The employment relationship in the United States is governed by a number of overlapping federal, state and local laws. According to the United States Constitution, federal law is a higher authority than state or local law, and will often pre-empt state and local laws when such laws deal with the same subject. That said, in cases where state and local laws provide greater protection of employees' rights, the greater of the federal, state and local protections will often apply.

These overlapping laws govern the creation of an employment relationship, the substance of that relationship and the termination of that relationship. Most of these laws, however, are prohibitory. For example, an employer may not make hiring or termination decisions based on an individual's protected characteristic (e.g., age, race, gender, religion). But the law does not dictate whom the employer must hire. Most details regarding the terms and conditions of the employment relationship are left to private agreement between employer and employee. Without an unlawful motive (e.g., discrimination based on a protected category) or a contract providing for employment for a definite duration, the employment of non-unionised employees in the US is generally 'at will', which means that either the employer or the employee is at liberty to terminate the employment relationship at any time, with or without advance notice or cause. Certain exceptions exist, as discussed below.

Employment-related lawsuits can be brought in federal or state court. Certain employment contracts may require arbitration or mediation of disputes, while others (such as collective bargaining agreements (CBAs)) may specify detailed grievance mechanisms for the handling of employment disputes. A number of federal and state government agencies also regulate aspects of the employment relationship. For example, the National Labor Relations Board (NLRB) will hear and rule on cases that implicate laws related to collective bargaining and unions in the United States. The Equal Employment Opportunity Commission investigates complaints of discrimination on a federal level, while agencies such as New York State's Division of Human Rights do the same on a state level. Many federal whistle-blowing laws are governed by the United States Department of Labor (DOL), which, like the NLRB, has its own set of judges (administrative law judges) and appeals process. In many cases, employees must first bring their claims to the appropriate governmental agency (and within a specific time frame) before attempting to file a lawsuit in court. Failure to do so can prevent the employee from having his or her complaint heard in court.


The main drivers of change in employment law throughout 2018 continued to be state and local legislatures, and federal agencies. The United States Congress, which was controlled by Republicans, passed no new national employment laws of note.

i Upcoming changes to the Fair Labor Standards Act overtime regulations

On 23 May 2016, under the administration of President Barack Obama, the DOL issued new overtime regulations intended to raise the minimum salary threshold required to qualify for certain exemptions from the minimum wage and overtime requirements under the Fair Labor Standards Act (FLSA). The new minimum salary for exempt status was to more than double the minimum from US$455 a week to US$913 a week (US$47,476 annualised). The new rule was also to increase the threshold for exemption as a 'highly compensated employee' from US$100,000 to US$134,004 per year.

The regulations were due to take effect on 1 December 2016. However, on 22 November 2016, a federal judge in Texas preliminarily enjoined the new overtime rule on a nationwide basis, blocking it from taking effect on 1 December 2016. In its decision, the court noted that nothing in the FLSA indicates that Congress intended the DOL to define the exemptions with respect to a minimum salary level – only with respect to duties – and that, consequently, the new rule is 'unlawful'.

On 31 August 2017, the Texas federal court granted the plaintiff's motion for summary judgment and declared the regulations to be invalid, ending the case at the lower court level. The court's reasoning was similar to its reasoning in the order granting the preliminary injunction. In October 2017, the DOL announced that it would appeal the Texas federal court's ruling to the Fifth Circuit Court of Appeals.

Separately, on 26 July 2017, the DOL announced that it was seeking public comment regarding the overtime regulations, with the suggestion that it is likely to propose a new version of the regulations. On 7 November 2017, at the DOL's unopposed request, the Fifth Circuit Court of Appeals announced that it would hold the DOL's appeal in abeyance pending the outcome of the DOL's revised regulations.

