Which issues would you most highlight to someone new to your country?
The United States has legislated to protect a wide variety of different groups against employment discrimination. However, as in many other countries, US laws change somewhat when the country’s leadership does. The 2016 change in administration—resulting in changes in both governmental and court appointments—has resulted in nearly continuous changes in both labor and employment laws and regulations. This makes it important to stay alert and informed on both general employment issues and issues relating to specific industries.
What do you consider unique to those doing business in your country?
With certain limited exceptions, most employment in the United States is on an at-will basis, meaning that the employer or the employee can terminate a non-contractual working relationship at any time and for any reason or no reason, as long as the reasons are lawful.
Is there any general advice you would give in the employment area?
US jurisdictions have statutes allowing an employer to have a policy of employment at will. The employer's documentation of its at-will policy, if confirmed in signed offer letters and employee handbooks, is a defence against a breach of contract claim.
However, many other types of claim—such as discrimination, personal injury, wage and hour and violation of public policy—can be made by terminated US employees, and the termination of employees is a complicated matter which varies by jurisdiction. While the use of release agreements is recommended to enable early and amicable termination arrangements to be reached with employees, when terminating an employee, employers doing business in the United States should consult counsel about the documentation of the termination process and the terms of any release agreement.
Often, employers may have employees sign arbitration agreements at time of hire to avoid litigation in state or federal courts. This is an important consideration for employers but one that requires input from counsel, as the courts’ view of arbitration agreements in an employment setting has been the subject of recent changes in interpretation.
Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?
The Department of Labor (DOL) and numerous states have proposed and enacted laws concerning family and sick leave. While family and medical leave has not been revised, some states have broadened the amount and types of leave available to employees.
In the past two years, the DOL has halted the progress of certain changes to the federal regulations of the Fair Labor Standards Act’s overtime provisions. The proposed revisions would have increased the threshold wage at which overtime pay would be required. At this time, the move towards those revisions has been halted and the DOL is now asking for input from both management and employee groups before it will move forward with the changes.
What are the emerging trends in employment law in your jurisdiction?
Developments are taking place in four major areas:
- the DOL’s overtime regulations, as mentioned above;
- the law applicable to trade secrets;
- the Equal Employment Opportunity Commission’s (EEOC’s) strategic plan for the coming years; and
- changes affecting union works under the National Labor Relations Act.
The DOL’s proposed rules were to have taken effect on December 1, 2016 and would have modified the federal regulations of the Fair Labor Standards Act’s overtime provisions. The intended updates to the regulations focused primarily on the salary thresholds currently in place for white collar and similar workers to be considered exempt from federal overtime laws. Recently, and under the new administration, the DOL successfully stayed litigation to allow it to propose revised regulations, which are viewed generally as being more employer friendly. However, these proposed regulations are still in development and have not been revealed to the public. It has been suggested that the new rules will not be finalized until at least the end of 2018. The Defend Trade Secrets Act 2016 contains many features, including:
- the creation of a federal private right of action for trade secret misappropriation;
- a provision permitting ex parte civil seizure of property necessary to prevent the dissemination of trade secrets; and
- a requirement that employers provide notice to employees of their immunities under the act for making confidential disclosures to the government and otherwise.
- The Federal Judicial Centre recently developed recommended best practices for:
- the seizure of information and media storing information; and
- the securing of the information and media once seized.
- The current best practices guide was published in June 2017.
Late in 2016, the EEOC, which enforces federal discrimination laws, adopted a strategic enforcement plan for 2017 to 2021 with six substantive priorities including:
- eliminating barriers in recruiting and hiring including application processes deemed to be restrictive (e.g., online applications inaccessible to persons with disabilities) and screening tools (e.g., background checks);
- protecting vulnerable workers (e.g., immigrant and migrant workers) and undeserved communities where language, work status and other hindrances make them vulnerable to discriminatory practices;
- addressing selected emerging and developing issues, such as:
- qualification standards and inflexible leave policies that adversely affect persons with disabilities; and
- accommodations for pregnant employees;
- equal pay protection for all workers regardless of not gender and any other protected category;
- preserving access to the legal system, including continuing to scrutinize overly broad waivers and mandatory arbitration provisions, as well as aggressively pursuing retaliation claims; and
- preventing systemic harassment by encouraging training and seeking strong enforcement coupled with monetary and injunctive relief.
