1. 8 Employment Law Tips to Know Before Starting
a Business
As a small business, it is always important to know about employment law before hiring your
first employee. You may save yourself from spending thousands of dollars on lawyers and
settling. We asked a number of employment law experts what they think is the most important
details that can be missed among small businesses and startups? This is what they had to say:
Jason M. Shinn of E-Business Counsel
“Due Diligence: Often times businesses will not conduct an adequate interview, follow up with
reference checks, or otherwise engage in other hiring due diligence before making a hiring
decision. This can lead to unpleasant surprises and potential liability down the road for such
claims as negligent hiring. Entrepreneurs and new businesses really need to approach the hiring
process in a manner similar to starting a new business – with a plan.”
Donna Ballman of Donna M. Ballman, P.A.
“The most common mistakes I see small employers make are misclassifying employees as
independent contractors; assuming that anyone who is salaried is exempt from overtime; badly
drawn or overbroad non-compete agreements; and failing to have handbooks that are given to
every employee. These are mistakes that even big employers make, but new employers make
assumptions about employment laws that are wrong – sometimes to catastrophic effect. My best
advice is to consult with an employer-side employment lawyer to get your policies and
procedures in place and make sure you’re doing it right.”
Chaim B. Book, Esq. of Moskowitz & Book, LLP
“The FLSA and similar state law require paying employees minimum wage and overtime even
for the smallest employers. Very dangerous area for small businesses. Penalties are stiff and
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2. you are responsible for other side’s attorneys fees. Restaurant owners should not mistakenly
believe that tips make up for underpaying staff.”
Thomas J. Simeone, Esq. of Simeone & Miller, LLP
“Have a written employment manual – so that you control what your policies are, rather than
have them later discerned (possibly by a court) based on a sampling of your practices.
Remember that even though your manual will say that it does not create an employment contract
(which all good ones do), it basically does constitute a contract because if you violate your own
policy, that can be considered employment discrimination. Thus, write into it discretion, when
needed, and make sure the rules are something you can meet as an employer.”
Jonathan S. Goodgold, Esq. of Goodgold Law LLC
“Whether you will offer benefits. There are costs and tax benefits for doing so. The benefits
must be equal across the board. And speaking of equality and fairness, every employee needs to
be treated equally and fairly and the policies implemented in a fair manner. Some employers
may have biases, but in the employment context, if they are made known, you will open yourself
up for lawsuits.”
Charles A. Krugel Labor & Employment Law & HR Counseling on Behalf of
Management
“One of the most important details that any startup misses is that practically all businesses, with
very limited exceptions, are liable for unemployment and workers compensation. That is,
almost all businesses are subject to some type of unemployment and workers compensation tax.
With unemployment compensation, the tax is directly levied by the government. With workers
compensation, the tax is usually levied in the form of insurance premiums. Most startups don’t
factor these taxes into their operating expenses. Consequently, when they’re hit with their first
claims, or when approached by vendors trying to sell them insurance or some sort of claims
processing service, the owner becomes overwhelmed and confused.”
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3. Randall Crane of Law Office of Randall Crane
“Failing to get workers compensation insurance. Any injury to an employee on the job, even a
small soft tissue injury can involve huge costs. Insurance companies have ways of controlling the
costs, but a small start up business lacks the time and expertise.”
Andrew Fulton of Anna Kontner
“All U.S. employers must complete and retain a Form I-9 for each individual they hire for
employment in the United States. This includes citizens and noncitizens. On the form, the
employer must examine the employment eligibility and identity document(s) an employee
presents to determine whether the document(s) reasonably appear to be genuine and relate to the
individual and record the document information on the Form I-9. This must be done within
three business days of hire. Penalties for not completing the forms properly can range from
$110 per violation, up to a maximum of $1,100 per violation. Firms who show a pattern of
hiring unauthorized workers are liable for criminal penalties of as much as $3,000 per employee
and may be subject to six months in prison.”
It sounds as if making assumptions is not the best way to start a business. Find out more about all
the facts and details on employment law before starting a business. Who better to get advice
from than real lawyers and experts? Find them on the related links to their name.
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