Employment laws are always changing, and every change affects HR. It’s your job to keep your organization compliant, and any mistakes can be expensive. In 2023, companies’ average legal spend was a whopping $3.1 million – nearly 30% more than the year before (LegalDive).
HR leaders need to stay on top of ever-changing compliance issues like at-will employment, the DOL’s overtime updates, discrimination laws, and more. This resource can help you get started.
NOTE: This article is not intended to serve as legal advice. If you have specific questions that impact your organization, we recommend that you consult your lawyer or a certified HR professional.
At-Will Employment
In states with at-will employment, an employer can terminate an employee at any time for any reason, except an illegal one, or for no reason without suffering legal liability. Likewise, employees are free to leave a job at any time for any or no reason with no adverse legal consequences.
Even if your state has at-will employment laws, exceptions may apply. For example, some states have public policy exemptions, where an employee can’t be fired for refusing to break a law. Other states have implied contract rules, which can prevent employers from terminating workers without just cause. If you fail to comply with local regulations, you may be at risk for a wrongful termination lawsuit. These laws are extremely nuanced, and HR leaders should do careful research before creating or updating the employee handbook.
Informing Your Team of At-Will Employment Laws
Most businesses define their employment policies in an employee handbook or manual. Though not legally mandated, many employers require new hires to formally acknowledge they have read and understand company policies.
Staying Compliant with At-Will Employment Laws
Even in at-will employment states, companies must follow certain laws to stay compliant when terminating employees. At the time of termination, most employers are required to provide:
- A final paycheck
- Any benefits the employee is entitled to, such as severance pay
- Information about how to apply for unemployment insurance benefits
At-will employment does not give employers the right to discriminate against workers for their race, sex, religion, sexual orientation, ability, or other protected identities. If an employer violates the rights of employees through discrimination or harassment, the worker can sue for damages.
Age Discrimination in Employment Act (ADEA)
The Age Discrimination in Employment Act (ADEA) forbids age discrimination against people aged 40 and older in any facet of employment. That includes hiring, firing, pay, job assignments, promotions, layoffs, training, benefits, and every other aspect of work. While this legislation isn’t new, it’s top-of-mind for many employers today. With more Baby Boomers reaching retirement age every day, age discrimination is an increasingly pressing issue.
This act doesn’t protect employees under the age of 40. However, some states have established similar laws to protect younger workers from age discrimination. It is not illegal for an employer to favor an older worker over a younger one, even if both employees are age 40 or older.
“Buying Out” Older Employees
In recent years, it’s grown more popular for employers to “buy out” older employees by offering them attractive severance packages. If an employee accepts the package, they sign away their rights to sue for age discrimination.
Employers that take this path need to follow certain regulations:
- Workers must be given 21 days to review the agreement.
- Workers have the right to review the agreement with an attorney at the employer’s expense.
- Even after they’ve accepted the offer, workers must be given seven days to revoke the deal.
- If you’re letting two or more people go, you must give them 45 days to review and 7 days to revoke the deal if they choose to accept.
Americans with Disabilities Act (ADA)
The ADA prohibits discrimination based on disability in employment. According to this legislation, a person with a disability could be:
- Someone with a physical or mental impairment that considerably limits one or more major life activities
- A person with a history or record of such an impairment
- A person who is perceived by others as having such an impairment (such as a person with severe and visible burn scars)
The ADA has provisions for the way a business treats both customers and employees. Almost all businesses that serve the public must follow ADA regulations, regardless of size or industry.
Types of Disabilities
The ADA lists a wide range of specific disabilities, some of which might surprise you. This list includes but is not limited to:
- Alcoholism
- Asthma
- Depression
- Cancer (including cancer in remission)
- Cerebral palsy
- Deafness or hearing loss
- Traumatic brain injury (TBI)
Fair Labor Standards Act (FLSA)
The FLSA sets the standards for minimum wage, overtime pay rules, recordkeeping, and child labor. These regulations apply to private sector businesses as well as federal, state, and local governments.
Changes to Overtime Rules
For HR, these FLSA is an especially hot topic because of recent changes to overtime rules. The Department of Labor (DOL) announced its new rules in April 2024. The update expands overtime protection to more employees by raising the exempt salary threshold. In other words, people with lower salaries will now be considered exempt employees.
Updated DOL Overtime Thresholds
Through July 1, 2024, the exempt salary threshold was $43,888 per year. Starting on January 1, 2025, the threshold will increase to $58,656 per year. If you currently employ workers who are exempt from overtime pay and make less than that amount, you’ll need to reevaluate their status.
Paid Family and Medical Leave (PFML)
To date, there are no federal employment laws regarding paid leave regulations. In recent years, states have taken the lead on the issue. These laws go beyond well-known Family Medical Leave Act (FMLA) regulations. Under the FMLA, eligible workers are entitled to a certain amount of unpaid leave each year for family and/or medical reasons. Paid Family and Medical Leave (PFML), on the other hand, gives employees paid time off for similar reasons.
Funding for PFML
Many states fund PFML programs with payroll taxes, which has a major impact on HR and payroll processes. Some cities have additional local laws. HR leaders should keep careful track of changing regulations, or it can lead to legal issues in the workplace.
Several states also have sick leave accrual requirements, whether or not they fund PFML through payroll. In these areas, employees earn paid family leave over time. In California, for instance, eligible employees accrue one hour of paid family leave for every 30 hours worked.
How Paycor Helps
Paycor’s suite of HR software empowers leaders to stay compliant with local, state, and federal regulations. Our recruiting software helps you stay ahead of changing laws with automated workflows and detailed compliance reporting. Benefits administration tools let leaders track ACA, FMLA, and ERISA requirements, communicate with the entire team, and navigate open enrollment. Best of all, our payroll solution seamlessly calculates the specific payroll taxes that apply to your business, based on your size, industry, location, and other criteria. With Paycor’s support, HR leaders can track and store critical documents, classify jobs correctly, and stay up to date on the most complex compliance issues.