While the EEOC has not announced any recent changes to the above strategic enforcement plan, there is speculation that certain priority areas may be shifted in light of the current administration’s priorities. Additionally, the EEOC has discontinued long-time efforts to revise the EEO-1 Form to collect pay and hours worked data from employers. Instead, the EEO-1 Form will continue to exclusively collect race, ethnicity and gender data by job category.
The EEOC also plans to issue a Notice of Proposed Rulemaking by August 2018 with a final rule by October 2019 and an effective date of early 2021 with respect to its 2016 regulations under the Americans with Disabilities Act and Genetic Information Non-discrimination Act relating to employer wellness programmes.
The historic role of the National Labor Relations Board (NLRB) is to protect the right of non-management employees to engage in protected and concerted activity involving wages, hours, and working conditions pursuant to the National Labor Relations Act. Until recently, the NLRB worked to
- enact “quickie election” rules (so named because they dramatically compress the election timeframe, which typically would favour unions);
- attack arbitration agreements that contain class action waivers;
- expand its joint employer standard; and
- broaden the scope of the joint employer doctrine.
However, since 2016, those activities have slowed and, in some cases, been reversed or replaced. For instance, the NLRB has opened for comment its plan to overturn the quickie election rule. Further, on December 14, 2017 the NLRB overruled its 2015 NLRB decision in Browning-Ferris Industries—which expanded joint employer liability—and returned to the pre-Browning Ferris Industries, employer-friendly standard.
The employment relationship
Country specific laws
What laws and regulations govern the employment relationship?
A number of federal, state, and local laws and doctrines govern the employment relationship in the United States, such as:
- the National Labor Relations Act;
- the employment at-will doctrine;
- Title VII of the Civil Rights Act of 1964;
- the Age Discrimination in Employment Act;
- the Americans with Disabilities Act;
- the Family and Medical Leave Act;
- the Fair Labor Standards Act;
- the Uniformed Services Employment and Reemployment Rights Act 1994 (USERRA);
- the Equal Pay Act; and
- the Immigration Reform and Control Act.
Who do these cover, including categories of worker?
- National Labor Relations Act—this covers union and non-union employees engaged in lawful protected and concerted activity.
- Employment at-will doctrine—absent a collective bargaining agreement or an individual employment contract, the employer is free to discharge an employee at any time with or without cause. Several state courts have carved out exceptions to this rule.
- Title VII of the Civil Rights Act of 1964—employers with 15 or more employees are prohibited from refusing to hire, discharging or otherwise discriminating against any individual in terms and conditions of employment because of race, color, religion, sex (including pregnancy) or national origin. Many state and local governments have mandated additional protected classifications, such as marital status, AIDS and sexual orientation.
- Age Discrimination in Employment Act—this prohibits private employers with 20 or more employees from discharging or otherwise discriminating on the basis of age against employees who are age 40 or older.
- Americans with Disabilities Act—this prohibits private employers with 15 or more employees from discriminating against employees or applicants with disabilities.
- Family and Medical Leave Act—this prohibits employers with 50 or more workers from discriminating against or interfering with employees for exercising their rights to leave under the act.
- Fair Labor Standards Act—this generally requires the payment of a statutorily prescribed minimum wage to all covered employees except certain younger workers, who may be paid a sub-minimum training wage for up to 180 days. It also requires employers to pay overtime to all non-exempt employees at a rate of one and one-half times the employee’s regular rate for all hours worked in excess of 40 per week. Other federal and state laws may require a higher overtime rate. The Fair Labor Standards Act provisions contain numerous exemptions from the minimum wage and overtime requirements.
- The USERRA is a federal law that establishes rights and responsibilities for uniformed service members and their civilian employers.
- Equal Pay Act—this requires that male and female workers receive equal pay for work performed under similar working conditions and requiring equal skill, effort and responsibility.
- Immigration Reform and Control Act—this makes it unlawful for an employer to hire anyone who is not legally authorized to work in the United States. All employers, regardless of size, must verify the identity and eligibility of employment of every new employee hired.
Are there specific rules regarding employee/contractor classification?
