Top 5 Employment Law Tips for Startups

By Kenneth Guyer posted 11-01-2020 08:40 PM


When you start any business, you usually begin by doing all of the tasks involved because you either can’t afford to hire a lot of people or that’s just how things naturally evolve. 

However, it’s important to pay special attention to your role as an employer especially when it comes to employment law. 

  • Learn About the Differences Between Employees and Contractors

A lot of startups prefer independent contractors because they’re more cost-effective than permanent employees. 

Hiring an independent contractor can significantly reduce your overheads and you don’t have to include them in your medical or worker’s compensation insurance. 

But, you should never classify an actual employee as an independent contractor, no matter how tempting it is, because this could lead to legal action being taken against you. 

  • Figure Out Exempt Employees

Another aspect of employment law to be aware of is that of exempt employees. 

Employees who are exempt from overtime laws must by law be paid a minimum monthly salary that’s double the state minimum wage for full-time employees. This goes for professionals and executives alike. 

But, it could also include specialized employees such as creative arts workers, external salespersons, and software developers. 

The easiest way to classify your employees and avoid any confusion is to draft comprehensive job descriptions. 

  • Save All Trade Secrets in the Best Way Possible

The word trade secret typically refers to a process, technique, method, device, program, compilation, pattern, or formula whose value lies in its public anonymity. As such, it’s crucial to keep your trade secrets a secret in order to protect your bottom line. 

This includes any formulas that you’ve developed which are unique to your brand, process methods, and customer lists. These are all trade secrets that can be protected, granted you take the necessary steps to keep them a secret in the first place. 

You can do this by only disclosing the information to members of your team that absolutely need to know, and keeping it in a password-protected environment. 

  • Draft Workplace Policies

Many employers provide things like free Internet access, email, and computers to their employees. 

However, things like comprehensive company policies are often missing thus leaving employees to guess as to how these systems should be used. 

For best results, make sure you have strict policies in place to let employees know that these systems are for work and they aren’t to be used for fun under any circumstances. 

You should also condemn employee abuse of these systems by making it clear that the sharing of confidential information or access to restricted websites is prohibited. 

  • Consider Employment Practices Liability Insurance

One of the few downsides of starting a business is that you could end up in litigation for unintended mistakes. 

That’s why it’s important to get EPL insurance to provide protection in case of successful employment claims. 

Make sure that your policy offers comprehensive coverage and makes sense for your particular sector and business.