Employment Law Advice for Employers
In Employment Law, What You Don't Know CAN Hurt YouFor employers, especially in a small business without a human resources department, employment laws can feel like a minefield. It is also one of the things that many small business owners struggle to find the time to deal with, until some crisis arises, like an employee complaint or a need to fire or discipline an employee.
The information throughout this site is intended to be useful for both employers and employees, but we have gathered some resources on this page and the linked pages specifically focused on the challenges you face as an employer, and the legal issues you should be aware of. We are employment lawyers and we are a small business- this means we have the legal expertise and the experience of managing our own team to help us help you navigate these issues. |
Questions?OR
|
Hiring Employees or Contractors
When you are hiring a new team member, there are a few things you should be mindful of from a legal perspective.
Prohibited Questions: Anti-discrimination laws apply to hiring decisions as well as termination decisions. This means you should be careful not to ask questions that could suggest a bias against a protected class. It is not per se unlawful to ask about things like disability, family or relationship status, religion or national origin, but it is better not to. Not only are these things likely not material to a candidate's ability to do a good job, but the inquiry itself could be a red flag if the candidate were to ever claim discrimination in this hiring process.
You are also prohibited by the equal pay laws from asking about a candidate's salary history before making a firm offer of employment with compensation included.
Independent Contractors: Before you make an offer, you should be clear about whether the person will be joining as a W2 employee or an independent contractor. The Massachusetts Independent Contractor Law is very strict, and many employers make the mistake of classifying people as contractors who really should be employees under the law. If you are considering hiring an independent contractor, we strongly recommend that you seek the advice of an experienced employment lawyer first.
Offer Letters and Employment Contracts: You do not need a formal employment contract in most circumstances. You will, however, want something in writing to document the terms of employment and any compensation details, to avoid confusion or misunderstanding in the future. A simple offer letter can accomplish this goal, and should include (i) compensation terms; (ii) job title; and (iii) a clear statement that employment is "at will" and that terms can be changed by the employer at any time.
Probationary Periods: Technically, with "at will" employment a probationary period is not necessary, as employment can generally be terminated at any time and for any lawful reason. Many employers, however, choose to have a probationary period (of whatever length you think it reasonably should take someone to get up to speed on the job) to make the expectation clear that the new employee will need to demonstrate competency and fit in a set period of time. If you use a probationary period, it should be spelled out in the offer letter as well.
Prohibited Questions: Anti-discrimination laws apply to hiring decisions as well as termination decisions. This means you should be careful not to ask questions that could suggest a bias against a protected class. It is not per se unlawful to ask about things like disability, family or relationship status, religion or national origin, but it is better not to. Not only are these things likely not material to a candidate's ability to do a good job, but the inquiry itself could be a red flag if the candidate were to ever claim discrimination in this hiring process.
You are also prohibited by the equal pay laws from asking about a candidate's salary history before making a firm offer of employment with compensation included.
Independent Contractors: Before you make an offer, you should be clear about whether the person will be joining as a W2 employee or an independent contractor. The Massachusetts Independent Contractor Law is very strict, and many employers make the mistake of classifying people as contractors who really should be employees under the law. If you are considering hiring an independent contractor, we strongly recommend that you seek the advice of an experienced employment lawyer first.
Offer Letters and Employment Contracts: You do not need a formal employment contract in most circumstances. You will, however, want something in writing to document the terms of employment and any compensation details, to avoid confusion or misunderstanding in the future. A simple offer letter can accomplish this goal, and should include (i) compensation terms; (ii) job title; and (iii) a clear statement that employment is "at will" and that terms can be changed by the employer at any time.
Probationary Periods: Technically, with "at will" employment a probationary period is not necessary, as employment can generally be terminated at any time and for any lawful reason. Many employers, however, choose to have a probationary period (of whatever length you think it reasonably should take someone to get up to speed on the job) to make the expectation clear that the new employee will need to demonstrate competency and fit in a set period of time. If you use a probationary period, it should be spelled out in the offer letter as well.
Wages and Benefits
Certain things are required for all employees, others depend on the number of employees you have and the roles of specific employees.
Minimum Wage and Timely Payment of Wages (required for all employees): Minimum wage in Massachusetts is now $15.00 per hour. All employees must earn at least this amount, whether as an hourly wage or in combination with tips, commissions, or other forms of compensation. With some limited exceptions, all employees must be paid weekly or bi-weekly, and receive their pay no later than 6 days after the close of the preceding pay period.
Earned Sick Time (required for all employees): All employees must be allowed to accrue and use sick time, though you are not required to pay for the sick time unless you have 11 or more employees. They may either accrue the time at one hour for every 30 hours worked, up to 40 hours, or you can provide an annual "bank" of 40 hours of sick time that replenishes each year. You may limit the use of sick time until after the first 90 days, though it must accrue during that period. You do not have to pay out unused sick time at termination or resignation.