There is no bright-line test to determine employee/independent contractor classification. The US Internal Revenue Service uses a 20-factor test, the US Tax Court uses a seven-factor test and other state tests vary. As in other areas of employment law, this test has been interpreted recently as somewhat more employer friendly—that is, the “employer” and “independent contractor” classifications are beginning to be more clearly delineated by the courts.
Must an employment contract be in writing?
No—an employment contract generally can be oral, implied and/or expressed.
Are any terms implied into employment contracts?
Legally enforceable employment promises may be implied in employment handbooks or policy statements. However, employment is generally at will in the United States. Contract interpretation is generally a matter for the state courts under each state’s contract laws. Some states read certain duties into employment contracts (e.g., duty of good faith and fair dealing between employees and employer).
Are mandatory arbitration/dispute resolution agreements enforceable?
Although agreements to arbitrate employment disputes are enforceable under the Federal Arbitration Act (FAA), the issue of whether there is an enforceable agreement is generally a matter of the applicable state law governing the formation of contracts or the enforceability of employer policies. A basic tenet of contract law of most, if not all states is that an employee’s promise to arbitrate is enforceable only if the employer gave some consideration for the promise. On May 21, 2018 the US Supreme Court held that employment arbitration agreements with class action waivers (requiring individual arbitration of class action claims) are enforceable under the FAA.
How can employers make changes to existing employment agreements?
The two basic approaches to modifying existing employment contracts are the pre-existing duty rule and the Restatement of Contracts approach. The pre-existing duty rule says that doing what you are already obliged to do is not consideration. Consideration is required on both sides. Thus, changes on both sides are required for there to be consideration from both sides. That is, any change in an employment contract should include some type of consideration (e.g., additional wages or a signing bonus).
The Restatement of Contracts approach is more tolerant of one-sided changes. Section 89 of the Restatement (Second) of Contracts provides: “A promise modifying a duty under a contract not fully performed on either side is binding if the modification is fair and equitable…; or to the extent provided by statute; or to the extent that justice requires enforcement”. Such language would apply only to an agreement which has not yet been fully exercised and still is susceptible to revision.
Notably, rules concerning the sufficiency of consideration in contract vary state by state, including with respect to niche areas (e.g., restrictive covenants).
Is a distinction drawn between local and foreign workers?
The Immigration Reform and Control Act of 1986 requires employers to verify the identity and entitlement to employment of every new employee hired through a completed Form I-9. All US employers, regardless of size, are subject to the provisions of that act. Employers must document and maintain all verifications and may face significant monetary penalties if proper documentation is not maintained. Employers may not knowingly hire unauthorized aliens. Penalties for hiring unauthorized aliens include heavy fines and, in some cases, imprisonment. The Immigration Reform and Control Act also penalizes employers for discriminating against employees or applicants because of national origin or citizenship status.
What are the requirements relating to advertising positions?
Generally, there is no standard procedure relating to advertising for jobs (although discrimination laws apply to job advertising). Some employers may have an affirmative action plan (either voluntarily or as required by a court order) in place that requires them to follow certain rules in order to comply with the plan. Employers with collective bargaining agreements may have bargained job posting procedures in place that they must follow to comply with the agreement. Other employers may have their own internal and external recruiting policies and procedures in place which should be followed consistently.
Federal contractors obligated under the Vietnam Era Veterans’ Readjustment Assistance Act, as amended by the Jobs for Veterans Act, are required by regulation to post open positions with an appropriate employment service delivery system.
What can employers do with regard to background checks and inquiries in relation to the following:
(a) Criminal records?
Federal law does not prohibit employers from asking about applicants’ criminal history. However, state and local laws may prohibit or regulate such checks and so-called “Ban the Box” legislation has been enacted to prohibit employers from including, on an initial employment application, a box that applicants must check if they have a prior criminal conviction. Also, federal equal employment opportunity laws prohibit employers from discriminating when they use criminal history information —that is, an individual cannot be completely prohibited from employment because of an unrelated minor criminal offense in the distant past. Using criminal history information to make employment decisions may violate Title VII of the Civil Rights Act 1964.
(b) Medical history?
The Genetic Information Non-discrimination Act of 2008 prohibits employers and health insurers from discriminating on the basis of genetic information, including family medical history. Medical history inquiries are also regulated by the Family and Medical Leave Act and the Americans with Disabilities Act. State and local laws may provide broader coverage than the Genetic Information Non-discrimination Act.
