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Labor Laws
As an HR professional, one of your responsibilities is to ensure your company is compliant with necessary state and federal laws. It can be overwhelming to stay on top of all the different laws. This article explains what labor laws are and their impact on an organization.

What Are Labor Laws?

Labor laws are in place for the protection and wellbeing of employees to ensure they are safe and protected in the workplace. They are meant to help mediate workplace relationships or disputes that arise between employees and employers.

Federal Labor Laws vs State Labor Laws

Federal labor laws are created and administered nationally for all states. State labor laws are governed by individual states. Most state laws are similar—however, every state will vary on how they administer or enforce those labor laws.

Why Are Labor Laws Important?

Labor laws help both employees and employers. They are put in place to clarify and provide guidance on the obligations an employer has to employees. Here are some reasons why those labor laws are important.

Set Proper Guidelines

As an employer, there are many things to consider and follow. Sometimes it is hard to know what is required by law and what is optional. Labor laws set proper guidelines to make sure you’re legally compliant. It also helps organizations ensure they are taking care of their employees well.

Mediate Legal Issues

As an employer, you make many choices on how to run your organization. Some are pretty straightforward, such as paying employees or making sure each employee has a manager they report to. However, there can be more gray areas with other issues, such as how long an employee can work, what is considered work, or for what reasons you can terminate an employee. Labor laws set rules and guidelines on how to respond to situations that aren’t black and white. This can help mediate legal issues that arise.

Establish Employee Rights

As an employer, you want to do everything you can to ensure your employees are taken care of and have the right support. Labor laws are in place to give employees rights. These rights might include child protection laws, wage protection, prevention of discrimination and reasonable hours and compensation. These labor laws help ensure employees are taken care of and have the proper support.

Federal Labor Laws Every HR Professional Should Know

There are many federal labor laws. It can be difficult to keep track of them all, especially when they are ever changing. Here are many of the federal labor laws that every HR professional should know:

Minimum Wage

This law stems from the Fair Labor Standards Act (FLSA) which ensures employees are paid a minimum amount per hour of work. Since 2009, the federal minimum wage has been $7.25 per hour. Some states have higher minimum wages, but every state has to pay at least $7.25 per hour. This is important for employers to know how much they have to pay employees and important for employees so they know they are being treated fairly. This law also states that employees must be paid time-and-a-half for any overtime they work. Overtime work classification can vary for each state, but generally working over 40 hours in a week is considered overtime. This applies to all non-exempt workers. SHRM explains the difference between exempt and non-exempt workers.

Worker’s Compensation

Employees who are hurt on the job are entitled to wages. Worker’s compensation laws protect employees’ jobs and wages if this occurs. This law may vary from state to state, but generally worker’s compensation covers the employee’s medical expenses, compensation for lost wages during recovery, and benefits for dependents if an employee dies on the job. This is important for employees so they know they are protected if they get hurt on the job, and important for employees so they are compliant by paying employees who are hurt on the job.

Family and Medical Leave Act (FMLA)

FMLA requires organizations with 50 or more employees to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth/adoption of children or a serious medical condition, either their own or a spouse, child, or parent. Eligibility is determined by being employed with the employer for at least a year and working at least 1,250 hours over the past 12 months. This is important for employees so they know their job is protected if they need an extended leave. It is also important for employers to be aware of how long employees can take leave for family or medical reasons.

Safety Rights

Labor laws require that an employee is given the necessary safety rights. Occupational Safety and Health Administration (OSHA) outlines those rights as the right to receive workplace safety and health training in a language you understand, work on machines that are safe, receive required safety equipment, be protected from toxic chemicals, request an OSHA inspection, report an injury or illness, review records of work-related injuries and illnesses, and see results of workplace hazards tests. For more information on these safety rights, refer to the OSHA website. It is important for employees to understand expectations of their working conditions, while these laws are important for employers so they can create the legal working conditions for employees.

Wrongful Discharge/Termination Laws

When an employer terminates an employee, they want to be sure they are fair and have just reasons for terminating the employee. Most states are at-will states except for Montana, which means that an employer or employee can terminate their employment for any reason, with or without notice, as long as it isn’t in violation with labor laws. Discrimination of any kind is against the law. If an employee is terminated due to race, religion, gender, pregnancy, sexual orientation, national origin, age, or disability and genetic information, it is a wrongful termination. This also applies if an employee is not hired because of protected classes. These laws are important for employees so they are aware if they are experiencing discrimination. They are important for employers so they ensure they document everything when it comes to terminating an employee in case of a wrongful termination claim.

