What Is the Definition of an Employer?
An Employer Provides Work for Employees
An employer is an organization, institution, government entity, agency, company, professional services firm, nonprofit association, small business, store, or individual who employs or puts to work, a person who is called an employee.
Most employers offer employees a comprehensive employee benefits package, as they can afford to offer benefits, including health insurance and paid time off, holidays, and vacation. Starting in 2016, under the Affordable Care Act, employers that have at least 50 employees (or 50 full-time equivalent employees) must provide health insurance or pay a fee.
If employers do not have 50 or more employees they can choose whether or not to provide benefits. These employers can pay just the salary or hourly wage and do not provide employee benefits.
Employers can hire employees as exempt employees who receive a salary for completing a whole job, such as $60,000 a year for supervising the quality department. Employees who are exempt must meet strict standards. An employer cannot just decide to pay someone a salary and label them exempt.
For instance, an employee can have a managerial exemption where she supervises others, or a professional exemption as an attorney, or an administrative exemption as a finance project manager.
Exempt employees receive the same salary each pay period regardless of the number of hours they worked. Employers cannot dock the wages of an exempt employee who goes home early, for instance.
Employees can also be nonexempt or hourly workers who are paid an hourly wage, such as $14.00 an hour, for each hour worked, and whose pay is subject to the terms of the Fair Labor Standards Act (FLSA) for overtime.
These employees must be paid for every hour worked. For instance, if an employee is scheduled to work from 8:00 to 5:00 with an hour lunch, the employee receives 8 hours of pay. But, if the employee works through lunch, they receive 9 hours of pay.
Work is performed by an employee for the employer under a verbal or an implied or written contractual agreement or contract. Some employers use job offer letters to confirm the details of an employment relationship. In union-represented workplaces, the employer is obligated to pay in accordance with the union-negotiated contract.
Unless there is a specific contract in place, employees in 49 of the 50 states (Montana is the only exception) are at-will. This means they can quit at any time and the employer can fire them at any time. Traditionally, in the United States, employees give two-weeks' notice when they resign.
Companies also usually have a reason for terminating an employee, such as poor performance or position elimination, but legally they do not have to have a reason. Employers cannot terminate an employee for a reason that violates the law, such as because of an employee's race or gender or pregnancy status.
An employer has certain responsibilities that are required by law about paying employees, withholding taxes, and filing government reports with the IRS.
Employers also pay employer side taxes that self-employed people pay themselves.
An employer generally determines the location and conditions of employment and determines the who, what, when, how, why of the work or services provided by the employee. The employee is subject to the direction and guidance of the employer.
Many companies want to use contractors so that they don't have to provide health insurance or pay employer side taxes. But contractor positions must meet strict qualifications. If, as an employer. you determine the work factors listed above, most likely the person is an employee and not a contractor. Consult with your employment attorney if you are unsure.