Employment Law: Protecting Workers And Employers (2026)

What Is Employment Law?

Employment laws are passed at both the state and federal levels. These laws have significant overlap.

In many cases, federal laws set a baseline for all workers, while states can provide additional protections or benefits. For example, states can set a minimum wage at the federal level or pass a minimum wage above the federal minimum wage.

Why Understanding Employment Law Matters

Employers must understand employment laws to comply with their requirements. Violating employment laws might trigger a regulatory enforcement action or give workers grounds for lawsuits.

For workers, it’s vital to know that employment laws protect their interests. For instance, state employment laws may prohibit employers from retaliating against employees for certain actions, such as reporting workplace safety violations.

Key Characteristics of Employment Law

Employment law governs the relationship between employers and employees. These rules can also cover the relationship between employers and labor unions.

Employment laws usually restrict or permit certain employer actions. Stated differently, these laws usually regulate the employer side of the employer-employee relationship.

However, some limit or restrict the employee’s actions or legal options. For example, workers’ compensation laws usually restrict employees’ right to sue companies for on-the-job injuries related to employer negligence.

Employment Discrimination Laws

Generally, employers are free to handle their employees as they see fit. But state and federal civil rights laws prohibit them from considering certain characteristics when deciding these terms, conditions or privileges of employment:

• Hiring and firing
• Promoting and demoting
• Training
• Setting wages and benefits

The immutable characteristics employers cannot use to discriminate among their workers include the following:

• Race
• Color
• National origin
• Sex or sexual orientation
• Religion
• Disability
• Age over 40

An employer would be prohibited from refusing to hire qualified women simply on the grounds of their gender, for instance. Antidiscrimination laws also prohibit employers from creating a hostile work environment in which workers are subjected to pervasive or severe conduct that would offend a reasonable person.

Wages, Benefits and Compensation

State and federal laws set the minimum wage. They also define which workers must be compensated for overtime work and the overtime pay rate.

If an employer chooses to offer retirement plans, federal laws regulate how those plans may be created and managed. They also set the standards for employer contributions to employee retirement accounts.

Employers that offer health coverage must comply with federal and state laws when employees are terminated or quit. Specifically, the employer must allow the worker to continue their health coverage under certain terms regulated by federal law.

Workplace Health and Safety

Employment laws also define working hours, including child labor laws that set minimum worker ages and employment conditions for underage workers.

Similarly, these laws establish safety standards for workplaces. They create a system for verifying compliance with safety standards, penalizing non-compliance and protecting workers who report safety violations.

Workers’ compensation laws determine which employers must carry workers’ comp insurance as well. They define the procedures and rules for seeking medical and disability benefits after an on-the-job injury or occupational disease.

Major U.S. Employment Laws

Federal employment laws that may impact your working conditions and terms include the following:

• Fair Labor Standards Act (FLSA): Regulates pay, tips, overtime and hours
• Employee Retirement Income Security Act (ERISA): Covers employee retirement plans
• Consolidated Omnibus Budget Reconciliation Act (COBRA): Regulates continuing health coverage for terminated workers
• Civil Rights Act: Prohibits discrimination and retaliation
• Americans With Disabilities Act (ADA): Requires a reasonable accommodation of worker disabilities

States also have their own employment laws, which define at-will employment, distinguish between at-will and contract employment and provide remedies for a breach of employment contract.

Common Causes of Legal Action

Some common causes of action by employees against their employers include:

• Employment discrimination
• Sexual harassment
• Hostile work environment
• Wage and overtime disputes
• Wrongful termination
• Breach of employment contract
• ADA violations

Employers are also subject to regulatory actions. These actions are administrative complaints or lawsuits filed by regulatory agencies for violations. For example, safety violations are handled through complaints filed by the Occupational Safety and Health Administration (OSHA) rather than employees.

Essential Terms to Know

You should be familiar with these key legal terms:

At-Will Employee

An at-will employee can be fired for any reason, except those prohibited by law. They can also be fired for no reason.

Contract Employee or Contractor

A contract employee is hired for a specified term or project. They can only be fired for breaching their employment contract.

Equal Employment Opportunity Commission (EEOC)

This federal agency handles discrimination complaints.

Discrimination

Discrimination means that you were treated differently from other similarly situated employees. Discrimination is not always illegal. For instance, an employer can require workers to be able to lift a certain weight, as long as the requirement relates to the work duties and is applied uniformly.

How Employment Lawyers Help

Employment lawyers have training and experience handling employment law disputes. They can analyze your situation and identify potential legal claims.

An attorney can gather evidence for your case, including any evidence in your employer’s possession. They will use this evidence to prepare an administrative complaint or lawsuit.

If you win your claim, your lawyer will prove your losses and seek appropriate remedies for the employment law violation.

Need to Know More About Employment Law?

ConsumerShield helps employees and employers to understand their legal rights and responsibilities. Explore our online tools and resources today.