Summary. Employment law is not one body of law but a dozen overlapping ones, encountered in a predictable sequence as each employee moves from applicant to alumnus. This toolkit follows that sequence: what must be right before a job is posted, what an offer letter should and should not say, the classification decisions made at hire that determine years of wage exposure, the handbook policies that actually get litigated, the leave and accommodation machinery, the documentation habits that decide termination cases long before termination, and the separation mechanics that produce either a plaintiff or a signed release.

What this toolkit is for, and who should use it

Most employment disputes are not close calls on the law. They are cases where an employer with no dedicated HR function did something ordinary — posted a job, hired a contractor, gave a raise, fired someone on a Friday — without knowing that a statute governed that specific act. The exposure compounds because employment obligations arrive from federal statutes, state statutes, city ordinances, and the employer's own handbook simultaneously, and only one of those four is drafted by the employer.

This toolkit is for the founder, office manager, or general counsel of a company between five and five hundred employees, and for the lawyer advising them. It is organized as a lifecycle rather than by statute, because that is how the problems actually arrive.

Roadmap at a glance

  1. Before the posting — pay transparency, job descriptions, and application forms.
  2. Screening and offer — background checks, references, immigration verification, and the offer letter.
  3. Classification — employee or contractor, exempt or non-exempt.
  4. Onboarding and the handbook — the policies that matter and the ones that create liability.
  5. Paying people correctly — hours, overtime, the regular rate, and pay statements.
  6. Leave, accommodation, and time away.
  7. Performance, discipline, and complaints.
  8. Separation — individual terminations, reductions in force, and releases.
  9. After separation — final pay, benefits, references, and restrictive covenants.

Stage 1 — Before the posting

The compliance work starts before anyone applies. A growing number of states and cities require a pay range in the job posting, and several require it whether or not the employer is located there if the role can be performed in that jurisdiction. Remote postings therefore trigger the strictest applicable rule.

Write the job description around the essential functions of the job, stated in terms of outcomes rather than physical methods. This description will be the central document in an ADA accommodation analysis years later, and a description written as "must lift 50 pounds" when the actual requirement is "must move inventory between the stockroom and the floor" narrows the employer's options unnecessarily.

Scrub the application form. Ban-the-box laws in most states prohibit criminal history questions before a conditional offer; a growing number of jurisdictions prohibit salary history inquiries; and questions about age, graduation dates, disability, and citizenship status beyond work authorization create evidence of discriminatory intent regardless of the intent behind them.

Illustration. A Mississippi company posts a remote role open to candidates in any state. Its posting has no salary range, which is fine in Mississippi and unlawful in Colorado, California, Washington, New York, and others. It receives a Colorado applicant, and the exposure attaches to the posting, not the hire.

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Stage 2 — Screening and the offer

If a third party prepares a background report, the FCRA applies: standalone written disclosure, written authorization, a pre-adverse action notice with a copy of the report and the summary of rights, a reasonable waiting period, then a final adverse action notice. 15 U.S.C. § 1681b(b). The standalone requirement is literal — including a liability waiver on the disclosure form has generated a long line of class actions.

Assess criminal history individually, considering the nature of the offense, the time elapsed, and its relationship to the job. A blanket exclusion invites disparate impact analysis.

Complete Form I-9 within the statutory windows, use E-Verify only where required or consistently, and do not demand specific documents — document abuse is its own violation.

The offer letter should state the position, the start date, compensation as an hourly rate or an annual salary paid in periodic installments, exempt or non-exempt status, at-will employment in plain terms, and the contingencies. It should not state an annual salary in a way that reads as a one-year guarantee, promise bonuses without discretion language, or describe a "probationary period" that implies just-cause protection afterward.

Illustration. An offer letter says: "Your annual salary will be $85,000." Four months later the employee is terminated and argues the letter promised a year of employment. Add the installment language and the at-will sentence, and there is no argument.

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Stage 3 — Classification

Two classification decisions are made at hire, and both create liability that accrues silently for years.

The first is employee or independent contractor. The tests differ by regime: the state ABC test where one applies, the FLSA economic reality test, the common law control test for tax, and state unemployment and workers' compensation standards. A worker can be a contractor for one and an employee for another. The contract label is close to irrelevant.