Now under the administration of President Donald Trump, the DOL has been less aggressive in raising wages. The comment period for a new proposed overtime rule ended in September 2017 and since then, the DOL has repeatedly delayed its announced deadline for releasing a final rule. In its Spring 2018 Regulatory Agenda, however, the DOL formally announced its intention to issue a Notice of Proposed Rulemaking in January 2019 'to determine what the salary level for exemption of executive, administrative, and professional employees should be'. The new rule would likely increase the minimum salary for exemption to something between US$30,000 and US$35,000, which is considerably lower than the level proposed by the Obama administration. It would also be significantly lower than some state law minimum salaries for exemption. For example, New York's minimum salary for exempt executive and administrative employees increased to US$58,500 for large employers in New York City at the end of 2018.

ii NLRB proposes new rule to clarify joint-employment standard

For the past 30 years, the NLRB has held that two companies would only be considered joint employers if they shared or co-determined those matters governing the essential terms and conditions of employment, and actually exercised the right to control. In its 2015 Browning-Ferris decision, the NLRB renounced this test and eliminated the requirement that the employer actually exercise control over the employees. Instead, the NLRB ruled that employers need only retain the contractual right to control, and that indirect control, such as through an intermediary, would be sufficient to find joint employment. In its 2017 Hy-Brand Industrial Contractors, Ltd decision, the NLRB reversed its position again and reverted to the old standard. However, in February 2018, the NLRB vacated its decision in Hy-Brand Industrial Contractors, Ltd based on allegations that one of the board members had a conflict of interest.

On 5 June 2018, the NLRB announced that it would soon start the rule-making process to clarify the current joint-employment standard. Writing in response to several United States senators who had questions about this announcement, Chairman John Ring stated that a majority of the board is 'committed to engage in rulemaking'. On 14 September 2018, the NLRB published a notice of proposed rule-making (NPRM) regarding the standards for joint employment. Under the proposed rule, an employer may be found to be a joint employer of another employer's employees only if it possesses and exercises substantial, direct and immediate control over the essential terms and conditions of employment, and has done so in a manner that is not limited and routine. Indirect influence and contractual reservations of authority would no longer be sufficient to establish a joint-employer relationship.

On 28 December 2018, the United States Court of Appeals for the District of Columbia Circuit issued a decision upholding in part and rejecting in part the Browning-Ferris standards for determining joint employment. In light of this federal appellate decision, in Browning-Ferris Industries of Cal, Inc v. NLRB, the NLRB extended the time for the public to submit comments regarding the NPRM to 28 January 2019.

iii State and local legislatures passed several new laws affecting employers

Employers must also be aware of new statutes affecting employees in particular states and cities. In particular, several states and cities, including New York, Washington, Arizona, Rhode Island, Vermont and the District of Columbia, passed or enacted laws since 2017 providing paid leave for medical and family care reasons.

The New York Paid Family Leave Law (NYPFLL) became effective on 1 January 2018 and requires employers to provide eligible employees with partially paid, job-protected leave to care for a new child or for a family member with a serious medical condition, as well as when a family member is called to active military service. The amount of leave and the benefit amounts available under the NYPFLL will be phased in, which began in January 2018 with eight weeks of paid leave per year at a rate of 50 per cent of the individual's average weekly wage (up to a designated cap), and will culminate in 2021 with a requirement to provide up to 12 weeks of paid leave per year at a rate of 67 per cent of the individual's average weekly wage (again subject to a cap). Benefits under the NYPFLL are funded by employee contributions made through deductions from wages.

The Massachusetts Paid Family and Medical Leave Program will become effective on 1 July 2019 and will provide eligible employees with up to 20 weeks per year of paid medical leave for an employee's own serious health condition, as well as 12 weeks per year of paid leave for family care purposes, including to care for a new child or for a family member with a serious medical condition, as well as when a family member is called to active military service. Employees taking leave under the law will receive up to 80 per cent of their average weekly wage (up to a designated cap). The programme will be funded by combined contributions from the employee and the employer.

The District of Columbia's Paid Family Leave Act will become effective on 1 July 2020 and will provide eligible employees with up to eight weeks per year of paid parental leave to bond with a new child, as well as up to six weeks of paid medical leave to care for a family member with a serious medical condition, and two weeks of paid medical leave for an employee's own serious health condition. Employees taking leave under the law will receive up to 90 per cent of their average weekly wage (up to a designated cap). The programme will be funded by contributions from the employer.

Another area in which state and city legislatures have been active is paid sick days. Rhode Island, Washington, Maryland, Michigan, New Jersey and the city of Duluth, Minnesota all passed or enacted paid sick leave laws that will provide eligible employees with paid time away from work for the employee's own medical needs, to care for a covered family member with an illness, injury or need for medical treatment, and for other specific purposes under the respective laws. The Washington law became effective on 1 January 2018, the Rhode Island law became effective on 1 July 2018, and the New Jersey law became effective on 29 October 2018. The Michigan law will become effective on 1 April 2019 and the Duluth, Minnesota law will become effective on 1 January 2020.

