One of, if not the most difficult challenge for United States-based employers is staying compliant with the myriad of federal labor laws that the Department of Labor (DOL) enforces. Every business operating in the United States must abide by the federal labor laws unless state laws preempt them. With decades of federal labor law iterations, the history of labor laws has changed drastically over time.
The following is a complete overview of United States federal labor laws for employers looking to stay compliant:
There are not many federal laws regarding hiring and recruiting. The few that do exist pertain heavily to veterans, as well as background checks.
The Uniformed Services Employment and Reemployment Rights Act (USERRA) declares that specific people who served in the U.S. armed services have a right to reemployment with the employer they had worked for prior to entering service. USERRA also protects service members from employer discrimination based on his or her past or military service as well as the intent to serve.
USERRA covers nearly all employees, including probationary and part-time staff, for service members performing voluntary or involuntary duty in “uniformed services”, such as the:
In addition to the right to reemployment, veterans have other special employment rights as well, including being provided preference in initial hiring, and protection in reductions in force / protection from being laid off. Veterans’ preference applies particularly for jobs with the federal government. Some states may have their own Veterans’ Preference laws for state government jobs.
The Veterans' Employment and Training Service (VETS) administers the federal Veterans’ Preference laws and other veteran employment protection laws.
The Fair Credit Reporting Act (FCRA) puts in place protections for information collected by consumer reporting agencies. Information collected in a background check may only be provided to those specified by the FCRA.
Employers who provide information to a reporting agency for a background check have certain legal requirements as well, such as the duty to investigate any disputed information. In addition, employers who use the information for credit, insurance, or employment purposes must notify the employee when an adverse action is taken as a result of a background check.
The Fair and Accurate Credit Transactions Act amended the FCRA, with changes primarily relating to record accuracy and identity theft.
The Dodd-Frank Act gave the majority of rulemaking responsibility to the Consumer Financial Protection Bureau. However, the Federal Trade Commission (FTC) retains all its enforcement authority.
The Immigration Reform and Control Act (IRCA) established an electronic system for verifying the immigration status of alien applicants to discourage unauthorized employment. IRCA regulations require all employers to verify an employee’s identity and to reinforce his or her eligibility for employment through the use of Form I-9, the Employment Eligibility Verification form.
These processes are handled under the United States Citizenship and Immigration Services (USCIS). The USCIS is also responsible for issuing employment authorization documents that act as evidence for an individual's right to work in the US.
The Employee Polygraph Protection Act is a law that prevents private employers from using lie detectors on employees for pre-employment screening or during the course of employment. Employers cannot require or request any employee or job applicant to take a lie detector test, nor can an employer discharge, discipline, or discriminate against an individual for refusing to take a test.
Additionally, employers cannot ask about the results of a lie detector test, nor discharge or discriminate against an individual based on the results.
Some employers are allowed to use a polygraph test for certain job duties, including:
Federal wage and hour laws are set by the U.S. Wage and Hour Division of the U.S. Department of Labor. The Fair Labor Standards Act (FLSA) was enacted in 1938 to protect workers from unfair employment practices.
The Fair Labor Standards Act covers several wage and hour-related topics, such as:
The FLSA employee classification system organizes workers into three different types: non-exempt, exempt, and independent contractors. Employers need to know which category each of their employees falls under. A misclassification of a worker may have state and federal monetary consequences.
Non-exempt employees: Employees that are paid an hourly rate and are subject to the minimum wage and overtime requirements set by the FLSA.
Exempt employees: Employees that are exempt from both minimum wage and overtime requirements. To qualify as an exempt employee, the employee must meet a job duty test and a salary level test. It’s important to note that the employee's job title does not determine exemptions.
The following duties and responsibilities are those that are classified as exempt employees:
To pass the salary level test, an employee must make at least $684 per week or $35,568 annually. For highly compensated employees, employees must make $107,432 per year, including at least $684 per week paid on a salary basis.
On April 26, 2024, the US Department of Labor (DOL) initially revised regulations regarding the exempt employee threshold amount, increasing the standard salary level and the highly compensated employee annual salary thresholds. However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the DOL's final ruling, ultimately reverting the minimum salary levels to the 2019 amounts ($684 per week and $107,432 per year for highly compensated employees).
