Five Ways Your Business May Be Violating Employment Law

Employment law, for a lot of business owners, is more procedural than behavior-defining. We file the forms, pay the taxes, buy insurance, and then just treat our staff with the respect we’d treat anyone. And for the most part that’s fine; a decent person doesn’t force people to work overtime for no extra pay, or work through their break. But, as it turns out, some pretty common demands may actually violate labor law.

1. Emailing employees after hours

Smartphones revolutionized the office. A Pew Research study found half of those surveyed workers believed smartphones upped their productivity. On the flip side, 35% of respondents said smartphones increased their total hours worked. The problem of expecting employees to check and answer emails outside of office hours has gotten some attention, but by and large it’s just taken as a cost of working in the 21st century.

Despite a begrudging acceptance, expecting people to check and answer work emails after hours does violate labor standards. Effectively, workers have to be paid when employers allow work to take place. So if you know people are working off the clock, like by answering work emails, you have to pay them for that time.

2. Misclassifying 1099 contractors

1099 labor—so named after the 1099-MISC form you send to hired contractors—is hot-button topic. Services like Uber and Lyft moved the debate on what separates an independent contractor from an employee into the public sphere. And so the Department of Labor is cracking down on people who misclassify employees. It’s totally fine to use 1099 contractors, but remember you cannot tell them when or where to work. They get the contract, they do the work however they want, and you pay them. You’re their client, not their employer.

3. Using non-compete agreements

NCAs are seen by many as a standard document to protect trade secrets. Basically, if an employee leaves, they can’t join up with a nearby competitor. These agreements are normally made up of two parts: a non-disclosure and a broad rule restricting where someone can work over the next couple of years. The trouble is usually with the latter part. States are happy to protect right to trade secrets, but restricting where someone can find work interferes with their basic right to make a living. About a third of states refuse to enforce them on those grounds. Other states, like California, made NCAs illegal, and refusing to hire someone because they won’t sign your NCA opens you to suit.

Other Articles From AllBusiness.com:

• The Complete 35-Step Guide for Entrepreneurs Starting a Business
• 25 Frequently Asked Questions on Starting a Business
• 50 Questions Angel Investors Will Ask Entrepreneurs
• 17 Key Lessons for Entrepreneurs Starting A Business

4. Assuming salaried workers don’t get overtime

There’s a mistakenly held belief that salaried employees don’t qualify for overtime pay. Currently, at the federal level, anyone salaried for more than $23,660 annually is exempt from overtime. But different states have passed their own floor; California, for example, pegs the exemption at different salaries, depending on profession. So you absolutely have to know what your state’s law is regarding the overtime exemption. Though, even if you’re currently not violating it, you should note that the federal government is moving to raise their threshold to $47,892 annually.

5. Asking staff to use personal devices for work

There's a lot of argument about whether employers have to reimburse their employees if they require staff to use their own personal devices for work. But, even though this point is still being discussed, you should know that something as simple as texting an employee about work, or asking them to link their work inbox to their phone, could put you on the hook for a percentage of their costs. This is not the standard in every state; so far, only California definitively ruled on this issue. But the state did hold that employees were owed reimbursement, and that may sway how other states rule on similar issues.

Employment law can be tricky because, on occasion, what’s widely practiced may be a flagrant violation. But saying "everyone else was doing it" isn’t a legitimate defense for violating labor codes. Classification, non-competes, and overtime are all areas that businesses have trouble navigating. But if you know the limits of the law, and you don’t force your staff to work as independent contractors or after hours, you’ll have taken a solid step towards keeping your employment practices above board.