6 Laws to Know Before You Hire

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Everyone has dreamed of starting their own business. Well, maybe that’s not completely true, but I know I have, and if you’re reading this, you’ve probably considered it as well. Of course, starting a company is a massive undertaking, and many will doubt your ability to take it all on. It’ll take lots of money and time, devout commitment, and a willingness to learn. You’ll also want to be aware of many laws. Business laws govern everything from the reporting of earnings, facility management, even the way you treat your customers. Perhaps the most important, however, is the way you treat your employees.

There are hundreds of laws pertaining to employee/employer interaction and relations, but I’ll cover the basics here. No matter what type of business you have, you’re governed by 6 basic laws & acts:
Safety first! The Occupational Safety Hazards Act (OSHA) is the second most in-depth act covered in this post, reading up on it could take hours. Thankfully, it can be summed up in a few words, which are often quoted. Employers must “…furnish… a place of employment free from recognized hazards.”. If there are work-place hazards, you’re required to create awareness of them (i.e. post signs, require safety meetings). Those looking to start a hazardous business such as construction should pay close attention to this, and look into industry-specific safety courses that ensure compliance.
The Fair Labor Standards Act of 1938 (FLSA). The FLSA is where we got our minimum wage from, back in 1938 (it was only $0.25/hour!). It also governs overtime (no less than 1.5x hourly rate for any hours worked after the 40th hour). For an employer, the FLSA covers a whole lot more. You must keep record of your employees’ names, addresses, birth date, occupation, hours work, & when the were paid. You must also record the time and date of the beginning and end of each pay-period.
If you’re planning on hiring minors, remember that 14-15 year-olds cannot work during school hours, and that anyone under 18 cannot work in a work-place deemed “hazardous”. What is considered “hazardous”? Well that’s decided by the Wage and Hour Office and by the 29 CFR Part 570 (Code of Federal Regulations).
Next we have the Consumer Credit Protection Act (CCPA). In a way, this law protects everyone: the employee and the creditors. As the employer, it is your duty to carry out any wage garnishment, but never more than 25% of the employee’s earnings after taxes. The limit gets bumped up to 50% for child support payments, and then again up to 65% for child support in arrears for more than 12 weeks. There is no limit for certain bankruptcy cases, or overdue federal tax debt.
This one is short & simple. The Employee Polygraph Protection Act (EPPA). Except for security service companies and those in the pharmaceutical industry, you’re not allowed to require polygraph-testing for either pre-hiring, or of current employees.
If you’re going to offer a retirement fund for your employees, you’ll want to read up on the Employee Retirement & Income Security Act (ERISA). A perfectly honest person should have no trouble with this one, but then again, laws weren’t made because of the perfectly honest people. In a nutshell, these retirement funds (which are a form of employee benefits) must be managed prudently, efficiently, with the employees best interest in mind, and in keeping with the agreement between the employer and employee.
Finally, you should know how to comply with the Uniformed Services Employment & Reemployment Rights Act (USERRA). Uniformed services meaning the Army, Navy, Air Force, Marines, Reserves, or National Guard. First of all, you cannot deny employment because of services in the Armed Forces, nor can you retaliate against an employee for enforcing the USERRA. It also mandates that any serviceman employed by you, who left in order to fulfill their duty, must be reemployed upon their return home, provided they satisfy 5 criteria.
-Returned within 5 years
-Gave advanced notice before leaving (unless they were unable to do so)
-Were absent due to being called into service
-Were not released dishonorably, or punitively
-Reported back to the employer after returning from service “in a timely manner” (unless unable)
I picked these six because they apply to almost any employer, but there are tons more. Also keep in mind these are all Federal laws, and there are plenty of laws specific to your state. Anyone looking to open up the doors for business will need to check out the Department of Labor’s website for more information, but hopefully this summary gives a basic idea of what’s expected of anyone looking to hire.
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An author/investor from New Jersey with a goal to improve the lives of small business owners and real estate investors by offering my experience. Beginning as a pre-foreclosure investor in real estate, I found ways to build up credit quickly in order to fund my business. Consequently, I created the Business Credit Workshop, a company that teaches methods to develop a rock-solid business credit profile and the little-known techniques on how and where to obtain business loans and business credit cards in today’s market.