Familiarize yourself with labor laws to avoid litigation
Posted On May 13, 2022
Small business owners know how much hard work goes into setting up their own business and running it successfully. Successful entrepreneurs are intimately familiar with their product or service, their customers, and their market. However, while they may be pretty good at making a profit, they may not be as well versed in state and federal labor laws. Therefore, business owners should be aware of applicable state and federal statutes when creating their policies to avoid being sued.
Determining the rules under which your business will operate serves several purposes. Rules explain employee expectations, prevent losses, and ensure operations run smoothly. However, creating your business policies can be incredibly complicated. Labor laws vary from state to state. Also, the main federal labor statutes depend on the size of your company. Further complicating the process is the fact that some rules are subject to interpretation. For example, the Americans with Disabilities Act defines disabilities broadly. The law establishes certain responsibilities towards these workers, so determining if a worker is protected by the ADA is very important.
Many small business owners unintentionally violate applicable statutes with their policies. What they believe to be flexible rules may be considered a violation under state or federal statutes. You can allow your workers to skip a lunch break to leave early. However, some states require certain workers to receive a lunch break in addition to breaks for hours worked during the day, and some states require when breaks must occur. Flextime policies are another way small businesses can unintentionally violate applicable statutes. The most common way these violations occur is by allowing workers to work longer but fewer days each week. Depending on the overtime statutes in your state, you may owe wages, back pay, or overtime fines. Finally, lending an employee money and deducting payments from their paychecks is illegal in many states. A better way to make a loan is to have the worker sign a promissory note and set up a regular payment schedule.
Fortunately, a wealth of information on how to comply with state and federal labor laws is available to small business owners. Check with your local Chamber of Commerce, Better Business Bureau, Small Business Administration, or department of labor for advice. These groups may hold seminars, distribute information packets, or have special sections on their website devoted to relevant statutes to guide the creation of their policies. Alternatively, attorneys who specialize in the field may consult with you about their rules. Investing in a consultation with an attorney to advise you on which rules do not comply with state or federal labor laws can be cheaper than seeing your insurance premiums increase after litigation.
Anyone who has started a business venture knows how much money, time, and education it takes to be successful. Learning about employment laws before creating policies for your workers is one of the best ways you can protect that investment.