As a small business owner, it's important to know the key employment law terms that could affect your business. This article provides a brief description of the most common employment law terms. For more helpful articles and resources about managing employees and handling the finer points of state and federal labor laws, you can visit FindLaw's Employment Law and Human Resources section.
Age Discrimination in Employment Act (ADEA): A federal law that protects older employees from employment discrimination on the basis of age.
Americans with Disabilities Act (ADA): A federal law that protects employees from discrimination on the basis of disability. This law also requires employers to make "reasonable accommodations" for their employees' disabilities.
At-will employment : A type of employment relationship in which there is no contractual agreement and either party may end the employment relationship at any time for any reason, or no reason at all, without incurring a penalty.
Back pay: A type of damages award in an employment lawsuit that represents the amount of money the employee would have earned if the employee wasn't fired or denied a promotion illegally.
Cafeteria plan: A type of employment benefits plan in which the employee selects benefits from a "menu," up to a specified dollar amount.
Consolidated Omnibus Budget Reconciliation Act (COBRA) : A federal law that requires employers to allow employees to continue their health insurance coverage after termination in the same insurance group, at the group rate, and with the same benefits.
Comparable worth: A legal concept under which people that work similar jobs, and are of similar worth to the employer, must be paid the same regardless of gender.
Constructive discharge : A type of termination of the employment relationship in which the employee quits, but the employer is liable as if a wrongful termination occurred because the employee was forced to resign due to intolerable working conditions.
Employee Assistance Program (EAP): A workplace program provided by the employer to assist employees in recovering from drug or alcohol abuse, emotional problems, job stress, marital discord, or workplace conflict.
Employee Stock Ownership Plan (ESOP): An employer-provided benefit that allows employees to purchase stock in the company under certain favorable terms.
Equal Employment Opportunity Commission (EEOC) : The federal administrative agency that enforces laws prohibiting discrimination in employment.
Equal Pay Act : A federal law that requires employers to pay the same wage to all employees who do the same work, regardless of gender.
Family Medical Leave Act (FMLA) : The federal law that requires certain employers to give time off to employees to take care of their own or a family member's illness, or to care for a newborn or adopted child.
Front pay: A type of damages award in an employment lawsuit that represents the amount of money the employee would have earned if the employee was reinstated or hired into the higher-paying position from which he or she was illegally rejected.
Garnishment of wages : Taking or seizing the amount an employee owes pursuant to a child support or other order directly from the employee's wages.
Hostile working environment : A work environment that is so charged with harassment, or similar unwanted behavior, it interferes with the ability to do one's job and is said to violate anti-discrimination laws.
Individual Retirement Account (IRA): A tax-deferred savings account into which a person can only contribute up to a certain amount each year.
Implied contract : A type of enforceable contract that's implied from the circumstances or parties' conduct, instead of a contract that's explicitly made.
Minimum wage : The set minimum hourly rate that employers in certain industries are required by law to pay their employees.
Mitigation: Action by an employee that will reduce the amount of damages resulting from an unlawful employment practice (i.e. obtaining new employment after a wrongful termination).
National origin discrimination : Discrimination based on an employee's ethnicity.
Noncompetition agreement : A contract (or part of a contract) in which an employee promises not to work for a competing employer or set up a competing business during, or for a certain length of time after, the employment with the employer.
Occupational disease: An illness contracted by workplace conditions (i.e. black lung disease contracted by miners).
Occupational Safety & Health Administration (OSHA) : The federal agency in charge of creating and enforcing workplace health and safety standards.
Overtime compensation: A higher rate of pay (usually 1.5 or 2 times the regular hourly rate) an employer is obligated to pay employees who work more than a certain number of hours in a day or week.
Sexual harassment : "Quid pro quo" harassment is unwelcome sexual advances by an employer or supervisor that becomes a condition of the employee's employment or represents a threat to the employee's continued employment. A "hostile work environment" harassment claim can arise when the presence of demeaning or sexual photographs, jokes, threats, or overall atmosphere is so pervasive as to create an intimidating and offensive work environment.
Social Security: A federal program of retirement or disability payments created by taxing employees' income.
Stock options: A type of retirement plan in which employees have the opportunity to purchase stock in the company for which they work.
Telecommuting: Working from home, or another location remote from the office, using technology such as telephones and computers.
Title VII: Part of the federal Civil Rights Act of 1964 that prohibits discrimination in employment on the basis of age, color, national origin, race, religion, or sex.
Tuition reimbursement: An employee benefit in which the employer pays all or part of the employee's tuition for coursework or training.
Whistleblower: The term for an employee who "blows the whistle" on an employer (i.e. reports an employer's illegal action or practice to the authorities). Whistleblowers are entitled to a number of protections under state and federal laws.
Getting Legal Help
If you have questions about any of these terms, or other general questions or concerns about your business, you may want to contact a local employment lawyer for advice.