Small business owners should familiarize themselves with the basic essentials of business law in order to avoid potentially devastating litigation.While some federal business laws only apply to businesses with 15, 20, 50 or even 100 employees, others apply to businesses with even a single employee. A brief overview of three areas of law that small business owners should be aware of will help business owners make lawful decisions that can help protect their company.
FLSA – Fair Labor Standards Act
Established in 1938, the Fair Labor Standards Act covers such topics as minimum wage requirements, overtime pay and limitations, record keeping requirements, and youth employment regulations that affect both part time and full time employees who are nonexempt. Nonexempt employees are those who are subject to timekeeping requirements as well as overtime requirements. Regulations pertaining to nonexempt employees include:
- Employees are required to keep track of the hours they work.
- Employees who work more than 40 hours in a work week must be paid overtime unless there are differing state regulations pertaining to daily overtime requirements.
- The rate of overtime pay for more than 40 hours worked in a workweek must be at 1 1/2 times the employees regular rate of pay.
The Act does not cover such topics as when raises must be payable, or that workers receive premium pay for holidays and weekends. Vacations, sick leave an rest/ meal breaks are not covered under this Act either. Additionally, it is illegal for employers to withhold charges or costs for company required uniforms, tools and other equipment under the Act.
While making a determination about which employees are covered under the Act is relatively simple, it is an area of the law that is commonly broken, whether small business owners do so knowingly or not. While some employers attempt to dodge the requirements for timekeeping and overtime by classifying their employees as independent contractors, others are in violation of the law due to simple mistakes in the classification of their employees. Proper classification of employees is essential for small business owners as well as for large corporations, and business owners should keep in mind that while the majority of salaried workers are exempt, some salary positions are actually covered under the Act. Business owners who are unsure about how to classify their employees can get advice from an experienced business lawyer to ensure that they are in compliance with the law.
Vicarious Liability
Employers can be held liable for any actions by their employees that cause harm to the employee or others while on company property or while using company equipment. Many small business owners don’t realize they may be held responsible for accidents or injuries that occur while the employee is performing job duties off of the premises as well.
If an employee who is making a delivery, picking up the mail, making a bank deposit or performing other acts within the scope of their employment while using their private vehicle causes an accident, for example the small business may be held liable under workers compensation law for any injuries or damages that are incurred by the employee, his or her vehicle, and that of anyone else involved.
Employers can lower their risk of being the victim of a vicarious liability lawsuit by purchasing workers’ compensation insurance (which is required by law), clearly defining their employees’ job descriptions and opting for a commercial general liability insurance policy that covers employees who conduct work in private vehicles.
Patents, Copyrights and Trademarks
Using someone’s intellectual property without permission can result in significant consequences down the line. Intellectual Property Law covers the use of trademarks, patents and copyrights. It protects such things as inventions, artistic creations, and brands. Punishments for violating Intellectual Property Law can range from severe monetary penalties to injunctions.
While understanding what constitutes intellectual property is essential, it isn’t necessarily sufficient to protect a small business. The world is filled with individuals and companies who register as many patents and trademarks as possible in order to file frivolous lawsuits against small businesses. While many small businesses wish to avoid the expense of retaining a business lawyer who can advise them about researching and filing trademarks and patents and warn them of potential conflicts, doing so could cost a small business thousands in the end.
Even the most successful small business can be devastated by expensive litigation and baseless lawsuits. Familiarizing themselves with the basic essentials of areas of the law that could affect their business, however, is the first step for small businesses to achieve the protection necessary to avoid being sued.
Should you have any questions about FLSA, Vicarious Liability, Patents, Copyright and Trademarks or any other law that may affect your business, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800.
Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services. Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.
To subscribe to our business e-newsletter, contact Vanessa at vgrazian@navigantlaw.com