(c) Drug screening?
Private employers generally may test job applicants and employees for drugs, alcohol and other controlled substances. Several states have enacted statutes or regulations that restrict these tests, including with respect to medical and recreational marijuana.
Before testing anyone, an employer should establish and follow reasonable testing procedures and policies. Employers in specific industries (e.g., transportation) and employers that do business with certain government agencies may be required by federal law to establish a drug-free policy and, in some cases, to test applicants and employees for the presence of certain drugs. Employers with employees represented by a union must bargain for the right to test before testing such employees.
(d) Credit checks?
An employer may incur liability under the Fair Credit Reporting Act by procuring or causing to be prepared consumer reports or investigative consumer reports on present or prospective employees if the individuals are not advised in writing and do not give their written consent that information about their character, general reputation and personal characteristics may be disclosed in the report.
If an employer rejects an applicant either wholly or in part because of the information contained in a consumer report or investigative consumer report, the employer must advise the applicant of this fact prior to acting upon the decision, must provide an explanation of the employee’s rights under the act, and must supply the name, address and toll-free phone number of the consumer reporting agency that made the report. A willful violation by an employer of this required process can result in actual damages, punitive damages and attorneys’ fees. An employer that negligently fails to comply with the act will be liable for actual damages and attorneys’ fees.
Several states have enacted similar legislation that may impose additional procedural requirements.
(e) Immigration status?
The Immigration Reform and Control Act of 1986, as well as Title VII of the Civil Rights Act, penalize employers for discriminating against employees or applicants because of national origin or citizenship status. Similar prohibitions exist in various state laws.
(f) Social media?
The National Labor Relations Act protects employees who engage in concerted activity involving wages, hours, and working conditions, and limits employers’ ability to conduct surveillance or monitoring of employees, including via social media. In addition, the National Labor Relations Board has taken the position that social media usage may constitute protected concerted activity and has also frowned on employers’ attempts to curtail or control employees’ social media use. For example, an employer's social media policies should not be so broad that they prohibit discussion of wages or working conditions among company employees.
The General Data Protection Regulation (GDPR) affects US companies in the same way that companies in other countries are being affected. While it does not limit employees’ use of social media, it is relevant to the way that personal data is shared electronically and should be reviewed when formulating policies and procedures relating to electronic communications.
Other than the National Labor Relations Act and the GDPR, there are no specific federal laws pertaining to social media. However, there are a variety of federal and state laws dealing generally with social media issues (e.g., data privacy issues).
Wages and working time
Is there a national minimum wage and, if so, what is it?
The Fair Labor Standards Act generally requires the payment of a statutorily prescribed minimum wage to all covered employees except certain younger workers, who may be paid a sub-minimum training wage for up to 180 days. The current federal minimum wage is $7.25 per hour, and has not increased since 2009. For that reason, several states (18 in 2018 alone) have enacted legislation requiring the payment of wages in excess of the federal minimum wage.
Are there restrictions on working hours?
There are no federal restrictions in the United States on employee working hours, except for break times for nursing mothers, and under child labor laws.
Hours and overtime
What are the requirements for meal and rest breaks?
There are no federal requirements in the United States related to meal and rest breaks, except that:
- non-exempt employees must be paid overtime for hours over 40 worked within a working week; and
- non-exempt nursing mothers must be given reasonable break times to express breast milk for their nursing child during one year after the child’s birth each time such employee has a need to express breast milk, and must be afforded an appropriate place (other than a bathroom) shielded from view and free from intrusion from co-workers and the public in which to express breast milk.
Fewer than half the states have enacted legislation requiring mandatory meal breaks. However, an employer does not have to pay an employee for a meal break unless:
- a state law specifically requires that payment;
- the employee must work through the scheduled break; or
- the break lasts for less than 20 minutes (in which case, pay is required).
Of the more than 20 states with meal period requirements, seven also have rest period requirements (i.e., California, Colorado, Kentucky, Minnesota, Nevada, Oregon and Washington).
How should overtime be calculated?
The Fair Labor Standards Act requires employers to pay overtime to all non-exempt employees at a rate of one and one-half times the employee’s regular rate for all hours worked in excess of 40 per week.
