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, professional, or certain computer or outside sales employees who satisfy the salary level and other requirements to meet one of the white-collar exemptions. Employees who do not meet the FLSA exemptions (generally blue-collar workers) are entitled to minimum wage and overtime under the FLSA, as well as any state or local minimum wage or overtime requirements.

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.

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 – although, depending on applicable state law, the employment contract need not be in writing to be enforceable. State law determines whether employment is “at will” and may prescribe what an employment contract must include.

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

Under the federal FLSA, most employers are required to pay overtime – at a rate of time and a half of the employee’s regular pay – for each hour worked that exceeds 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. The FLSA limits the types of flexible scheduling arrangements available. Maximum working hours for minors are imposed by federal and state laws.

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. States and localities may impose minimum wages above the federal minimum wage. The federal government does not otherwise intervene in decisions regarding increases, bonuses or other types of compensation. State laws regulate the timing of compensation payments and permissible deductions from pay.

Vacation Pay

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, which is regulated by state and/or local law. State laws will often determine whether an employee is entitled to accrued vacation pay at the conclusion of the employment relationship.

Family/Medical Leave

The federal Family and Medical Leave Act (FMLA) requires employers of a certain size to provide unpaid leave for maternity, taking care of a medical condition, or caring for family members. Paid sick leave is not required by federal law. 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:

• up to 12 weeks of unpaid leave per year;
• continuing health insurance benefits during leave (if already provided by the employer); and
• job protection (which guarantees an employee can 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 and local family leave laws provide more generous leave benefits than the FMLA by:

• covering smaller employers;
• extending the time for unpaid leave;
• requiring paid leave in some instances; and
• permitting intermittent leave for maternity.

Workplace Accommodations

Additionally, depending upon the type of employer, the Americans with Disabilties Act (ADA) requires an employer with the requisite number of employees to provide a disabled employee with reasonable accommodations unless said accommodations would impose an undue hardship on the employer. Reasonable accommodations can include a leave of absence, a modified work schedule, modified duties, transfer to a vacant position, or (in some instances) unpaid leave beyond the 12 weeks provided under the FMLA.

Confidentiality/Non-disparagement

Traditionally, there have not been limitations on confidentiality and non-disparagement requirements. However, there are increasing concerns with regard to such requirements in the employment arena, especially around the extent to which they might prevent disclosure of harassment allegations. A recent ruling by the National Labor Relations Board limits confidentiality and non-disparagement terms – even if agreed – between employers and non-management employees. This is an area that is still evolving under US law.

Employee/Employer Liability

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; or
• liable for negligence in the hiring, supervision or retention of an employee, as determined by state law.

The enforceability of restrictive covenants, including non-competition and non-solicitation agreements, varies considerably from state to 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 time, geographic scope and the restrictions placed on the employee.

A growing number of states have substantially limited the circumstances under which covenants are enforceable and a growing number of states are requiring greater consideration, especially for low wage earners. In California, for example, non-competition agreements 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 or rewrite an over-broad agreement also varies by state. Some states permit courts to rewrite over-broad provisions through a process called reformation. Some states permit “blue pencilling”, which allows the court to erase over-broad terms and enforce the remaining provisions. Still, other states do not permit either approach; in those states, courts will not enforce an overbroad agreement at all.

See 2.1 Non-competes.

Data Protection Laws

Employee data protection laws in other countries are often much more restrictive than in the US. However, 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 (eg, customers) whose personal information they may obtain.

There are a number of federal data protection laws that impact the employment relationship, including:

• the Health Insurance Portability and Accountability Act (HIPAA), which dictates the circumstances under which PHI may be released and to whom it may be released;
• the Genetic Information Nondiscrimination Act (GINA), which covers genetic information;
• the ADA, which limits when an employer may obtain medical information, how such information may be used and disclosed, and how it may be stored and retained;
• the FMLA, which limits the use and disclosure of medical information collected to administer leaves under the law;
• 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
• 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 1974, limits the type of information that federal government employers may keep on their employees.

Personal Information Requirements

Most US states impose requirements related to personal information. Every state has enacted laws defining PII and requiring notification of security breaches involving PII. Many states have enacted laws that require companies to keep PII secure and to destroy, dispose of, or otherwise make PII unreadable or undecipherable once they are finished with PII they hold.

Many states have also enacted laws to protect social security numbers, with limited exceptions for employers, and some have laws providing expanded protections to PHI or other health information. A significant number of states have also enacted employee social media privacy laws, which limit when and how employers may use social media information about their employees.

