The benefits of employment and labor law compliance
As small businesses transition into successful companies with many valuable employees on the payroll, understanding employment law becomes a necessity. The regulations that govern hiring, termination, and workplace management practices continue to evolve, so all employers should stay up to date as they focus on creating a positive culture in a fair and productive workplace.
In this blog post, we explain the basics of employment laws for business owners and why they are so critical for success. We also provide some useful tips to help employers in any industry navigate common legal challenges while protecting the best interests of their workers and businesses.
Why employment laws are important
Established companies, technology startups, and new manufacturing businesses rightfully prioritize their profit margins, growth strategies, and marketing plans as they compete for customers and carve out a unique niche. Those lucky enough to endure and expand should also count employment law compliance among their top priorities, since minimizing legal risks, retaining top talent, and fostering a positive company culture are just a few of the important benefits.
On the other hand, failing to give employment laws the time and attention they need can lead to many unwanted consequences, with employee lawsuits for workplace discrimination, unpaid wages, harassment, retaliation, and other issues potentially becoming sources of both financial and reputation loss. Businesses also put themselves at risk for state, federal, and local fines and penalties when they violate labor or employment laws.
Employment laws and employment policies
Employment laws are legally binding and enforceable regulations, while employment policies are internal guidelines that companies establish and document to encourage effective workplace systems and practices for:
- Employee pay, vacation, health, and retirement benefits
- Discrimination protections during hiring and promotions
- Worker safety training and emergency evacuation plans
- Non-disclosure of company secrets for current and former employees
Employment policies create an opportunity to convey expectations to employees or establish a foundation for training programs with more detailed work instructions and procedures. Managers and human resource teams should ensure their policies do not conflict with existing laws, and continually monitor the landscape to ensure the two remain in sync.
Employment law tips for business owners
The scope and variety of employment laws, along with the never-ending changes and additions, can become a source of frustration for businesses attempting to align their policies and practices to stay in compliance. Prioritizing key aspects of employment law while fostering a positive company culture can make it easier to navigate potential challenges.
1. Establish fair hiring practices
Every business wants to attract the best available talent to gain a competitive edge. To do this appropriately, hiring and recruiting processes must be performed in a way that is fair, unbiased, and non-discriminatory. Federal laws create a more level playing field for veterans, minorities, and those with disabilities. Many states also have laws in place to limit what can be included in background checks and protect candidate privacy. Companies should also stay current with state and federal laws regarding promotions as they attempt to get the right person in the right seat at work without violating the rights of other candidates.
2. Maintain thorough records
Record-keeping is a human resource practice with a direct impact on employment law compliance. All employee annual reviews, disciplinary actions, and other relevant documentation should be securely filed and retained in case it is needed to dispute (or support) future legal issues. Maintaining basic records for things like wages earned, hours worked, and dates of hire allows businesses to comply with employment laws, including the Fair Labor Standards Act (FLSA), while preserving company history.
3. Create a safe and healthy environment
Providing a workplace where all employees feel safe from physical and emotional harm should always be a high priority, regardless of the occupational health and safety regulations in place. Safety policies, training courses, and procedures, along with strong anti-harassment rules and practices, help to prevent situations that can put employees in harm’s way. More importantly, these policies and practices demonstrate the respect companies have for their most valuable assets.
4. Navigate termination and non-compete clauses
No worker or business begins the relationship thinking about their legal recourse if the tenure ends on bad terms, but these eventualities must be considered to stay on firm legal ground. All states except Montana have at-will employment laws in place, meaning most workers can essentially be let go for any reason, at any time. However, there can still be exceptions made based on retaliation, discrimination, and other factors that provide a basis for employee legal action.
As they carefully consider the legal implications of termination, companies should also ensure their non-compete and non-disclosure agreements are adequate to protect their intellectual property once employees land elsewhere.
5. Foster a positive workplace culture
Employment law presents a dizzying array of regulations that are subject to change and re-interpretation at any given time. These employment laws share the common goal of protecting workers from unfair, unsafe, or undisciplined situations that can damage more than their careers. Establishing a positive business culture through effective leadership and transparent communication is an overarching strategy that curtails many of the legal challenges faced by less responsible businesses.
A strong and well-established company culture also promotes a shared understanding of ethical standards, and open-door policies that encourage workers to report illegal or improper activities before they escalate into legal challenges.