Other federal and state laws may require a higher overtime rate.
What exemptions are there from overtime?
The Fair Labor Standards Act contains numerous exemptions from the minimum wage and overtime requirements, including exemptions for certain white collar employees (e.g., executive, administrative or professional employees; computer professionals; and outside salespeople). The revised regulations proposed in 2016, which would increase the salary requirements for the imposition of overtime pay, have been delayed and revised. The Department of Labour continues to solicit input on the new version of the regulations and is aiming to finalize them by the end of 2018.
Is there a minimum paid holiday entitlement?
The Fair Labor Standards Act (FLSA) does not require payment for time not worked, such as vacations or holidays (federal or otherwise). These benefits are generally a matter of agreement between an employer and an employee.
Some states have enacted legislation requiring paid holiday entitlement.
What are the rules applicable to final pay and deductions from wages?
The Fair Labor Standards Act generally precludes deductions from salary for exempt employees. Wages are generally due upon completion of work and must be paid within a reasonable time, although many states provide for a specific time period. Payment must be made by cash, cheque or, in some states, direct deposit to an employee’s bank account or pay cards, and must be accompanied by a statement showing gross wages, deductions and net wages.
State laws vary widely on this issue and should be consulted on a case-by-case basis.
What payroll and payment records must be maintained?
In the case of employment-related taxes, the IRS guidelines say to keep the records for a minimum of four years after the tax is paid or is due, whichever of the two dates is later.
The FLSA requires employers to keep:
- all payroll records for at least three years; and
- supporting documentation for how wages were determined (e.g. time cards) for two years.
Discrimination, harassment & family leave
What is the position in relation to:
The federal Age Discrimination in Employment Act prohibits employers with more than 20 employees from discharging or otherwise discriminating on the basis of age against employees who are age 40 or older. Involuntary retirement of employees with satisfactory performance violates the act, although certain highly compensated executives may be required to retire at 65. An employer may discriminate on the basis of age only when age is a genuine occupational qualification necessary for the safe and efficient operation of the business.
Several states have age discrimination statutes that are more restrictive. Some state statutes have no minimum age for coverage and may apply to employers with fewer than 20 employees.
Under Title VII of the Civil Rights Act of 1964, employers with 15 or more employees are prohibited from refusing to hire, discharging or otherwise discriminating against any individual in the terms and conditions of employment because of race, color or national origin. Unlawful discrimination exists either when an employer intentionally discriminates against a member of a protected group or when a neutral policy or practice that cannot be justified by business necessity has an unintentional adverse impact on a protected class of employees.
States also prohibit race discrimination in state anti-discrimination statutes.
Section 503 of the Rehabilitation Act requires federal government contractors to take affirmative action to employ and advance in employment qualified individuals with disabilities. Section 504 of the Rehabilitation Act prohibits disability discrimination by recipients of federal funds. The Americans with Disabilities Act prohibits private employers with 15 or more employees from discriminating against employees or applicants with disabilities. The Rehabilitation Act and the Americans with Disabilities Act seek to ensure access to equal employment opportunities based on merit. These laws prohibit an employer from discriminating against an individual with a disability if the individual is able to perform the essential functions of the specific job held or sought.
Both the Rehabilitation Act and the Americans with Disabilities Act prohibit discrimination in employment against an individual:
- with a physical or mental impairment that substantially limits one or more of his or her major life activities;
- with a record of such an impairment; and
- who is regarded as having such an impairment.
- The Americans with Disabilities Act also prohibits discrimination against a qualified individual because that person is known to have a relationship or association with another individual who has a known disability. The Americans with Disabilities Amendments Act, which became effective on January 1, 2009, significantly modified the definition of ‘disability’ under the Americans with Disabilities Act.
A number of states have also adopted disability discrimination laws, but these vary widely. For instance, some states’ disability discrimination laws apply only to public employees, and some require only one or two other employees to be employed by the same employer.
Under Title VII of the Civil Rights Act of 1964, employers with 15 or more employees are prohibited from refusing to hire, discharging or otherwise discriminating against any individual in the terms and conditions of employment because of sex (including pregnancy and gender identity—i.e., failing to act in conformity with gender stereotypes). Unlawful discrimination exists either when an employer intentionally discriminates against a member of a protected group or when a neutral policy or practice that cannot be justified by business necessity has an unintentional adverse impact on a protected class of employees. The Equal Employment Opportunity Commission has taken the position that Title VII protects individuals from discrimination based on their gender identity (including specifically transgender status) and sexual orientation.
