Employment Law Issues for a Small Business

NOTHING IN THIS ARTICLE SHOULD BE CONSTRUED AS LEGAL ADVICE AND THE READER SHOULD NOT RELY ON THE STATEMENTS CONTAINED HEREIN.

The following consists of some of the key employment law issues all small business owners should consider when starting a new business. 

Hiring/Onboarding  

• Determine your needs.  

Before posting an ad or hiring an employee, all business owners should carefully determine what type of work they need and the amount of employees needed.  

You should determine if an independent contractor rather than an employee is more suitable given business needs.  This is an important analysis and legal counsel is often recommended.  

If a business decides to hire an employee, it should determine if the employee will be exempt or nonexempt as defined under federal and state laws.  

For all employees, it is essential that employers be familiar with wage and hour laws to ensure employees are classified properly and paid appropriate wages as required under the Fair Labor Standards Act and Montana Wage and Hour laws.   

•  Draft clear and accurate job descriptions.   

Prepare job description(s) identifying the job duties, responsibilities and qualifications required for the role.   

A job description is important and compelling evidence to support the classification of your employees- exempt versus nonexempt.  

 Identify essential job duties separately.  Failure to identify the essential job duties may become problematic if the employee/applicant is unable to perform certain job duties due to a medical issue or disability.    

• Plan out and prepare for interviews.  

The best practice is to ask all applicants the same set of questions associated with the requirements of the job and to take detailed notes of their answers.  

When interviewing potential applicants, avoid any questions that relate to medical inquiries, citizenship, national origin, marital status, place of birth, or union affiliation.  

If you are a regional or national employer, you will also need to be aware of certain pay equity state laws which prohibit employers from asking about salary history and prohibit asking about prior arrest information as well.   

Policies/Handbooks/Agreements  

•  Employee Handbook and/or Policies  

Another important issue to consider is whether you will have an employee handbook or policies outlining benefits offered to employees and your expectations of your employees.  

When preparing an employee handbook and/or policies and procedures for employees to follow, it is important to understand that in Montana, non-probationary employees are not at will.  Also, any type of progressive disciplinary policy contained in a handbook must be followed.  

• Benefits 

You may want to determine if you will provide employees with benefits such as health care, life insurance and retirement.  Another common benefit is providing employees with vacation, sick leave or paid time off.   It is important to know that under Montana law, vacation time is considered wages which cannot be forfeited.  “Lose it or use it” policies are prohibited in Montana.  

• Agreements  

In some instances, it may be appropriate to enter into a contractual agreement with an employee.   This depends upon the nature of the position and the needs of the business and should be evaluated on a case by case basis.  

Also, if an employer has confidential and proprietary information that employees need to keep secret and which need protection, you should consider having certain employees- sign confidentiality and non-disclosure agreements prior to hire.  

 Please note that in Montana and other states, the ability to give employees non-compete and similar restrictive covenants are limited and it is recommended you confer with your attorney. 

Employee Relations  

• Anti-Discrimination Laws 

Once you have employees onboarded and working, all business owners should be familiar with and comply with state and federal anti-discrimination laws.   

Although many federal anti-discrimination laws require 15 or more employees to be applicable, that is not the case for state laws including Montana which applies to all employers.  

• State Statutes  

In addition, Montana has a specific state statute that prohibits termination of most non-probationary employees without good cause. Therefore, documentation of poor performance and improper conduct in Montana is more important than ever.  

Involuntary Terminations  

• Types of Terminations  

Sometimes it becomes necessary to involuntarily dismiss an employee who is not performing or who displays poor conduct/behavior in the workplace.   

Further, a reduction in force or lay-off is also necessary due to business needs.    

• Importance of Documentation  

When the circumstances arise requiring an involuntarily dismissal of an employee, it is important to ensure all paperwork demonstrates and supports that the termination reason was for legitimate non-discriminatory reasons and in Montana, was for good cause.  Working with a Human Resources professional or lawyer before making the decision to terminate an employee is often time well spent.  

Failure to take the time to ensure there is proper documentation supporting the decision could result in costly and time consuming lawsuits.