The rewards of owning your own business are numerous, including being your own boss and profiting directly from the fruits of your labors.

These benefits, however, are only attainable in the context of legal structures — namely, laws regarding your employees.

At first glance, employment law can appear intimidating and too complex to understand. We’ll help you by breaking down employment law basics and revealing how you can effectively navigate the laws to benefit you and your employees.

Paperwork … and more paperwork

Maintain clear and thorough documentation of your legal decision-making processes.

Most employment laws are in place to protect employee rights and ensure employers uphold their responsibilities. Therefore, keeping a rigorous paper trail of all employee-related matters, such as hiring and termination practices, payroll, and benefits, will ensure you are abiding by the law and provide assurance under scrutiny.

In the unfortunate event of a legal quagmire such as an audit or lawsuit, detailed record-keeping can be a lifesaver.

Wages, commissions, and profits

Many employment laws revolve around employee wages, such as the federal minimum wage mandate of $7.25 per hour passed in 2009. Many states have also passed laws requiring higher minimum wages, which may reflect local cost-of-living standards.

Carefully consider how much you should be paying your employees based on your own profits, employee skills and abilities, and a position’s eligibility for commission.

Also, be extra careful if you feel you need to fire an employee. Wrongful termination is a key issue faced by employers who fire employees for actions that are actually legally protected. Carefully review your state’s laws before you begin the process of letting an employee go.

Promoting inclusion and equity

Another primary role of employment law is ensuring that certain groups and individuals have equal access to securing and maintaining jobs.

The Equal Pay Act of 1963 was landmark legislation making it illegal to pay men and women unequal wages for the same work. Similarly, the Americans with Disabilities Act of 1990 outlaws employment prejudice and discrimination against individuals with disabilities.

These laws are specifically designed to promote inclusion and equity in employment by safeguarding the rights of social groups that have been historically marginalized.

Workplace climate is another arena covered under employment law. The Equal Employment Opportunity Commission prohibits discrimination based on race, religion, sex, age, and other social categories.

Safe, comfortable = productive

Sexual harassment is a topic of increasing public attention, and employers should be diligent in promoting a safe, comfortable, and therefore productive, workplace for all employees.

Similarly, healthy physical working conditions are governed under the Occupational Safety and Health Administration’s guidelines surrounding exposure to harmful substances and work-related injuries.

Seeking professional guidance

To ensure you’re covering all your bases, it may be prudent to seek out professional guidance in the form of an employment lawyer.

A good lawyer will be well versed in employment law and can advise you in matters such as constructing your employee handbook and navigating major new hires or terminations.

The bottom line

Although employment law can be challenging to figure out and implement in your own business, taking care to educate yourself and seek guidance ensures your company is legally sound.

Your path to financial freedom starts here.

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