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Avoid the Small Business Killer: Failing to Comply with Employment Laws

May 26, 2015

Posted in Business Start Ups, Employment Law

photo - small biz killer by Flazingo PhotosNew businesses start every day. Without the security of a regular pay check, new ventures are started, new ideas are explored and tomorrow’s success stories are being written today. But for many business owners failure is in their future and a main reason can be lack of compliance with employment laws and bad human resource practices, according to an article by Margaret Jacoby published in the Huffington Post.

Because compliance with employment, labor, tax and benefits laws can be complicated and expensive, many small business owners don’t give them the attention they deserve. They’re not topics the owners are at ease with so they give them short shrift. They hope nothing goes wrong and they don’t get caught playing fast and loose with the rules.

Here are areas of employment law that small business owners need to be wary of:

  • Non Discrimination Laws: Discriminatory employment practices based on a job applicant’s or employee’s race, religion, sex, national origin, age, disability, pregnancy, or sexual orientation or gender identity is illegal.
  • Wage and Hour Laws: Hourly employees must be paid at least California’s minimum wage as well as for overtime. Salaried workers do not qualify for overtime but giving a worker a “salary” while treating the person like an hourly employee won’t end your obligation to pay overtime.
  • Safety Laws: Federal and state safety laws and regulations cover employees, who have a right to a safe work environment.
  • Workers Compensation: Not covering employees with workers compensation insurance or not accurately stating their job duties to get lower rates are criminal offenses.
  • Immigration Laws: Employers need to follow immigration laws in to make sure job applicants are eligible to work in the US.
  • Misclassifying Employees: Treating a worker as an employee, with sufficient potential control over the terms and conditions of employment, while labeling the person as an independent contractor to avoid various taxes and laws would be a huge mistake, opening up a company to a variety of potential civil and criminal law violations.

You may have a gift for high technology, dentistry or real estate development, but that doesn’t mean you’re a good people manager. If you can’t afford to get profession human resources advice or services when you reach the point you need to hire employees, you must to do your homework and put in the time and effort necessary to educate yourself and make sure you comply with state and federal employment laws.

There are many potential threats to the viability of your business, including legal actions by job applicants, employees and government agencies enforcing employment laws. They can drain the financial resources from your business, in addition to taking time and energy you should spend running your business. Lawsuits and enforcement actions can also result in bad publicity, damaging your hard earned reputation.

If you’re running a small business and have questions and concerns about employment laws, or other laws impacting your operations, contact my office. We can talk about your situation, the challenges you face, the applicable laws and your options for moving forward.