When business owners think of expanding to the United States, they typically think of which state to incorporate in and whether to form as a subsidiary or register as a foreign entity. They know employees should have a legal right to work in the United States when physically in the US is a prerequisite to hire. Still, one of the most important factors is giving equal weight to employment law implications. Awareness and proactive compliance efforts are crucial for mitigating risks associated with lawsuits, particularly those related to retaliation, discrimination, and other employment law violations.
Overview
Employers must navigate federal, state, and local laws, with compliance obligations varying based on employment location. While federal law establishes baseline standards, employers must also adhere to stricter state or local laws that offer greater employee rights and protections.
Even for Federal laws, there is generally no universal application of all laws to private employers. For instance, the Fair Labor Standards Act (FLSA) is applicable if the employer either engages in inter-state commerce or has sales of at least $500,000.00. Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act (ADA) is applicable to employers with 15 or more employees. Additionally, the Age Discrimination in Employment Act (ADEA) is applicable to employers with 20 or more employees, and the Family and Medical Leave Act of 1993 (FMLA) is applicable to employers with 50 or more employees, within a 75-mile radius of the worksite among others.
Employee Classification
Fair Labor Standards Act (FLSA) typically dictates minimum standards for wages, overtime pay, work conditions etc. Employers can be considered exempt or non-exempt from FLSA. This impacts wage standards and entitlements to overtime pay. Exempt status typically applies if specific salary, job duties, and payment structure criteria are met. Non-exempt status means the employee is typically entitled to minimum wage and overtime pay of 1.5 times the regular hourly wage over 40 hrs.
Minimum Wage
While the federal minimum wage is $7.25/hr, compliance with state and local wage laws where the employee is based is essential.
Paid Time Off
Federal law does not mandate general paid time off, except for specific situations like federal procurement contracts. However, many states and localities have enacted paid sick leave laws, and employers often provide paid time off for federal holidays.
Unpaid Time off
FMLA leave extends up to 12 weeks during an employer-specified 12-month period. However, up to 26 weeks of leave can be available in some cases. For example, if an employee is caring for a military family member or caring for a child, family member, or additional health reasons.
Benefits
Employers are typically not required to offer the same rights and benefits to part-time or temporary workers as they offer to full-time employees.
Mandatory Deductions
Employers must withhold taxes and other mandatory deductions from employee salaries, including federal, state, and local income taxes, as well as social security and Medicare taxes.
Termination
Most employment in the US is at-will, allowing either party to terminate the employment relationship with or without cause. Employers may be required to continue health coverage and provide notices under the Consolidated Omnibus Budget Reconciliation Act, 1974 (COBRA) and Employee Retirement Income Security Act, 19974 (ERISA). State laws may specify requirements for final paychecks and accrued benefits upon termination.
Employment Agreement and Employee Handbook
Employers should provide comprehensive employment agreements and employee handbooks covering terms of employment, benefits, leave policies, legal obligations, and dispute resolution procedures.
Employer Musts
Essential compliance for employers includes completing Form I-9 for employment eligibility verification, completing W-4 form, obtaining consent for background checks, providing required notices, maintaining accurate records, and ensuring non-discriminatory hiring practices.
Conclusion
Navigating employment law in the United States requires diligence and ongoing compliance efforts due to its complexity and evolution. While a foreign jurisdiction where an Employer may be expanding from, may completely agree with non-competes, most States in the US do not enforce, and the new FTC rule is attempting to nullify where they were allowed. Some States allow arbitration some don’t, and some allow with certain exceptions. The U.S. Department of Labor (DOL) and Equal Employment Opportunity Commission (EEOC) are at the forefront of ensuring compliance and enforcement by imposing severe penalties. Employers should contact the trusted attorneys at Chugh, LLP to help formulate a plan to keep compliant and understand all applicable employment laws.
