You’re a small business owner, not an employment attorney. But it’s still your responsibility to know which federal, state and local labor laws apply to you and to stay in compliance with them. Breaking labor laws could result in fines — or worse.
Of course, you wouldn’t intentionally break labor laws. But many small employers end up on the wrong side of employment regulations simply because they don’t fully understand their obligations. Maybe they’re trying to offer their employees a certain level of flexibility or maybe they just don’t realize that certain rules apply to them. Are you making any of these five common labor law mistakes?
Not Giving Breaks
Federal law doesn’t require you to give your employees meal or 15-minute breaks. But that doesn’t mean your workers aren’t entitled to breaks under the laws of your state. Some states require that hourly employees receive at least a 30-minute meal break and a certain number of 15-minute breaks, depending on how many hours an employee works each day. In some states, the law even goes so far as to dictate to employers when these breaks must occur. For example, in California, employees must receive a 30-minute meal break before the end of their fifth hour of work.
What are the laws regarding breaks in your state? Check with your state’s labor office to make sure you’re giving your employees the breaks they’re entitled to and that you’re handling overtime appropriately, too. You may be required to pay your employees overtime when they work more than eight hours in a day, even if their total hours for the work week don’t exceed 40.
Classifying Employees as Independent Contractors
Some small business owners think it’ll be easier and cheaper to classify their employees as independent contractors, so they don’t have to pay payroll taxes or cover benefits like disability and paid leave. But there are rules surrounding who can be classified as an independent contractor and who can’t. If you’re requiring your employees to work at a specific location during specific hours, they must be classified as employees and offered all of the protections they’re entitled to under the law, such as workers compensation and unemployment insurance.
Failing to Provide Final Paychecks for Any Reason
Even if an employee leaves your company on poor terms, you have to give him or her that last paycheck — to not do so is wage theft. Whether or not you have to give employees their final paychecks immediately will depend on your state’s law; some states require that you hand over the cash as soon as the employee has finished his or her last day, whether you’ve fired them or whether they quit. In many states, you have to pay up even if the employee still has company property in their possession. If you can’t find an employee to give them a last paycheck, you may need to hand it over to your state’s lost or unclaimed property division.
Making Payroll Mistakes
Whether it’s not withholding the appropriate amount of tax, not paying employees overtime, paying an incorrect hourly wage, classifying employees as exempt when they should be non-exempt or something else, payroll mistakes can cost you big time. And if you’re a small business owner, you probably can’t afford a dedicated HR professional to make sure that all of your paychecks are on the up-and-up. Payroll mistakes are among the biggest labor law compliance issues small employers face; you can avoid them by outsourcing payroll and other HR tasks.
Not Providing Harassment or Discrimination Training to Supervisors
Some states, like Connecticut, Maine, and California, require employers to give managers and supervisors harassment and discrimination training in the interests of fostering safe, healthy work environments. Make sure you’re compliant with your state’s regulations regarding harassment, discrimination and sensitivity training. Even if your state doesn’t require such training, it’s a good idea to educate your employees, so you don’t run afoul of federal equal-opportunity and anti-harassment laws.
Many small business owners fail to comply with state and federal labor regulations, but you don’t want to be one of them. Make sure your business is completely on the right side of the law. Educate yourself about your responsibilities, and don’t be afraid to ask for help. As a small business owner, you have enough on your plate. The last thing you need is trouble with the law.