In 2018, new laws restricting an employer's ability to enquire into an applicant's compensation history during the hiring process were passed or became effective in California, Connecticut, Delaware, Hawaii, Massachusetts, Oregon and Vermont, the cities of Philadelphia (Pennsylvania), New York City (New York) and San Francisco (California), and Puerto Rico. The laws generally make it unlawful for employers to enquire into job applicants' wage and other compensation history during the hiring process, and also make it unlawful for employers to rely upon an applicant's compensation history for the purpose of formulating salary, benefits and other compensation unless the applicant has voluntarily and without prompting disclosed such information.

In April 2017, a lawsuit was filed seeking to enjoin the implementation of the Philadelphia compensation history law based in part on an argument that the law violates employers' right to free speech under the First Amendment of the United States Constitution. In response, the city of Philadelphia agreed to indefinitely delay implementation of the ordinance – previously scheduled to become effective on 23 May 2017 – pending resolution of the legal challenge. On 30 April 2018, a federal judge ruled that employers can ask job candidates to disclose their salary histories, but cannot use that information to determine their pay. At the time of writing, the decision is pending appeal before the United States Court of Appeals for the Third Circuit.

State governments have also continued the trend of 'ban-the-box' laws, which prohibit potential employers from enquiring about an applicant's conviction history and permit such enquiries only after a conditional offer of employment has been made. Kansas, Michigan and Washington either passed or had ban-the-box laws become effective in 2018.

In February 2017, the District of Columbia enacted the Fair Credit in Employment Amendment Act, which amended the DC Human Rights Act to prohibit employers from discriminating against job applicants and current employees based on their credit information. Specifically, the law prohibits, with certain exceptions, employers in the District of Columbia from requiring an applicant or employee to submit credit information as a condition of employment, or from enquiring into, accepting or using a prospective or current employee's or applicant's credit information. The District of Columbia joined a number of states and cities, including California, Illinois, Maryland and New York City, that have enacted similar laws limiting the use of credit checks during the hiring process.

State and city legislatures have also been active with respect to amending and expanding equal pay laws. On 18 July 2018, California amended its pay equity law to require fair pay for men and women who perform 'substantially similar work, when viewed as a composite of skill, effort and responsibility'. Similarly, the Massachusetts Equal Pay Act, which became effective on 1 July 2018, expands the definition of who can be compared for pay purposes and limits the considerations employers may use to justify pay differences between men and women. On 24 April 2018, New Jersey enacted the Diane B Allen Pay Equity Act, which, among other things, makes it an unlawful employment practice to pay employees of any protected class under the New Jersey Law Against Discrimination at a lesser rate than other employees who perform 'substantially similar work' unless the differential is based on a legitimate business reason. Significantly, unlike other pay equity laws, New Jersey's statute prohibits pay disparity based on several protected classes, such as sexual orientation, gender identity or expression, age and disability (including pregnancy).


i Masterpiece Cakeshop, Inc v. Colorado Civil Rights Commission (decided 4 June 2018)

In Masterpiece Cakeshop, Inc v. Colorado Civil Rights Commission, the United States Supreme Court ruled that a baker's free exercise clause rights under the United States Constitution were not properly considered by the Colorado Civil Rights Commission when it held that he was legally required to bake and sell a wedding cake for a same-sex couple.

David Mullins and Charlie Craig were legally married in Massachusetts but planned a celebration ceremony in Colorado, where same-sex marriage was not yet legal. The couple filed a charge with the Colorado Civil Rights Commission alleging sexual orientation discrimination after a local bakery owner refused to sell the couple a wedding cake based on the owner's religious belief that marriage should be between a man and a woman. The Colorado Court of Appeals upheld an administrative law judge's order requiring the cake shop to design and sell wedding cakes for same-sex marriages. Subsequently, the United States Supreme Court granted review of the case. The majority decision, written by now-retired Justice Anthony Kennedy and joined by Justices Elena Kagan and Stephen Breyer, concluded that the Commission demonstrated 'clear and impermissible hostility towards the sincere religious beliefs motivating [the cake shop owner's] objection'. In reaching its decision, the Supreme Court explained that '[i]n this context the baker likely found it difficult to find a line where the customers' rights to goods and services became a demand for him to exercise the right of his own personal expression for their message, a message he could not express in a way consistent with his religious beliefs.' Although the Supreme Court's decision acknowledges that religious objections to same-sex marriages may be considered a legally protected view in some circumstances, the Supreme Court also explains how 'such objections do not allow business owners and other actors in the economy and in society to deny protected persons equal access to goods and services under a neutral and generally applicable public accommodations law'.