To determine if an employee is the third type, an independent contractor, the IRS has created the following determining factors:
Employers must look at all factors when determining whether a worker is an employee or an independent contractor. There is no specific set number of factors or one factor that single-handedly defines when a worker is an independent contractor. The employer must look to the working relationship as a whole and consider the degree or extent of the employer's control of the employee.
Effective since July 24, 2009, the current federal minimum wage set by the FLSA is $7.25 per hour. Many states have enacted their own minimum wage laws. When a state law sets its minimum wage higher than the federal, the state wage applies / preempts federal law.
Most states that don’t have a minimum wage higher than the federal value have a state minimum wage of the same value ($7.25 per hour). Some states, however, do not have any unique legislation regarding minimum wage.
In rare cases, the state of Georgia’s minimum wage is actually lower than the federal minimum. In this instance, employers must pay all employees covered by the FLSA the federal minimum wage. Any employees who are not covered by the FLSA may be paid less than $7.25 an hour.
Learn more about the minimum wage rates by state
Under the FLSA regulations, employers are allowed to take a tip credit towards a tipped employee’s minimum wage and overtime. However, for an employer to claim a tip credit, the tipped employee must have enough tips to equal at least the federal minimum wage and overtime compensation.
Based on the current federal minimum wage rate, the tipped minimum wage rate is $2.13 per hour, meaning that employers may take a maximum tip credit of up to $5.12 per hour.
Signed into law on July 4, 2025, and effective between the 2025 through 2028 tax years, the One Big Beautiful Bill Act (OBBBA) introduced several tax deductions for certain individuals, including one for tipped employees.
Starting on the 2025 tax year, employers must report an accurate total amount of cash tips an employee receives, as well as his or her occupation that qualifies as “customarily and regularly” receiving tips, by filling out the appropriate information on employee W-2s.
Non-exempt employees must be compensated with overtime pay for hours worked in excess of 40 in a single workweek (can be any seven consecutive 24-hour periods, and does not have to be Monday - Sunday). Overtime pay rate may not be less than 1.5 times the employee's regular rate of pay.
For Example, a non-exempt worker making $7.25 an hour would make $10.86 per hour of overtime.
For employees ages 16 and older, there is no limit on the number of hours they may work in a workweek.
The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest unless an employee also goes over the 40-hour mark.
In addition to the “No Tax on Tips” provision, the One Big Beautiful Bill Act (OBBBA) introduced tax deductions for employee overtime pay.
Starting on the 2025 tax year, employers must report an accurate total amount of qualified overtime compensation paid out by filling out the appropriate information on employee W-2s.
Generally, the definition of hours worked includes all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace.
Other specific instances that count as hours worked include:
Employers covered by the FLSA must adhere to recordkeeping requirements by keeping certain records for each non-exempt employee. While the act does not require any particular format for these records, there is a specific set of information that is required to be kept.
These include:
Records shall be kept for at least three years when pertaining to payroll, collective bargaining agreements, sales, and purchases. Records used to compute wages, such as time cards, piecework tickets, wage rate tables, work schedules, and adjustments to wages, shall be kept for two years.
All records must be kept open for inspection by the Division’s representatives. Records may be kept at the worksite or within a central records office.
Employers must display an official poster outlining the provisions of the FLSA. However, employers must ensure the federal labor law postings are up-to-date and in compliance with current regulations. Many businesses leverage a labor law poster subscription service to automatically receive the latest required federal posters for each worksite.
The FLSA requires employees to be paid on a regular, predetermined payday each pay period.
An employer may not deduct from an employee’s wages for cash or merchandise shortages, employer-required uniforms, or tools of the trade when doing so brings total compensation below the minimum wage or reduces the amount of overtime pay.
Get an overview of each state’s payday requirements schedule.
Employers are not required by law to give employees their final paycheck immediately. However, final pay must be received by the first regular payday for the last pay period the employee worked.
Some states have enacted their own final pay laws, with some that require immediate payment.
Federal child labor provisions authorized by the FLSA ensure that young employees are able to work in a safe environment that does not jeopardize a minor employee’s health, well-being, or educational opportunities.
As a general rule, the FLSA sets 14 years old as the minimum age for employment and limits the number of hours worked by minors under the age of 16. The FLSA also prohibits the employment of a minor in work declared hazardous by the Secretary of Labor.
