Every state has its own set of pros and cons for the small business owner, and employment laws can break your business if you’re not familiar with them. Employment laws can be different depending on your industry, as the rules are usually different for exempt and non-exempt employees. Whether you’re operating a retail business, a restaurant, a professional services firm, a research based business or any number of others businesses, there are certain laws you need to follow or you could find yourself facing some serious penalties.


Exempt vs. non-exempt

One of the most common ways in which startup companies fail to comply with employment law is by not classifying employees correctly. Employers must follow labor code for all non-exempt employees, but don’t assume that your employees are exempt. According to a 2015 California Employment Law Report article titled “Five Exempt Employee Classifications All California Employers Should Understand” by Anthony Zaller, “The employer bears the burden when classifying an employee as exempt, and simply providing a title to an employee does not make them exempt. The employee must meet very specific requirements for each applicable exemption, and if the requirements are not met the employer must comply with all wage and hour requirements — such as overtime pay, etc.”

The National Labor Relations Act (NLRA)

Even if your employees are non-union, your business is still subject to the rules of the National Labor Relations Act. According to the National Labor Relations Board, “Congress enacted the National Labor Relations Act (NLRA) in 1935 to protect the rights of employees and employers, to encourage collective bargaining, and to curtail certain private sector labor and management practices, which can harm the general welfare of workers, businesses and the U.S. economy.” Under this act, even non-union employees may be entitled to some of these rights.

Age Discrimination in Employment Act (ADEA)

Most startups are aware of the Americans with Disabilities Act and Equal Opportunity Employment Laws, and the Age Discrimination in Employment Act is similar. This law protects workers over the age of 40 from being subject to discriminatory practices. According to the Equal Opportunity Employment Commission, part of the law states, “It shall be unlawful for an employment agency to fail or refuse to refer for employment, or otherwise to discriminate against, any individual because of such individual’s age, or to classify or refer for employment any individual on the basis of such individual’s age.” If your company has to conduct layoffs, you may need to take additional steps to ensure that you aren’t discriminating against older workers. Employment laws are complex, and not knowing about them is not a valid excuse for breaking them. If you’re not sure whether or not your workplace is up to snuff, check with your local Small Business Administration to find a professional who can evaluate your company.

This article was written by Alaina Brandenburger for CBS Small Business Pulse.


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