Certain states have laws that represent new approaches to data protection and have become a model for similar legislation across the nation. One such example is Illinois, which imposes conditions on the collection and use of biometric information, including fingerprints, retina scans and facial geometry scans (which could be used to identify individuals through photographs). The Illinois Biometric Privacy Act (BIPA) has a number of requirements, such as written consent and disclosure of policies related to biometric data collection and usage. It also allows private individuals to bring suit and recover damages for violations.

Elsewhere, the California Consumer Privacy Act 2018 (CCPA) established rights for California residents – for example, notice obligations for employers on the information they hold on employees, applicants and contractors. The California Privacy Rights Act 2020 introduced a number of changes to the CCPA and came into effect in January 2023. The end to employer exceptions for a number of CCPA notice and individual rights requirements means that employers must:

• develop a comprehensive programme to monitor how data is collected, used, shared and destroyed throughout the employment relationship;
• communicate with California residents; and
• process rights requests when received.

Laws concerning personal information and data protection are changing rapidly. In addition to proposed national legislation, new rights and duties for employers are expected in a number of states during the coming years.

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 1986 (IRCA) places the burden of immigration compliance on employers and prohibits the hiring, recruiting, or referring for a fee of individuals who are not authorised to work in the USA. It also requires employers to confirm the identity and employment eligibility of new employees.

Subject to very few exceptions, a foreign worker must have a work visa permitting them to work in the USA. Employers have the option of participating in the immigration sponsorship process; however, they may not directly ask about a candidate’s national origin, citizenship or immigration status during the hiring process. Instead, employers must use neutral questions to determine whether the applicant requires immigration sponsorship to begin working or to continue employment in the future – for example, “Are you legally authorised to work in the USA?” and “Do you now, or will you in the future, require immigration sponsorship for work authorisation?”. If a candidate answers affirmatively to the second question, the employer may ask more direct questions about the applicant’s immigration status and work authorisation in order to make an informed hiring decision.

Foreign nationals can obtain nonimmigrant (temporary) visas and immigrant (permanent) visas to work in the USA. Most foreign nationals initially enter the USA on a nonimmigrant visa. The most common employer-sponsored nonimmigrant visas include the H-1B, L-1 and nonimmigrant NAFTA Professional (TN) visas.

H-1B Visa

H-1B visa status is available to foreign nationals coming to the USA to work temporarily for a specific US employer in a specialty occupation. A specialty occupation is defined as one that requires the following as a minimum for entry into the job:

• theoretical and practical application of a body of highly specialised knowledge; and
• the attainment of a bachelor’s degree or higher in the specialty (or its equivalent in work experience).

The H-1B is subject to an annual quota. The United States Citizenship and Immigration Services (USCIS) uses a pre-registration process through which employers must enter candidates in the H-1B lottery. Selection via the pre-registration process is required before an employer can submit an H-1B petition on behalf of a foreign national.

The pre-registration process begins in March each year, with the earliest possible H-1B start date of 1 October. If a foreign national currently holds H-1B status, they are eligible to “port” the H-1B status to a new employer at any time after filing a new H-1B petition.

L-1 Visa

L-1 visa status is available to employees of foreign companies who are coming to the USA to work temporarily for a qualifying organisation that is related to the foreign company. This must be either the same company, the parent company, a branch office, an affiliate, or a subsidiary. The employee must have at least one year of experience working for the company abroad and must be coming to the USA to work in an executive, managerial, or specialised knowledge capacity.

TN Visa

TN visa status is only available to citizens of Canada and Mexico. Canadian and Mexican nationals may qualify for TN classification if they possess the necessary credentials for one of the listed approved TN occupations.

Employers may permit employees to conduct mobile or remote work so long as such a working arrangement complies with federal and state laws that would otherwise apply – eg, workers’ compensation laws, the FMLA, the Occupational Safety and Health Act (the “OSH Act”) and the ADA.

In order to comply with the OSH Act, for example, employers must continue to keep records of work-related injuries – even if such work-related injuries occur at home. As a result, employers should include telecommuting employees in any safety training that might apply to them and should instruct telecommuting employees to report accidents and injuries that could be work-related immediately.

If an employee’s remote or mobile workspace is located outside the employee’s home, then additional considerations and potential restrictions arise, especially if the individual performs work out-of-state or internationally.

