Many small business owners try to be flexible in order to accommodate their employees’ needs, busy lives, and unexpected situations.  However, even if owners are simply trying to be kind and helpful, they may be unintentionally breaking federal and/or state employment laws.  Violating such laws may open the small business owners up to potential lawsuits or claims filed by the United States Department of Labor, the California Department of Industrial Relations, or from private employment law firms on behalf of employees.  In order to avoid legal action, it is always a good idea to consult with a small business attorney who is familiar with federal and state labor laws and who can help you ensure compliance with these laws.  Below are only a few of the ways small business owners may violate employment laws.

Flexible hours and/or breaks

Many small business owners allow employees to have more flexible schedules, such as working longer hours per day for fewer days per week, or skipping lunches and breaks in order to leave earlier in the afternoon.  However, this flexibility may violate labor laws regarding overtime and mandatory break times.  Though federal laws do not mandate break and lunch times, California state law does.  California law requires that an employer provide a 10 minute break after every 3.5 hours worked, and a 30 minute lunch break after 5 hours of work, unless the entire work day is completed in 6 hours.  If an employee skips all breaks in order to leave after 7 hours, the small business may be found in violation of labor laws.  Furthermore, if an employee works longer days for fewer days a week, he or she may be entitled to overtime pay depending on the number of hours worked per day and the employee’s classification.

Misclassifying employees

Employees may be classified as exempt or nonexempt from overtime and meal/break laws.  Exempt employees generally receive a fixed salary regardless of how many hours they work.   Many small business owners may decide to pay all employees a fixed salary in order to classify them as exempt rather than deal with time sheets and overtime.  However, exempt classifications are not always that simple and many employees may still truly be nonexempt even if they receive a fixed salary.  Some of these employees may sue for violations of labor laws if they realize they have been improperly classified.

Furthermore, many small business owners misclassify employees as independent contractors.  Classifying someone as an independent contractor allows the business owner to avoid certain liability, tax payments, and provided benefits.  However, many independent contractors may believe they have been misclassified and are actually entitled to employee benefits, and this type of misclassification is a commonly litigated issue.  Therefore, you should always consult with a small business attorney to ensure you are not misclassifying your employees or independent contractors.

Failing to provide harassment and discrimination training

Some owners may believe that because their business is on the small side, harassment and discrimination training is not necessary.  However, California law mandates that businesses of a certain size provide at least two hours of interactive training to all employees who may serve as a manager or supervisor every two years.  California Assembly Bill 1825 (AB 1825) specifies the nature of the required training.  Failure to comply with this law opens a business up to citations from the state and increased liability in harassment lawsuits.

- Claire Kalia


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