Don't be Complacent When it Comes to Compliance
Ahh, I can see it now. You are the entrepreneur who has stars in his eyes and money on his mind. You have a dream of starting your own business or you have already started one and life is looking GOOD. Or is it? You have your banker, accountant, business attorney, computer repair firm and other vendors. All good stuff. Have any of these people told you how to be in compliance with employment laws? Probably not because that is not their job.
Compliance in small business or in any business is not to be taken lightly. The Department of Labor administers and enforces more than 180 federal laws. These mandates and the regulations that implement them cover many workplace activities for about 10 million employers and 125 million workers. Out of these 180 federal laws, 55 of them deal directly with employment.
The craziness behind all of this is the fact that these laws are ever changing and can be a bear to keep up with when keeping your business in compliance. Are you in compliance? Do you know all of the laws that pertain to your company? Do you know the fines that come with breaking these laws?
To give you a short summary of these laws and their definitions, listed below are some, not all, of those that can be of utmost importance below:
The following federal laws apply to all employers who have one or more employees:
- The Immigration Reform & Control Act of 1986 (IRCA) – must complete and I-9 form for all new employees hired after November 1, 1986. Must verify identity and authorization to work in the United States. (Read on to see HOW VERY important it is to adhere to this law)
- Fair Labor Standards Act (FLSA) – AKA – Wage and Hour law – regulates minimum and overtime as well as exemptions to the laws. (This is another law that is very important and can get small businesses into “hot water” when not paying attention to the specific language)
- Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) – the federal statute creating certain protections for employees who take temporary leaves of absence or reserve duty in the uniformed services. Applies to all companies.
- Jury Service and Selection Act of 1968 – Employers cannot terminate an individual for serving on a jury.
- Employee Retirement Income Security Act (ERISA) – governs reporting that must be done by employers regarding pensions and other group benefits.
- Fair Credit Reporting Act – states that when an employer uses a third party to check any part of an applicant’s background, they must notify the applicant of this practice before it’s done. If there is an adverse decision based upon the background check, the applicant must be notified and given a chance to respond to the findings.
- Employee Polygraph Protection Act of 1988 – Employers can no longer conduct polygraphs on current or existing employees. Certain industries and government employers are exempt.
These are just a few.
If you have 15 or more employees, you have to think about:
- Civil Rights Act of 1964 (Title VII) – outlaws discrimination based on race, color, creed, religion, place of national origin or sex.
- The Pregnancy Discrimination Act of 1978
- The Americans with Disabilities Act (ADA) – cannot discriminate against anyone with a disability AND must make reasonable accommodations to qualified individuals with a disability.
- Age Discrimination in Employment Act
- Genetic Information Non-Discrimination Act
This group of laws applies to businesses that employ 50 or more employees. There are two laws that pertain to businesses that employ 100 or more:
- Family & Medical Leave Act (FMLA)
- Employer Information Reports (EEO-1 Forms)
- Worker Adjustment & Retraining Notification Act (WARN) –
Then, if you have Federal Contracts, the following laws may apply to you:
- Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA)
- Davis-Bacon Act (Gov’t Contracts)
- Service Contract Act (Gov’t Contracts)
- Walsh-Healey Public Contracts Act (Gov’t Contracts)
- Rehabilitation Act of 1973 (Gov’t Contracts)
- Drug Free Workplace Act of 1988 (Gov’t Contracts) – requires government contractors of any size to comply with drug free workplace requirement.
Then there are:
- Health Insurance Portability Accountability Act (HIPAA) – Allow employees to have insurance coverage for pre-existing conditions upon change of jobs based on length of coverage at previous job.
- Occupational Safety & Health Administration (OSHA) – their mission is to ensure that businesses provide safe and healthy working environments for all their employees.
Not to mention State and local laws such as New Hire Reporting and workers comp. It is important to know how state or municipal employment laws affect your business practices.
You don’t Know What You Don’t Know and What You Don’t Know CAN (and often will) Hurt You
Now I know you are probably thinking that this is a bunch of boring mumbo jumbo, but think again. In reality it is very serious and should be taken very seriously. There are too many businesses out there that are not paying attention to the importance of implementing and enforcing these laws.
In February of 2009, Hilda Solis, the current Secretary of Labor, made the statement, “There’s a new sheriff in town.” Her intention is to ensure that the employees of American businesses are treated fairly. However, the concept of fairness may be defined very differently by business owners and managers than by an agent of the DOL. Therefore it is good to know what you are dealing with.
As mentioned above and the importance of IRCA, it is essential for you to know that the Immigration and Customs Enforcement agency (ICE) is out for “blood” or in nicer terms, your money, when it comes to compliance. ICE is the second largest investigative agency in the federal government. I-9 audits conducted by ICE have tripled in the last few years. Many small businesses have been fined _ not because they hired someone illegally, but because the paperwork was not filled out correctly. ICE estimates that 90% of companies have incorrect I-9 forms.
It isn’t hard to fill out an I-9 form correctly but if no one trains you, you don’t know what to look for within the form. Now you may have just gotten your business into a heap of trouble and fines. Unnecessary fines! Some of these fines range from thousands to tens of thousands of dollars. Really? REALLY!
Another hard hitter by the DOL is fines and/or lawsuits for wage and hour (FLSA) violations. The primary duty of the Wage and Hour Division (WHD) is to investigate complaints of violations of the FLSA. The WHD states that 75% of the companies in the country are in violation of the law. Last year the WHD hired over 700 new investigators. Their mission is to find companies that are in violation of the FLSA, or the law that sets minimum wage (which by the way is $7.67 for the state of Florida and the Federal Minimum wage is $7.25 per hour), overtime and child labor standards throughout the country. The WHD is looking for such things as misclassified employees (salaried or exempt vs. hourly or non-exempt), employees working “off the clock,” and W-2 employees vs. Independent Contractors.
And to make matters worse, there are plenty of “Ask Gary” lawyers out there waiting in the wings to take on another personal injury matters or join alliances with WHD and go after the companies who are not paying their people for overtime. The commercials are on TV and the radio. You know – “For the People.” It’s time we started looking out “For the Employers.”
The best defense is to be the great offense. Know the rules and make sure you are in compliance with them. If you’re not sure, get with an expert. Stop assuming you know what is required, ask for help, take preventative action and always remember: KNOWLEDGE IS POWER!
AND IF YOU DON’T KNOW YOU HAVE NO POWER!!