Two ways for small businesses to avoid labor rights issues
When small businesses are starting out, their payrolls might consist of wages for just the company leader. As the firm grows, entrepreneurs will need to hire additional help, process their paperwork and track their time and attendance.
The Fair Labor Standards Act (FLSA) applies to all companies that make $500,000 or more each year through gross annual dollar sales volume. However, employees can still be covered even if the company has not yet hit that benchmark. Therefore, it may be in owners' best interest to uphold basic labor rights in order to avoid violations, regardless of their companies' size.
1. Verify employee classifications
The FLSA states that improper employee classifications are one of the most common violations among small businesses. Owners may be tempted to hire independent contractors instead of part-time or full-time employees to avoid paying overtime and extending basic benefits, as Entrepreneur magazine reports. However, they must be very careful to ensure that relationships with workers do in fact meet all the criteria outlined by the Department of Labor.
2. Outsource human resources
If owners still have their hands in too many projects to spend time processing employees' paperwork and verifying benefits, they can consider outsourcing payroll tasks. These services calculate and issue paychecks, manage employee benefits and offer professional advice about FLSA compliance to unburden busy startup leaders.
The Fair Labor Standards Act (FLSA) applies to all companies that make $500,000 or more each year through gross annual dollar sales volume. However, employees can still be covered even if the company has not yet hit that benchmark. Therefore, it may be in owners' best interest to uphold basic labor rights in order to avoid violations, regardless of their companies' size.
1. Verify employee classifications
The FLSA states that improper employee classifications are one of the most common violations among small businesses. Owners may be tempted to hire independent contractors instead of part-time or full-time employees to avoid paying overtime and extending basic benefits, as Entrepreneur magazine reports. However, they must be very careful to ensure that relationships with workers do in fact meet all the criteria outlined by the Department of Labor.
2. Outsource human resources
If owners still have their hands in too many projects to spend time processing employees' paperwork and verifying benefits, they can consider outsourcing payroll tasks. These services calculate and issue paychecks, manage employee benefits and offer professional advice about FLSA compliance to unburden busy startup leaders.
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