Employment Law FAQs

By | November 20, 2007

Table of Contents

Do all employees need to have Employment Agreements? It is not a legal requirement that employees have written agreements with their employers spelling out the terms of their employment. However, it can often be sound business practice, both for employer and employee, to have a written Employment Agreement, spelling out the terms and conditions of employment.

hat are the benefits of having an Employment Agreement?
An Employment Agreement sets forth the terms and conditions of employment, i.e. salary, basic duties, benefits. Such agreements can protect both employees and employers by spelling out clearly what will be expected of the employee, what will be required of the employer, and what will be considered grounds for termination.

In lieu of an Employment Agreement, employment terms and conditions may be established in a more casual format, through the use of an Employment Offer Letter.

What other agreements may employees be asked to sign at the beginning of their employment?
New employees may be asked to sign a Confidentiality Agreement. Confidentiality Agreements prevent an employee from disclosing information, such as business or trade secrets, that they learn during the course of their employment. This would generally include any information regarding customers, supplies, finances, research, development or manufacturing processes, or any technical or business information.

Additionally, employers may ask their new employees to sign a Non-Compete Agreement and/or a Non-Solicitation Agreement. A Non-Compete Agreement simply states that if an employee chooses to leave their employer, they agree that they will not engage in any business that would directly compete with that of the employer. It is important to note that many courts may decide to enforce only portions of such an agreement, as they do not permit unreasonable restrictions to be placed upon on the ex-employees ability to earn a living. A Non-Solicitation Agreement states that in the event the employee leaves his employer, he will not solicit that employer’s customers, clients or employees for a stated period of time.

If there is the potential to develop proprietary inventions or designs in the course of employment, employees may also be asked to sign an Employee Patents and Inventions Agreement. By signing this agreement, the employee agrees to assign to his employer any rights he may have to those inventions or designs. Such an agreement can prevent disputes between employer and employee in the future.

What is At-Will Employment?
If an employee does not have a written Employment Agreement stating the term of employment, then that employee is considered to be an at-will employee. Historically under common law, at-will employees could be terminated at any time and for any reason; they were employees only so long as both they and their employees wished them to be.

In the 20th century, however, a number of exceptions have been carved out of the at-will employment doctrine, providing to all employees protection against certain types of unreasonable or discriminatory termination. Thus, even at-will employees now have some recourse under the law for unreasonable or discriminatory termination.

What legal protections are afforded to at-will employees?
Both state and Federal law provide all employees (including those who are at-will) with a number of protections against certain types of termination. Some of these protections are in the form of exceptions to the at-will doctrine, and some are statutory protections, largely directed at preventing discrimination.

There are generally three types of state law exceptions to the at-will employment doctrine: the Public Policy exception; the Implied Contract exception; and the Covenant of Good Faith and Fair Dealing.

  • Public Policy- This exemption exists in most states (See our Employment Law Guide for a state-by-state list of exceptions), and says that an employee termination that is in clear violation of an established public policy will not be permitted. For example, a employer discharging an employee for refusing to break the law would violate this exemption. In order for a public policy exemption to exist, most states require that the public policy be clearly expressed in the state constitution, a state statute, or other governmental rule or regulation.
  • Implied Contract- This exemption exists in a majority of states. It says that even if an employee does not have a written employment agreement, he may not be terminated without cause if an implied contract exists with his employer. An implied contract can be either written or oral, and may exist when an employer makes assurances to employees regarding job security, or regarding procedures that will be followed prior to termination. An example would be an employee handbook that states that employees will only be terminated for just cause. Such a statement might constitute an implied contract, protecting that company’s employees from at-will termination.
  • Good Faith and Fair Dealing- In a minority of states, a covenant of good faith and fair dealing is read into every employment relationship. These states may prohibit terminations that are made either in bad faith, or without just cause, depending upon that state’s interpretation of the exception.

In addition to these state-law exceptions, there are a number of federal protections that exist for all employees. These statutory protections are designed to prevent many different types of discrimination in the workplace. For more information about these protections, please see below, “What laws protect employees against discrimination by an employer?”

What is the minimum wage?
The Federal minimum wage is set under the authority of the Fair Labor Standards Act (FLSA). Currently, the Federal minimum wage is $5.85 per hour (as of July 2008).

Many states have passed their own minimum wage laws. For more information about state minimum wage rates, please see our the State Minimum Wage Table included in our Employment Law Guide, or see the Department of Labor’s website.

Which employers are required to pay their employees minimum wage?
Employers covered by the FLSA are required to pay their eligible employees an hourly wage greater than or equal to the federal minimum wage. The FLSA covers employers that do at least $500,000 in business per year. It also applies to smaller employers if they are engaged in interstate commerce or in the production of goods for commerce, such as employees who work in transportation or communications or who regularly use the mails or telephones for interstate communications. In addition to private sector employers, the FLSA also applies to federal, state or local government agencies.

