According to the U.S. Small Business Association, the country's 28 million small businesses account for 55 percent of all jobs. As such, it's no surprise that as Americans recover from recent financial downturns, many are making the move to small-business ownership or expanding their companies into neighboring states. However, along with the freedom and creativity offered by small-business operation comes the need to find — and follow — local employment rules. The following are five tips to help ensure you stay compliant:
1. Know Federal Laws
Employers must always comply with federal law, so the first step is to ensure you know which federal employment laws apply to your employees. Federal law will also generally guide in the absence of any state or local mandates. For example, the Department of Labor requires that after 40 hours of work in one week, employees must be paid time-and-a-half of their regular rate of pay for each subsequent hour. Some states do not have similar overtime requirements, while others may have more stringent requirements. For example, in California, employees are entitled to double-time after eight hours on the seventh consecutive day of work. To help avoid costly fines or penalties, employers should comply with the requirement that provides the most generous benefit to employees.
2. Recognize State Differences, Know Local Requirements
As noted by Business News Daily, complying with employment laws in states such as Texas is often easier than in states on the East Coast or West Coast, where where employees are afforded more protections. This is vital for companies considering a move or an expansion. If you're moving to a state that is friendly to small and midsize business, you may be held to less stringent requirements, while a move to higher-competition states such as New York may require more strict adherence to state requirements. Some cities, including major areas such as New York City, Chicago and San Francisco, have their own requirements, particularly around paid sick leave and 'ban the box' laws.
3. Hire Help
Most small businesses have limited HR staff. Typically, one person — often the owner — handles HR for the entire company. Since you may not necessarily be an HR expert, it's easy to miss important requirements or inadvertently violate state law. Enterprise suggests hiring an HR professional where applicable. Forming a working relationship with an attorney who specializes in employment law is one cost-effective way to get expert advice on local employment rules.
4. Attend Community Meetings
In many cities, the local Chamber of Commerce will hold information nights or meet-and-greet sessions for new business owners to give them an opportunity to learn about local laws and ask questions. Attending these sessions is a great way to help you stay compliant and increase your visibility in the community, which can help expand your potential customer base.
5. Get Specific Data
Sometimes, you just have to do the legwork. The U.S. Department of Labor website has helpful information about federal and state minimum wage laws, minimum employment age requirements and minimum rest periods to ensure you aren't inadvertently violating state employment rules. It is also a best practice to review applicable state department websites, such as the New York State Department of Labor, for more detailed explanations of local laws.
Noncompliance with employment rules is accidental for most small businesses and can be the result of overwork and lack of HR expertise. However, the consequences can be significant — fines and penalties may be enough to sink your company. Constantly educating yourself can make a big difference in helping to avoid labor losses.
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