If you are just starting up a new business, it is vital that you understand how employment law works. Here are three easy California employment law traps that many starts-up fall into. The best way to avoid these traps is to work with an employment law firm to make sure you set everything up correct and legally from the beginning for your start-up.
#1 Make Sure You Draft Workplace Polices & Procedures
As a new start-up, you probably plan on providing your employees with computers, tablets or smartphones, as well as internet access to go with those devices and a free email address. Make sure you don't fall into the trap of providing those devices without also providing your employees with workplace policies and procedures that they have to sign in order to use those devices.
Your electronic policies and procedures should make it clear that the devices are provided for work, not personal use. They should also clearly outline that your business reserves the right to monitor all use and work done on these devices. Furthermore, your electronic policies should restrict the potential for employee abuse of these devices. Without clear policies in place, you will not have the grounds to discipline or fire an employee for their use of electronic devices, nor will you have the right to monitor how your devices are being used.
#2 Make Sure You Have The Right Type Of Employment Practices Liability Insurance
Next, before you even hire your first employee, you need to have employment practice liability insurance or EPL insurance in place. This insurance will protect your business from any claims that an employee could bring against you in court. You need to make sure that your EPL policy covers the type of situations and disputes your line of business is most likely to be concerned about.
For example, if you only have three employees, you don't need to worry about having class action coverage. However, if you are planning on hiring a hundred employees, you probably want to have class action coverage included in your EPL policy.
If you don't have the right type of coverage for your business, you could lose it all if you are taken to court.
#3 Know Which Employees Are Exempt From Overtime Laws
Finally, you need to understand which of your workers are exempt from California overtime laws and which workers are not exempt. If a worker is exempt from California overtime laws, it means you do not have to pay them overtime for the work that they perform that exceeds eight hours in a day or more than forty hours a week. A general rule of thumb is that employees who make more than twice California's minimum wage as their yearly salary are exempt from being paid overtime.
However, this is just a general rule and there are specific laws in place that govern different sectors. For example, for a computer professional to be exempt from overtime they have to primarily perform intellectual or creative work; if they perform routine and unvaried work, they most likely are not an exempt from overtime pay.
The best way to ensure that you are paying everyone fairly is to have an employment law firm, like John Franco Law, look over job title, tasks and salary of each of your employees to determine if they are exempt or not from overtime pay.
As a start-up in the state of California, it is vital that you understand employment law before you hire your first employees. You need to understand how employees are classified and what type of pay they are entitled to. You need to make sure you have workplace policies and procedures in place for electronic use and communication. You also need to make sure you have adequate ELP insurance so if somewhere along the line, you wrong an employee, you will not lose your business trying to settle their lawsuit. An employment law firm can guide you through all of these employment law traps and ensure that from a legal employee standpoint, your business is set up for success.