Ch1. Introduction to US Labor Law — Meaning, Structure, and Framework

The Significance of Labor Law

US Labor and Employment Law:
The body of law governing individual and collective employment
relationships between employees and employers

Why Labor Law Is Necessary:
- Protect economically vulnerable workers
- Correct imbalances in freedom of contract
- Set minimum standards for working conditions

Characteristics of Labor Law:
① Social law: governs private relationships using public standards
② Mandatory: contracts that fall below statutory minimums are void
③ Collective: NLRA governs collective bargaining relationships

The US Labor Law Framework

Individual Employment Law:
- Fair Labor Standards Act (FLSA) — minimum wage, overtime, child labor
- Equal Pay Act
- Occupational Safety and Health Act (OSHA)
- Title VII, ADA, ADEA, GINA — anti-discrimination
- Pregnancy Discrimination Act (PDA) / PWFA

Collective Labor Law:
- National Labor Relations Act (NLRA) — union rights, collective bargaining
- Labor Management Relations Act (LMRA / Taft-Hartley)
- Labor Management Reporting and Disclosure Act (LMRDA)

Social Insurance Law:
- Federal Unemployment Tax Act (FUTA)
- Workers' Compensation (state programs)
- Social Security Act (OASDI)
- Medicare

Employee and Employer

Defining “Employee”

FLSA § 3(e):
"Any individual employed by an employer."

Employee Status Factors (Economic Reality Test):
① Degree of control exercised by the employer
② Worker's opportunity for profit or loss
③ Permanency and duration of the relationship
④ Nature of the compensation (wages vs. business income)
⑤ Whether the work is integral to the employer's core business

Independent Contractors and Gig Workers:
Delivery drivers, insurance agents, tutors, etc.
→ Entitled to NLRA rights as "workers" if economically dependent
→ FLSA coverage turns on economic reality, not contract label

Defining “Employer”

Employer:
Any person acting directly or indirectly in the interest of an
employer in relation to an employee

Joint Employer Doctrine:
- When two entities share or co-determine the essential terms
  and conditions of employment, both may be liable
- Staffing agencies and host companies often deemed joint employers
- NLRB joint employer standard: substantial direct and immediate
  control over essential terms and conditions

The Employment Contract

Employment Contract:
An agreement in which an employee provides services and
the employer pays compensation

Required Contract Terms (Best Practice):
① Compensation (rate, calculation method, payment schedule)
② Scheduled hours of work
③ Paid time off and holidays
④ Leave entitlements (FMLA, state leave)
⑤ Job title and duties
⑥ Term of employment (if fixed-term)

Written Notice Obligations:
At-will states: no statutory form required, but written
  contracts are enforceable and recommended
States like CA, NY: pay notice requirements mandate specific
  written disclosures at hiring
Violation: civil penalties, typically $50–$5,000 per violation

Legal Basis:
FLSA, state wage-payment statutes, and applicable state law

Scope of FLSA Coverage

Coverage:
Employers engaged in interstate commerce with annual sales
of at least $500,000 (enterprise coverage), or any
individual employee engaged in interstate commerce
(individual coverage)

For employers NOT meeting enterprise thresholds
(partial FLSA rules still apply):
- Minimum wage
- Overtime (if individual coverage exists)
- Child labor provisions
- OSHA (separate statute, all employers)

Fully excluded from FLSA overtime:
- Exempt executive, administrative, professional employees
  (salary + duties tests)
- Outside salespeople, certain agricultural workers

Employee Status Test ★★★★★ : Control · profit/loss opportunity · permanency · nature of compensation · integration. Courts apply a totality-of-circumstances analysis — no single factor is determinative. Memory tip: Control + P/L + Permanency + Pay + Integration

Five Required Employment Contract Terms ★★★★★ : Compensation · hours · leave · job duties · workplace policies. Written form and delivery to the employee are best practice and required in several states. Memory tip: Pay + Hours + Leave + Duties + Policies

FLSA 500k / Interstate Commerce Threshold ★★★★ : Enterprise coverage: $500,000+ annual sales. Individual coverage: any employee handling goods in interstate commerce. Most employers meet one or both tests. *Memory tip: FLSA =$ 500k or interstate*

Practice Quiz

Q. What is the most important factor in determining whether a worker is an employee or an independent contractor under federal law?

Economic dependence on the alleged employer — specifically the degree to which the employer controls the work and whether the worker has a genuine opportunity for independent profit or loss. Contract labels (e.g., “independent contractor agreement”) do not determine the outcome.

Q. What is the penalty for failing to provide a required written pay notice in states that mandate it?

Civil penalties typically ranging from $50 to$ 5,000 per affected employee per violation. The underlying contract is not automatically void, but the employer may owe additional damages.