Perspectives

Understanding Employment Law as a Small Business Owner

Running a small business means wearing a lot of hats—but one area that can’t be overlooked is employment law. Even unintentional missteps can lead to costly consequences. Here are a few common pitfalls—and how to avoid them:

It might seem easier to 1099 someone instead of putting them on payroll, but the IRS and Department of Labor are cracking down on misclassification. If you control when, where, and how someone works, they’re likely an employee.

✅ Tip: Review job roles carefully and use government classification tools or consult an attorney.

Even small teams need structure. Without clear policies, you’re more vulnerable to inconsistent practices—and potential legal claims.

✅ Tip: Create a simple handbook outlining expectations, time off policies, and anti-harassment rules.

Yes, most employment is at-will, but that doesn’t protect you from claims of discrimination, retaliation, or wrongful termination.

✅ Tip: Always document performance issues and follow a consistent disciplinary process.

Overtime laws still apply—even if your employee “doesn’t mind” working late. Many businesses get tripped up here.

✅ Tip: Know your state and federal wage laws and track hours accurately.

Yes, even your breakroom needs legal attention! Federal and state laws require certain postings for employees to see.

✅ Tip: Order a current labor law poster set annually or use a service that keeps it updated.

Final Thought:
You don’t have to become an employment law expert—but having the right legal partner can make all the difference. If you’re unsure about your obligations, it’s better (and often cheaper) to ask before a problem arises.

✅ Need help reviewing your policies or contracts? Reach out to our team. We’re here to help your business grow—without legal headaches.