Your Guide to Federal and State Labor Laws

Different administrative agencies at both the federal and state level oversee these protections, which involve everything from health and safety issues to workplace discrimination and employee benefits.

Failure to follow federal and state labor laws can result in significant financial penalties and even lawsuits. As a result, you should always check the regulations at both the federal and state levels to make sure you’re in compliance before you make significant labor-related decisions. Employers are responsible for keeping up to date with changes to labor law, and even the smallest employers may be held liable if they violate these complicated laws.

While labor law is extremely complex and detailed, this brief guide covers many of the topics that are most relevant to small business owners.

Wage and Hour Regulations

Federal Law

The primary federal law governing wage and hour regulations is the Fair Labor Standards Act, or FLSA. The FLSA, which is enforced by the Department of Labor (DOL), regulates a wide range of topics, including:

• Minimum wage
• Overtime laws
• Child labor standards
• Tipped wages
• Worker time spent on travel, waiting, sleeping, training, and being on-call
• Recordkeeping requirements

The FLSA applies to most employees. However, some categories of employees are exempt from the minimum wage or overtime provisions of the FLSA. Among the categories of exempt employees are:

• Executives and other highly paid employees
• Some administrative employees
• Professionals, including creative and teaching professionals
• Commissioned salespeople

The FLSA also determines which employees can be paid overtime. Nonexempt employees who work more than 40 hours in the same week must be paid overtime of 1.5 times their usual hourly wage. Exempt employees, who are typically paid salaries rather than hourly wages, don’t receive overtime pay.

Some categories of nonexempt employees are subject to the FLSA’s minimum wage standards but are not subject to overtime laws. In other words, employers must pay these employees at least minimum wage but don’t have to pay them overtime. Among these job classifications are:

• Motor and rail carrier employees
• Local radio and TV station employees
• Motor vehicle and watercraft salespeople
• Delivery drivers
• Livestock auction workers
• Produce workers
• Taxi drivers
• Law enforcement
• Criminal investigators
• Fire protection
• Domestic service workers
• Forestry workers
• Workers at movie theaters or recreational establishments
• Workers at nonprofit educational institutions

Another key classification to stay on top of is whether a worker is an employee or an independent contractor. In some cases, employers hire independent contractors only to learn that the federal government classifies those workers as employees, who must receive overtime. The IRS offers a 20-factor test to determine whether a worker is an independent contractor, an exempt employee, or a nonexempt employee.

The classification of employees can be tricky. It’s important to get it right, as penalties can be steep for misclassification. Check with a labor attorney if you’re not sure about the status of your employees.

State Laws

While the FLSA standards provide minimum required protections, states may demand increased protections for workers, such as higher minimum wages. These requirements vary from one state to the next. However, states may never legislate protections that are less than those mandated by the FLSA.

Many states require higher standards of protection for workers, going beyond just the minimum wage. Some states demand greater overtime protection for workers, while others mandate rest breaks and meal breaks for workers, which are not covered by federal law.

States’ child labor laws also vary. In different states, children are allowed to work in various job categories, with laws overseeing how many hours they can work, guaranteeing their continued education, and creating a safe workplace. If you plan to hire minors, check with your state’s Department of Labor to learn the specific regulations involved.

Health and Safety Regulations

Federal Regulations and Oversight

The Occupational Safety and Health Administration (OSHA), which is part of the DOL, develops and enforces regulations to promote workplace safety. It enforces regulations requiring specific safety and health precautions on an industry-by-industry basis.

OSHA has the ability to fine employers up to $7,000 per day for minor violations and as much as $70,000 per day for willful or repeated violations. Employers also have to provide employees with information about their rights, hazardous work environment training, and how to report any issues. They must also provide employees with information about any hazardous working conditions, such as those caused by working with dangerous chemicals. In addition, they have to inform employees on how to report any OSHA violations.

OSHA covers almost all employees in the United States. The only employees not covered by OSHA regulations are the self-employed, federal workers protected by another agency (such as the Coast Guard or FAA), and family members working on family farms.

Through its Whistleblower Protection Program, OSHA also enforces almost two dozen federal laws that protect whistleblowers who report concerns about workplace health and safety in various industries. OSHA protects whistleblowers against retaliation, which can take the form of firing, demoting, denying benefits, intimidation, and reassignment.

