Employment 2019 Second Edition Comparisons

Last Updated September 09, 2019

Law and Practice

Authors



Shook, Hardy & Bacon LLP has a national employment litigation & policy practice that represents corporate employers in complex class action (employment discrimination, and wage and hour), EEOC litigation, unfair competition litigation, whistle-blower claims and high-stakes executive disputes. Innovation and collaboration are SHB hallmarks. With offices in Atlanta, Boston, Chicago, Denver, Houston, Kansas City, London, Los Angeles, Miami, Orange County, Philadelphia, San Francisco, Seattle, Tampa and Washington, DC, and with more than 500 lawyers, Shook serves clients throughout the world.

The Fair Labor Standards Act (FLSA) exempts certain white-collar workers from the statute’s minimum wage and overtime requirements. Employers are not required to pay minimum wages or overtime pay to executive, administrative and professional employees who satisfy the salary level and other requirements to meet one of the white-collar exemptions.

Employment contracts are not required. Where a written contract does not exist, courts may imply terms governing the employment relationship from statements made in employee handbooks, offer letters and/or oral representations.

Employment contracts are not required. In the American workplace, employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time. For those employment relationships that are under contract, most are in writing. However, depending on applicable state law, the employment contract need not be in writing to be enforceable.

There is no federal law that requires employers to provide specific written information to employees at the time of hire, but some states require employers to disclose information such as the employee’s wages or regular payday at the outset of employment.

Maximum working hours are imposed by federal and state laws. Under the federal FLSA, most employers are required to pay overtime – at a rate of time and one half of the employee’s regular pay – for each hour worked over 40 hours per week, unless the employee is statutorily exempt. Some states expand these terms and conditions to include overtime in excess of eight hours in one day or overtime for work performed on weekends.

Minimum wage requirements are imposed by federal and state laws. The federal minimum wage for employees covered by the FLSA is currently USD7.25 per hour. Most states impose minimum wages above the federal minimum wage. For instance, the minimum wage in California is USD11.00 per hour and the minimum wage in Washington, DC is USD13.25 per hour. Some cities, like Los Angeles, also impose minimum wage requirements higher than the state minimum wage for certain categories of workers.

Vacation and vacation pay are subject to very few regulations and are not required under federal law. However, most employers do provide some paid vacation leave.

The federal Family and Medical Leave Act (FMLA) requires employers of a certain size to provide unpaid leave for maternity, to take care of a medical condition, or to care for family members. Under the FMLA, an employee is eligible for unpaid leave if the employee has been employed for at least 12 months by the employer and for at least 1,250 hours of service during the previous 12-month period. An eligible employee is entitled to (i) up to 12 weeks of unpaid leave per year; (ii) continuing health insurance benefits during leave (if already provided by the employer); and (iii) job protection (an employee is guaranteed to return to the same job or its equivalent). Leave related to a serious health condition may be taken intermittently or on a reduced leave schedule when medically necessary.

Some state family leave laws provide more generous leave benefits than the FMLA by covering smaller employers, extending the time for unpaid leave for up to 16 weeks, and permitting intermittent leave for maternity.

Additionally, the federal Americans with Disabilities Act (ADA) requires an employer to provide reasonable accommodations to a disabled person unless they would impose an undue hardship on the employer. Reasonable accommodation can include a paid leave of absence, a modified work schedule, or unpaid leave beyond the 12 weeks provided under the FMLA.

Traditionally, there have not been limitations on confidentiality and non-disparagement requirements. Increasingly, though, there are concerns regarding such requirements in the employment arena. This is an area that is still evolving under US law.

In general, employees may be held liable for their actions depending on the nature of the act and the context in which the act occurred. Under the American doctrine of respondeat superior, an employer may be held vicariously liable for an employee’s acts that are committed within the scope of employment.

The laws governing the enforceability of restrictive covenants, including non-competition and non-solicitation clauses, vary considerably by state. A covenant that is enforceable in one state may well be unenforceable in another. Most states follow the general rule that restrictive covenants are enforceable, provided they are necessary to protect a legitimate interest of the employer and are reasonably limited in duration, geographic scope and the restrictions placed on the employee in pursuing his or her profession.

Some states (approximately 15 to 20) have substantially limited the circumstances under which covenants are enforceable. In California, for example, non-competition clauses are invalid unless otherwise covered by an express statutory exception.

An employer can enforce a restrictive covenant by filing a civil lawsuit seeking an injunction to prevent the employee from violating the covenant and/or damages to compensate the employer for the violation.

