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Managing Employees

A small business owner spends much of their time managing employees. This requires a basic understanding of employment law. You also must know how to maintain a harmonious workplace. Large companies rely on their human resources departments for employee management. Small business owners must act as their own HR department.

In this section, you will find information on various management issues. Articles include creating discipline and company policies, creating an effective employee handbook, and implementing a telecommuting policy.

Company Policies and Employee Handbooks

Small businesses sometimes skimp on company policy. When you only have a few employees, it can seem like a waste of time. Everyone knows what's happening and who their co-workers are—why have an employee handbook?

Having the rules that apply to your business in one place is a good idea. After all, even small businesses must follow federal laws. As your small business grows, more laws will apply.

The Fair Labor Standards Act (FLSA) applies to all employers. It sets the federal minimum wage, weekly hours, and overtime pay. It also affects child labor and recordkeeping laws. Some states, such as California, have higher minimum wage laws and differing hourly and overtime standards.

Title VII of the Civil Rights Act prohibits employers with more than 15 employees from discriminating based on race, religion, gender, national origin, or sexual orientation. The 2020 Supreme Court decision in Bostock v. Clayton County, Georgia, expanded this to include gender identity.

The Family and Medical Leave Act (FMLA) guarantees all eligible employees up to 12 weeks of unpaid leave. The FMLA covers employers with more than 50 employees. Some states have similar laws for fewer employees.

Your employee handbook should contain information about the state and federal labor laws applying to your particular industry. Handbooks should also include reporting information for the Equal Employment Opportunity Commission (EEOC). The EEOC handles anti-discrimination laws and complaints.

Disciplinary and Termination Policies

Federal and state laws affect how employers can discipline and terminate their workers. Even in "at-will" states, anti-discrimination laws prohibit firing employees based on race, religion, or gender.

Employers must ensure their disciplinary policies are fair, proportional, and even-handed. Most businesses have a sequential or stepped approach to discipline. For instance, a first violation is a verbal warning; a second is a written warning. Your disciplinary policy should be part of your employee handbook.

Employees and the Internet

Internet and email policies are essential now that nearly every company has an online presence. The internet and email make communication easier with customers, vendors, and employees. Internet security is just as important. You must keep your business secure and promote your employees' productivity.

Your internet policy should have two parts. One part is protecting your customer information. The other is protecting and monitoring your employees' internet use. While the two parts work together, they are separate policies.

Customer data includes credit card information, names, addresses, and shipping information. PCI Data Security Standards require merchants to keep consumer data secure.

Employee internet use balances employee rights to privacy in the workplace and the employer's business needs. Employers can track employees' internet use and install security software on their routers. Letting your workers know that you are doing this is a good idea.

Employee Personnel Files

It's a good idea to keep a personnel file for each employee. Personnel files should contain job-related documents, such as:

  • Offer letters
  • Job applications
  • Employment contracts
  • Salary and employee benefit information
  • Discipline and performance reviews

Proof of employment documentation (I-9 documents) must be available in a separate file for Department of Labor inspection. Medical records and health insurance must have their own files under HIPAA and ADA regulations.

Small businesses without human resources departments should consider using document management software (DMS) to maintain their records. These systems will update automatically and ensure compliance with DOL and other regulatory agencies.

Employees can access their own files according to company policy and state law. Files should have limited access at all other times.

Telecommuting and Remote Work

More employers have turned to telecommuting and remote work to appeal to new employees and improve the work environment. Although work-from-home has been around for some time, the 2020 pandemic made it effective for small businesses as well as large companies.

Not all companies are suitable for remote work. Not all employees within a company want to work from home full-time. Small business owners should consider some factors when developing their policies.

In general, state laws cover remote workers. But a few cities, such as San Francisco and New York, also have local laws for remote and hybrid workers.

The Americans with Disabilities Act (ADA) requires employers to offer reasonable accommodations to workers with disabilities. Telecommuting can be one of those accommodations. If an employer offers telecommuting, it must allow employees with disabilities equal opportunity to participate in such a program.

Your policy should include a method of tracking workers' hours and job performance. The workweek should conform to your company's regular business hours.

Independent Contractors

Another aspect of remote work has been the rise of independent contractors. Small businesses needing temporary specialists or part-time workers can use independent contractors in several ways.

Contractors handle their own payroll taxes and health insurance. Employers don't need to deduct social security or income taxes from the worker's pay.

Most independent contractors work from home or in an existing workplace. They don't add any cost to your business overhead.

Contractors work according to the terms of a separate agreement. Once the contractor completes the terms, the employment relationship terminates.

Hiring an Employment Law Attorney

Small business owners want effective employees. Management can be difficult, and wage and hour laws are complex. When you need legal advice about employee management, talk with a business law attorney in your area.

Learn About Managing Employees

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