Employment laws that small business owners should be mindful of

Small business owners may be violating employment laws even as they are just trying to be good employers by being lenient and kind. Many of the problems arise from the fact that state laws vary enormously. But some of these mistakes are universal and are often prohibited by federal law. 

Most small business owners aren’t lawyers and probably don’t have enough time to keep up with constantly changing small business employment laws. Calling on an attorney to stay updated can be complicated, too. Still, it’s important for you to take the time to educate yourself so that you can keep your workers safe and happy. Here are a few of the ways companies often get in trouble with the law. 

Often, employers are sued for failure to provide meal and rest periods for nonexempt employees who are improperly classified as exempt. An exempt employee is typically someone who is paid a specified amount of money — a salary — regardless of the number of hours worked per week. Under both state and federal law, these positions may be exempt from overtime requirements, as well as meal and rest breaks. Problems begin when employers pay everyone a salary, rather than dealing with meal and rest breaks, overtime, and time sheets.

Don’t be fooled because Federal law doesn’t require this or that. While federal law doesn’t require employees to be given lunch or coffee breaks, certain states require that non-exempt employees get 30-minute lunch breaks, plus breaks for hours worked during the day. Laws even stipulate when the break must be given. In some states, a meal break must be provided no later than the end of the employee’s fifth hour of work. So giving employees the option of skipping lunch to get out of work early is a law-breaker.

Terminating employees for taking a leave of absence is illegal. The law protects employees from being fired for taking family or medical leave, military leave or for serving on jury duty.
Giving employees loans and deducting repayments from their pay checks is also problematic. Most states don’t permit employers to deduct anything other than pay and benefits from employee paychecks. Instead, have the employee sign a promissory note with the oversight of a lawyer and arrange a regular schedule of repayments.

It’s tempting to be the small business owner who wants to let your new employees work in a less-structured environment. You may allow your employees to set their own work hours. You may lend your employees money and then deduct the loan from their payroll. Think hard before going down this road. Your relaxed work environment could be violating state or federal labor laws. It may be your desire to be a flexible, kind, and loved employer. However, you are not running a popularity contest, you are running a business. Get on the right track before you hire your first employee by creating an employee handbook and ensuring you are following the law.