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Surprising Laws That May Apply to Your Small Business

Surprising Laws That May Apply to Your Small Business

These laws could be applicable to your small business. Are you in compliance?

  • You might be surprised to learn that there are laws that govern almost all aspects of business. Managers of small businesses need to ensure that they do not violate any laws and regulations, from hiring to compensation to financing.
  • Small businesses could be breaking the law by failing to provide workers’ compensation and family leave.
  • Work with HR managers and attorneys to stay on top of any regulatory changes and protect your business.
  • This article was written for small business owners that want to be compliant with state and federal laws.– It can be difficult to keep up with the constantly changing rules and regulations that affect businesses. Many small business owners are acutely aware that there are many laws and regulations that affect their businesses. These laws are constantly changing and it is easy to forget them with daily business operations.

Small mistakes can have serious consequences for small businesses. If business owners fail to follow the applicable laws, they could face fines or even lawsuits. It doesn’t absolve anyone who breaks the law, so it is important to be informed. These are the laws that often get small business owners caught off guard.

1. It is possible to confuse freelancers.

Because it is more cost-effective and flexible than hiring full-time employees , many small businesses hire freelancers. Your small business may need to consider whether the freelancer is an employee or an independent contractor depending on how they are employed. You could face severe penalties if you fail to comply.

Lauren Milligan, ResuMAYDAY’s CEO and career advancement coach, stated that she has consulted many small-business owners over the years. She found that most of them don’t understand the legal distinction between independent contractors or employees. “Most people were classifying their employees as independent contractors and paying them for it. But, in reality, they were requiring their employees to be classified as employees. This is a mistake that can lead to fines, tax problems, and labor violations for the business owner.

Independent contractors have to meet certain criteria. Otherwise, the freelancer must fall under the employee classification. These are the main criteria for independent contractors.

  • Each individual can influence what and how much work they do.
  • The individual is responsible for payment, reimbursement and provision supplies.
  • There are no ongoing agreements regarding typical employee benefits such as insurance, pension plans, or paid time off.

These criteria may not be met by a freelancer. They might have to be classified as employees and paid accordingly. If the freelancer fails to meet these criteria, they may need to be classified and paid as an employee. Not to be overlooked is the fact that certain states have even more stringent guidelines regarding independent contractor classification.

2. The laws against sexual harassment are becoming more precise.

Many states and cities have tightened existing laws against sexual harassment in the wake of #MeToo. New York, for instance, requires that all businesses with more than one employee adhere to a set of new training standards.

According to Paychex’s senior compliance analyst Tammy Tyler, employers with employees in New York must either adopt the state-approved model sexual harassment prevention training, or develop their own version that meets or exceeds state minimum standards. All employers must offer interactive anti-sexual harassment training to all employees, regardless of their classification, by October 1, 2019, and every year thereafter.

New York is not the only state that has strengthened sexual harassment protections at work. States like Washington, Connecticut, Maryland and Delaware have passed or are contemplating passing laws that regulate sexual harassment prevention and training in the workplace.

3. Small businesses are also affected by antitrust regulations.

Antitrust laws might be viewed as something that affects large corporations or rules that go back to Theodore Roosevelt’s trust-busting administration. These laws can also affect small businesses. Antitrust laws are applicable to price fixing, collusion, or monopolization. It doesn’t really matter how large or small the company is.

“Antitrust is a field of law that we usually associate with large, Fortune 500 companies, but federal antitrust legislations can and have affected small business,” stated Priyanka Prakash (senior staff writer at Fundera, and former attorney. Antitrust laws are in effect when a business, regardless of its size, sets prices with other businesses, uses unfair competition, or monopolizes a market. The market can also be defined as a small geographical area. Small businesses can be affected.

Antitrust violations can be both criminal and civil penalties under the Sherman Act . They are punishable with a maximum $350,000 fine and a three year sentence in prison. Antitrust laws are not something to be played with.

4. Workers’ compensation insurance may be required by law.

Many small business owners are unaware that workers’ compensation insurance in many states is as important as auto insurance for drivers. According to Manta’s survey of 900 small-business owners, it is illegal to not have it. However, 26% of them operate without it.

