U.S. Employment Law: What Every Employer Needs to Know

How U.S. employment law is layered

Italian employers are used to one national framework: the Civil Code, the Statuto dei lavoratori and a sector CCNL setting pay grades and notice. The U.S. has three stacked layers, and the employer must meet whichever rule is most protective.

• Federal law sets a floor (minimum wage, overtime, anti-discrimination, unpaid family leave, union rights, safety, benefit plans). Most federal laws apply only above an employee-count threshold.
• State law usually goes further: higher minimum wages, daily overtime in California, paid sick and family leave, final-pay deadlines, noncompete limits, pay transparency, and anti-discrimination rules often covering employers with a single employee.
• Local law adds more in New York City, San Francisco, Los Angeles, Chicago, Seattle, Philadelphia and others: local minimum wages, sick leave, scheduling and ban-the-box rules.

The law that applies is the law where the employee physically works, not where you are headquartered. A remote employee in New Jersey reporting to Milan is governed by New Jersey and federal law, and each new state triggers new tax, unemployment and often paid-leave registrations. See our state guide.

At-will employment and its exceptions

In 49 states employment is "at-will": either side can end it at any time, for any lawful reason or none, without notice or severance. Montana is the exception (good cause required after probation). A termination is still illegal if the real reason is:

• Discriminatory: race, sex, pregnancy, age 40+, disability, religion, national origin, genetic information, plus traits added by states (sexual orientation, marital status and more).
• Retaliatory: punishing a complaint, leave request, safety report or wage claim.
• Against public policy: firing for jury duty, refusing to break the law, or filing a workers' compensation claim.
• In breach of contract: an offer letter promising a fixed term, or a handbook promising dismissal only "for cause".

Key federal laws and their employee-count thresholds

Federal statutes switch on at different sizes. Title VII counts employees on payroll in 20 or more calendar weeks of the current or preceding year, and a U.S. subsidiary and its Italian parent can sometimes be counted together as an "integrated enterprise".

FLSA: minimum wage, overtime and exempt tests

Staff are either non-exempt (overtime at 1.5x for hours over 40 in a workweek, no averaging) or exempt. Executive, administrative and professional exemptions require a salary basis, at least $684 per week ($35,568 a year), and qualifying duties; the job title is irrelevant. The 2024 rule raising the floor to $58,656 was vacated in November 2024. The highly compensated threshold is $107,432, and computer professionals can be exempt at $27.63 per hour. States go higher: California requires twice the state minimum wage (about $70,304 in 2026), and New York and Washington also set higher levels; verify each year. See compensation.

Anti-discrimination laws

Title VII, the ADA, the ADEA, GINA and the EPA are enforced by the EEOC. Title VII and ADA compensatory and punitive damages are capped by size: $50,000 (15-100 employees), $100,000 (101-200), $200,000 (201-500), $300,000 (500+), plus uncapped back pay and attorney fees; many state laws have no caps. Releases from employees 40+ need 21 days to consider (45 in group exits) and 7 days to revoke.

PDA and PWFA (2024 regulations)

The Pregnant Workers Fairness Act regulations took effect June 18, 2024, requiring accommodations (breaks, seating, remote work, light duty, temporary suspension of essential functions) for known pregnancy-related limitations unless undue hardship. In May 2025 a Louisiana federal court vacated the provisions on elective abortion; the rest stands. The EEOC's Republican majority may revisit other parts.

FMLA, COBRA and ERISA

During FMLA leave, group health coverage continues on the same terms. COBRA allows 18 months of continued coverage (longer in some cases). ERISA applies once you sponsor a 401(k) or health plan: plan document, Summary Plan Description and usually Form 5500. See benefits.

The NLRA in non-union workplaces, and the NLRB in 2025-2026

About 6% of private-sector workers are unionized, so most Italian subsidiaries will never negotiate a collective agreement. The NLRA still protects "concerted activity": employees discussing pay, complaining together about a manager or criticizing conditions online. Supervisors are not protected; most individual contributors are.

