5 tips to stay labor law compliant

Hiring employees for a small business is an important milestone that should be celebrated. After all, it means your business is not only growing but thriving. But hiring staff has one disadvantage: it requires that you be cognizant of and compliant with any applicable labor laws.

Labor laws are an extensive set of rules and regulations at both the federal and state level.

One of the core purposes of labor law legislation is the protection of employees' rights, which often requires education efforts on the part of the employer.

Failure to comply can have significant financial consequences, which can be quite damaging to a business's bottom line. Because of this, it's important for every small business owner to be vigilant when it comes to labor law compliance.

While it's impossible to be specific about the actions any individual business needs to take, the following five tips can help you stay on track when it comes to your particular requirements for labor law compliance.

1. Know the labor laws that apply to your business

Before you can be sure you're compliant, you need to know what state and federal labor laws apply to your business. Even though federal laws apply across the country, there are many variations in terms of the applicability of a specific federal requirement to your individual business.

For example, the notice requirements under the Age Discrimination in Employment Act apply only if you employ 20 or more employees.

In addition to federal laws, each state has its own set of labor laws that your business must comply with.

A good way to familiarize yourself with the state-level requirements is to visit the website for the state agency in charge of employment, often called the Department of Labor or something similar.

2. Create a compliance checklist

Once you know what laws apply to you, putting together a compliance checklist can be helpful. For example, you'll likely be required to place both state and federal labor law posters in prominent places in the workplace. Having a list of the required notices on hand will help you to more efficiently determine whether you need to take further actions to stay compliant. If any of the actions are recurring, such as annual notices, make sure that someone on your staff is tasked with keeping a calendar and making sure the tasks get completed by the appropriate deadlines.

3. Compile an employee handbook

While it will take some initial time to develop a comprehensive employee handbook, it can be an invaluable tool in your compliance toolkit.

Not only does a handbook give your employees helpful information about their rights and benefits, it can also help reduce the kind of misunderstandings that can sometimes lead to employee lawsuits.

In addition to creating an employee handbook, you should also:

• Create an update schedule to ensure the handbook is an accurate reflection of your company's current policies
• Have each employee sign a form acknowledging receipt of the handbook and any subsequent updates

4. Perform a job discrimination self-audit

As a savvy business owner, you already know that discriminatory practices can open you up to potentially costly employee grievances.

Since you probably already have a number of HR and employment practices in place, a self-audit can help ensure you're not treading into discriminatory waters.

To proceed with an audit, identify the anti-discrimination rules and regulations applicable to your business. For example, Title VII of the Civil Rights Act is a federal law that prohibits both race and gender discrimination in all businesses.

As discussed above, it's also important to look at state laws as well. Some states, for example, protect employees' gender identity rights.

5. Use an employment agreement

Whether you're hiring full-time staff or you need someone to work for you on a part-time basis, always use an employment agreement or contract to legally solidify the employment relationship.

Such a document can help protect both your employee's rights and those of your business.

By setting out the requirements of your employee's job in writing, you reduce the possibility of any future confusion about the employment relationship. The more comprehensive the agreement is, the more protection it can provide to both parties.

Whether you use a customized employment agreement template or hire an attorney to draft an agreement for you, this is one business document you should never dispense with.

Keeping abreast of all the actions required to stay compliant with labor laws is important for the health of every small business. But staying compliant need not be an administrative headache, and being proactive goes a long way toward reducing the potential consequences of noncompliance.