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The number of federal and state laws and regulations that govern the workplace is ever increasing. Having a basic understanding about employment laws is important to avoid making mistakes that can lead to costly litigation.  Below are helpful tips regarding three (3) issues that a small business should pay particular attention to in order to protect its business and stay out of court.

1. Implement an Employee Handbook

Every business should have its personnel policies clearly set forth in an employee handbook.  An employee handbook is the most effective way to establish rules, benefits and expectations.  Employee handbooks are also an effective tool to help employers ensure consistent treatment of employees. This is important, because many employment discrimination lawsuits are based on inconsistent application of rules.  Once an employee handbook is created it should be updated and kept current.  It is a good practice to review the handbook each year. Any changes to the handbook should be communicated to employees in writing.

2. Protect Company Information & Relationships

Many employers do not understand that their employees may lawfully make plans to enter a competing business while they are employed.   One way to protect your company’s competitive information and customer relationships is to have your employees sign agreements that contain covenants against competition, solicitation of clients, recruitment of employees, and use of confidential information.  In addition, employers should also develop, disseminate and train employees on policies concerning the use of company-issued computers and electronic devices.   It is important to limit access to databases, documents or devices containing sensitive information through the use of passwords. Additional safeguards include labeling sensitive documents as “confidential” or “secret”; discarding  and shredding  printed copies of sensitive documents after use; and prohibiting employees from taking confidential information home with them.

3. Pay Your Employees Properly

The number of wage and hour lawsuits is rising, especially lawsuits based on failure to pay overtime.  It is a common misconception that if an employee is paid a salary the employee is exempt from the overtime laws.  In order for an exemption to apply, an employee’s salary and specific job duties must meet all the requirements of the Department of Labor’s regulations.  To meet the salary test, for example, employees must be paid on a salary basis at not less than $455 per week ($23,660 annually).  Employees earning less than this threshold are not exempt and must be paid overtime.    Actual job duties must also fit within the regulations.

Problems also arise when employers fail to pay employees for all compensable time. For example, break periods of short duration, usually 20 minutes or less, must be counted as hours worked. Other common pitfalls to avoid include failure to maintain pay records as required by law, failing to pay for certain travel time and for time employees spend donning and doffing protective gear, and making improper deductions from exempt employee paychecks.

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Given the expected rise in regulatory oversight, it would be prudent for employers to make sure that they have policies that are in compliance with federal and state employment laws.  By taking proactive measures, an employer can also protect its information and better position itself for growth and success.

Kenneth N. Winkler is a shareholder in Berman Fink Van Horn, P.C., an Atlanta based law firm.  Ken’s practice is concentrated in the area of employment law.  Ken has extensive experience working with entrepreneurs, and small privately held businesses and he is particularly effective in drafting employee handbooks, employment agreements and non-compete agreements.  Ken may be contacted at or 404.261.7711.

The legal information provided in these articles is general and should not be relied on as legal advice. Legal advice cannot be given without full consideration of all relevant information relating to your individual situation.

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