Employment Law for Business
Employment law experienced significant growth in the latter twentieth and early twenty-first centuries. Employers must comply with a number of federal and state laws designed to end discrimination and promote a fair work relationship. This essay reviews some of the major Federal and State laws that directly affect the employer-employee relationship. The essay goes on to discuss some issues related to the determination of whether an employer-employee relationship exists and how that relationship may terminate. This essay concludes with comments regarding steps an employer may take to comply with the regulatory framework.
Keywords Americans with Disabilities Act (ADA); Employee Retirement Security Act (ERISA); Employment law; Employment discrimination; Fair Labor Standards Act (FLSA); Family Medical Leave Act (FMLA); Independent contractor; Occupational Safety and Health Act (OSHA); Title VII; Workers' compensation
Law: Employment Law for Business
Employers may find candidates for a job from a number of sources (want ads, employment agencies or referrals) and entice them with salary, location, opportunity for advancement, etc. The employer will then screen people for the job with interviews, tests and references. While each of those practices has specific laws and indeed are covered by the anti discrimination law discussed later, this essay will be concerned with the obligations that an employer and an employee have after the employment agreement has been consummated.
An employer makes an offer whereby the employer promises to do something (pay wages, provide benefits, etc.) and the employee accepts the offer and thereby promises to do something (work certain hours, do a certain job, etc.). After this agreement is made, certain legal obligations apply. While employers and employees have certain freedom to contract and agree to certain conditions of employment, that freedom is limited and regulated by federal, state and local laws. The complete array of law that can apply to the employer-employee relationship exploded in the second half of the twentieth century; this essay discusses the major laws that affect most businesses most of the time.
Congress has passed several laws that regulate the employment environment: Fair Labor Standards Act (FLSA), Occupational Safety and Health Act (OSHA), Employee Retirement Security Act (ERISA), Family Medical Leave Act (FMLA) and various laws on discrimination based on race, national origin, gender, religion and age. We will take a look at each area mentioned, for an overview of the basic federal regulatory framework and its impact on how companies do business.
The Fair Labor Standards Act applies to most employers, including work at home, and sets the minimum wage, overtime pay standards, recordkeeping and child labor standards. The FLSA applies to all businesses that engage in interstate commerce or handle, sell or produce goods that have moved in interstate commerce. As a practical matter, FLSA applies to a very large number of businesses and it covers approximately 100 million full and part time employees. Generally, the FLSA will apply to a business that that does over $500,000 in volume. Certain businesses and employees are exempt from the FSLA, for example, executives, outside sales, professional employees and hospitals. However, if the FLSA applies, the employer must pay the federal minimum wage or more per hour and pay time and half for hours worked in excess of forty per week. Children under twenty years old may be paid a reduced rate for the first ninety days of employment. According to U.S. Department of Labor regulations, employers must keep records of certain information including wages and hours. The FLSA also restricts certain labor performed in the home. The Department of Labor investigates violations of the FSLA and violators can face criminal prosecution, fines up to $10,000 and possible imprisonment. State laws may also apply to areas covered by the FLSA and the law with the higher standard must be applied (Department Of Labor [DOL], 2005).
The Occupational Safety and Health Act sets standards that require employers to adopt practices to provide a safe and healthy work environment and the OSHA administrative agency conducts inspections to ensure compliance. OSHA covers generally all employers and their employees in the 50 states and the U.S. territories. Under OSHA, an employer is defined as any person engaged in business affecting interstate commerce who has employees (except governments, generally). Among other exceptions, self-employed people are not covered and neither are industries that are regulated by other federal agencies (mining, nuclear energy, transportation industry). For example, an OSHA standard may require that employees be provided with and trained to use protective equipment. Employees must then conform their conduct to the rules that apply to them. OSHA standards fall in to four main categories: employee right of access to medical and exposure records, personal protective equipment, hazard communication and record keeping. Every employer covered by OSHA is subject to inspection and if an inspector cites a violation, the business faces fines depending on the severity of the violation and the business's history of violation (DOL, 2005).
