Labor Laws That All Small Business Owners Need to Understand


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Any small businesses that employ a number of people have to worry about federal labor laws. While many of these laws only apply to certain sizes of companies, it’s still recommended for all business owners to be aware of all these laws in order to do everything by the book. One law might not affect a company that has less than 15 employees, but if the company grows beyond this point things may change completely.

In this article, we’ll cover the federal labor laws that small-business owners need to know about in order to run a successful business.

FLSA (Fair Labor Standards Act)

The FLSA is a law that regulates if certain employees are eligible to get paid for overtime or not. Most businesses in the US are affected by it, including small businesses. In order for an employee to be excluded and ineligible to get paid for overtime work, all three of these conditions must be met:

  • Minimum salary – An employee must earn at least $23,600 per year ($455 per week) if they are to be excluded from overtime pay.
  • Paying consistency – An employee must be salaried and their paycheck should be relatively unchanged.
  • Types of duties performed – An employee must have an executive, administrative, or professional position. This is to ensure that everyone on the bottom of the work chain is entitled to their overtime pay if they work over 40 hours per week.

OSHA (Occupational Safety and Help Act)

OSHA regulates safety and health conditions in a workplace. It requires employers to report any health issues that might be jeopardizing the safety of their employees but also obligates the employers to have a clean and hazard-free workplace. Employees are allowed to file an OSHA complaint if they feel like their health is at risk and they can do so without any fear of retaliation.

Businesses that employ 11 or more people are under obligation to keep records of work-related injuries for 5 years. Small businesses mostly face OSHA related issues due to uncleanliness, so it’s a good idea to hire a weekly cleaning service.

Title VII of the Civil Rights Act

This labor law was put in place to prohibit discrimination in employment and especially in hiring practices. Whether it’s race, color, creed, religion, national origin, age, or physical and mental disabilities, everyone has the same right to employment as long as they are qualified to do the job.

Any business that employs 15 or more people must comply with Title VII, but it’s recommended as a good practice for any business out there to comply with it. There’s no denying that discrimination is still present in most workplaces, so employees have the right to file a complaint if they feel they are being discriminated against.

INA (Immigration and Nationality Act)

This labor law applies to foreign citizens who are authorized to work in the U.S. through a number of visa programs, like H-1B, H-1B1, or H2A. Every business regardless of its size must comply with INA and it’s the main reason why I-9 forms must be completed within 3 days of hiring a new employee. The I-9 form is used for verifying the identity as well as employment authorization of any employees who are seeking employment in the United States from the outside.

Not filing the I-9 forms within the 3 days can get you in a lot of trouble if your employees prove not to be eligible to work in the US, which is why you’ll want to ask your new employees to bring an ID on their first day at work.

ADA (Americans with Disabilities Act)

This law was meant to bring another layer of protection for people with mental and physical disabilities, an area that is already regulated by Title VII act. The purpose of ADA is to prohibit any employers, governments, or recruiting agencies from discriminating against job candidates with disabilities, whether it’s during a job application process, career advancement, or firing process. ADA also regulates pregnancy, as it’s treated as a temporary disability, so pregnant women can file an ADA complaint just as well as any other employees with disabilities.

While ADA is only for businesses that employ 15 or more people, experts from WithstandLawyers advise all businesses to comply with it if they are to avoid liability and a potential lawsuit.

EPA (The Equal Pay Act of 1963)

EPA was put in place to ensure that all employees are given equal pay for equal work, whether they are male or female. This basically means that it’s against the law for employers to pay women less than men for the same content of work that they do and vice-versa. Keep in mind though that employers are not obligated to give an equal pay based on a job title, but rather based on the job content.

Bottom Line

Understanding federal labor laws are vital for any small-business owner if they want to keep their business out of trouble. There are also many state laws that regulate the same areas as federal laws, in which cases you should always comply with the one that benefits the employee the most.

Complying with labor laws isn’t just about avoiding any legal issues, it’s also about being a good employer and respecting your employees in order to grow your business.

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