Employment law is an ever-changing area, with laws being passed, revised and overturned at a rapid pace. In-house counsel should take a proactive approach to this important area of the business.
Employees should seek legal advice when they have an issue that may involve employment laws, such as filing an administrative charge with the EEOC or appealing a denial of unemployment benefits.
Classification Issues
Whether someone is an employee or independent contractor has profound implications for taxes, wage and hour laws, and other worker protections. Misclassification can lead to repercussions including fines and even lawsuits.
The issue is not always straightforward, and workers may have varying views on how they should be classified. For example, a worker’s contract may state that they are an independent contractor, but a company must review the actual duties that person performs to determine exempt or non-exempt status under federal and state rules.
Having HR software that supports the different classifications of employees can help save time and money. The software can centralize employee pay and benefits while allowing for flexibility should an employee’s categorization change, such as from salaried to hourly or from full-time to part-time. It can also support different payroll tax calculations for the same employee. The system may also help ensure compliance with local and state laws regarding overtime. This could be critical in a freelance economy where some workers may be entitled to overtime based on the number of hours they work each week.
Misclassification of Employees
Misclassification of employees is a serious issue that impacts workers in many ways. In the US alone, studies show that between 10% and 30% of businesses misclassify contractors as employees. This has significant tax implications. For example, it deprives the government of the revenue intake that they are entitled to, as employers must withhold and pay employee income taxes.
On the other hand, it costs the business more in terms of labour cost. Moreover, the business may be liable to pay back taxes and penalties.
In addition, employees are legally entitled to a number of protections including minimum wage and sick leave. However, contractors are generally ineligible for these benefits. Therefore, some companies choose to save money by misclassifying employees as contractors. Whether done intentionally or due to ignorance of the consequences, this can result in legal action against the company. Engaging a global PEO mitigates this risk by acting as the Employer of Record, protecting the business from liability and reducing the likelihood of misclassification.
Wrongful Termination
The employer-employee relationship can be strained by disputes that touch on wages, workplace safety and wrongful termination. Often, these issues require the expertise of an employment law attorney to resolve.
Employers are entitled to terminate employees for many reasons, but there are restrictions on how and when this can occur. For example, firing someone who is part of a protected class — such as age, race or gender — can violate the EEOC’s rules. It can also be illegal to fire a worker who has access to competitive information or high-level trade secrets and refuses to share the information.
Employees need to be aware of their rights at every stage of the employment process and seek legal advice when their rights are threatened or violated. Having access to a provider lawyer as part of a LegalShield personal legal plan can help reduce the stress associated with these concerns and increase the chances of reaching a successful resolution.
Employee Lawsuits
Regardless of how well your company treats its employees, they can still bring lawsuits that could hurt your business. Some employee lawsuits arise from mistreatment such as favoritism or rudeness, but others stem from violations of specific laws. These include discrimination on the basis of race, gender, pregnancy or other protected classes as well as retaliation for whistleblowing.
An attorney can also help you with contracts and agreements you use with your employees, including severance agreements or releases. Having a lawyer review these agreements can prevent you from making mistakes that could lead to costly legal claims.
Other common reasons for employment litigation include wrongful termination or denial of rights such as workers’ compensation, union rights and disability. These cases usually require a trial before a judge or jury, which can take some time to conclude. In most cases, the plaintiff is seeking monetary compensation. This may include back wages, future earnings and lost benefits such as pensions.employment law advice
