If you run a small business, you have a lot to think about: sales, expenses, taxes, and more. If you hire workers of any kind — such as full-time or part-time employees, temporary employees, or independent contractors — you also need to make sure that you're complying with the applicable labor laws.
Labor laws were created to prevent companies from taking advantage of their employees — whether intentionally or not — and violations can result in major consequences. Big corporations are now in the news regularly for violating wage laws, and the subsequent litigation often results in millions of dollars in back pay. Even if you’re not a large corporation, if you don’t pay your employees fairly and in accordance with labor laws, you could find yourself on the receiving end of a lawsuit.
Workers are beginning to assert their rights more actively, and as a result court cases related to fair wages have increased dramatically — in 2012, nearly one billion dollars was recovered for victims of wage theft.
Make sure you’re not committing these violations:
1. Pressuring employees to work off the clock
You are required to pay your workers for all time spent on the job. If you ask your employees to work during their unpaid lunch hour, stay after shift for additional tasks, or cover extra hours without pay, you may be committing a labor law violation.
Low-income workers are the most common victims of this type of wage theft because they are more likely to be paid hourly — whereas salaried employees are exempt from overtime. However, even if you hire exempt employees, guidelines related to break times and work hour limits affect your business. Make sure your business practices align with the applicable laws.
2. Classifying workers incorrectly
Independent contractor arrangements are becoming increasingly common. The current administration is working aggressively to halt wage misclassification practices and protect employees who would otherwise lack access to paid medical leave, overtime, unemployment benefits, and other essential protections. It’s important to verify whether your worker is actually considered an independent contractor under the terms of the law.
The IRS provides information about wage classification so you can determine how each worker fits into your business, and what laws apply to that particular relationship.
3. Paying below minimum wage
The current federal minimum wage is $7.25 per hour, but many states have implemented their own minimums. If you’re not paying your employees the minimum wage required by law, you may be committing wage theft and exposing yourself to a lawsuit.
Don’t be careless when it comes to paying your employees fairly. Follow the guidelines and laws that were created to protect both you and your employees.
Note: This post was written for informational purposes only and should not be misconstrued as legal advice.