Commissions and Bonuses (applicable to all employees): A commission is any payment to an employee that is based on that employee's individual performance- sales and revenue from specific clients or customers served are the most common examples. Commissions are considered wages, and therefore strict penalties can apply if they are paid late or not paid at all. Recent changes in the law have increased this risk for employers, so if you have anyone paid in whole or part on commissions, it is a good idea to have your compensation plan reviewed by an attorney.
Bonuses are not considered wages. If you have a discretionary year end bonus, or periodic bonuses based on the performance of the business as a whole, those are not considered wages for purposes of the wage and hour laws.
Enrollment in Paid Family Medical Leave (required for all employees): It is the employer's responsibility to facilitate deductions from employee paychecks to contributed to the Paid Family Medical Leave fund, unless you offer a comparable benefit through insurance. If you have fewer than 25 employees, you are not required to contribute to this amount, though you may choose to do so as an additional benefit for your staff.
Overtime Compensation (required for non-exempt employees): for an employee who is not paid on a salary basis and/or does not have job duties that are considered exempt from overtime, they must be paid at 1.5 times their regular rate of pay for any hours worked over 40 in a single week. Even if you are on a bi-weekly payroll, you must count each week by itself for purposes of determining overtime.
Health Benefits: If you have less than 50 employees, you are not required to provide health insurance, but if you do choose to provide it you need to make sure it is available to all eligible employees. If you have 50 or more employees, the federal Affordable Care Act does require you to provide some form of health insurance to your eligible employees.
Vacation Time: You are not required to provide vacation time to your employees, paid or otherwise. Most employers do offer some amount of vacation, though, as a way of recruiting and retaining good people and also allowing their employees some balance in their lives. If you offer vacation you do have to pay out any accrued, unused time when the employment terminates. You can control the magnitude of this obligation by having a policy that vacation must be used in the year it is earned, and will not roll over into future years.
Minimum Wage and Timely Payment of Wages (required for all employees): Minimum wage in Massachusetts is now $15.00 per hour. All employees must earn at least this amount, whether as an hourly wage or in combination with tips, commissions, or other forms of compensation. With some limited exceptions, all employees must be paid weekly or bi-weekly, and receive their pay no later than 6 days after the close of the preceding pay period.
Earned Sick Time (required for all employees): All employees must be allowed to accrue and use sick time, though you are not required to pay for the sick time unless you have 11 or more employees. They may either accrue the time at one hour for every 30 hours worked, up to 40 hours, or you can provide an annual "bank" of 40 hours of sick time that replenishes each year. You may limit the use of sick time until after the first 90 days, though it must accrue during that period. You do not have to pay out unused sick time at termination or resignation.
Commissions and Bonuses (applicable to all employees): A commission is any payment to an employee that is based on that employee's individual performance- sales and revenue from specific clients or customers served are the most common examples. Commissions are considered wages, and therefore strict penalties can apply if they are paid late or not paid at all. Recent changes in the law have increased this risk for employers, so if you have anyone paid in whole or part on commissions, it is a good idea to have your compensation plan reviewed by an attorney.
Bonuses are not considered wages. If you have a discretionary year end bonus, or periodic bonuses based on the performance of the business as a whole, those are not considered wages for purposes of the wage and hour laws.
Enrollment in Paid Family Medical Leave (required for all employees): It is the employer's responsibility to facilitate deductions from employee paychecks to contributed to the Paid Family Medical Leave fund, unless you offer a comparable benefit through insurance. If you have fewer than 25 employees, you are not required to contribute to this amount, though you may choose to do so as an additional benefit for your staff.
Overtime Compensation (required for non-exempt employees): for an employee who is not paid on a salary basis and/or does not have job duties that are considered exempt from overtime, they must be paid at 1.5 times their regular rate of pay for any hours worked over 40 in a single week. Even if you are on a bi-weekly payroll, you must count each week by itself for purposes of determining overtime.
Health Benefits: If you have less than 50 employees, you are not required to provide health insurance, but if you do choose to provide it you need to make sure it is available to all eligible employees. If you have 50 or more employees, the federal Affordable Care Act does require you to provide some form of health insurance to your eligible employees.
Vacation Time: You are not required to provide vacation time to your employees, paid or otherwise. Most employers do offer some amount of vacation, though, as a way of recruiting and retaining good people and also allowing their employees some balance in their lives. If you offer vacation you do have to pay out any accrued, unused time when the employment terminates. You can control the magnitude of this obligation by having a policy that vacation must be used in the year it is earned, and will not roll over into future years.
Non Compete Agreements and Other Restrictive Covenants
If you are hiring a team member with significant contact with customers and prospects, or with access to sensitive and confidential business or technical information, you may want to consider an employment agreement that restricts their activities for a period of time after their employment ends. Here are some things you should know:
Non Compete Agreements: New Massachusetts law tightly controls what must be included in a non compete agreement for it to be enforceable. If you believe it is necessary to restrict your employees from competing at all, you should seek legal advice before creating an agreement, as many of the templates available were either drafted before the law changed or do not accurately reflect its requirements.
