Little-Known Employment Laws That Can Mess With Your Business

Seasoned entrepreneurs know the importance of ensuring that they comply with relevant employment laws before hiring people, but those new to the world of business often make mistakes, and this can land them in serious legal trouble. The last thing your startup wants is a legal liability for failing to comply with employment law.

Take a look at some of the most common ways new entrepreneurs fail to comply with employment law.

Failing To Pay For Rest Breaks

Entrepreneurs want to be as efficient with their capital as possible. Because of this, they are often loathed to pay their employees while they munch on snacks or go outside and smoke a cigarette. But the law says that all employees must receive paid compensation during breaks, even if they are not productive with their time. Failing to pay employees for this time can land you and your business in serious legal bother.

The law surrounding what constitutes a paid break is a little convoluted. Employers have to pay employees for short breaks lasting between five and thirty minutes. But there’s no requirement in the law to add hour-long lunch breaks to an employee’s cumulative time. In other words, if the break is longer than 30 minutes, you don’t have to pay for it.

Firing An Employee For Taking A Leave Of Absence

The purpose of employment law is to protect individual employees and provide a fair legal framework business owners can use to deal with disputes. But many new entrepreneurs do not know the full scope of the law, and this, again, can land them in legal trouble.

A common issue is firing employees who have taken a leave of absence. Consider the following scenario: an employee gets sick with a long-term illness, and their doctor prescribes them six months off work to recover.

As a startup entrepreneur, you might think that the best thing that you can do in that situation is to fire the employee and hope that they get better in the future so that they can return to work. But not so fast: if you did fire that employee, you would have just broken employment law. Employment law forbids employers from letting employees go solely on the grounds of absence.

That’s not to say that you can never fire an employee for being absent. If they continually turn up to work late or takes time off on holiday without following your vacation policy, then you have grounds to dismiss them.

Subtracting Anything From Employee’s Pay (Except Taxes And Benefits)

Firms often get into trouble with the law, according to Ogletree Deakins, when they start subtracting sums of money from their employee’s pay.

Consider the following situation: an employee causes damage to your equipment, so instead of making them pay for it directly, you just take some money out of their paychecks for the next few months. Well, if you do that, then you’ve just broken employment law. The only things that you are legally allowed to remove from an employee’s paycheck are taxes and benefits.

The same applies when giving an employee an advance or a loan. Let’s say that the employee is in a bit of financial trouble and needs a quick cash injection to keep themselves afloat. So you decide that you’re going to do something nice and provide them with a loan upfront. You will pay yourself back by taking some money out of their paycheck every month. Again, you’ve broken the law if you do this.

If you do give a loan to an employee in trouble, make sure that they sign a promissory note. Do not remove any pay from their paychecks. Allow them to pay you back using their own financial facilities according to the terms of your agreement.

Wrongly Classifying Employees To Avoid Paying Extra Hours

One of the great things about salaried workers for employers is that they don’t have to pay them overtime if they work longer than their contracted hours. This makes things simple for business owners by reducing the complexity of their accounts.

But there’s a problem: it’s not always the case that salaried workers do not need to be paid for the additional hours they work above their contract. There are some conditions where employers must still shell out.

For instance, the law says that only some employees can be classified as exempt from being paid for extra hours. They must earn more than $23,660 per year, they must have some responsibility in the company, and they must be paid on a salary basis.

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