Whether a court will enforce an overbroad restrictive covenant varies by state. Some states permit “blue pencilling,” which allows the court to strike the overbroad terms and enforce the remaining, reasonable provisions if they are severable. In other states, the courts are permitted to rewrite the overbroad provisions. And still other states do not permit either approach, and the courts in those states will not enforce an overbroad restrictive covenant at all.

See 2.1 Non-competition Clauses.

Employee data protection laws in other countries are often much more restrictive, although the USA is trending towards more data protection obligations with an assortment of data protection laws that regulate the collection, use and transfer of employees’ personally identifiable information (PII) and personal health information (PHI). These laws are not limited to protecting active employee information, so employers’ obligations extend to former employees, job applicants, independent contractors and other non-employee groups whose personal information they may obtain (such as customers). There are five primary federal data protection laws that impact the employment relationship: (i) the Heath Insurance Portability and Accountability Act (HIPAA), which dictates under what circumstances and to whom PHI may be released; (ii) the Genetic Information Nondiscrimination Act (GINA), which covers genetic information; (iii) the Americans with Disabilities Act (ADA), which limits when an employer may obtain medical information, how such information may be used and disclosure of such information; (iv) the National Labor Relations Act (NLRA), which prohibits employers from interfering with workers’ rights to engage in concerted activity, including such activity through social media; and (v) the Fair Credit Reporting Act (FCRA), which applies to those who use consumer reports, including background checks conducted on applicants and employees. Another federal law, the Privacy Act, limits the type of information that federal government employers may keep on their employees.

Additionally, most US sates impose a wide range of requirements. Almost all states have enacted laws requiring notification of security breaches involving PII, and many have enacted laws requiring companies to destroy, dispose of, or otherwise make PII unreadable or undecipherable. Some states have laws providing expanded protections to PHI. More recently, a significant number of states have enacted employee social media privacy laws.

US employers are prohibited from hiring or continuing the employment of a worker who is not authorised to work in the USA. The Immigration Reform and Control Act of 1986 (IRCA) places the burden of immigration compliance on employers and prohibits hiring, or recruiting or referring for a fee, individuals who are not authorised to work in the USA. It also requires that employers confirm the identity and employment eligibility of new employees.

Subject to very few exceptions, a foreign worker must have a work visa permitting him or her to work in the USA. Employers have the option of participating in the immigration sponsorship process. Employers may not, however, directly ask about a candidate’s national origin, citizenship, or immigration status during the hiring process. Instead, they must use neutral questions to determine whether the applicant requires immigration sponsorship to begin working or to continue employment in the future. Those questions include: (i) Are you legally authorised to work in the United States?; and (ii) Do you now, or will you in the future, require immigration sponsorship for work authorisation (for example, H-1B status)? When a candidate answers affirmatively to the second question, the employer may ask more direct questions about the applicant’s immigration status and work authorisation to make an informed hiring decision.

The most common employment-based statuses sought by American employers for their employees include H-1B, L-1 and TN.

H-1B status is available for foreign nationals coming to the USA to work temporarily for a specific American employer in a specialty occupation (ie, one that requires theoretical and practical application of a body of highly specialised knowledge and the attainment of a bachelor’s or higher degree in the specific specialty, or its equivalent in work experience, as a minimum for entry into the job).

L-1 status is available for employees of foreign companies who are coming to the USA to work temporarily for a qualifying organisation related to the foreign company that is either the same company, the parent company, a branch office, an affiliate, or a subsidiary.

TN status was created under the North American Free Trade Agreement (NAFTA) and is only available to citizens of Canada and Mexico. TN status enables citizens of Canada or Mexico to enter the USA to temporarily engage in business activities at a professional level.

The National Labor Relations Act protects employees’ rights to organise a union. While nearly one half of American employees in the private sector belonged to unions in the 1940s, union employees now represent a shrinking segment of the US workforce. In fact, the use of unions in the private sector has decreased in recent years to a rate below 10%. In contract, the percentage of union employees in the public sector has been an area of dramatic growth for labour organisations.

The NLRA prohibits employers from interfering with, restraining, or coercing employees in the exercise of their rights to organise a union.

Secret ballot elections are used to determine whether employees wish to be represented by a union. Section 9 of the NLRA prescribes general rules concerning the election process. Additionally, the National Labor Relations Board (NLRB) and the courts have developed processes through which employees have the opportunity to cast an informed vote in an election determining a union’s representation status.

When employees choose a union to represent them, the employer and the union are required to meet at reasonable times to bargain in good faith to reach a binding agreement setting forth terms and conditions of employment. The employer does not have to adopt any proposal by a union but is required to bargain in good faith.

If no agreement can be reached, the employer may declare an impasse. However, the union may appeal to the National Labor Relations Board if it contends that the employer has not conferred in good faith. The NLRB can order the employer back to the bargaining table.