Employees working out-of-state, whether in a second home or otherwise, may involve tax issues and other states’ laws (eg, workers’ compensation and state privacy laws and/or regulations). By way of an example, an employee that works from a condo in Chicago for a total of three months out of the year would implicate the Illinois BIPA (see 3.1 Data Privacy Law and Employment for further details).

When working internationally, employers should consider how long the employee will work while abroad (whether a set amount of time or a potentially indefinite period), all countries where the employee will work, and whether the employees’ benefits would continue while abroad. Depending on the country, certain restrictions may apply – for example, South Korea and European countries have data protection requirements and data transfer restrictions that may apply to an employee working abroad. Additionally, the EU imposes certain safety requirements for home offices that may apply to employees working out of an international home.

Employers use sabbaticals to keep valued employees or provide a phased route toward retirement. When considering sabbatical leave, employers should carefully consider:

• the eligibility criteria it will depend on (eg, tenure and performance);
• length of leave;
• pay during leave; and
• the continuation of benefits and/or years of service.

Examples include a month-long sabbatical every five years with employer-paid travel expenses, 40 hours of paid volunteer work per year, three to six months of partially paid leave to volunteer or pursue a career-enhancing opportunity, and four weeks of unpaid leave.

Although employers do not face any outright restrictions on sabbatical leaves, employers should consider that some states may require substitution of other unpaid leave rights during the sabbatical leave. By way of an example, some states and the FMLA allow employers to compel the use of paid leave benefits with any sabbatical leave. In contrast, certain jurisdictions (eg, Washington state) permit an employee to substitute unpaid leave with paid leave but prohibit an employer from compelling an employee to substitute unpaid sabbatical leave with other paid leave benefits.

Employers should also consider that sabbatical leave might affect the separate issue of whether an extended period of leave is a reasonable accommodation that an employer must provide to an individual with a disability. Multiple jurisdictions have held that an indefinite leave of absence cannot be a reasonable accommodation. Nonetheless, others allow for the possibility that a long-term leave (up to multiple months) with an identifiable end date may be a reasonable accommodation that an employer must consider granting in the absence of an undue hardship. The Ninth Circuit Court of Appeals (covering district courts in Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon and Washington) has not eliminated the possibility that a definite long-term period of leave may be a reasonable accommodation under the ADA. In such states, a plaintiff could cite a sabbatical benefit as evidence that a long-term period of leave will not present an undue hardship to an employer because the employer voluntarily offers similar periods of leave to non-disabled individuals for personal reasons.

Employers are using tools such as wellness programmes and rewards to create a better work–life balance and provide different tools to recruit and retain talent. Such rewards may include biometric trackers (eg, fitbits), exercise equipment, gym memberships, and raffles and prizes. Although employers may have tax or benefit incentives for these programmes, these rewards present risks under the ADA, GINA and the HIPAA, among others – as well as under state laws concerning biometric data (eg, the Illinois BIPA). Employers using such programmes should ensure that:

• each programme applies uniformly and consistently; and
• the scope of such programmes does not violate privacy considerations.

Desk-sharing or “hotelling” is another option to allow for hybrid schedules and/or greater work mobility among a workforce. When providing hotelling spaces or transitioning from one-to-one desk assignments to desk-sharing arrangements, employers should communicate these changes with employees and ensure that employees have notice of the changes. It is worth bearing in mind that employees should still have access to private spaces to the extent that their job may so require it – for example, it would not make sense for Human Resources personnel to have a desk-sharing arrangement in an open area without access to a secure location for confidential conversations.

The NLRA, enacted in 1935, was designed to provide rules to limit “industrial warfare” following a period of violence and unrest between employers and employees. The NLRA protects employees’ rights to engage in “protected, concerted activity” in the workplace regarding the terms and conditions of their employment and, if they choose, to organise a union.

Although 29.5% of American employees belonged to unions in the 1960s, union membership in the private sector has declined steadily since then and currently stands at just 6%. In contrast, the percentage of union employees in the public sector has grown markedly in the past 20 years and currently stands at 33.1%.

The NLRA prohibits private sector employers from interfering with, restraining or coercing employees in the exercise of their rights to organise a union. The NLRA also protects employees’ right not to organise a union.

Section 9 of the NLRA prescribes general rules concerning the election process. The NLRB and the courts have also developed processes through which employees have the opportunity to cast an informed vote in an election to determine a union’s representation status.

