In the United States, the employment relationship is governed by federal and state laws and, sometimes, by the laws of local government within states (counties, boroughs, cities and towns).
the Sarbanes-Oxley Act and the Dodd-Frank Act, establishing whistleblowing protection for employees of publicly held companies (and any subsidiaries or affiliates whose financial information is included in consolidated financial statements) who make complaints or assist in investigations regarding shareholder fraud, accounting, internal accounting controls or auditing matters.
See question 2 for a discussion of the main federal anti-discrimination and anti-harassment laws. See question 42 for a discussion of the federal Worker Adjustment and Retraining Notification (WARN) Act.
other federal statutes prohibiting discrimination based on citizenship and veteran status.
The Americans with Disabilities Act Amendments Act of 2008 (ADAAA) came into effect on 1 January 2009. The ADAAA makes important changes to the definition of the term ‘disability’, which has the impact of broadening the coverage for individuals who seek to establish that they have disabilities within the meaning of the ADA.
On 29 January 2009, the Lilly Ledbetter Fair Pay Act of 2009 (FPA) was signed into law, eliminating many statute of limitations defences to pay discrimination claims under federal employment laws such as Title VII, the ADEA and the ADA. The FPA amends Title VII by providing that an unlawful employment practice occurs each time an employer issues a pay cheque that has been affected by a prior discriminatory pay decision, regardless of when that initial alleged discriminatory pay decision was made. The FPA applies retroactively to all claims pending on or after 28 May 2007.
Also, virtually all 50 states have their own anti-discrimination and anti-harassment laws. Some state and local laws prohibit discrimination or harassment on the same bases covered by federal laws. Others prohibit discrimination or harassment on additional bases such as marital status, sexual orientation, gender identity, transgender status, domestic or civil union partner status, family status and appearance. All anti-discrimination and anti-harassment laws - federal, state and local - prohibit retaliation against employees for exercising their rights under such statutes by opposing or making complaints of discrimination or harassment, or participating in legal proceedings regarding discrimination or harassment.
Federal government agencies enforce federal employment laws. State government agencies enforce state employment laws. Most employment-related laws allow individuals to bring lawsuits in federal or state court to enforce the law at issue or to recover monetary damages for violation of that law. Some federal and state laws require individuals to pursue and exhaust their remedies with the specified government agency before filing lawsuits in a federal or state court.
the United States Department of Justice enforces the non-discrimination requirements of the IRCA.
Federal law does not restrict background checks of applicants and employees as long as the employer conducts the check directly rather than through a third party. When an employer uses a third-party vendor to conduct the background check, however, the process is governed by the Fair Credit Reporting Act (FCRA). The FCRA does not prohibit an employer from hiring a vendor to conduct background checks or from taking employment action based upon the results of such investigations, but it does require the employer to first provide notice and obtain permission from the applicant or employee. The FCRA also requires that notice be provided to applicants and employees before any adverse employment action can be taken based upon background check information, and the FCRA requires that applicants or employees be given the opportunity to correct or explain any negative information. The FCRA further requires employers to maintain the confidentiality of background check information, and places some limits on how this information can be used. It is also important to note that a number of states, including California and New York, have their own laws governing the use of background checks and impose additional requirements and restrictions on an employer’s ability to obtain and use this information.
In April 2012, the EEOC issued guidance regarding when it is appropriate for an employer to use background check information relating to an applicant’s criminal history. The EEOC’s guidelines state that employers should exercise caution before excluding individuals from employment on the basis of a criminal history, and asks employers to avoid blanket exclusions unless there is a close link between the requirements of the job and the type of crime committed. Similarly, certain states and municipalities across the country have enacted legislation limiting the ability to inquire as to criminal records and the use of this information during the application process and in other employment decisions.
the results of the examinations are used only in accordance with the provisions of the ADA, and if people with disabilities are excluded from the position on the basis of the examination, the examination must be job related and consistent with business necessity.
State laws may also provide restrictions on pre-employment medical and physical examinations of applicants.
no specific medical information is reported to the employer; rather, the employer is only informed of a pass or no-pass result.