The second is exempt or non-exempt. Exempt status requires salary basis, the applicable salary level, and satisfaction of a duties test. The administrative exemption is the one most often claimed and least often satisfied — "discretion and independent judgment with respect to matters of significance" is a real standard, not a description of any office job.

Illustration. A company hires ten "1099 sales consultants," sets their schedules, requires them to use the company CRM, and forbids them from selling for anyone else. Three years later one files for unemployment. The state agency finds an employment relationship, and the audit reaches all ten, for all three years, with penalties.

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Stage 4 — Onboarding and the handbook

A handbook is a liability document and a defense document at the same time. It must contain a conspicuous at-will disclaimer and a statement that the handbook is not a contract; an anti-harassment policy with multiple reporting channels, at least one bypassing the direct supervisor; an anti-retaliation commitment; leave policies matched to the jurisdictions where employees actually work; timekeeping rules; a safe harbor for improper deductions from exempt pay; and acknowledgment of the state and local rights that must be disclosed.

It must not contain progressive discipline described as mandatory steps, confidentiality rules that prohibit discussing wages or working conditions (Section 7 of the NLRA protects that discussion for non-supervisory employees, union or not), or policies the company does not follow. An unfollowed policy is worse than no policy: it establishes the standard and then proves the deviation.

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Stage 5 — Paying people correctly

Wage and hour claims are the highest-volume employment claims because they are objective, easily aggregated, and carry fee-shifting and liquidated damages.

Track all hours worked, including work before and after shift, work from home, and time spent on a phone answering messages. The employer's duty is to know: "we didn't authorize it" is not a defense where the employer had reason to know the work was performed. 29 C.F.R. § 785.11.

Compute the regular rate correctly for overtime — it includes nondiscretionary bonuses, shift differentials, and commissions, not just base pay. This is the most common arithmetic error in wage litigation.

Follow state rules on meal and rest breaks, pay frequency, wage statement content, expense reimbursement (including a portion of home internet and phone for remote workers in states like California and Illinois), and final pay timing.

Illustration. A non-exempt employee earning $20 an hour receives a $500 quarterly production bonus and works 45 hours in one week of that quarter. The overtime premium must be recalculated to include the bonus allocated across the period. The shortfall is small per week and enormous across 60 employees and three years.

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Stage 6 — Leave, accommodation, and time away

Determine FMLA coverage (50 employees within 75 miles; 12 months and 1,250 hours of service) and administer the notice and certification process on the statutory timeline. Track intermittent leave carefully.

Run the ADA interactive process for any request that signals a medical limitation, whether or not the word "accommodation" is used. Document the request, the essential functions, the options considered, and the outcome. Leave itself can be a reasonable accommodation beyond FMLA exhaustion, and terminating at the moment FMLA runs out is a recurring and avoidable error.

Layer in state and local leave: paid sick leave, paid family leave, jury duty, voting leave, military leave under USERRA, and pregnancy accommodation under the PWFA, which requires accommodation for known limitations related to pregnancy and childbirth without the ADA's disability threshold. Add PUMP Act break and space obligations for nursing employees.

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Stage 7 — Performance, discipline, and complaints

Termination cases are usually decided by documents created months earlier. Give contemporaneous, specific, written feedback; apply standards consistently across comparators; and never write a review that says "meets expectations" for someone the company is preparing to fire.

When a complaint arrives, investigate promptly, thoroughly, and impartially, and document it. The quality of the investigation is itself an element of the employer's defense to a harassment claim under Faragher and Ellerth, and a botched investigation converts a defensible claim into a punitive damages exhibit.

Protect against retaliation with particular care. Retaliation is the most frequently alleged charge at the EEOC, and it is the claim that survives when the underlying discrimination claim does not. Anti-retaliation provisions reach conduct that would dissuade a reasonable worker from complaining. Burlington Northern & Santa Fe Railway Co. v. White, 548 U.S. 53 (2006).

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Stage 8 — Separation

Before an individual termination, run the checks: Is the stated reason documented and consistent? Have comparators been treated the same? Is the employee on protected leave, or did the employee recently complain? Is final pay ready on the timeline the state requires? Is there an agreement with post-employment obligations?

