Business owners must comply with a variety of federal labor laws. Though many small business owners think that these laws only apply to large corporations, many federal labor laws apply the moment that a business hires its first employee. Companies that violate labor laws may face fines, lawsuits, or even criminal prosecution.
Read on for an overview of four federal labor laws that every business should know and follow.
Wage and Hour Laws: Fair Labor Standards Act (FLSA)
The Fair Labor Standards Act (FLSA) establishes the federal minimum wage, requires overtime pay under certain circumstances, and prohibits wage discrimination based on gender. The law also mandates that employers maintain records of hours and wages for most employees.
The FLSA applies to covered enterprises and covered employees. Covered enterprises are businesses that earn more than $500,000 annually while engaged in interstate commerce. Covered employees are those engaged in interstate commerce. Though smaller businesses may assume that their employees do not meet this standard, the FLSA’s “interstate commerce” requirement has been interpreted very broadly. Current guidance from the Department of Labor (DOL) states that simple acts such as using a computer or telephone to communicate with customers in other states meet the interstate commerce standard, as does preparing orders to be shipped across state lines. Unless a company is completely certain that its employees never interact with people in other states in any way, it should not assume that its employees are not covered by the FLSA.
Not all workers are covered by the FLSA. Though the number of businesses hiring independent contractors is rising, these laborers are not covered by the law. While workers like independent contractors fall entirely outside the scope of the FLSA, other workers are exempt from some, but not all, of the law’s requirements. For instance, most professional, salaried employees and seasonal employees are exempt from the FLSA’s minimum wage and overtime requirements. Businesses should take care when assigning labels to workers because the misclassification of workers as independent contractors or exempt employees is a major focus of DOL enforcement actions.
Employers who willfully or repeatedly violate the FLSA’s minimum wage or overtime requirements are subject to a civil penalty of up to $1,000 for each violation. Some willful violations are punished with criminal penalties ranging from fines to imprisonment.
Several federal laws protect workers from workplace discrimination. Title VII of the Civil Rights Act of 1964 prevents discrimination on the basis of race, color, religion, sex, and national origin. The Americans With Disabilities Act (ADA) outlaws discrimination against those with physical and nonphysical disabilities. The Age Discrimination in Employment Act (ADEA) bars employers from taking adverse actions against employees over age 40. These and other federal anti-discrimination laws (also known as Equal Employment Opportunity or EEO laws) ensure that workplaces that are accessible and fair for all employees.
Title VII and the ADA apply to employers with more than 15 employees, while the ADEA applies to those with more than 20 workers. However, companies with fewer employees may be required to comply with EEO laws if they work with the federal government. Federal contractors or subcontractors with contracts exceeding $10,000 per year must also comply with federal EEO laws. The Office of Federal Contract Compliance Programs (OFCCP) at the DOL ensures that federal contractors and subcontractors do not discriminate while they work for the government.
Federal EEO laws prohibit employers from discriminating in the hiring process. Once hired, employers cannot discriminate when making decisions about compensation, promotions, layoffs, and other work-related matters. These laws also require employers to maintain harassment-free workplaces.
Companies should take these laws seriously because EEO violations can be expensive. Successful EEO plaintiffs can recover damages such as back pay, back benefits, attorney’s fees, expert witness fees, and court costs. In extreme cases, courts have allowed punitive damages.
Union and Collective Bargaining Laws
The National Labor Relations Act (NLRA) protects a worker’s right to unionize or otherwise organize to improve working conditions. The NLRA applies to most nongovernment employers. Rather than setting one bright-line rule for determining whether an employer falls within its scope, the NLRA sets different revenue thresholds for different industries and activities (i.e., retail vs. nonretail). Companies should consult their legal counsel to determine whether they meet the NLRA’s threshold requirements.
To protect workers’ bargaining rights, the NLRA prevents employers from taking adverse actions against employees who exercise their bargaining rights. For example, the NLRA prohibits employers from threatening to fire or lay off a unionizing employee. The NLRA also prevents employers from assigning bargaining workers to more difficult tasks or more inconvenient schedules. Though most NLRB orders direct employers to deal fairly with employees and unions, in extreme cases, the NLRB can require employers to pay litigation costs, attorney’s fees, and union expenses. These examples demonstrate that employers should think carefully before taking any action that might be construed as interfering with a worker’s bargaining rights.
Family and Medical Leave Laws
The Family and Medical Leave Act (FMLA) allows eligible employees at covered employers to take 12 weeks of unpaid leave to have a baby, adopt a child, recover from an illness, or care for a family member. An employer is subject to the FMLA if it employs 50 or more employees for 20 or more workweeks in a calendar year. Employees are eligible for FMLA to leave if they work for a covered employer for 12 consecutive months and work at least 1250 hours during those 12 months. Also, the employee must work at a location where the employer has at least 50 employees. (The law counts all employees within a 75-mile radius of the employee’s worksite.)
Businesses should avoid interfering with an employee’s FMLA rights by engaging in practices such as pressuring an employee to return to work, asking an employee to work while on leave, or curtailing an employee’s insurance benefits. Employers must also reinstate all employees who are not “key employees” after a timely request. (A key employee is a salaried, FMLA-eligible employee who is among the highest-paid 10 percent of all the employees in the relevant 75-mile radius.) Some employers intentionally misclassify workers as key employees to skirt the FLMA’s reinstatement requirements.
Failing to comply with the FMLA can be costly. Employees who feel that an employer has interfered with their FMLA rights or retaliated against them for exercising those rights can sue. Successful FMLA plaintiffs are entitled to back pay, front pay, attorney’s fees, and liquidated damages.
Compliance With Federal Labor Laws Is Good Business Practice
Companies have little to gain by breaking federal labor laws, but they have much to lose. To help companies comply, the NLRB, the DOL, and the OFCCP all require businesses to prominently display posters notifying workers of their rights under the FLSA, the FMLA, the NLRA, and federal EEO laws.
If your business is covered by any of these laws, contact the Poster Compliance Center today to learn more about your posting requirements and how our accurate, up-to-date posters can help protect your business.