Non-Solicitation Agreements: A non solicitation agreement is an agreement not to solicit or accept business from customers or known prospects for a period of time after employment. Unlike a true non compete, a non solicitation agreement is not subject to the same restrictions, and is generally enforceable. For many businesses, a good non solicit is all that is required to protect their interests.
Non Disclosure Agreements: A non disclosure or confidentiality agreement requires your employees to continue to hold your information in confidence after their employment ends. These are common and enforceable.
Non Compete Agreements: New Massachusetts law tightly controls what must be included in a non compete agreement for it to be enforceable. If you believe it is necessary to restrict your employees from competing at all, you should seek legal advice before creating an agreement, as many of the templates available were either drafted before the law changed or do not accurately reflect its requirements.
Non-Solicitation Agreements: A non solicitation agreement is an agreement not to solicit or accept business from customers or known prospects for a period of time after employment. Unlike a true non compete, a non solicitation agreement is not subject to the same restrictions, and is generally enforceable. For many businesses, a good non solicit is all that is required to protect their interests.
Non Disclosure Agreements: A non disclosure or confidentiality agreement requires your employees to continue to hold your information in confidence after their employment ends. These are common and enforceable.
Employee Discipline and Termination
We've saved the best for last, as this is often the greatest pain point for employers. Nobody does this lightly, and nobody enjoys it. But sometimes it has to be done. Here are some things you should know:
Final Paycheck: If you terminate an employee, they must be paid all their final wages, including unused vacation time and earned commissions, on the day of termination. A recent decision has made clear that the triple damages under the Wage Act are available even if the payment is only a day or two late, so you need to be prepared before actually delivering the termination message. Vacation pay and commissions can get confusing- if it is not crystal clear to you what is owed you should consult an attorney prior to the termination.
Unemployment Information: You are also required to provide information about applying for unemployment when you terminate an employee. This does not mean you are agreeing that they are eligible for benefits, just that you are providing them the form and your business' EIN number so that they can apply. You will get separate notification about their claim if you want to contest benefits.
Discrimination and Retaliation Laws: You should be mindful of, but not paralyzed by, the laws that protect people who are in certain protected classes or who have engaged in protected activities. Such individuals are not immune from termination or discipline, but if they fall into one of these categories you need to be sure you can demonstrate your legitimate reason for your actions. Because the reality is a vast majority of employees are protected in one category or another, it is a good practice to consult an attorney before disciplining or terminating anyone, but especially someone you know to be protected by these laws.
Benefits Continuation: If you offer health insurance benefits to your employees, you are required to give a terminated employee (in most cases) the option to continue that coverage for a period of time. Known as "COBRA coverage," this is an opportunity for them to have uninterrupted coverage with the same plan, though they will have to pay the premiums themselves without an employer contribution if they elect to continue.
Severance Packages: You are not required to offer severance to a terminated employee, but it can be a good idea, both in order to secure a release of claims and also to allow them to walk away with some assistance in the transition that may make them less likely to try to pursue any claims against you.
Final Paycheck: If you terminate an employee, they must be paid all their final wages, including unused vacation time and earned commissions, on the day of termination. A recent decision has made clear that the triple damages under the Wage Act are available even if the payment is only a day or two late, so you need to be prepared before actually delivering the termination message. Vacation pay and commissions can get confusing- if it is not crystal clear to you what is owed you should consult an attorney prior to the termination.
Unemployment Information: You are also required to provide information about applying for unemployment when you terminate an employee. This does not mean you are agreeing that they are eligible for benefits, just that you are providing them the form and your business' EIN number so that they can apply. You will get separate notification about their claim if you want to contest benefits.
Discrimination and Retaliation Laws: You should be mindful of, but not paralyzed by, the laws that protect people who are in certain protected classes or who have engaged in protected activities. Such individuals are not immune from termination or discipline, but if they fall into one of these categories you need to be sure you can demonstrate your legitimate reason for your actions. Because the reality is a vast majority of employees are protected in one category or another, it is a good practice to consult an attorney before disciplining or terminating anyone, but especially someone you know to be protected by these laws.
Benefits Continuation: If you offer health insurance benefits to your employees, you are required to give a terminated employee (in most cases) the option to continue that coverage for a period of time. Known as "COBRA coverage," this is an opportunity for them to have uninterrupted coverage with the same plan, though they will have to pay the premiums themselves without an employer contribution if they elect to continue.
Severance Packages: You are not required to offer severance to a terminated employee, but it can be a good idea, both in order to secure a release of claims and also to allow them to walk away with some assistance in the transition that may make them less likely to try to pursue any claims against you.
How Our Employment Lawyers Can Help
|
|
|
We can help you navigate these issues and get clarity on your rights and obligations when issues with employees arise in your business. You can use the button below to schedule a call back from a member of our team, or give us a call at 781-784-2322.