ii Janus v. AFSCME Council 31 (decided 27 June 2018)

In Janus v. AFSCME Council 31, the United States Supreme Court held that it is a violation of the First Amendment of the United States Constitution to require public sector employees who are not members of a union to pay any union dues, even when a portion of those dues is attributable to the costs of collective bargaining on behalf of all employees.

Fair share fees – also known as agency shop fees or union dues – are paid by public sector employees who choose not to belong to a union but are still covered by a collective bargaining agreement. Such fees are used to finance the union's efforts to collectively bargain, administer the collective bargaining agreement, arbitrate grievances and otherwise represent employees. In the 1977 Abood v. Detroit Board of Education decision, the Supreme Court upheld the legality of state laws requiring such payments in the public sector. Recently, however, there were several challenges to the constitutionality of agency fees based on the First Amendment of the Constitution.

Mark Janus, a child support specialist for the Illinois Department of Healthcare and Family Services, argued that requiring him to pay US$44 per month in agency shop fees to the American Federation of State, County and Municipal Employees (AFSCME) union violated his First Amendment rights. The Seventh Circuit Court of Appeals, which covers Illinois, Indiana and Wisconsin, rejected Janus's argument because it did not have the authority to overrule Abood. Subsequently, the United States Supreme Court granted review of the case. The decision, written by Justice Samuel Alito, concluded that the First Amendment prohibited states and public sector unions from deducting agency shop fees from 'nonconsenting' employees. In reaching its decision, the Supreme Court explained how 'compelling individuals to mouth support for views they find objectionable' or to 'subsidize the speech of other private speakers' raises First Amendment concerns that must be examined under an 'exacting scrutiny' standard. Under this standard, the 'compelled subsidy must serve a compelling state interest that cannot be achieved through means significantly less than restrictive of associational freedoms'. Finding that the justifications offered in Abood – labour peace and free riders – failed to satisfy this standard, the Supreme Court ruled that such fees must not be deducted unless the employee 'affirmatively consents to pay' and that such agreements must be freely given and shown by 'clear and compelling' evidence. Importantly, this ruling applies only to public sector unions, and therefore unions operating in the private sector may still collect agency fees from non-members.


i Employment relationship

In the US, the employer and employee are usually free to agree to a contract on terms chosen by them. Based on mutual consent, an employment contract is an agreement by which the employee gives the employer his or her labour or services at a predetermined price. These contracts can range from fixed and negotiated agreements to contracts that are implied under certain situations. Negotiated contracts are formed either orally or in writing. If the parties enter an oral contract of undefined duration, this will generally be considered an 'at-will' contract. An at-will employment relationship means that either party can terminate the employment relationship at any time and for any reason that is not unlawful.

When there is no express employment contract, a court may find that an implied contract was nevertheless formed. The court will look for certain indications that an employment contract was contemplated by looking at the conduct of the parties and the usual practices within the business in question. Many jurisdictions also look to the provisions of employee handbooks for implied contract terms. Generally, however, an employee without an express employment contract must prove the existence and terms of an implied contract. Moreover, an employer can generally avoid implied contract claims by using express disclaimers that state that the employment relationship is terminable at will.

The promises within the employment contract should be definite and certain as to essential terms, such as the identity of the parties, the nature and extent of the service, the location of the service and the compensation. However, if there are uncertain terms within an employment contract, courts will often uphold its enforceability if they can discern intent from the parties' behaviour. The parties to an employment contract may modify it by mutual assent. Also, if the employment is at will, the employer will usually be able to unilaterally impose future changes on the conditions of employment, for example, by altering policies contained in an employee handbook.

ii Probationary periods

Probationary periods are not required by statute, but are common in employment agreements and employee handbooks in the United States. During a probationary period, an employee's performance is subject to more frequent review and the benefits made available to employees may be more limited. Even if an employee successfully completes a probationary period, however, employment typically remains at will unless the employee's contract specifies otherwise, meaning that no notice is required to terminate the employment relationship.

iii Establishing a presence

To hire employees and conduct business in the United States, foreign corporations must register with the national and state tax authorities. All businesses operating in the United States must pay federal, state, and in some cases, local taxes. When a corporation registers with the appropriate tax authorities, it receives a tax ID number or permit.

