Self-employed pop quiz: Which employees are entitled to overtime and which are not? What workplace benefits are required and which are perks? The answers to these types of questions are of course important, vital even to the success of your business, but many small business owners do not know the answers.
And that begs two questions: First, when you own a business, where do you go to get informed, legally speaking? And second, are there some common legal issues of which you need to be especially aware? As to that second question, the answer of course is yes and we will get to those in a moment. As far as where you can go to first get up to speed, here are a few options:
The Small Business Administration: The SBA should be your first stop when researching workplace rules and laws. For example, SBA.gov has an excellent piece entitled 10 Steps to Hiring Your First Employee, which covers everything from forms you need to fill out and file to getting an Employer Identification Number.
After that, you should also check out the SBA’s section on Business Law and Regulations. This area will help you discover environmental laws, relevant e-commerce laws, advertising law and more.
The IRS: Not a little bit of your business life is undoubtedly consumed by taxes. The good news is that the IRS has a great one-stop shop that can help you unclutter the clutter and work your way through the maze that can sometimes be federal tax regulations. Its Self-Employment and Small Business Tax Center offers not only articles and publications, but videos and webinars as well to help you make sense of it all.
The United States Patent and Trademark Office: USPTO.gov is another valuable legal research resource. When you own a business, you need to protect your inventions, logos, and other sorts of intellectual property. What you can and cannot protect, and how to do so, can be found at USPTO. The government’s copyright office is similarly valuable.
SCORE: SCORE counselors are individuals with business experience and meeting with one, either online or in person, can help you get a general overview of what you need to legally know.
Websites: There are many websites that offer the basics in business legalities, such as LegalZoom, along with software, necessary forms, and more.
Now, as to that second question, while it is beyond the scope of an article like this one to specifically answer any legal questions, what should be helpful is a list of those workplace laws and situations that commonly trip-up entrepreneurs, so here you go:
1. Employee or independent contractor? Labeling an employee an independent contractor can be a costly mistake, so it would behoove you to know the difference between the two. While the resources above can help with that, understand that the general rule is that an independent contractor is called that for a reason – he of she must truly be independent.
- Set their own pay
- Make their own schedule
- Decide when and where to work
- May work for several businesses
- Are truly independent
2. Overtime or not? Another issue that can easily trip up an employer is whether or not a certain employee should be paid for overtime. Essentially, hourly employees are entitled to overtime, whereas exempt employees are not. An exempt employee typically holds managerial, executive, administrative, professional or outside sales positions. They usually get a salary in weekly, bi-weekly or monthly payments. Check with your CPA regarding your specific situation.
3. No discrimination: The basic rule is this: When hiring, promoting, or firing, it is illegal to discriminate on the basis of race, color, religion, sex or national origin. Therefore, even when interviewing people for a job, questions that touch on those subjects should be avoided, as the answers should be irrelevant to your hiring decision.
Bottom line: Knowing what is and is not legally expected of you, and how to protect yourself, is critical. Do any of these laws surprise you? Share your thoughts below.