Hazardous occupations for all minor employees include the following:
Minor employees under the age of 16 are prohibited from additional occupations, such as:
The FLSA also regulates the hours and time of day minor employees under 16 years of age can work, with adjustments depending on whether school is in session or not.
Each state also has its own laws relating to the employment of minors. If state law and the FLSA overlap, the law that protects the minor employee more will apply.
The DOL also has separate guidelines for minors when it comes to specific industries of employment, including but not limited to:
Wage garnishment is a legal procedure in which an employee’s wages are withheld via a court order for the payment of a particular debt. An example of a particular debt would be child support or alimony. Federal law does have some requirements and regulations regarding wage garnishment.
Administered by the Wage and Hour Division of the DOL, the Consumer Credit Protection Act (CCPA) protects employees from discharge by their employer due to wage garnishment for any singular debt (subsequent debts are NOT protected). It also limits the amount of wages that can be garnished in a single week.
The CCPA applies to all employers and employees who receive wages or other earnings for personal services. Forms of compensation that can be garnished include:
NOTE: Tips are not covered by the CCPA.
Federal law does not require employers to provide any kind of paid or unpaid benefits to employees. However, there are certain protections for employees when employers do choose to provide benefits.
The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets standards for most voluntarily established retirement and healthcare plans in private industries.
Employers are required to:
Finally, if a defined benefit plan is terminated, an employer must guarantee payment of specific benefits through a federally chartered corporation known as the Pension Benefit Guaranty Corporation (PBGC).
The Consolidated Omnibus Budget Reconciliation Act (COBRA) is an amendment to ERISA and allows employees and their dependents to temporarily retain their employer-sponsored health benefits when specific situations arise in which coverage would otherwise end.
These qualifying events include:
Covered employers who offer a group health plan(s), and have 20 or more employees in the previous year, must provide COBRA coverage when there is a qualifying event.
The monthly cost under COBRA is equal to the plan’s monthly premium plus a 2% administrative fee, equating to 102% of the coverage cost.
COBRA law details how employees and their dependents may elect COBRA and sets forth details of employer notice.
The Health Insurance Portability & Accountability Act (HIPAA) was created to offer protection for employees to improve portability and continuity of health care insurance coverage.
HIPAA provides more opportunities for employees to enroll in group health care coverage after losing other health coverage, or if he or she experience a certain life event.
Qualifying life events covered under HIPAA include:
Whether the employee lost coverage eligibility or experienced a qualifying life event, employees must request special enrollment for coverage within 30 days starting when the loss of eligibility or qualifying event happens.
HIPAA also prohibits discrimination in enrollment and in any premiums charged to employees and their dependents based on any health factors. The core purpose is to preserve the state’s role in regulating health insurance, including the authority to better protect insurance than that available under federal law.
The Affordable Care Act (ACA) is an ERISA amendment that expands access to health coverage. The ACA also incorporates various protections.
Generally speaking, covered employers are known as applicable large employers (ALE) and are defined as employers with 50 or more employees in the last calendar year. Covered employers must offer minimum essential coverage to their full-time employees and dependents up to the end of the month in which they turn age 26 or face penalties.
Minimum essential coverage must include the following:
Under the ACA, large employers who fail to offer their employees minimum essential coverage as required will be subject to penalties.
Other laws to note regarding employee benefits include the following:
Employers, whether a private company or a part of the state government, should ensure that the business complies with the state’s workers’ compensation laws and programs. There are, however, some federal laws regarding workers’ compensation.
The Longshore and Harbors Workers’ Compensation Act is administered by the Office of Workers’ Compensation Programs (OWCP).
It provides for compensation and medical care to certain maritime employees and to qualified dependent survivors of such employees, who are disabled or die due to injuries that occur on the navigable waters of the U.S. or in any adjoining areas that are used for loading, unloading, and or repairing a vessel.
The Energy Employees Occupational Illness Compensation Program Act is a compensation program that provides a lump-sum payment, including medical benefits, to employees, current or former, or his or her surviving dependents of the Department of Energy (DOE) and its contractors.