Drug and alcohol testing of applicants and employees is predominantly a subject of state law, which can vary widely from state to state.
There is no legal requirement to give preference in hiring to particular people or groups of people. The anti-discrimination laws that are discussed in question 2 prohibit discrimination against job applicants who are in protected categories.
State, not federal, law would govern the maximum duration of any fixed-term employment contract. Although generally there is no limitation on the duration of a fixed-term employment contract, such contracts in the United States are typically for a term of one to three years.
There is no law (federal, state or local) that requires any probationary period at the beginning of the employment relationship. Unless the employer agrees to a probationary period - with an individual employee or with a representative of employees such as a union - it would be the employer’s choice whether to establish a probationary period and, if so, whether such probationary period would be extended in the employer’s discretion or only under certain circumstances. Most states, except Montana, do not require a probationary period.
See question 36 for a discussion of Montana’s probationary period.
Control, dependence and risk of loss are among the primary factors used to distinguish between an independent contractor and an employee. An employee is generally an individual whose time, place and manner of providing services or results are controlled by or subject to the control of the employer. Generally, the employer provides the employee with the tools and means necessary for the work to be performed, the employee is economically dependent upon the employer, and the employer bears the risk of loss if the work performed or results achieved by the employee are not satisfactory to the employer (eg, the employer must still pay the employee, and can only discipline or terminate the employee if the work or result is not satisfactory).
By contrast, an independent contractor is an individual or business entity that is generally retained to deliver a specific result and, except for deadline and security of intellectual property reasons, has the right to control the time, place and manner of performing the work necessary to provide the agreed-upon result. Independent contractors typically market their services to more than one entity, provide the tools and other means necessary to produce the result, and bear some risk of loss in the event they fail to deliver the result in a timely manner, or deliver results that are unsatisfactory in quality or quantity to the contracting business (eg, the contractor will not be paid).
In July 2015, the United States Department of Labor issued Administrator’s Interpretation No. 2015-1 concerning the misclassification of employees as independent contractors. The Administrator’s Interpretation states that whenever a worker is ‘economically dependent’ on an employer, the worker is an employee. In contrast, when a ‘worker is in business for him or herself (ie, economically independent from the employer), then the worker is an independent contractor’.
In the United States, there are numerical limitations on two significant temporary visa categories: H-1B and H-2B. H-1B visas are for professional workers coming into the United States to work temporarily for a US employer in a specialty occupation. A specialty occupation is one requiring, at a minimum, a baccalaureate degree in a specific academic discipline (or the equivalent in work experience), and the foreign national worker must have that educational background or the equivalent in work experience. Under current law, there are only 65,000 H-1B visas available each fiscal year. There is a separate allotment of 20,000 H-1B visas available to foreign workers who have obtained an advanced degree from a US institution of higher education, such as a US master’s degree, PhD, juris doctor or other professional degree. Employers may apply for these H-1B visas beginning 1 April, six months before the start of the fiscal year in which the H-1B visa will become active.
US institutions of higher education and affiliated not-for-profit organisations, not-for-profit research organisations and US government research institutions are not subject to the H-1B cap. This means they may apply for H-1B visas for professional workers at any time. In addition, H-1B workers extending their stay or transferring from one cap-subject employer to another are not subject to the numerical limitation.
H-2B visas are for temporary workers who will work for US employers on temporary projects with a finite end, for seasonal workers and for workers who will fill a peak-load need. For example, many hospitality companies use the H-2B category to bring to the United States seasonal resort workers, ski instructors, etc. There is a numerical limitation of 66,000 H-2B visas available each fiscal year. Half of the allotment is made available for the first half of the fiscal year, and the second half is opened up in the second half of the fiscal year.
There are also work visas based on special legislation or trade treaties. The E-3 is a work visa available to nationals of Australia, and the H-1B1 is available to nationals of Chile and Singapore. These visas have requirements that are very similar to the H-1B in terms of the type of occupation and educational background required.
