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  • Legal system, currency, language

    Combination of federal statutory law, state statutory and common law, and local statutory law. Regulations vary significantly from state to state. US Dollar ($). English.

  • Corporate presence requirements & payroll set-up

    A foreign entity can engage employees to do business in the US subject to certain business and tax considerations and registration as an entity qualified to do business in any state where it has employees and/or is engaged in business. All US employers are required to obtain a federal Employer Identification Number (EIN), to pay applicable payroll taxes and withhold certain tax contributions from their employees. Employers may be required to register employees with the specific state in which they are employed (regulations vary from state to state). Certain states (eg, California) have requirements regarding what information must be provided to employees with their pay (including itemized deductions and reports of hours worked, among other information).

  • Pre-hire checks

    Required

    None, except in certain regulated industries which may require fingerprinting, background checks, motor vehicle histories, and/or drug/alcohol screening.

    Permissible

    Laws vary from state to state. Reference and education checks are common. Criminal background and credit checks generally may be performed in accordance with applicable federal, state, and local law, with an increasing number of state and local jurisdictions limiting criminal history questions on applications and permitting such checks only following a conditional job offer. Medical examinations and drug and alcohol screening are generally permissible if conducted post-offer and in accordance with applicable law.

  • Immigration

    All employees must be legally authorized to work in the US, whether by citizenship, permanent residence (green card) status, or a valid visa (which often requires sponsorship by the employer). Within three days of the start of employment, all employees must submit materials establishing such authorization and complete a Form I-9.

    Employers operating in certain industries (eg, government contractors) and in certain states may be required to use the federal E-Verify system for work authorization confirmation, though some states prohibit or limit use of E-Verify.

  • Hiring options

    Employee

    At-will, fixed-term, full-time or part-time, temporary or seasonal. Generally, the nature of the employment relationship is at-will, meaning either the employer or the employee may terminate the relationship at any time, with or without notice and with or without cause, as long as the reason for termination is not discriminatory/retaliatory and does not otherwise violate the law. Certain jurisdictions have either superseded the general rule of at-will employment by statute (eg, Montana) or have adopted a statutory severance scheme for terminations without cause (eg, Puerto Rico).

    Independent contractor

    Independent contractors can be engaged directly as individuals, or through an entity (eg, LLC, LP). Contractors must be truly independent and not be closely directed by the principal. There are multiple tests utilized that consider various factors (on both the federal and state level) to determine whether an individual is properly classified as an independent contractor. By way of example, if an individual is engaged through a separate business entity, is not performing work that is a part of the company's core business, performs the same or similar services for other entities, and is engaged for a short-term assignment or project, the individual will likely be deemed properly classified and engaged as an independent contractor. Employers should utilize agreements with independent contractors to document the relationship.

    Evolving agency decisions and views – namely from the Department of Labor (DOL) and NLRB (National Labor Relations Board) – have provided more employer-friendly guidance on independent contractor classifications, while certain states' legislation and case law are becoming more employee and contractor friendly (eg, California).

    Agency worker

    Employees may provide services through an employment agency or professional employer organization (PEO). The company and the agency may be deemed "joint employers" and be held jointly liable under various employment laws. Which entity is financially responsible for any such liabilities may depend on the terms of the agreement with the employment agency or PEO.

  • Employment contracts & policies

    Employment contracts

    Given the at-will employment concept that exists across the US, most employees do not have any employment agreements, written or otherwise.

    However, executives and high-level managers tend to have written employment agreements that-will address items such as duties, compensation, restrictive covenants, and any post-termination severance obligations.

    Contracts are not required, and if used, are not required to have any specific terms.

    Probationary periods

    Permissible, but unnecessary in a typical "at-will" relationship, unless something about the terms or conditions of employment (such as right to accrue vacation or participate in group health benefits) will change following the expiration of the probationary period.

    Policies

    Policies vary from state to state. Employers are required to post notices about employee rights under various federal and state laws. Anti-harassment, discrimination, and retaliation policies are highly recommended to be included in an employee handbook, and may help in the defense against related claims. Certain government contractors are required to implement affirmative action plans. Most employers have employees sign an acknowledgment of the "at-will" employment policy.

    Third-party approval

    If the workforce is represented by a union or other labor organization, changes to policies that affect terms and conditions of employment need to be submitted to the union or other labor organization for negotiation prior to implementation.

  • Language requirements

    Certain documents and notices are required to be posted or provided in the language known to be the primary language of a certain percentage of the workforce or of specific employees, if other than English. "English-only" policies in the workplace may be subject to legal challenge as discriminatory, unless there is legitimate business purpose for the rule.