For a reduction in force, analyze the selection criteria for disparate impact before the decision, under privilege. Determine whether the WARN Act (100 or more employees; 60 days' notice for a plant closing or mass layoff, 29 U.S.C. §§ 2101-2109) or a state mini-WARN applies, and note that state thresholds are often lower.

If seeking a release, provide consideration beyond what is already owed. For employees 40 and over, comply with the OWBPA: 21 days to consider (45 in a group program, with the required disclosure of the decisional unit, job titles, and ages of those selected and not selected), 7 days to revoke, and advice to consult counsel. 29 U.S.C. § 626(f). Note that a release cannot bar filing an EEOC charge, and that several states restrict non-disparagement and confidentiality terms covering harassment or discrimination claims. The Speak Out Act, 42 U.S.C. §§ 19401-19404, voids predispute nondisclosure and non-disparagement clauses covering sexual assault and sexual harassment disputes.

Illustration. A 58-year-old employee is included in a five-person layoff. The OWBPA disclosure shows the decisional unit skewed heavily toward older workers. The release is unenforceable as to the ADEA claim, and the disclosure the employer was required to prepare is now the plaintiff's best evidence. The time to find that out was during the pre-decision analysis.

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Stage 9 — After separation

Pay final wages on the state's schedule, including accrued vacation where state law treats it as earned wages. Issue COBRA notices on time. Handle references under a consistent policy. Process unemployment claims truthfully, remembering that statements made to the agency become admissions in later litigation.

Enforce restrictive covenants realistically: assess enforceability under the governing state's law, note the states that ban or sharply limit non-competes, and recognize that a trade secret and customer non-solicitation theory is often stronger than a non-compete. Recover company property and data, disable access on the last day, and preserve the departing employee's devices and accounts if a dispute is foreseeable.

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Stage 10 — Records, notices, insurance, and the annual audit

The last stage is the one that has no trigger, which is why it does not happen. Employment compliance decays: an employee moves to a new state and nobody updates the leave policy; a role changes and nobody revisits the exemption; a handbook is amended in one place and not another.

Records. Keep payroll records for at least three years and the records on which wage computations are based for two, 29 C.F.R. pt. 516. Keep I-9s for three years after hire or one year after separation, whichever is later. Keep personnel files, applications, and job postings for the periods required under Title VII, the ADA, and the ADEA — one year generally, and longer for federal contractors. Keep medical and disability information in separate, confidential files, which is a statutory requirement, not a best practice. Keep FMLA records for three years.

Notices and posters. Federal posters (FLSA, FMLA, EEOC, OSHA, USERRA, polygraph, and the employee rights notices) must be displayed where employees can see them, and remote-only workforces need an electronic equivalent that employees actually receive. State and local posting requirements add to that list and change often.

Insurance. Confirm workers' compensation coverage in every state where an employee works — remote hires create coverage gaps that surface at the worst moment. Confirm employment practices liability insurance is in place, and read the exclusions: wage and hour claims are commonly excluded or sublimited, prior acts may be excluded, and the duty to defend may be subject to consent-to-settle provisions that constrain strategy. See Business Insurance and Coverage Disputes.

The annual audit. Once a year, under counsel:

  • Reconcile the roster against the states and cities where people actually work, and confirm registration, withholding, unemployment insurance, workers' compensation, and leave law coverage in each.
  • Re-test exempt classifications against current duties and the current salary threshold.
  • Re-test contractor classifications against the applicable tests.
  • Review the handbook against the current law of every jurisdiction represented on the roster.
  • Sample timekeeping records for off-the-clock patterns and rounding.
  • Recompute the regular rate for a sample of bonus-earning non-exempt employees.
  • Review complaint logs and investigation files for patterns and for unclosed matters.
  • Confirm I-9s are complete and stored correctly, and run an internal audit before ICE does.
  • Confirm arbitration agreements, if used, are current and enforceable in the relevant jurisdictions.

Illustration. A 40-person company hires its first employee in Colorado. Nobody notices that the offer letter's salary range disclosure obligation, the state's paid family leave program, its unemployment registration, its wage theft statute, and its non-compete restrictions all now apply to that hire. Each of the five is a small task on the day of the hire and a real problem eighteen months later.

Resources

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External and primary sources

This toolkit is educational and not legal advice. Employment obligations vary by state, by city, and by employer size, and change frequently. Consult qualified employment counsel before making a classification, discipline, or separation decision.