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A Information to Employment Legislation for Small Enterprise House owners


“It’s best to begin a enterprise – it will likely be enjoyable!” 

Fixing issues along with your services or products or showcasing your distinctive expertise is the enjoyable aspect of being a small enterprise proprietor. 

However operating a small enterprise includes extra than simply delivering an excellent buyer expertise. There are employment legal guidelines and authorities laws masking all the things from office security to worker rights that each small enterprise proprietor should know and observe.

Being out of compliance may very well be pricey. Not solely can the federal government superb you, however you can expose your small enterprise to pricey lawsuits. The very last thing any small enterprise proprietor needs is to see their enterprise shut as a result of they weren’t in compliance with an employment regulation.  



Preserving your small enterprise in compliance  

Whereas employment legal guidelines and authorities laws might really feel like a nuisance – who actually needs one other rule to observe? – these legal guidelines and laws exist for a purpose. At one level on this nation, it was okay to have younger youngsters working in factories, require folks to work six days per week with no time without work, and discriminate towards somebody due to their race or gender. 

Employment legal guidelines had been enacted to vary these harmful and dangerous practices and defend the well being and security of American employees. In addition they defend your finest pursuits. So long as you observe the legal guidelines and laws, you may run your online business the way you select. 

Training meetingTraining meeting

5 classes of employment regulation and laws  

Whereas the U.S. Division of Labor administers and enforces greater than 180 completely different federal legal guidelines that cowl points associated to employment, the most typical ones fall into 5 classes: 

  1. Hiring practices and anti-discrimination legal guidelines
  2. Worker classification and wage legal guidelines
  3. Office security and well being laws
  4. Worker rights and protections
  5. Compliance and threat administration

1. Hiring practices and anti-discrimination legal guidelines

As a small enterprise proprietor, you need to encompass your self with people who find themselves passionate and see your imaginative and prescient. However when recruiting expertise, it’s essential to know the employment legal guidelines that cowl hiring so that you don’t say or do one thing within the interview course of that might get you into hassle.  

Most of the employment legal guidelines that cowl hiring practices additionally embody anti-discrimination components, which cowl all office interactions. 

Equal Employment Alternative legal guidelines

Equal Employment Alternative (EEO) legal guidelines make it unlawful to discriminate towards a job applicant or an worker due to their: 

  • Race 
  • Faith 
  • Intercourse (which incorporates gender id and sexual orientation) 
  • Nationwide origin 
  • Age
  • Incapacity 
  • Genetics 

EEO legal guidelines additionally defend sure veterans and ladies who’re pregnant. 

These legal guidelines apply to hiring, terminating, selling, and coaching your workforce members. In addition they cowl harassment, wages, and advantages. As a result of these legal guidelines might be obscure, Homebase gives a couple of recommendations on the ins and outs of selling staff and defending pregnant worker’s rights.

In a nutshell, it’s unlawful to rent, hearth, or promote anybody based mostly on the classes listed above. Additionally it is unlawful to set wages and provide advantages to staff based mostly on these classes. 

Individuals with Disabilities Act

One other anti-discrimination regulation that’s essential to know is the Individuals with Disabilities Act (ADA). Along with not discriminating towards an individual with a incapacity, you should additionally make cheap lodging for people with disabilities to allow them to carry out their job duties. 

What about background checks? 

As you undergo the hiring course of, you could need to run a background verify on potential candidates. There is no such thing as a regulation that claims you may’t do this, however there are legal guidelines that defend the applicant. You could first get permission to run a background verify, which candidates can refuse. In the event that they do refuse, you don’t have to rent them. 

Homebase gives a guidelines to observe if you need to run a felony background verify throughout the hiring course of. 

2. Worker classification and wage legal guidelines

EEO legal guidelines make it unlawful to find out wages based mostly on the identical protected classes famous above. It’s additionally essential to know the Truthful Labor Requirements Act (FLSA), which covers worker classification. 

H3: Non-exempt vs. exempt worker classification    

Worker classification legal guidelines cowl the necessities associated to worker wages. There are two varieties of worker classification – exempt and non-exempt. 

  • Exempt staff are sometimes paid an annual wage for his or her providers. They’re exempt from federal minimal wage and extra time pay necessities, however should meet different necessities to qualify as exempt, which embody being paid a set wage of no less than $684 per week whatever the high quality or amount of their work. 
  • Non-exempt staff are sometimes paid an hourly price. They’re required to be paid no less than the federal minimal wage or state minimal wage whether it is increased. Non-exempt staff are additionally entitled to extra time pay of 1 ½ occasions their hourly price for any work over 40 hours per week. 

