Employment Laws

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Contextual influences on compensation practices include federal laws, state laws and regulations. This lesson is going to cover both laws and other influences impacting compensation practices. Knowledge of these laws is critical to building a strong compensation foundation.

There are four federal constitutional amendments that form the basis of employment law. Article I, Section 8 provides congressional power to regulate commerce. The First Amendment specifies what Congress can’t do relating to making laws abridging the freedom of speech, religion, etc. The Fifth Amendment stating that “No person shall…be deprived of life, liberty, or property, without due process of law…” Finally, the Fourteenth Amendment, Section 1states governments’ limitations to make laws which shall abridge the privileges or immunities of citizens of the United States.

The following is a timeline of United States laws that impact compensation practices. The bolded laws in the diagram are those related to compensation practices. In general it is important to know and understand the laws and regulations in a country where the business is located before assuming that a company’s compensation plans will be in compliance.

United States federal laws center around four basic themes:

• Income continuity, safety, and work hours
• Pay discrimination
• Meeting disabilities and family needs
• Prevailing wage laws