The L visa is available for employees transferring from a corporate entity abroad to a US parent, subsidiary, affiliate or branch of the foreign employer. In order to qualify for the L visa, the foreign worker must have worked for the related entity abroad for one of the prior three years in a managerial, executive or specialised knowledge capacity. The foreign national must be offered a position in the related US entity in a similar capacity. The L-1A visa, for managers and executives, is valid for a total of seven years. The L-1B visa, for individuals with specialised company knowledge, is valid for a total of five years.
Sometimes a company may transfer a worker to the United States on an E visa. E visas are available to nationals of countries with which the United States has certain treaties of trade, investment, navigation, friendship or commerce. The company that will employ the foreign national in the United States must be majority owned by nationals of the treaty country or publicly traded on the stock exchange of the treaty country. The employing company must represent a substantial investment in the United States, or must conduct trade, at least 50 per cent of which must be between the United States and the treaty country. The foreign national must be a citizen of the same treaty country and must be entering the United States to assume a managerial, executive or essential function. There is no requirement that the E visa applicant work with a related entity abroad for a period of time before applying for the visa. E visas are typically granted for five years at a time and are renewable in most circumstances.
There are no numerical limitations on the number of L or E visas that may be issued each year.
Work authorisation is available to spouses of L and E visa holders. The work authorisation is unrestricted as to employers but is time-limited, and may be valid for one or two years. It is renewable for as long as the principal visa holder remains in L or E status. The couple must be legally married. Work authorisation is not available to non-spouse partners. The spouse of the L or E visa holder may apply for a work authorisation card (employment authorisation document) upon entry into the United States in L-2 or E-2 status. The processing time for these cards is usually 90 days.
Every US employer must verify the identity and work eligibility of every worker hired to perform services in the United States since 6 November 1986. The verification must be completed on Form I-9 within three business days of hire and maintained during the employment of the worker and for a period of time after separation or termination. Employers who fail to undertake verification of workers’ identity and employment authorisation may face serious civil fines and, increasingly, criminal penalties. The Immigration and Customs Enforcement agency of the Department of Homeland Security may conduct audits and raids of employers to determine whether verification is taking place. Foreign nationals who work without appropriate authorisation in the United States may face difficulty receiving future immigration benefits, such as permanent residence, or, in egregious cases, may be removed from the United States and barred from returning for a certain period of time. In addition, the US government offers employers the use of an electronic verification database known as E-Verify. Use of E-Verify is currently optional for most US employers except for certain federal government contractors and companies doing business in certain states.
A labour market test is required as a precursor for two temporary visas. It is required for the H-2B visa discussed above for seasonal or peak-load workers, as well as for the H-2A visa for seasonal agricultural workers.
In addition, a labour market test is required as a first step for most employment-sponsored permanent residence applications. The process involves a highly structured recruitment campaign that complies with Department of Labor rules and an online attestation of recruitment activities. Employers are required by law to cover all fees and costs for such labour market tests.
Generally, the FLSA does not limit or restrict the number of hours adult employees may work in a single working day or working week if the employees agree to work those hours. However, depending upon an employee’s job classification, if the employee works in excess of a certain number of hours per working day, or per working week, the employer may be required to pay the employee at premium wage rates for the excess hours under either the FLSA or applicable state laws. In addition, some state laws prohibit employers from requiring employees to work more than a certain number of hours per working day or per working week, and protect employees against retaliation by employers if the employees refuse to work in excess of such hours. Further, some states require employers to provide their employees with meal breaks and rest breaks after working a certain number of hours in a day or during certain times of the day. There may be other regulatory limitations on working hours for minors or adults in certain specific industries or positions (eg, commercial truck drivers, airline pilots).
All employment positions are presumed to be subject to the minimum and overtime wage requirements of federal and state wage and hour laws, unless the employer can prove that the employee’s compensation and job duties and responsibilities qualify the employee for one of the exemptions of the FLSA or applicable state wage-and-hour laws. If the employee is not exempt (ie, non-exempt), the employee is eligible for premium pay for overtime worked.
Under the FLSA, non-exempt employees are entitled to 1.5 times their regular rates of pay for all time worked in excess of 40 hours in one working week (defined as a recurring period of seven 24-hour periods). Regular rate of pay is calculated by taking into account the employee’s hourly rate as well as any additional cash compensation entitlements, such as sales commissions, performance bonuses and certain other forms of compensation, such as meals and housing, provided by the employer.