For non-exempt staff, it’s essential to precisely monitor the time that they work every week. Homebase’s on-line timesheets may also help you keep compliant with monitoring hours. 

Contract employees and freelancers 

As you might be rising your workforce, you could think about hiring unbiased contractors or freelancers. These kind of employees are distributors identical to another provide vendor you do enterprise with. 

Due to that, you don’t should observe employment regulation as a result of they aren’t your staff – they’re suppliers. Nevertheless, you should nonetheless observe EEO legal guidelines when awarding their contracts. There are additionally tax legal guidelines to observe, particularly concerning issuing a 1099 for any fee made to a contract employee or freelancer over $600 in a calendar 12 months. 

3. Office security and well being laws

Preserving your workforce secure whereas they’re on the job is your accountability as a small enterprise proprietor. Office security and well being legal guidelines and laws largely fall below the Occupational Security and Well being Administration (OSHA) requirements, which embody:

  • Recording severe work-related accidents and sicknesses. As a small enterprise proprietor, you should report any damage or sickness that occurred when staff had been working. Accidents or sicknesses embody fatalities, lack of consciousness, damaged bones or tooth, and needle sticks for folks in medical professions. Data should be stored for 10 years. 
  • Reporting extreme accidents. OSHA requires enterprise house owners to report any employee fatality or hospitalization as a consequence of a work-related damage inside eight hours of the incident. 
  • Figuring out hazardous supplies. Enterprise house owners should conduct periodic inspections to establish and assess the danger of any potential hazardous materials. 
  • Worker coaching and security applications. OSHA requires enterprise house owners to supply coaching to staff who face hazards on the job. 

4. Worker rights and safety legal guidelines 

Many worker rights legal guidelines are lined below the EEO legal guidelines. These embody the correct to not be harassed or discriminated towards based mostly on the protected classes we famous above. Staff even have the correct to obtain equal pay for work, cheap lodging for medical circumstances or spiritual beliefs, and have their medical info stored confidential. Different worker rights legal guidelines embody:

Household and Medical Depart Act

The Household and Medical Depart Act (FMLA) entitles staff to take as much as 12 weeks of unpaid depart for outlined causes, which embody the delivery or adoption of a kid, to get therapy for or recuperate from a severe sickness, and to look after a sick relative. 

There are particular guidelines that govern FMLA, and solely small enterprise house owners that make use of 50 or extra staff are required to observe FMLA necessities. 

Whistleblower safety legal guidelines

As a small enterprise proprietor, below the whistleblower safety legal guidelines, it’s unlawful to retaliate towards an worker who submits a grievance to authorities companies together with OSHA, the Wage and Hour Division, and the Workplace of Federal Contract Compliance Applications. 

Non-compete and non-disclosure agreements

Non-compete clauses is usually a crucial component of your relationship along with your workforce members, particularly material consultants. A non-compete clause is a contractual time period between a enterprise proprietor (employer) and an worker that blocks that worker from working for a competing employer or beginning a competing enterprise inside a sure geographical space and for a sure time frame after employment ends. 

If you happen to select to have non-compete clauses along with your workforce, we advocate hiring an employment legal professional. 

Colleagues working in officeColleagues working in office

5. Compliance and threat administration necessities

As a small enterprise proprietor, you must inform your staff about your insurance policies, procedures, and expectations. Your staff also needs to know their rights and protections below state and federal regulation. 

This info must be consolidated right into a written doc like an worker handbook. Whereas worker handbooks usually are not required by regulation, they’re a easy and efficient solution to talk crucial info. They’re additionally nice instruments to share info that’s required below the legal guidelines we’ve outlined on this article, which helps you keep compliant. 

To mitigate threat for any employment regulation violation, it’s a good suggestion to host common coaching along with your workforce on the completely different employment legal guidelines. Your human assets workforce ought to maintain present with all authorities legal guidelines and laws. 

When doubtful on something, search authorized counsel {and professional} steerage. Not realizing or understanding the regulation will not be an excuse within the eyes of presidency regulators! 

Homebase makes staying compliant simple

From assist with drafting job descriptions to monitoring time and managing payroll, Homebase helps small enterprise house owners with staying compliant with employment legal guidelines and laws. Make your work simpler. See how one can get began with Homebase

Hiring your first worker? Take a look at our New Rent Coaching Guidelines and Onboarding Information

Get your new enterprise up and operating with Homebase.



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