Labor Law and Additional Information
Today we will talk about Labor Law and responsibilities that come with having employees.
Are you ready to dive straight into it? I hope you are, because we are doing it anyway.
Labor and Law, two things that bring goosebumps to any experienced business owner. We are gonna dive into the basics of what that means for you, our fellow entrepreneur.
Legal disclaimer, I am not your attorney and can’t legally advise you. Before following any of the information in this article, consult with the licensed attorney.
Following is the list we will cover in this chapter:
- Wage laws
- Schedules
- Taxes
- Unions
- Workers Comp
- Unemployment insurance
- Paid time off
- Health insurance
- Labor and Wage Laws
- Wage Laws differ from state to state, check what they are in your state. You must pay minimum wage $15 per hour (in New York in 2021) for non-tipped workers and $5 per hour + tipped workers (such as servers in the restaurant), however they must still make at least minimum wage after getting tips.
Workers must have at least 30 mins food break in the first 8 working hours and additional 15 mins every 4 hours after that.
Any hours worked in the excess of 40 hours a week must be paid 1.5 times the hourly rate for overtime. (note this information constantly changes and it’s different in every state).
- Schedules
In most cases, businesses are required to provide a weekly schedule to a new hire and give at least 1 week in advance if it changes.
Some cities and states penalize businesses for the last minute schedule changes and especially when it happens on a consistent basis.
- Taxes
Taxes should be automatically deducted from the employees payroll and paid by the business every quarter or monthly.
Amount of taxes and deductions is calculated based on the W2 form your employees fillout.
For those who use the BizBaby payroll feature, BizBaby doesn’t submit your business or payroll taxes on your behalf, you need to find a payroll provider that can do it for you. We used Intuit and ADP companies previously.
- Unions
Any business with 2 or more employees is subject to potential unionization.
That means their workers can request a union election held with NLRB and if elected, business will have to bargain with union leaders to have special employment conditions and pay for unionized workers.
Process can be relatively quick, from submitting a petition by the group of workers to holding an election within 3-4 months. Elections are anonymous and usually done by mail, however in person votes collection is also common.
Unfortunately in small business, unions usually spell a “death sentence”, since it creates distance between workers and the business owner.
Distrust among unionized workers and those who chose not to join the union since there is rarely any human resources department to deal with intricacies of Unions.
And lack of financial resources to provide additional financial benefits to unionized employees.
- Workers Comp
In order to protect workers from work accidents, each state requires businesses to contribute an additional % based on payroll into special Workers Compensation Insurance.
Failure to have workers compensation can result in heavy fines and in case of accident, payment for medical expenses will be placed directly onto the business.
- Unemployment Insurance
Similar to Workers Comp, each state collects Unemployment Insurance to insure employees that lose the job have funds to cover their unemployment for the period of up to 6 months. (also depends on the state).
Those funds are collected from a business' monthly, % based on the payroll. Usually the UI rate goes higher when employees are fired from a company.
- Paid Time Off and Sick Leave
In New York there is no requirement on paid time off (vacation days), however businesses with 5 or more employees are required to provide at least 40 hours of paid sick leave in 2021.
However this will be different not only between states, but also cities.
- Health Insurance
Most states require businesses to provide health insurance benefits to their employees when they employ more than a certain number of workers. In New York that number was 50 in 2021.
That doesn’t mean businesses must fully cover insurance, but simply provide a health insurance that employees can choose to use and pay for before tax deduction.
Some states provide health insurance assistance to small business owners allowing them to provide some very good health insurance benefits to their employees. This will increase employee retention and happiness, don’t hesitate to check with your city and state for such programs.
- Labor and Wage laws are one of the strictest laws when it comes to employers.
Labor department doesn’t care about the legal status of the workers when it comes to wages, work conditions, mistreatments and abuses.
IRS and State departments don’t tolerate unpaid or unreported income taxes, again, they are not connected to Homeland security and don’t really care about workers legal status. (as of the making of this video)
Every employee is treated the same way as if they are citizens and must be paid minimum wages.
Taxes must be reported and paid on time, otherwise you are subject to heavy penalties, as a company, officer of the company or even on a manager level who knew or was in charge of distributing unfair, unreported or unlawful wages.
Let’s go over everything one more time, we covered today:
- Wage laws
- Schedules
- Taxes
- Unions
- Workers Comp
- Unemployment insurance
- Paid time off
- Health insurance
- Warnings
Congratulations! You are now educated on the basics of labor law. One of the most important legal aspects of owning a business, and not being a business. Of course if you are the only worker in your company, then this article is kind of useless.