[Want more information about workers’ compensation insurance?” For more information, see our primer.

For violations of workers’ compensation insurance, the penalties can be severe in some states. For example, in New York, a violation of workers’ compensation insurance could lead to a $2,000 fine for each 10-day period. This includes any workers’ compensation costs that may be incurred if the employee is hurt on the job.

New Jersey’s failure of workers’ compensation insurance can result in a $10,000 fine and up to 18 months imprisonment. Pennsylvania has harsher penalties, with a $15,000 fine and seven year imprisonment.

Understanding the laws governing workers’ compensation in your state is crucial, as it affects your business’ profitability and freedom.

5. Popularity is growing for the ‘Ban The Box’ laws.

Ban the box refers to the practice that bans the checkbox from application forms which requires applicants to disclose if they have been convicted. Employers can discriminate against those who have already been sentenced for a felony by using the box.

Verified First compliance manager Rebecca Weiser stated that several states have banned the use of the box by all private employers, regardless of size. The box has been banned in some states, including California, District of Columbia and Illinois. Many major metropolitan areas have their own ban the box laws.

Although penalties vary from one jurisdiction to the next, they usually require violators of the law to pay a penalty and may even include jail time. Massachusetts has a law that imposes a maximum $5,000 fine on an individual for violating the law and $50,000 on an organization. Violations could lead to up to one year imprisonment.

6. Some small businesses might offer family leave.

Many small businesses are exempted from giving time off to employees as part of the Family and Medical Leave Act.

Small businesses that employ less than 50 people may still need to provide leave under state family leave programs. California, Colorado and Connecticut have their own medical and family leave laws.

The eligibility requirements vary depending on the state laws. However, in most cases the laws will apply even to small businesses that are not covered by the FMLA. Many of these leave are job-protected, meaning that employees must be allowed to take the legally permitted time off to return to work or another job within the company.

7. Many internships that are not paid are illegal.

Small businesses are often faced with high labor costs. Many small businesses are looking to grow their workforce but don’t have the resources to hire another employee. Unpaid internships sound like a great solution.

The criteria to legally provide an unpaid internship are more stringent than most business owners realize. Unpaid internships can only be legal if the intern is the primary beneficiary. To determine if the internship they are offering meets the Department of Labor (DOL requirements for unpaid internships), business owners should refer the primary beneficiaries test.

Unpaid interns can be hired by businesses if they fail to meet the primary beneficiary criteria. The business can then be ordered to pay the intern minimum wage. If a business violates the unpaid internship regulations repeatedly or willfully, the DOL may impose additional penalties.

Staying on top of regulatory changes: Tips

There are always new laws being passed and there are often updates or amendments to existing laws. These are ways to keep up to date with regulatory changes and ensure compliance for your business with all applicable laws.

  • Keep in touch with your attorney and meet regularly with them. It is difficult to make sense of complex business laws and understand how they might apply to your business. A trusted attorney is a good choice for small business owners. They should meet regularly with them to discuss any legal obligations. Small businesses can get legal counsel to help them understand the tax laws and file requirements. They also have the ability to advise on labor law issues.
  • Employ a dedicated HR manager, or hire a consultant to help you. Owners of small businesses have many responsibilities. This often leads to the creation of unclear HR policies and procedures that are not followed. An HR manager can keep up with labor laws and regulatory changes, and update your company’s policies and training materials accordingly. An HR consultant can help you determine if it is time for a full-time HR Manager. They will also track legal changes and keep your employee handbook updated annually.
  • Join local and state associations. You can stay current by becoming more involved in your industry and community. Join local chambers and professional associations in your industry. Many professional associations offer training to members about regulatory updates and laws applicable to small businesses.

Stay on top of any regulatory changes to protect yourself

These laws are not the only ones that can surprise small business owners, but they are the most important to be aware of. An attorney is recommended if you are unsure whether your business is adhering to federal, state, or municipal laws. It is cheaper to hire a professional to review your operations than run afoul with the government.

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