Small Business Compliance: 4 Common Law Violations
Employee Misclassification
The IRS itself is taking this problem more and more seriously. The idea is that you hire someone whom you manage as an employee but classify as a contractor; that means you don’t offer them benefits nor do you pay certain taxes for them. Employees lose benefits, the IRS loses income, and employers can lose a bundle if they’re found guilty of violating any of the provisions of the FLSA (“wage-and-hour” laws), including employee misclassification. Misclassification issues not only put employers in the IRS’s crosshairs, it can be costly. Just ask Uber, whose $100 million settlement with 400,000 drivers in California and Massachusetts was thrown out for being too small a settlement.
Company Email
How can company email be illegal? Well, it depends on your policies. The National Labor Relations Board (NLRB) has ruled that all employees with access to company email for work have a right to use their employer’s email for protected, non-business use during non-working time. In plain English: any requirement that employees limit their use of company email to work-related communications outside of working hours is probably unlawful. That’s not all: if you expect non-exempt employees to respond to work emails after hours, that time may be legally compensable under the FLSA, including overtime.
Family and Medical Leave
The Family and Medical Leave Act – which allows eligible employees of employers with 50 or more workers within a 75-mile radius to take up to 12 weeks each year of unpaid leave for specific family and medical reasons – can be tricky to follow. The complexity of the law means there are many routes to non-compliance. Do you prohibit eligible employees from taking FMLA leave? Do you impose illegal restrictions or requirements upon those who do? You must also be wary of disciplining, laying off, or firing employees who take FMLA leave. You are allowed to discipline or terminate employees who fail to follow company policy or to meet their job requirements. However, the Department of Labor has established that the burden of proof will be on the employer to prove that the employee would have been subject to discipline or termination even if not on leave.
Job Interviews
Ill-advised interview questions could make your company vulnerable to a U.S. Equal Employment Opportunity Commission (EEOC) complaint or litigation. Interviewers may not ask questions relating to protected classes like age, gender, disability, marital or family status, etc. On the surface, that seems simple enough, but the issue can become subtle, and it’s possible to “back into” prohibited questions with seemingly innocuous inquiries. For example, if you ask about the availability of child care, you’re asking about family status. Similarly, there are some protected categories that may surprise you, such as country of origin, which means you cannot ask about U.S. citizenship during the interview process. After you’ve hired the candidate, you will have to verify their eligibility to work in the U.S., but the Immigration Reform and Control Act generally forbids employers from asking applicants about their citizenship prior to an offer of employment.
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with HR administration, benefits, payroll, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.