Following state and federal employment law can get complicated quickly. No matter how small your business is, you must make sure you are in compliance with hiring regulations. Otherwise, you could find yourself facing hefty fees and punishments. Here are five costly mistakes companies often make when it comes to employment law and how to avoid them.

1. Missing and Incomplete I-9 Forms

The Employment Eligibility Verification Form I-9 verifies employee identities, and if they are eligible for employment in the United States.

Problem: Employment law states that the 1-9 form must be filed within three days of an employee’s start date. Missing that deadline or filing an incomplete form results in hefty fines.

  • Forms must be completed with the proper dates and signatures.
  • Forms must include the correct supporting identification documents. New hires can choose to provide any documentation deemed acceptable from a government list; employers cannot limit which documents they will allow.
  • Upon termination of employment, I-9 forms must be destroyed three years after the employee’s start date or one year after the employee’s termination date, whichever is later.

Advice: Have all employees complete the I-9 as a part of the on-boarding process. Implement a paperless system to save time associated with the printing and scanning of documents, says Andre Lavoie, CEO and co-founder of ClearCompany. A digital system will help ensure all I-9 forms are properly completed and quickly filed.

 2. Outdated W-4 Forms

IRS Form W-4 establishes the tax withholding amount employers will deduct from an employee’s wages.  Employees must complete this form upon being hired and before they get their first paycheck. The IRS provides an online withholding allowance calculator.

Problem: Employers need to maintain up-to-date W-4 forms that reflect recent changes to an employee’s personal situation (e.g., marriage, children, divorce) to stay in compliance with employment law.

Advice: While employment law allows for employees to amend their W-4 forms at any time, it is good practice to mandate employees resubmit their W-4 each year.

3. Insufficient Employment Application Forms

An employment or job application form is the documentation prospective employees fill out in order to be considered for a position. It’s the employer’s main information source about potential employees. State and federal employment law mandates that specific questions and notices be included on the job application form. These include criminal-background check questions, Americans with Disability Act (ADA) procedures, and notices of at-will employment.

Problem: If employers do not follow all employment application regulations, they are at risk for liability claims and non-compliance penalties.

Advice: Make sure you and your legal team stay up to date on job application employment law. Accurate job descriptions are key to following regulations. Lavoie recommends having current employees doing the job and all relevant managers fill out questionnaires in order to correctly define job expectations and responsibilities. These should include any physical requirements.

4. Failing to Provide Harassment Prevention Training

State and federal law protect employers from numerous forms of workplace harassment. Many states require that employers provide harassment prevention training to their employees.

Problem: Employees reflect the behavior of their managers. Without the appropriate harassment prevention training, leadership may be permitting or engaging in conduct that violates anti-harassment laws. Employees deserve to be treated respectfully and professionally.

Advice: Even if your state does not mandate workplace harassment prevention training, it’s smart to provide it as part of your on-boarding process, says employment law consulting company TriNet. Good training can go a long way to creating a welcoming corporate culture. Conduct training as often as needed, and make sure all training is well documented in accordance with all employment law and regulations.

5. Misclassifying Employee Status

The most common employer challenge is correctly classifying employees as exempt or nonexempt as mandated by the Fair Labor Standards Act (FLSA), says TriNet. Based on an employee’s classification, FLSA provides certain protections, such as an accurate record of all time worked and overtime pay. The US Department of Labor also relies on an employee’s classification to determine if job duties and salary meet all employment law regulations.

Problem: If an employee is misclassified, state and federal laws allow for the employee to recover back wages, in addition to penalties and fees.

Advice: Good legal counsel from employment law experts will help you avoid any misclassifications. Also, TriNet CEO Burton Goldfield recommends immersing yourself in FLSA rules. “Know the law,” he says. “You do not need to become a lawyer, but do become familiar enough to be able to identify when you have a potential issue on your hands.”

There are many employment law violations that could cost your company a lot of money in penalties, fines and back pay. Contact an UpCounsel employment attorney to help ensure you’re following all employment laws and regulations.


Photo: “Understanding Employment Law and More on The Price of Business” by usdr, used under US Daily Review



About the author

Alex Liu

Alex Liu

Alex began his career as a scientific legal consultant and then as a journalist researching and reporting on health policy and health sciences. At UpCounsel, he enjoys researching and analyzing data to help businesses make informed decisions. In his free time, Alex is working on a documentary.

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