6 Ways You’re Probably Breaking the Law

As an employer, are you up-to-date with your local, state, and federal compliance requirements?

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As a small business owner, you may be breaking the law without knowing it. Review the 6 common ways SBOs fail to meet requirements

Here's what you need to know:

  • Make sure to classify employees correctly
  • Offer nursing mothers breaks
  • Check your state's anti-harassment training laws
  • Review flex lunch and vacation policies
  • If you pay employees by piece rate, ensure they're being paid accurately

The United States compliance landscape is a patchwork of local, state, and federal regulations. The overlap can make it hard for small business owners to keep up with the various compliance requirements they’re legally obliged to meet.

Here are 6 common ways SBOs unknowingly break the law — and how to avoid doing so at your business (or what to do if you realize you’ve been breaking it).

Misclassifying employees

Misclassifying employees can happen in 2 ways: designating employees as contract workers when they’re not, or incorrectly categorizing employees as exempt:

  • Small businesses commonly mislabel employees as contract workers, violating federal Department of Labor law and often state laws too. Californian SBOs must pay extra attention to worker classification in the wake of AB5.
  • Exempt workers are commonly referred to as salaried employees, and they’re exempt from overtime pay and meal and rest breaks. To qualify as an exempt employee, you must “perform executive, administrative, or professional duties” and meet the Fair Labor Standards Act minimum pay — $35,568 in 2020. SBOs may assume it’s just easier to pay everyone a salary and classify their team as exempt, but this is illegal. Be sure you know the difference.

Not offering a nursing mothers break 

Nursing mothers have protections under the Fair Labor Standards Act. The law requires that mothers can have “reasonable break time for an employee to express breast milk for her nursing child for one year after the child’s birth.”

The law also requires that employers provide a space for nursing mothers, other than a restroom. If the room isn’t a dedicated lactation room, it must be available when the nursing mother needs it and “be free from intrusion and shielded from view.”

SBOs must ensure their non-exempt employees are still being paid at least minimum wage and overtime. If not, you’re out of compliance and breaking the federal law.

California amended the state’s previous lactation accommodation law in January 2020 by mandating all employers provide a room with:

  • Access to electricity
  • A sink with running water
  • A fridge to store milk

For states that don’t require these amenities by law, employers can create a welcoming and inclusive space for mothers by doing so.

Failing to provide anti-harassment training

State law determines whether or not you have to provide anti-harassment or anti-discrimination training. A majority of states mandate training for public employees, but not private ones.

However, if you’re an SBO in California, Connecticut, Delaware, Massachusetts, New York, or have at least 15 employees in Maine, you must provide anti-harassment training to all employees.

The requirements for training vary by state and range from in-depth, interactive training that discusses statutes of limitations for previous assaults — to training that goes over the types of conduct that can be harassment and the strategies to prevent it from happening. If you’re unsure of your duties, check your state’s labor office.

Having a flex lunch policy

If you allow non-exempt employees to skip out on lunch breaks in favor of earlier start or end times, you may unwittingly be breaking the law. Federal law under the FLSA requires meal breaks for non-exempt employees.

The government isn’t so concerned about crumbs on your keyboard, but more so unpaid labor. FLSA says non-exempt workers cannot work for free, even if by their own volition.

Making your vacation policy “use it or lose it”

In an attempt to mitigate big, potentially crippling payouts, some SBOs prefer a “use it or lose it” vacation policy where employees must do just that. Rather than accruing PTO for long vacations or hefty payouts upon retirement, employees must take their vacation time or pass it up for good.

This is fine in some states but not in others, such as California, New York, Nebraska, and Montana.

Paying employees by piece rate

When SBOs elect to compensate their workers by completed projects, it’s called paying piece rate.

Common positions that pay piece rate are:

  • Agricultural work
  • Mechanics
  • Data entry workers
  • Craftsmen and women

SBOs must ensure their non-exempt employees are still being paid at least minimum wage and overtime. If not, you’re out of compliance and breaking the federal law.

To avoid this, SBOs must keep careful track of their employees’ hours to ensure their piece rate pay is equal or greater than minimum wage and compensates for overtime pay. Use the DOL’s calculator if you’re unsure.

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