4 common business mistakes employers make

Image by Mohamed Hassan from Pixabay

By James Daniels

Every business, from startups to large organizations, must follow various laws and regulations each day. Unfortunately, many companies overlook their legal requirements for salaries, contracts, and more, which can impact their employees and increase the risk of legal and financial consequences. Here are four common business mistakes employers make.

1) Using compensatory time over overtime

Some private companies often provide their staff with compensatory time when an employee works beyond their agreed hours. If you are unsure what compensatory time is, it’s when an employer pays them with time off instead of increasing their salary. It might feel like a fair agreement for employees at the time, but it is an illegal business request.

Non-exempt employees shouldn’t receive comp time in lieu of overtime, as they have a right to payment for additional hours they work. Any company that requests a team member work additional hours for compensatory time is in breach of the Fair Labor Standards Act (FLSA).

2) No written agreements

Written contracts aren’t a legal requirement in the United States, but it is wise for employers and employees to have written agreements in place, such as their workers’ rights and benefits. Also, some US states require employers to provide staff with specific details in writing, such as their hourly rate, overtime rate, and termination of employment information. It is wise to provide employees with written agreements after two months from their start date.

The employment document will provide a clear outline of an employer’s rights and obligations at work. As a result, it will provide basic rules for a team member to follow, which will boost productivity and make it easier to embark on any disciplinary procedures.

Also, it will provide an opportunity to notify your employees on various issues related to the business, such as dealing with confidential information, intellectual property, and trade restraints.

3) Ignoring workers’ compensation insurance

As accidents can happen in any workplace, businesses, small and large, should have insurance policies in place to protect their operations and staff. Most state laws require employers to secure workers’ compensation insurance. Often only companies with fewer than three employees are exempt from doing so. In addition to being a legal requirement, insurance coverage is in the best interest of a business, as it will provide financial coverage if an employee is injured at work.

Depending on your state, disability insurance might be a legal requirement, as it will provide coverage for a non-workplace-related injury or illness and will cover a percentage of a staff member’s annual salary. Also, it will safeguard a business from expensive litigation via the Americans with Disabilities Act.

4) Refusing meal and rest breaks

At present, the federal government doesn’t require businesses to offer meal or rest breaks, but some state laws do. Businesses and employees must research their state’s laws for breaks and mealtimes for a fair working environment.

Currently, U.S. states don’t require employers to provide paid breaks, but they have a mandatory requirement to provide unpaid meal and rest breaks. Even if a business has many locations across the United States, it must adhere to each state’s laws to protect its employees’ rights.


James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can while away hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.

Leave a Reply

The Self-Employment Survival Guide can help you succeed. Learn all about it here.

Self-Employment Survival Guide book cover