Online Class: Employment Law Fundamentals

The process of employment law begins long before you actually hire someone. Before you step into the position of either a small-business owner/employer or supervisor or manager of a larger corporation, it is vital that you have some understanding of employment law. By learning the fundamentals of employment law, you will, at the very least, limit the possibility of litigation. At the most, you will avoid making costly mistakes and be able to get down to the business of making money. 

A successful and savvy employer or manager knows:

• how to properly design job postings and advertisements.
• the proper technique for screening applicants.
• which questions to avoid during the interview process.
• that checking references and past records may diminish employment concerns.
• how to avoid charges of invasion of privacy or defamation of character.
• both federal and state laws that regulate employment practices.
• how to avoid illegal discrimination charges.
• how to protect against unfair competition.
• how important it is to avoid making promises he or she may be unable to keep.
• that immigration laws must be applied in all cases.
• and much, much more. 

All Employers Must Obey Employment Laws

What many employers falsely believe is that as long as they have good intentions, they are protected from a potential lawsuit. This may have been the case 100 years ago. However, today's employers are regulated by a myriad federal and state laws when it comes to handling employees. 

Employment Equals Economic Relationship

The first fact you need to be aware of is that employment is an economic relationship. An employer seeks competent and dependable help in order to grow a business. An employee is looking for work with compensation. The laws regarding employing people to work for you or your organization are constantly changing. From Congress to state legislatures to federal and state regulatory agencies, today's employer must brave a veritable minefield of potential disasters in the employer/employee relationship. 

This course will deal with some of the potential dangers and help you determine when professional legal advice should be sought. Remember, this course will not make you qualified to be an employment attorney or tax expert. Nor should you believe you are able to take on the Equal Employment Opportunity Commission without the benefit of legal counsel, or even be able to deal with all the legal ramifications of a union being established in your workplace. 

In this course, you will learn the following:

• Treat employees reasonably and fairly.
• Employees are not members of your family.
• All personnel policies should promote your business.
• Personal prejudices have no place in business.
• Do not assume you know everything there is to know about employment law.
• Keep written records; anything not documented did not happen!
• Consult the appropriate professional, whether attorney or accountant, when you have a question. 

 

The High Cost of Making Employment Mistakes

This is an area in which you can take reasonable steps to minimize your risk of making costly mistakes. Hiring the wrong person for the job can cost you in wages, in time lost on a project, and in litigation when you try to terminate this individual and hope to hire a better candidate. 

Learning the basics of employment law will help you avoid making mistakes. Sadly, even an honest mistake will get you into trouble. Litigation costs employers billions of dollars a year. By establishing up-to-date employment policies, you will avoid making most of the common mistakes. Not understanding employment law will seriously impact how well and how long you do business. 

Employees vs. Independent Contractors

Independent contractors often are hired to work for you without the complication of actually hiring them as employees. The risk, however, is if they "become" employees based on how you deal with them. 

One of the biggest things that will distinguish an independent contractor from an employee is determining who is responsible for how that individual is allowed to do his or her job. If the employer dictates the hours, the manner, the method of payment, where the individual does the work, then that person is not an independent contractor, but an employee. 

In order to have someone classified as an independent contractor, you as an employer have a say in how much that person will make for a certain amount of work being done. How that work is done, how many hours it takes, the manner in which it is done, and where it is done must be up to the independent contractor. 

The Internal Revenue Service (IRS) prefers that people you pay for work be employees. It simplifies the tax burden for both of you. However, there are times when you periodically need specialized skills. An example could be an attorney or an accountant. Some employers need specialized computer or writing skills. These types of jobs are filled by independent contractors. 

Employees usually are paid according to the time they spend working, per piece of work, or on a commission basis. They also are bound by supervision or direction on how to accomplish their job. An independent contractor is usually paid a specific amount for a given job as established in an agreement and has more freedom to decide how to accomplish that job. 

Where these two show a great distinction is in the tax arena. Here, it is important to note that most states do not actually have a legal definition of an independent contractor. It is up to you, the employer, to understand the legal ramifications of hiring an independent contractor and what tax burden you bear. Each state has its own laws that determine whether an individual is an employee or an independent contractor. 

For an employee: You must pay your portion of that worker's Social Security and Medicare taxes. You must also withhold federal and state income taxes and the employee's share of Social Security and Medicare and pay the employee according to the tax laws of your state. 

For an independent contractor: You do not have to withhold taxes from the amount you pay that worker. The independent contractor is responsible for paying all of his or her Social Security and Medicare taxes. You do, however, have to supply a Form 1099 to each independent contractor to whom you pay more than $600 per year and send the form to the IRS. 

In addition to the tax issue, as an employer, you must be aware of other issues that differ with an employee and an independent contractor. Here you must look into your state and local laws to ensure that you adhere to them strictly.

• Worker's Compensation
• Unemployment Compensation
• Job Benefits
• Workspace
• Firing
• Cost 

 

Employment at Will

Employment Contracts

Most employers believe that if they do not have a written contract, then they have an employment-at-will agreement. However, if you have made any kind of spoken or even implied promise about the work, you may find yourself in a difficult position. Perhaps you have made promises, even in your employee manual or handbook, that you will follow certain steps prior to termination of employment. This creates an implied contract with your employees, and turns an at-will employee into one with a contract. 

Promising job security is another form of implied contract. This could make you vulnerable to a lawsuit should you terminate an employee, even if you are suffering from the economic downturn and have no choice but to reduce your workforce. Beware of making verbal promises. 

Arbitration Agreements

With the increased incidence of litigation, or court cases surrounding employment issues, more and more employers are establishing a mandatory arbitration agreement as a condition of employment. This is an alternative way to handle employment issues rather than going to court. This agreement is between the employer and employee, defining how they will resolve future employment disagreements by binding arbitration.  

Arbitration agreements can:

• reduce the cost of going to court;
• limit the employee's ability to appeal the decision;
• be faster than traditional legal processes;
• maintain privacy for both the employer and the employee;
• take up less time than a traditional court case;
• reduce an employer's insurance premiums;
• usually yield more predictable results.