Number 1 – Understand licensing you might need depending on your occupation.
Depending on what you do, you may require licensing in your state. Some states have an abundance of licensing requirements. California, New York and New Jersey have hundreds of licensing requirements. If you’re a barber or a locksmith or a funeral director or a dietician or a building contractor, there are a lot of occupational licenses and permits out there which are required on a state-by-state basis.
Do not think if you want to open a deli that you can just rent a location and start yourself up. You will probably be required to get a license from the state, which not only requires a fee but applying for it and going through a potentially drawn-out approval process. Check on the licensing requirements in your state for your type of business and occupation.
Number 2 – Know your local minimum wage rate.
The federal minimum wage is $7.25 an hour. But there are many cities which have a higher minimum wage. State and local rules supersede the federal rate, so make sure you are aware of what the requirements are when planning for payroll costs. In many cases, you might not be able to find workers who will work for minimum wage.
Number 3 – Keep up to date on Labor Law posters for employees.
Both state and federal labor law posters are required for businesses. If a business has one or more employees, it is required by laws and/or regulations to post federal, state and OSHA mandatory posters. More specifically, the following six postings must appear in each workplace location: federal minimum wage, Employee Polygraph Protection, OSHA, FMLA, USERRA, and EEO. Labor Laws vary by state and sometimes by localities. Employers must change posters when the State, Federal or OSHA agencies make legislative or regulatory changes. You can alleviate the stress of having to keep up with these regulatory changes with our Labor Law Poster subscription.
Number 4 – Understand your state’s independent contractor rules.
Independent contractors and employees are two different classifications for workers and have rules that differ greatly depending on the state your business is in. Many states have more stringent rules than what the federal government has. Currently, the Department of Labor is taking comments on a change to worker classification rules which could impact many businesses on a federal level, but the state you are in will have the final say in who counts as an employee and who counts as an independent contractor. Know what the rules of your state are and avoid costly penalties for incorrectly classifying workers. It is a common misconception that you only need to have an agreement with the worker in order to classify them as an independent contractor. That is not true.
Number 5 – Know if you can not ask about prior convictions or salary history.
Pay transparency is being looked at by the Federal Department of Labor, but there are many states which have their own rules covering asking about the history of an employee. These are rules based on the idea of historic discrepancies in pay between different groups of people and are meant to protect a new employee who may have been earning less at a previous job. Other states have specific rules against asking about prior convictions, especially on a first interview. These state rules, like many listed above, supersede federal regulations. Check with your state’s Department of Labor for guidelines on asking for salary history and prior convictions.
Number 6 – Remember to report new hires.
When you hire new people, most states have a mechanism for you to report those new hires to the state. The reason for that is that the states are tracking people who are on or off the unemployment roles as well as people who might need to pay for child support. That includes former employees whom you have rehired, even if they are part-time. The exact rules vary between states, again check with your local Department of Labor.
Number 7 – Check if your state requires harassment and discrimination training.
There are states which require training for employees about discrimination and harassment, notably California and New York. Other states are considering legislation on this as well. This would include training for all sizes of employers, depending on where your business is located. You might not be exempt just because you are a small business. Check with your state’s Department of Labor to see if there is harassment or discrimination training you need to be aware of to operate without penalty in your state. Our HR Support Center is the perfect resource for navigating these issues.
Number 8 – You may have mandatory employee commuter benefits.
Commuter benefits are a growing trend in major metropolitan areas. New Jersey is currently the only state which requires it be offered to employees, but cities like Seattle, New York and San Francisco do. The IRS allows your employees to put away up to $280 a month ($300 starting in 2023) for commuter expenses, pre-tax. You also get a deduction from your payroll taxes. Your local Department of Labor will know if it is mandatory in your area.
Number 9 – Understand whistleblower protection.
Most states have whistleblower acts to protect employees who report illegal or fraudulent activity at their workplace. Each of the 34 states with these laws in place lays out the rules differently. Whistleblowers are often protected from adverse action such as retaliation and termination by state and federal legislation, and hefty fines can be levied against violators.
Number 10 – Know that there are small business resources out there for you.
Regardless of the state in which you do business, there are small business resources at your disposal. A good place to start is the Federal Small Business Development Centers. SBDCs are a part of the Small Business Administration. If you go to sba.gov, you can find where the small business development centers are in your state. Often, they are connected to universities and colleges. They can walk you through the requirements you need to know as a startup. Different states have their own non-profits or government arms which help startup businesses. Your state’s Department of Commerce is a good resource and will have rules and regulations on the state’s website.
Although our services do not cover all of the needs of a startup business, we can help you with many of the tedious chores involved with paying employees and reporting and paying payroll amounts and taxes properly to state and federal authorities. In addition, we can help you with getting workers compensation insurance as required by your state. Our customer service scores are significantly better than our major competitors even though our pricing is often 30% less. Feel free to reach out if you would like information and a no-obligation price quote. No business is too small. We have lots of customers who have one employee.