Employment laws exist to govern the relationship between employers and employees. As a small business owner, your knowledge and compliance with employment laws can make or break your company. Flaunting employment laws, either intentionally or otherwise, can attract litigation and audits, as well as ruin your company’s reputation. To help you avoid the adverse consequences of non-compliance, below are a few tips you should consider.
1. Understand Employment Laws
Knowing your legal obligations and understanding your employees’ rights will save you from a lot of legal problems. Numerous federal and state laws exist to govern all aspects of employment, ranging from recruitment to terminating employee contracts. The laws also regulate employee wages and benefits, as well as workplace safety. Some of the crucial laws every small business owner should understand include;
- The Fair Labor Standards Act (FLSA) for guidance on employee salaries including, minimum wage and overtime pay
- The Family Medical and Leave Act (FMLA) governing employee medical leave
- Anti-Discrimination laws such as Title VII of Civil Rights Acts, Equal Pay Act, and Age Discrimination in Employment Act (ADEA)
- The Occupational Safety and Health Act (OSHA) regulating workplace safety
- The National Labor Relations Act (NLRA) governs the employee’s rights to collective bargaining
You can consult an employment lawyer to help you understand the provisions of the law and how you can stay compliant. Also, be on the lookout for any changes in the legal landscape so you can stay updated and adjust accordingly.
2. Have an Employee Handbook
An employee handbook clearly outlines your company’s expectations from employees, as well as what the employees should expect from you. An employee handbook is crucial for protection against employee lawsuits due to reasons such as wrongful termination or workplace harassment. It also communicates your company policies and provides an avenue for employees to seek help.
Some of the primary contents to include in your employee handbook are code of conduct, anti-discrimination and harassment policy, as well as a hiring and separation policy for when your recruit or fire employees. Additionally, include the company’s compensation and benefits policy, as well as a communications policy.
When creating your employee handbook, use clear language that is easy to read and understand. Also, keep the policies consistent and always ensure they do not violate any employment laws. Make sure that your employees sign the handbook upon entry into the company. You should also review it regularly and make any necessary adjustments.
3. Maintain Accurate Records
Most employee complaints arise from pay disputes. As a business owner, maintain accurate time and pay records of your employees to minimize common pay disputes such as holiday pay, as well as pay agreements. Employee records allow you to track the hours your employees work. Doing so enables you to calculate overtime pay and payroll information accurately.
Thanks to technology, you can utilize attendance and time software for efficient record-keeping and generation of reports for future use. When storing employee records, ensure you do so within the confines of the law regarding the length of time you can keep them. According to the FLSA, you should keep employee payroll records for a maximum of 3 years.
4. Put Employment Contracts in Writing
Usually, an employee enters into a contract with the employer immediately after accepting a job offer, making a written contract unnecessary. Although the agreement may be legally binding, it is impossible to prove implied or oral contracts in case of disputes or misunderstandings. Therefore, small business owners must put employment contracts in writing.
A written contract acts as evidence and point of reference in case of employment. It should contain employment terms and conditions including employee responsibilities and how to handle workplace issues. Always issue your employees with an employment contract and have them sign it before they start working. However, you can also provide it within two months of employment.
5. Work with an Employment Lawyer
As a small business owner, you shouldn’t rely on general attorneys only for advice on employment laws. Instead, work with an employment lawyer to help your business stay compliant with employment laws. An employment lawyer has in-depth knowledge of the law and can explain the legal jargon that is hard to understand using simple language.
Besides educating you on employment laws, an employment lawyer can also help you draft important company documents like anti-discrimination and harassment policies and employment contracts. Lastly, having an employment lawyer gives you access to expertise in employment law. You can always seek advice or legal representation in case of employee lawsuits or claims to avoid mistakes that can jeopardize your business.
Hiring employees for your business signifies growth. However, it also comes with legal obligations that you must fulfill. The above tips can help you avoid common mistakes regarding employment law and protect your business from getting into legal troubles.
