Labor Law Compliance | 4 mins read

What is Labor Law Compliance and Challenges to Look Out For

what is labor law compliance and challenges to look out for 1626393576 5985
Hanh Truong

By Hanh Truong

What is Labor Law Compliance?

Labor law compliance is the process of abiding by various labor standards that the federal, state, and local governments enacted. All companies and organizations in the public and private sectors are required to follow established regulations. Entrepreneurs who conduct business with global entities must also follow international labor laws.

The guidelines set forth for labor are intended to protect workers and their safety and interests. For example, California has regulations that require employers to pay employees overtime for the hours worked in excess of 40 hours in a week and 8 hours in a day. It is critical that employers comply with these standards to prevent lawsuits, penalties, and fines. Non-compliance can also negatively impact a business's reputation and ability to attract top talent.

Employers can effectively maintain awareness of federal and state mandates by staying on top of news reports and policy updates. Regulations are consistently evolving, therefore, business owners need to be diligent to avoid accidentally violating employee rights. Companies can also utilize smart business systems, such as time-tracking and scheduling software. These latest solutions are programmed to remind managers of labor laws.

Labor Law Compliance Challenges

Labor law compliance is a crucial component of running businesses of all sizes. Owners and operators need to take responsibility and ensure they are up-to-date about current guidelines. The following are some of the top challenges that organizations should be aware of.

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1. Job Application Restrictions

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There are various restrictions that dictate what employers cannot ask on a job application. For example, in California, companies can not inquire applicants about prior convictions or arrests. Doing so allows more workers to be able to find employment and reduces the chance of convicted people relapsing into criminal behavior. Other states have followed suit with this guideline, such as Hawaii, Maryland, and Connecticut.

Similarly, some states will have laws that restrict employers from asking applicants about previous compensation. Company owners should review their application forms and processes and make revisions, if necessary. And while some states may not have these specific restrictions, experts advise that employers be diligent, as states may enact them over time.

2. Claims for Medical and Mental Health

According to the Americans with Disabilities Act (ADA), employers must provide reasonable accommodations for their employees. Recently, however, employees have been making claims that their employers fail to accommodate emotional and mental health issues. As the destigmatization of mental illness becomes ever so important, it is crucial that organizations realign their standards.

Additionally, the use of medical marijuana can present an obstacle for ADA standards and for businesses that prohibit drug use. Some states will have thorough regulations for these challenges and/or have legalized the use of recreational and medical marijuana. Assessing these laws will ensure companies are up-to-date with their compliance.

3. At-Will Employment

Small business owners oftentimes misconstrue at-will employment laws and assume that they can fire a staffer for no reason. This, however, can result in a wrongful termination lawsuit if the employee declares they are from a protected class - such as gender, religion, or orientation. To prevent this, business leaders need to carefully and accurately document performance issues and remediation tactics. With proper documentation, they can mitigate lawsuits and negative impacts on their reputation.

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4. Work Hour and Wage Regulations

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There are various federal, state, and local regulations regarding wages, work hours, and employee classifications. It can sometimes be confusing for small businesses to keep up with multiple regulations. Such confusion can easily result in improper overtime pay or incorrectly classifying an exempt employee as non-exempt.

Managers can avoid non-compliance by keeping thorough and accurate time and attendance records. They should follow the Fair Labor Standards Act (FLSA) and document any safety training. The state Occupational Safety and Health Administration (OSHA) will have safety outlines for businesses of most industries.

5. Labor Code Violation Lawsuits

Employees have a right to make claims against employers for violating labor codes. In California, the Private Attorneys General Act (PAGA), allows employees to also file lawsuits on behalf of their coworkers and the State of California for multiple types of violations. It is critical that business owners stay compliant with all local, state, and federal labor and employment regulations. Doing so will mitigate labor code violations and PAGA lawsuits.

Key Takeaways for Labor Law Compliance

key takeaways for labor law compliance 1626393577 6585

  • Labor law compliance is the practice of following labor regulations enacted by the federal, state, and local governments.
  • Organization leaders need to be diligent and up-to-date about labor and employment laws because non-compliance can lead to lawsuits and fines.
  • Some business systems, such as scheduling and time clock apps, can help companies stay compliant.
  • Labor law challenges that entrepreneurs need to be aware of include job applications restrictions and medical health claims.

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