Starting a Company? Here’s What You Need to Know About Employee Rights

This is another post in my series aimed at entrepreneurs

Most young startup owners are keen to get to the point of business expansion as quickly as possible, which sometimes means forgetting about employee rights. Breaking these employment laws can be very damaging to companies, especially young ones. Not only is knowledge of these laws important to create a safe and healthy work environment, but it’s also vital if you’re to avoid liability. Not to mention that you’ll have better chances employing the best people if you offer better benefits, some of which are mandatory, while others are voluntarily given by the company.

This article highlights some of the employee rights young startup owners should be aware of in order to go on successfully with their business.

Rights Against Discrimination and Harassment

In most Western countries today, there are laws that clearly state that it’s illegal for employers to discriminate their employees (or potential candidates) based on gender, race, religion, color, national identity, age, pregnancy, or sexual orientation. These laws usually don’t apply to all employers though, as smaller companies (with less than 15 employees) aren’t obliged by these laws. It’s also worth noting that while these laws protect older workers based on age, there usually aren’t any laws that protect younger employees.

When it comes to harassment, employers are obliged to protect all of their employees from sexual harassment. This can be done by organizing anti-harassment training, or encouraging employees to step-out any illegal sexual-advances, or any other type of sexual harassment.

Whistle Blower Rights

Every employer usually hands out a couple of NDA’s (Non-disclosure Agreements) before hiring anyone. What young employers sometimes fail to realize is that NDA’s in no way protect you if your company breaks the law in any way and such conduct is reported by one of your employees. Yes, they did sign an agreement that they won’t go in public with anything related to how the company operates, but these NDA’s are void when faced with the whistleblower rights. This means that your employees have the right to take action against you in certain situations and the law will protect them from your retaliation, no matter the outcome.

Difference Between Employees and Independent Contractors

Small business owners often get confused about employees and independent contractors, yet this happens often intentionally as well. The idea why so many startups want their employees to be characterized as independent contractors is that the latter group isn’t a subject to wage and hour laws. Furthermore, independent contractors aren’t subject to payroll taxes, which means quite a lot for any startup that’s trying to grow on a small budget. However, neither the employer nor the employees are allowed to decide what kind of relationship they’re creating, as this is completely decided by state and federal laws. Consequences of this can lead to paying interests or even getting a criminal penalty, which can completely cripple your business.

That’s why it’s vital to have a legal counsel in order to ensure that the workers you want to hire as independent contractors can be classified as such.

Worker’s Compensation Insurance

In the early 20th century, if you’d get injured while on a job, the only course of action you could take would be to sue your employer and try to prove that your injury was their fault. Today, it’s no longer so, mostly because of Worker’s Compensation Insurance.

Employers today have Worker’s Compensation Insurance available for their employees, which means that if they get injured and can’t continue to work, you as their employer will be providing money that they can no longer earn through wages.

However, best compensation lawyers also warn that there’s a tradeoff for accepting Worker’s Compensation Insurance from your employer. While most employees don’t even give it a second thought before accepting, sometimes they don’t even know that by accepting it they are giving up their rights to sue the employer for injury at work.

Employee Rights to Fair Wages

Your employees have a number of rights when it comes to being paid fair wages for their work.

  • Employee Rights to Minimum Wage – In the West, most countries have a strict law about minimum wage for nonexempt employees. This means that if your workers are characterized as employees (and not Independent Contractors) they are eligible to get at least the minimum wage which is decided by the law.
  • Equal Wages for Men and Women – Ever since the 60’s it’s become illegal to pay men and women different wages for the same work. While the law is clear on this, even today most women are only paid about 80 cents for every dollar that a man earns.

Bottom Line

While there are multiple laws that clearly state what employee rights are, there’s also a small thing called common sense. The better you treat your employees, especially as a young entrepreneur that’s looking to build a team, the better results you’ll get out of them. In the end, it’s not all about laws and avoiding penalties, but about creating a healthy work space, one where some of the top young talents will want to work at.

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