Littler Employment Content - Employee Compensation and Benefits

A. Wages and Hours

The primary law governing wages in the United States is the federal Fair Labor Standards Act (FLSA).

The FLSA sets basic minimum wage and overtime pay standards. Workers who are covered by the FLSA are entitled to a minimum wage of not less than $7.25 per hour as of July 24, 2009. Moreover, although there are no federal restrictions on the number of hours an employee may work in a week, employers must pay eligible (“non-exempt”) employees an additional one-half times the individual’s regular rate of pay for all hours of work in excess of 40 in a week.

State laws often establish additional minimum wage and overtime requirements. State laws also regulate the timing of the payment of wages and the manner in which they must be paid.

The federal and state laws that regulate wages and working hours cover an extremely broad range of issues, including:

  • classification of workers as independent contractors or employees
  • classification of employees as exempt from overtime pay requirements
  • “off-the-clock” work time
  • meal and rest periods
  • breaks for breast feeding
  • travel and commuting time
  • frequency of wage payments
  • limitations on working hours and duties, and other special rules for minors.

Further details about regulation of wages and working time are provided in Littler’s Start-Up Guide for Foreign Employers in the United States; to request a copy, please contact Susan Woodhouse at swoodhouse@littler.com

B. Leaves of Absence

There are few laws that require employers to provide leaves of absence (e.g., vacation, medical leave, maternity/paternity leave, caregiving leave) for their employees. Indeed, the leaves of absence which are mandated by federal or state law are often unpaid. Nevertheless, there are a number of relevant leave laws that an employer new to the United States should understand. The sources of these leave obligations can come from the Americans with Disabilities Act (ADA), the Family Medical Leave Act, Workers’ Compensation laws, short term or long term disability plans, pregnancy disability and maternity leave statutes, handbook provisions for vacation or personal leave time, collective bargaining agreements, and state and local laws.

Further details about leaves of absence are provided in Littler’s Start-Up Guide for Foreign Employers in the United States; to request a copy, please contact Susan Woodhouse at swoodhouse@littler.com

C. Pensions or Retirement Benefits

Employers and employees contribute to a federal Social Security program that provides retirement benefits to employees. This program, which is the only governmental pension scheme, is funded mainly through a payroll tax on each employee’s wages. The employer pays half of the payroll tax. The employer deducts the other half directly from the employee’s wages.

Private employers are not required to provide additional pension or retirement benefits, although many do so as a way to attract and retain qualified and talented employees. In the past, employers provided pensions as the primary retirement benefit; nowadays, employers are providing other more portable benefits and savings vehicles. U.S. law does not mandate any particular benefits to be provided to employees. Nevertheless, if an employer decides to provide such benefits, those benefits are governed solely by a federal statute, the Employee Retirement Income Security Act (ERISA), which ensures there is a uniform body of law with respect to benefits across the country.

Further details about retirement benefits are provided in Littler’s Start-Up Guide for Foreign Employers in the United States; to request a copy, please contact Susan Woodhouse at swoodhouse@littler.com

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