5 Employment Laws All Small Businesses Owners Should Know
Managing the employees is one of the most challenging tasks associated with entrepreneurship. Unless the employees are satisfied, you cannot expect productivity. Also, the issue of human resources management is tangled with the need to ensure compliance with the state laws. While going by your reason tells you that employees who are better engaged are more productive, in your effort to keep them happy, you might often land up in courts or having to pay penalties. Hence it is essential to gain some familiarity with the most important employment laws in order to maintain the peace and stability inside an organization and ensure the right relationship with the employees. Here is an overview of five important employment laws to know while managing the human resources in a small business.
An employee exempted is entitled to receive a predetermined amount of money irrespective of the number of hours worked. Both federal and state laws exempt the salaried employees from mandatory breaks and overtime pays. Such a classification makes it easy for the employees to go by since there are no timesheets for tracking and also overtimes or meal breaks to deal with. The problem crops up when a disgruntled non-exempt employee is wrongly classified as exempt seeing them sue their former employers for overtimes that were not compensated. If you wish to avoid such an unpleasant lawsuit, it is advisable that you get to know from your state labor office on what qualifies the employees for exemption. Consulting an employment law attorney or a human resources expert can also help you in this.
Independent contractor and a regular employee
Companies can hire employees under two categories namely an independent contractor or a regular employee who is entitled to all the employment benefits. This is a knotty subject that can often lead you into confronting the IRS or disgruntled workers. For instance, a person might join you as an independent contractor and be happy with the position. If the employee faces an accident but does not qualify for an employee’s compensation, then the issue might trigger up. If the case is heard by the court which finds that the employee is wrongly classified as an independent contractor, the employer might be forced to pay all the pending payments like the worker’s compensation benefits, penalties and also the unpaid overtime. This is a costly repercussion which you will want to avoid. Hence, consider such distinctions and ensure compliance with the law for your own good. An independent contractor advertises the services, works for multiple clients, sends an invoice for the work delivered, maintains the job records, enjoys the off time and is solely responsible for the losses and gains of his or her business.
As an entrepreneur, it is natural that you will innovate some ways to keep your employees happy and contented. At times you might imagine you are being nice to give your employees some amount of freedom with their schedules. In fact, they might also be thankful to you for this. However, know that this arrangement can invite a few problems. For instance, if you are allowing your employees to work for longer times on the working days allowing more no work days, you might be breaking the overtime laws. Some states, however, allow letting the workers on the job for certain hours without inviting overtime. Since you are liable to pay the overtime charges in most cases, you must find this out from your state specific laws.
A good number of employers implement some HR solutions that also includes a policy saying that if the employee does not make use of a paid vacation within a year, it is lost once for all. Though this is a favorable policy to save the employer’s spending, it might, in fact, go against the law in your state. Some state laws say that upon termination of the working relationship the earned but unused vacation time has to be paid.
Harassment and Discrimination training
In some states, harassment and discrimination training are legally mandated. However, in order to prevent some lawsuits, it is necessary to train your first level supervisors on how to manage some situations. In this connection, you may access the necessary resources on the EEOC (Equal Employment Opportunities Commission) and the human resources management solutions available outside your office.
Most entrepreneurs find small business HR overwhelming. Even everyday activities can be difficult if you do not know what the laws say about them. Knowledge of the basic employment laws is, therefore, essential to avoid any repercussions and also to stay in compliance with the laws. Mark Carey, a reputed executive compensation, and employment law attorney & founder of Mark P. Carey, P.C says small businesses can always benefit from the consultancy services offered by an accomplished employment lawyer CT. Also as an entrepreneur, update yourself with the developments with regard to employment laws so that you are able to make the right decisions from time to time and also avoid any legal issues in managing your employees.