There are a number of businesses that are exempt from the FLSA’s requirements. For more information, please consult the Department of Labor’s website.

Are employers required to pay overtime wage rates?
Under the FLSA, nonexempt employees must be paid at least 1.5 times their standard hourly rate for any hours worked in excess of 40 per week.

There are a number of exemptions that may remove an employee from the minimum wage and/or overtime rules. For example, commissioned sales employees, computer professionals, and farmworkers all may be exempt from the FLSA’s overtime rules, depending upon their regular base compensation rate. Employees of seasonal and recreational establishments may be are exempt from both overtime and minimum wage requirements. For more detailed information about employee exemptions, see the Department of Labor’s Fair Labor Standards Act Advisor.

Are employees legally entitled to family and medical leave?
The federal Family and Medical Leave Act (FMLA) states that all eligible employees must be given up to 12 weeks of unpaid leave per year for any of the following reasons:

  • for the birth and care of the newborn child of the employee;
  • for placement with the employee of a son or daughter for adoption or foster care;
  • to care for an immediate family member (spouse, child, or parent) with a serious health condition; or
  • to take medical leave when the employee is unable to work because of a serious health condition.

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Under the FMLA, an eligible employee is one who has been with a covered employer for at least 12 months, has been employed for at least 1,250 hours of service during the 12-month period immediately preceding the commencement of the leave, and is employed at a worksite where 50 or more employees are employed by the employer within 75 miles of that worksite.

The FMLA applies to employers that are engaged in interstate commerce, or in any industry or activity affecting commerce. It also applies to any business that employs 50 or more employees for each working day during each of 20 or more calendar workweeks of the current or preceding calendar year. Public agencies and public elementary and secondary schools are covered, regardless of the number of employees employed. For more information about exempt employers, or about other rules and requirements under the FMLA, please see the LawGuru FMLA FAQ page, or the Department of Labor’s FMLA compliance web page.

Some states have enacted their own Family and Medical Leave legislation as well. You can find a brief overview of these state initiatives at the Department of Labor’s website. For more detailed information about state Family and Medical Leave laws, contact your state labor office.

What laws protect employees against discrimination by an employer?
There are a number of federal statutes designed to protect employees from discrimination in the workplace. Below is a brief of discussion of some of the more prominent of these statutes.

Title VII of the Civil Rights Act of 1964

  • What types of discrimination are prohibited under Title VII?
    Under Title VII, employers are prohibited from discriminating against employees and job applicants on the basis of race, color, national origin, sex, and religion. As part of its prohibition against sexual discrimination, Title VII also prohibits discrimination on the basis of pregnancy, childbirth or related medical or family conditions.
  • What employers are covered by Title VII’s anti-discrimination rules?
    Title VII applies to all employers with 15 or more employees, including state and local governments.
  • What employment activities are covered under Title VII?
    Title VII prohibits discrimination in regard to hiring, termination, promotion, compensation, job training, or any other term, condition or privilege of employment.
  • What constitutes harassment?
    In the context of racial discrimination, ethnic slurs, racial jokes, offensive or derogatory comments, or other verbal or physical conduct based on an individual’s race or color constitutes unlawful harassment if the conduct creates an intimidating, hostile or offensive working environment or interferes with the individual’s work performance.In the context of sexual harassment, the following conduct constitutes harassment: unwelcome sexual advances, request for sexual favors, and other verbal or physical conduct of a sexual nature. Such conduct must explicitly or implicitly affect an individual’s employment, unreasonably interfere with an individual’s work performance, or create an intimidating, hostile or offensive work environment.
  • Does Title VII have any effect on pre-employment applicant screening?
    Title VII states that requesting pre-employment information that discloses or tends to disclose an applicant’s race strongly suggests that race will be used unlawfully as a basis for hiring. Therefore, if members of minority groups are excluded from employment, the request for such pre-employment information would likely constitute evidence of discrimination.If an employer legitimately needs information about its employees’ or applicants’ race for affirmative action purposes and/or to track applicant flow, it may obtain racial information and simultaneously guard against discriminatory selection by using “tear-off sheets” for the identification of an applicant’s race. After the applicant completes the application and the tear-off portion, the employer separates the tear-off sheet from the application and does not use it in the selection process.

