What Laws Small Business Owners Should Consider?
There are many laws that small business owners need to be aware of and consider as they hire employees and grow their businesses. Even if you’re only hiring one employee, you need to check employment laws to make sure you’re in compliance.
It’s overwhelming as well as exciting when you hire your first set of employees. You’re excited because it’s a sign all your hard work is paying off since your business has grown large enough to require extra hands. However, it can be overwhelming when you’re confused about the laws and want to make sure you don’t accidentally get yourself in trouble. To help ease the confusion, here are five main areas you need to look into:
Laws That Apply to All Businesses Regardless of Size
Some laws are business size specific, whereas others apply to businesses of all sizes. Research the laws that are applicable to all businesses regardless of size. You must always follow them. Here are some laws that you and all other business owners need to abide by:
Child labor laws
Fair Labor Standards Act (FLSA)
Employee Safety – OSHA
Military service leave
Independent contractor rules by the IRS
Display of appropriate notices and posters
Immigration Reform and Control Act – Form I-9
Based on how many employees you have, there may be additional laws you need to follow. You’ll have to check your state and local laws to know what they are.
Understand the Definition of an Employee in Law
In order to remain in compliance with employment laws, you must understand what counts as an employee in law. You don’t want your small business to be punished over a misunderstanding of what constitutes an employee. Independent contractors don’t count as employees, but all other hires do.
Even if an individual only works one day a week, they are an employee unless they’re an independent contractor. Temporary employees are still employees even if you found them through an employment agency. To calculate your employee count if your payroll varies weekly, look at the 20 weeks of the year with the highest staff count.
Seemingly Minor Laws Matter
You already know the “common sense” laws, such as child labor, workers’ compensation, and anti-discrimination, but what about the lesser known laws that seem minor? Don’t ignore these laws. Your small business could get caught if you do. For instance, business owners are expected to allow their employees to leave work for their children’s school activities.
Check the Laws Before Hiring New Employees
Get into the habit of checking the laws before hiring new employees because employment laws may change. Even if you’re only adding one new hire, you need to be up-to-date with legalities surrounding employment. It’s a hassle but fines and court hearings are a bigger hassle. Prevent lawsuits and fines by diligently checking the laws before hiring new employees.
Check the Laws Again After Making Changes to Your Business
Hiring a new employee isn’t the only time you should check employment laws. Any time you make a change to your small business warrants checking the laws in relation to employment. Seemingly irrelevant changes may have been addressed in new employment laws since you last hired or last made a change to your business.
Understanding the employment laws that your small business must follow is essential for keeping your small business out of a court room. In order to always stay in compliance, develop the habit of checking employment laws after making changes to your business, checking employment laws when hiring a new employee, obeying the seemingly minuscule laws, understanding the definition of an employee in legal terms, and following the laws that apply to all businesses.