Employment Law and Compliance
Domain 2: Employment Law and Compliance
This domain tests the statutes that govern the employment relationship and how they interact with benefit plans: wage-and-hour law, equal employment opportunity, leave, worker classification, and ERISA fiduciary duties.
Core rules and concepts
- FLSA requires overtime at 1.5× the regular rate for non-exempt employees after 40 hours per workweek. Exemption requires the salary basis test, the salary level, and the duties test - all three.
- Title VII prohibits discrimination based on race, color, religion, sex (including pregnancy and sexual orientation), and national origin. Retaliation claims do not require proving the underlying discrimination occurred.
- ADEA protects workers age 40 and older; the ADA requires reasonable accommodation absent undue hardship.
- FMLA provides 12 weeks of unpaid leave to eligible employees: 12 months of service, 1,250 hours in the prior 12 months, and a worksite with 50 or more employees within 75 miles.
- ERISA imposes duties of loyalty and prudence on plan fiduciaries and sets minimum reporting and disclosure standards.
Worked example
An employee earning $900 per week works 48 hours. Regular rate = $900 ÷ 40 = $22.50. Overtime premium = 8 × $22.50 × 0.5 = $90, so total pay = $990. The common error is paying 1.5× for all eight extra hours ($270) as if the salary covered only 40 hours; that treatment is correct only when the salary was intended to compensate straight time for the additional hours.
Traps that cost marks
- Treating salary payment alone as proof of exemption.
- Assuming FMLA applies to every employer; the 50-employee threshold matters.
- Missing the distinction between the regular rate and the base hourly rate.
- Forgetting that ERISA preempts many state benefit laws but not all of them.