Federal Employment Law

What small business owners need to know.

I. Requirements Applicable to Most Employers

A. Employee Benefit Plans

The Employee Retirement Income Security Act (ERISA), which governs certain activities of most employers who have pension or welfare benefit plans, preempts many state laws in this area. ERISA is administered by DOL's Pension and Welfare Benefits Administration (PWBA). The statute also provides an insurance mechanism to protect retirement benefits through a requirement that employers pay annual pension benefit insurance premiums to the Pension Benefits Guaranty Corporation (PBGC), which is associated with the Department of Labor. Pension insurance information can be obtained by writing PBGC, Processing and Technical Assistance Branch, 1200 K Street, NW, Washington, DC 20006, or by calling (202) 326-4000.

ERISA covered pension plans must meet a wide range of fiduciary and reporting and disclosure requirements. PWBA’s regulations define such concepts as what constitutes plan assets, what is adequate consideration for the sale of plan assets, and the effects of participants having control over the assets in their plans, among other things.

Under ERISA, welfare benefit plans also must meet a wide range of fiduciary, reporting, and disclosure requirements. There are also disclosure and notification requirements for the continuation of health care provisions that were enacted as part of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). These provisions cover group health plans of employers with 20 or more employees on a typical business day in the previous calendar year. COBRA gives separated participants and beneficiaries an election to maintain, at their own expense, coverage under the employer's health plan for a limited period of time.

The Health Insurance Portability Act of 1996 added several provisions to ERISA which are designed to provide participants and beneficiaries of group health plans with improved portability and renewability of coverage, as well as improved access to insurance and protection against discrimination on the basis of health status.

B. Safety and Health Requirements

The Occupational Safety and Health Act (OSH Act) , which is administered by DOL's Occupational Safety and Health Administration (OSHA), regulates safety and health conditions in most private industry workplaces (except those regulated under other federal statutes, e.g., the transportation industry). Many private employers are regulated through states operating under OSHA-approved plans.

It is the responsibility of employers to become familiar with job safety and health standards applicable to their establishments, to comply with the standards, and to eliminate hazardous conditions to the extent possible. Compliance may include ensuring that employees have and use personal protective equipment when required for their safety or health. Employees must comply with all rules and regulations that are applicable to their own actions and practices.

Employers covered by the OSH Act are required to maintain workplaces that are safe and healthful. In doing so, they must meet certain regulatory requirements. Through regulations, OSHA promulgates safety and health standards, and frequently makes distinctions by type of industry.

Safety standards include regulations covering hazards such as falls, explosions, electricity, fires, and cave-ins, as well as machine and vehicle operation and maintenance, etc.

Health standards regulate exposure to a variety of health hazards through engineering controls, the use of personal protective equipment (e.g., respirators or hearing protection), and work practices.

Where OSHA has not promulgated a specific standard, employers are responsible for complying with the OSH Act's "general duty" clause [Section 5(a)(1)], which states that each employer "shall furnish . . . a place of employment which is free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees."

When OSHA develops specific safety and health standards, the more general safety and health regulations originally issued under the following laws administered by the Department of Labor are superseded: the Walsh-Healey Act, the Service Contract Act, the Contract Work Hours and Safety Standards Act, and the Arts and Humanities Act.

Another generally applicable statute, the Fair Labor Standards Act (FLSA) prescribes the conditions under which minors (those under age 18) can safely work. These restrictions affect most private and public employment. This Act is administered by the Wage and Hour Division of DOL's Employment Standards Administration (ESA). Child labor provisions of the FLSA (non-agriculture) include restrictions on the hours of work and occupations for youths under age 16, and set forth 17 hazardous occupations orders for jobs declared by the Secretary of Labor to be too dangerous for minors under age 18 to perform.

C. Wage, Hour and Other Workplace Standards

The Fair Labor Standards Act (FLSA) prescribes minimum wage and overtime pay standards as well as recordkeeping and child labor standards for most private and public employment, including work conducted in the home (homework). This Act is administered by the Wage and Hour Division of DOL's Employment Standards Administration (ESA).

The minimum wage and overtime pay provisions of the FLSA require the following from employers of covered employees who are not otherwise exempt:

As of September 1, 1997, employers must pay covered employees a minimum wage of not less than $5.15 an hour. Employers may pay employees on a piece-rate basis and, under some circumstances, may consider the tips of employees as part of their wages.

Youths under 20 years of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive calendar days of employment. with an employer. Employers may not displace any employee to hire someone at the youth minimum wage.

