As your business continues to grow, you typically need to start hiring more employees. When doing so, there are things you need to know and understand about employment law.
Before You Hire...5 Things You Need to Know about Employee Law
As the economy continues to surge, business owner confidence is at a record high. For more than half of small business owners, that confidence is translating into record new hires, with many businesses hiring full-time employees for the first time. However, when a business cycles into a hiring mode, it must be able to wade through many layers of regulations born out of a tangled web of federal, state and even local jurisdictions. Mismanaged hiring or employment practices, whether intentional or unintentional, can have costly consequences, so business owners are wisely cautioned: Before you hire, there are five things to know about employment law.
Know which laws apply to your business
The various state and federal employment laws are applied based on the type, size, and scope of a business or organization. Such factors as amount or revenue, number of employees, business location, and business purpose dictate which laws apply. For instance, some federal laws such as Americans with Disabilities Act apply to businesses that employ at least 15 employees, while the Equal Pay Act applies to any business that falls within the purview of the Fair Labor Standards Act which includes just about every business.
Know Your State's Requirements
Most states have issued their own requirements for laws that regulate discrimination, so it is just a matter of studying the regulations for the state in which the business operates. For some regulations, such as those that regulate wages and overtime, state and federal laws overlap which requires a business to comply with both sets of laws even where the standards are different. Local governments may issue their own wage requirements which can add another layer of compliance.
Know that multi-state employment compounds the complexity
The challenge of complying with overlapping federal, state and local laws is compounded if the business employs people in multiple states. Each state may have its own requirements and the mix of government regulations in one state may require a completely different approach to total compliance than with another state. The solution for some companies is to adopt the highest possible standards for discrimination, wages and such and apply those in all states. This also could address the difficult issue of creating employee handbooks that can satisfy each state and locality's standards.
Know that the national labor relations act applies to you
Most small businesses are surprised to know that the NLRA doesn’t just apply to companies that hire union employees. It actually applies to any company with at least one employee that is involved with interstate commerce and ensures the right of any group of employees to organize. This does not apply to businesses involved in agriculture.
Know the requirements for conducting a valid background check
Background checks are becoming more necessary and businesses are coming under more scrutiny in their practices. The Fair Credit Reporting Act regulates the practice of background checks and, its requirements can be somewhat confusing. While employers have the right to check into the background of prospective employees, the prospective employees also have rights which are enumerated in the Act.
Employee laws have sprung up, piecemeal over the course of many decades to the point where all businesses are impacted in one way or another. Understanding the laws that affect your business is vital to minimize legal mishaps. The best course of action for any business may be to work with an employment attorney, who can help structure practices and policies for employee hiring and relations.
Read other situation analysis articles