Under some states’ wage-and-hour laws, such as California law, a non-exempt employee’s entitlement to overtime compensation is greater than that provided by the FLSA. For instance, while the FLSA requires that overtime compensation be paid at 1.5 times the employee’s regular rate of pay for all time worked in excess of 40 hours in one working week, California law requires that overtime compensation be paid at 1.5 times the employee’s regular rate of pay for all time worked in excess of eight hours, up to and including 12 hours, in one working day (defined as a recurring 24-hour period) or for all time worked in excess of 40 hours in one working week, and for the first eight hours worked on the seventh day the employee works in a working week. California law also provides for an overtime compensation rate equal to two times the employee’s regular rate of pay for time worked in excess of 12 hours in one working day, and for time worked in excess of eight hours on the seventh day the employee works in a working week.
In the United States, employees cannot waive their right to receive overtime payments and generally cannot agree to settle claims arising from an employer’s failure to provide such payments, absent approval by a court or the United States Department of Labor (see Boaz v FedEx Customer Information Servs, Inc, 725 F.3d 603, 606 (6th Cir 2013) recognising that ‘employees may not, either prospectively or retrospectively, waive their FLSA rights to minimum wages, overtime, or liquidated damages’; and Lynn’s Food Stores, Inc v United States, 679 F.2d 1350, 1352-53 (11th Cir 1982) establishing the long-recognised exception for settlement agreements approved by a court or the Department of Labor). However, one federal circuit court of appeals has held that a union-negotiated settlement agreement may be enforceable without court or Department of Labor approval, where the agreement resolves ‘claims predicated on a bona fide dispute about time worked and not as a compromise of guaranteed FLSA substantive rights themselves’ (Martin v Spring Break ’83 Prods, LLC, 688 F.3d 247, 255 (5th Cir 2012)).
No law (federal, state, or local) requires employers to provide employees with paid vacation or paid holidays. However, if an employer elects to provide its employees with such paid-time-off benefits, some states’ laws regulate how an employer administers such benefits.
the employee is medically certified by a healthcare provider as having a serious health condition as defined by the FMLA.
A number of states and localities have their own laws that parallel the FMLA. Some states have laws that provide greater rights to a medical leave than that provided by the FMLA.
Although there is no federal statute establishing the right of any employee to paid medical leave, in September 2015 President Obama issued an Executive Order requiring federal contractors to provide employees working on government contracts with seven days or more of paid sick time per year.
In the past few years, there has been an explosion of paid sick time laws enacted by states and municipalities. For example, in January 2012, Connecticut became the first state to require employers with 50 or more employees to provide up to five days of paid sick leave to their ‘service worker’ employees. Other states have since followed suit, passing laws that require employers to provide paid sick leave; those states include Washington, Vermont, Rhode Island, Oregon, Arizona and Maryland. This trend has grown among municipalities as well. Municipalities, such as San Francisco, California; New York, New York; the District of Columbia; Jersey City and Trenton, New Jersey; Philadelphia, Pennsylvania; Seattle, Washington; and Portland, Oregon have enacted similar paid sick leave laws.
For example, San Francisco requires all employers to provide paid sick leave to employees (including temporary and part-time employees) who perform work in the city. Under the San Francisco Paid Sick Leave Ordinance, paid sick leave begins to accrue 90 calendar days after the commencement of employment, at an accrual rate of one hour of paid sick leave for every 30 hours worked. There is a cap of 40 hours of accrued paid sick leave for employees of employers for which fewer than 10 persons (including full-time, part-time and temporary employees) work for compensation during a given week. For employees of other employers, there is a cap of 72 hours of accrued paid sick leave. An employee’s accrued paid sick leave carries over from year to year. Employees are entitled to paid sick leave for their own medical care and also to aid or care for a family member or designated person. Similar laws have been adopted in other California municipalities.
