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Updated Nov 20, 2023

7 Labor Laws You Might Be Breaking

There are many labor laws you should know, but check out these seven you may be missing.

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Nicole Fallon, Business Ownership Insider and Senior Analyst
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This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.

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Following and keeping apprised of all federal and state labor laws and regulations is integral to running a business. For small businesses without in-house HR professionals and legal counsel, this can be a difficult task. However, 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.

Editor’s note: Need help with compliance? Consider outsourcing your HR to a third party. Fill out the below questionnaire to be connected with vendors that can help with HR outsourcing.

Labor laws you need to know

Below are seven federal labor laws you need to ensure your business is complying with. 

1. FMLA and employee leave

The Family and Medical Leave Act is a commonly misunderstood employment law. Under this 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. 

“It’s important to understand the nuances,” said Ashley Kaplan, director and senior corporate counsel at ComplyRight, Inc. “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.” 

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.

2. 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 and grants employees the right to unionize, collectively bargain and engage in concerted activity for their “mutual aid or 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 limit 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 in their handbook, and perhaps seek legal counsel to ensure they aren’t restricting permitted online activity. 

However, during former President Donald Trump’s time in office, the NLRB became 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.

Did You Know?Did you know
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.

3. 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 percent of the total workforce for contractors with 100 or fewer employees, or 7 percent 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.

4. 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]

Many regulations (and even some agencies) came under consideration for significant changes during the Trump administration. It’s important to prepare for new developments and keep an eye out for further changes to the existing rules. 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.

Key TakeawayKey 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.

5. 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.

6. 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 inform 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.

7. Child labor laws

Working with young employees can be an interesting experience. If you do hire minors, make sure you comply with child labor laws. Under the FLSA of 1938, it is your responsibility as an employer to ensure your workplace is safe and doesn’t threaten the well-being or schooling of your young staff.

You cannot treat minors the same as adult workers. Based on their age, minors 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.

These laws vary by state, so check to see what’s permitted where you live. Labor laws protections are managed by the Wage and Hour Division.

If you employ minors, 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.

The importance of understanding employee labor laws

Labor law compliance requires you to stay up to date on the legal landscape to make 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,” Kaplan said. “But the truth is, the labor law umbrella covering businesses is extensive, and every employer needs to be aware.”

Failure to follow labor laws can result in financial penalties of up to $10,000 and possible jail time. Depending on the offense, you may have to provide back pay 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.

Keeping your company compliant

Labor law compliance keeps your business out of legal trouble and provides a safe work environment for your employees. Take some time to periodically review these and other labor laws, and check for any amendments, because the specifics of these laws change often. When you keep up with labor laws, you stay out of trouble — and keep your employees happy and safe

Shayna Waltower and Simone Johnson contributed to this article. Source interviews were conducted for a previous version of this article.

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Nicole Fallon, Business Ownership Insider and Senior Analyst
Nicole Fallon is a small business owner with nearly a decade of experience overseeing day-to-day business operations. She and her co-founder self-funded their company and now lead a team of employees across multiple disciplines. Fallon's first-hand experience as an entrepreneur running a staffed business has given her unique insight into startup culture, budgeting, employer-employee relationships, sales and marketing, and project management. Fallon's business expertise is evident in her work with the U.S. Chamber of Commerce, where she analyzes small business trends. Her writing has been published in Forbes, Entrepreneur, and Newsweek, and she enjoys collaborating with B2B and SaaS companies.
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