Depending on the size and nature of the corporation, the list of taxes imposed on it can be quite extensive. Also, depending on the size of the corporation there may be requirements for medical leave, continuation of employee benefits after termination, health and safety standards, and compensation for employees injured on the job.

A company that is not registered with the tax authorities may engage an independent contractor. However, federal and state taxation and labour authorities are rapidly increasing their enforcement activities against employers who misclassify workers as independent contractors rather than employees.

A company that is registered with the tax authorities will have certain withholding and deduction requirements under taxation laws at the federal, state and sometimes local level that must be followed.


Non-compete clauses that restrict an employee's ability to compete with his or her former employer for a limited period following termination of employment are permissible in most US states. Some states take a negative stance towards these clauses, while others are much more permissive when it comes to their enforcement.

In California, for example, the legislature has stated: 'Every contract by which anyone is restrained from engaging in a lawful profession, trade, or business of any kind is to that extent void.' California will, however, allow the limited use of non-compete clauses in the context of a sale or dissolution of a corporation, partnership or limited liability corporation. This approach emphasises the benefits of open competition and employee mobility while protecting the value of a business interest being sold to a buyer.

Almost all other states, including many of the states with a major international business presence such as Delaware, Illinois, New York and Texas, will enforce a non-compete agreement if it satisfies the particular state's requirements of reasonableness. To be reasonable, a non-compete agreement generally must:

  1. satisfy general contract law requirements (e.g., be the product of mutual agreement, supported by adequate consideration, free from duress);
  2. have restrictions that are reasonably limited, both geographically and temporally;
  3. advance a legitimate business interest of the party seeking to enforce the non-compete agreement; and
  4. survive a balancing of both parties' interests and consideration of the public interest.

The standards of reasonableness with respect to geographic and temporal restrictions vary depending on the state. In Delaware, courts will generally balance the harm to the former employee, the legitimate interests of the employer (e.g., the protection of goodwill, confidential information and trade secrets, but not merely a desire to stifle ordinary competition), and any harm to the public (e.g., preventing a medical specialist from serving a community where there is great need) in determining whether the reasonableness standard has been met. In New York, as in many states, courts state that they disfavour non-compete agreements but will often enforce narrowly tailored clauses that are necessary to protect legitimate business interests and which are reasonable in scope.

In general, non-compete agreements must be ancillary to another valid contract, for example, an employment agreement supported by adequate consideration. Jurisdictions differ on whether an offer of continued employment is sufficient consideration for the imposition of a non-compete agreement, or whether a beneficial change in the employment relationship (such as hiring, a promotion, or the provision of a bonus or other benefit) is required. Regardless of whether a post-employment non-compete agreement is entered into, employees may not compete with their employers while they are employed, as this is generally viewed as a breach of an implicit duty of loyalty that each employee owes their present employer.


i Working time

The federal FLSA does not impose maximum working hours for adults. It does, however, prohibit the employment of minors under 14 years of age. It also regulates the type and amount of work in which minors under the age of 18 can engage. States have similar laws, with some states specifying limits on working time, such as prohibiting employers from requiring work for seven consecutive days.

ii Minimum wage and overtime

Federal and state laws require that employees receive a minimum hourly wage for each hour worked. In addition, the FLSA and many state laws require that employees be paid overtime for any time spent working over 40 hours in a working week. In general, an employee must be paid one-and-a-half times his or her regular hourly rate of pay for all overtime hours worked. Overtime is calculated on a weekly basis, so that if an employee works 60 hours one week but only 20 hours the next week, the employer is still obligated to pay the employee for 20 hours of overtime worked during the 60-hour week. Some states have overtime laws that are more generous than federal law. For example, in California overtime is generally payable for all work exceeding eight hours in one day or exceeding 40 hours in a given week at one-and-a-half times the regular rate of pay. However, overtime pay in California becomes double the regular hourly rate of pay if an employee works more than 12 hours in a workday and for all hours worked in excess of eight hours on the seventh consecutive day of work in a working week.