New York City has also passed its own paid sick leave act. Under the New York City Earned Sick Time Act (the Act), which took effect on 1 April 2014, employers with at least 20 employees ‘within the City of New York’ are required to provide their employees with paid sick leave. Only employees who work more than 80 hours per year, including full-time, part-time, and temporary or seasonal employees, are covered by the Act. These covered employees must accrue at least one hour of sick leave for every 30 hours worked, and are entitled to 40 hours of sick leave per calendar year. While the law states that accrued but unused sick leave shall carry over from year to year, employers may limit employee usage to a maximum of 40 hours per year. The Act provides that paid sick leave may be used for absences due to an employee’s own medical care or the care of a family member in connection with a physical or mental illness, injury or health condition, and for closures of an employee’s place of business or an employee’s child’s school or childcare provider due to a public health emergency.
Similarly, the District of Columbia requires employers to provide paid sick time. Under the Accrued Sick and Safe Leave Act, the amount of leave employers are obligated to provide varies depending on the size of the company - three to seven days per calendar year. Unused leave carries over annually, but an employer is never obligated to provide more leave than the required statutory maximum. Employees may use paid leave for absences resulting from their own medical care and the care of a family member in connection with a physical or mental illness, injury or mental condition, and for absences related to obtaining social, legal or medical services for the employee or a family member who was the victim of stalking, domestic violence or sexual abuse. These permissible uses are commonly found in paid sick time ordinances and laws enacted by other jurisdictions nationwide.
Various federal and state laws establish the right of employees to take a leave of absence in certain circumstances.
military caregiver leave of up to 26 weeks in a single 12-month period, for the employee to care for a family member (eg, spouse, son, daughter, parent or next of kin) who is an injured serviceman or servicewoman.
Passed on 28 October 2009, amendments to the FMLA expanded the coverage of exigency leave to include family members of the regular armed forces and of military caregiver leave to include family members of veterans. The employer is not required to pay employees during FMLA leave, although employees generally can use their accrued paid-time-off benefits (voluntarily provided by the employer) to continue pay during such leave, and in some cases employers can require employees to use their accrued paid-time-off benefits during FMLA leave.
The United States Department of Labor published final FMLA regulations in 2009 and additional regulations relating to military family leave in early 2013. Combined, these two sets of regulations mark the first major regulatory changes to the FMLA since its enactment in 1993. Among other things, the regulations have altered the notice and certification requirements of the FMLA. They have also provided clarification as to when an employee can take FMLA leave to care for a family member, and as to the documentation that an employer can require in connection with such leave requests. Furthermore, the new regulations provide substantial guidance as to employer and employee rights and responsibilities associated with exigency leave and military caregiver leave.
The federal Uniformed Services Employment and Reemployment Rights Act (USERRA) establishes the right of employees to leaves of absence due to military service. USERRA also establishes re--employment and other benefits protections for employees returning from cumulative periods of military leave of five years or less. USERRA does not require employers to provide employees with pay during military leave, but does require that employees on military leave be permitted to use their paid-time-off benefits (voluntarily provided by the employer) and to continue participating in certain of the employer’s benefit plans during the military leave. Several states have enacted family military leave laws. For example, California requires employers with 25 or more employees to provide up to 10 days of unpaid leave to eligible employees who are spouses of deployed military servicemen and servicewomen, to be taken when a military spouse is on leave from deployment during a time of military conflict.
Further, under the ADA and its state or local equivalents, or both, a leave of absence may be considered a reasonable accommodation for covered qualified employees with disabilities. The reasonableness of such an accommodation, including the duration of such leave, is determined on a case-by-case basis.
In addition, some states have laws that establish the right of employees to take unpaid time off from work for certain reasons such as to vote, to serve on a jury or to appear as witnesses in legal proceedings, to perform services as volunteer firefighters or emergency responders, to participate in school or day-care activities, or to seek medical services and legal recourse as victims of domestic abuse or violent crime.
The only benefit that employers are mandated by law to provide to their employees is workers’ compensation insurance. In general, workers’ compensation insurance provides partial wage replacement payments and, if needed, medical services and treatment and vocational rehabilitation services to an employee who sustains a work-related illness or injury. Workers’ compensation is a subject of state, not federal, law. Most states also require employers to contribute to state-administered unemployment and disability insurance funds for which employees may be eligible for benefits upon termination of employment or becoming disabled.
