7 laws employers must know

By Steve Strauss

Q: I've been working at my place of employment for three years. I was told that because of my title I am not qualified for overtime pay. I don't even get a break or lunch! Is that legal?

O.W.

A:It's hard to tell whether employers break the law because they are ignorant or diabolical. I like to think it's the former. That said, there is confusion about what is legally required of employers.

To help clarify, here are seven laws every employer must know. (Note: I am giving you federal law here; rules in your state may be different.)

1.Independent contractors and employees: This is an area ripe with abuse-not all intentional. Small business owners like to label people as independent contractors because they don't have to provide workman's comp insurance, match unemployment insurance or pay FICA. That's enticing.

But it is also dangerous.

If you get caught treating workers as independent contractors when they are actually employees, the penalties could put you out of business.

Here's how to treat independent contractors:

They are truly independent.

They decide when, where and how their work gets done.

They often work for several companies.

They set their own hours, pay and schedule.

2. Benefits: You are not required to give employees health insurance, vacation time, sick leave or time off for legal holidays. Surprisingly, all that is required of you is that you pay them at least minimum wage, withhold and match social security (FICA), pay unemployment taxes, provide workman's compensation insurance, and pay non-exempt employees overtime if they work more than 40 hours a week.

Federal law does not even require that you give employees breaks or meal times. Sorry!

3. Exempt and non-exempt employees: The question is, which employees are exempt from overtime pay and which are not? According to the federal Fair Labor Standards Act, exempt employees typically hold executive, administrative, professional or outside sales positions. And they usually get a salary, regardless of days or hours worked.

So how do you know how to figure out how much to pay whom? Getting a handle on pay, benefits, withholdings and the like can be a snap if with modern accounting software.

4. Discrimination: It is illegal to either not hire, or fire, or refuse to promote, an employee because of race, color, religion, sex or national origin. Discrimination may also include, depending upon the circumstances, age, sexual orientation, marital status or disabilities.

Note: This also means that you should avoid questions relating to the categories above when interviewing potential employees. Why? Because if you ask, and then don't hire that person, they may conclude that your "inappropriate" questions are proof of your discrimination in hiring. Yes, this may be a hard thing for someone to prove as it often ends up being a "he said / she said" situation, but you never want to get to that point.

5. Sexual harassment: There are two types of sexual harassment claims:

Quid pro quo: Literally, "this for that." Here, the victim is forced to have sex to obtain a job benefit.

Hostile work environment: In this case, the employee is subject to unwanted sexual advances, physical conduct, or improper language poisons the work environment such that it becomes an abusive workplace.

6. Protection of proprietary information: There are several legal documents that an employer should consider having employees sign:

Non-disclosure agreements: NDAs basically say that the employee may be given access to confidential information and if so, they cannot relay that information to outside parties without the prior, written approval of the employer.

Work-for-hire: Any intellectual property created by an employee in the course of their employment is, by law, the property of the employer. But, just to be safe, you may want to have your employees sign work-for-hire agreements which state that they understand and agree that you will own whatever they create at work.

Non-compete agreements:

Steve Strauss is one of the country's leading small-business experts, a columnist for USATODAY.com and the author of The Small Business Bible.