States also prohibit gender discrimination (some specifically including gender identity and sexual orientation).
(e) Sexual orientation?
The Equal Employment Opportunity Commission has taken the position that Title VII of the Civil Rights Act 1964 extends protection to individuals from discrimination based on sexual orientation by virtue of its prohibition on sex discrimination, but federal courts have overwhelmingly disagreed with such characterization..
Many state and local governments have mandated additional protected classifications, including sexual orientation. Other protected classifications that vary state by state include gender identity (including specifically transgender status), marital status, parental status and AIDS or AIDS-related conditions.
Under Title VII of the Civil Rights Act of 1964, employers with 15 or more employees are prohibited from refusing to hire, discharging or otherwise discriminating against any individual in the terms and conditions of employment because of religion. Unlawful discrimination exists either when an employer intentionally discriminates against a member of a protected group or when a neutral policy or practice that cannot be justified by business necessity has an unintentional adverse impact on a protected class of employees.
States also prohibit religious discrimination, and many go below the 15-employee threshold.
The Americans with Disabilities Act prohibits private employers with 15 or more employees from discriminating against employees or applicants with disabilities.
The Family and Medical Leave Act prohibits employers with 50 or more workers from discriminating against employees for exercising their rights to leave under the act.
The Genetic Information Non-discrimination Act of 2008 prohibits employers and health insurers from discriminating on the basis of genetic information. The employment provisions regulate the acquisition and use of genetic information in the employment context and apply to employers with 15 or more employees.
Under the Uniformed Services Employment and Reemployment Rights Act 1994, employers are prohibited from discriminating against employees or applicants who volunteer for or are called up for military service. Military service includes both active and reserve duty. The basic rule is that employers must return the veteran to the job that he or she would have had but for military service, with accrued seniority-based benefits. Employers must also grant employees leave time for reserve or training duty and cannot require that employees use vacation time for these activities. The leave may be unpaid.
The Equal Pay Act amended the Fair Labor Standards Act in 1963. The Equal Pay Act provides that if workers perform equal work in jobs requiring "equal skill, effort, and responsibility… performed under similar working conditions", the workers must receive equal pay. The Fair Labor Standards Act applies to employees engaged in some aspect of interstate commerce or all of an employer's workers if the enterprise engages as a whole in a significant amount of interstate commerce. Pay equity regulations and initiatives have been proposed by both the Equal Employment Opportunity Commission (with respect to data gathering and reporting obligations) and the Department of Labor’s Office of Federal Compliance Contract Programmes.
Family and medical leave
What is the position in relation to family and medical leave?
The Family and Medical Leave Act requires that employers with 50 or more workers provide eligible employees with up to 12 weeks of unpaid, job-protected leave during any 12-month period:
- to care for a new-born child or newly placed adopted or foster child;
- to care for an employee’s seriously ill family member (spouse, parent or child);
- because of a serious health condition that makes the employee unable to perform his or her job functions; or
- because of a qualifying exigency arising out of an immediate family member’s active duty in the armed forces.
Several states have adopted family and medical leave protection that are more stringent than the Family and Medical Leave Act. Additionally, both federal and state law initiatives to provide paid family leave and sick leave are underway.
What is the position in relation to harassment?
Harassment based on a protected status—including sex, age, race, disability, religion, color or national origin—is prohibited as a type of discrimination. In general, an employee who makes a claim of illegal harassment must show that the harassment was based on a protected category and was so severe or pervasive as to alter the conditions of the work environment and create a hostile or abusive situation.
What is the position in relation to whistleblowing?
Legal protections for employees who report illegal misconduct by their employers have increased dramatically since the late 1970s, when such protections were first adopted for federal employees in the Civil Service Reform Act of 1978. Since then, with the enactment of the Whistleblower Protection Act of 1989, Congress has expanded such protections for federal employees.
Congress has also established whistleblower protections for individuals in certain private sector employment through the adoption of whistleblower provisions in at least 18 federal statutes. These include the Sarbanes-Oxley Act, the Food and Drug Administration Food Safety Modernization Act and the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Several states have also adopted whistleblowing protections.
