A few years ago, a client came to my office to notarize something. He thanked me and asked, “What can I do for you?” Since he was a business owner, I asked what he would like to learn about. He paused and said, “I need to know about the rules of labor law in New York City.”
Growing businesses and start-ups needing legal assistance help, but may be short on cash flow, are often vulnerable to boss/worker issues. The employer/employee relationship is one of the most heavily regulated relationships in the nation. The business law attorneys at Chidatma Law Group understand how complicated these situations can be and are here to help.
What New York Business Owners Should Know About Employment Law
At-Will Employment Is Your Best Friend
Employment at will is a term used when an employee can be dismissed by an employer for any reason (that is, without having to establish “just cause” for termination) and without warning, as long as the reason is not illegal. In New York, assuming you are not in a union and have no written employment contract (for a period of time), you are employed “at will.” This means an employer can fire an employee for any reason – or no reason at all. For example, an employer may fire an employee because they are a fan of the Mets instead of the Yankees.
The Employer Must Act Rationally
An employer cannot fire someone because the employee is in a protected class like race, religion, sex, pregnancy status, national origin, age, disability, marital status, sexual orientation, or familial status. Be aware that there are other less common exceptions. If you violate these exclusions, you could be liable to the employee for back pay, reinstatement/front pay, compensatory damages, punitive damages, and attorney’s fees.
No One Works For Free
Hiring an unpaid intern to help your new business seems ideal if you are strapped for cash. Students are eager to gain experience in a new market, in a real office, and with a real business. The interns are happy just being around and learning by osmosis. The problem is using unpaid interns may lead to significant costs. Interns generally are not exempt from minimum wage and overtime obligations. Failure to pay the interns can subject the company to damages. A possible exception is if a student is earning school credit, but even that should be examined closely.
What About Overtime?
Employees who are paid a salary are not entitled to overtime. Paying a salary, as opposed to paying a worker by the hour is one piece of the equation. The other more important piece is what the employee does. Only employees who get paid a certain minimum salary and perform specific, legally recognized duties are exempt from overtime.
There are so many overtime exemptions they would be impossible to list here. A good rule of thumb is if the employee is neither an executive nor the head of a department, he or she is likely eligible for overtime. The employment law attorneys at Chidatma Law Group can help you determine who at your business is eligible.
Be Wary of Misclassifying Employees As Independent Contractors
Hiring an independent contractor as opposed to an employee can be a benefit to your business. No need to provide benefits, no need to pay a portion of social security or unemployment taxes, nor is there an obligation to provide benefits like health insurance.
However, just calling a worker an independent contractor (even if there is a written agreement to that effect) is not enough. If the Department of Labor shows up for an audit, they will look at a number of factors including:
- Does the worker work only for the company, or do they have income from several similar sources?
- Who controls how, where, and when the work gets done?
Misclassifying employees as independent contractors, however, can have devastating financial consequences for the business owner, who may face substantial liability for income, social security and unemployment tax, and liability for interest and penalties.
Contact Chidatma Law Group Today
If you’re going to grow your business you will have to hire workers. Heed these warnings and you will avoid many of the employment problems that trip up start-ups and growing companies. Contact Chidatma Law Group today for a consultation to get more information about what’s right for your business.
