Businesses large and small must be aware of and abide by many different employment laws. However, because of the sheer number of employment laws, not to mention all the other business-related laws that demand compliance, it can be easy to overlook employment laws that are less obvious. Below I discuss four laws that are often overlooked but still have the potential to cause significant legal headaches.
Prohibiting employees from talking about wages and other terms of employment
Businesses have many reasons why they may want to limit or prohibit employees from discussing wages or other terms of employment with co-workers. However, businesses that do may be violating the National Labor Relations Act (NLRA).
Most people know the NLRA as the federal law that governs the relationship between private companies, their employees, and unions. What they miss is that it also protects employees who engage in concerted, protected activity, regardless of whether a union is involved or not.
One of the concerted, protected activities protected by the NLRA happens to be employees discussing terms and conditions of employment with co-workers. This includes co-workers discussing wages, salaries, commissions, bonuses, and any other type of compensation. It also includes discussions about any workplace policies, such as breaks rules, overtime requirements, appearance standards, discipline policies, etc. Essentially, if a topic is directly related to an employee’s compensation, job duties, or performance standards, he or she can discuss it with co-workers.
One additional thing to keep in mind is that, under the NLRA, you can violate the law simply by having a policy in place prohibiting employees from discussing their wages or other terms and conditions of employment. It does not require that you actually take disciplinary action against them. This is because the NLRA also prohibits businesses from discouraging employees from engaging in protected, concerted activity. Thus, a rule, whether written or verbal, that discourages employees from discussing working conditions with co-workers by itself is illegal. Acting on the rule constitutes a separate violation. For more information, read out blog post Something you need to know before you tell your employees not to discuss wages with co-workers
To be protected from improperly discouraging or disciplining employees when engaging in the protected activity of discussing wages with each other, businesses should remove from their handbook any policies that explicitly or implicitly prohibit the behavior. After that is done, they must make sure managers and supervisors understand that prohibiting employees from discussing terms and conditions of employment is improper. This is important because, even if you have removed all written traces of an illegal policy, all it takes is one manager or one supervisor, with the best intentions of protecting your business, to get you into trouble by verbally communicating the policy to employees.
Refusing to pay employees when they work unauthorized hours
It can be frustrating for businesses who are trying to control cost by limiting work hours to have to pay employees who work beyond their approved schedule without permission. This includes employees who work unapproved overtime. However, under the Fair Labor Standards Act and many state wage and hour laws, businesses must do just that.
The Fair Labor Standards Act requires businesses to pay employees for all hours they are suffered or permitted to work. This standard, “suffered and permitted to work,” has been interpreted to include unapproved time worked by employees. It is frustrating, but unfortunately it is the law. Failing to pay employees for this unapproved time can lead to wage claims and intrusive administrative investigations. And remember, as the U.S. Department of Labor or similar state agency is poking around your time records, if they find anything else amiss, they will pursue those additional claims against you as well.
So what recourse do you have for employees who work unauthorized time? The answer is counseling and discipline. Although you can’t refuse to pay employee for working unapproved time, you can counsel them and discipline them for doing so. Providing notice to employees about working unauthorized time in employee handbooks and other policies related to working hours go a long way to discourage the behavior and give you a basis for taking disciplinary action when necessary. For more information, read our blog post Unapproved Hours Worked and Time and Attendance Policies
Hiring all temporary workers as independent contractors
Not all businesses hire temporary employees, but those that do may be tempted to hire them all as independent contractors. Hiring temporary workers as independent contractors is administratively much easier for companies than going through the hiring and onboarding process required for employees. Plus, there are the tax, unemployment, and other complications that come with hiring employees. Many of these businesses that hire temporary employees as independent contractors assume it is permissible because of the short duration of employment. However, in many cases, the assumption is wrong.
The determination of whether an individual is an employee or an independent contractor depends on many factors. Duration and permanence of employment is only one of them. Other factors that go into the analysis include:
- the extent to which the work performed by the worker is an integral part of the employer’s business;
- the worker’s opportunity for profit or loss depending on his or her managerial skill;
- the extent of the relative investments of the employer and the worker;
- whether the work performed by the worker requires special skills and initiative;
- the degree of control exercised or retained by the employer over the worker.
If businesses fail to consider all the possible factors that are necessary to make temporary workers independent contractors, they may make the wrong determination and may be exposing themselves to expensive wage, tax, and other claims. For more information, read our blog post 6 Factors You Should Know before Classifying a Worker as an Independent Contractor
If a business regularly hires temporary workers, instead of taking the risk of categorizing them as independent contractors, one solution that may work is hiring them through a temporary staffing company. By hiring temporary employees through a temporary staffing company, businesses can reduce the administrative burdens of hiring temporary workers while eliminating the risk of hiring them as independent contractors. It also minimizes the unemployment concerns that arise when laying off temporary workers when they are no longer needed.
Requiring applicants to disclose their criminal past too soon in the hiring process
Historically, it has been the practice of most businesses to ask applicants about their criminal pasts on employment applications. Although this is still permissible in many states, it isn’t in others, and the number of states that prohibit it is growing.
Known as banning-the-box, many states, in an attempt to increase the employment rates of individuals with criminal pasts, have made it illegal for employers to ask prospective employees about their criminal pasts on employment applications. Some have gone even further, postponing the inquiry to even later in the hiring process. For more information, read our blog post Do you know if you should “ban the box”?
Businesses must be aware if the state where they have employees has a ban-the-box law. If so, it is time to remove any questions related to an applicant’s criminal history from job applications. Businesses must also make sure that removing the inquiry from the application is sufficient. If not, they must instruct managers and supervisors involved in the hiring process to know when the inquiry may be made. Failure to take such actions may lead to the unwanted costs of legal complaints.
Businesses must be aware of the employment laws that apply to them. The discussion above is meant to help identify four employment laws that are less well-known but still carry significant risk when violated. Staying on top of even the less well-known laws can help businesses by saving the time and money required to fight wage and other employment claims.