  • Minimum employment rights

    Employees entitled to minimum employment rights

    Most employers are covered by the Fair Labor Standards Act (FLSA) which guarantees minimum wage and overtime pay for non-exempt employees. The most common exemptions are for executive, administrative, professional, outside sales, or computer professional employees. To qualify for an exemption, an employee must be paid a fixed salary of at least US$455/week (US$23,660 annually) and must meet the applicable "duties" test for the exemption at issue. However, the DOL has issued a proposed rule that would increase the minimum salary threshold to qualify for exemption from the overtime provisions of the FLSA to US$679/week
    (US$35,308 annually), which would become effective January 1, 2020. Some states impose additional wage and hour requirements above the FLSA requirements (eg, Oregon); where state laws are more favorable to employees, the state law requirements will apply.

    Working hours

    There is no federal limit on the number of hours per day or per week that an employee over the age of 16 can work (although there are overtime pay requirements, as discussed below). There are restrictions on child labor and in certain professions (eg, airline pilots, drivers), and hours may be limited by a collective bargaining agreement (with a labor union). In some states, certain employers are required to give their workers one day off each week.

    Overtime

    Generally, non-exempt employees must be paid 1.5 times their regular rate of pay for all hours worked in excess of 40 hours per week. Overtime must be calculated on a weekly basis, and cannot be "averaged" over a period of 2 or more weeks. In some states (such as California), additional overtime is required in certain circumstances (eg, more than 8 hours per day).

    Wages

    All non-exempt employees must be paid at least the federal minimum wage, which presently is US$7.25 per hour. Some states and cities have higher minimum wage requirements, such as California US$11.00 or US$12.00 per hour (depending on employer size), with scheduled annual increases up to US$15.00 per hour by 2022 or 2023 (depending on the size of the employer) and New York (ranging from US$11.10 to US$15.00 per hour, with incremental raises to US$12.50 or US$15.00 per hour by the end of 2019, 2020 or 2021, depending on the size of the employer and the location within the state). Many states and territories have a current minimum wage above US$10.00 per hour (and many cities have even higher current minimum wages) and/or have passed legislation that will raise the minimum wage above US$10.00 per hour within in the next 5 years, with several raising minimum wage to US$15.00 per hour.

    Vacation

    There is no statutory requirement to provide paid vacation or holiday to any employees. Most employers will adopt a vacation or paid time off policy. Once such a policy is adopted, many states will treat accrued vacation or paid time off as wages that cannot be withheld or taken away.

    Sick leave & pay

    There is no federally mandated right to paid sick leave. Employers with 50 or more workers generally have to provide eligible employees unpaid leave under the Family and Medical Leave Act (FMLA) for up to 12 weeks in any given year due to a serious health condition of the employee or his/her family members, or for a qualifying exigency arising out of the fact that a family member is a covered military member or on covered active duty, and for up to 26 weeks to care for a family member who is a covered military member. Employers also may be required to provide unpaid leave (for at least some period of time) as a reasonable accommodation to a qualified employee with a disability under the Americans with Disabilities Act (ADA).

    Certain states and local jurisdictions (eg, Washington state, California, New York City, Dallas) have established what is likely the beginning of a trend imposing more generous leave requirements and requiring additional benefits like paid sick leave.

    Maternity/parental leave & pay

    There is no federally mandated right to paid maternity/parental leave. Under the FMLA, employers with 50 or more workers generally have to provide eligible employees unpaid leave for the birth or adoption of a child, or to care for a newborn or a newly-placed child, for up to 12 weeks in any given year. Certain states and local jurisdictions have more generous leave requirements. In certain states, employees who are temporarily disabled for medical reasons, including pregnancy and childbirth, are eligible to receive partial wage replacement in the form of temporary disability insurance benefits (and employers may be required to enroll in state-provided or state-sponsored insurance plans to cover the payments, eg, in New York, or contributions may be deducted from employees' paychecks, eg, in California).

  • Discrimination

    Federal law generally protects employees from discrimination, harassment or retaliation based on: race, color, religion, sex (including transgender identities and, potentially, sexual orientation), national origin – Title VII of the Civil Rights Act (Title VII); age (over 40) – Age Discrimination in Employment Act (ADEA); disability – Americans with Disabilities Act (ADA); and genetic information – Genetic Information Nondiscrimination Act (GINA). State and local protected categories vary and are often broader, and include: creed, sexual orientation, marital status, domestic partnership status, military status, domestic violence victim status, arrest record, conviction record, alienage, citizenship status, and unemployment status. Some states and local jurisdictions have banned asking candidates about compensation history in an attempt to reduce pay inequality.

