Whether you own a small business or a startup, becoming familiar with today's pivotal employment and labor laws is necessary for your company's and employees' success. Today's workforce is no longer at the mercy of their employers. What are the employment laws? Various employment and labor laws and regulations protect your employees, yourself, and your company.
Why Are Employment and Labor Laws Important?
As a small business owner, it's recommended that you become familiar with the various employment and labor laws, as each is crucial for your company to operate effectively. Each law clarifies and stipulates a company's obligation to its employees so employees are safe and protected in the work environment. While some business owners view employment and labor laws as bureaucratic, these laws are necessary components of a fair and just society for all involved. Below is a brief overview of the impact employment and labor laws make on our workforce today:
- Classification of workers
- Child protection
- Wage protection
- Reasonable hours and compensation
- Discrimination prevention
- Workplace Safety and Health
Fair Labor Standards Act
The Fair Labor Standards Act (FLSA) is a federal law that sets the standards for various labor-related issues, from minimum wage and overtime pay eligibility to recordkeeping and classifications for part-time and full-time employees and contractors. Small business owners must understand the FLSA guidelines to remain compliant and provide proper compensation for every employee. There are numerous details within the FLSA regarding wages and recordkeeping that you should be familiar with, such as:
- Currently, the Federal Minimum Wage has not increased since 2009, when Congress set it at $7.25. The minimum wage may increase by June 2025 to $15 if the Raise the Wage Act of 2021 is enacted in March 2021. Because of the low federal minimum wage amount, many cities and states have set a minimum wage law independently, as many studies have shown that $7.25 is not enough to live on.
- Some businesses allow customers to leave tips for employees, but the tips mustn't be shared with yourself or other managers, and some states have a lower tipped minimum wage. If your state follows this guideline, you can pay your employees a lower minimum wage as tips make up the difference. Your employee's hourly pay must meet or exceed your state's minimum wage guidelines.
- Overtime pay of one and one-half times the regular rate must be given to nonexempt employees working over 40 hours in a week to exclude weekend or holiday work unless otherwise specified. Labor costs and paid overtime can be controlled by adequately scheduling employees and hiring part-time employees.
- Certain records must be kept for a minimum period under FLSA, regardless of whether the employee works for you. If documents aren't stored as hard copies or virtually with a customer financing software program, you may be subject to a fine or alternative punishment.
Occupational Safety and Health Act
The Occupational Safety and Health Administration created the Occupational Safety and Health Act (OSHA) of 1970 to reduce activity that may put workers at risk or in hazardous situations. Several safety regulations in OSHA help minimize workplace danger. As an employer, it's your responsibility to let your employees know that they can seek training, request an OSHA inspection, and report safety concerns at any time. OSHA inspectors can show up without providing notice, so there are a few essential guidelines for you to be aware of:
- OSHA-compliant posters. Your employees must be informed of their rights by hanging OSHA posters in spaces where workers will see them regularly, like break rooms or restrooms.
- Hazardous substances. All hazardous substances must be identifiable and marked. Each employee must be trained and knowledgeable about treating injuries caused by these dangerous substances.
- Fire safety and equipment. Employees should be regularly trained in what steps to take during a fire, such as fire exits, fire equipment, and overall safety protocol.
Family and Medical Leave Act
As of 1993, businesses with more than 50 employees must offer eligible employees up to 12 weeks of unpaid leave per year for the birth of a child, adoption, illness, or other serious personal or family events. An employee is eligible for Family and Medical Leave Act (FMLA) benefits after being with a company for at least 12 months and having worked at least 1,250 hours in the previous year. Remember, while you as an employer cannot interfere with, prevent, or deny an employee from taking unpaid leave, you can require employees to fill out request forms and submit necessary medical documentation.
Whistleblower Protection Program
The Occupational Safety and Health Administration also oversees the Whistleblower Protection Program, which protects employees who expose or report workplace violations from termination or retaliation. The Whistleblower Protection Program allows workers to feel comfortable and confident expressing concerns without being concerned about being fired or demoted. If an employer retaliates against an employee in any way, they are in violation of this law.
Workers' Compensation
Guidelines for Workers' Compensation or "workers' comp" range from state to state, but businesses of every size must carry workers' compensation insurance as this will cover the medical costs of any employees injured on the job. An injured employee will receive partial wages from workers' compensation insurance while recovering from a workplace injury. Workers' compensation insurance also limits how an employee sues for negligence. If you don't have workers' compensation insurance at your business, you risk being sued by an injured employee, which could impact your company immensely.
Civil Rights Act of 1964
Our workforce is protected against many forms of discrimination because of the Civil Rights Act of 1964. This federal law protects employees against discrimination "based on race, color, national origin, religion, sex, and disability." Additional regulations were also established to protect against age and wage discrimination. Because of the Civil Rights Act of 1964, all employers are required to treat employees of any kind equally, whether during the hiring process, employment, or exit.
Unemployment Benefits
Employees can qualify for unemployment benefits if they've become unemployed for circumstances outside their control, such as being laid off or fired without notice. States nationwide have individual unemployment agencies, but these benefits are offered through a joint federal-state program meaning specific federal guidelines must be met. Unemployed persons in the United States are typically eligible to receive unemployment benefits for up to 26 weeks, depending on their unique situation and residing state-specific requirements.
Equal Pay Act of 1963
The ongoing gender pay gap has been a focus for many years, and as an employer, it's essential to know that it is illegal to pay women less for doing the same job as men. Most employees in today's workforce are discouraged from discussing their salary with other coworkers, making it challenging to identify disparity. Employers are encouraged to engage in appropriate workforce management so there is no discrimination between male and female salaries. While many factors play into an individual's offered salary, from the job description and actual duties to experience and education, female employees must receive equal pay to their male coworkers.
Final Thoughts
While researching and learning the various employment and labor laws in the United States may seem daunting, you must be known as a business owner to protect yourself. Today's workforce is protected in numerous ways, from being offered a minimum income level and allotted unpaid leave time to workplace protection. Without these various employment law protections, our employees would be vulnerable to unsavory employers. Familiarize yourself with employment and labor laws so your new business plan effectively caters to each employee's needs.
