Managing Your Business

9 Commonly Misunderstood Labor Rules

As a small business owner, it’s up to you to stay current with labor employment laws that affect your employees and abide by labor rules. Failing to follow labor laws can result in expensive fines and litigation from disgruntled employees.

The following nine labor rules are often misunderstood. Learning as much as possible about them will help you avoid any issues. 

(The following is for informational purposes only and is not legal advice. If you have a legal question about labor rules, consult a licensed business attorney.)

1. Employee Leave Through the FMLA

The Family and Medical Leave Act (FMLA) applies to companies with 50 or more employees. The act ensures that eligible workers receive up to 12 weeks of unpaid leave for medical or family reasons. Your company must keep employees’ jobs available and protected during their time off.

To show eligibility for unpaid leave, employees must provide employers with documentation from a medical professional relaying why the person needs time off for medical reasons. Employees can request unpaid leave from your company for the following:

  • To care for a newborn child within the first year of life

  • To care for an adopted or foster care child within one year of placement

  • To manage the care of a child, parent, or spouse with a serious medical condition

  • To care for a military family member with a severe injury or illness

  • To recuperate from a serious illness that prevents an employee from performing his or her duties

  • For any urgent situation that occurs because an employee’s direct family member is in the military on active duty

2. Employee Right to Discuss Salaries With Coworkers

The National Labor Relations Act (NLRA) states that employers cannot stop most employees from discussing their salaries and terms and conditions of employment amongst themselves. Employees are permitted to discuss wages because this is necessary to organize or unionize if desired.

3. Employee Freedom to Post Negatively About a Company on Social Media

An employee’s ability to post their views about your company on social media is also covered in the NLRA. This is allowed because the act calls for employees to be able to come together to make changes to their employment. The right is protected, even if all the employees do is complain.

If you wish to include a social media policy in your employee handbook, it’s advisable to seek legal counsel to ensure you’re not violating Section 7 of the NLRA.

4. OFCCP and Affirmative Action Requirements

It’s essential to understand the rules released by the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) in 2013. These included strengthened discrimination protections for veterans and those with disabilities. 

Affirmative action requirements went into effect in 2014, including hiring quotas for qualified individuals with disabilities that amount to 7% of the total workforce. Employers must also allow employees to voluntarily self-identify as disabled individuals or protected veterans.

5. Independent Contractors

There are strict rules as to who you can treat as an employee. As their name suggests, independent contractors are in business for themselves. However, if contractors who work for your business fit certain criteria, they are considered employees by the federal government. It’s important to know the difference.

A contractor is independent if the person creates their own schedule and works most of the time offsite. They can work when they want and accomplish their jobs in whatever way they see fit.

6. Employees and Overtime

A common misconception is that an employer can decide which employees are exempt from overtime. This isn’t true. The type of work the person is doing determines whether they get overtime.

According to the Fair Labor Standards Act (FLSA), non-exempt employees with more than 40 hours of work per week must be paid overtime pay at a rate of one and one-half times the workers’ regular rate of pay. You can find more information on the Department of Labor’s Wage and Hour Division page, which also includes laws regarding minimum wage.

Employees ineligible for overtime pay must fall into the FLSA’s executive, administrative, or professional exemptions, sometimes called white-collar exemptions. These jobs require specific job responsibilities and requirements.

Keep in mind that the IRS and the Department of Labor are on the lookout for businesses that misclassify workers to avoid overtime and taxes. The IRS uses a 20-factor test to catch these offenders. Ensure that your company follows the rules to avoid problems with Uncle Sam.

7. Paying Employees for Unauthorized Overtime

If an employee works overtime despite your instructions not to do so, the employee is still owed overtime pay. It doesn’t matter if the person is violating a written policy or direct orders. A manager or supervisor who is aware the employee is working overtime must compensate the person for the extra workday hours. You may, however, discipline the employee so that the behavior is hopefully not repeated in another workweek.

8. Wrongful Termination

Generally, employees are working for your company “at will.” That means they can be terminated from employment at any time for any reason without notice from you. 

Wrongful termination involves an employee being fired because of discrimination on the part of your company. Knowing your rights will protect you from employees who falsely accuse your company of wrongful termination.

9. Harassment

Harassment is a commonly used term that many don’t fully understand. Some employees may think that the term refers to having to work with a superior who is difficult to deal with. That’s not the case. 

Harassment refers to when management or another employee commits repeated aggressive actions against an employee. The harassment involves one’s sexuality, religion, gender, or race. If any of these circumstances arise, your company may be liable.

To safeguard your company and prevent labor law issues, review your employee handbook now. Check that none of your policies or rules violate your employees’ rights according to labor rules and federal law.

Running a business in a professional manner and staying informed is the best way to ensure that your company is successful. For more human resource tips or help with managing your small business, please check out our learning center, or reach out to our friendly Swyft Filings business professionals.

Originally published on October 24, 2022, and last edited on November 17, 2022.

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