What New Businesses Need to Know About Employment Laws


Every entrepreneur who intends to set up a new business must master the United States Employment Laws even before any recruitment and hiring of staff. This is also crucial in writing the Employee’s Handbook as well as in setting up the framework of employees’ salaries and benefits. Employers who disregard this will have a high probability of eventually needing legal mediation in employment disputes or litigation.

Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) requires minimum wage, overtime pay, recordkeeping, and child labor standards for full-time and part-time employees in the public and private sector. Covered private companies are those that earn an annual gross income of $500,000 or more or are doing interstate commerce, as well as schools, health care facilities, and facilities housing the aged.

Since July 24, 2009, the minimum wage was set at $7.25 per hour, with overtime pay at one-and-a-half times the regular rate. If the state has a higher minimum wage law, the employee must receive the specified higher amount.

Domestic service workers qualify if they work more than eight hours a week or earn at least $1,700 a year from one employer. There are certain specific exemptions from the minimum wage requirement and overtime pay and it is the obligation of the employer to find out if employees are exempt or not.

Since March 23, 2010, the FLSA required employers with at least 50 employees to provide nursing mothers with adequate break time to express milk as often as needed. Space must be available, separate from the bathroom, with privacy, and with no intrusions from co-workers and the public.

Child labor provisions in the FLSA prohibit the employment of minors in jobs that are dangerous or under conditions detrimental to their health or well-being. The rules also specify hours of work allowed and protect the educational opportunities of minors.

Employers must keep updated records of employees’ personal information as well as work time and pay. They are also required to display an official poster showing the requirements of the FLSA for all employees to see.

Family and Medical Leave Act

employees smiling

The Family and Medical Leave Act (FMLA) mandates unpaid leave for specified family and medical reasons, with the employer required to restore the employee’s job, pay, benefits, and other terms and conditions of employment upon return. This can run concurrently with any paid leave benefits of the employee, subject to the company’s leave policy.

The Act covers private commercial employers with at least 50 employees, as well as private and public schools and public agencies. To qualify, an employee must work for at least 12 months, even if not consecutively, for the employer, with at least 1,250 hours of work in the year immediately before the FMLA leave. The employee must also work within 75 miles of the site where the employer employs at least 50 people.

Allowed leaves are 12 workweeks in a year for the employee’s illness that prohibits job performance, care for the employee’s immediate family member with a serious illness, care of the employee’s child within a year from birth, adoption or foster care within a year of placement, or any emergency regarding the employee’s immediate family related to active military duty. Under the Military Caregiver Leave, this extends to twenty-six workweeks in a year to care for an injured or ill immediate family member who is a military servicemember.

There is, however, no federal law mandating paid sick leaves or paid vacation leaves, and the U.S. is one of very few countries that do not require these. Out of the world’s 193 countries, 179 required paid sick leaves as of March 2020. The U.S. Families First Coronavirus Response Act (FFCRA) that included the Emergency Family and Medical Leave Expansion Act and Emergency Paid Sick Leave Act took effect on April 1, 2020, but ended on December 31, 2020.

Before the pandemic, the 11 states that required paid sick leaves were Washington D.C., Washington, Connecticut, California, Massachusetts, Oregon, Vermont, Arizona, Rhode Island, Maryland, and New Jersey. New York and Colorado mandate it effective 2021. New Mexico’s law will be effective in 2022.

Equal Employment Opportunity Commission

The Equal Employment Opportunity Commission (EEOC) enforces several laws prohibiting discrimination against job applicants and employees based on national origin, race, color, religion, disability, age, and sex, including sexual orientation. Among these laws are the Equal Pay Act of 1963, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Age Discrimination in Employment Act (ADEA), and the Rehabilitation Act.

A Mutually Beneficial Agreement

These are only a few of the major laws of the U.S. Department of Labor (DOL). There are other laws and many stipulations under these laws that both employers and employees must study to find out what applies to them.

Clear labor laws protect both employees and employers. Knowing the requirements and prohibitions enables both parties to act accordingly and avoid disagreements that negatively affect the business. Smooth employer-employee relationships result in higher productivity that in the end benefits everyone.

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