Handbook rules

Rules banning salary discussions, "negative comments" about the company, all workplace recording or blanket investigation confidentiality can be unlawful. Under the 2023 Stericycle standard a rule is presumptively unlawful if a reasonable employee could read it as chilling protected activity, unless narrowly tailored to a legitimate interest. McLaren Macomb (2023) limits broad confidentiality and non-disparagement clauses in severance agreements for non-supervisors.

NLRB changes and quorum

• January 2025: Member Gwynne Wilcox was removed, leaving the Board without a quorum for most of 2025.
• December 2025: the Senate confirmed James Murphy and Scott Mayer, restoring a quorum with David Prouty; Crystal Carey became General Counsel.
• August 7, 2026: James Macy was confirmed, creating a 3-1 Republican majority with the three votes Board tradition requires to overrule precedent.
• Flagged for reversal: Stericycle, Cemex (bargaining orders without elections, rejected by the Sixth Circuit in March 2026), Amazon (captive-audience meeting ban) and Thryv remedies. As of September 2026 they remain binding until actually overruled.

Harassment training, retaliation and whistleblowing

Federal law does not mandate harassment training, but a policy, complaint channel and training support the Faragher/Ellerth defense against supervisor harassment claims. Six states mandate training:

Retaliation

Retaliation is the most frequently alleged basis in EEOC charges, cited in close to half of them. An employer can win the underlying discrimination claim and still lose on retaliation: any materially adverse action (dismissal, demotion, worse shifts, exclusion) taken because someone complained, requested accommodation or leave, or testified.

Whistleblower laws

• Federal: OSHA handles whistleblower provisions of over 20 statutes. Sarbanes-Oxley protects employees of U.S.-listed companies; Dodd-Frank pays SEC awards of 10-30% of sanctions above $1 million and voids agreements that impede reporting to the SEC.
• State: New York Labor Law 740 protects reports of any legal violation and requires a posted notice; California Labor Code 1102.5 carries penalties up to $10,000 per violation; New Jersey's CEPA is among the broadest.

Paid sick leave and paid family and medical leave in 2026

There is no federal paid sick or parental leave for private employers. States use two types of law: paid sick leave (employer-paid, accrued hours) and paid family and medical leave (PFML) (state insurance funded by payroll contributions).

Missouri, Nebraska and Alaska ballot measures

• Missouri: Proposition A (2024) took effect May 1, 2025, but HB 567 repealed its sick leave provisions effective August 28, 2025. No statewide requirement in 2026.
• Nebraska: in force October 1, 2025, as amended by LB 415: only employers with 11+ employees, accrual of 1 hour per 30 worked after 80 hours of employment, no payout at termination, and an equivalent PTO policy satisfies the law. Verify caps with the Nebraska DOL.
• Alaska: in force July 1, 2025: 1 hour per 30 worked, up to 40 hours (under 15 employees) or 56 hours (15+). In May 2026 the House voted to exempt seasonal workers and employers with 9 or fewer staff (amendment to HB 193), but the Senate did not act before session end, so the law stands as approved. Verify later changes.

The table simplifies accrual, carryover, frontloading and payout rules, and state program rates change every January.

Noncompetes after the FTC rule

The FTC's 2024 noncompete ban never took effect: a Texas court set it aside in August 2024, and in September 2025 the FTC dropped its appeals and accepted the vacatur. It now acts case by case (including warning letters to healthcare and staffing employers). Noncompetes are a matter of state law.

• Bans: California (void even if signed elsewhere, and using one is unlawful), Minnesota (agreements since July 1, 2023), North Dakota and Oklahoma (narrow exceptions), Wyoming (since July 1, 2025, with exceptions for executives, managers and trade secrets). Washington's near-total ban takes effect June 30, 2027.
• Salary thresholds (mostly indexed): Illinois $75,000 (rising to $80,000 in 2027), Oregon $119,541, Washington $126,858.83 until its ban, Colorado for highly compensated workers ($130,014 in 2026), DC about $162,000, Maryland 150% of state minimum wage, Maine and Rhode Island tied to the federal poverty level, Virginia and New Hampshire for low-wage workers. Massachusetts bans them for non-exempt staff and requires garden leave or other consideration.
• Pro-enforcement: Florida's CHOICE Act (July 2025) presumes covenants of up to four years enforceable for employees earning over twice the county average wage. Tennessee's new statute took effect July 1, 2026.
• New York: no statute. Courts enforce reasonable noncompetes protecting trade secrets or unique services. Governor Hochul vetoed a ban in 2023 and later threshold bills have not become law as of September 2026. In flux.

