8 Nov 2022


Key Employment Laws Impacting Compensation and Benefits

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Academic level: College

Paper type: Coursework

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The recent recession has negatively affected employment while also increasing the unemployment rates in America. America being a capitalist nation is populated by few wealthy people who own the businesses in the country and the many with low income who work in the companies. The widening wage gaps have led to many strikes in recent time thus worsening the relationship between employers and their employees. The conflict is based on the need for businesses to maximize their profits by reducing costs of production but the employees with the intention to raise their standards of living want more payments, compensation, and benefits (Miller, 2013). The federal and states’ governments have laid different laws to enhance the relationship between the employers and employees by protecting both sides from exploitation from either party. The essay focuses on three major employment laws impacting compensation and benefits and how they directly or indirectly guide policies within the organizations.

Employment Laws

The first employment law discussed is based on payments and compensation when the worker is actively working, the second law is based on termination payment, and the third is on pension or post-employment period. The Fair Labor Standards Act (FLSA) is the oldest and includes most of the laws that enhance equality, wages, and other benefits, for instance, health insurance or compensation following in the line of duties injuries. According to the FLSA, nonexempt employees are supposed to receive 150% of all hours they work over 40 hours of any week (Miller, 2013). The nonexempts are employees subject to the minimum wage and overtime provisions of the FLSA. According to the Department of Labor in 2004, and updates in 2016, the exempt rules were formulated to reduce litigation and exploitation of the low-wage workers by ensuring that they benefited or were compensated for their long hours of working (Atchison, Belcher, & Thomsen, 2016). Nonexempt employees were those earning less than $23,600 annually.

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The second employment law impacting benefits and compensation is the Old Age, Survivors, Disability and Health Insurance Program (OASDHI). OASDHI forms the basis of compensation of workers with various laws under it, for instance, the Unemployment Insurance (UI). The UI is legible for all employees who lose their jobs for reasons beyond their control. In many states, the employee receives UI if they are unemployed because of labor disputes, but they may be ineligible if their actions made them lose their jobs. Under OASDHI program the Workers’ Compensation laws are enacted to ensure that the employees receive compensation following in the line of duty injuries (Atchison, Belcher, & Thomsen, 2016). Compensation is dependent on the time of injury and number of dependents of the victim. Maximum and minimum payment is specified for the type of injury and the typically determined law. The states provisions and the employer’s accident records are also used to determine the amount of compensation. The law enables the employees to receive compensation for the injuries and also keep their jobs if they can be able to continue working following the accident (Atchison, Belcher, & Thomsen, 2016). It also helps to ensure employers improve workplace safety as more records would lead to higher compensations even for minor injuries. These changes enable employees to benefit from working in a safer working environment.

Although the provision of pensions is not mandatory according to the federal and states rules, some laws ensure that the retired employees who worked in companies that had retirement benefits plans for their employees stick to their promise. Under the Employment Retirement Income Security Act (ERISA), pensions offered by the private industry employees met their standards and were received by the employees. ERISA sets the minimum standards for funding, participation, vesting, and benefit accruals and requires that plan fiduciaries be accountable (Atchison, Belcher, & Thomsen, 2016). Under the law, pensioners can sue breaches of fiduciary duty or for benefits if they are not received.


The employment laws impact compensation and benefits of employees by ensuring they are not exploited by the employers. They also ensure that the employer is aware of the several economic and legal standards before making any decision or fire employees without any justifiable cause.


Atchison, T., Belcher, D., & Thomsen, D. (2016). DLC THE LAW AND COMPENSATION AND BENEFITS . Dlc.erieri.com . Retrieved March 28, 2017, from, https://dlc.erieri.com/index.cfm?fuseaction=textbook.chpt02

Miller, R. (2013). Business law today (1st ed.). Mason, ohio: South-western.

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