Both federal and state laws provide for a range of exemptions from overtime requirements. Under federal law, the most common exemptions apply to certain employees who are:

  1. executives;
  2. administrators;
  3. professionals (e.g., doctors or attorneys);
  4. outside salespeople; and
  5. certain computer employees.

States may add categories to these exemptions (or subtract from them) with respect to state wage and hour laws. To determine whether an employee qualifies for an exemption, the employee generally must meet certain tests, such as a requirement that he or she be paid on a salary basis (with certain threshold requirements) and have specified 'primary' job duties. The employee's job title does not determine whether an exemption applies to the employee.


A domestic company that wishes to employ a foreign worker must apply for a temporary work visa for that worker. This is not to be confused with employment-based immigration, where the foreign worker wishes to immigrate to the United States permanently as an employee. In those cases, the foreign worker must fit into one of a number of categories showing that he or she has highly unique skills, or the employer must obtain a labour certification from the USDOL by showing that the foreign worker is being offered a job that will not displace a US worker or have a negative effect on wages and working conditions of US workers.

One of the most common temporary work visas is for 'specialty occupations'. A specialty occupation usually requires a certain level of experience or type of education. For the foreign worker to be able to accept an offer of employment in a specialty occupation he or she must also meet certain educational requirements or have extensive training or experience in the field.

Some non-immigrant visas also require the employer to obtain a certification of labour condition from the USDOL. In its application, the employer must assure the agency that it will pay proper wages and provide a working environment that is not detrimental to its workers.

Foreign workers generally must pay state and federal taxes. An individual's ultimate federal tax liability will depend on the nature of any tax treaty between his or her home country and the United States. A number of employee rights are built into the temporary visa programmes. These contain basic employment protections as well as protections unique to non-immigrant workers. These protections are announced and enforced by the USDOL.


Employers of a certain size (depending on the particular legislation) must comply with non-discrimination laws. For example, employers who employ 15 or more employees are prohibited, under Title VII of the Civil Rights Act of 1964, from discriminating against employees and applicants on the basis of race, religion, colour, sex or national origin, and are likewise prohibited under the Americans with Disabilities Act from discriminating on the basis of an individual's mental or physical disability. Employers who employ 20 or more employees are prohibited from discriminating on the basis of age against employees aged 40 and older. Many states have laws of their own regarding discrimination that are more protective of employees than the federal requirements.

Independent contractors, on the other hand, generally do not enjoy the same protection as employees. Religious organisations, which enjoy a certain amount of protection from government infringement under the United States Constitution, are also exempted from some discrimination laws.

Federal law also establishes requirements regarding workplace health and safety. Employers covered by the Occupational Safety and Health Act of 1970 (OSHA) must ensure that their workplaces are free of serious health hazards, and they must follow the health and safety standards promulgated under OSHA. The USDOL may impose fines on employers that do not abide by OSHA's requirements. As in most areas of federal employment legislation, OSHA encourages the individual states to move beyond the minimum standard of protection under federal law. It encourages states to submit their own proposals for occupational health and safety. If a state does not submit a plan, the federal law overrides any state laws passed concerning issues covered by OSHA. If a state does submit a plan, and it is approved by the USDOL, the state may assert jurisdiction over the workplace health and safety issues covered under the state law or regulation.

Rules regarding company discipline or conduct are often contained in employee handbooks.


There is no general requirement under United States law that employment-related documents be translated into an employee's primary language, or that they be written in English. While English is by far the most common language used in business and legal transactions, there are no general federal laws requiring the use of a particular language in legal or contractual employment documents.

Federal and state courts in the United States (except in local courts in some US territories, such as Puerto Rico) conduct court business in English. There are no federal legal certifications required of translators who translate documents into English for use in the federal courts. However, there are some federal and state legal requirements that mandate translation of employment notices into employees' primary languages. An example is the regulation of the NLRB that requires a posting of unionisation-related rights in employers' workplaces, and also states that such posting must be in the employees' primary languages.

While it is not required, it is generally recommended that employment contracts and handbooks be translated into an employee's native language if the cost of translation will not be excessive. This is because employee contracts and handbooks are frequently used as evidence in employment-related lawsuits. If the employee can reasonably claim that he or she could not understand the employment agreement, offer letter, work rules or handbook, the usefulness of these materials in defence of the employer may be more limited.


