U.S. Employment Law Essentials
A plain-English, interactive tour of the federal rules that govern the American workplace — pay, classification, discrimination, leave, safety, and the line between what an employer can and can't do.
This course summarizes major federal employment laws as of June 2026. It does not cover the many state and local laws that often add stronger protections (see the companion California course), and it isn't legal advice. Thresholds and dollar figures change; verify against the agencies in Sources and consult qualified counsel before acting.
The framework & "at-will" employment
Who makes the rules, and the default that governs most American jobs.
U.S. employment law is a layered system: federal law sets a floor, and state and local laws can add more protection (but not less). Employers must comply with whichever rule is most protective of the employee.
At-will employment
In every state except Montana, employment is presumed "at-will" — either side may end it at any time, for any reason or no reason, so long as the reason isn't illegal. The big exceptions:
- Unlawful reasons — you can't fire for a protected characteristic, for taking protected leave, or for whistleblowing/retaliation.
- Contracts — an employment agreement, offer letter, or CBA can override at-will.
- Implied promises & public policy — handbooks or conduct can create implied terms; firing someone for, e.g., serving jury duty violates public policy.
The enforcers
| Agency | Covers |
|---|---|
| DOL (Wage & Hour Division) | Wages, overtime, FMLA, child labor. |
| EEOC | Discrimination, harassment, retaliation. |
| NLRB | Union & non-union "concerted activity" (NLRA). |
| OSHA | Workplace safety & health. |
"At-will" means an employer can terminate an employee:
Wages & hours — the FLSA
The Fair Labor Standards Act is the backbone of pay law.
The core rules
- Minimum wage:
$7.25/hourfederally (unchanged since July 2009). Many states/cities require more — pay the higher rate. - Overtime: non-exempt employees earn 1.5× their regular rate for hours over 40 in a workweek. Federal law has no daily overtime (some states do).
- The "regular rate" includes most bonuses and incentive pay — not just base wage.
- Tipped employees: a federal cash wage as low as
$2.13is allowed if tips bring the worker to at least $7.25; otherwise the employer makes up the difference. - Child labor and recordkeeping rules also live in the FLSA.
All hours suffered or permitted to work are paid — pre-shift setup, post-shift cleanup, working through lunch, answering emails at home. Auto-deducting meal breaks the employee actually worked is a frequent (and expensive) mistake.
A non-exempt employee works 9 hours Monday and 31 hours across the rest of the week (40 total). How much overtime is owed federally?
Exempt vs. non-exempt classification
Whether someone gets overtime turns on a salary test and a duties test — both must be met.
"Salaried" does not mean "exempt." To be exempt from overtime under the common white-collar (EAP) exemptions, an employee must satisfy all three:
- Salary basis — paid a fixed salary not subject to reduction based on quantity/quality of work.
- Salary level — at least
$684/week ($35,568/year). - Duties test — primary duties fit the Executive, Administrative, or Professional definition (or outside sales / certain computer roles).
A 2024 DOL rule would have raised the threshold to ~$58,656. A federal court vacated it in late 2024, and in May 2026 the DOL formally restored the 2019 levels: $684/week ($35,568/yr) and a highly compensated employee threshold of $107,432/year. Always confirm the live figure.
Exempt salary quick-check
Enter an annual salary to see whether it clears the federal salary level. (Remember: the duties test must also be met.)
Federal threshold: $684/week = $35,568/year; HCE = $107,432/year. Educational estimate — duties test & state thresholds also apply.
An employee earns a $90,000 salary but spends the day doing routine data entry with no independent judgment or management. Likely status?
Employee vs. independent contractor
Misclassification is one of the costliest mistakes an employer can make.
Contractors don't get minimum wage, overtime, benefits, unemployment, or most employment-law protections — so the classification matters enormously, and agencies scrutinize it. Federally, the touchstone is the "economic reality" of the relationship: is the worker truly in business for themselves, or economically dependent on the employer?
Relevant factors include the degree of control over the work, opportunity for profit/loss, investment, permanence, skill, and how integral the work is to the business. No single factor is decisive.
Calling someone a "1099 contractor" or having them sign a contract doesn't make it so. Penalties for misclassification include back wages, overtime, taxes, and benefits — and some states (like California) apply an even stricter ABC test.
What most determines whether a worker is an employee or contractor under federal law?
Anti-discrimination law
A cluster of federal statutes, each with its own scope and employee-count trigger.
| Law | Protects against discrimination based on… | Applies at |
|---|---|---|
| Title VII (1964) | Race, color, religion, sex (incl. pregnancy, sexual orientation & gender identity), national origin | 15+ employees |
| ADA | Disability (+ duty to accommodate) | 15+ employees |
| PWFA (2023) | Failure to accommodate pregnancy/childbirth | 15+ employees |
| GINA | Genetic information | 15+ employees |
| ADEA | Age (40 and older) | 20+ employees |
| Equal Pay Act | Sex-based pay differences for equal work | Virtually all employers |
In Bostock v. Clayton County (2020), the Supreme Court held that Title VII's ban on sex discrimination covers sexual orientation and gender identity. Discrimination can be intentional (disparate treatment) or a neutral policy with discriminatory effect (disparate impact).