Qualified employees are workers who suffer serious injury or death due to:
The Federal Employees’ Compensation Act (FECA) establishes a workers’ compensation program that pays for related medical expenses and compensation benefits for the disability or death of a federal employee resulting from personal injury sustained while working. The program also helps injured federal employees return to work when he or she is medically able to.
FECA, also administered by the OWCP, also:
The Black Lung Benefits Act provides cash payments each month as well as medical benefits to coal miners who are totally disabled from pneumoconiosis (black lung disease) as a result of working in the nation’s coal mines.
The benefits also apply to surviving dependents of a deceased mining employee due to the same disease.
Most states have their own laws regarding leave and absence; however, many states often use the Family and Medical Leave Act as the basis for their own rules.
The Family Medical Leave Act (FMLA) provides certain employees up to 12 weeks of job-protected, unpaid leave per year and requires their group health benefits to be maintained during the leave.
Under the FMLA, covered employers include:
Covered employers must provide their eligible employees with up to 12 weeks of unpaid leave each year for any of the following reasons:
Employees are eligible for leave if:
Time taken off work due to pregnancy complications can be counted against the 12 weeks of family and medical leave.
Additionally, in accordance with military caregiver leave under FMLA, an employee is eligible for 26 workweeks of leave in a single 12-month period if they need to care for a covered servicemember with a serious injury or illness, if the eligible employee is the servicemember’s spouse, son, daughter, parent, or next of kin.
With provisions dealing with general businesses as well as specific industries, federal regulations regarding health and safety in the workplace are extensive. Employers must understand the unique health and safety laws for the state(s) where the business operates, as many states have specific provisions separate from federal requirements.
Administered by the Occupational Safety and Health Administration (OSHA), the Occupational Safety and Health Act (OSHA / OSH) is responsible for outlining standards for how to keep a workplace and the employees in it safe from any dangers or hazards.
Enforced through inspections and investigations conducted by OSHA (the organization), the OSH Act has several divisions of provisions that cover sectors such as general businesses (businesses otherwise not covered under different divisions), construction, maritime, and agriculture.
Some of the many topics that the OSH Act covers regarding safety include:
Employers can view an extensive list of covered topics under OSHA on the US DOL website.
The OSHA General Duty Clause is an additional section of the OSH Act that requires that all employers provide a work environment "free from recognized hazards that are causing or are likely to cause death or serious physical harm."
All employers are subject to this clause; however, the clause is only used when no standard applies to the particular hazard in question.
Per OSHA, the following elements are necessary to prove a violation of the General Duty Clause:
In addition to federal OSHA laws, some states have their own laws administered by OSHA, such as the Oregon OSHA.
States with their own Health and Safety laws may have specific additional OSHA divisions in place. For example, Oregon has a forest activities division, something many states, like Texas, wouldn’t need.
Federal law also includes regulations for unions and the relationship they hold with their members.
The National Labor Relations Act (NLRA) was passed by Congress in 1935, encouraging and protecting employees at private-sector workplaces that collectively bargain in the goal of seeking better working conditions without the fear of employer retaliation. The NLRA is established to protect most employees, whether the workplace is unionized or non-unionized.
Employees protected under the NLRA can perform what is known as a “concerted activity”, meaning an activity where employees act together or on behalf of others to improve working conditions or compensation.
Examples of concerted activities can include:
Employees may lose protection under the NLRA if he or she:
The National Labor Relations Board (NLRB) enforces the NLRA and protects concerted activities.
The Landrum-Griffin Act deals with the relationship between a union and its members, and it’s administered by the Office of Labor-Management Standards. The act serves as a bill of rights for unions and their members.
It protects union funds, as well as promotes democracy within the union by requiring that labor organizations file annual financial reports and by establishing standards for the election of union officers. Union officials, employers, and labor consultants all must file reports regarding certain labor relations practices.
Employers who are recipients of government contracts, grants, or financial aid are subject to laws regarding wages, hours and scheduling, benefits, and health and safety.
The Davis-Bacon Act applies to contractors and subcontractors performing on federally funded contracts (including the District of Columbia) for the construction, alteration, or repair of public buildings and works. Note that state-funded projects are managed under the state’s own Department of Labor using its own determination for prevailing wages.
Employers must pay their employees no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area. The act directs the DOL to determine such prevailing wage rates. Employers overseeing federal contract projects can research the exact project’s prevailing wages using the System for Award Management (SAM) website.
