If you've recently decided to expand your small business or sole proprietorship by hiring an employee, you may be excited and looking forward to offload some responsibilities on your new worker. However, there are some laws and regulations that you should keep in mind while making personnel decisions. Violating certain employment-related laws can subject you to fines, penalties, and sometimes even jail time. Read on to learn more about the factors you should take into consideration when making your final hiring decision.
Unlawful employment discrimination
Title VII of The Civil Rights Act of 1964 provides a number of protections against employment discrimination. Specifically, you're not permitted to make employment decisions (such as hiring, firing, and promoting) based solely on immutable factors like age, sex, race, ethnicity, national origin, disability, and religion. If you're found to have violated one of these provisions, you may be sued in federal court and subjected to fines and injunctions, some of which may even be enough to shut your business down.
Although Title VII applies equally in all states, some states have added additional "protected classes," such as gays, lesbians, and transgendered individuals. If you live in one of these states, you're required to abide by these anti-discrimination laws as well as the federal laws.
Minimum wage and spread of hours
The Fair Labor Standards Act (FLSA) and related state laws govern the minimum wage you must pay all employees. Currently, this wage is $7.25 per hour. If you're using tipped staff, you're permitted to pay as little as $2.13 per hour -- however, your staff must earn an average of at least $7.25 per hour in base salary plus tips. If a particular staff member earns less than this during a particular shift, you are required to supplement his or her wages until these wages total at least $7.25 per hour for the shift worked.
Although this federal law governs all states, some states have set their own minimum wage -- choosing to pay one to several dollars more than the federal minimum wage. If your state has prescribed a higher minimum wage than the federal government requires, your business is required to pay the state wage.
In some states, "minor wages" are enforced. These states permit a below-minimum-wage salary for certain younger employees, particularly teenagers. Many states prescribe a lower wage for minors during a certain probationary period -- however, it's illegal to fire a young employee after this probationary period in order to avoid having to pay minimum wage. If your business requires one or more minimum-wage workers and you live in a "minor wage" state, you may wish to hire a teenager in order to save money during your business's introductory period.
Other states, like New York, have a "spread of hours" law. These laws require a business to pay an extra hour or more of minimum wage when an employee works more than a certain number of hours per shift (in New York, an employee receives an extra hour of minimum wage pay for every 10-hour shift worked). You'll want to consult your state's Department of Labor website (as well as the federal Department of Labor website) to determine precisely what wages you're required to pay your employees.
Workers compensation insurance
Another important component to your personnel model is workers compensation insurance. Most states will require you to carry a certain amount of this insurance, depending upon the number of employees you hire. This insurance helps compensate your employee for any medical expenses or lost wages incurred as a result of an on the job injury.
You may wish to consult an attorney who specializes in employment and business law to ensure that you're following all your state's prescribed procedures for hiring your first employee. You can pop over to this site to learn more.
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