Employment Law Tips Every Entrepreneur Should Know

Running a business is a lot of work, especially for small companies or startups that do not have the luxury of hiring different professionals to take care of the various business aspects. One of the critical entities every entrepreneur should prioritize is the law. The rule of law in every business setting plays a vital role – from negotiating contracts, setting benchmarks and quality standards to protecting the rights of the organization and its people.

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Mastering business law and navigating the complex legal landscape isn’t a quick fix. Most entrepreneurs won’t go back to law school just to learn the legal aspects of their business. Instead, they will hire employment lawyers to handle everything legal. That said, it doesn’t hurt learning a few employment law basics so you can make informed decisions and successfully run your company. As an entrepreneur, below are the four critical areas of employment law that you need to know.  

How to Classify Employees 

It’s no secret that hiring an independent contractor is more economical than hiring a full-time employee. However, some employers confuse the two or try to dodge their responsibilities by classifying employees as independent contractors. If you make this mistake, you risk attracting costly litigations and claims. 

Besides understanding the overtime rules, you want to differentiate employees from independent contractors. Here some of the main differences:

  • Independent contractors supply and use their own tools or equipment to complete the work while employees use the employer’s tools and resources.
  • Independent contractors perform their assigned work when, where, and how they want while employees work under the company instructions.
  • Independent contractors are paid per project and are bound by a contract agreement. In contrast, employees are paid by time (hourly or daily rate, etc.,) and the employer can terminate their employment at any time and for any reason.

Trade Secrets and Patents

Trademarks, patents, and copyrights are some of the intellectual property (IP) that the company has a right to protect or keep a secret. IP laws cover patents that protect inventions while copyrights protect artistic creations. On the other hand, trademarks protect brands, and punishments for violating the IP rights range from monetary penalties to injunctions.

As an entrepreneur, understanding the IP laws will save you from costly penalties, but there are always loopholes and people trying to take advantage of these loopholes. Retaining a competent employment lawyer will warn you against potential violation issues and even defend you against some baseless litigations. 

Employment lawyers can further help your company when filing patents and trademarks. They also ensure all your employees understand the company’s trade secrets and sign confidentiality agreements in which they promise not to disclose these secrets. 

Drafting Workplace Policies and Procedures

Workplaces that lack clear and well-drafted policies and procedures risk complacency or other habits, which can derail productivity. It’s common, for instance, for a company to provide computers, laptops, and internet access to employees so they can be more comfortable and productive delivering on their duties.

It’s also not uncommon for employees to step outside the line and use these resources for their own benefits or in their own interests, such as playing video games, accessing restricted sites, etc. Here, employment lawyers will help you draft binding agreements where employees promise to use the company resources to enhance their work and stick within the limits of their job description.

Choosing Insurance Policies 

Every business owner, at some point, will be faced with one challenge –choosing one from the many insurance policies in the market. Often, not all these policies are as attractive as they sound. In fact, choosing the right insurance policy to cover your business and employees requires proper research and insights from a trusted insurance professional. 

You can protect your business from employment claims by purchasing employment practices liability (EPL) insurance. By working with your employment lawyer, you’ll better understand your business needs and even choose the right insurance that will protect your company from employment litigations and claims. 

Always remember that purchasing expensive insurance coverage doesn’t guarantee protection. You should first understand the EPLI coverage policies and the loopholes, advantages, and disadvantages before signing up. If your business doesn’t have EPLI coverage so far, your lawyer will advise you whether or not you’ll be better off remaining self-insured/ uninsured or signing up with a plan.

Final Thoughts

In business, the law is a critical aspect that can determine whether your business will grow or sink into losses. Several companies have filed for bankruptcy after years of costly litigations and hefty fines. If you want to avoid court battles and instead focus on growing your business, you want to pay keen attention to the above four areas of employment law. Similarly, seeking some basic knowledge of employment and business law will go a long way in enriching your entrepreneurial journey.

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