Employment Laws: Small Teams, Big Rules

Employment laws can be complex and vary depending on the number of employees a business has. It is important for employers to understand their legal responsibilities to ensure they are compliant and avoid penalties and legal issues. While some laws apply to all employers, such as the Fair Labor Standards Act (FLSA) and the Immigration Reform and Control Act (IRCA), others are dependent on the number of employees. For example, the Family and Medical Leave Act (FMLA) only applies to employers with 50 or more employees, whereas the Americans with Disabilities Act (ADA) applies to businesses with 15 or more employees. As well as federal laws, there are also state-specific employment laws that must be considered.

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards for full-time and part-time workers in the private sector and in federal, state, and local governments. The FLSA applies to all business owners and sets the federal minimum wage at $7.25 per hour, although some states have a higher minimum wage that must be adhered to. The Act also requires employers to pay overtime at a rate of one-and-a-half times a non-exempt employee's regular rate if they work more than 40 hours in a workweek. It's important to note that the FLSA does not mandate overtime pay for work on weekends, holidays, or regular rest days unless overtime is worked on those days.

The FLSA also outlines regulations for hiring employees under the age of 18, restricting the hours that children under 16 can work and prohibiting the employment of children under 18 in certain dangerous jobs. Additionally, the Act includes provisions to protect the educational opportunities of minors and prohibit their employment in detrimental conditions.

Employers must display an official poster outlining the FLSA's requirements and keep records of employee time and pay. The FLSA also allows employers who meet certain criteria to take a partial credit against their minimum wage obligations for tipped employees.

While the FLSA covers most employees, there are some exemptions. For example, employees in ministerial roles for religiously affiliated employers are not entitled to overtime. Additionally, certain employees with disabilities may be paid below the minimum wage if approved by the Department of Labor's Wage and Hour Division.

Family and Medical Leave Act (FMLA)

The Family and Medical Leave Act (FMLA) entitles eligible employees to take up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons. This includes the birth or adoption of a child, caring for a family member with a serious health condition, or managing their own serious health condition. Employers must maintain the employee's group health insurance coverage during their leave.

To be eligible for FMLA leave, employees must have worked for their employer for at least 12 months, completed at least 1,250 hours of service in the past 12 months, and work at a location where the company employs 50 or more employees within 75 miles.

FMLA is applicable to all public agencies, public and private elementary and secondary schools, and companies with 50 or more employees. The Act is administered by the Wage and Hour Division of the U.S. Department of Labor and aims to help employees balance their work and family responsibilities.

FMLA leave can be taken intermittently or as a reduced leave schedule when medically necessary for the employee's own serious health condition, to care for a family member with a serious health condition, or for qualifying exigency purposes. Employees must provide at least 30 days' notice to their employer if the need for leave is foreseeable.

Upon returning from FMLA leave, employees must be reinstated to the same or equivalent position with equivalent benefits, pay, status, and other terms of employment.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act (ERISA) is a federal law that sets minimum standards for most voluntarily established retirement and health plans in the private industry. It was enacted in 1974 to protect the interests of employee benefit plan participants and their beneficiaries.

ERISA requires plans to provide participants with plan information, including important details about plan features and funding. It also sets minimum standards for participation, vesting, benefit accrual, and funding. The law outlines fiduciary responsibilities for those who manage and control plan assets.

ERISA requires plans to establish a grievance and appeals process for participants to obtain their benefits. It gives participants the right to sue for benefits and breaches of fiduciary duty. If a defined benefit plan is terminated, ERISA guarantees payment of certain benefits through the Pension Benefit Guaranty Corporation (PBGC).

ERISA does not cover plans established or maintained by government entities, churches for their employees, or plans maintained solely to comply with workers' compensation, unemployment, or disability laws. It also does not apply to plans maintained outside the United States for nonresident aliens or unfunded excess benefit plans.

Uniformed Services Employment and Reemployment Rights Act (USERRA)

The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects active and reserve military members from discrimination by their employers for their military participation. It also requires employers to rehire some employees who become deployed. USERRA’s main purpose is to prevent employers from discriminating against military employees, whether by firing them, keeping them from elevating, or making their more difficult than for others in similar roles. Any discriminatory action will be considered a violation of the Act if the military service was a “motivating factor”.

Under USERRA, employers are not allowed to discriminate against individuals based on their uniformed services membership. This means that employers may not discriminate during the hiring process or for the duration of their employment. An employee who needs to take leave for military service must give 60 days' notice. If they do so, the employer must reinstate them into employment when their service is complete.

USERRA also requires employers to rehire most veterans after returning from service. The veteran must be rehired at a position and pay equal to that as if the employee never left, and this means some employers must rehire the employees on better terms than they left. To qualify for this treatment, a veteran must have given the employer proper notice of future uniformed service and must start employment again soon after finishing service. This does not apply to employees who are in uniformed services for less than 32 days. Those who are in service for 32-180 days cannot be fired by the employer after returning for at least 180 days, with certain exceptions, and a year for those that are in service for more than 180 days.

There are exceptions that may disqualify an employee. An employee cannot be in service for more than five years with the same employer and still be guaranteed employment after service. An employer may not have to rehire an employee if they can prove that doing so is highly impractical because of changes in the business or major financial difficulties.

Consumer Credit Protection Act (CCPA)

The Consumer Credit Protection Act (CCPA) is a federal law that protects employees from unfair treatment in relation to wage garnishment. It applies to all employers and individuals who receive earnings for personal services, including wages, salaries, commissions, bonuses, and income from pension or retirement programs.

The CCPA's Title III sets out limitations on the amount of an individual's earnings that can be garnished. It also protects employees from being fired if their pay is garnished for a single debt. This means that employers cannot terminate an employee because their wages have been garnished for one debt, but this protection does not extend to cases where wages are garnished for two or more separate debts.

The CCPA defines earnings as compensation paid or payable for personal services. This includes wages, salaries, commissions, bonuses, and payments from pension or retirement programs. It also covers lump-sum payments, such as bonuses, awards, and retroactive merit increases. For employees who receive tips, the cash wages paid directly by the employer and any tip credit claimed by the employer are considered earnings under the CCPA.

The amount of pay that can be garnished is based on an employee's "disposable earnings," which is the amount left after legally required deductions like taxes and the employee's share of Social Security, Medicare, and State Unemployment Insurance tax. Deductions that are not required by law, such as voluntary wage assignments or union dues, are usually not subtracted from gross earnings when calculating disposable earnings.

The CCPA sets a maximum amount that can be garnished in any workweek or pay period, regardless of the number of garnishment orders. For ordinary garnishments, the weekly amount cannot exceed the lesser of two figures: 25% of the employee's disposable earnings or the amount by which the employee's disposable earnings exceed 30 times the federal minimum wage ($7.25 per hour).

The CCPA also places limitations on the amount of earnings that can be garnished for child support and alimony. It allows up to 50% of disposable earnings to be garnished if the worker is supporting another spouse or child, or up to 60% if they are not. An additional 5% may be garnished for support payments that are more than 12 weeks overdue.

It is important to note that the CCPA's limitations on wage garnishments do not apply to certain bankruptcy court orders or debts owed for federal or state taxes. In the case of conflicting state wage garnishment laws, the law resulting in the lower amount of earnings being garnished must be followed.

Frequently asked questions