Worker classification

European companies often start with a U.S. "consultant" on a 1099. Misclassification brings back overtime, payroll taxes, penalties and benefit claims; in California, willful misclassification costs $5,000 to $25,000 per violation.

• FLSA: "economic reality" test. The DOL stopped applying its 2024 six-factor rule in May 2025 and in February 2026 proposed a rule centered on control and opportunity for profit or loss; check whether it is final.
• IRS: common-law control test (behavioral, financial, relationship).
• ABC test states: California, Massachusetts, New Jersey and others presume employment unless the worker is free from control, works outside your usual course of business and runs an independent business.

Exempt versus non-exempt is the second classification risk; both errors fuel class actions. Without a U.S. entity, a PEO or Employer of Record is usually safer than contractor status (see setup).

Posters, recordkeeping, EEO-1, the handbook and a compliance calendar

Posters: federal notices (FLSA, EEO "Know Your Rights", FMLA if 50+, USERRA, OSHA, polygraph) plus state and city posters, displayed physically and electronically for remote staff. Many states also require written notices at hire, such as New York's wage notice (LS 54) and California's Wage Theft Prevention Act notice.

Records: payroll 3 years under the FLSA (New York 6); Form I-9 completed within 3 business days of hire and kept 3 years after hire or 1 after termination, whichever is later (see immigration); personnel records at least 1 year under EEOC rules (California 4); medical records separate and confidential; OSHA logs 5 years.

EEO-1: filed by employers with 100+ employees. In July 2026 the EEOC voted 2-1 to propose rescinding the EEO-1 and related recordkeeping; until a final rule, verify whether the current cycle must be filed. California and Illinois pay data reports and Massachusetts EEO reporting (100+ employees) continue regardless.

What a U.S. handbook contains

• At-will statement and a "not a contract" disclaimer.
• EEO, anti-harassment and anti-retaliation policy with several complaint channels; accommodation procedures.
• Pay practices: workweek, timekeeping, overtime approval, meal and rest breaks, expense reimbursement (mandatory in California, Illinois and others).
• Leave: PTO, state sick leave, FMLA if 50+, PFML, jury duty, voting, military.
• Conduct, IT and social media rules drafted with the NLRA in mind; confidentiality with whistleblower carve-outs.
• State supplements and a signed acknowledgment.

Compliance calendar

Litigation risk and EPLI insurance

Plaintiffs' lawyers work on contingency, many statutes shift fees to the employer, and juries decide cases. A typical path:

1. Internal complaint or demand letter. Your investigation here shapes everything after.
2. EEOC charge. Required for Title VII, ADA, ADEA and GINA claims within 180 days, or 300 where a state agency exists. The EEOC may mediate or investigate, then issues a right-to-sue notice; the employee has 90 days to file. Wage claims go straight to court or agencies.
3. Lawsuit. Discovery reaches emails and chats, including those of Italian executives, then summary judgment and possibly trial.

Arbitration and class actions

Under the Federal Arbitration Act and Epic Systems (2018), employers can require individual arbitration with class waivers. The 2022 Ending Forced Arbitration Act excludes sexual harassment and assault claims. Wage and hour class and collective actions are the biggest exposure, and "mass arbitration" (hundreds of individual filings with employer-paid fees) is a growing counter-tactic.

PAGA in California

PAGA lets an employee sue for Labor Code penalties on behalf of the state and co-workers. Since the 2024 reform the plaintiff must have personally suffered the violation, penalties are capped at 15% for employers that took reasonable compliance steps before notice (30% after), and employees receive 35%. Individual claims can be arbitrated; representative claims stay in court.

EPLI

Employment Practices Liability Insurance covers defense and settlements for discrimination, harassment, retaliation and wrongful termination. It usually excludes wage and hour claims (or offers a small defense sublimit), and retentions are higher in California. Premiums depend on headcount, states and claims history; it is often bundled with D&O, and some PEOs include it.

Practical guides

Frequently asked questions