Age Discrimination in Employment Act (ADEA)

  • What types of discrimination are prohibited under the ADEA?
    The ADEA protects individuals who are 40 years of age or older from discrimination based on age. For example, the ADEA prohibits the placement of age limitations on apprenticeship programs. It also prohibits the denial of employment benefits to older employees.For more information about ADEA requirements and protections, please visit the Equal Employment Opportunity Commission’s ADEA information page.
  • What employers are covered by the ADEA?
    The ADEA applies to employers with 20 or more employees, including state and local governments. It also applies to employment agencies and labor organizations, as well to the federal government.
  • How does the ADEA affect pre-employment activities?
    The ADEA does not specifically prohibit an employer from asking an applicant’s age or date of birth. However, because such inquiries may deter older workers from applying for employment or may otherwise indicate possible intent to discriminate based on age, requests for age information will be closely scrutinized to make sure that the inquiry was made for a lawful purpose, rather than for a purpose prohibited by the ADEA.The ADEA generally makes it unlawful to include age preferences, limitations, or specifications in job notices or advertisements. A job notice or advertisement may specify an age limit only in the rare circumstances where age is shown to be a “bona fide occupational qualification” (BFOQ) reasonably necessary to the normal operation of the business.

Americans with Disabilities Act (ADA)

  • What types of discrimination does the ADA prohibit?
    The ADA prohibits covered employers from discriminating against qualified disabled individuals.
  • Which employers are covered by the ADA?
    The ADA covers employers with 15 or more employees, including state and local governments. It also applies to employment agencies and to labor organizations.
  • Who is protected under the ADA?
    Under the ADA, an individual with a disability is a person who:

    • Has a physical or mental impairment that substantially limits one or more major life activities;
    • Has a record of such an impairment; or
    • Is regarded as having such an impairment.

    A qualified employee or applicant with a disability is an individual who, with or without reasonable accommodation, can perform the essential functions of the job in question. Reasonable accommodation may include, but is not limited to:

    • Making existing facilities used by employees readily accessible to and usable by persons with disabilities.
    • Job restructuring, modifying work schedules, reassignment to a vacant position;
    • Acquiring or modifying equipment or devices, adjusting or modifying examinations, training materials, or policies, and providing qualified readers or interpreters.
  • What actions must an employer make to accommodate a disabled applicant or employee?
    An employer is required to make a reasonable accommodation to the known disability of a qualified applicant or employee if it would not impose an “undue hardship” on the operation of the employer’s business. Undue hardship is defined as an action requiring significant difficulty or expense when considered in light of factors such as an employer’s size, financial resources, and the nature and structure of its operation.An employer is not required to lower quality or production standards to make an accommodation; nor is an employer obligated to provide personal use items such as glasses or hearing aids.
  • How does the ADA apply to pre-employment activities?
    The ADA states that employers may not ask job applicants about the existence, nature, or severity of a disability. Applicants may be asked about their ability to perform specific job functions. A job offer may be conditioned on the results of a medical examination, but only if the examination is required for all entering employees in similar jobs. Medical examinations of employees must be job related and consistent with the employer’s business needs.
  • Does the ADA consider illegal drug use or alcohol abuse to be a protected disability?
    Employees and applicants currently engaging in the illegal use of drugs are not covered by the ADA when an employer acts on the basis of such use. Tests for illegal drugs are not subject to the ADA’s restrictions on medical examinations. Employers may hold illegal drug users and alcoholics to the same performance standards as other employees.

How are independent contractors treated differently than employees under the law?
An independent contractor is not an employee, and as such, the employer is not responsible for withholding federal or state income taxes for that individual. Employers are also not required to pay workers’ compensation or unemployment insurance for individuals classified as independent contractors.

Further, independent contractors generally enjoy fewer protections under the law than do employees. They are generally not subject to the minimum wage and overtime requirements of the FLSA, and are not covered by many of the FLSA’s other protections against employer misconduct.

What determines whether someone is an employee or an independent contractor?
The determination as to whether an individual is an employee or an independent contractor depends largely upon the degree of control that the employer exercises over them. For example, whether the employer dictates the location in which work is performed; the degree to which the individual’s business expenses are reimbursed; and the permanency of the relationship, are all factors that go into determining whether an individual is an independent contractor or an employee.

The following forms found in our Employment Forms section relate to the topic of this article:

Employment Forms Combo Packages – These form combo packages contain various Employment Forms and Agreements in one convenient package.

Employment Application – Employment Application forms for use in all states. This well-designed non-discriminatory employment application helps you obtain “need-to-know” information from a job applicant and helps you evaluate a prospective employee’s qualifications and skills. Find the right employee by using the right form.

Employment Agreements & Amendments – Various Employment Agreements including Regular Employee and Independent Contractor Agreements and Employee Agreement Amendments for use in all states.

Independent Contractor AgreementThis agreement is used when a business wants to hire an individual from outside their company to perform different types of services for a limited period of time. It sets forth all the terms and conditions for such an arrangement.

Personnel and HR Forms – Various Personnel and Human Resource (HR) Forms including Job Description, Performance Review, Warning Notice and much more for use in all states.

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