What Is Employment Law? (With Key Terms and Examples)

Updated January 10, 2023

The area of law known as employment law includes every aspect of the employer-employee relationship. Workplace safety, wages, pensions and unemployment compensation are all aspects of employment law. There are a wide range of laws that cover employment, and understanding them can help you gain insight into your rights as an employee. In this article, we discuss what employment law is, why it's important and its key terms, along with a few examples of situations that involve employment law.

What is employment law?

Employment law is the section of laws that govern the relationship between an employee and their employer, including the rights and responsibilities of both parties. It helps to ensure that a workplace is safe and appropriate to work in, govern the hours that an employee can work and determine the wages that an employee can receive. Included in employment law are many regulations from all levels of government. Due to how extensive employment law is, it's often divided into different areas, such as workplace safety, wages, benefits, family and medical leave, unemployment and workplace conduct.

Why is knowing about employment law important?

Employment law is designed to ensure that all parties in a business get treated fairly and ethically, which can help to keep a business running efficiently. If both an employer and employee understand what their rights and obligations are, they can be more prepared in certain situations, such as in a case of salary misclassification. Employment law can also help to prevent work disruptions between employees and management by setting standards to govern the workplace. Employment law can mitigate issues that may arise in the workplace. For example, Title VII of the Civil Rights Act of 1964 prohibits discrimination.

Key terms related to employment law

Most businesses have some type of employment law they follow. There is a wide range of subject areas related to employment law, and each often has its own set of standards and associated terms. Here are some aspects of employment law and the key terms that relate to them:

Employment discrimination

Discrimination in the workplace occurs when a member of a protected class experiences different treatment than their peers. While discrimination can take many forms, it's prohibited by law. Here are a few terms associated with employment law regarding discrimination:

Title VII: Title VII prohibits employment discrimination based on characteristics such as race, color, religion, sex or national origin.
Age Discrimination in Employment Act: This law prevents employers from discriminating on the basis of age.
The Equal Pay Act: This law protects men and women from wage and benefit discrimination based on gender.
Americans with Disabilities Act (ADA): This law prohibits discrimination based on disabilities, requiring employers to provide reasonable accommodations for employees with disabilities.
The Pregnancy Discrimination Act: This act amended Title VII to prohibit employers from discriminating due to pregnancy or a condition related to pregnancy or childbirth.
Genetic Information Nondiscrimination Act (GINA): This act prohibits discrimination on the basis of genetic information.

Wages and benefits

In addition to paying employees hourly wages or annual salaries, many employers offer their employees access to benefits such as health and dental insurance, paid time off and retirement plans. Employment law covers most aspects of an employee's compensation and benefits. Here are a few key terms associated with this section of employment law:

Fair Labor Standards Act (FLSA): This act sets the standard for minimum hourly wages, establishes overtime pay and defines what can be considered work.
Minimum wage: The minimum wage represents the lowest amount that an employer can pay their employees and often varies, depending on the area.
Overtime compensation: This represents the amount that the government requires an employer to pay an employee for working over 40 hours a week, typically at a higher rate of pay than their regular rate.
Wage garnishment: This occurs when an employer withholds part of an employee's earnings to pay off a creditor.
Consolidated Omnibus Budget Reconciliation Act (COBRA): This law allows employees and their families to continue to access their group health benefits at the same rate, even after leaving their job.
Employee Retirement Income Security Act (ERISA): This law governs how companies administer healthcare benefits and pension plans, requiring employers to manage plans according to a certain set of standards.
Tuition reimbursement: In some situations, employers may offer to pay all or part of an employee's tuition for training as a condition of the position.
Stock options: With stock options, employees can purchase stock in their company.
Cafeteria plan: With this type of benefits plan, employees can select certain benefits from a list up to a specified amount.

Health and safety

All employees have the right to a safe workplace free of certain hazards. Under employment law, the government can hold employers responsible for medical costs if an employee becomes injured on the job. Here are a few key terms associated with employment law regarding the health and safety of a workplace:

Occupational Safety and Health Administration (OSHA): OSHA is the regulatory agency that's responsible for creating health and workplace safety standards, in addition to enforcing those standards.
Occupational Safety and Health Act: This act helps to minimize dangers in the workplace by establishing certain standards, including provisions for specific industries, such as the construction industry.
Occupational disease: This is any illness that's associated with a particular work environment.
Environmental hazard: Environmental hazards in the workplace include any substance that can adversely affect an individual's health or the surrounding environment.
Emergency Action Plan: This is a plan that's put into place during certain emergencies, typically due to the risk involved in certain work sites.

Additional aspects of employment law

Besides health and safety, wages and benefits and discrimination, employment law also often focuses on labor relations, unemployment compensation, family and medical leave, employee contracts, immigration and even the hiring process. Certain industries may have additional considerations for some aspects of employment law. Here are a few additional terms relating to employment law:

At-will employment: With this form of employment, both the employer and employee aren't under a contractual agreement and either can leave the relationship at any time and for any reason.
Wrongful termination: A wrongful termination occurs when an employee has their employment illegally terminated by the employer.
Noncompetition agreement: This is an agreement in which an employee makes a promise to an employer that they won't work for a competing employer, typically for a certain amount of time.
Unemployment: This is a financial benefit paid to an individual who no longer has a job, typically comprising a certain percentage of their former earnings.
Whistleblower: Whistleblowers are individuals who gain access to certain legal protections after they report their employers to the authorities for illegal actions.

Related: Guide to Unemployment Benefits

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Examples of situations that use employment law

Here are a few examples of situations in which employment law may be useful:

Example 1: Overtime

Amanda works as a hairdresser. Her typical work schedule is Monday to Friday from 8 a.m. to 6 p.m. On Monday, Tuesday and Wednesday, she worked until 6 p.m. Due the busyness of the salon, she worked three extra hours on Thursday and Friday. Amanda reports the extra amount she worked to the salon on her timesheet. After calculating the extra hours, the salon in which Amanda works adds the overtime she worked to her paycheck, above the amount she typically makes. Employment law requires the salon to compensate employees like Amanda 1.5 times their regular hourly rate for overtime hours.

Example 2: Family and medical leave

Megan is about to give birth to her second child and wants to take some time off from her job as a teacher after her son is born. She hasn't missed many days in the school year, but she hopes to use the time to recover and care for her son. She notifies the administration at the school she works at, who let her know that under employment law, she can take up to 12 weeks of unpaid leave to care for her child.

Example 3: Minimum wage

Joe just started a new position as a cashier at a fast-food restaurant. However, he's spoken with individuals who work at competing restaurants and feels that he's not making the wages he'd like to be as a non-exempt employee. He reviews the employment law and discovers that he is being paid a dollar below the minimum wage. After reporting to his employer, Joe is able to resolve the situation and earn the wages he desires.

Disclaimer: This article is for information purposes only and is not intended to constitute legal advice; you should consult with an attorney for any legal issues you may be experiencing. Please note that none of the companies mentioned in this article are affiliated with Indeed.