Staffing Your Small Business: 3 Legal Concerns - Free Enterprise
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Staffing Your Small Business: 3 Legal Concerns

Adequately staffing a small business requires careful consideration by an employer on a host of potential legal issues. Our Free Enterprise series on Starting Your Own Business is here to clarify some of the most common concerns.

For starters, business owners should focus on the nuts and bolts of staffing, such as hiring, salary, benefits, conflict management, and termination.

To begin thinking about these issues, ask yourself the following three questions:

Starting Your Own Business

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  1. Are you seeking an employee or an independent contractor? When starting a business, one of the first questions you'll need to tackle is what type of workers you want. The two categories -- employee or independent contractor -- will affect you differently regarding a number of issues, such as your vicarious liability for workers' actions and your health insurance obligations under Obamacare. Above all, beware misclassifying your workers. As a general rule of thumb, if you're looking for control over how your worker goes about his business, you're jonesing for an employee rather than an independent contractor.
  2. What should go into your employment agreements? The centerpiece to your staffing plans -- and not getting sued -- will be crafting comprehensive employment contracts. There are certain issues every employment agreement should address, such as: term of employment, compensation (including terms on raises and bonuses), tech privacy and social media policies, grievance procedures, benefits and sick days, dispute resolution, and termination. Also, don't forget to tackle post-employment issues such as nondisclosure and non-competition. They can be addressed directly in the employment contract or attached as separate agreements.
  3. How should you investigate, punish, or fire a worker? Before you hire anyone, make sure you have a clearly stated procedure in your employee handbook that addresses issues related to investigating an employee, disciplining an employee, or firing an employee. It's tough to predict when an employment relationship will turn sour, so it's important to plan for it pre-emptively. Doing so will help you to prevent ex-employee lawsuits.

These are just a few basic concerns when it comes to hiring for your new business. For personal legal advice on your particular staffing issues, you may want to consult an experienced employment law attorney in your area.

Of course hiring workers may also raise a few tax questions, which fledgling entrepreneurs may not be too familiar with. Tomorrow, our Starting Your Own Business series concludes by walking you through the basics of small business taxes.

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