Employment Law Resources

Running a small business means wearing many hats. If you're lucky enough to have a human resources department, great! Otherwise, you're your own HR manager. That means knowing all the federal and state laws about hiring, firing, and employee benefits. There are compliance issues to handle and record record-keeping regulations to follow. A small business owner can easily become overwhelmed.

Fortunately, government agencies want you to succeed with your business. They understand that you may not have a big HR department like a Fortune 500 company, so resources are available for you. Understanding federal laws and state regulations is essential for crafting company policies that protect your business and your workers.

Visit FindLaw's Employment Law and Human Resources section for additional links and information.

Hiring, Wages, and Benefits

Bringing new employees into your business and keeping them is essential for small businesses. You can't afford a high turnover if you have only a few workers.

Federal and state regulations regulate the hiring process. How you advertise job openings, interview candidates, and offer benefits are all defined by law.

The Equal Employment Opportunity Commission (EEOC) oversees most federal employment laws. The EEOC handles discrimination complaints and wrongful termination claims. The U.S. Department of Labor Wage & Hour Division oversees federal wage and hour disputes.

Hiring and Interviewing

The hiring process begins with your job listing. Whether you make multiple listings on internet job boards or use a private service, there are some rules you must follow. These include:

• You're not required to list any job functions. If you do, you must provide essential job functions according to the Americans with Disabilities Act (ADA). These are the elements of the job a worker must be able to perform with or without reasonable accommodation.
• Your job description must avoid overt or subtle discrimination that may violate Title VII of the Civil Rights Act.
• Any pre-employment testing must be given after a conditional offer of employment. Drug tests, most skills testing, and psychological evaluations cannot be used to pre-screen applicants. Polygraph tests (lie detector tests) are prohibited except in a few particular cases.

Discrimination is a major consideration in hiring and interviewing prospective employees. Keep the following in mind:

• Title VII of the Civil Rights Act prohibits hiring decisions based on race, religion, gender, or national origin. The 2020 U.S. Supreme Court Decision Bostock v. Clayton County Georgia incorporated sexual orientation and gender identity into Title VII.
• The Age Discrimination in Employment Act (ADEA) prohibits discrimination in hiring and firing workers over the age of 40.
• The Americans with Disabilities Act (ADA) states any otherwise qualified worker must be considered for a position if they can carry out the essential functions of the job with or without reasonable accommodations.

Small businesses should get legal advice when developing hiring policies to avoid discriminatory behavior during their hiring process.

Employee Compensation

Compensation is anything paid or provided to your employees which is required by law. This differs from fringe benefits or perks you offer as incentives. The Fair Labor Standards Act (FLSA) determines the federal minimum wage, overtime pay, and employee classifications.

Under the FLSA, all businesses with at least two employees are covered and must follow the guidelines. These include:

• Paying all non-exempt employees the minimum wage of $7.25 per hour
• Paying overtime wages at a rate of one and one-half times the employee's hourly rate
• Displaying a recordkeeping poster in a prominent location
• Obeying child labor laws

State laws about minimum wage and overtime pay differ from the FLSA. Where state wages are higher, employers must pay the higher rate. Check with your state labor board before making final wage and compensation decisions.

Health Insurance and Workers' Compensation

Health insurance is often a new hire's number-one concern when getting a new job. Since the advent of the Affordable Care Act (ACA), businesses with more than 50 employees must provide employees with the option to purchase health insurance.

The Trump Administration removed the individual mandate requirement of the ACA, but five states (California, Massachusetts, New Jersey, Rhode Island, and Vermont) and the District of Columbia kept it.

Several states now require small businesses to provide some type of group health insurance or pay part of their employees' state-mandated premiums. Review your state's requirements with your insurance carrier or state labor board.

All states except Texas require employers to have workers' compensation insurance. Workers' comp is not an alternative to health insurance. Workers' compensation protects workers and employers in case of job-related injuries or illnesses.

Time off and Medical Leave

The Family and Medical Leave Act (FMLA) applies to all businesses with more than 50 employees. Eligible employees may take up to 12 weeks of unpaid leave every 12 months for:

• Medical purposes
• The birth of a child
• The adoption of a child

Complying with the FMLA is not an option. Employers must display a notice of FMLA regulations in plain view at the workplace.

Paid time off (PTO) and paid sick leave are not federal mandates. Some states, such as California, now require these benefits by law.

Workplace Policies

HR professionals suggest having a written workplace policy that describes your anti-discrimination, disciplinary, and other policies. Create an employee handbook you can give new workers during onboarding. Most states now require regular anti-discrimination and anti-harassment policies and training.

Written policies protect employees and employers. A written policy ensures that everyone gets the same information. It provides clear guidelines for managers when correcting workers' behavior. If an employee sues your business for discrimination or harassment, a written policy or handbook is powerful evidence on your behalf.

Discrimination and Harassment

Federal discrimination and harassment laws carry over from hiring into the workplace. The same rules that apply to employing new workers also apply to their interactions on the job. Workplace discrimination can include unequal treatment in:

• Pay or benefits
• Discipline or corrective action
• Opportunity for promotion or advancement
• Harassment, including awareness of harassing behavior

The U.S. Department of Labor (DOL) defines harassment as any unwelcome conduct based on race, religion, gender, national origin, sexual preference, or sexual orientation. Harassment becomes unlawful conduct when:

• It becomes a condition of continued employment
• The conduct is severe or pervasive enough to create a hostile work environment

Once the employer becomes aware that harassing or discriminatory behavior occurs in the workplace, they must address it. Otherwise, the employer is liable for any legal action.

Discipline and Termination

Large businesses have the advantage of HR support for unpleasant tasks. When a manager at a big company must reprimand an errant worker, they can send them up to HR. Small business owners must do the dirty work themselves.

Having good HR policies written before you begin can help streamline the process. There are no federal or state disciplinary rules except those against discrimination. Determining your attendance policies and other rules is up to you. There are HR software programs and websites that can assist you with formulating your policies.

Terminating workers is never enjoyable. Employers must take care to follow state and federal guidelines about discrimination and age requirements. Older workers may not be terminated to avoid paying pensions. If an employee has filed an EEOC claim or whistleblower complaint, an employer must exercise caution to avoid a possible wrongful termination lawsuit.

Hiring an Employment Law Attorney

It's essential to ensure your business complies with all employment laws required of a company in your particular industry and location. If you have questions or concerns about the employment laws that apply to your business, you should contact an experienced employment law attorney near you.