Small Business Risks in a Big Legal World

It’s a “Catch-22.”

Small businesses are usually launched because of an entrepreneurial, risk-taking spirit.

The catch, of course, is that small businesses must head off employment risks in a big legal world. If they want to grow, prosper and succeed, that is.

To do that, they should start out by asking/answering this question, “How can my business reduce risks?”

Based on my experience, I see a common thread to this common quandary. Many small business employers can veer off-course by approaching employment-related actions reactively, rather than proactively.

Instead, you want to develop a risk-management strategy through which you consider all possible alternatives, as well as take the time to evaluate and assess the level of exposure and liability you might typically face. Veering off course is one thing, but falling off a cliff is another.

Here are just a few practical suggestions that may help you get started:   

1. Take the time to familiarize yourself with the employment law landscape and related regulations, particularly those that apply to your business or industry. There are numerous federal and state laws that businesses must comply with, regardless of business or industry size.
2. Be mindful of the potential level of liability exposure when making decisions, especially those that impact employees. Make sure you establish the business-related reasons for any actions you are taking. From that point, develop your business-related criteria for making those decisions. You want to be able to always defend or justify the decisions you make based on business needs. Again, of course, you want to make sure your business stays compliant with the various employment regulations.
3. Surround yourself with professionals, particularly those in Human Resources (HR) and employment law, as they can help you decipher the various state and federal regulations. Obviously, anyone can go online and read federal and state regulations. Every state has a “.gov” Web site, as does the federal government. Keep in mind that the application and interpretations of legal regulations change constantly. And depending on different court decisions, opinions, etc., and those that come from federal agencies, such as the U.S. Department of Labor, all employers face constantly changing interpretations. Employment law is complex, complicated and operates in an ever-changing landscape.

Finally, in addition to seeking HR and business-related guidance, some employers also consult with those who specialize in professional employer-liability management and government compliance.

Have you taken time to review the employment law landscape and related regulations?