All private employers that are subject to Title VII of the Civil Rights Act of 1964 with 100 or more employees excluding state and local governments, primary and secondary school systems, institutions of higher education, Indian tribes and tax-exempt private membership clubs other than labour organisations; or employers that are subject to Title VII that have fewer than 100 employees if the employers are owned or affiliated with another employer, or there is centralised ownership, control or management so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees.
All federal contractors (private employers) that are not exempt as provided for by 41 CFR section 60-1.5, have 50 or more employees, and are prime contractors or first-tier subcontractors, and have a contract, subcontract or purchase order amounting to US$50,000 or more; or serve as a depository of government funds in any amount; or are financial institutions that are issuing and paying agents for US Savings Bonds and Notes.
Only those establishments located in the District of Columbia and the 50 states are required to submit the form. Both the EEOC and the Office of Federal Contract Compliance Programs (OFCCP) use the form to collect data from private employers and government contractors about their female and minority workforce. The two agencies also use the data from the form to support civil rights enforcement and to analyse employment patterns, such as the representation of women and minorities within companies, industries or regions.
The validity and enforceability of employee covenants not to compete, solicit or deal are a matter of state, not federal, law. Under some states’ laws, such as California law, covenants not to compete, solicit customers or deal are void as being against public policy and are unlawful except in very limited circumstances, such as when given in connection with the sale of a business entity or sale of all or substantially all of the assets of a business entity.
the covenant is reasonable in time, subject matter and geographical reach consistent with the employer’s legitimate business interest.
Some states, such as New York, consider whether the former employee’s services are unique or extraordinary. In California, covenants not to solicit employees are valid and enforceable if they are not deemed an unreasonable restraint on competition.
Generally, there is no requirement that an employer continue to pay a former employee while he or she is subject to post-employment restrictive covenants, in the absence of a contractual agreement between the employer and employee to do so. In some states, however, payment during the restricted period will increase the likelihood that a court will find the covenant reasonable and enforceable.
Generally, employees are agents of the employer and act on behalf and for the benefit of the employer when performing their jobs. Accordingly, employers can be held liable for the harm resulting from acts and omissions of their employees occurring in the scope and course of the employees’ employment.
However, a 2013 United States Supreme Court decision, Vance v Ball State University (133 S Ct 2434), limited the scope of employees who are considered ‘supervisors’ such that employers can be held liable for their conduct. In Vance, the Supreme Court ruled that an employee is only a supervisor for purposes of imposing liability on an employer if the supervisor has the power to take ‘tangible employment actions against the victim’, which include such actions as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits. If a supervisor does not meet these standards, the employer cannot be held vicariously liable for the supervisor’s actions.
Employers are required by federal, state and local tax laws to withhold from employee wages the following as taxes: US Social Security tax, US Medicare tax, US income tax and, if applicable, state income tax and local income tax. In addition, some states also require employers to withhold additional taxes from employee wages to fund certain government-sponsored and government-administered unemployment programmes, such as a state disability insurance benefit programme.
is not developed by use of any employer equipment, supplies, facilities or trade-secret information.
results from any work performed by the employee for the employer.
Various federal and state laws protect trade secrets and confidential business information. Under federal law, the Computer Fraud and Abuse Act (CFAA) prohibits accessing a protected computer without authorisation or exceeding authorisation for the purposes of obtaining information, causing damages or perpetrating a fraud. The CFAA is primarily a criminal statute, but it also provides for civil liability and has been used by employers against former employees who unlawfully accessed computer systems. Many states also have legislation to protect trade secrets and confidential business information, such as the New Jersey Computer Related Offenses Act and the Massachusetts Taking of Trade Secrets law. Many states also have common law causes of action that can be used by employers when employees or former employees misappropriate confidential and proprietary business information.
See also the ‘Update and trends’ section for a discussion of the federal Defend Trade Secrets Act of 2016.
