Federal Labor Laws Small Business Should Know (pt. 1)

Federal labor laws exist to protect employees and help businesses maintain a solid reputation. Regardless of how long you’ve been running a business, it is crucial that you stay informed and updated with the following labor laws that apply to all U.S businesses.
In total, we will review 5 important federal labor laws. We will divide them into a two part series. In this article, we will review 3 laws and move on with the rest on our second article.

Law 1: Fair Labor Standards Act (FLSA)

Its basic principle is to classify employees as exempt or non exempt for overtime pay.
What It Is:
The FLSA is a law that requires you to pay overtime for certain employees, and it affects most employers in the US, even small businesses. An employee must meet all 3 of these conditions in order to be exempt from overtime pay:

  • Salary amount — Employee must earn more than $455/week or $23,600/annual.
  • Consistency in pay — An employee is either salaried, or on a consistent hourly schedule with a relatively unchanging paycheck.
  • Types of job duties performed — Employee position is managerial (aka executive), administrative (aka they are staff employees and not “on the line”), or professional (meaning they require a degree like an engineer, doctor, or lawyer).

For example:
Anna is at $11/hour as a retail sales associate. She is part time at 20 hours per week, and consistently works her 20 hours. Anna makes $11,200/year consistently. Anna would be eligible for overtime pay, but only if she works over 40 hours per week. This is because she would be below $23,600/annually even at full time. So, after 40 hours per week, she would get 1.5x $11/hour.
Type of Businesses That Need to Comply With This:
All except for a few industries, like agriculture, railroads, and schoolteachers.

Law 2: Immigration and Nationality Act (INA)

INA is why you need to have I-9 forms completed within 3 days of onboarding your new employee. If you’re not using a PEO or payroll program to handle this for you, we highly recommend using the E-verify program to track your I-9 verifications and also recommend that you keep all I-9s in a separate folder from other personnel files (password protected if electronic or locked if paper).
What It Is:
INA is the law that applies to aliens authorized to work in the U.S. under certain nonimmigrant visa programs (H-1B, H-1B1, H-1C, H2A).
Type of Businesses That Need to Comply With This:
Every business in the U.S.

Law 3: Occupational Safety and Health Act (OSHA)

OSHA is both the act and the agency that govern safety and health issues in the workplace.
What It Is:
Safety and health conditions in the workplace are regulated by the Occupational Safety & Health Administration (OSHA) which was founded by the OSH Act. Apart from reporting requirements, employers also have a general duty under this act to have a safe, clean, and hazard-free workplace. Employees have the right to file OSHA complaints without fear of retaliation.
Type of Businesses That Need to Comply With This:
All employers must comply with it, but only those with over 10 employees must keep records of serious injuries or accidents for 5 years. They also need to report any issues to OSHA between February and April of each year.
 
 
On our next article, we will go over two more laws to keep in mind that are crucial for all small business owners to be aware of.
 
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