A. The United States Federal System
There are two primary spheres of law in the United States: federal and state. The U.S. Constitution is the foundation for all federal law and is the supreme law of the land. Federal law is legislated and enforced by the national government through its own system of courts and administrative agencies.
In addition, the United States is comprised of 50 states and various territories. Elected legislatures, assemblies, and executives govern each state and pass laws effective within the borders of their own jurisdiction. Furthermore, each state has its own enforcement organizations, including separate judicial systems and administrative agencies.
Some areas of law are governed solely by one system or the other. For example, private sector collective bargaining in the United States is legislated and enforced exclusively at the federal level. Employee retirement and pensions is also an area governed solely by national law. On the other hand, the manner and timing of wage payments or an employee’s accessibility to his or her own personnel file are state issues.
Many laws, at one level or another, are governed by both federal and state law. Discrimination laws can be found in both federal and state statutes. Minimum wage and overtime laws are also governed by both federal and state statutes. In addition, the scope of the protections under each statute changes often.
It should be noted that there is a third sphere of law which may impact employment decisions, as well: local law. Municipalities, counties, towns, and villages establish their own laws to govern local issues. While such entities do not often regulate employment directly, some localities exert significant control over employment issues. For example, New York City has passed its own anti-discrimination rules which are more protective of employees than either the federal or New York State laws.
B. U.S. Employment Laws
In the United States, employment laws can be found in federal and state constitutions, statutes, codes, administrative regulations and executive directives. The United States, as a common law jurisdiction, has also adopted the principle of stare decisis, i.e., that judges can interpret the laws passed by the federal and state legislatures and their decisions serve as precedent in subsequent disputes.
Some of the more significant federal laws that govern the employment relationship include the Fair Labor Standards Act; Title VII of the Civil Rights Act of 1964; the Americans with Disabilities Act; the Age Discrimination in Employment Act; the Family Medical Leave Act; National Labor Relations Act; and the Occupational Safety and Health Act. States, and some localities, have adopted similar laws.
Unlike some countries, there is no general court or arbitrative body that is solely responsible for deciding all employment disputes, such as the labor courts found in many jurisdictions. Employment laws are enforced in large part by private litigation brought in federal or state court and various administrative agencies. Most employment laws provide for civil and/or equitable remedies. Several statutes, such as the National Labor Relations Act, limit enforcement exclusively to a particular administrative agency. In some cases, those agencies can act only on a complaint filed by a third party. In other instances the administrative agency can enforce a statute on its own initiative. Other statutes provide for parallel enforcement by private individuals and by the designated administrative agency.
Another defining characteristic of employment disputes in the United States is the tremendous amount of money at risk, due to a combination of factors: the litigation process involves extensive pre-trial discovery (e.g., requests for document production, factual affidavits, and live testimony by parties and witnesses); the expenses of archiving, searching and producing electronic data; and the availability of jury trials in certain cases.
C. Employment Contracts and At-Will Employment
A hallmark of U.S. employment jurisprudence is the doctrine of at-will employment. The doctrine creates a rebuttable presumption that the employment relationship may be terminated at the will of either the employer or the employee. This means that either of the parties may terminate the employment relationship, for any lawful reason, at any time, without providing prior notice and without triggering entitlement to some form of compensation.
The doctrine of at-will employment is not governed by federal law and a uniform set of rules does not exist for applying this important concept. Instead, the doctrine is governed by the statutes or common law of each of the states. One common feature of at-will employment, however, is that the parties are not required or even encouraged to enter into a written employment agreement. Indeed, given the presumption of at-will employment, written employment agreements are infrequently used in the United States, except for executive or other key positions, or when specifically required by law.
Further details about employment contracts and at-will employment are provided in Littler’s Start-Up Guide for Foreign Employers in the United States; to request a copy, please contact Susan Woodhouse at email@example.com