In today’s day and age, owning and operating small businesses are a fantastic option for people who want to be in control of their lives and routine, and have a good place where they can channel their creative energies. That said, owning a business – no matter how small – comes with a set of responsibilities. Any small business should comply with a set of local, state, and federal laws when they hire staff to assist them in making their future.
Not being able to comply with these laws can – and does result in the business facing serious consequences, ranging from fines worth thousands of dollars to expensive lawsuits that can cripple the business altogether. The following are some important employment laws that all owners of small businesses should be aware of:
Fair Labor Standards Act
The Fair Labor Standards Act is one of the most important (if not the most important) employment law. Not complying with this act can be detrimental to the existence of many small businesses. This act discusses several points, including (but not limited to) child labor prohibitions, standards of proper recordkeeping, minimum wage rates and mandatory rates overtime pay.
Small businesses are often vulnerable to not complying with this act, as they don’t have much cash flow (especially when starting out), which in turn makes them do things that can – and do make them run into payroll-related issues. These missteps include misclassifying employees as independent contractors, not keeping records properly and not being able to justify their actions.
Anti-Discrimination Laws
Any owner-employer of a small business should be familiar with and comply with all relevant anti-discrimination laws. There are several Anti-Discrimination laws, many of which are relevant to employers who have a specific number of employees (like 15 or more). This is the case for Title VII of the Civil Rights Act. Several states, however, have lower standards of requirements, with some states imposing said laws when an employer hires even a single employee.
According to Title VII, an employer cannot discriminate between their employees on the basis of color, race, religion or national origin. Also prohibited is discrimination on the basis of sex, which the EEOC has interpreted as a prohibition on discrimination on the basis of sexual orientation and gender identity. There are other federal laws in place as well – such as the ones that prohibit discrimination on the basis of an individual’s genetic information, age (in case the employee over 40 years of age or older), and disability.
The function of anti-discrimination laws is to help prevent discrimination of both intentional and unintentional nature. The latter of the two often tends to occur on account of a facially-neutral employment policy which causes a disparate impact. Anti-discrimination laws vary from one law to another, with some imposing a higher degree of burden on the employer (like requiring them to provide suitably customized accommodations to employees who have disabilities). Laws also vary from state to another, with some states providing extra protections and prohibitions on the basis of some additional characteristics like height and/or weight, and age discrimination on the basis of age group.
Occupational Safety And Health Act
Following this law should be a must for every small business owner and employer. According to the Occupational Safety and Health Act, employers should provide a safe working environment for their employees. Employers also have an additional duty of report all cases of serious work-related deaths and injuries. Employers who have more than ten employees must maintain records of those accidents for no less than five years. Not complying with these regulations will lead to employer facing significant fines.
Immigration And Nationality Act
This law – or the lack of obedience of it – often proves to be the bane of many good employers. As per the Immigration and Nationality Act, it is the duty of the employers to make sure that any and every employee they hire have a legal immigration status. The are various methods to ensure this, the most prominent of them being the I-9 Form, which should be duly filled and then approved. To make things more convenient, employers can now track their I-9 verifications with the help of the E-verify program.
Employers should personally check the documents of their employees in order to confirm their legal immigration status. Furthermore, all of the confirming documents must be kept separately from other documents of the employee.
Fair Credit Reporting Act
Yet another important law that small business should have a proper understanding of is the Fair Credit Reporting Act.
In the event that an employer obtains an employee or applicant’s credit report, they must ensure that the same fully comply with this law. It should also the noted that said credit report can be a vital part of the process of a background check.
According to the Fair Credit Reporting Act, employers should procure any information regarding an applicants or employee’s credit if it is relevant for the purpose of employment. Even in such cases, the employer must make sure to obtain the employee’s written permission before they procure the credit report. In addition to all of this, the employer must also provide a disclosure to the employee which duly informs their rights to them.
Tax Laws
This one goes by default – employers should have a good grasp of the various tax laws that can – and do – impact them. This includes knowing the various type of employment taxes that they have to collect and remit to the taxing authorities.
Wage Garnishment Laws
Employees should have a comprehensive understanding of the concept of wage garnishment; this knowledge can prove to be very useful in case the employee’s wages are garnished.
Employers, on the other hand, should also have a solid understanding of basic concepts such as the percentage of the employee’s paycheck that can be withheld, how various types of amounts differ (for instance, child support versus judgment creditor). Furthermore. employers should have a thorough knowledge of where payments should be remitted in such situations.
Legal Assistance
No matter how knowledgeable a business owner might be as regards legal issues, he/she will still need strong and stable legal assistance. Contacting – and retaining an employment lawyer will help them understand their rights and responsibilities better and will allow them to make the correct legal response to any situation that may crop up in the course of working.
An employment lawyer can – and does have many roles to play when it comes to assisting business-owners. Not only do they explain the federal, local, and state laws, along with the impact they have on the business, they also discuss compliance measures which will help keep the business – and the business-owner stay on the right path.
