Running a business means staying apprised of the current legal landscape and making sure your operations comply with the rules. Labor and employment regulations are among the easiest to violate, but failing to follow them can also become quite costly.
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 doesn't serve as a valid excuse for breaking the law.
"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."
The below four laws in particular are often a concern for small businesses. In a previously conducted Business News Daily interview, Kaplan offered her advice on how to ensure compliance.
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FMLA and employee leave
The Family and Medical Leave Act (FMLA) is a commonly misunderstood employment law. Private-sector employers with 50 or more employees are required to grant eligible workers up to 12 weeks of job-protected, unpaid leave for certain family and medical reasons during a 12-month period. [Want to learn more about FMLA? Read our 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, and can do so by closely examining the reasons employees give to justify their leave through an employee request form and mandatory medical certifications. By doing so, employers can determine whether an employee's absence meets the standards for FMLA leave set out under the law.
NLRA's role with non-unionized employers
Even if your company doesn't employ unionized workers, you're still subject to the requirements of the National Labor Relations Act (NLRA). 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 and protection" — commonly referred to as Section 7 rights. These rights include the 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 advised employers to carefully craft their social media policies, and perhaps even seek legal counsel to ensure they aren't restricting permitted online activity.
However, it is worth noting that since President Donald Trump's election, the NLRB has become markedly more friendly toward employer policies. In December 2017, the board overturned previously standing 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, employers' rationale for establishing the policy are taken into consideration before the board determines that a rule violated employee rights.
OFCCP and affirmative action requirements
In 2013, the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) issued two new rules to strengthen discrimination protections for veterans and individuals with disabilities: the Vietnam Era Veterans' Readjustment Assistance Act (VEVRAA) 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 record-keeping 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 as protected veterans or disabled individuals at both the pre-offer and post-offer stages, via an OFCCP-compliant form.
FLSA and IRS employee misclassification
Many small business owners rely on independent contractors to keep operations running. But depending on their relationship with the business, these workers may be considered employees by the federal government.
The Fair Labor Standards Act (FLSA) requires covered employers to pay overtime to employees working more than 40 hours per week at a rate of one-and-a-half 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 are targeting 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 level of control the employer has over the worker's day-to-day operations, as well as his or her contributions to the business, will usually dictate the worker's status.
If you're unsure about how these or any other employment law issues affect your business, visit the Small Business Administration website, or consult with an attorney.
It's important to note that 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 remain prepared for new developments and keep an eye out for further changes to the existing rules.
Additional reporting by Adam C. Uzialko.