Before starting a small business, you must be aware of employment law for two primary reasons – preventing liability and business disruption. Both of which can end your enterprise. From the moment you even begin to hire your first employee, you have triggered various employment laws, some more, some less, depending upon your state. Regardless of where you are however, the landscape of your business has changed.
The first misstep can begin with a job advertisement, formal or even informal. Any advertisement that has the effect of excluding an increasing number of protected classes, can result in disruptive agency inquiries at the least and actual liability at the worst. While federal laws regarding various types of protected classes generally do not apply until an employer has fifteen or more employees, state and local laws, often apply at much lower levels and some even at one employee. In this situation, both affected applicants and the state or municipal enforcement authority can bring actions for the violation.
Once hired, an all to common mistake new businesses make concerns employee classification or unfortunately, misclassification under the wage and hour laws. You cannot afford to make this mistake; legal fees alone can cost thousands of dollars, let alone penalties, interest and treble damages. For purpose of these laws, (also known as minimum wage and overtime laws) employees fall in to one of two categories, exempt or non-exempt. That’s it. Unfortunately, there are so many embedded anecdotal methods for making this decision that are wrong, employers, new and established, think they have done the right thing by checking into it themselves and going with what seems like an easy answer; “she has her own office and for years has been paid a salary, so she doesn’t get overtime.” Not necessarily. The truth is the anecdotal methods have nothing to do with the law, are wrong, and you will likely wind up on the wrong side of a department of labor investigation or suit for overtime pay – very disruptive.
Assuming you’ve cleared the first two hurdles by getting some advice from an employment lawyer, there are few more items you need to protect your business. The first is the basic boilerplate policies that deal with equal opportunity, sexual harassment and disabilities that each employee needs to read and acknowledge – in writing. Recently, federal law has greatly expanded the scope of employer liability in cases of employee disability or even “perceived” disability with the enactment of the Americans with Disabilities Act as Amended. Knowing the new scope of the ADAA is the first step in avoiding liability.
The next item to address is whether you need to have an employment contract and if so whether it should have a non-competition provision. In addition to clearly addressing compensation and at-will status, these agreements can protect your business from disappearing and reappearing down the street. There are significant state law limitations and exclusions, so these provisions must be carefully drawn so as to protect your business as much as possible.
We know some hazards of operating a small business cannot be prevented such as accidents, weather disasters and information system hiccups. However, we have seen by looking at only a few employment law questions, small business can prevent employment liability and employment related business disruption by being aware and getting the right advice.
Mark Manta has earned a reputation for excellence in the delivery of legal services as the founder, owner, and managing partner of a successful legal practice specializing, labor/ employment law, and HR consulting. Mark Manta’s legal career has been distinguished by the award of the highest peer review rating for attorneys by Martindale-Hubbell, the preeminent attorney rating organization, and a history of zero losses in all cases proceeding to trial. Mr. Manta has litigated discrimination, sexual harassment, FMLA, ADA, NJFLA, NJLAD, Title VII, CEPA, whistleblower, wage and hour, and trade secret cases. In addition to his litigation success, Mr. Manta has developed new/updated existing HR policies in numerous industries, insulated companies from risk by ensuring legal compliance, protecting company interests/assets, and preserving individual employee rights. www.mantacole.com