What Is the Definition of an Employer?

An Employer Provides Work for Employees Who Are Paid to Do a Job

Do you know the definition of employer and what an employer does?
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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 or a staff member.

In some organizations that want to demonstrate their egalitarianism, and send the message that all employees are equal; they just have different jobs, employees are often called an associate or team member. In other organizations that implement employee empowerment, employees are still called employees, but they can often tell you what the company values about their relationship with employees.

How Does an Employer Compensate Their Employees?

In exchange for the employee’s work or services, the employer pays compensation that may include a salary, an hourly wage, and benefits that are above the federally mandated minimum wage in the US.

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. Started in 2016, under the Affordable Care Act, employers must either "offer minimum essential coverage that is “affordable” and that provides “minimum value” to their full-time employees (and their dependents), or potentially make an employer shared responsibility payment to the IRS.

In the President Donald J. Trump administration, requirements of employers are changing so you will want to stay closely in touch with your employment law attorney to make certain that your requirements as an employer are understood and carried out.

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 Hire Exempt and Nonexempt Employees

Employers can hire employees as exempt employees who receive a salary for completing a whole job. For example, an employer hires an employee for $60,000 a year to supervise 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 or he 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.

Employers can also hire employees who can 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's lunch, the employee receives 8 hours of pay. But, if the employee works through lunch, they receive 9 hours of pay.

Employers Make Employment Agreements With Employees

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.

The employer is more likely to have an official contract with higher-level employees who function in a professional capacity such as a lawyer or financial analyst. Contracts are also used for senior-level managers who have job titles such as chief financial officer, director, president, or manager.

Unless there is a specific contract in place, employees in 49 of the 50 states are employed at-will. (Montana is the only exception as it has eliminated the at-will rule.) This means they can quit at any time and the employer can fire them at any time for any reason.

Traditionally, in the United States, employees give two weeks' notice when they resign.

Employers Can Terminate Employment

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 because of at-will employment. 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.

Employers Have Responsibilities to Employees

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. If the employee does not like the working conditions or the responsibilities that are given to them by an employer, they should quit their job.

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.

Please note that the information provided, while authoritative, is not guaranteed for accuracy and legality. The site is read by a world-wide audience and ​employment laws and regulations vary from state to state and country to country. Please seek legal assistance, or assistance from State, Federal, or International governmental resources, to make certain your legal interpretation and decisions are correct for your location. This information is for guidance, ideas, and assistance.

Article Sources

  1. U.S. Internal Revenue Service. "Employer Shared Responsibility Provisions." Accessed March 31, 2020.

  2. Whitehouse.gov. "Healthcare." Accessed March 31, 2020.

  3. U.S. Internal Revenue Service. "Employer Shared Responsibility Provisions." Accessed March 31, 2020.

  4. U.S. Department of Labor, Wage and Hour Division. "Overtime Pay." Accessed March 31, 2020.

  5. National Conference of State Legislators. "At-Will Employment - Overview." Accessed March 31, 2020.