How Can Small Businesses Stay Compliant with Labor Laws?

Ah, labor laws—the ever-evolving puzzle that small business owners must solve to stay on the right side of the law and avoid a starring role in a Department of Labor investigation. The good news? Staying compliant doesn’t require a law degree or a crystal ball (though both would be nice). The bad news? Labor laws aren’t one-size-fits-all, and a “set it and forget it” approach won’t cut it. But don’t panic—let’s break it down.

 Know Which Laws Apply to You 

Before you can stay compliant, you have to know what you’re complying with. The rules vary based on: 

- Business size: Many federal laws, like the Family and Medical Leave Act (FMLA) or the Affordable Care Act (ACA), kick in once you hit a specific employee count. 

- Location: States (and sometimes cities) love to pile on additional requirements. Wage laws, paid leave, and harassment training mandates can vary widely. 

- Industry: Are you in construction? Healthcare? Tech? Industry-specific rules might apply to you. 

Pro Tip: Even if you’re a small team, you’re still subject to big laws, like the Fair Labor Standards Act (FLSA) wage and hour, overtime and anti-discrimination laws. 

 Stay Up-to-Date on Changes 

Labor laws change. A lot. And while you might not enjoy reading government updates over your morning coffee, it’s critical to keep an eye on evolving requirements. Recent trends include: 

- Higher minimum wages (because $7.25 doesn’t buy much these days). 

- Expanded paid sick leave laws. 

- New overtime thresholds. 

- Increasing focus on workplace harassment and discrimination prevention. 

Pro Tip: Sign up for email alerts from the Department of Labor (DOL) or your state’s labor office. Or better yet, work with a partner like Peopleish to stay in the loop without spending hours decoding legalese. 

 Create Clear, Written Policies 

Here’s a secret: compliance starts with communication. Employees need to know the rules, and you need proof that they were told. Written policies—whether in a handbook, memos, or even a single-page policy document—are your compliance BFFs. 

Focus on key areas like: 

- Overtime and wage policies. 

- Anti-discrimination and harassment. 

- Paid time off and attendance. 

- Safety and health protocols. 

Pro Tip: Keep your handbook updated and tailored to your business. A 10-year-old template pulled from the internet won’t do you any favors. 

Classify Employees Correctly 

Nothing catches a regulator’s eye faster than misclassifying employees. Here’s the gist: 

- Exempt vs. Non-Exempt: Exempt employees don’t qualify for overtime, but the rules for exemption are strict. If someone doesn’t meet the criteria, they’re non-exempt, end of story. 

- Independent Contractors vs. Employees: Just because you call someone a contractor doesn’t make it so. The IRS, DOL, and your state may have different criteria, but misclassifications can cost you big time. 

Pro Tip: When in doubt, classify conservatively. It’s easier to adjust later than to explain an audit finding. 

 Document, Document, Document 

If you didn’t document it, it didn’t happen—at least in the eyes of regulators. Keep records of: 

- Employee timekeeping and pay. 

- Performance reviews and disciplinary actions. 

- Compliance with safety training, harassment training, and other required programs. 

- Signed employee acknowledgments for policies and handbooks. 

Pro Tip: Invest in an HR system or simple tools to keep everything organized. Shoeboxes of paper won’t cut it. 

Provide Mandatory Training 

Some training isn’t optional. Depending on your location and size, you might need to provide: 

- Anti-harassment training (required in some states). 

- Safety training under OSHA guidelines. 

- Industry-specific training (e.g., food safety, hazardous materials). 

Even if training isn’t mandatory, offering it shows that you’re proactive and helps prevent potential violations. 

Pay Your Taxes (and File On Time) 

Payroll taxes are a common compliance pitfall. While not fully within the HR wheelhouse, many employees tasked with HR are also tasked with payroll so it’s worth mentioning here.  When in doubt, work with a CPA you trust.  (We have a network of them and we’re happy to recommend someone amazing if you need a starting point.)

Make sure you’re: 

- Withholding the correct amounts for federal and state income taxes, Social Security, and Medicare. 

- Paying unemployment taxes. 

- Filing all necessary reports on time. 

Pro Tip: Partner with a payroll provider or accountant to avoid mistakes. Payroll errors can lead to fines and unhappy employees. 

Conduct Regular Audits 

Think of audits as a compliance tune-up. Set aside time to review: 

- Payroll and timekeeping records. 

- Employee classifications. 

- Benefits offerings and ACA compliance (if applicable). 

- Safety protocols and training records. 

Catch issues before a regulator—or a disgruntled employee—does. 

Don’t DIY Compliance 

Labor law compliance is complex, and even the best-intentioned small business owner can make mistakes. Consider partnering with an HR consultant (like Peopleish!) to help you navigate the maze. We can: 

- Keep you informed about legal changes. 

- Help you create customized policies. 

- Conduct audits and provide ongoing support. 

The Bottom Line 

Staying compliant with labor laws isn’t a one-and-done task—it’s an ongoing process. But with the right mix of vigilance, tools, and support, you can keep your business on solid ground. And remember, compliance isn’t just about avoiding fines—it’s about creating a fair, safe, and positive workplace for your team. 

Need help sorting it all out? That’s what we’re here for. Peopleish makes compliance manageable, so you can focus on running your business. Let’s keep those labor law nightmares at bay together.