Managing Your Business

9 Commonly Misunderstood Labor Rules

As a small business owner, it's up to you to stay current with laws that affect your employees. This includes making sure to 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 employee 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. Your employees can request unpaid leave from your company for the following reasons:

  • 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
  • Recuperation time for a serious illness that prevents an employee from performing his or her duties
  • Any urgent situations that occur 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 your company on social media

Also covered in the NLRA is employees' ability to post their views about your company on social media. This is allowed because the act calls for employees being 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. These include 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. Treating independent contractors as employees

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. Deciding which employees to exempt from overtime

An employer is unable to decide which employees are exempt from overtime. The type of work the person is doing determines whether he or she gets overtime.

According to the Fair Labor Standards Act (FLSA), employees working more than 40 hours per week must be paid overtime pay at a rate of one-and-a-half times the workers' regular hourly rate.

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. To make this determination, the IRS uses a 20-factor test. Ensure that your company is following the rules in this area to avoid problems with Uncle Sam.

7. Not paying employees for unauthorized overtime

If an employee works overtime despite your instructions to not 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 hours. You may, however, discipline the employee so that the behavior is hopefully not repeated.

8. Understanding 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. Misunderstandings regarding what constitutes 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.

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

Ready to Start Your Business?