Essential Things Every Startup Should Know About Labor Law Compliance

by Josh Biggs in Startup on 29th October 2020

Although starting your own company is an exciting experience, it also comes with various challenges. If you’re a tech startup, you’re most likely to focus on product development at the expense of other aspects. It’s advisable to nurture your company culture from the start. As you work on achieving your objectives, remember to pay special attention to your hiring procedures. Ensure they comply with all relevant laws and regulations.

Which State and Federal Requirements Must You Adhere To?

Part of your startup journey entails familiarity with the following laws:

  • Fair Labor Standards Act (FLSA)

This federal law outlines regulations on minimum wage, overtime remuneration, child labor standards, and documentation. It covers both part-time and full-time employment in private and public organizations. FLSA violations can result in costly and time-consuming lawsuits and settlements.

Although it sets employment benchmarks for the entire country, some states and local authorities also create their own legislation. There are several aspects of employment that FLSA doesn’t govern. They include vacation, sick leave, pay raises, and employee termination. Your startup will have to craft most of these guidelines internally. 

  • Equal Pay Act

This law forbids workplace discrimination based on gender. It states that you must pay your employees equal salaries and wages so long as they provide the same amount of effort, skill, and responsibility under similar conditions. In case of varying wage rates, you must raise the remuneration of lower-paid employees to the level of their better-paid colleagues. It’s against the law to solve this discrepancy by reducing wages.

  • Economic Realities Test

This clause is an additional resource under FSLA to help you determine whether the people you hire are contractors or employees. The distinction can be hard to make in your startup’s early days when you’re yet to define clear roles. If the test shows that a worker is an employee, federal employment laws automatically apply to them.

Local regulations vary depending on your actual area of operation. Before launching your startup, engage qualified employment lawyers who are familiar with both federal and state labor laws.

Other Labor Law Compliance Tips

1) Optimize Your Recruitment Process

Independent contractors have different requirements for full-time employees. While hiring, refrain from making inappropriate inquiries touching on marital status, age, and other personal details. They could trigger legal and PR problems if unsuccessful applicants feel discrimination based on gender, race, creed, or disability. Stay up to date with state requirements because some jurisdictions require you to inform new hires about specific policies.

2) Keep Accurate Records

All employment contracts should be in writing because they come in handy in case of disputes, lawsuits, and other disagreements. Engage your employment lawyer to draft and implement detailed documents for each position in your startup. It’s advisable to document other areas of interest. They include policy reviews, training programs, employee performance evaluations, and warnings to errant workers. Submit some of these documents to the relevant enforcement agencies as a compliance measure.

3) Enforce Workplace Health and Safety Standards

Workplace health and safety laws don’t just apply to risky occupations such as mining and construction. Although some of OSHA’s rules won’t apply to your startup, you must still comply with the ones that do. Tech employees could suffer ergonomic injuries due to work-related musculoskeletal disorders (MSDs). Train your employees on how to avoid common workplace hazards. Your insurance provider can also offer detailed tips on health and safety compliance to reduce potential liability.

4) Labor Laws Outline Minimum Requirements

Even if you comply with all labor laws, you must remember that those are the minimum requirements. Strive to implement the highest standards possible to boost employee morale and overall productivity. Study and adhere to the laws that apply to your particular niche. Although you may seek clarification from the relevant enforcement agency, take their feedback as valuable suggestions and not legal advice.

5) Respect and Enforce Your Employees’ Constitutional Rights

Human rights should apply to all of your workers, whether they’re unionized or not. That means creating a harmonious environment where nobody feels discriminated against. Other than enforcing these rights, you must also actively investigate potential violations and take appropriate action.

6) Display Your Labor Law Posters

This rule applies whether you have remote or onsite employees. To maintain compliance, clearly show state and federal posters on your premises. Your remote employees should also have access to electronic versions of labor law posters. These printable documents are available for every state. Post them on your company intranet or email them to your remote workers to ensure everyone understands labor compliance requirements.

Final Thoughts

A firm regulatory foundation significantly improves your startup’s chances of success. Compliance with the latest state and federal labor laws will increase the morale of current and future employees. By engaging employment lawyers to handle your labor law compliance efforts, you’ll have enough time to focus on your company’s core objectives. This conducive environment significantly contributes to your long-term growth.

Categories: Startup