Written by Claire M Lesikar, Eric S Bord and Michael D Schlemmer From Morgan Lewis & Bockius LLP on Sept 18, 2025
Hiring of employeesPreference and discrimination
Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?
There is no legal requirement to give preference in hiring to particular people or groups of people. Various anti-discrimination laws prohibit discrimination against applicants who are members of protected groups or based on citizenship status.Written contracts
Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?
No.Fixed-term contracts
To what extent are fixed-term employment contracts permissible?
State, not federal, law would govern the maximum duration of any fixed-term employment contract. Although, generally, there is no limitation on the duration of fixed-term employment contracts, such contracts are typically for a term of one to three years in the United States.Probationary period
What is the maximum probationary period permitted by law?
There is no federal law that requires any probationary period at the beginning of the employment relationship. Unless the employer agrees to a probationary period – with an individual employee or with a representative of employees, such as a union – it would be the employer’s choice whether to establish a probationary period and, if so, whether such a probationary period would be extended in the employer’s discretion or only under certain circumstances. US states and territories, except Montana and Puerto Rico, do not require a probationary period.Classification as contractor or employee
What are the primary factors that distinguish an independent contractor from an employee?
Control, dependence and risk of loss are among the primary factors used to distinguish between an independent contractor and an employee.
An employee is generally an individual whose time, place and manner of providing services or results are controlled by, or subject to the control of, the employer. Generally, the employer provides the employee with the tools and means necessary for the work to be performed, the employee is economically dependent upon the employer, and the employer bears the risk of loss if the work performed or results achieved by the employee are not satisfactory to the employer (eg, the employer must still pay the employee and can only discipline or terminate the employee if the work or result is not satisfactory).
By contrast, an independent contractor is an individual or business entity that is generally retained to deliver a specific result and, except for deadline and security of intellectual property reasons, has the right to control the time, place and manner of performing the work necessary to produce the agreed-upon result. Independent contractors often market their services to more than one entity, provide the tools and other means necessary to produce the result, and bear some risk of loss in the event that they fail to deliver the result promptly or deliver results that are unsatisfactory in quality or quantity to the contracting business (eg, the contractor will not be paid).
This area of US law has undergone substantial change and continues to evolve very quickly on both the federal and state level in the current regulatory and enforcement environment. Several states have adopted the onerous ABC Test, which significantly limits contractor classification.
Under the ABC Test, a worker is considered an employee and not an independent contractor unless the hiring entity satisfies all three of the following conditions:
- the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;
- the worker performs work that is outside the usual course of the hiring entity’s business; and
- the worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.
Exposure resulting from contractor misclassification can be significant, including exposure based on tax liabilities, failure to provide benefits, failure to reimburse for expenses, wage and hour claims, and associated penalties and derivative claims.
Several states and municipalities, such as Illinois, Washington and New York, have passed laws requiring that hiring entities comply with specific requirements when engaging an independent contractor, including paying independent contractors a set minimum amount or providing paid sick leave.Temporary agency staffing
Is there any legislation governing temporary staffing through recruitment agencies?
Several states, such as New Jersey and Illinois, have passed laws specifically governing the rights of temporary employees. For example, New Jersey recently passed the New Jersey Temporary Workers Bill of Rights, which guarantees certain pay, notices and other rights to temporary employees.
