Hiring employees is no small feat. A business needs to hire employees when growth is too much for current staff to handle, and if an owner was operating a business as a one-man operation, they may find themselves at the wrong end of the law.
It’s easy to not know employment law and break laws that you didn’t know existed.
There are simple employment laws that can be broken that will land a small business in front of the court, pleading their case and hoping that their business doesn’t incur a major fine or penalty.
1. Meal and Rest Break Laws
The United States’ Fair Labor Standards Act (FLSA) doesn’t require employers to provide a lunch break or even a rest break to their employees. While this is harsh, states have implemented their own laws, in some cases, which will require an employer to provide a lunch or meal break to employees.
You may be surprised to find that only the following states require meal breaks for employees:
- New Hampshire
- New York
- North Dakota
- Rhode Island
- West Virginia
But many of these states do have requirements in place for minors that allow them a meal break. There are similar laws for rest periods that also differ by state.
Your state labor office is the best source of contact to determine if you’re abiding by your state’s employment law.
2. Misclassifying Employees
It’s easy to misclassify employees. A lot of business owners do this unknowingly and only find out when there is a lawsuit against them.
There are numerous forms of misclassification. Let’s use an example to clarify one of the biggest misclassification issues: exempt.
- A company classifies an employee as exempt
- An exempt employee isn’t subject to overtime or meal break laws
Some companies find it easier to put every employee on a salary, and this is the basis description of an exempt employee. An exempt employee is someone who gets paid the same amount if they work 20 hours or 90 hours in a week in most scenarios.
Employers that just classify everyone as exempt may often be sued for improperly classifying a non-exempt person as exempt.
You will also find many companies that classify their employees as independent contractors.
Litigation is common in these cases because businesses can get into severe tax trouble due to classifying employees as independent contractors. Even in the event that an employee asks for this classification, it’s important to only classify a person as an independent contractor if it’s true.
Your business can be sued when the person finds out they’ve lost their entitlement to:
- Workers’ compensation
- Paid leave
3. Improper Employee Termination
You’re the boss, so you believe you have a right to terminate any employee you please. And while you do have great authority, this authority must be used in accordance with the law. A prime example of this is an employer firing an employee on a leave of absence.
Laws protect employees from being fired if their leave is related to:
- Jury duty
- Military leave
- Family leave
- Medical leave
You also cannot fire employees capable of meeting the demand of the job due to:
The employee can file charges against you for discrimination at this point. Employers cannot fire whistleblowers either. If you have an employee that is not meeting the job description or has performance issues, you’ll need to maintain clear and concise documentation to prove these performance issues exist.
4. Failing to Pay Money Owed on Termination
You’re positive you’re terminating an employee on sound legal ground, and you’re following every law appropriately. The employee has vacation time, and you have a “use it or lose it” policy in place. First and foremost, you want to check if your state prohibits your policy.
In states that have a vacation policy law, you may need to pay the employee for this vacation time.
Vacation time, when a “use it or lose it” policy is prohibited, is seen as a form of compensation that is required to be paid back when an employee leaves the company. If you fail to pay this compensation, rightfully that of the employee, you may find that you’re breaking employment laws in your state.
An attorney in your state can help you better understand and make sense of employment laws to keep your business from making a costly mistake along the way.