 and younger can still legally work on farms, despite risks from heavy machinery and heat-related illnesses from sun exposure.

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What Are the Main Characteristics of Employment Law?

Employment law is an extensive, relatively young branch of law that’s constantly changing. It allows employees to understand their rights and is often divided into areas such as wages and benefits, health and safety, and employment discrimination. Other key areas include family and medical leave, labor relations, unemployment compensation, employee contracts, immigration, the hiring process, pensions, social security and wrongful termination. The U.S. Department of Labor administers and enforces most federal employment laws.

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What Are the Key U.S. Employment Laws?

The U.S. Department of Labor oversees an extensive range of employment laws, but there are other agencies that monitor the workplace as well. The U.S. Equal Employment Opportunity Commission (EEOC) enforces many of the laws protecting workers from discrimination, working with Fair Employment Practices Agencies (FEPAs) to manage charges of employment discrimination at the state and local levels. 

Additionally, the National Labor Relations Board (NLRB) oversees the law that controls the relationship between unions and their members. Finally, the U.S. Department of Justice administers the Americans with Disabilities Act, which protects people with disabilities in many areas of life, including the workplace.

Here’s an overview of key U.S. employment laws. 


The Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) of 1938 prescribes standards for wages and overtime pay, which affect most private and public employment. The FLSA requires employers to pay employees who are not otherwise exempt at least the federal minimum wage and overtime pay of 1.5 times the regular rate of pay. (An exempt employee is salaried, and does not receive overtime pay or qualify for minimum wage.) The FLSA also restricts the hours that children under age 16 are allowed to work and prohibits the employment of children under age 18 in jobs considered too dangerous.


Occupational Safety and Health Act (OSH)

The OSH Act of 1970 is administered by the Occupational Safety and Health Administration (OSHA). Covered employers must comply with OSHA’s regulations as well as their health and safety standards. Under the OSH Act, employers must also provide employees with a workplace free from recognized, serious hazards, which include everything from workplace violence to hazardous material spills. OSHA enforces the law through workplace inspections and investigations.

While the U.S. Department of Labor oversees federal employee compensation, it has no oversight of state workers’ compensation programs. State government or private company employees should contact the workers’ compensation program from their state for more information.

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Family and Medical Leave Act (FMLA)

One of the most well-known and often-used labor laws is the Family and Medical Leave Act (FMLA) of 1993, which requires employers to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth or adoption of a child or for the serious illness of the employee or the employee’s spouse, child or parent.


Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act of 1974 (ERISA) regulates employers who offer pension or welfare benefit plans for their employees. Certain employers and plan administrators must fund an insurance system to protect specific retirement benefits and pay premiums to the federal government.

The federal government also has labor laws governing:

A more obscure law is the Employee Polygraph Protection Act, which prohibits most employers from using lie detectors on employees but permits polygraph tests in specific circumstances.

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Common Causes of Action in Employment Law

Employees can take legal action against their employer as individuals or as a union. While it’s more difficult, employers can also sue their employees. It’s important for both parties to be proactive and know their rights and responsibilities to avoid running afoul of the law. 


When Can Employees Sue Their Employers?

  • Inconsistent discipline/discrimination: Employers must ensure they’re applying disciplinary measures uniformly across employees. If an employee gets away with something for which their coworker was fired, the terminated employee could claim discrimination and pursue legal action.  
  • Workplace harassment: This is a type of discrimination that violates federal or state anti-discrimination laws. Harassment can prompt legal action if a workplace becomes hostile, abusive or intimidating.
  • Wrongful termination: Firing an employee for illegal reasons or in a way that breaches a contract constitutes wrongful termination. Examples include an employer making an employee’s work so difficult that they quit on their own, an employee getting fired due to discrimination or an employee reporting an employer for illegal activity and getting fired (retaliation).
  • Wage law violations: Employers can face legal action for denial of overtime pay, errors in the calculation of hours and overtime, and misclassifying employees as independent contractors.

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When Can Employers Sue Their Employees?

  • Negligence: If an employee causes injury to another person or property, the employer may be able to sue.
  • Defamation: If an employee knowingly makes false statements that harm the employer’s business or reputation, the employer may pursue legal action. Even if the statement doesn’t cause any monetary loss, if it is harmful to the employer’s reputation they may face a lawsuit.
  • Violating a non-compete clause: Many employment contracts prevent an employee from working in a specific field within a set geographic area for a certain time post-employment. Certain states no longer enforce non-compete clauses, but many still uphold the agreements if they find that they were reasonable and made in good faith.
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