- Labor laws are protections and safeguards to help ensure employees are safe and protected in the workplace.
- Many labor laws and regulations are mandated by the Occupational Safety and Health Administration, which enforces safe and healthy working conditions.
- Failure to follow labor laws can result in financial penalties and lawsuits.
- This article is for business owners who want to ensure their compliance with all the labor laws required to run their business.
Following and keeping apprised of all federal and state labor laws and regulations is integral to running a business. Large companies have the luxury of hiring HR professionals and legal counsel to stay informed of their compliance status and any changes in the pipeline. For small businesses, this can be a more difficult task, but a lack of resources isn't a valid excuse for breaking the law. It's critical to stay on top of these issues, as labor and employment regulations are among the easiest to violate.
Importance of understanding employee labor laws
Labor law compliance requires you to stay up to date on the legal landscape, making sure your business operations follow the rules.
"Many small businesses think they can fly under the radar with some of the bigger federal labor laws," said Ashley Kaplan, a senior labor and employment law attorney. "But the truth is, the labor law umbrella covering businesses is extensive, and every employer needs to be aware."
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Failure to follow labor laws can result in financial penalties up to $10,000 and possible jail time. Depending on the offense, you may have to provide backpay plus interest to your employees or pay for lost employee benefits. You could also be hit with lawsuits from impacted employees, which can be an expensive scenario of court costs, settlement fees and jury awards. These lawsuits can also damage your brand's reputation, which can have serious long-term ramifications.
Key takeaway: Breaking a federal labor law can result in costly penalties and expensive lawsuits that damage your business's reputation.
FMLA and employee leave
The Family and Medical Leave Act is a commonly misunderstood employment law. Private-sector employers with 50 or more employees must grant eligible workers up to 12 weeks of job-protected, unpaid leave for certain family and medical reasons over a 12-month period. [Want to learn more about FMLA? Read our FMLA compliance guide here.]
"In addition to very specific requirements regarding coverage and eligibility, the FMLA prohibits employers from interfering with, preventing or denying any rights provided by the law," Kaplan told Business News Daily. "It's important to understand the nuances."
Employers also play a role in reducing employee abuse of the FMLA, Kaplan said. As an employer, you should closely examine the reasons employees give for their leave through an employee request form and mandatory medical certifications. This way, you can determine whether an employee's absence meets the legal standards for FMLA leave.
Key takeaway: The Family and Medical Leave Act requires employers with 50 or more employees to provide 12 weeks of protected unpaid leave for workers if they or their family members become ill.
NLRA's role with nonunionized employers
Even if your company doesn't employ unionized workers, you're still subject to the requirements of the National Labor Relations Act. This law applies to most private employers, granting employees the right to unionize, collectively bargain, and engage in concerted activity for their "mutual aid and protection" – commonly known as Section 7 rights. These rights include permission to discuss the terms and conditions of employment, such as wages.
The National Labor Relations Board's aggressive approach to social media policies in the workplace has proven problematic for employers in the past, Kaplan said. Although most employers have limited what employees may post on Facebook or Twitter, such efforts can get companies in trouble if the rules interfere with Section 7 of the NLRA. Kaplan advises employers to carefully craft their social media policies, and perhaps even seek legal counsel to ensure they aren't restricting permitted online activity.
However, since President Donald Trump's election, the NLRB has become markedly friendlier toward employer policies. In December 2017, the board overturned precedent that made it easy for an employee to push back against policies they believed could be "reasonably construed" to interfere with their rights under Section 7. Now, an employer's rationale for establishing the policy is taken into consideration before the board determines that a rule violated employee rights.
Key takeaway: Even if your company doesn't hire unionized workers, the National Labor Relations Act gives your employees the right to form labor unions and come together to discuss a collective bargaining agreement, and to negotiate workplace conditions and their salary.
OFCCP and affirmative action requirements
In 2013, the Department of Labor's Office of Federal Contract Compliance Programs issued two rules to strengthen employment discrimination protections for veterans and individuals with disabilities: the Vietnam Era Veterans' Readjustment Assistance Act and Section 503 of the Rehabilitation Act. The affirmative action requirements for covered federal contractors and subcontractors went into effect in 2014 and include measurable hiring targets as well as recordkeeping and data-tracking obligations.
