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#4 Labor Laws That All Business Owners Should Understand

By Nicole Fallon, Business News Daily Assistant Editor June 1, 2014 04:04 am EST

Credit: Labor law image via Shutterstock

Legal compliance is an important part of running any business. Federal regulations govern numerous aspects of business, and labor and employment laws are among the most carefully scrutinized.

Larger corporations can hire dedicated HR professionals and keep attorneys on retainer to help the business stay up-to-date and in compliance with labor laws. But a lack of resources doesn t excuse small businesses from dealing with these important legal issues.

Many small businesses think they can fly under the radar with some of the bigger federal labor laws, said Ashley Kaplan, senior employment law attorney for the HRdirect family of brands, including PosterTracker.com. But the truth is, the labor law umbrella covering businesses is extensive, and every employer needs to be aware.

In recent months, businesses of all sizes have raised a few major employment law concerns. Kaplan discussed four key areas that employers should fully research and understand. [9 Laws That Affect Small Businesses in 2014]

FMLA and employee leave. The Family and Medical Leave Act (FMLA) is a commonly misunderstood employment law. Private-sector employers with 50 or more employees are required to grant eligible workers up to 12 weeks of job-protected, unpaid leave for certain family and medical reasons during a 12-month period.

In addition to very specific requirements regarding coverage and eligibility, the FMLA prohibits employers from interfering with, preventing or denying any rights provided by the law, Kaplan told Business News Daily. It s important to understand the nuances.

Kaplan noted that employers can help reduce employee abuse of the FMLA by thoroughly examining the reasons for leave through an employee request form and mandatory medical certifications. In doing so, companies should determine whether an employee s absence qualifies under FMLA guidelines.

NLRA s role with non-unionized employers. Even if your company doesn t employ unionized workers, you re still subject to the requirements of the National Labor Relations Act (NLRA). This law applies to most private employers, and grants employees the right to unionize, collectively bargain, and engage in concerted activity for their mutual aid and protection commonly referred to as Section 7 rights. These rights include the permission to discuss the terms and conditions of employment, such as wages.

The National Labor Relation Board s aggressive approach to social media policies in the workplace has proven problematic for employers, Kaplan said. Although most employers have limited what employees may post on Facebook or Twitter, such efforts can get companies in trouble if the rules interfere with Section 7 of the NLRA. Kaplan advised employers to carefully craft their social media policies. and perhaps even seek legal counsel to ensure they aren t restricting permitted online activity.

OFCCP and newly expanded affirmative action requirements. In September 2013, the Department of Labor s Office of Federal Contract Compliance Programs (OFCCP) issued two new rules to strengthen discrimination protections for veterans and individuals with disabilities: the Vietnam Era Veterans Readjustment Assistance Act (VEVRAA) and Section 503 of the Rehabilitation Act. Effective March 24, 2014, the affirmative action requirements for covered federal contractors and subcontractors include measurable hiring targets, as well as new record-keeping and data-tracking obligations.

Contractors must now strive to achieve an aspirational utilization goal for hiring qualified individuals with disabilities: 7 percent of the total workforce for contractors with 100 or fewer employees, or 7 percent for each job group for larger employers. The OFCCP also requires contractors to establish hiring benchmarks for protected veterans.

You can opt to use the national benchmark of 8 percent, or develop your own figure based on leading labor statistics, certain VEVRAA factors and your own hiring circumstances, Kaplan said.

As an additional compliance requirement, employers should invite applicants to voluntarily self-identify as protected veterans or disabled individuals at both the pre-offer and post-offer stages, via an OFCCP-compliant form.

FLSA and IRS employee misclassification. Many small business owners rely on independent contractors to keep operations running. But depending on their relationship with the business, these workers may actually be considered employees by the federal government.

The Fair Labor Standards Act (FLSA) requires covered employers to pay overtime to employees working more than 40 hours per week at a rate of one-and-a-half times those workers regular hourly rates. Any employee ineligible for overtime pay must fall clearly under the FLSA s executive, administrative or professional exemptions (often referred to as white collar exemptions ), which involves specific job responsibilities.

Both the IRS and the Department of Labor are targeting businesses that purposely misclassify workers to avoid paying overtime, payroll taxes and other employee-related expenses, Kaplan said. The IRS uses a 20-factor test to determine worker status, based on three key areas: behavioral factors, financial factors and type of relationship. The level of control the employer has over the worker s day-to-day operations, as well as his or her contributions to the business, will usually dictate the worker s status.

If you re unsure about how these or any other employment law issues affect your business, visit the Small Business Administration website, or consult with an attorney.

Nicole Fallon

Nicole Fallon received her Bachelor s degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. She currently serves as the assistant editor. Reach her by email. or follow her on Twitter .