In December 2019, the NLRB issued new guidelines on the conduct of representation elections, thereby revising rules implemented under the prior administration that were considered by employers to have tilted the process in favour of unions. The newly revised rules seek to restore the balance between employer, union and employee interests in the election process. The current administration is, however, openly pro-union and decisions from the NLRB reflect these pro-union leanings.

Once elected, the role of the union is to represent fairly the interests of the employees in the bargaining unit and negotiate the terms and conditions of employment with the company. These include wages, benefits, and other terms and conditions such as seniority, overtime and work schedules.

Under the NLRA, subjects of bargaining are divided into two categories:

• “mandatory” (which the parties must negotiate); and
• “permissive” (which neither party can be forced to negotiate).

When employees choose a union to represent them, the employer and the union are required to meet at reasonable times and places to negotiate in good faith to reach a binding agreement that sets forth the terms and conditions of employment. The employer and union are not required to adopt any proposal made by the other; however, they are required to bargain in good faith to try to reach an agreement. Failure to reach an agreement may result in a strike or lockout or could prompt the union to resort to other economic weapons.

If the parties do not reach agreement despite good-faith bargaining, the employer may declare an impasse and unilaterally implement its bargaining proposals. The union could, however, file an unfair labour practice charge with the NLRB if it contends the employer failed to bargain in good faith. The NLRB can order the employer back to the bargaining table and to rescind any unilateral changes the employer may have made based on a claim of impasse.

For workforces that are organised, bargaining typically takes place at the company level. However, some employers bargain with unions through associations, which may result in a uniform agreement for certain types of work performed by numerous different employers (eg, across an industry such as construction).

Employment is generally presumed to be “at will”, meaning either the employee or the employer can end the employment relationship without notice at any time for any reason – be it good or bad – or for no reason at all. There are four major exceptions to the “employment at will” doctrine – namely, where there is:

• a dismissal due to discrimination or retaliation that is in violation of a federal, state or local law;
• an express or implied contract, including a collective bargaining agreement;
• an implied covenant of good faith and fair dealing; and
• a discharge that would violate the state’s public policy – for example, firing an employee for seeking worker’s compensation benefits following a work-related injury.

The laws surrounding these exceptions vary considerably by state.

Unless provided for by the terms of an employment contract or collective bargaining agreement, procedures do not differ depending on the grounds for dismissal.

Lay-Offs

In the USA, the term “lay-off” is often used for instances in which an employer eliminates a number of jobs due to economic reasons or a business need to restructure.

Although a group of at-will employees may generally be dismissed by an employer at any time, the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”) and certain state law equivalents require employers to give employees advance notice of a lay-off or plant closing in some circumstances. In addition, if an employer seeks a release of federal age discrimination claims in connection with an exit incentive programme or other group employment termination, they must provide certain disclosures to the employees being separated. Lastly, an employer may have additional obligations when dismissing a group of employees under a collective bargaining agreement or – in some cases – if the employee works in the public sector.

Unless specified in an employment contract or collective bargaining agreement, there generally are no notice requirements. There is, however, one caveat – in some circumstances involving a plant closing or mass lay-off, an employer may have to give employees 60 days’ notice of the lay-off 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.

Similarly, except where provided for by an employment contract, severance pay is not required. Employees are generally not entitled to compensation on dismissal beyond pay up until their final day of employment 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 (known as “unemployment compensation”), which is generated by the state government from a special tax paid by employers.

Given that employment is generally presumed to be “at will”, an employer may dismiss an employee for any reason, with or without cause or notice. The only exceptions are where:

• any applicable employment contract, collective bargaining agreement provides otherwise; or
• the employee is dismissed for a reason proscribed by federal, state or local law (ie, an employee’s age, disability, race, sex, or national origin).

In a collective bargaining relationship, there are recognised principles of just cause. The employee must have notice of the rule that is the subject of dismissal, the rule must be reasonable, the employer must have conducted a fair investigation and ascertained evidence of the violation, and the penalty must fit the “crime”. The determination of such must include an assessment of the prior points, in addition to the employee’s seniority and work record.

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 where an employer seeks a paid release of federal age discrimination claims. Additionally, special rules exist for the release of claims based on violations of the FLSA, which requires minimum wage and overtime pay for most employees. Several federal agencies, such as the SEC and the NLRB, have also brought enforcement actions against employers whose release agreements impede a person from exercising their right to provide truthful information to governmental or regulatory bodies.

There is no specific protection against dismissal for particular categories of employees, except where provided by the anti-discrimination laws, the NLRA, or other federal or state statutes.