The NLRA explicitly provides for self-organisation among employees and for collective bargaining between those employees and management. It also establishes certain 'unfair labor practices', which, if violated, could result in administrative sanctions before the NLRB.

Employees have the right to form labour organisations or unions (which, if approved by a majority of employees in a secret ballot, management must recognise and bargain with). The NLRA also allows them to engage in collective activities such as strikes and peaceful picketing in support of lawful bargaining objectives or to protest against alleged unfair labour practices. Managers cannot organise for collective bargaining purposes.

An appropriate bargaining or election unit typically contains employees with similar skills and levels of pay who work together in close physical proximity and perform the same functions. A union seeking to organise a group of employees must first file an election petition and show that they have substantial support among the proposed unit. Then, the NLRB conducts a preliminary investigation to ensure that the election would be within the NLRA's jurisdiction and comply with its regulations. If the parties agree on all relevant issues, such as the place and timing of the election, the definition of the bargaining unit, and who is eligible to vote, then the NLRB will approve that agreement and the election will be scheduled.

The election is usually held at the workplace and is monitored by the NLRB. Voters use a secret ballot, and either the union or the management may have observers to monitor the election and challenge potential voters. Apart from these challenges, a party can challenge the conduct of the election. In those cases, if the regional director of the NLRB finds valid objections, he or she will order a new election. If the employer's unfair labour practices have made it impossible to hold a fair election, however, the NLRB has sometimes ordered the employer to recognise and bargain with the union.

There are a number of statutory protections for unions and workers who wish to organise. For example, employers may not threaten employees with discipline or termination if they support a union. The employer likewise may not promise benefits to workers who vote against the union. The NLRA also prohibits discriminating against job applicants or employees on the basis of union affiliation, either in hiring, termination, discipline or the awarding of benefits.

Once the bargaining representative is determined, the two sides must meet to agree on a CBA that will govern the relationship between the represented employees and the employer. The CBA is a product of the parties' own negotiations and there are no imposed terms. Both sides must, however, bargain in good faith. If one side can prove that the other is bargaining in bad faith (or is refusing to bargain), the NLRB or a court can impose unfair labour practice sanctions on an offending party.

Under the NLRA, the parties must bargain about wages, hours and certain other conditions of employment. This is the bare minimum and both sides must be open in their bargaining (including with respect to the exchange of information). Once the CBA has been agreed to, it must be set in writing and signed by all representatives. If the parties cannot reach an agreement despite bargaining in good faith, either side can declare an impasse.


The United States has no centralised data protection agency. There are federal laws regarding the protection of financial and medical data. Some states have their own data protection laws, which vary from state to state.

i Requirements for registration

There are no data processing registration requirements under United States law. For multinational companies operating in the United States, the EU–US Privacy Shield (which replaced the Safe Harbour scheme, which was invalidated in October 2015) provides a means by which companies can lawfully export data from the European Union to the United States, under certain conditions. The Privacy Shield allows a company that wants to transfer personal data from the European Union to the United States to do so by having its US counterpart notify the Department of Commerce that it has adopted the Privacy Shield Principles agreement. The Privacy Shield is a self-certification registry that must be confirmed annually to the US Department of Commerce.

ii Cross-border data transfers

Cross-border data transfers are not regulated under US law. The Privacy Shield (discussed in subsection i) provides a mechanism by which multinational companies can transfer data from the European Union to the United States in compliance with EU data protection laws.

iii Sensitive data

There is some protection of sensitive data in the United States. For example, the Health Insurance Portability and Accountability Act (HIPAA) seeks to protect the privacy of employees' health information in the health insurance context. HIPAA also encourages healthcare providers and insurers to store and transfer health information electronically. The Americans with Disabilities Act also requires employers to maintain employees' health information securely and confidentially, and to store such information separately from an employee's general personnel or employment records.

The Fair Credit Reporting Act (FCRA) seeks to protect the privacy of consumers' financial (and especially credit) information. To this end, the FCRA imposes obligations on consumer credit reporters to investigate and verify the accuracy of consumers' credit information, at their request.

iv Background checks

The permissibility (or mandatory nature) of criminal and credit-related background checks generally varies by state and occupation. At the federal level, the FCRA creates procedural requirements for background checks performed on applicants or employees by third-party providers, which regulate both criminal history and credit-related background checks. Many states require a criminal background check for employees in certain occupations such as those working in childcare, primary education, nursing, law enforcement and prison security. Some states authorise background checks either expressly or implicitly, but do not require employers to request them.

