5 Labor Laws All Business Owners Should Know

As a business owner, you have little time to enjoy the satisfaction of having proven the naysayers wrong by turning a dream into a full-fledged business enterprise. The demands on your time can be overwhelming. Getting together with a business law attorney to ensure that your business complies with state and federal labor laws must be a priority.

All businesses must comply with laws enacted to protect workers or face enforcement action by state and federal regulatory agencies as well as lawsuits filed by or on behalf of workers seeking damages. Some laws may only apply to certain businesses or industries, but here are five labor laws that all business owners need to know.

Fair Labor Standards Act

The FLSA sets federal standards for business owners including the following pertaining to the payment of workers: 

  • Minimum wage: Establishes a federal minimum wage, but state law may require payment of a minimum wage that is higher than the federal minimum of $7.25.
  • Overtime pay: The law requires the payment of overtime pay to employees working in excess of 40 hours a week.
  • Classification of workers: The law prohibits the misclassification of workers. For example, an employer cannot avoid paying minimum wage, overtime, or benefits by classifying someone as an independent contractor who is, in fact, an employee.

The law applies to workers under the following circumstances:

  •         Work for a business with annual sales of at least $500,000.
  •         Employed by a business engaged in interstate commerce.
  •         Housekeepers, cooks, and other domestic service workers.

Determining whether your business is subject to the FLSA can be tricky. For example, someone employed to do custodial or janitorial services in a building where products sold in interstate commerce are produced would be protected by the FLSA. 

Keep in mind that state laws pertaining to wages and other matters included in the FLSA also may apply to your business. For example, 29 states and the District of Columbia currently require businesses to pay minimum wages that are higher than the federal standard.

Family and Medical Leave Act

The FMLA applies to businesses with 50 or more employees. Workers who have been on the job for at least a year must be offered up to 12 weeks of unpaid leave without risk of losing their jobs. The following are some of the situations to which the FMLA may apply:

  •         A worker caring for a sick family member.
  •         Birth or adoption of a child.
  •         Illness of a worker.
  •         Emergencies or other caregiving situations related to military service of a member of a worker’s family.

Although your business may have to comply with FMLA because it has fewer than 50 employees, at least 30 states have medical and family leave laws. Some of them, such as California, require paid leave based on the duration of employment and the hours worked by an employee. You should check the labor laws in your state to learn if they apply to your business even when a particular federal law does not.

Occupational Safety and Health Act

The Occupational Safety and Health Administration is a federal agency created by the Occupational Safety and Health Act to set and enforce rules and regulations protecting workers throughout the country. OSHA shares responsibility with local agencies to oversee worker safety standards in states that have enacted their own laws.

Violation of OSHA safety standards can subject your business to penalties, including a $7,000 civil penalty for each violation for which a citation is issued. A willful violation resulting in the death of a worker may subject an employer to criminal prosecution.

Workers’ compensation laws

Workers’ compensation laws in each state provide a method for people injured or sick because of accidents or conditions related to their job. The laws differ from state to state, but they generally provide the following benefits:

  •         Payment of medical treatment for work-related injuries and illness.
  •         Payment toward wages lost from being unable to work while recovering.
  •         Payments to dependent family members for the work-related death of a worker.

Benefits are provided through insurance paid for by businesses that have employees. Failing to maintain coverage can subject a business to penalties.

Workplace discrimination: Civil Rights Act of 1964

Although you may not immediately think of it as labor law, the Civil Rights Act of 1964 prohibits employers from discriminating in the hiring, promotion, and firing of employees on the basis of race, color, religion, sex, or national origin. Other federal statutes now include age, gender, and disability as grounds for claims of discrimination by employees.

As with other labor laws mentioned in this article, keep in mind that many federal laws now have counterparts on the state level that you need to know about to ensure compliance by your business. The easiest way to keep track of them is by relying on the advice and guidance of an attorney with experience in business law.

Author’s Bio:

Steve Howards has been writing legal-centric articles for several years now. He started working with the personal injury attorney law firm Herrig & Vogt in 2019 as the Content Marketing Manager, which has allowed him to expand on his writing in personal injury, family law, and much more. Steve strives to offer the public advice on various laws covering a variety of practices.


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