There are over 25 federal laws that employers must follow to stay legally compliant, and that’s not even counting the individual laws that change based on your home state. Small businesses that staff more than 15 employees have unique regulations in place to ensure they treat their workers fairly. Still, the majority of the following laws apply to all companies regardless.
If you’re looking for assistance in navigating this complex employment law landscape, consider hiring an expert in HR compliance services.
Important Employment Laws All Small Businesses Should Know
Equal Pay Legislation and Enforcement
The Equal Pay Act applies to all businesses, and it’s irrelevant to the law if there was an obvious attempt to discriminate. The law requires all employers give equal pay for equal work to men and women for doing substantially similar jobs or equal work. You’re allowed to pay an employee a different wage based on seniority, merit, or any other factor that doesn’t include sex.
Fair Labor Standards Act (FLSA)
The FLSA regulates employee pay, establishes the national minimum wage, and overtimes standards federally. Some states will raise the minimum wage above the federally stated amount of $7.25. For example, California has a minimum wage of $14.00, but different areas have a higher standard. Overtime pay changes from state to state, as well.
Three prime violations exist within the fair labor standards act: withholding and deductions without consent, withholding pay as punishment or paying below the minimum wage. For more information on the FLSA, seek free employment legal advice from an attorney.
Incorrectly Identifying Employees
Businesses must correctly label workers for tax purposes. Failing to do so could cause severe financial issues for your company from the IRS and the incorrectly marked employees. Knowing the difference between W-2 and 1099 is the first step, as you’ll likely hire one or the other. As a rule, independent contractors work for themselves, and employees work for you.
Employees are more expensive to hire, as employers have to pay a portion of their income tax, disability benefits, health coverage, and more. This may discourage employers from hiring employees or classifying them as such, but you’ll save money on legal fees if you’re caught.
Occupational Health and Safety Act
Employers are expected to keep their workplace safe and free from hazards that could cause severe injury or death to employees. If an injury does occur, the employer must report the incident, even if it didn’t result in the death or severe injury, keep records that comply with the law, and inform employees what their rights are under the act in a written format.
Employees’ Use of Social Media and Marijuana (In Legal States)
All companies have the right to enforce rules that won’t lead to criminality or lawsuits but may decrease productivity. As a rule, most employers won’t let their workers use their phones for private purposes, but you can’t deny them from discussing specific topics.
For example, if you catch an employee or you’re told that a group of people are discussing their “poor work conditions” or “low pay,” you can’t fire them based on that alone. You have to be careful when talking about your reason for limiting social media at work.
Marijuana is another tricky subject to approach, as many employees use it for medical purposes. A marijuana drug test will come out positive if they use it recreationally outside of the workplace, so you’ll need to accommodate employees who do.
Immigration Reform and Control Act (IRCA)
Under the IRCA act, employers cannot knowingly hire an illegal immigrant or continue to employ said person once they are found to have immigrated illegally. All employers must verify that all of their employees are U.S. citizens or authorized to work in the United States. If needed, you can even hire a trusted immigration attorney. They can help you make important decisions and explain to you all the laws that you need to be aware of.
At the same time, a business can’t discriminate based on citizenship status or national origin unless another federal law states they can be. Employers who discriminate will be investigated.
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