As the old saying goes, your people are your business’ most important assets. And that’s true for startups as well.
As we’ve seen over the past several years, attracting and retaining talented workers remains one of the biggest challenges startups face. Without enough employees, finding product-market fit and scaling a business can be extremely difficult, if not impossible.
While startups like to “move fast and break things,” when it comes to building a workforce, it’s important to slow down and ensure you’re complying with employment laws and putting in place sound employment practices.
In this article, we’ll run through four employment law mistakes that startups should avoid making. But first, let’s review the scope of laws that may affect your startup as well as some of the risks of non-compliance.
Which employment laws apply?
A poorly written employee handbook is often worse than no handbook at all.
All businesses have to figure out which employment laws apply to them. There are federal, state and local laws and regulations that may impose obligations on your startup, and these may be about everything from paid leaves to whether a non-compete agreement is enforceable.
The difficulty of figuring this out gets compounded when a business has different locations, because laws vary from state to state and city to city. Beyond jurisdictional distinctions, different laws and regulations will apply based on factors like the company’s size and number of employees. For many federal laws, 50 employees is an important threshold — for example, private employers with fewer than 50 employees are not covered by the Family and Medical Leave Act, but they may be covered by state family and medical leave laws.
The patchwork of various employment laws and regulations that may apply to your startup can be confusing. That’s why it’s important to focus on these issues and get help when necessary so your startup can understand and comply with its obligations.