Employment laws in the USA every new business owner must be aware of

Starting a business in the USA is a dream for many entrepreneurs. However, with this dream comes a lot of responsibility, especially when complying with the numerous labor and employment laws in the US. These laws can be complex and confusing, and it is important to understand them to avoid any legal issues.

This blog will provide an overview of some of the most important employment and labor laws in the US. We will also discuss the consequences of non-compliance with these laws and how Global Squirrels, a staffing and payrolling platform, can help you onboard top talent and ensure 100% compliance with US labor and employment laws through our EOR and Professional Employer Organization (PEO) services.

What are some essential employment laws in the USA?

1. Minimum wage and work hours

The minimum wage in the US is $7.25 per hour as of 2023, according to the Fair Labor Standard Act (FLSA). This act was passed on July 24th, 2009, and all private and public employers must at least pay their employees this minimum wage. However, this can vary depending on other federal and state laws. For instance, the minimum wage in California is $16 per hour as of January 1st, 2024, and in Los Angeles is $17.27 as of July 1st, 2024.

Additionally, non-exempt workers are entitled to overtime pay, at least 1.5 times their regular hourly wage, for any hours worked over 40 in a workweek. These regulations aim to protect workers from exploitation and ensure fair compensation for their labor.

2. Workplace safety

Under the Occupational Safety and Health Act (OSHA), employers are required to provide a safe and healthy workplace, free from recognized hazards that could cause death or serious physical harm. This includes addressing known hazards, limiting exposure to harmful chemicals, implementing safe practices, and keeping records of workplace injuries and illnesses.

3. Health coverages

Health coverage in the USA includes several options. Employer-sponsored insurance is standard, with companies covering part of the premium and offering medical, dental, and vision coverage. Medicare is a federal program for those 65 and older or with certain disabilities, covering hospital care, medical services, and prescriptions. Medicaid provides health coverage for low-income individuals, with eligibility varying by state. Health Maintenance Organization (HMO) plans require members to use a network of providers and often need referrals.

4. Anti-discrimination laws in the USA

Federal and state laws protect employees from discrimination and harassment at work. The Equal Employment Opportunity Commission (EEOC) enforces US work laws prohibiting unfair treatment based on race, color, religion, sex, national origin, age (40 or older), disability, or genetic information.

Discrimination occurs when an employer mistreats an employee due to these protected categories. To report discrimination, individuals can file a charge through the EEOC or a local Fair Employment Practices Agency (FEPA). Federal employees and contractors follow different processes through the Equal Employment Office (EEO) or Office of Federal Contract Compliance Programs (OFCCP).

Harassment, including sexual harassment, is unlawful when it creates a hostile work environment or leads to adverse employment decisions. Retaliation, such as firing or demotion, for engaging in protected activities like reporting discrimination is also illegal. Employees experiencing discrimination or harassment can file lawsuits after reporting through the EEOC.

5. Family leaves benefits

The Family and Medical Leave Act (FMLA) grants eligible employees of covered employers up to 12 work weeks of unpaid, job-protected leave within a 12-month period for various family and medical reasons. These include caring for a newborn, newly adopted, or foster child within one year of placement; caring for a spouse, child, or parent with a serious health condition; addressing the employee’s own serious health condition; or handling qualifying exigencies related to a family member’s military service. Additionally, employees may take up to 26 work weeks of leave in a 12-month period to care for a covered servicemember with a serious injury or illness if they are the servicemember’s spouse, child, or parent.

Here are some recent developments in the employment laws in the USA

In recent U.S. Dept of Labor laws, some new legal developments have significantly impacted workplace rights and protections. The U.S. Supreme Court has strengthened protections for LGBTQ+ employees, expanding their workplace rights. Additionally, rulings on class action waivers in arbitration agreements have changed how businesses manage employee disputes. New changes to handling these actions are worth noting for companies with collective action cases under the Fair Labor Standards Act (FLSA). Moreover, new legislation around sexual harassment and assault in the workplace is reshaping how companies must address and prevent these issues. Keeping up with these legal shifts is essential for ensuring compliance and protecting both employers and employees in the modern workplace.