Privacy in the workplace
Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?
Various federal and state laws govern employees’ rights regarding privacy and monitoring in the workplace. Generally, if a private employer has given notice and obtained prior consent from the employee, employee monitoring is allowed under the law. Employees’ activities while using an employer’s computer system are largely unprotected by personal privacy laws. Typically, if an employer has a valid business purpose for monitoring an employee’s email and internet usage, the employer is allowed to do so. Emails are considered company property if sent using the company computer system.
Under the Electronic Communications Privacy Act, there are some legal limitations to an employer’s right to monitor employees’ telephone and voicemail usage. Personal calls should not be monitored beyond the time necessary to determine that the calls are personal in nature.
Employers generally have a right to monitor employees via a security camera, as long as cameras are not in bathrooms or dressing rooms.
Under the National Labor Relations Act, employers are prohibited from monitoring or conducting any surveillance of employees’ union activities.
Additionally, various laws regulate the enforcement of online data security and privacy policies, as well as the dissemination of private identification and health information. The following is a sample of such laws:
- the Federal Trade Commission Act and the Children’s Online Privacy Protection Act;
- the Financial Services Modernization Act;
- the Health Insurance Portability and Accountability Act;
- the Fair Credit Reporting Act;
- the Controlling the Assault of Non-Solicited Pornography and Marketing Act;
- the Telephone Consumer Protection Act;
- the Electronic Communications Privacy Act;
- the Computer Fraud and Abuse Act; and
- the Judicial Redress Act.
To what extent can employers regulate off-duty conduct?
A number of federal and state laws prohibit private employers from regulating off-duty conduct. In particular, the National Labor Relations Act prohibits employers from monitoring or conducting surveillance on any union activities, including off-duty meetings or gatherings.
Laws in several states provide legal protection for employees who engage in certain political activities outside the workplace. Some states have enacted broad protections for off-duty conduct, such as prohibiting employers from disciplining employees for conduct that occurs outside the workplace if the conduct is not illegal.
Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?
No federal law prohibits employers from monitoring employees on social media sites. Some states have laws that prohibit an employer from disciplining an employee for off-duty activity on social networking sites unless the activity can be shown to damage the company in some way. Some states also protect employee social media passwords from access by employers or third parties.
Trade secrets and restrictive covenants
Who owns IP rights created by employees during the course of their employment?
As a general rule, an employer will own the intellectual property created by its employees in the course of their employment. However, intellectual property that is created by an employee other than in the course of employment is owned by the employee, not the employer. Employers often protect their rights through specific written agreements with employees.
What types of restrictive covenants are recognised and enforceable?
A restrictive covenant is analyzed under traditional contract law requirements. Most states deem restrictive covenants to be legally binding as long as the clause contains reasonable limitations as to the geographical area and time period. The extent to which non-compete clauses are legally allowed varies by jurisdiction. Some jurisdictions, such as the state of California, invalidate non-compete clauses for all but equity stakeholders in businesses. The Defend Trade Secrets Act 2016 contains many key features to aid employers in protecting trade secrets from misappropriation.
Are there any special rules on non-competes for particular classes of employee?
Many states limit the enforceability of non-compete agreements in the medical and legal professions. Some states, including Illinois, also prohibit non-compete agreements for low-wage earners.
Discipline and grievance procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?
Except for unionized employees covered by a collective bargaining agreement, no specific laws regulate the procedures that an employer must follow with regard to discipline and grievance procedures.
Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?
No—in the United States, fewer than 7% of private sector employers are unionized.
What are the rules on trade union recognition?
The National Labor Relations Act gives private sector workers the right to choose whether they wish to be represented by a union and establishes the National Labor Relations Board to hold elections for that purpose. As originally enacted in 1935, the act makes it illegal for employers to:
- discriminate against workers because of their union membership;
- retaliate against them for engaging in organizing campaigns or other concerted activities, or forming company unions; or
- refuse to engage in collective bargaining with the union that represents their employees.
The act does not cover governmental employees, with the exception of employees of the US Postal Service, a quasi-public entity.
Nearly 30 states now have legislation that prevents trade unions from signing collective agreements with employers requiring employees pay fees to the union when they are not members (frequently called ‘right-to-work’ laws by their political proponents).
