Five Employment Laws You Can't Ignore

Barbara Weltman

If you have any employees (including yourself), be sure to understand some basic employment laws so you can avoid problems. While some laws only apply if you have a certain number of workers, others apply to companies with one or more employees.

1. Minimum wage and overtime laws. How much are you required to pay employees? The federal Fair Labor Standards Act covers minimum wage and hours rules. Currently, the federal minimum wage rate is $6.55 per hour; on July 24, 2009, it increases to $7.25 per hour.

Also, check on state minimum wage rules. Your state's rate applies if it is higher than the federal rate. Some states have increased their hourly minimum wage rates effective January 1, 2009, including: Arizona ($7.25); Connecticut ($8.00); Florida ($7.21); Montana ($6.90); New Mexico ($7.50); Ohio ($7.30); Oregon ($8.40); Washington ($8.55). A number of other states, such as Illinois, Indiana, and Kentucky, are scheduled to increase their rates some time during 2009. For a complete listing of minimum wage rates by state, go to the
Department of Labor's website.

2. Unemployment laws and worker compensation. Be sure to comply with these laws. State labor departments routinely audit businesses (even when the owner is the only employee) to ensure that they are complying with state laws to:

  • Pay unemployment insurance (the state fixes the rate that a business pays, based on its claims experience).
  • Carry worker's compensation insurance through a private carrier. Owners may be exempt from carrying this coverage.
  • Classify workers appropriately as employees if you exercise sufficient control over when, where, and how they perform their duties. If workers are employess, then you must comply with employer obligations for them. If, however, you don't exercise control, then workers can be classified as independent contractors who are responsible for their own taxes and insurance.

3. Disability protection. The Americans with Disabilities Act is designed to protect diabled workers form being discriminated on the job in terms of hiring, promotion, firing, benefits, etc. A business must take reasonable accomodations to help them do their job unless it would place an undue hardship on the company. The law applies to business that employs 15 or more workesr for 20 or more work weeks during the year (part-timers count).

On January 1, 2009, changes in the definition of disability that were made by the ADA Amendments Act of 2008 went into effect. While regulations regarding the changes are not yet in effect, the DOL's Office of Disability Policy's Job Accomodation Network has provided some
guidance. View the changes (the definition of "reasonable accomodations" to enable a disabled person to work for your company has not changed).

4. Retirement plans. If you, as a business owner, want to be covered by a qualified retirement plan, you can't discriminate against your employees in this regard. This means you must include workers within the plan if they meet certain age and period of employment tests and the Employers Retirement Income Security Act of 1974 (ERISA) rules apply for any number of employees.

For example, if you maintain a Simplified Employee Pension (SEP) and want the maximum contribution on your behalf, you must use the same percentage-of-compensation to figure contributions on behalf of rank-and-file employees.

5. Re-employing military personnel. Under the Uniformed Services Employment and Reemployment Rights of Act of 1994 (USERRA), all employers must comply with federal law to re-employ workers who left the company for military duty and are now returning. Returning service personnel can retain their jobs and their benefits (essentially pay raises, retirement plan contributions, and other benefits they would have enjoyed if they hadn't left to serve the military).

There are special requirements with respect to disabled veterans; employers must make certain accomodations for them to do their job.

Resources for help:
A starting point in learning about employment laws is the U.S. Department of Labor's FirstStep Employment Law Advisor,
an online resource that walks you through compliance, starting with having all required workplace posters and going through all require recordkeeping and reporting obligations.

Then check with your
state department of labor (find a link to your through the federal Employment Standards Administration).

If you have any doubts or concerns about employment laws, be sure to talk to an HR expert or consult with an employment law attorney.

Barbara Weltman, author of several books including her most recent, 1001 Deductions & Tax Breaks 2009
Copyright 2009. All Rights Reserved.

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