It can be easy to misclassify a worker, especially when it comes to small businesses. There are a few different classifications that employees can fall under, such as employee or independent contractor, salaried or hourly and overtime exempt or non-exempt. Assigning the wrong status to a worker can bring costly consequences like liability for employment taxes, required payment of back wages, and other penalties. In order to avoid such trouble that will bring nothing but headaches, you should know exactly what constitutes certain designations and how to determine how you should classify a worker.

Independent Contractor vs. Employee

The first determination you should make is whether or not you technically have an independent contractor or an employee. The Internal Revenue Service (IRS) has developed a set of criteria to help employers make this designation. The IRS states that there are three areas where you should look to figure out if your worker is an employee or an independent contractor.

Behavior

Typically, workers are considered to be employees if the employer has the right to control and direct the work performed by the worker. Your worker may be an employee if:

Potential hazards and health risks are everywhere, even in industries that are seemingly safe. As a small business owner, you must protect your employees from dangers and unsafe environments. If an employee is injured, there are multiple insurance options available to them recover. Many new business owners have questions about which coverages are mandated by Illinois employment law.

Health Insurance Coverage

Employers pay hefty costs to offer health insurance, but is it necessary? Deductibles and premiums are higher than workers’ compensation insurance, but health insurance does cover a wide variety of injuries and illnesses, including those that did not occur at work.

Health insurance benefits are not required but can be an added perk to your employees. If you have a small business of fewer than ten employees, discuss the options with your employees. Some people would instead choose their own insurance rather than have the “cookie cutter” plan offered by group benefits, and they may be able to find a better price than is being provided by the group policy.

July 24, 2018 marked the ninth anniversary since the last time the federal minimum wage rate was increased, to $7.25 per hour. Federal laws explain that no state may set minimum wages at less than this amount, but they are welcome to offer more, which Illinois does. In 2010, Illinois raised the state minimum wage to $8.25 per hour. Although there is strong support for another increase, to date, the amount has remained the same. While it seems like it should be easy to pay an employee for the amount they work, there are many complexities to this process that can result in disputes between employers and employees. Common errors include the miscalculation of overtime pay, wage shortages, and violations of minimum wage requirements.

A Complex Math

Verifying that employees are paid correctly for the time worked should be simple, but violations often occur nonetheless. Often, determining the amount of time worked is not the problem; rather, it is the minor nuances that cause violations. Consider the following examples:

The primary goal for most small business owners is to have a thriving business. Expanding a customer base is a crucial component of growing your business. Many companies accomplish this goal by gathering data about their patrons for future use. For instance, many companies collect email information to provide their customers with notices about upcoming events and sales. This method is useful in creating repeat customers and increases the probability of additional traffic. However, businesses must use caution with their clients’ information to avoid breaking federal laws surrounding data privacy and limit the possibility of commercial litigation.

Online Interaction

The majority of companies today use a website to serve the needs of their clients better. However, these websites often track every move each customer makes, storing this information in a database. Small businesses should be sure to follow the proper procedures to protect this customer data. Creating a valid privacy policy is an excellent way to begin. When creating one for your business, keep the verbiage simple and adhere to your promises. Once your plan is ready, make it visible for all customers to read before proceeding with your website.

They say that “time is money,” and that is true in all aspects of life. No matter whether you are discussing your personal life or your business, saving time ultimately saves you money. Especially in a business aspect, proper time management enables you to get more work accomplished efficiently, which can earn your business more money and cut down on overhead costs while ensuring that you meet the requirements of the Fair Labor Standards Act (FLSA). Here are a few time management tips that will help you in both your business and your personal life:

Ditch the Smart Device

Unless your business operates directly on your smartphone, you should make it a habit to keep it out of reach, especially during business hours. Employee cell phone usage should be limited as well. Even the best worker has a hard time avoiding the temptation of checking their device at work. Remove the temptation by either requiring that cell phones be left in one’s vehicle or locker or kept turned off at work. Lead by example and follow the rule yourself to gain optimum efficiency.