5 Critical Things You Should Know About Employment Law

Labor laws are safeguards that help ensure employees are protected in the workplace. Following all federal and state labor regulations is necessary when running a business, but not …

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Business MeetingLabor laws are safeguards that help ensure employees are protected in the workplace. Following all federal and state labor regulations is necessary when running a business, but not all startups have the luxury of hiring HR professionals that maintain legal compliance.

Whether you’re an employee or employer, here are 5 employment laws you should know.

Key Types of Employment Laws

Employment law covers many topics that encompass work-related issues. However, some of the best free employment law advice we can offer is simplicity. Most of the employment law topics we’ll discuss in this article fall into one of the five following categories:

  • Equal Payment Rights: Laws that support the Equal Pay Act of 1963, which means women/girls have the right to earn the same salary as men for equal work.
  • Anti-Discrimination Laws: Laws that adhere to the Civils Rights Act of 1964, which means employers can’t discriminate based on race, religion, color, sex, or origin.
  • Medical Leave Laws: Laws covering medical leave for full-time employees who work for employers with more than 50 workers. These employees are entitled to 12 weeks of leave in a 12-month period and maternity leave but don’t guarantee paid leave.
  • Fair Labor Requirements: Laws that follow federal law employment standards. These vary depending on whether you’re an employee, contract worker, or freelancer.
  • State-Specific Laws: Laws that change depending on the state your employer works in. Break times, minimum wage, and safety standards vary widely in each U.S. state.

Wrongful termination will typically result from an employer breaking one of the five key employment laws. However, although some laws are common knowledge, others are misinterpreted as wrongful termination or are considered illegal despite your employer telling you otherwise. In the next section, we’ll examine some recurrent practices and their legality.

5 Things Everyone Should Know About Employment Law

Labor law compliance requires you to stay up to date on its changing legal landscape. To make sure you follow the rules and avoid financial upheaval, take notice of the following laws.

1. Unfair Termination Isn’t Always Illegal

In most circumstances, employers can terminate their employees “without cause” or “at will,” even after many years of service. Employers don’t even have to give a reason for a discharge on your record. However, there are many illegal reasons for an employer to terminate you:

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  • Employers cannot discriminate based on anyone’s race, religion, color, sex, origin, age, pregnancy, gender identity, sexual orientation, disability, or accommodation request.
  • Union employees can’t be fired without cause during their union agreement or contract.
  • State-specific laws prohibit termination on the grounds of veteran status, medical marijuana use, maternity status (mothers or fathers), or public benefits usages.
  • If an employee is fired because they were enforcing their own legal rights (filing for unpaid wages) or for reporting an employer to a government agency, it’s illegal. 

There are many times when an unfair termination is simply that and nothing more. Under these circumstances, you may still be entitled to severance pay or other government benefits.

2. Terminated Employees May be Entitled to Waiting Time Penalties

A waiting time penalty may be afforded to you if your final wages are late. In California, for example, an employee that gives their employer 72 hours of notice must receive their final paycheck the day they’re terminated.

Employees that don’t provide 72 hours notice must receive their final paycheck in 72 hours. Failure to give an employee their last paycheck in a timely manner will result in the employer paying penalties that compound over a 30 day period.

3. Employees are Often Written Down as Contractors Illegally

Some employers will give actual employees a contractor status to avoid paying unemployment insurance, workers’ compensation, and health benefits. Contractors are often designated further and exempt from overtime pay and aren’t protected against discrimination or OSHA safety laws.

If you answer “no” to the following questions, you’re an employee, not a contractor:

  • Do you work independently away from the control or direction of a supervisor?
  • Does the main source of your income come from regular business duties? (For example, are you writing code for a software company, or are you fixing the computer?)
  • Are you an independent business that markets its services outside of the company?

Speak to an outside governing body immediately if you answered no to these questions. You’ll be entitled to unpaid labor, including overtime in some cases and other employee benefits.

4. Employers Can’t Withhold Earned Money or Vacation Pay

It’s considered illegal to withhold or deduct money from an employee’s paycheck without legitimate cause, which is often hard to prove. In most occupations, you can’t deduct uniforms, tools, or money due to breakage, cash shortage, or inadvertent error (i.e., mistake or accident). 

Many employers use the “use it or lose it” vacation policy, but these are considered illegal. Most U.S. states give employees the ability to keep unused vacation pay, just like unpaid wages. However, an employer can allow reasonable caps on vacation pay or wait a certain amount of time before you can cash out on your earnings. It’s best to speak to your employer for specifics.

5. Former Employers Can Say Bad Things When Giving a Reference

While it’s seen as common knowledge that past employers can’t say anything bad about you if they’re contacted for a reference, this isn’t true. All employers have the right to say negative, truthful statements about an employee’s job performance. There aren’t any federal laws that address what an employer can or can’t say, only that what they declare has to be true.

The reason why employers often don’t say anything negative is because there is a fine line between what state laws consider illegal and legal. Many employers adopt a policy not to provide any information other than dates of employment to ensure they stay legally compliant.

However, if your past employer is law savvy and didn’t like your job performance, they could state true information that will prevent you from getting a job. Opinions, such as “she was often late,” are very legal and very damaging to your reputation. Always check with a past employer to ensure they want to give a reference and what they’ll likely say to your new potential boss.


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