    The US Supreme Court is expected to rule on whether federal employment discrimination laws protect LGBT employees. The Equal Employment Opportunity Commission (EEOC) has taken the position for years that LGBT rights are covered, while the federal Circuit Courts have split on the issue.

    At least 11 states (eg, California, New Jersey, New York) have passed legislation in light of the #MeToo movement, strengthening protections for women and against sexual and gender harassment and in some states restricting the effect of non-disclosure provisions in sexual harassment and sex discrimination matters.

  • Benefits & pensions

    The Affordable Care Act (ACA, or Obamacare) requires certain employers to provide insurance for their employees or pay a penalty. By state law, employers generally must maintain workers' compensation insurance for on-the-job injuries, and unemployment insurance to provide benefits to former employees in the event of a qualified involuntary termination of employment. No retirement benefits or pensions are required unless included in a written agreement (eg, a collective bargaining agreement with a labor union), but, where provided, their administration is governed by federal law.

  • Data privacy

    Certain states restrict the use of employees' social security numbers for any identifying purposes. Medical information must be maintained separately from personnel files and kept confidential. Otherwise, employers generally are entitled to monitor or search corporate emails of their employees and internet traffic accessed by their computer systems, on the premise that employees do not have an expectation of privacy in the use of their employer's computer systems or corporate emails (especially with a policy that says so). Jurisdictions vary as to an employer's ability to search or monitor personal email addresses and websites accessed from an employer's computer or premises.

  • Rules in transactions/business transfers

    None, except if it results in a plant closing or mass layoff, in which case employees are generally entitled to at least 60 days' notice, if feasible (see Mass layoff rules below). In an asset sale, employees can be transferred through termination and rehire.

  • Employee representation

    Trade unions are common in certain sectors. The US private sector had a unionization rate of 6.4% in 2018, compared with 6.5% in 2017. Employees' rights to organize and engage in "concerted activity" regarding their terms and conditions of employment are protected under the National Labor Relations Act (NLRA), whether or not they belong to a union or work in a unionized workplace.

  • Termination

    Grounds

    In almost all states, absent a contract or union agreement to the contrary, an employer may terminate an employee for any non-discriminatory, non-retaliatory reason, at any time, with or without notice, and with or without cause.

    Employees subject to termination laws

    Generally, all employees are protected by some laws prohibiting termination for certain reasons (eg, discrimination, retaliation). Employees who are parties to a collective bargaining agreement or have a written employment agreement may have greater protections, as dictated by their contracts.

    Restricted or prohibited terminations

    Employers cannot terminate employees based on any protected category, in retaliation for a complaint of discrimination or harassment based on any protected category, or for engaging in protected whistleblowing activity. Greater protection may be afforded by collective bargaining agreements or individual contracts.

    Third-party approval for termination/termination documents

    Not applicable for this jurisdiction.

    Mass layoff rules

    Under the Worker Adjustment and Retraining Notification (WARN) Act, employers with more than 100 employees generally must provide 60 days' notice to affected employees and certain government agencies of a plant closing or mass layoff that surpasses certain thresholds of employees affected. Some states have "mini-WARN" acts with more far-reaching requirements (ie, applicable to employers with fewer employees, are triggered at lower thresholds, and/or provide for longer notice periods).

    Notice

    Generally, no advance notice is required for a termination of employment, unless otherwise required by contract or the termination involves a triggering event under the WARN Act or a state equivalent "mini-WARN" act (see above). Certain states (eg, Georgia) may require that the terminated employee be provided with a written notice related to the separation.

    Statutory right to pay in lieu of notice or garden leave

    Payment in lieu of notice is permitted even if there is no contractual right to make such a payment. It is not common for an employee to be placed on garden leave.

    Severance

    Other than as provided by contract or in an employer's severance plan or policy, there is generally no statutory right to severance pay under federal or state law (except in Puerto Rico).

  • Post-termination restraints

    Permissible restraints are generally governed by state law (statutory and common law) and vary significantly from state to state. In most states, post-employment restrictions that are reasonably necessary to protect employer's legitimate business interests will be enforced.

    Non-competes

    Enforcement of non-competes varies from state to state. Where they are permitted, restrictions lasting from 6 months to 1 year are generally deemed reasonable, and restrictions lasting more than 2 years are generally considered unreasonable (except in connection with the sale of a business). Some states (eg, California, Colorado, North Dakota, Oklahoma, Oregon, Washington and Massachusetts) prohibit or otherwise strictly limit non-competes in the employment context by statute, except in connection with the sale of a business.

