Federal Employment Laws That Impact Compensation and Benefits

INTRODUCTION

Compensation and benefits programs in the United States are impacted by:

• federal, state, and local legislation
• regulations imposed by the executive branches of governing bodies
• case law for some developing legal concepts

It is difficult to encapsulate this environment briefly, but in essence the "rules" state that:

1. Compensation must not be too low or (in some circumstances) too high. These limits are governed by the Fair Labor Standards Act, or FLSA, and Maximum Reasonable Compensation or Intermediate Sanctions legislation as defined by the Internal Revenue Service. (Reasonable compensation and intermediate sanctions are discussed in DLC Course 21: Compensation for Business Leaders.)
2. Compensation decisions should be managed by the employer.
3. Certain groups, based on race, color, religion, national origin, age (40 and older), sex (including pregnancy, gender identity, and sexual orientation), disability or genetic information, and veteran status, are protected in the interest of fairness.
4. All employees must be paid when the pay is due. Delaying payment of compensation earned is a Department of Labor (DOL) violation.

Federal and state legislative bodies have not labeled the laws, regulations, and cases according to categories of compensation. Nor have they limited them to compensation alone. As a general guiding principal, practitioners should confirm whether for each of the laws or regulations covered in this course, a corresponding state or local statute exists. They tend to be more “generous” to the employee and will supersede the Federal requirements.