With the deepening of globalization, when enterprises expand their business in multiple countries, cross-border labor compliance has become one of the most complex and severe challenges. To help enterprises systematically address this issue, we have collaborated with top labor lawyers from over 50 major jurisdictions worldwide (all recommended by Chambers, The Legal 500, or equivalent institutions) to jointly compile a Chinese-English labor & employment compliance guide exceeding 1 million words, and we will continuously update relevant key points.

This article publishes the key points of labor & employment compliance by September 2025 in the United States. 

01 Overview of the Labor Law System

1.Legal System

Under the federalist system, the employment relationship is often subject to overlapping legal authorities. In any given case, an employer may need to comply with federal, state, and local laws on the same subject.

2.Resources and Agencies

The following is a list of major federal laws that govern the employment relationship across the country:

• Federal Discrimination and Harassment Laws;

• Federal Wage and Hour Statutes;

• Federal Employee Leave Laws;

• Federal Employee Benefit Laws;

• Federal Immigration Laws;

• Federal Mass Layoff Laws.

02 Employment Qualifications and Classification

1.Employment Age

In the United States, the minimum working age is generally 14 years old for most non-agricultural jobs, as established by the Fair Labor Standards Act (FLSA). There is no mandatory retirement age, and, in most instances, the imposition of a retirement age would be considered age discrimination.

2.Qualifications for Foreign Employers

The question of whether a separate U.S. company should be set up in order to hire workers and, if so, in which legal form, largely depends upon tax considerations, how the company wants to present itself on the U.S. market, and what is the most practical way to ensure the company meets all employer obligations with regards to employment, social security, and tax law.

3.Classification of Employment

The term employee is defined in U.S. employment law in a number of different ways, depending on the jurisdiction (federal and/or a particular state) and the type of law being enforced. The FLSA, for example, defines the term employ as “suffer or permit to work.”

4.Foreign Workers

Before a foreign national can work in the United States, one of the following visas may be required:

• H-1B Visa: Specialty Occupation;

• H-2B Visa: Temporary Positions in Shortage Occupations;

• H-3 Visa: Trainee;

• L-1 and L-2 Visas;

• Blanket L Visa;

• Visa: Extraordinary Ability.

03 Recruitment and Employment Contracts

1.Background Examination

Generally, background checks are permitted and widely used in the United States during the application process, provided that the applicant has been given a legally compliant disclosure that the background checks will be obtained and has authorized them. However, specific information that may be contained in background checks may have additional restrictions under federal or state law.

2.Contract Types

In the United States, employers are not required to enter into written employment contracts with employees. Therefore, written employment contracts are rare, except for senior executives and salespeople. Instead, many U.S. workers either work under an oral employment arrangement or else have a so-called “offer letter”―in effect, creating an informal employment contract, which nonetheless, under certain circumstances can be binding.

3.Probationary Period

Whether probationary periods are allowed depends on the state, industry, and whether the employee is part of a union and subject to a collective bargaining agreement.

04 Working Standards

1.Remuneration

The primary law governing wages in the United States is the federal Fair Labor Standards Act (FLSA). The FLSA sets basic minimum wage and overtime pay standards. State laws may establish additional requirements.

2.Working Hours

While federal law does not place any daily or weekly limits on the amount of time an employee can work, some states require that employees be given a day of rest each week and/or that employees be compensated at a premium rate for work performed on the seventh consecutive day of work.

3.Rest and Leave

Under federal law, there are no required general rest or meal break periods, except for required lactation break periods. There are numerous state laws, however, that require rest and meal breaks.

05 Occupational Health and Special Protection

1.Occupational Health and Security

Employers have several obligations under the Fed-OSH Act regulations including:

• Providing a Safe and Healthy Workplace;

• Posting the Required Poster from Fed-OSHA;

• Complying with Specific Fed-OSH Act and Applicable State Standards.

06 Personal Information and Privacy

1.General Rules

There is no comprehensive federal data privacy law in the United States that protects the personal data of employees or job applicants. However, there are a number of federal statutes and regulations that address specific aspects of data privacy and protection.

2.Transnational Transfer

Transfers are freely permitted unless there are particular federal or state restrictions based on the nature of the information.

07 Anti-Discrimination and Anti-Harassment

Discrimination is unlawful whether through disparate treatment or disparate impact:

• Disparate treatment occurs when an individual is treated differently based on the individual’s membership in a protected class;

• Disparate impact occurs when a seemingly neutral employment policy or practice has an adverse impact upon a protected class without sufficient business justification.

08 Internal Policies

1.Applicability

It is common practice for employers to adopt a handbook, which contains the company’s policies and is provided to employees at hire. Employers must take care in consistently implementing the handbook, or run the risk of a discrimination claim.

2.Validity

Generally, employee consent is not required to adopt a handbook. However, where the employees are unionized, the employer will have to adopt the handbook consistent with requirements of the applicable collective bargaining agreement and law.

3.Whistleblowing

Generally, federal and state anti-discrimination laws contain anti-retaliation provisions. These laws protect employees from retaliatory employment actions when they complain about discrimination or harassment that they themselves suffered or observed in the workplace.

