Hiring: the legal issues that start at the beginning
Employment law starts before the first day of work. Legal exposure during hiring includes:
- Job postings — language that could suggest preference for protected characteristics (age, gender, national origin) creates liability even if unintentional
- Interview questions — there are specific questions you cannot legally ask candidates in most states (marital status, childcare arrangements, disability status, religion)
- Background checks — the Fair Credit Reporting Act (FCRA) has specific requirements for employer background checks. Many states have "ban the box" laws limiting when criminal history can be considered
- Employment eligibility (I-9) — every employer must verify employment eligibility using Form I-9. Failures can result in significant civil and criminal penalties
- Offer letters vs employment contracts — an offer letter should include a clear at-will disclaimer. A detailed employment agreement may create contractual rights that override at-will status
Employee vs independent contractor: the most expensive mistake
Worker misclassification is one of the most common and costly employment law violations. The IRS, Department of Labor, and every state labor agency looks at the actual economic reality of the relationship — not what your contract calls the worker.
If you are found to have misclassified employees as contractors, you can face:
- Back payroll taxes (employer share of FICA, Medicare) plus interest and penalties
- Back overtime pay under the Fair Labor Standards Act (FLSA)
- State unemployment tax liability
- Benefits claims (health insurance, retirement plans)
- Workers' compensation claims
- State penalty assessments (California's penalties are especially severe)
Termination: how to do it right
Most at-will terminations are legally defensible. The ones that aren't share common characteristics:
- No documentation of performance issues before the termination
- The termination appears to follow a protected activity (reporting harassment, taking FMLA leave, filing a workers' comp claim, "whistleblowing")
- The terminated employee belongs to a protected class and was treated differently than similar employees outside that class
- The employee handbook contained language that could be read as a promise of job security
- Verbal promises of job security were made by managers
Before any termination, an employment attorney review is worth the cost for senior employees, employees who recently engaged in protected activity, or any situation where the termination reason is subjective. The documentation review alone can identify exposure you don't know you have.
Wage and hour compliance
The Fair Labor Standards Act (FLSA) and state wage laws create specific obligations for employers. The most common violations:
- Overtime miscalculation — non-exempt employees must receive 1.5x their "regular rate of pay" (not just their hourly rate) for hours over 40/week. Many employers calculate this incorrectly
- Exempt misclassification — workers are classified as "exempt" salaried employees to avoid overtime, but don't meet the actual legal tests (salary level + job duties)
- Off-the-clock work — employees checking emails or performing prep work before their shift "starts" — if they're working, you owe them pay
- Meal and rest break violations — many states have specific break requirements that trigger premium pay if violated. California's rules are among the strictest
- Tip pooling rules — regulated under FLSA and state law. Getting this wrong creates significant exposure for hospitality businesses
Anti-discrimination and harassment compliance
Federal law (Title VII, ADEA, ADA, PWFA) prohibits employment discrimination on the basis of race, color, religion, sex, national origin, age, and disability. State laws add protected classes: sexual orientation, gender identity, marital status, and others depending on the state.
For employers, the key compliance elements are:
- A clear written anti-harassment and anti-discrimination policy
- A complaint procedure that employees know about and actually use
- Prompt investigation of any complaint
- Documentation of the investigation and outcome
- Consistent application of policies regardless of who is involved
- Regular manager training on what harassment looks like and what to do when they see it
What does an employment attorney cost for employers?
| Service | Typical Cost |
|---|---|
| Employee handbook (draft or comprehensive review) | $1,500 – $4,000 |
| Employment agreement / offer letter template | $500 – $2,000 |
| Non-compete / NDA package | $750 – $2,500 |
| Pre-termination review (one employee) | $500 – $2,000 |
| Separation agreement / severance | $750 – $2,500 |
| EEOC charge response | $3,000 – $15,000 |
| Employment dispute / mediation | $5,000 – $25,000 |
| Employment litigation (full defense) | $25,000 – $250,000+ |
| Ongoing HR legal counsel (retainer) | $1,000 – $3,000/month |
| Wage & hour audit / compliance review | $2,500 – $7,500 |
Find an employment attorney for your business
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Wrongful Termination (Employee)
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Frequently asked questions
Can I fire an employee without cause?
In most US states, employment is "at-will" — meaning either party can end the employment relationship at any time, for any reason or no reason, as long as the reason is not illegal (discrimination, retaliation, whistleblowing). However, at-will employment has many exceptions: implied contracts from handbook language, public policy exceptions, written employment agreements, and union contracts. Before terminating, consult an employment attorney to review your documentation and ensure the termination is defensible.
Are non-compete agreements enforceable?
It depends heavily on the state. California, North Dakota, and Oklahoma essentially ban non-competes. The FTC issued a rule attempting to ban most non-competes that is working through the courts. In states where they are enforceable, non-competes must be reasonable in scope, geography, and time. An overly broad non-compete may be completely unenforceable. An employment attorney drafts agreements that hold up in your jurisdiction.
What is the difference between an employee and an independent contractor?
Misclassifying an employee as a contractor is one of the most expensive employment law mistakes. The IRS and state agencies look at the actual facts — not what the contract says. Key factors: Does the business control how the work is done? Does the business provide tools? Is this person economically dependent on you? Many states (California, Massachusetts) apply strict tests. Misclassification can result in back payroll taxes, benefits claims, overtime liability, and significant penalties.
What should be in an employee handbook?
A well-drafted handbook covers: at-will employment disclaimer, anti-harassment and anti-discrimination policies, complaint procedures, leave policies (FMLA, state leave laws), time-off and PTO, remote work policies, confidentiality and IP assignment, and disciplinary procedures. It should be reviewed annually and whenever you add employees in new states. Critically, it should not contain language that could be interpreted as an implied employment contract.
How much does an employment attorney cost for businesses?
Employment attorneys for businesses typically charge $250-500/hour. Handbooks and employment agreements run $1,500-5,000 as flat-fee packages. Defending an EEOC charge through mediation/settlement costs $5,000-25,000. Full employment litigation can reach $50,000-250,000. Many business employment attorneys offer retainer arrangements for ongoing HR support at $1,000-3,000/month, which is often more cost-effective than ad-hoc engagement.