In the case of a prime contract (over $100,000), employers must compensate workers at least 1.5 times their normal rate of pay for all hours worked past 40 in a week. Overtime provisions of the FLSA also apply.
The McNamara-O’Hara Service Contract Act requires contractors and subcontractors of federally funded public works projects to pay their workers, at a minimum, the wages and fringe benefits prevailing in the locality or the rates that are equivalent to a previous contractor’s collective bargaining agreement.
Employers are only required to do so when a contract is considered a prime contract (over $2,500).
If a prime contract is over $100,000, employers must pay all workers, no matter the responsibilities or duties, at least 1.5 times his or her regular rate of pay, for all hours worked in a workweek after 40.
The Walsh-Healey Public Contracts Act establishes minimum wage, the maximum hours a worker may be scheduled for, and health and safety standards regarding contract work on public projects.
The act applies to contracts valued over $15,000 for the manufacturing or furnishing of materials, supplies, articles, or equipment for the U.S. government or the District of Columbia (D.C.).
The act is enforced by the wage and hour division of the DOL, with the exception of the health and safety standards, which are administered by OSHA.
The act does not apply to:
Minimum wage and overtime are enforced as outlined in the FLSA under the act.
There are several important federal laws that protect employees and employers from all kinds of discrimination. The Equal Employment Opportunity Commission (EEOC) oversees and enforces employee discrimination at the federal level.
For a business to be an equal opportunity employer, in accordance with EEO laws, employers must be familiar with the following federal discrimination laws:
A strong set of federal labor laws and provisions covering how employers should treat, compensate, and otherwise utilize employees is only half of the battle. In addition, federal labor law includes provisions in order to protect employees from employers who violate federal labor law.
The Sarbanes-Oxley Act (SOX) affords whistleblower protections for employees of publicly traded companies.
Under SOX, covered employers are those with a class of securities registered under section 12 of the Securities Exchange Act of 1934 (15 U.S.C. 78l) or are required to file reports under section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78o(d)).
No Company or officer, employee, contractor, subcontractor, or agent may discriminate in employment by discharging, demoting, suspending, threatening, or harassing an employee that made reports to federal regulatory and law enforcement agencies, Congress, a supervisor, internal corporate investigators, or participates in an S.E.C. regulatory proceedings related to fraud against the company’s shareholders.
Under 42 U.S. Code section 12203, no person shall discriminate against any individual because such individual has opposed an unlawful practice or because such individual made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing.
Federal labor law also includes specific laws, created for specific industries, in order to address the specific needs of that industry.
Industries that have their own specific federal labor laws include:
The US DOL requires that several labor law posters be posted in an easily visible and accessible location at every location where work is performed or done.
The DOL posters required by federal labor law include:
All US employers should always have the most up-to-date labor law posters to avoid severe penalties. Using a labor law poster subscription service ensures employers are covered with accurate versions of the required posters.
In the event of a plant closing or mass layoff, the Worker Adjustment and Retraining Notification Act (WARN) requires employers to provide a written notice at least 60 days in advance to affected workers, his or her family, and the appropriate members of the State Rapid Response Dislocated Worker Unit (Rapid Response Service).
After a notification is submitted, Rapid Response Services then work with the employer to provide information regarding retraining services that help laid-off workers find new jobs.
Rapid Response Services can include:
The WARN Act covers the following employers:
Some states have their own version of the WARN Act, such as the Washington Mini-WARN Act, that is designed to cover smaller businesses. Other states, such as New York, have rules extending the days a notice must go out before a layoff or closure. It’s best to check with the state’s department of labor to get a full understanding of WARN Act compliance.
Federal labor laws are constantly evolving, and even small changes can have a major impact on how employers manage payroll, employee benefits, and more. From the basics of wage and hour requirements to recordkeeping obligations, maintaining Federal labor law compliance is essential to protecting businesses from costly penalties.
Organizations that are struggling to keep up with or understand the intricacies of federal regulations can benefit from partnering with a payroll and HR provider that specializes in regulatory guidance and ongoing support. A trusted partner can help ensure company processes align with the most up-to-date federal standards while reducing administrative burden.
Companies seeking payroll and HR services can find a provider now or can receive expert-level assistance by contacting us for more information.