There is no federal legislation that protects employee privacy or personal data per se. Privacy protection is primarily a function of state law; however, certain provisions of some federal laws aim to protect employee privacy and personal data. The ADA requires employers to maintain the confidentiality of information and records on an employee’s health and medical condition. The FCRA permits an employer to obtain background information on an applicant or employee through a third party, but only if the applicant or employee authorises the background investigation and delivery of results to the employer. The FCRA also limits employers’ use of background check information, requires employers to maintain the confidentiality of background check information, and requires destruction of records containing such information by means that prevent the reconstruction of such information.
Many of the 50 states have either a state constitutional provision or statutes that protect the privacy of certain information, including medical, personal, financial and background check information. To the extent an employer collects and maintains records of such information on applicants and employees, the employer also must comply with those laws.
There is no law (federal, state or local) that protects employees in the event of a business transfer. However, if an employer must lay off employees in connection with the business transfer and such layoff is covered by the WARN Act, the affected employees are entitled to receive 60 days’ advance notice of termination.
Unless the employer contractually agrees otherwise (either in an individual employment or a collectively bargained agreement), most employment in the United States is ‘at will’, meaning that it is not for any specific period of time, and the employer and employee each have the legal right to terminate the employment relationship at any time, with or without advance notice or procedures and with or without any particular cause or reason. However, employers cannot terminate even at will employees for a reason that is unlawful under federal, state or local law. The state of Montana does not recognise at-will employment after a six-month probationary period. In that state, after the probationary period has elapsed, an employer may only terminate an employee for ‘good cause’, which is defined as ‘reasonable job-related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of operations, or other legitimate business reason’.
Advance notice of dismissal or pay in lieu of such notice is not required by any federal, state or local law, unless the termination of employment is due to a mass layoff or plant closing as those terms are specifically defined under the WARN Act or any counterpart state law applicable to the employer. However, an employer may contractually agree to provide employees with advance notice of dismissal or pay in lieu of advance notice.
Unless the employer has contractually agreed to provide its employees with advance notice of dismissal or pay in lieu of advance notice (either in an individual employment or a collectively bargained agreement), or the termination of employment is due to a mass layoff or a plant closing under the WARN Act or any applicable state law counterpart, advance notice or pay in lieu of such notice is not required.
No federal, state or local law establishes a right to severance pay upon termination of employment. Whether to provide severance pay and, if so, in what form or amount, are determinations made by the employer or may be required in an individual employment or a collectively bargained agreement.
No, unless the employer has contractually agreed to such procedures in an individual employment or a collectively bargained agreement. Many states do require, however, that terminated employees be provided information relating to their medical insurance benefits and eligibility for unemployment compensation insurance benefits.
to recover penalties that may be authorised by a specific statute under which a claim is brought.
Under certain claims, the former employee may request reinstatement of employment.
Yes. The WARN Act generally requires an employer with 100 or more employees in the United States to provide its employees, and others, with 60 days’ advance notice if the employer will conduct a mass lay-off or a plant closing, as those terms are specifically defined in the WARN Act. In addition to employees, others who are entitled to such advance notice are the employees’ union, the state government, and certain local government officials. If the employer fails to provide the required notice, employees may file a lawsuit against the employer for the pay and value of certain ERISA-governed benefits the employees would have received during the period, up to 60 days, for the number of days that advance notice should have been given. In addition, the local government may also recover a penalty of US$500 per day for up to 60 days for the number of days that advance notice should have been, but was not, given to the local government official.
Some states, such as California and New York, also have their own laws that impose similar advance notice requirements as well as other requirements on employers in connection with layoffs and closures affecting a certain number of employees. These state laws typically cover smaller layoffs and closures than the WARN Act.
Yes, individual employees may assert claims on behalf of other individuals through class or collective actions, and such claims have become extremely prevalent over the past decade. In a class action, all individuals who fall within the class definition will be deemed to be part of the class unless they affirmatively ‘opt out’ of the class. In a collective action, on the other hand, only those individuals who affirmatively ‘opt in’ will be deemed to be part of the class. In class or collective actions, employers may be required to disclose to opposing counsel the names and addresses of all employees, current and former, who may be part of the class so that opposing counsel may contact them.