Which federal laws apply to your business?
Many federal laws kick in only at certain employee counts. Enter your headcount to see which thresholds you cross.
Simplified for training. Counting rules, joint-employer status, and state laws can change coverage. Not legal advice.
A company has 12 employees. Which statement is correct?
Harassment & retaliation
Two of the most common — and most preventable — sources of liability.
Harassment
Unlawful harassment is unwelcome conduct based on a protected characteristic that is either:
- Quid pro quo — a manager conditions a job benefit on submitting to (often sexual) conduct; or
- Hostile work environment — conduct severe or pervasive enough to alter working conditions.
Employers can be strictly liable for a supervisor's harassment that ends in a tangible job action, and liable for co-worker harassment they knew or should have known about and failed to fix. A strong policy, training, and prompt investigation are the core defenses.
Retaliation
It's illegal to punish someone for engaging in protected activity — filing a complaint, reporting discrimination/harassment, requesting accommodation, or participating in an investigation. Retaliation is the single most common charge filed with the EEOC, and you can be liable for retaliation even if the underlying complaint turns out to be unfounded.
An employee files a good-faith harassment complaint that an investigation can't substantiate. A month later, their manager cuts their hours over it. This is:
Reasonable accommodation & the interactive process
Three federal duties to accommodate, one shared mindset.
Employers must provide reasonable accommodations — unless doing so causes undue hardship — in three areas:
- Disability (ADA) — e.g., modified equipment, schedule changes, leave, reassignment.
- Religion (Title VII) — e.g., schedule swaps, dress/grooming exceptions. (The bar for employer hardship was raised in Groff v. DeJoy, 2023 — more than a trivial cost.)
- Pregnancy (PWFA, 2023) — accommodations for pregnancy, childbirth, and related conditions.
When an employee requests accommodation (no magic words required), engage in a good-faith, individualized dialogue to identify an effective option. Document it. Shutting the conversation down is itself a violation.
An employee says their medication makes mornings hard and asks to start an hour later. The best first step is to:
Leave laws
There is no general federal paid-leave law — but several unpaid and protected-leave rules apply.
| Law | What it provides | Key trigger |
|---|---|---|
| FMLA | Up to 12 weeks unpaid, job-protected leave (26 for military caregiver) for serious health conditions, bonding, and certain family/military needs | Employer 50+ employees within 75 mi; employee 12 months & 1,250 hours |
| USERRA | Job protection & reemployment for military service | All employers |
| PUMP Act | Reasonable break time & space to pump breast milk | Most employers |
| ADA leave | Leave as a reasonable accommodation | 15+ employees |
Federal law doesn't require paid sick leave, paid family leave, or vacation. Many states and cities now do — another reason to check local law (and the California course).
A 30-employee company's worker asks for FMLA leave. Are they covered?
Workplace safety — OSHA
Every employer owes workers a safe place to work.
The Occupational Safety and Health Act requires employers to provide a workplace free from recognized hazards (the "General Duty Clause") and to follow specific OSHA standards. Core obligations:
- Comply with applicable safety standards and provide required training and protective equipment.
- Record and report serious injuries; maintain the OSHA 300 log (for covered employers).
- Post the OSHA "Job Safety and Health" notice.
- Never retaliate against workers who report hazards or injuries — whistleblower protection is built in.
An employee reports an unguarded machine to OSHA. The employer's lawful response is to:
Labor relations — the NLRA
A surprise to many: this law protects non-union workers too.
The National Labor Relations Act's Section 7 gives most private-sector employees the right to engage in "protected concerted activity" — acting together about wages, hours, or working conditions — whether or not a union is involved.
Protected
- Two+ employees discussing pay.
- Group complaints about conditions.
- Talking about unionizing.
- Posting jointly about a workplace issue.
Employer can't
- Ban employees from discussing wages.
- Threaten or fire over concerted activity.
- Interrogate or surveil organizing.
- Promise benefits to discourage a union.
A handbook clause forbidding employees from discussing their pay almost always violates the NLRA — a common, easily-overlooked trap.
Three coworkers email leadership together about unsafe conditions and unpaid overtime. They have no union. Are they protected?
Hiring & background checks
Compliance starts before day one.
- FCRA — before running a third-party background check, give a clear standalone disclosure and get written authorization. Before rejecting someone based on a report, follow the pre-adverse / adverse action notice steps (give them a copy and time to respond).