09 Termination of Employment

1.Termination Grounds

Every state except Montana provides that employment is considered at-will, which means that the employment relationship can be terminated by either party at any time, with or without advance notice, and with or without a reason.

For unionized employers, terminations usually require “just cause” according to the collective bargaining agreement. Many collective bargaining agreements permit employers to conduct layoffs, and specify circumstances or procedures for doing so.

2.Termination Procedure

There are no procedural requirements for dismissing an employee unless the employer has contractually agreed to such procedures in individual employment or collectively bargained agreements. Many states require, however, that terminated employees be provided with information relating to their medical insurance benefits and eligibility for unemployment compensation insurance benefits.

3.Severance and Compensation

Upon termination, employees are required to be paid all wages they have earned through their last date of employment. Depending upon the terms of the employee’s commission agreement and/or bonus plan, this generally will include all unpaid commissions and bonuses earned prior to the employee’s dismissal.

There are no federal or state laws requiring severance pay to employees in the typical small-scale dismissal of employment.

4.Wrongful Termination

If a court finds that an employer conducted a wrongful termination, the employer may be liable for reinstatement, backpay and other compensatory damages, and punitive damages, the latter of which can amount to millions of dollars.  The degree to which judges and juries are likely to award a wrongly terminated employee high damages depends largely on the location, and whether the court is federal or state.

5.Mass termination and Layoffs

When a large number of employees will be terminated in a short period of time, there are both federal and state laws that require advance notice of the dismissals if certain criteria are satisfied. The WARN Act generally requires employers with 100 or more full-time employees to give 60 days’ notice to the affected employees, prior to a “plant closing” or a “mass layoff” of 50 or more employees, if other thresholds are reached.

10 Confidentiality, Non-Compete, and Non-Solicitation

1.Confidentiality

Various federal and state laws protect trade secrets and confidential business information. Under federal law, the Computer Fraud and Abuse Act prohibits accessing a protected computer without authorization or exceeding authorization to obtain information, causing damages or perpetrating fraud.

Many states have legislation to protect trade secrets and confidential business information. Many states also have common law causes of action that can be used by employers when employees or former employees misappropriate confidential and proprietary business information.

2.Non-Compete and Non-Solicitation

Generally, post-employment restrictive covenants in the United States are likely enforceable if they are narrowly tailored as to time, geographic scope and prohibited activity, and also have a legitimate business purpose. Whether or not a covenant is enforceable is a fact-specific inquiry and is often litigated before U.S. courts.

11 Work Representation and Trade Unions

1.Work Representation

The United States recognizes the right of a worker to join a union. (Works councils are not recognized under U.S. law.)  

2.Trade Unions

A major difference that comes with unionization is that an employer generally may no longer change certain terms and conditions of employment, i.e., without negotiating with the union. Both the employer and union have a duty to bargain in good faith to attempt to reach a collective bargaining agreement.

Unions propose rights for employees to be included in the collective bargaining agreement, such as the right to be terminated for “just cause” rather than “at will,” a grievance and arbitration procedure, and other job protections and benefits.

12 Dispute Resolution

1.Procedures & Enforcement

Employment disputes often lead to litigation, which are resolved either before government agencies like the Equal Employment Opportunity Commission or in courts. Many employers require employees to sign mandatory arbitration agreements, under which the parties are required to submit the employment dispute to private arbitration and thus avoid litigation in court.

Among unionized employers, almost all collective bargaining agreements have procedures where employees must arbitrate most of their wrongful termination claims against their employer.

2.Waiver & Enforcement

Generally, an employee can agree to waive rights to potential employment claims. However, an employee cannot prospectively waive claims based on acts or omissions that have not yet occurred.

13 Others

1.Latest Development & Trends

English: Managing human resources (HR) while overlooking the unexpected ramifications of at-will employment in America. America is the only country with an at-will employment system. At-will employment has several unusual features.

2.Cultural and Religious Considerations

Employers headquartered overseas operating in the United States are prone to the mistake of giving U.S. job applicants overly formal, overly detailed employment contracts that restrict the employer’s flexibility to make changes going forward. The informal offer letter, unusual as it may seem from an international perspective, is ideal for the context of American HR.

* To avoid ambiguity, this article should not be regarded as legal advice.

Authors

Lavanga Wijekoon is an attorney and shareholder at the Chicago office of Littler Mendelson, P.C.. Lavanga has a “hybrid” practice in that in one-half of his practice, he represents employers in litigation before U.S. courts and government agencies, and in the other half of his practice, he advises multinational clients on international employment issues, with a particular focus on the Asia Pacific region. As a result, Lavanga is able to advise non-US clients on US law issues in a way that is sensitive to and knowledgeable of those clients’ own legal and cultural backgrounds.

Esther Choi is an Associate at Littler Mendelson, PC. With over 11 years of experience, Esther counsels and represents employers before state and federal courts as well as administrative agencies in a broad range of employment law matters, including discrimination and harassment, retaliation, whistleblowing, wrongful termination, and civil rights. She also handles complex litigation and assists international companies provide discrimination, harassment, and immigration compliance trainings in English and Korean.

Translator

Jin Dongjie, Master of Laws, associate at Anli Partners. Area of expertise: Labor Law, ESG Compliance, Dispute Resolution.