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 or no reason; this is determined by state law. However, as discussed in 7.1 Grounds for Termination, common exceptions include where there is:

• dismissal due to discrimination or retaliation that is in violation of a federal, state, or local statute;
• an express or implied contract, including a collective bargaining agreement;
• an implied covenant of good faith and fair dealing; and
• a public policy exception prohibiting discharge if it would violate the state’s public policy.

Employees may have grounds for a wrongful dismissal claim, therefore, in situations where employment is terminated as a result of whistle-blowing, filing a worker’s compensation claim, or refusing to engage in unlawful conduct.

The remedies available depend on the law under which those claims are asserted. However, they generally include some combination of back pay, lost benefits, front pay, liquidated damages, compensatory damages (including emotional distress damages), punitive damages, and attorney’s fees and costs – in addition to equitable relief such as reinstatement.

Discrimination

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 (which includes sexual orientation and gender identity), 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) or who seek benefits under federal law (eg, under the ADA or the FMLA).

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, political affiliation, language abilities, use of tobacco products, firearm ownership, public assistance status, height, weight, and personal appearance.

Prohibited Practices

Prohibited discriminatory practices generally include bias in all terms, conditions and privileges of employment, including hiring, promotion, evaluation, training, discipline, compensation, classification, transfer, assignment, lay-off and discharge. Where disadvantageous to the employee, 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.

Prohibited discriminatory practices also include failing to reasonably accommodate an employee’s request for a disability or religious accommodation. The standards for evaluating each type of accommodation differ and religious accommodations are an evolving area under US law.

Harassment

Workplace harassment is also unlawful. Although many harassment cases involve allegations of sexual harassment, harassment based on other protected characteristics 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 efforts to prevent and correct the harassment.

Retaliation

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.

Proving Discrimination

Generally, employees must first prove:

• they are a member of the protected class;
• they were qualified for the job and/or satisfactorily performed the job;
• they were subjected to an adverse employment action; and
• the adverse employment action occurred under circumstances giving rise to an inference of discrimination.

The employer must then establish that the adverse employment action was taken for a legitimate, non-discriminatory reason. If the employer does so, the employee must prove that the reason offered by the employer was a cover-up (or pretext) for discrimination. An employee is also generally required to show that the employer intended to discriminate, except when claiming a particular practice or policy has a disparate impact based on a protected characteristic.

There are also affirmative defences to discrimination claims that may apply in limited circumstances and depending on the nature of the claim. Employers are generally allowed, for example, to discriminate on the basis of sex, age, religion or national origin if such a characteristic constitutes 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 (including emotional distress damages), punitive damages, and attorneys’ fees and costs – as well as equitable relief such as reinstatement.

Employment disputes may include in-person or virtual depositions. Virtual court proceedings are increasingly permitted in the USA, including court conferences, settlements and mediations, and trials. Even where the proceeding itself is in-person, more judges are allowing witnesses to appear virtually. This is generally a court- or judge-specific determination – although the parties may agree to conduct depositions or mediations virtually.

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

Litigation

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.

Depending on the nature of the claims and the parties, employment disputes may be litigated in either federal or state court. Federal courts have jurisdiction to hear employment cases:

• arising from federal employment laws;
• in which the USA is a party; and
• between citizens of different states when there is more than USD75,000 in controversy.

The federal court system comprises 12 judicial circuits, which 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 from state employment laws. Each state has a court system that is composed of trial courts, courts of appeal, and a state supreme court.

Class Action Claims

Class action claims are available in employment disputes, unless the employee has waived the right to participate in such claims ‒ for example, by signing an employment contract that prevents the employee from pursuing class claims. The Supreme Court decision in Wal-Mart Stores, Inc v Dukes, 564 US 338 (2011) was a landmark decision that interpreted 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. The current legal landscape could change with regard to the enforcement of arbitration provisions through the legislative process.

Many employers prefer arbitration because the proceedings are quicker and less public.

Pre-dispute arbitration agreements are generally enforceable. The Supreme Court has recognised a liberal federal policy favouring arbitration and has permitted employers to require that employees submit employment-related claims to arbitration on an individual basis (and not as part of a class action). Most employment disputes may be submitted to arbitration; however, new federal legislation in 2022 places limits on the enforceability of mandatory pre-dispute arbitration agreements in the case of sexual harassment and sexual assault claims.

Attorney’s fees and costs are available under some employment statutes. By way of an example, Title VII and other federal anti-discrimination statutes permit the prevailing party to recover attorney’s fees.