For workforces that are organised, bargaining typically takes place at the company level. Some large unions do co-ordinate bargaining within an industry. However, they still have to come to independent agreements with each company.

Employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time for any reason (good reason, bad reason, or no reason at all). There are four major exceptions to the employment at-will doctrine: (i) dismissal due to discrimination or retaliation in violation of a federal, state, or local statute; (ii) an express or implied contract, including a collective bargaining agreement; (iii) an implied covenant of good faith and fair dealing; and (iv) a public policy exception prohibiting discharge if it would violate the state’s public policy. The law surrounding these exceptions varies considerably by state.

There are not different procedures depending on grounds for dismissal, unless provided for by the terms of an employment contract or collective bargaining agreement.

In the United States, the term “layoff” is used for instances in which an employer eliminates a number of jobs for economic reasons or due to the employer’s business need to restructure.

While a group of at-will employees may generally be dismissed by an employer at any time, the federal WARN Act and its state equivalents require some employers to provide employees advance notice of a layoff or plant closing. In addition, the federal age discrimination law requires an employer to make certain disclosures to employees being dismissed as part of an exit incentive programme or other employment termination programme, if the employer offers consideration in exchange for signing a waiver of rights under that law. Any such waiver must include certain mandatory provisions to be valid. Lastly, an employer may have additional obligations when dismissing a group of employees as required by an applicable collective bargaining agreement or, in some cases, if the employee works in the public sector.

There are no required notice periods, except in some circumstances involving a plant closing or mass layoff, in which case the employees may be entitled to 60 days’ notice of the layoff under the WARN Act or an applicable state law equivalent. Some of these analogous state laws are more expansive in terms of coverage and employee rights.

Severance is not required, unless provided for by an employment contract. Employees are generally not entitled to compensation on dismissal beyond their final pay and any other business expenses owed to them at the time of dismissal. Depending on the law of the state in which the employee works, an employee may be entitled to receive temporary and partial wage replacement called “unemployment compensation,” which is generated by the state government from a special tax paid by employers.

Because employment is generally assumed to be at-will, an employer may dismiss an employee for any reason, with or without cause, except as otherwise provided for by any applicable employment contract or collective bargaining agreement.

Termination agreements are permissible. In general, there are no specific procedures or formalities required for termination agreements.

The Older Worker Benefit Protection Act (OWBPA) provides procedural safeguards pertinent to a paid release of age discrimination claims. Additionally, special rules exist for the release of claims based on violations of the Fair Labor Standards Act, which requires minimum wage and overtime pay for most employees. Several federal agencies, such as the Securities and Exchange Commission (SEC) and National Labor Relations Board (NLRB), have also brought enforcement actions against employers whose release agreements impede an individual from exercising his or her right to provide truthful information to governmental or regulatory bodies.

There is no specific protection against dismissal for particular categories of employees, except as provided for by the anti-discrimination laws.

Employment is generally assumed to be at-will, meaning either the employee or the employer can end the employment relationship at any time for any reason (good reason, bad reason, or no reason at all). There are four major exceptions to the employment at-will doctrine: (i) dismissal due to discrimination or retaliation in violation of a federal, state, or local statute; (ii) an express or implied contract, including a collective bargaining agreement; (iii) an implied covenant of good faith and fair dealing; and (iv) a public policy exception prohibiting discharge if it would violate the state’s public policy. The law surrounding these exceptions varies considerably by state.

The remedies available depend on the law under which those claims are asserted, but generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and attorneys’ fees and costs, as well as equitable relief such as reinstatement.

Employment discrimination is prohibited by a variety of federal, state and local laws. Federal law prohibits employment discrimination based on the protected characteristics of race, colour, national origin, sex, pregnancy, religion, age, disability, citizenship status, genetic information and military affiliation. Federal law also prohibits retaliation against employees who oppose unlawful discrimination or who participate in proceedings challenging unlawful discrimination.

Most state and some local laws contain analogous prohibitions, with certain jurisdictions expanding the list of protected categories to include such characteristics as marital and/or familial status, sexual orientation, gender identity, political affiliation, language abilities, use of tobacco products, public assistance status, height, weight and personal appearance.

Prohibited discriminatory practices generally include bias in all terms, conditions and privileges of employment, including hiring, promotion, evaluation, training, discipline, compensation, classification, transfer, assignment, layoff and discharge. These activities are often referred to as “adverse actions.” To demonstrate discrimination, an employee must establish a connection between the protected characteristic and the adverse action or condition.

Workplace harassment is also unlawful. While most harassment cases involve allegations of sexual harassment, harassment based on other protected categories is also actionable. Employer liability in harassment cases depends on who engaged in the harassment, whether the harassment resulted in a tangible employment action and the employer’s response to the harassment.