- Criminal history — the EEOC cautions against blanket bans; consider the nature/timing/relevance of the offense. Many states/cities add "ban-the-box" rules.
- Form I-9 — verify work authorization for every hire (see the companion I-9 course); don't over-document or discriminate.
- Job ads & questions — avoid screening that has a discriminatory effect; some jurisdictions ban salary-history questions and require pay ranges in postings.
Before rejecting an applicant because of a third-party background report, the FCRA requires you to:
Pay equity, benefits & end of employment
From equal pay to the final paycheck and beyond.
Pay equity
The Equal Pay Act requires equal pay for substantially equal work regardless of sex; differences must trace to seniority, merit, production, or another legitimate non-sex factor. Title VII also reaches pay discrimination on other protected bases.
Benefits (federal baseline)
- COBRA (20+ employees) — lets workers continue group health coverage after qualifying events.
- ERISA — governs how benefit/retirement plans are run (fiduciary duties, disclosures).
- ACA employer mandate — applies to "applicable large employers" (50+ full-time-equivalents).
End of employment
- WARN Act (100+ employees) — 60 days' notice for qualifying mass layoffs/plant closings.
- Final pay timing is set by state law (no federal deadline).
- Unemployment insurance is administered by states.
When is an employee's final paycheck due under federal law?
Recordkeeping, posters & compliance
The unglamorous habits that win audits.
- Payroll records — the FLSA requires keeping basic pay/hours records (generally 3 years; supporting records 2 years).
- Posters — display required federal notices (FLSA minimum wage, FMLA, EEO "Know Your Rights," OSHA, USERRA, polygraph). State posters add to these.
- I-9s — retain per the I-9 rule (later of 3 years after hire / 1 year after termination).
- EEO-1 reporting — employers with 100+ employees (and some federal contractors) file demographic data.
- Consistency — apply policies evenly; document performance and decisions contemporaneously.
Most employment disputes turn on whether the employer treated people consistently and can prove it. Clear policies, even application, and timely records are your best defense.
Quick reference
Federal thresholds & figures at a glance (current to June 2026 — verify before relying).
| Item | Federal figure |
|---|---|
| Minimum wage | $7.25/hour |
| Tipped cash wage (with valid tip credit) | $2.13/hour |
| Overtime | 1.5× over 40 hrs/week (no federal daily OT) |
| Exempt salary level (EAP) | $684/week · $35,568/year |
| Highly compensated employee | $107,432/year |
| Title VII · ADA · PWFA · GINA | 15+ employees |
| ADEA (age 40+) · COBRA | 20+ employees |
| FMLA | 50+ employees within 75 miles |
| WARN Act · EEO-1 reporting | 100+ employees |
| ACA employer mandate | 50+ full-time-equivalents |
Glossary
| Term | Meaning |
|---|---|
| At-will | Default rule: either party may end employment for any lawful reason. |
| Disparate impact | A neutral policy that disproportionately harms a protected group. |
| EAP exemption | Executive/Administrative/Professional overtime exemptions. |
| Exempt | Not entitled to overtime (must meet salary + duties tests). |
| FLSA | Fair Labor Standards Act — wage & hour law. |
| Protected activity | Conduct (complaints, requests, participation) shielded from retaliation. |
| Protected concerted activity | Employees acting together on working conditions (NLRA §7). |
| Reasonable accommodation | A change that lets an employee work, absent undue hardship. |
| Undue hardship | Significant difficulty or expense that can excuse an accommodation. |
Employer compliance checklist
A starting baseline. Ticks save in your browser.
Test yourself & earn your certificate
12 questions. Pick an answer for each, then submit. Score 80%+ to unlock a shareable completion certificate.
The federal minimum wage is:
Federal overtime is owed after:
To be exempt from overtime (EAP), an employee must meet:
Title VII and the ADA apply to employers with:
Calling a worker a "1099 contractor":
A handbook rule banning employees from discussing their wages is:
FMLA generally requires an employer to have:
An employee's good-faith discrimination complaint is unproven. Punishing them for it is:
When an employee requests a disability accommodation, the employer should:
"Sex" discrimination under Title VII includes:
The WARN Act (60-day layoff notice) generally applies to employers with:
Federal law sets the deadline for an employee's final paycheck as:
Generate your completion certificate
Official sources
Primary federal sources — when this course and an official source differ, the official source wins.
- U.S. Dept. of Labor — Wage & Hour: dol.gov/agencies/whd
- FLSA exemption salary levels: dol.gov/agencies/whd/overtime/salary-levels
- EEOC (discrimination): eeoc.gov
- NLRB (labor relations): nlrb.gov
- OSHA (safety): osha.gov
- DOL FMLA: dol.gov/agencies/whd/fmla