Increasingly, as noted above, states and localities are placing limits on an employer's ability to use criminal records uncovered in a background check to disqualify an applicant, particularly where the job raises few concerns regarding security, safety or confidentiality, and on the timing for an employer to conduct a background check during the hiring process (ban-the-box laws). New York City passed such a law, dubbed the New York City Fair Chance Act, which took effect on 27 October 2015. As discussed in Section II.iii, Kansas, Michigan and Washington all passed or had ban-the-box laws take effect in 2018. Numerous other states and cities, including but not limited to Illinois, Massachusetts, New Jersey and the District of Columbia, and the cities of Chicago (Illinois), Philadelphia (Pennsylvania), Portland (Oregon), San Francisco (California) and Seattle (Washington), also have laws restricting the timing of criminal background checks in the hiring process or the use of criminal records in employment.

Additionally, a number of states and cities strictly limit or prohibit in most contexts an employer's use of credit history to disqualify an applicant for employment, including California, Connecticut, Illinois, Maryland, the District of Columbia, and the cities of New York City and Philadelphia.


i Dismissal

At-will employees may generally be dismissed for any lawful reason or no reason at all. While the employment-at-will doctrine governs most employment relationships in the United States, there are many limitations on the doctrine. As mentioned above, employee handbooks and manuals can create an obligation to follow certain procedures for dismissal, which, if not followed, could give rise to a claim for breach of contract.

Oral contracts can also alter an otherwise at-will relationship. As long as the language and promises are specific enough, and there is an exchange of value within the contract, courts may uphold oral contracts that attempt to limit terminations only for good cause.

Contracts implied from the conduct of the parties can also limit the at-will doctrine. Many states look to the nature of the occupation, any prior course of dealing between the employer and employee, and any general customs within the industry to determine whether it was reasonable for an employee to think that he or she was being offered more job security than the at-will doctrine would supply.

Carefully written contracts can preclude or limit claims based on subsequent oral or implied contracts.

Union members who are subject to a CBA may only be dismissed under the terms of that CBA, and union members are virtually never employed at will. Most CBAs have a dispute or grievance mechanism, and the parties must work within that contractual framework. And most CBAs require the employer to show just cause before discharging or disciplining an employee.

ii Redundancies

Group lay-offs, plant or site closings, and reductions in force are governed by a federal law, the Worker Adjustment and Retraining Notification Act (WARN), which requires businesses that employ 100 or more full-time employees to provide the affected employees (or their bargaining representatives) and certain state and local government entities with 60 days' written notice before: (1) any shutdown of a site, or of one or more facilities or operating units at a single site, that results in an employment loss for 50 or more employees; or (2) a large-scale lay-off in the form of an employment loss during a 30-day period (or a 90-day period for lay-offs that occur for similar reasons as part of the same process) at a single site of either 33 per cent of that site's workforce (if they number 50 or more) or a loss of 500 or more employees in total. Certain states, such as New York, have their own 'mini-WARN' laws that contain similar or more protective provisions.


The United States does not have a general transfer of undertakings law or business transfer law affecting mergers, acquisitions or outsourcing decisions by companies. However, some CBAs and other employment contracts may have provisions affecting business transfers. And some federal and state laws require advance notice in cases of large-scale lay-offs and plant closings.

In an asset sale where the purchaser wishes to retain employees of the selling business, it will be required to make individual offers of employment to the employees because their employment will not transfer automatically.


Two years following the election of President Donald Trump, both the executive branch of the federal government and the Senate remain under Republican control. As a result of the midterm elections, the Democrats took back control of the House of Representatives. While it was anticipated at the start of the Trump administration that the centralisation of power in one party would create the possibility of federal legislation and rule-making that would favour businesses and employers, there has been little legislative or regulatory change on the federal level in terms of private employment. As a result, it is likely that there will continue to be an increase in state and local government activism on worker-protection issues such as minimum wage, pay equity and paid leave. As a general matter, employees will continue to be entitled to the greatest of the protections provided by federal, state and local law.


1 Allan S Bloom is a partner, and Laura M Fant and Arielle E Kobetz are associates, at Proskauer Rose LLP.