One of the most important milestones of a business is to hire employees. It’s an exciting endeavor, especially for startups. It’s an indication that you have a thriving and growing business. However, it doesn’t mean that hiring staff doesn’t come with a disadvantage. Yes, despite being a step towards success, hiring employees requires you to have the knowledge and be in compliance with labor laws. And that is not always easy.
In every operation that your business undertakes involving your employees, it’s essential to make sure that you’re going to comply with the federal and state rules. Staying apprised of the existing legal landscape will be beneficial as it can be easy to violate them, especially if your business has multiple locations.
Compliance with labor laws, however, isn’t only about avoiding fines, it is also about maintaining a safe work environment for all employees. Labor laws also present guidelines on how to treat your workers fairly. Therefore, if you want to build a long-lasting and sustainable business, you have to keep up with federal labor law, together with state and local regulations.
How To Stay Labor Law Compliant?
There are simple things you can do or implement for your business to be in labor law compliance as possible.
The first thing, of course, is to know what labor laws apply to your business. Some federal laws have specifications in terms of its applicability, and others may have variations as they reach the local level. An excellent example is the Age Discrimination In Employment Act, which only applies to businesses with twenty or more staff.
Another step you can take is to create or come up with a compliance checklist. A compliance checklist should contain all the required notices on hand. Having a list of these notices will help you to determine further actions that you have to take more efficiently. It’s also a way to track how your business manages compliance tasks and if it’s doing enough to complete these tasks by the appropriate deadlines.
Last but not least is to develop an employee handbook as part of your compliance toolkit. It will help in reducing misunderstandings between you and your staff by giving them helpful information about their rights and benefits.
What Are The Labor Laws That You Should Comply With?
Missed opportunities might result from only fulfilling the minimum requirements instead of ultimately meeting your legal obligations. Always staying in full compliance will allow you to take advantage of all the benefits that various laws, rules, and regulation offers.
Below are some of the laws you should comply with as you move forward with your business operations.
Correct FLSA and IRS Employee Classification
To keep their operations running, many startups rely on workers known as independent contractors. Despite being called “independent contractors,” the federal government may still consider them as employees depending on the relationship they have with your business.
At a rate that gets calculated as one-and-a-half times the regular hourly rates of the workers, employees that FLSA or the Fair Labor Standards Act covers should receive overtime pay from employers. Employers give overtime pay to workers who work more than forty hours a week. Employers can benefit from modern financial tools to make sure that compensations get calculated accurately.
The overtime pay has exemptions, though, and it happens once an employee falls under the executive, as well as the administrative or professional FSLA exemptions. The white-collar exemptions involve specific job responsibilities that may cover one of your workers.
Some businesses purposely misclassify employees to avoid paying payroll taxes, overtime compensation, and other employee-related expenses. It’s something that you have to avoid doing if you don’t want the Department of Labor and the Internal Revenue Service to hunt your business. Based on three significant areas, which include the type of relationship, financial factors, and behavioral factors, a 20-factor test gets performed by the IRS to determine the status of a specific worker accurately. The worker status gets classified through his contributions to your business as well as the level of control you have over his daily operations.
FMLA or the Family and Medical Leave Act
One of the most commonly misunderstood labor laws is the FMLA or the Family and Medical Leave Act. For twelve months, given there are valid family and medical reasons, workers have to receive up to twelve weeks of unpaid yet job-protected leave from private-sector employers. It holds as long as the employer has fifty or more employees.
Employers don’t have the power to interfere, prevent, or deny employee rights because these are provided for them by the law. It’s essential to understand the nuances since the FMLA has very specific requirements concerning coverage and eligibility.
However, the FMLA has standards that employees have to meet before they become eligible for leave. That said, part of the responsibilities of employers is to carefully examine the reasons for asking leave to reduce abuse of the FMLA act.
Minimum Wage Fairness Act
Businesses also have to comply with minimum wage increases that the law demands. There are now more labor laws that favor part-time and hourly workers, so you have to make sure that you keep yourself updated with the current minimum wages in every state where your business operates.
The laws mentioned above are only some of the many labor laws that are existing in the country. Ask yourself if your business is in labor law compliance and prepare for new changes and developments to the existing rules to avoid consequences.