Introduction
The relationship between an employer and their employees is an important and highly regulated one. Federal and state laws set some basic responsibilities that employers must abide by. The goal of these laws is to protect the rights and interests of employees.
It is important for employers to understand what being an employer entails, including the responsibilities they have towards their employees. Understanding these things will better the relationship they have with their employees and protect the employer from legal issues.
What Is an Employer?
The law defines an employer as an entity (whether an individual, company, or non-profit) that enters into a relationship where an employee exchanges their labor for compensation. As the party providing the job, the employer must abide by laws and regulations related to their role. A wide range of situations can constitute employer-employee relationships. We will explore these in this article.
Types of Employers
As employers are defined as someone who compensates an employee in exchange for their labor, a number of different types of entities can be considered an employer.
- Corporations
- Government agencies
- Non-Profits
- Private employers (individuals)
- Small businesses
Corporations
Large businesses with shareholders are called corporations. Corporations are unique because there are a number of stakeholders involved, but the business is separate from the individuals involved in the business.
Employees will choose corporations as their employer, as corporations are often well-established businesses. They have the resources available to offer training and will pay for talent. As employers, corporations offer structure and stability for employees. However, with that structure comes limited decision-making power unless the employer hires the employee in an upper management role.
Employers who are corporations won’t receive the same exemptions or exceptions that small businesses receive. Due to their resources, the law expects them to fulfil their obligations as an employer.
Government Agencies
Government agencies are specialist divisions often created by the federal government through legislative action to fulfil a need. The government has countless agencies and so it is the largest employer in the US.
The government is also considered a particularly attractive employer as the government is not affected by changes in the economy so employees don’t have to fear job loss as much as they do with other types of employers. The government also provides great work-life balance as an employer. It offers stable 8-hour shifts and great benefits and leave entitlement. It may not pay as well as private employers (especially corporations), but it still pays well and is good about providing cost of living adjustments to its salaries. Government agencies also prioritise diversity and have a lot of checks and balances in place to ensure it is a good place to work for all types of people.
Non-Profits Organizations
Non-profit organizations are set up to serve a public need rather than make a profit. Charities are common examples of non-profit businesses as are religious institutions and hospitals. Because these kinds of businesses don’t make a profit, they receive tax exemptions. As employers, they also receive some leniency on some of the stricter employment laws that large employers like corporations are bound by.
However, non-profits also have stricter requirements due to their exemptions. For example, they must publicly declare their financials. They are also required to serve the public and if they fail to do either they may no longer be eligible for non-profit status.
Employees may choose non-profits as an employer because they offer the opportunity to earn a living while contributing to their community. It is a good fit for employees that want to make a difference. Non-profits come in a range of sizes. Large non-profits have more structure, while smaller non-profits give employees more opportunity for input.
Private Employers
Private employers or individual employers are people who hire someone to work for them. This is often domestic staff like housekeepers, personal assistants, care workers, or gardeners. Individual employers are still often bound by employment laws and should consider researching the responsibilities they have towards their employees. It is considered best practice to hire an attorney to oversee the employment contract.
Alternatively, many private employers will choose to hire their personal staff as independent contractors. This gives the employee more flexibility and autonomy. Independent contractors are extremely tax efficient because of their small size. It also changes the responsibilities the employer has because the “employee” is not actually an employee; they are a second business.
Small Businesses
The definition of small businesses can vary between states and industries. The classification may be made based on profit or number of employees. Research whether you would be considered a small business employer in your state and industry.
Small businesses can be good employers from an employee’s perspective because they can offer more personalized support. Employees may have more say and decision-making power because small businesses often won’t have the rigid structure that corporations have. Employees will often have more power to choose their own projects and pursue opportunities.
As an employer, small businesses may have some leniency or exemptions for some things because they don’t have the resources that large corporations do. However, small businesses should be aware of their responsibilities as an employer. They may not be able to afford the legal consequences of breaking employer laws.
What Are Employment Agreements?
An employment agreement is a contract that dictates the responsibilities and expectations of both parties. Employment agreements are usually written contracts that both the employer and employee sign. However, verbal employment agreements are still binding.
Some of the things covered in the employment agreement include:
- Job title
- The details of the position
- Responsibilities and duties
- Benefits
- Compensation
- Resignation guidance
- Termination guidance
- Dress code or uniform (if applicable)
- Travel or other expense reimbursement
Each employer will create an employment agreement specifically for their needs. The employer may detail any other expectations they have or add clauses that explain the job.
How Do Employers Compensate Employees?
Employers offer their employees compensation in exchange for their labor. Compensation may take the form of a salary or hourly wages. Plus, a compensation package will include things like paid time off, healthcare benefits, and bonuses or commissions (if applicable.) Federal and state laws will dictate the minimum compensation an employer can offer for different types of positions.
Many employers will offer additional perks to make the job more attractive to top talent. For example, they may have childcare benefits, free food or drink, gym membership, flexible working arrangements, etc. Some employers may even offer signing bonuses or unlimited vacation time to ensure they are an attractive employer. These are not legal obligations for employers; they are bonuses that employers can offer at their own discretion.
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Amit2025-03-28 04:24:272025-03-28 04:24:29What Is a Pay Stub and Why It Matters for Employees and Employers