Finally, it is unlawful to retaliate against employees who raise concerns about unlawful discrimination or harassment. An employee need not prove that discrimination occurred in order to prove that an employer’s response to the employee’s complaints constituted unlawful retaliation. Rather, an employee simply needs to prove a causal connection between the complaints and the adverse action.

Generally, the employee first must prove that she is a member of the protected class, she was qualified for the job and/or satisfactorily performed the job, she was subjected to an adverse employment action and the adverse employment action occurred under circumstances giving rise to an inference of discrimination. The burden of proof then shifts to the employer to establish that the adverse employment action was taken for a legitimate, non-discriminatory reason. If the employer does so, the burden shifts back to the employee to prove that the reason offered by the employer was a cover-up (or pretext) for discrimination.

There are also affirmative defences to discrimination claims that may apply in limited circumstances and depending on the nature of the claim. For example, employers are generally allowed to discriminate on the basis of sex, age, religion, or national origin because of a bona fide occupational qualification (BFOQ). A BFOQ exists when a specific characteristic is necessary for the performance of the job. Gender may be a relevant factor, for example, in job performance for a model of women’s clothing. The BFOQ defence is very narrowly restricted and should not be relied on in most situations.

Remedies available for discrimination claims depend on the law under which those claims are asserted, but generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (which include emotional distress damages), punitive damages, and attorneys’ fees and costs, as well as equitable relief such as reinstatement.

Employment disputes may be litigated in either federal or state court, depending on the nature of the claims and the parties involved. Federal courts have jurisdiction to hear cases arising out of the federal employment laws, employment cases in which the USA is a party and employment cases between citizens of different states when there is more than USD75,000 in controversy. The federal court system is comprised of 12 judicial circuits that are geographically divided across the country. Each circuit is divided into a number of geographic districts, with a trial court in each district. Decisions of these trial courts may be appealed to the district’s corresponding circuit court of appeals, and ultimately to the Supreme Court. State courts have jurisdiction to hear cases arising out of state employment laws. Each state has a court system that is comprised of trial courts, courts of appeals, and a state supreme court.

Federal employment agencies such as the EEOC and DOL have authority to investigate certain employment claims and even litigate those claims in federal court on behalf of employees. These agencies also have authority to hear such employment claims through an administrative law judge.

Class action claims are available in employment disputes, unless the employee has waived the right to participate in such claims, such as by signing an employment contract that prevents the employee from pursuing class claims. The United States Supreme Court decision in Wal-Mart Stores, Inc. v Dukes, 564 U.S. 338 (2011) was a landmark decision interpreting the class action commonality requirement as a requirement that the class present the capacity to generate common answers apt to drive the resolution of the litigation. More recently, the Supreme Court’s Epic Systems Corp. v Lewis decision (138 S. Ct. 1612 (2018)) permits employers to implement and enforce arbitration agreements with class action waivers. These are matters that on occasion are addressed by the legislative body, and the current legal landscape could change with respect to enforcement of arbitration provisions through the legislative process.

American employment litigation in the courts is handled by attorneys on behalf of their clients. There is a well-established plaintiffs’ bar that represents individuals and classes, typically on a contingency fee basis. For employer and company defendants, there is also a well-established defence bar. Cases are resolved through the representation of counsel, either by dispositive motion, settlement, or jury verdict.

Employment disputes may be submitted to arbitration. In fact, arbitration is often used in the employment context, and many employers prefer arbitration because the proceedings generally take less time to resolution, are less expensive and are less public.

Pre-dispute arbitration agreements are generally enforceable. The United States Supreme Court has recognised a liberal federal policy favouring arbitration and has permitted employers to require employees to submit all employment-related claims to arbitration on an individual basis (and not as part of a class action).

Attorneys’ fees and costs are available under some employment statutes. For instance, Title VII and other federal anti-discrimination statutes permit the prevailing party to recover attorneys’ fees. Employment contracts may also provide that the prevailing party is entitled to attorneys’ fees.

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Law and Practice in USA

Authors



Shook, Hardy & Bacon LLP has a national employment litigation & policy practice that represents corporate employers in complex class action (employment discrimination, and wage and hour), EEOC litigation, unfair competition litigation, whistle-blower claims and high-stakes executive disputes. Innovation and collaboration are SHB hallmarks. With offices in Atlanta, Boston, Chicago, Denver, Houston, Kansas City, London, Los Angeles, Miami, Orange County, Philadelphia, San Francisco, Seattle, Tampa and Washington, DC, and with more than 500 lawyers, Shook serves clients throughout the world.