Starting a Business? Start Learning About Employment Law

Starting a Business? Start Learning About Employment Law

To succeed as an entrepreneur, you need to know a little about everything. Particularly at the beginning of your career, you will have your fingerprints on every business activity from accounting to marketing. Therefore having a diverse set of skills and knowledge is greatly beneficial.


Despite this, too many entrepreneurs neglect to properly research one of the most important fields for business managers: employment law. By becoming more knowledgeable in terms of employment law, you can keep your startup safe from employee lawsuits, avoid large fines and penalties from the government and maintain a strong and productive workforce. Learning employment law is a win-win-win, so you should start now.

A Few Major Employment Laws You Must Know

FLSA — Fair Labor Standards Act

This law affects all U.S. employers, even your teeny-tiny startup. Under FLSA, you are required to pay employees overtime if they earn more than $455 per week, if they have a consistent hourly schedule or are salaried, and if their position is managerial, administrative or professional in nature.

INA — Immigration and Nationality Act

Within three days of adding an employee, you must file I-9 forms to comply with INA. This is because you need proper paperwork to hire non-U.S. citizens; without it, you are subject to heavy fines. Only a select group of so-called aliens are able to work in the U.S. with non-immigrant visas. Therefore, you should know a bit about whom you hire before you do so.

OSHA — Occupational Safety and Health Act

Many employers overlook this employment law, misbelieving that because they run an office — not a machinery shop — they don’t need to worry about OSHA. However, OSHA has dozens of requirements for the health and safety of office workers, so you should be careful to learn those affecting your startup.

Title VII of the Civil Rights Act

The Civil Rights Act outlaws discrimination based on race, color, religion, sex or national origin — even in hiring practices. Strictly, this law only applies to a business which has 15 or more employees. You should, however, strongly consider adhering to it from the beginning to avoid fines or worse: public outrage.

ADA — Americans With Disabilities Act

A noteworthy omission from the Civil Rights Act was those with physical and mental disabilities; fortunately, Americans with disabilities gained protection in 1990 with the ADA. Because of this law, Businessyou cannot discriminate against job candidates or employees with known disabilities, including pregnancy. You must also be able to provide reasonable accommodation for disabilities, such as ramps or special equipment.

COBRA — Comprehensive Omnibus Budget Reconciliation Act of 1985

One of the more obscure employment laws, COBRA requires you to continue supplying health insurance for employees that have been fired, laid off or let go for any reason. This comes into effect as soon as you have 20 or more employees.

FMLA — Family and Medical Leave Act

You don’t need to worry about FMLA until you have 50 or more employees. At that point, however, you should be aware that you are required to offer 12 weeks of unpaid, job-protected leave to employees with at least a year of service who have recently acquired a child or suffered a family illness or death. It may be an idea to consider doing more than the minimum with this one; you can use Finland’s policies as a pattern.

ERISA — Employment Retirement Income Security Act

To read and understand ERISA in its entirety, you probably need an employment law degree. Suffice it to say that ERISA requires you to comply with ERISA when you offer your employees pension, retirement or welfare benefit plans —  which include 401K(s), IRAs and similar services. If you want to offer these benefits to your workers, you should gain legal assistance or the expertise yourself.

A Few Minor Employment Laws You Can’t Ignore

FCRA — Fair Credit Reporting Act of 1970

There are a few good reasons to ask job applicants for their credit scores, but before you do, you must comply with this employment law. The FCRA demands that you notify candidates of your interest in pulling their credit score and that you obtain written authorization from them.

FICA — Federal Insurance Contributions Act

FICA is a recognizable acronym because it appears on everyone’s paychecks. They demand that employers withhold a small portion of each employee’s pay and match that sum to contributions to social security and Medicare. It’s a small act of socialism that does much good.

USERRA — Uniformed Services Employment and Reemployment Rights Act

If one of your employees is pulled for military duty, you cannot fire them — at least, if they are absent for only as long as USERRA permits, which is five years. If an employee remains in active military duty longer than that, you’re under no obligation to reemploy them.

CCPA — Consumer Credit Protection Act

This law is lengthy and addresses many issues, but for employers, the most relevant regulation regards garnishments. If employees have liens, student loans or child support, only a certain percentage of individuals’ paychecks can be garnished.

To be a successful business leader, you need to know employment law backwards and forwards — or at least hire someone who does. The above-listed acts are incredibly important for every entrepreneur and every employee. In addition, you should delve deeper into employment law to ensure you aren’t missing any rules and regulations affecting your industry or business.

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