Small businesses face an ever-increasing body of employment law imposing complex and rapidly changing rules. Compliance in these new laws is critical for every business, regardless of size.
As the general counsels of two Wisconsin-based professional employer organizations (PEOs), we’d like to offer some insight about some of the most common new employment law issues facing the state’s small businesses.
Overtime payment exemptions
One of the most important developments in employment law has been the issuance of new overtime exemption rules by the U.S. Department of Labor (DOL). Small businesses simply cannot afford to be unaware of these rules, because they affect overtime exemptions and because a misclassification might result in significant back-pay liabilities. The DOL has made it a priority to enforce these changes, which are the most significant changes in how overtime eligibility is determined in the past 60 years.
It is also important for employers to carefully review job descriptions in light of these new rules to be sure that they are consistent with the rules and with the development of new exempt categories that did not exist at the time the prior rules were developed.
Health information privacy
The Health Information Portability and Accountability Act (HIPAA) requires that certain employee health information be kept private. A variety of requirements are imposed on businesses as a consequence of this law. A business is required to appoint an internal privacy compliance officer to ensure compliance, and penalties may be assessed for violation of this law.
Private medical information may not be disclosed to various persons without pre-approval. The information must be kept in a secure and locked location. More recently, rules have been published that specify how electronic information relating to private health information must be protected.
Obligations to employees in the military
These days, it is not uncommon that an employer might have an employee called up for military duty. Following an honorable discharge and return home, suppose an employee demands her job back and catch-up employer contributions to her 401(k) plan. The employee claims she is no longer an employee "at will" and says that the company failed to provide her with the opportunity to continue her health insurance while on leave (even though she was on the military’s health plan). She’s right – on all counts.
Many small employers do not realize that the federal military leave laws apply to all employers, regardless of size. What if your company hired someone to perform her duties in her absence? The employee returning from military duty is entitled to her job back, regardless. She may, in fact, be entitled to a promotion because the "escalator principle" generally mandates that a veteran be placed in the position she would have occupied if she had not taken the leave, even if that requires the employer to train or retrain her.
Requests for job accommodations
Your newest employee, a production assistant who must stand for most of the work day, has been working eight-hour shifts since he started. Last week, he told you he has developed a form of arthritis in his hips and back and requested that his shift be decreased to six hours per day. Analyzing requests for job accommodations can be very complicated, but as a small business, you reason that your company isn’t covered by the Americans with Disabilities Act (ADA) because you have less than 15 employees, so you need not be concerned about such requests. This reasoning ignores the Wisconsin Fair Employment Act (WFEA), which prohibits disability discrimination and requires accommodation efforts such as the ADA for all Wisconsin employers, regardless of size.
Some small-business owners then reason that this request for a reduced work schedule doesn’t need to be granted because it’s too burdensome. Again, this reasoning may be wrong, because there are few "always correct" legal conclusions about requested accommodations. The WFEA requires that employers consider each requested accommodation on a case-by-case basis. As a result, an accommodation that is unreasonable and therefore not required for an employee in one set of circumstances, may be "reasonable" and required for an employee in a different set of circumstances.
The ever-changing employee handbook
One human resource task critical to a well-run business is constantly updating the employee handbook. Often neglected by small businesses, an effective handbook explains key work rules, reinforces certain expectations and communicates policies required by law.
To protect themselves, small business-owners need to keep current in their knowledge of the evolving workplace laws or seek expert advice if that task is too time-consuming.
Thomas Detmer is general counsel for The Employer Group, a Madison-based company with several clients in the Milwaukee area. He can be reached at (608) 661-6308 or trd@theemployergroup.com. Michael Gotzler is general counsel for QTI Human Resources, which has offices in Milwaukee, Madison and seven other Wisconsin locations. He can be reached at (608) 258-5525 or michaelg@qstaff.com. To learn more about professional employer organizations (PEOs), visit www.napeo.org, the Web site of the National Association of Professional Employer Organizations.
January 21, 2005, Small Business Times, Milwaukee, WI
