4 Labor Law Compliance Challenges

Is your business compliant to current labor laws?

Whatever the size of your business, labor law compliance is always a big deal. The main problem faced by many business owners is the change and amendments to labor regulations. This may specially be an issue if your business is in a developing country, whereby new laws get into play as development progresses.

Some simple procedures, such as hiring staff, managing sick and paid leaves can become quite a challenge – federal, state or local governments are regularly amending a company’s responsibility to its workers. And as you already know, failing to keep up with these ever-changing rules often carry significant penalties.

For this reason, it is always in the best interest of your business to always stay up to date with the latest labor law changes. Below are some of the ‘must-know’ employment trends you should know when running a business, especially if your company is registered in the U.S.A.

Top 4 Labor Laws Compliance Challenges

  1. Employment at Will

While many business owners seem aware of this law, many do however misinterpret the Employment at will. Many business leaders often assume this means they can fire anyone, at any time, with no reason given.

In reality, wrongful termination of an employee can lead to heavy lawsuits for a company. It is VERY important you take the time to go through the list of protected classes and refrain yourself from acting (firing) an employee for any of the reasons listed. For example, you cannot fire an employee simply based on national origin, religion, gender, sexual orientation or HIV status. The list of protected classes is long, so be sure to carefully check the labor law regulations.

One precautionary measure that any company should undertake is keeping proper records. These include performance issues, counselling employees or any progressive training your employees have undertaken. This serves as your shield (and proof) if employees claim their rights have been violated if they are terminated.

  1. Employee Classification

Wage, salary and hour regulations are often a source of confusion, especially among small business owners. Classifying employees as exempt or non-exempt is a critical process when you have to deal with paying overtimes.

It is essential to keep time and attendance records accurately and up to date, as per the Fair Labor Standards Act (FLSA) rules or any similar law applicable to your region of operation. Safety trainings should be properly documented and compliant to your federal and/or state Occupational Safety and Health Administration (OSHA) regulations, or equivalent laws applicable to your business region.

  1. Mental Health and Medical Claims

If you are in U.S.A, you are most likely familiar with the Americans with Disabilities Act (ADA). One of the key requirements of this Act is that a company should offer reasonable accommodation for any workers who are differently capable.

One worrying trend over the past few years has been the growing number of reported cases where the employee claims the employer failed to provide a reasonable accommodation for his emotional or mental health issue. This trend very unlikely to stop, since more health care professionals advocate to reduce the stigma associated with mental illness.

Most businesses normally have an employee handbook. 90 percent of the time, this handbook prohibits drug use. What would happen if you fire an employee who fails a drug test but holds a valid prescription to use medical marijuana? Easy answer: the employee can sue you and this can lead to serious penalties for your company.

It is very important that you go through your country/state laws to enquire about all the possible aspects of the mental and medical claims.

  1. Background Checks

Commonly known as “ban the box” laws, these prohibit private companies from asking about an applicant’s criminal record in the hiring process. The aim of this law is to simply limit the company’s ability to make a biased decision based on an applicant’s criminal history. Studies carried out in also point the benefits to society as this has enabled more people “get a second chance” and helped in reducing the rate of recidivism.

California was the first state to enforce ban the box laws. Currently, many other states and countries have followed the example. It should be noted that private companies can still inquire about the criminal history, but only after an applicant is qualified for the job.

How to keep your business compliant

No matter what is the size of your business, it is key to be completely up to date with the latest employment laws. Legislations change routinely, and many smaller businesses assume labor and employment laws apply only to larger organizations. This may be true to some extent, such as paid family leave, but in the end it all depends on what country or state you operate in.

Being proactive and being able to adapt swiftly to any amendments is essential if you want to avoid significant fines and business penalties. While it is true that employment laws will forever continue to evolve around the world, there is a way to make it easier for business owners: a PEO.

A reputable Professional Employer Organization (PEO) can be your best line of defense to address any compliance issue. A PEO can be especially helpful if you are doing business on the African continent; where laws vary widely from country to country and change regularly.

Africa HR Solutions is the largest and most respected PEO on the African Continent. With a team of dedicated professionals and in country specialists, Africa HR Solutions has helped major brands across the globe set their footprint in Africa. We provide a wide array of services to help international businesses expand in 44 African countries.

Expanding your business in Africa? Talk to us.

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