    Customer non-solicits

    Enforcement of customer non-solicits varies from state to state. They are generally permissible if the employee was involved with a customer and the employer aided in developing the relationship or if the employee obtained confidential information from or about the customer. Customer non-solicits are treated similarly to non-competes in most states, including that they are generally prohibited in California.

    Employee non-solicits

    Enforcement of employee non-solicits varies from state to state. They are generally permissible (except in California).

  • Waivers

    Waivers of certain rights are generally enforceable in exchange for valuable consideration, though their enforceability and permitted scope will vary from state to state. Waivers of certain statutory rights (such as federal age discrimination claims under the ADEA) are only valid if they meet specific statutory requirements (eg, for a waiver of ADEA claims, they must include certain acknowledgements and a specific consideration and revocation period).

    There are certain claims that generally cannot be waived as a matter of law, including workers' compensation claims, unemployment claims, and the right to file or participate in certain administrative claims (eg, a charge of discrimination filed with the EEOC). Additionally, per the US Securities and Exchange Commission (SEC), an employer cannot require an employee to waive his or her right to participate in a monetary recovery in connection with a whistleblower claim brought before the SEC.

  • Remedies

    Discrimination

    Damages for discrimination vary depending on statute and jurisdiction. Federal caps exist for certain claims. Other claims, including most state law claims, allow for unlimited compensatory damages, including front pay, back pay, emotional distress and attorneys' fees. Many claims allow for the recovery of punitive damages.

    Unfair dismissal

    Because almost all states follow the at-will employment doctrine, claims for unfair dismissal are generally disfavored, unless it constitutes a discriminatory or retaliatory dismissal or a termination in violation of public policy.

    Failure to inform & consult

    Similarly, because almost all states follow the at-will employment doctrine, a claim for failure to inform and consult generally does not exist, unless it constitutes a discriminatory or retaliatory dismissal, or a dismissal covered by the WARN Act or its state equivalent.

  • Criminal sanctions

    Employers may be criminally liable for certain violations of wage and hour laws. In limited circumstances, employers may be vicariously liable for the criminal acts of their employees. Employers may be liable for monetary statutory penalties (such as double or treble damages) for violations of wage and hour and other laws.

  • Key contacts
    Brian Kaplan
    Brian Kaplan
    Partner DLA Piper LLP (US) [email protected] T +1 212 335 4515 View bio
    Ute Krudewagen
    Ute Krudewagen
    Partner DLA Piper LLP (US) [email protected] T +1 650 833 2245 View bio
    Dean Fealk
    Dean Fealk
    Partner DLA Piper LLP (US) [email protected] T +1 415 836 2521 View bio
    Joseph Guarino
    Joseph Guarino
    Partner DLA Piper LLP (US) [email protected] T +1 973 520 2569 View bio
    Jamie Konn
    Jamie Konn
    Partner DLA Piper LLP (US) [email protected] T +1 404 736 7849 View bio

Termination

United States

Grounds

In almost all states, absent a contract or union agreement to the contrary, an employer may terminate an employee for any non-discriminatory, non-retaliatory reason, at any time, with or without notice, and with or without cause.

Employees subject to termination laws

Generally, all employees are protected by some laws prohibiting termination for certain reasons (eg, discrimination, retaliation). Employees who are parties to a collective bargaining agreement or have a written employment agreement may have greater protections, as dictated by their contracts.

Restricted or prohibited terminations

Employers cannot terminate employees based on any protected category, in retaliation for a complaint of discrimination or harassment based on any protected category, or for engaging in protected whistleblowing activity. Greater protection may be afforded by collective bargaining agreements or individual contracts.

Third-party approval for termination/termination documents

Not applicable for this jurisdiction.

Mass layoff rules

Under the Worker Adjustment and Retraining Notification (WARN) Act, employers with more than 100 employees generally must provide 60 days' notice to affected employees and certain government agencies of a plant closing or mass layoff that surpasses certain thresholds of employees affected. Some states have "mini-WARN" acts with more far-reaching requirements (ie, applicable to employers with fewer employees, are triggered at lower thresholds, and/or provide for longer notice periods).

Notice

Generally, no advance notice is required for a termination of employment, unless otherwise required by contract or the termination involves a triggering event under the WARN Act or a state equivalent "mini-WARN" act (see above). Certain states (eg, Georgia) may require that the terminated employee be provided with a written notice related to the separation.

Statutory right to pay in lieu of notice or garden leave

Payment in lieu of notice is permitted even if there is no contractual right to make such a payment. It is not common for an employee to be placed on garden leave.

Severance

Other than as provided by contract or in an employer's severance plan or policy, there is generally no statutory right to severance pay under federal or state law (except in Puerto Rico).