Although the Act does not place a limit on the total hours which may be worked by an employee who is at least 16 years old, it does require that covered employees, unless otherwise exempt, be paid not less than one and one-half times their regular rates of pay for all hours worked in excess of 40 in a workweek.

In addition, the FLSA generally prohibits the performance of certain types of work in an employee's home unless the employer has obtained prior certification from the Department of Labor. As noted above, child labor provisions (non-agriculture) of the FLSA include restrictions on the hours of work and occupations for youths under age 16.

Other generally applicable statutes which set workplace standards include:

Under the Immigration and Nationality Act (INA), foreign workers are allowed to work in the United States. The Employment Standards Administration’s Wage and Hour Division has enforcement authority pertaining to the employment of nonimmigrant workers in four visa classifications: D-1 (crewmembers); H-1A (registered nurses); H- 1B (workers employed in a “specialty occupation” or as a fashion model); and H-2A (workers employed in temporary agricultural jobs). Additionally, under the INA, employers must verify the identity and employment authorization of all employees, including foreign workers.

The Family and Medical Leave Act requires employers of 50 or more employees (and all public agencies) to provide up to 12 weeks of unpaid, job-protected leave to eligible employees for the birth and care of a child, for placement with the employee of a child for adoption or foster care, or for the serious illness of the employee or a family member. This Act is administered by the Wage and Hour Division of ESA.

Veteran's reemployment rights ensure that those who serve in the armed forces have a right to reemployment with the employer they were with when they went in service, including those called up from the reserves or National Guard. The Uniformed Services Employment and Reemployment Act, which provides these rights, is administered by DOL's Office of the Assistant Secretary for Veterans' Employment and Training.

Plant closings and layoffs may cause employers to become subject to the Worker Adjustment and Retraining Notification Act (WARN) which provides for early warning to employees of proposed layoffs or plant closings. The Employment and Training Administration can provide information on WARN, but since it does not have administrative or enforcement authority under WARN, it cannot provide specific advice or guidance with respect to individual situations.

The Employee Polygraph Protection Act (EPPA) prohibits most use of lie detectors by employers on their employees. This Act is administered by the Wage and Hour Division of ESA.

Garnishment of wages by employers is subject to regulation under the Consumer Credit Protection Act. This Act is administered by the Wage and Hour Division of ESA.

The Labor-Management Reporting and Disclosure Act (LMRDA) (also known as the Landrum-Griffin Act) deals with the relationship between a union and its members. It ensures certain basic standards of democracy and fiscal responsibility in labor organizations. This Act is administered by DOL's Employment Standards Administration, Office of Labor-Management Standards (OLMS).

II. Requirements Applicable to Employers Because of the Receipt of Government Contracts, Grants or Financial Assistance

Non-discrimination and affirmative action requirements for Federal contractors are set under Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veteran's Readjustment Assistance Act (38 U.S.C. 4212). These programs prohibit discrimination and require affirmative action with regard to race, sex, ethnicity, religion, disability and veterans' status. ESA's Office of Federal Contract Compliance Programs (OFCCP) administers these programs.

Wage, hour, and fringe benefit standards are determined for employees of federal contractors under: the Davis-Bacon and Related Acts (for construction); the Contract Work Hours and Safety Standards Act; the McNamara-O'Hara Service Contract Act (for services); and the Walsh-Healey Public Contracts Act (for manufacturing). The Wage and Hour Division of ESA both makes the determination of the required wage and benefit rates and enforces the requirements under the various statutes. Safety and health standards are also issued under these Acts and are applicable to covered contractors, unless they have been superseded by specific standards issued by the Occupational Safety and Health Administration. Contact your local OSHA Office for more detail on safety standards.

III. Industry-Specific Requirements

A. Agriculture

Several safety and health standards issued and enforced by OSHA and the Environmental Protection Agency (e.g., pesticides) apply to this industry. In addition, several agriculture-specific programs are administered by the Employment and Training Administration and the Employment and Standards Administration's Wage and Hour Division.

Under the authority of the Occupational Safety and Health Act , OSHA has issued a number of safety standards that relate directly to the agricultural industry, including: field sanitation, overhead protection for operators of agricultural tractors, grain handling facilities, and guarding of farm field equipment and cotton gins. Contact your local OSHA Office for more detail.

The Immigration and Nationality Act (INA) requires that employers wishing to use nonimmigrant workers for temporary agricultural employment under the H-2A visa classification apply to the Employment and Training Administration for a labor certificate showing that there are not sufficient workers in the U.S. able, willing, qualified and available to do the work, and that employment of such nonimmigrant workers will not adversely affect the wages and working conditions of workers in the U.S.

