5 labor law compliance challenges in changing times

Business Journals

a day ago

Navigating labor law compliance is an ongoing challenge for businesses. The laws and regulations governing the workplace change constantly, from paid leave to safety standards. Falling behind can lead to penalties, lawsuits, and reputational damage. Here are five current labor law challenges employers need to watch.
1. Restrictions on Job Applications
States are increasingly adopting "ban-the-box" laws that prevent employers from asking about applicants' criminal history during the early stages of hiring. These laws, first adopted in California, aim to reduce barriers to employment for those with a criminal record. Today, states like Connecticut, Hawaii, and Illinois, as well as many municipalities, enforce similar rules.
Additionally, many states have imposed salary history bans, restricting employers from inquiring about prior earnings during the hiring process. Even if your business isn't currently impacted by these laws, this trend is growing, making it worth adapting hiring practices preemptively.
2. Mental Health and Medical Accommodations
The ADA requires businesses to provide reasonable accommodations for employees with disabilities. Recently, there's been a growing focus on accommodating mental health issues and removing stigmas surrounding such conditions.
At the same time, medical marijuana presents compliance challenges, particularly in states where its use is legal. For example, how should businesses approach employees who fail a drug test but hold a medical marijuana prescription? Employers must balance the ADA, workplace safety regulations, and state laws, which can lead to complex compliance scenarios.
3. Employment-at-Will Misconceptions
Many small business owners assume 'employment at will' means they can terminate employees for any reason without issue. However, wrongful termination claims often arise if the fired employee is part of a protected class—for example, based on gender, race, religion, or increasingly, LGBTQ+ status.
Proper documentation is crucial to protect businesses. Maintain accurate records of performance concerns and follow established training and counseling processes to reduce the risk of legal challenges.
4. Employee Classification and Wage Compliance
Misclassifying employees as exempt or non-exempt can result in serious consequences under the Fair Labor Standards Act (FLSA). Employers must document time, attendance, and safety training records accurately, especially in industries with OSHA regulations.
Small businesses often struggle to understand when overtime applies or misinterpret state-specific wage laws. Regular audits of classifications and payroll practices can help businesses stay compliant.
5. Lawsuits for Labor Law Violations
California's Private Attorneys General Act (PAGA) illustrates the risks companies face when employees bring forward labor law claims. PAGA allows employees to act as private attorneys, filing lawsuits on behalf of themselves and others for labor violations.
Although this legislation is specific to California, it demonstrates the potential scope of legal challenges nationwide. Non-compliance, whether intentional or not, invites fines, lawsuits, and reputational harm. Addressing compliance issues proactively can help mitigate these risks.
Why Compliance Awareness Matters
While some businesses assume labor laws primarily apply to larger organizations, most regulations—including those addressing discrimination, safety, or wage standards—extend to small businesses. Violations can lead to substantial fines, time-consuming lawsuits, and long-term damage to employer reputation.
Wronged employees often share negative experiences online, which can hurt a company's ability to attract top talent. Staying ahead of changes in labor laws and responding swiftly can protect your business and preserve your brand image.
How To Stay Ahead
Review policies regularly, keeping pace with federal, state, and municipal regulations.
Document everything, from training to disciplinary actions.
Consider working with a professional employer organization (PEO) for guidance on HR and compliance challenges.
Employment laws evolve continuously. Addressing issues now may save costs, stress, and reputational risks in the future. By staying informed and proactive, businesses can rise to meet these challenges and thrive despite changing times.
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