What are the rules on collective bargaining?
In the United States, the parties must bargain in good faith, which is defined as meeting at reasonable places and times with the union and exchanging proposals. There is no requirement that either the union or the company agree to any of the proposals provided by either party. For the most part, the National Labor Relations Act displaces state laws that attempt to regulate the right to organize, to strike and to engage in collective bargaining. The National Labor Relations Board has exclusive jurisdiction to determine whether an employer has engaged in an unfair labor practice and to decide what remedies should be provided.
Are employers required to give notice of termination?
Outside the context of plant closures and mass layoffs under the federal Worker Adjustment and Retraining Notification (WARN) Act and state law counterparts, employers in the United States are not required to provide employees with notice of termination.
What are the rules that govern redundancy procedures?
The WARN Act requires private sector employers (both for profit and non-profit) to give 60 days' notice of mass layoffs and plant closures; it allows a number of exceptions for unforeseen emergencies and other cases. A “mass layoff” consists of 50 or more employees if that number is at least 33% of the employer’s active work force. (For employers with 500 or more affected employees, the percentage is irrelevant.)
While the federal WARN Act applies to both mass layoffs and plant closures, several states have adopted more stringent requirements of their own, which take precedence over the WARN Act.
Are there particular rules for collective redundancies/mass layoffs?
The WARN Act applies to employers of 100 or more employees (not including those who have worked fewer than six months in the last 12-month work period or those who work an average of less than 20 hours per week—although those individuals are entitled to any WARN Act notice that is issued), and provides certain protections to employees involved in plant closings and mass layoffs. The WARN Act requires employers to provide at least 60 days’ advance written notice of covered layoffs and plant closures to affected employees, their representatives, and appropriate local government officials. If the employer does not give the required notice, it may be held liable to affected employees for back pay and benefits for the 60-day notice period and, if a lawsuit ensues, for attorney fees to the employees.
Covered employers are required to notify employees when a plant closure will affect 50 or more employees during any 30-day period. An employer must notify employees of a mass layoff if the layoff affects at least one-third of the employees and at least 50 employees at a single site (if 500 or more employees are affected by the layoff, the one-third requirement does not apply). There are some exceptions for WARN’s required 60-day notice period, but many of the exemptions have been narrowly construed. The sale of a business may trigger a WARN Act notice, and employers should be familiar with the act’s provisions, should that situation arise.
Some states have enacted laws similar to WARN that may apply to smaller employers and layoffs of fewer employees (often referred to as the ‘mini-WARN acts’).
What protections do employees have on dismissal?
Traditionally—absent a collective bargaining agreement or an individual employment contract, and subject to discrimination protection—an employer is free to discharge an employee at any time with or without cause. However, courts in several states have carved out exceptions to this rule.
Some state courts have held that employees may not be discharged in violation of public policy. Some states have also held that a written employee handbook may create an actionable employment “contract” between the employer and employee that applies to prerequisites for termination. Several states have recognized that an employer may insert language in the handbook conspicuously disclaiming any contractual intent. Montana has statutorily limited the applicability of the employment-at-will doctrine.
Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?
The Supreme Court is the highest court in the United States. In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court.
All power not delegated to the federal government remains with the states. Each of the 50 states has its own state constitution, governmental structure, legal codes and judiciary. The structure of state court systems varies from state to state.
Each state court system has unique features; however, some generalizations can be made. Most states have courts of limited jurisdiction presided over by a single judge who hears civil and criminal cases of some limited value. States also have general jurisdiction trial courts that are presided over by a single judge. These trial courts are usually called ‘circuit courts’ or ‘superior courts’ and hear civil and criminal cases with a higher damage threshold. Some states have specialized courts that hear only certain kinds of cases, such as traffic or family law cases. All states have a highest court, usually called a ‘supreme court’, which serves as an appellate court. Many states also have an intermediate appellate court, which hears appeals from the trial court. A party in a case generally has one right of appeal.
What is the procedure and typical timescale?
What is the route for appeals?
Thirteen federal appellate courts sit below the US Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate courts’ task is to determine whether the law was applied correctly in the trial court.
Appeals courts consist of three judges and do not use a jury. A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals of decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the US Court of International Trade and the US Court of Federal Claims.