Sex discrimination

In June 2020, the U.S. Supreme Court ruled that LGBTQ+ employees are protected from workplace discrimination under Title VII of the Civil Rights Act of 1964. The EEOC has aligned with recent Supreme Court decisions by rescinding its opposition to mandatory arbitration agreements in employment discrimination cases.

Class action

The U.S. Supreme Court upheld class action waivers in employment arbitration agreements under the National Labour Relations Act (NLRA) and Federal Arbitration Act (FAA), requiring explicit agreements for class arbitration. Biden’s 2022 law invalidates forced arbitration in sexual harassment/assault cases. The Court’s TransUnion LLC v. Ramirez ruling requires concrete harm for Fair Credit Reporting Act (FCRA) claims. Recent cases limit collective actions under FLSA, with courts rejecting lenient certification standards for “opt-in” plaintiffs, benefiting employers.

Consequences of not complying with the United States labor laws

Reputational damage

Violations can severely damage a company’s public image. Negative publicity from lawsuits or regulatory actions can deter potential customers and employees alike. For example, founders can face a boycott after being found guilty of discrimination, significantly impacting their sales and market position.

Employee relations

Non-compliance can lead to low employee morale and trust issues within the workforce. Employees who feel their rights are not respected may become disengaged or seek employment elsewhere, increasing turnover rates.
Discontent among employees may result in collective actions such as strikes or union formation, further disrupting business operations.

Operational disruption

Investigations and audits: Non-compliance can trigger government investigations that divert resources and focus away from core business operations. This can lead to significant operational disruptions.
Business closure: In extreme cases, particularly related to unsafe working conditions or environmental violations, businesses may be forced to cease operations entirely.

Discover Global Squirrels’ PEO and EOR solution to comply with the US employment laws

Global Squirrels, a comprehensive staffing and payrolling platform, can help you streamline your HR and administrative functions, including compliance with employment laws in the United States, through our Employer of Record (EOR) & Professional Employer Organization (PEO) solutions.

Read: Looking for an Employer of Record (EOR) solution in the USA? Check out this blog article to learn how Global Squirrels ensures compliance with US employment laws, streamlining HR and payroll for your business.

The PEO solution can handle a few HR functions, such as payroll & benefits management. But along with EOR, Global Squirrels will take care of hiring new staff, leave and timesheet management, task assignment, and compliance with all United States labor laws. Thus, whether you want to onboard a permanent or short-term worker who will work remotely or from your office in the US, our PEO and EOR solutions will handle all these aspects on your behalf. With the EOR solution, Global Squirrels will be the legal employer of your hired employees and ensure 100% compliance with employment laws in the US and zero risks to your business.

Global Squirrels’ SaaS platform offers subscription-based hiring plans that are cost-effective and eliminate high markups and hidden charges that many outsourcing or EOR companies charge. We do this by charging a flat license fee and the payroll cost of a hired worker, thereby, allowing businesses to save up to 20% on hiring costs while also attracting top talent in the US.

Here are the Orange and Purple hiring plans:

Orange Plan: This plan helps you find and hire talent in the U.S. who meet all your business requirements by giving you complete control over hiring as you provide the information such as the job description, qualifications, skills, and whether you want the professional to work from the office or remotely. Once you submit the job requirements, you will receive curated profiles of top candidates within 2 to 5 business days. You can then choose whom to interview and finally confirm the ones you wish to hire and onboard. Our platform will manage everything from interview scheduling to onboarding and handling all the HR functions, allowing you to focus on your projects.

Purple Plan: It consists of all the HR functions, and we will help you onboard a candidate already sourced by you. With this plan, our platform will handle the payroll & benefits, timesheets and task management, performance management, offer letter generation, and compliance with local, federal, and state laws in the US.

Do you want to know more about how our EOR and PEO solutions can help you comply with employment laws in the USA? Request a demo today!