State Regulations

States may establish and enforce their own health and safety laws, but only if they receive federal approval to do so first. The states with their own health and safety guidelines are:

• Alaska
• Arizona
• California
• Hawaii
• Indiana
• Iowa
• Kentucky
• Maryland
• Michigan
• Minnesota
• Nevada
• New Mexico
• North Carolina
• Oregon
• South Carolina
• Tennessee
• Utah
• Vermont
• Virginia
• Washington
• Washington, D.C.
• Wyoming

In addition, Arkansas, Connecticut, New Jersey, and New York have assumed partial responsibility for workplace safety and health, usually just in workplaces in the state and local public sector.

If your business is in one of the above states, you need to follow your state laws regarding workplace health and safety. If you’re in another state, you’re required to follow OSHA standards for your industry.

Workers’ Compensation

Workers’ compensation provides benefits for employees who are injured or become ill on the job. Workers’ comp benefits typically pay two-thirds of an injured worker’s salary, as well as paying for medical bills.

The DOL doesn’t oversee workers’ compensation programs, which are administered at the state level. Every state requires employers to have workers’ comp insurance, though in each state, some employers are exempt. For example, often employers with very few employees don’t have to carry workers’ comp insurance. Check with your state’s Department of Labor to find out the specifics that apply to your company.

Workplace Discrimination Laws

Federal Laws

The Equal Employment Opportunity Commission (EEOC) oversees the enforcement of antidiscrimination laws in the workplace. Employers may not discriminate against applicants and employees in protected categories. They may also not use neutral employment policies that affect people in protected categories negatively.

The EEOC also investigates and prosecutes complaints of workplace discrimination. Workers are protected against discrimination on the basis of:

• Race
• Color
• Religion
• Sex
• Gender identity
• Sexual orientation
• Pregnancy
• National origin
• Age (for workers over 40)
• Disability
• Genetic information (including family medical history)

All U.S. workers are protected by the EEOC, as are job applicants and former employees. They’re also protected against workplace retaliation on the part of an employer.

State Laws

Most states provide additional discrimination and retaliation protections for workers. Check with your state to see what protections it offers. As with other DOL regulations, states are allowed to add to and expand federal guidelines, but they cannot reduce worker protections from the federal level.

Employee Leave and Benefits Regulations

Benefits Standards and Regulations

The Employee Retirement Income Security Act of 1974, commonly referred to as ERISA, sets minimum standards for private industry retirement and health insurance plans. The Employee Benefits Security Administration (EBSA), which administers portions of ERISA, requires certain employers to provide retirement insurance. It also imposes reporting requirements for retirement plans and health care fiduciaries.

ERISA covers almost all retirement and health care plans offered in the United States, exempting only those maintained by government entities or churches. There’s no overlap between federal and state jurisdictions where benefits are concerned. States govern and administer workers’ compensation and unemployment insurance plans. The federal government, through EBSA, controls everything else.

Leave Standards and Regulations

The Family and Medical Leave Act (FMLA) protects the jobs of employees who need time off for health care responsibilities. Employees are granted unpaid leave of up to 12 weeks to care for their own serious health condition, a newborn child (including adopted and fostered children), or a spouse, child, or parent with a serious health condition.

Employers who have 50 or more employees must protect the job security of employees taking leave under FMLA. Employees are eligible for FMLA after working 12 months for an employer. Employers are responsible for making sure employees are eligible for the leave, and medical certification is required.

Many states offer greater leave protections than those mandated by the FLMA. Often states lower the 50-employee requirement, asking employers with fewer employees to provide leave. In addition, some states expand coverage to domestic partners and other extended family members.

Conclusion

The above areas are just the beginning of the workplace regulations overseen by the DOL and comparable state agencies. In addition, the DOL also oversees and enforces issues regarding hiring and firing, child labor laws, background check regulations, employee privacy laws, and many more areas regarding labor law and employee rights.

Whether you’re planning to have employees for your business or not, ZenBusiness can provide tools to help you start, run, and grow your company. Contact us when you’re ready to start your dream business to sail through the paperwork and start off on the right foot.

The content on this page is for informational purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional in your state.