Chances are you stop at red lights, signal before turning and know when to yield. Motor vehicle laws are generally clear and specific and we all need to pass a test to get our drivers’ license. Before you hired your first employee, however, nobody tested you on the applicable employment laws—but those laws exist and they apply to your business.
One of the first things to realize when you have employees is that there are laws, rules and regulations (federal, state + local) that may apply and you can’t always just do what you want.
As stated by L. Ron Hubbard in 1956:
“A game consists of FREEDOMS, BARRIERS and PURPOSES.”
This applies to the game of running and expanding your business. While the employment laws may seem to you to be barriers to achieving your company’s goals and purposes (and I agree that some of them can be a real pain), you’ll never overcome them (or prevail against them) if you don’t know what they are.
This is a simple point, but one that I find in my practice repeatedly . . . business owners don’t know there’s something to know here and often ignore the fact that there are laws they need to follow regarding how they deal with their employees. Despite an entrepreneur’s desire to do it his or her way—there is something to know about having employees. Failing to bother to obtain that vital knowledge often puts companies in legal hot water.
For example, you can’t decide that your company doesn’t pay for overtime hours or that everyone will be on salary. The wage and hour laws don’t work that way. You may not be able to just fire the pregnant lady even if your company is in an at-will state and her performance is just horrible. And asking job applicants about their medical and psychiatric history, or the drugs they are taking (even if you really want to know), is a flagrant violation of the disability discrimination laws. Furthermore, in many U.S. states you cannot require that compensation be paid by direct deposit—that choice needs to be optional.
Additionally, although many companies have policies prohibiting employees from discussing their compensation such restrictions violate the National Labor Relations Act. But wait, I can hear you saying: The National Labor Relations Act (“NLRA”) only deals with U.S. labor union issues and your company is not unionized. That’s partially true, your humble attorney will tell you—but this U.S. law also applies when employees take what are called “concerted protected activities,” those actions employees take together to improve the terms and conditions of their employment such as how they are paid. In fact, the NLRA is now being interpreted to apply to your social media policy, your confidentiality policy, and even your at-will policy (whether you have unionized employees or not). With knowledge of the appropriate laws, however, and how they apply to you, each of these situations can be properly addressed in a way that protects the company.
Management-side employment lawyers, such as myself, partner with business owners and provide advice and counsel on this area where an ounce of prevention is worth a pound of cure. Legal fees for prevention are far less than defending an employee lawsuit. Just like you’ve learned your trade and profession, and have someone provide you with advice on marketing, and have hired an experienced accountant, don’t forget that when it comes to having employees there are rules of the road that need to be learned. And it is something you can know about and can use for your company’s betterment and expansion.