The Migrant and Seasonal Agricultural Worker Protection Act (MSPA) requires that covered farm labor contractors, agricultural employers and agricultural associations comply with worker protection provisions applicable to migrant and seasonal agricultural workers who they recruit, solicit, hire, employ, furnish or transport or, in the case of migrant agricultural workers, to whom they provide housing. The Wage and Hour Division administers the requirements of MSPA. Contact your local ESA Wage and Hour Division Office for more detail.

The Fair Labor Standards Act (FLSA) contains special child labor regulations applicable to agricultural employment. The regulations administered and enforced by the Wage and Hour Division apply only to those establishments with employees (e.g., they do not apply to family-run and family-operated farms that do not hire outside workers). Contact your local ESA Wage and Hour Division Office for more details.

B. Mining

The goal of the Federal Mine Safety and Health Act of 1977 is to improve working conditions in the nation's mines. This law strengthened an earlier coal mining law and brought metal and nonmetal miners under the same general protections as those afforded coal miners. Its provisions cover all miners and other persons employed to work on mine property. The Act is administered by the Labor Department's Mine Safety and Health Administration (MSHA).

Under the Act, the operators of mines, with the assistance of their employees, have the primary responsibility for ensuring the health and safety of the miners. MSHA is responsible for fully inspecting every underground mine at least four times a year and every surface mine at least twice a year to ensure that these responsibilities are met. MSHA also conducts training and provides technical assistance to the mining industry in the continuting effort to reduce deaths, serious injuries, and illnesses.

The Act established mandatory miners' training requirements and strengthened health protection measures and gassy mine safety programs. It also included tougher civil monetary penalties for safety or health violations by mine operators. In addition, the Act provided for closure of mines in cases of imminent danger to workers or failure to correct violations within the time allowed, and it called for greater involvement of miners and their representatives in processes affecting workers' health.

Each mine must be registered with MSHA. Many mine operators are required to submit plans to MSHA for approval before beginning operations. Such plans must be followed during mining. Required plans for underground coal mines cover operational aspects such as ventilation and roof control. Training plans are required for both underground and surface mines. Mine operators are also required to report each individual mine accident or injury to MSHA.

MSHA's Coal Mine Safety and Health Division enforces the law and the relevant regulations at more than 4,600 underground and surface coal mines. MSHA's Metal and Nonmetal Mine Safety and Health Division enforces federal requirements at more than 11,000 non-coal mines (including open pit mines, stone quarries, and sand and gravel operations).

Health and safety regulations developed and enforced by MSHA cover numerous hazards, including those associated with the following:

• exposure to respirable dust, airborne contaminants and noise;

• design, operation and maintenance requirements for mechanical equipment, including mobile equipment;

• roof falls, and rib and face rolls;

• flammable, explosive and noxious gases, dust and smoke;

• electrical circuits and equipment;

• fires;

• storage, transportation, and use of explosives;

• hoisting; and

• access and egress.

The Black Lung Benefits Act (BLBA) , part of the Federal Mine Safety and Health Act of 1977, provides for monthly payments and medical treatment to coal miners totally disabled from pneumoconiosis (black lung). The Act also provides for payments to certain family members of miners who died from, or are totally disabled because of pneumoconiosis. The Act is administered by ESA’s Office of Workers’ Compensation Programs, Division of Coal Mine Workers’ Compensation.

C. Construction

Several DOL agencies are involved in administering programs related to the construction industry:

Under the Occupational Safety and Health Act, OSHA sets and enforces occupational safety and health standards specific to the construction industry.

The Davis-Bacon Act and related Acts require most contractors and subcontractors on federally assisted construction contracts in excess of $2,000 to pay prevailing wage rates and fringe benefits as determined by the Secretary of Labor through the Wage and Hour Division of the Employment Standards Administration (ESA).

Under E.O. 11246, ESA’s Office of Federal Contract Compliance Programs has issued specific regulations on non-discrimination and affirmative action requirements for federal construction contractors and subcontractors.

The "Anti-Kickback" section of the Copeland Act applies to all contractors and subcontractors performing on any federally funded or assisted contract for the construction or repair of any public building or public work -- except contracts for which the only federal assistance is a loan guarantee. This provision precludes a contractor or subcontractor from inducing an employee -- in any manner-- to give up any part of his/her compensation to which he/she is entitled.

D. Transportation

Many laws with labor provisions affecting the transportation industry are administered by agencies outside of the Department. For example, the Railway Labor Act is administered primarily by the Department of Transportation and the Railway Retirement Board. Special DOL programs for this industry include longshoring and maritime industry standards issued and enforced by OSHA under the Occupational Safety and Health Act.