Contractors must now strive to achieve an "aspirational utilization goal" for hiring qualified individuals with disabilities: 7% of the total workforce for contractors with 100 or fewer employees, or 7% for each job group for larger employers. The OFCCP also requires contractors to establish hiring benchmarks for protected veterans.
As an additional compliance requirement, employers should invite applicants to voluntarily self-identify on an OFCCP-compliant form as protected veterans or disabled individuals at both the pre-offer and post-offer stages.
Key takeaway: The Department of Labor's Office of Federal Contract Compliance Programs has several labor laws on the books to specifically protect veterans and those with disabilities.
FLSA and IRS employee misclassification
Many small business owners rely on independent contractors to keep operations running. Depending on their relationship with the business, though, these workers may be considered employees by the federal government.
The Fair Labor Standards Act requires covered employers to pay overtime to employees working more than 40 hours per week at a rate of 1.5 times those workers' regular hourly rates. Any employee ineligible for overtime pay must fall clearly under the FLSA's executive, administrative or professional exemptions (often referred to as "white-collar exemptions"), which involves specific job responsibilities.
Both the IRS and the Department of Labor target businesses that purposely misclassify workers to avoid paying overtime, payroll taxes and other employee-related expenses, Kaplan said. The IRS uses a 20-factor test to determine worker status, based on three key areas: behavioral factors, financial factors and type of relationship. The employer's level of control over the worker's day-to-day operations, as well as the worker's contributions to the business, usually dictate the worker's status. [Read related article: Difference Between Exempt and Nonexempt Employees]
If you're unsure how these or any other employment law issues affect your business, visit the Small Business Administration website, or consult an attorney.
Many regulations (and even some agencies) have come under consideration for significant changes since the beginning of the Trump administration. As such, it's important to prepare for new developments and keep an eye out for further changes to the existing rules.
Key takeaway: The Fair Labor Standards Act requires employers to pay workers who put in more than 40 hours per week 1.5 times their hourly rate.
Whistleblower Protection Program
It's important for employees to feel comfortable speaking up about workplace violations. The Occupational Safety and Health Administration (OSHA) Whistleblower Protection Program protects employees who expose or report a company's violations from termination or retaliation. Under these protections, workers can express their concerns without the fear of being fired or demoted. Employers are in violation of this law if they retaliate against the employee in any way.
Key takeaway: OSHA's Whistleblower Protection Program protects workers from backlash if they report their employer for violating any laws.
OSHA's workplace safety rules
OSHA aims to reduce activity that puts workers at risk or in hazardous situations. The Occupational Safety and Health Act of 1970 has several safety regulations in place to minimize workplace danger.
For example, if you have harmful chemicals at your worksite, you must provide safety data sheets about the substances to employees. In addition, you must display labor law posters or verbiage that informs workers how to properly report workplace safety issues. Workers should also have access to the information that they have the right to seek an OSHA inspection, and training if needed.
Key takeaway: OSHA sets guidelines to keep workers physically safe in the workplace. The Occupational Safety and Health Act requires employers to disclose to workers that they have the right to seek training or an OSHA inspection and how to report any safety concerns they have.
Child labor laws
Working with young employees can be an interesting experience, and it's important to get it right if you do hire minors. Under the FLSA of 1938, it is your responsibility as an employer to ensure your workplace is safe and doesn't threaten the wellbeing or schooling of your young staff.
You cannot treat minors the same as adult workers. Based on their age, they are only allowed to work a certain number of hours and within certain industries. For example, those 14 or younger can be employed as actors or performers, work in certain agriculture jobs, deliver newspapers, or work for their parents.
Key takeaway: If you employ youth, make sure the job doesn't interfere with their education or go over the legal number of hours for their age, and that your workplace meets safety regulations for minors.
Simone Johnson and Adam Uzialko contributed to the reporting and writing in this article. Source interviews were conducted for a previous version of this article.