Small Business Tips 5
Disputes between employees and employers are fraught with emotion and can quickly escalate into litigation. Even seemingly minor mistakes may be expensive and time consuming for business owners to resolve. With some advanced planning and thorough record keeping you may be able avoid some of the most common HR mistakes. Contact your LegalShield provider law firm if you need assistance.
- Properly vet all new hires. Always take the time to review employment history, contact references and interview all new hires. Avoid hiring someone as a favor or simply because they are a friend or family member. Make sure they are qualified for the position and are a good fit for your business. It is also your responsibility to verify that an employee is a United States citizen or is otherwise eligible to work in the U.S. The U.S. Small Business Administration offers details on what to do when hiring your first employee. If you have any legal questions contact your LegalShield provider law firm.
- Develop and implement an HR policy handbook. Even if you only have one employee, your business needs an HR handbook. A well written HR handbook will help protect you from litigation. Your handbook should cover everything from benefits, time away from work, harassment, non-discrimination policies and workers’ compensation. Provide each employee with a copy of the handbook and have him or her sign a document stating that it was received. If you need assistance reviewing or developing your company’s employee handbook contact your LegalShield provider law firm.
- Follow changes in the law. Wage, hour, workplace safety and the other laws governing you and your employees are subject to change. It is important to follow changes in both local and federal legislation. The U.S. Department of Labor (DOL) Wage and Hour Division website has information specifically targeted to small business owners. It is important to periodically review your policies with employees and document the date and time of the review.
- Document everything. A lack of documentation can be a nightmare when an HR dispute results in litigation. Document every HR interaction with your employees. Start a file containing the employee’s original application or resume, letters of reference, job description, signed receipt of employee manual, benefit information and other employment details. It is also important to annually document each employee’s performance. Poor job performance and unprofessional behavior should be documented immediately. Should you face a legal action as a result of terminating an employee, or any other HR issue, documentation may be vital to your legal defense.
- Properly classify your workers. One of the most common HR mistakes involves the incorrect classification of workers. The first determination to make is whether the worker is an employee or a contractor. Learn more about the difference between contractors and employees by reading our article from January 2014. Once you have determined that a worker is an employee you must also determine whether or not they are exempt from wage and hour laws established by the Fair Labor Standards Act (FLSA). The FLSA also governs the payment of overtime, which is a frequent point of contention in labor disputes. The DOL offers valuable information on employee classification via their website. Some states have different wage and employment laws. Contact your LegalShield provider law firm if you need more information on the laws where your business operates.
Selling products and services online allows your small business to reach a wider audience. It is important to be aware of current regulations and understand the legal risks of online sales such as protecting payment information, sales tax and dispute resolution. If you have questions or concerns call your LegalShield provider law firm today.
- Protect customer data. One of the most important considerations to make is for the security of customer payment information. Often, for small businesses, the best solution is to use a vendor who will handle your transactions and forward payments to an account you designate. There are a wide range of options for online payment services. You can learn more by reading our article “What You Need to Know About Online Payment Services”.
- Review your vendor’s terms of service. In addition to payment processing your online business may work with other vendors or partners, including online advertising providers, website and domain name hosting companies and online sales networks. It is important that you carefully review all service agreements and contracts before you sign them. Your LegalShield provider law firm can assist in your review.
- Follow your state and local regulations. Just because your business operates online does not mean it is free of state and local business regulations. You must still follow applicable employment, business registration and licensing regulations. If you are unsure of which laws apply to your business, contact your LegalShield provider law firm.
- Learn the rules of advertising. Online advertising carries the same rules and regulations that govern storefront businesses. The most important rule to live by is that all of your advertising must be truthful and cannot mislead consumers. If you make a specific claim about a product or service you must be able to verify the accuracy of your claim. Even if you hire an online marketing company to work on your behalf, you are the one who is ultimately responsible for reviewing your business’s advertising. The Federal Trade Commission has detailed information about online advertising on their website.
- Know when you need to collect sales tax. If you make a sale in a state where your business has a physical presence, such as a store, office or warehouse, you may be responsible for collecting sales tax. Not every state requires sales tax and some states only collect taxes on certain items. It is important to make sure you follow the proper tax guidelines in any state where your business has a physical presence. Some online payment vendors automatically calculate and collect tax from purchases. If you need additional information contact your state taxing authority or your LegalShield provider law firm.
- Develop a strong customer relations strategy. The Internet allows your products to travel further into the marketplace, but it also amplifies the voice of unhappy customers. Online businesses suffer greatly from poor online reviews, which may send potential customers running. The lack of face-to-face communication in online sales and services can lead to more misunderstandings and may make resolution difficult. Develop a system for working to resolve customer complaints. Your investment in good customer service will help your reputation and improve your bottom line. To learn more about protecting your business’s online reputation read our article from March 2014.
One of the greatest fears a small business owner may face is the loss of a valuable employee. If that employee leaves to start their own business or to work for a competitor and takes your customers, the result could be disastrous for your bottom line. It may be possible to protect your business using a non-competition agreement. Call and speak with your LegalShield provider law firm to learn more.
A non-compete clause or covenant not to compete is an agreement between and you and your employee, which states that if the employee leaves your business he or she may not enter into or start a competing business. A well written non-compete clause will legally protect your trade secrets, client information, marketing strategies, and other information vital to your business’s success. It is important that your non-compete clause be narrowly tailored to protect your business interest. If the agreement would hinder the employee’s ability to obtain any reasonable employment after leaving your business, it may not be enforceable by the court.
Before you sign or ask an employee to sign a non-competition agreement, it is essential that you speak with an attorney. Laws regarding non-competition agreements vary by state. Some states prohibit non-compete almost entirely, while others strictly limit them to certain businesses or circumstances. Your LegalShield provider law firm can advise you of the laws that govern your state and help review your agreement. Call today to learn more.