Health Coverage

Due to the Affordable Care Act of 2010, larger companies are required to provide health insurance to employees. Companies with 50 or more full-time employees must offer a minimal level of health insurance to their employees or pay a substantial fee (this depends on how many employees the organization employs). An employee is considered full-time if they work an average of 30 hours a week. This is important for employees so they are provided health insurance benefits, while it is important to employers so they are aware of their obligation to provide health insurance to employees.

Payroll Taxes

Payroll taxes are withheld from employees’ salaries and paid to the federal government to fund social programs such as social security and medicare. An employer is required to take these taxes and pay them to the government. In addition, an employer is required to pay unemployment tax depending on how many employees file for unemployment every year. This program is managed by the state, but benefits are offered through a joint federal-state program. These laws are important for employees so they have access to unemployment benefits when they lose their job. They are important for employers so they understand the ramifications of terminating employees without good cause.

Child Labor Laws

These laws protect the rights and safety of employees under the age of 18. Federal laws prohibit employment of minors under age 14 in nonagricultural occupations. They also restrict the number of hours and type of work that minors under the age of 16 can perform. Lastly, they prohibit minors under the age of 18 from working in any hazardous occupation. Child laws are different for minors in agricultural employment. This is important for employees so that minors are aware of their rights and don’t get overworked, and important for employers so they don’t schedule minors to work too much or give them work they are not supposed to perform.

Where to Find Your State Labor Laws

You can find information on state labor laws by going to your state department of labor website. You can find each state’s department of labor on their website.

How to Ensure Your Company Complies With Labor Laws

It can be hard to stay up-to-date with all the ever-changing labor laws on the federal and state level. Here are a few ways to ensure your company is compliant with labor laws.

Step 1: Know the Laws That Apply to Your Business

Some labor laws apply to companies based on industry, company size and what state you operate in. To ensure you are compliant with labor laws, you need to know which laws apply to your company.

Step 2: Create a Checklist

Once you have established what laws are required in your area, make a list of each law and make sure you are following each of them. This is a good list to review on a quarterly or yearly basis.

Step 3: Compile an Employee Handbook

As mentioned prior, it can be hard to keep track of all the labor laws and make sure you are following them. As an employer, you should have an employee handbook that outlines the company’s rules and required labor laws. The handbook should include employee acknowledgements where they sign and agree to handbook details. After writing the handbook, it should be reviewed by your legal team or an employment lawyer to ensure it is compliant with federal and state labor laws.

Consequences of Not Following Labor Laws

Having discussed the importance of labor laws and the impact they have on employers, it is important to understand the consequences of not complying. Labor laws are in place for the benefit of employees and employers. However, if they aren’t followed, there can be serious consequences.

Financial Penalties

Most labor laws include a financial penalty if broken. Some, such as violating minimum wage laws, can be as much as $1,000 per violation. However, more severe penalties exist, such as violating child labor laws. Violating child labor laws can cost a company as much as $10,000 per employee.

Legal Costs

In addition to the financial penalties that can occur when an employer violates a labor law, there can be additional legal costs, which can be quite costly for companies. If a former employee files a wrongful termination claim against an employer and it is proven in court, it can cost the company hundreds of thousands of dollars.

Damaged Reputation

Some larger companies might be financially stable enough that they have the necessary funds to pay penalties or legal costs for labor law violations. However, nothing prevents how labor law violations can hurt the company brand. As social media has become more prevalent, company names can be dragged through the mud for violating labor laws. For example, when a company fired an employee for being pregnant, it was deemed wrongful termination and discrimination.This company experienced huge backlash on Facebook because of the incident. Incidents like this are hard for a company to overcome.
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Tanner Pierce, PHR

Tanner Pierce, PHR

Tanner has over 4 years of HR professional experience in various fields of HR. He has experience in hiring, recruiting, employment law, unemployment, onboarding, outboarding, and training to name a few. Most of his experience comes from working in the Professional Employer and Staffing Industries. He has a passion for putting people in the best position to succeed and really tries to understand the different backgrounds people come from.
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