HR / Selecting The Right Team – Legal Perspective

MANORI DE SILVA, ASSOCIATE AT CARRERAS & LEMOINE, LLP

Manori, please tell us more about yourself and your expertise?

I worked at an international law firm in London for several years before coming to the US. I am qualified as a lawyer in England & Wales, California and Georgia. My work includes assisting small to medium-sized businesses and individuals with employment and contract disputes.

What laws govern the hiring and terms of employment in the US?

There is no single body of ‘employment law’ in the US.

Federal laws apply in all states in relation to certain aspects of employment, such as discrimination and overtime.

States and local governments are free to supplement Federal law to add extra protections. Lastly, employers and employees are free to agree to additional terms as long as the terms do not violate Federal or state / local law.

Can you explain the notion of at-will and related risks and benefits?

Nearly all states in the US have a default at-will position, which means the employer and employee are free to end the relationship at any time for any reason and without any prior notice unless they have specifically agreed the employment is not at-will. (Employers still have to comply with anti-discrimination laws when terminating an employee.)

This provides great flexibility, but the employee’s lack of job security can result in lower performance and the employer’s inability to attract the best candidates in the case of very high-level, executive positions. The parties can agree a notice period to create some level of job security. However, employers should seek legal advice be- fore changing the at-will status to ensure they do not inadvertently give rights that extend beyond their intentions.

What are the terms of employment in the US between an employee and an employer?

For non-executive positions, terms of employment are frequently documented by way of a short letter.

Companies tend to use more comprehensive written documents only for executives. Europeans often refer to ‘contracts’ when they really mean ‘fixed-term contracts’ or ‘permanent positions’, i.e for a fixed or indefinite duration and which can only be terminated in limited circumstances.

As explained above, the default position in the US is at-will, not fixed term or permanent and even senior employees can have at-will contracts with an agreed notice period.

A company considering a fixed-term or permanent contract in the US should seek legal advice before making any such offer to a potential employee to ensure the company has adequate means of ending the relationship.

What are the minimum legal benefits that an employer has to provide an employee in the US?

There are virtually no benefits that a private employer is required to provide in the US – not even paid holiday – although employers must contribute towards social security and unemployment insurance.

Certain types of leave are nevertheless mandatory, such as medical and military leave if certain criteria are met. The Affordable Care Act will also make health insurance mandatory for employers of a certain size.

Employers who want to attract good, skilled candidates nevertheless do tend to offer some level of paid vacation and contribution to health and retirement plans.

How are benefits managed and organized by an employer?

This depends on the number of employees. If there is only one employee, the benefits can be in a letter/contract. If there are several employees, it is usually easier to have an employee handbook with details of any benefits, sick policy, leave policies, bonus structure etc.

Can you briefly cover retirement?

Except for contributions to social security, a private employer is not required to contribute to any programs related to retirement, such as a pension plan. If the employer does offer a pension plan, then it must comply with non-discrimination laws in the administration of the plan. As already mentioned, employers of skilled workers frequently offer contributions to 401(k) / employer sponsored plans to attract better candidates.

In case of a separation or disagreement, how are the relations handled between the employer and employee?

Usually, the first step should be to seek legal advice on the rights and obligations of the parties. Sometimes the parties have agreed in advance to arbitrate disputes. Where arbitration is not mandatory, civil courts can handle employment disputes, although certain types of claims, such as discrimination claims, can be referred initially to government bodies. The appropriate forum and procedure will depend on the type of claim and the state.

What are the legal differences between hiring a “local” with an authorization to work in the US and sending someone from your origin country?

Advantages of having a local from the US include a pre-existing network of contacts, someone who understands the local culture, and absence of moving / housing costs. However, the employer needs to be able to properly monitor the employee’s activities from abroad.

Employees from the origin country may understand the culture of the company. However, can they speak and write English at an adequate level? Employees from Europe generally have higher expectations than local employees in terms of vacation, working hours and benefits. Non-local employees will also have to comply with strict US immigration laws, which will require the employer to retain an experienced immigration attorney.

DISCLAIMER: The above are general comments on the employment environment in the US and nothing in the above constitutes legal advice. Each employment situation is different. Employers and employees should seek advice from an attorney qualified in the relevant state to understand his/her particular rights and obligations.

For specific answers and information, contact Manori de Silva,

Tel: +1 770 351 0099/ mdesilva@cbr-uslaw.com

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