Women-Owned Business Owners Corner: Top Ten Legal Mistakes Made by Corporations

By Stacia Abner –The contemporary American workplace is susceptible to numerous federal, state, and local law regulations that impose strict obligations on businesses (e.g., wage and hour legislation, nondiscrimination legal guidelines, etc.). Most companies, especially smaller businesses, tend not to completely understand the scope of such obligations and, therefore, frequently (albeit inadvertently) violate what the law states. These violations can result in costly lawsuits, along with civil and criminal penalties. In my experience of being a defense attorney in addition to being a plaintiff’s lawyer, the most frequent employment law mistakes done by companies are these (in no particular order):

1.  Misclassifying personnel as independent contractors. Generally, only workers who operate their particular separate organizations are “independent contractors.” Few workers meet this test; in reality, most personnel are considered “employees” for the law, which suggests they’re eligible for the total array of workplace protections.

2. Misclassifying non-exempt staff members as exempt. Normally, all workers are eligible to minimum wage and overtime pay, unless these are “exempt” under state and federal law. The exemption rules (e.g., for executive, administrative, and professional personnel) only apply in limited circumstances, however; consequently, many staff members that are claimed by businesses to become “exempt” actually have entitlement to minimum wage and/or overtime pay.

3. Not complying with state wage payment legislation. i.e. New York imposes several specific rules regarding how businesses be forced to pay their personnel. These rules include providing new personnel with written notice of the rate of pay and regular pay date; prohibiting deductions from wages unless to the employee’s benefit and authorized in writing; requiring written contracts for commissioned salespersons; and providing terminated employees with written notice of the last day’s work, their last day’s benefits, and their right to make an application for unemployment benefits.

4. Not owning a worker handbook. A laborer handbook is a tool for effective employer-employee relations. It notifies workers of the company’s values, policies, and procedures; promotes compliance with labor and employment laws and regulations; so helps create an orderly, efficient, and transparent workplace.

5. Not documenting personnel job performance. A well-managed corporation clearly communicates its employees’ duties and responsibilities (e.g., through written position descriptions), trains and supervises employees to be sure they are meeting these requirements, and offers regular, objective, consistent feedback (e.g., through written evaluations and, where necessary, disciplinary actions). A not enough accurate, complete, contemporaneous documentation can cause liability in the eventuality of a case by a worker.

6.  Not training supervisors regarding EEO laws and regulations. Federal, state, and local equal employment opportunity (EEO) legal guidelines prohibit businesses from taking adverse actions against employees (e.g., demotion, termination) for reasons not linked to an employee’s job performance, including those depending on an employee’s race, color, sex, age, disability, religion, national origin, sexual orientation, and marital status ( to call the commonest “protected characteristics”), plus retaliation for an employee’s good faith complaints of discrimination. It is imperative that supervisors learn the way to manage personnel without violating (or appearing to violate) these law regulations.

7.  Not providing reasonable accommodations for disabled staff members. Most EEO law regulations prohibit businesses from taking adverse actions against personnel according to certain protected characteristics, but disability discrimination legislation also impose an affirmative obligation on businesses to “reasonably accommodate” disabled staff members to be able to make them perform the primary functions of these jobs. Such accommodations can include restructuring job duties, modifying work schedules, or providing assistive devices. Businesses have to supply a disabled personnel with needed accommodations unless the process would cause an “undue hardship” for the company (e.g., very costly, too disruptive).

8. Not obtaining releases from terminated employees. When terminating a worker, businesses need to get a release that waives the employee’s potential legal claims against the corporation. The simplest way to get a release is in exchange for an offer of severance (where appropriate). Generally speaking, companies are not necessary to pay for severance to employees (unless essential to an employment contract or possibly a collective bargaining agreement). If they choose to achieve this (e.g., associated with layoffs), they ought to require employees to sign a release in return for the payment.

9. Not protecting confidential company information. Every corporation is dependent upon certain vital, often confidential, details about its business operations, including trade secrets, marketing and advertising practices, and customer and client lists. Access to this information ought to be tied to personnel with a “need to know” and may be protected by appropriate non-disclosure, non-compete, and/or non-solicitation agreements (depending on the nature of the information as well as the employee’s position).

10.  Not consulting a professional -a certified employment law attorney. Perhaps the one most critical point to take away from this discussion is businesses have to consult an experienced employment lawyer to ensure they are in compliance with all the increasingly numerous and complex law regulations that carpet work just like a minefield. Large businesses normally have attorneys and recruiting professionals working to aid them in this field. Small- and medium-size corporations often tend not to. Their biggest mistake is attempting to navigate this minefield independently.

About the Author

Stacia Abner resides in Ovid, New York and writes her personal blog where she uses her experience as defense attorney to assist workers and corporations handle the elements of employment law.