Employment-Related Compliance Tips for Small Businesses

Getting a small business off the ground and maintaining its success isn’t easy, and compliance issues that come with having employees present no small challenge.

As a small business owner, effectively managing your employees can drive the success of your business, while inefficiency can become a time sink that takes you away from the details that truly matter. This article seeks to cut through the noise and deliver five critical tips needed to ensure compliance with your employee group.

1. Keep Uncle Sam (and the rest of his family) happy. No matter your size, the state and federal governments expect all businesses to understand their tax withholding and filing obligations, including withholding and paying payroll taxes, filing quarterly and annual tax returns, and paying unemployment taxes. Don’t forget that you’ll need workers’ compensation insurance as well.

2. Classify your workers correctly. Every employer needs to know the difference between employees and independent contractors and between exempt (hourly) and non-exempt (salaried) employees. In this arena, merely labeling someone an “independent contractor” or an “exempt” employee is insufficient; the worker actually has to meet the legal tests for falling into these categories. Failing to properly categorize workers can lead to wage claims by workers and back taxes and penalties assessed by the government.

3. Be fair and consistent. In Oklahoma, employment-related liability for discrimination, harassment and retaliation can fall on an employer of any size. The key to avoiding such liability is the fair and consistent application of workplace decisions and practices. Differential treatment or favoritism, while not necessarily illegal, can be perceived as discriminatory. Small businesses should consider using an employee handbook (even if relatively short) to guide fairness and set appropriate expectations for all concerned. (You may even wish to consider employer practices liability insurance; even one lawsuit can be quite costly to defend.)

4. Hire the right people. While it can be challenging to find the right candidate (particularly in a tight labor market), the wrong hire can be costly – in terms of lost effectiveness and efficiency in your business operations or through later unemployment or wrongful termination claims. Taking the time to consider the qualities necessary for successful employment and avoiding hurried hires and gut feelings can lead to successful recruitment and longer tenured employees.

5. Keep workplace safety top of mind. All employers have a duty to provide a safe workplace to their employees. While small businesses (those with under 10 employees) are exempt from certain recordkeeping requirements, they are not exempt from OSHA’s safety standards.

While there is no “easy” button when it comes to employment-related compliance for small businesses, ensuring compliance and best practices can ease your worries, reduce your liability, and allow you to focus your attention on building your small business.

This article first appeared in The Journal Record on March 18, 2022, and is reproduced with permission from the publisher.


Associated People:

Michael W. Bowling

Practice Area:

Labor & Employment