The Employee Retirement Security Act covers most private sector employee benefit plans that have been voluntarily established by employers or employees. ERISA regulations seek to ensure that employee benefit plans are established and maintained fairly and are financially sound. Generally, the mangers of employee benefit plans must manage funds for the exclusive benefit of the employees, be prudent and avoid conflicts of interest, report and disclose information to the government and employee beneficiaries and cooperate with investigations. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), a part of ERISA, provides for the continuation of health coverage for ex-employees, at their own expense, of a business with a qualifying health plan. The Department of Labor has significant authority to enforce ERISA by bringing a civil action, investigating violations, imposing fines (up to $1,000 per day) and imposing criminal penalties in certain circumstances. Generally, ERISA supersedes state laws that relate to employee benefit plans (DOL, 2005).
The Family Medical Leave Act allows employees to take unpaid leave in certain situations. This allows employees to tend to their family lives without the concern of being terminated and promotes the stability and economic interests of families while serving the country's interest in preserving the family unit. The FMLA applies to businesses that are engaged in interstate commerce or an activity that affects interstate commerce and has fifty or more employees that have worked at least twenty weeks in the current or previous year. Generally, under the FMLA, an employee's job is protected for twelve weeks out of any twelve month period of unpaid leave to give birth and care for a child or care for themselves or an immediate family member with a serious health condition. An employee improperly terminated can sue the employer under the Act (DOL, 2005).
Title VII of the Civil Rights Act of 1964 (Title VII) was the first federal legislation to give broad protection against employment discrimination against any individual with respect to compensation, terms, conditions or privileges of employment based on "race, color, religion, sex [including pregnancy] or national origin" by employers, labor organizations and employment agencies. Three years latter, Congress enacted the Age Discrimination in Employment Act (ADEA) that extended similar coverage provided by Title VII to age discrimination. In 1990, Congress passed the American with Disabilities Act (ADA) to prevent employment discrimination against people with physical or mental disabilities. The ADA prohibits discrimination and requires employers to make reasonable accommodations to qualified individuals. Employers with a minimum of fifteen employees under Title VII and ADA (minimum of twenty under the ADEA) that are engaged in activities that affect interstate commerce are covered by the anti-discrimination laws. The "affects commerce" requirement is not difficult to meet; even local activities can meet the test and as a practical matter, almost any company that meets the minimum employee requirement will also meet the affects commerce requirement. These laws have broad coverage but they are not complete. Sex discrimination, under Title VII, refers to gender—including transgender (Employment Law, 2013)—and not sexual orientation and the ADEA applies to people over forty and permits discrimination against young people because of their age, although state law may provide such coverage (Rothstein, 2004; Burkhauser, 2012). Additionally, the U.S. Supreme Court has ruled that adverse employment decisions must be narrowly scrutinized as cause for action. In the case of age discrimination, age must be the sole reason and not merely a "motivating factor." Similarly, whereas discrimination based on gender, race, or religion itself as a motivating factor is proscribed by Title VII, retaliatory dismissal for complaining about discrimination, if other factors contributed to the dismissal, is not (Brill, Fant, & Baddish, 2013).
The laws above operate to prevent the employer from discriminating against an employee in a protected class and they also prevent an employer from taking action against an employee for making a complaint under the laws. An employee has a retaliation claim against an employer if the employer responds to the filing of a claim in a way that is materially adverse to the job applicant or employee such that the employer action could dissuade other workers from supporting or making a charge of discrimination (HR Focus, 2007).
The Equal Employment Opportunity Commission (EEOC), a federal administrative agency, enforces Title VII, the ADEA and the ADA. Employees who wish to enforce rights granted under the anti-discrimination acts file with regional EEOC office. The EEOC has broad power to investigate employer practices and sue private employers to comply with the laws. The EEOC also issue interpretative guidelines and policy statements to...
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