Generally, the imposition of a mandatory retirement age is not allowed, though there may be exceptions in certain specific industries.
Generally, yes. However, whether a court will enforce an employment arbitration agreement when the dispute to be arbitrated arises under a federal statute, a state statute, or state common law is an issue that continues to be extensively litigated. Moreover, litigation is often initiated over the circumstances of entering into the arbitration agreement and its terms.
In addition, because arbitration agreements constitute a waiver of the right to a jury trial, arbitration agreements are subject to state contract law as well as state statutory law. Some states, such as California, have developed specific standards that must be met if an employment arbitration agreement is to be enforced. Because state laws can differ in these respects, agreements to arbitrate employment disputes must be carefully drafted.
Generally, yes. However, an employee cannot waive claims based on acts or omissions that have not yet occurred. Moreover, a waiver of minimum wage, overtime and certain other wage claims generally requires court or Department of Labor approval to be enforceable. Some states’ laws prohibit waivers of workers’ compensation insurance benefits and waivers of unemployment insurance benefits; rights under certain federal laws such as the NLRA also cannot be waived.
Under contract law of most states, a waiver is valid and enforceable if it is given knowingly and voluntarily, and in exchange for something of value to which the individual giving the waiver is not already entitled. Some statutes establish additional substantive and procedural requirements for a valid waiver of claims. For example, the ADEA requires that a waiver of age claims under the ADEA meet certain requirements based on the context in which the waiver is being given, including but not limited to a minimum period of time for the individual to consider and sign the waiver and a seven-day period after signing within which to revoke the waiver. Under California law, a waiver of unknown claims arising from past acts or omissions is not valid unless the waiver also includes an express waiver of rights under the California Civil Code, section 1542.
On 15 July 2009, the EEOC issued new guidance (EEOC Guidance) on discrimination waivers and releases contained in employee severance agreements. The EEOC Guidance addresses all types of discrimination waiver and release requirements, and contains specific examples and numerous questions and answers that should be taken into account by employers when dealing with waiver and release issues in severance agreements.
Similarly, on 1 April 2015 and 16 August 2016, the US Securities and Exchange Commission issued press releases reflecting its position that confidentiality agreements or provisions that potentially could chill an employee’s willingness to cooperate with a government agency or make whistleblowing reports violate securities laws.
The limitation periods vary based on the statutory or common law basis for employment-related claims. In general, however, the limitation periods for most employment-related claims range from one to three years. Claims under some state laws typically can be brought as late as four to five years, and under other states’ laws as late as 10 years, in limited circumstances, after the alleged wrongful act, omission or resulting harm.
New federal remedies: a federal private right of action for trade secret theft that provides for federal law remedies instead of only state law remedies. The federal remedies may include injunctive relief, damages and the possibility of double damages for wilful and malicious misappropriation.
Choice of federal or state remedies: because the legislation does not pre-empt state law, trade secret owners have the choice to pursue relief in federal or state court. A variety of factors may apply to any particular case in determining whether to pursue federal or state remedies.
New recovery mechanism: in appropriate cases, new tools allow one to recover stolen trade secrets based on a short-term, ex parte court order to seize trade secrets by law enforcement officials and bring them within the custody of the court, with a full hearing held within seven days and an opportunity for all parties to be present.
Stronger protections for trade secrets during litigation: several protections better safeguard the use of trade secrets in litigation, including the use of protective orders and the opportunity for a trade secret owner to inform the court of the interests to maintain confidentiality of the trade secret.
Digital issues: the law includes new provisions addressing unique digital issues that arise in trade secret cases.
Whistleblower protections: it also includes a whistleblower provision concerning the disclosure of trade secrets to law enforcement to report or investigate possible violations of the law.
Notification requirement: a disclosure about the immunity provisions is required in every employee contract ‘that governs the use of a trade secret or other confidential information’ that is ‘entered into or updated after’ 11 May 2016, when the DTSA was enacted. The failure to provide notice bars exemplary damages or attorney fees against an employee who did not receive notice.
Criminal penalties: the law increased the maximum criminal penalties for organisations convicted of foreign economic espionage or trade secret theft.