As a new business owner, it’s often difficult to prioritize all the different roles and responsibilities on your plate. But one of the most critical is having a thorough understanding of your local employment laws.
Employment laws can vary dramatically from area to area, and the consequences of running afoul of them can be serious. As you plan your new business, make sure you’re compliant with employment law in your state and municipality, as well as federal employment law.
What do employment laws cover?
Employment laws are a group of legal regulations governing the relationship between employees and their employers. The aim of employment law is to create a safe and fair workplace, and they address topics like wages, benefits, safety in the workplace, employee eligibility, harassment and discrimination.
Keep in mind that the federal government establishes certain employment laws, each state does the same, and many townships and municipalities have their own set of employment laws. You’ll need to make sure you’re adhering to all these laws when running your business. Laws are constantly being changed and updated. For example, Washington State implemented a new minimum wage for 2025. It is imperative that you stay remain informed about any changes to your local laws.
Consequences of not following employment laws
We’ll start with the negative first: If you’re caught breaking employment laws, you may be subject to a number of penalties and adverse effects. These can range in severity, but all of them are a big enough problem that it’s well worth your while to stay compliant.
Fines and criminal charges
Violating employment laws can lead to trouble with the authorities and being found liable or guilty can result in costly fines that sap your business’s bottom line. In the worst cases of employment law violation, you might even be subject to criminal charges.
The risk of lawsuits
In the case of employment law on subjects like minimum wage, benefits and overtime, employees have grounds to file lawsuits if they believe they can prove you’ve broken the law. Even winning such lawsuits is a major headache, as you’ll be forced to devote time and money to resolving them. And if you do end up losing, you’ll be facing a court judgment in addition to that lost money and time.
Future issues with licensing and permits
Businesses that break employment law often see problems with the authorities and regulatory bodies in the future. Any business relies on being able to receive certifications, licenses and permits, and employment law issues can lead to hold-ups or even rejection of approval on these. This can cripple a business’s ability to function.
Damage to your reputation and brand
Being caught breaking employment law can lead to negative consequences for your business’s brand. This is especially true if you’re employing people within a relatively self-contained community, where your potential customers will have some connection with your employees. Even aside from the formal consequences, you may also see your sales shrink after a business law violation.
Additional benefits to following employment laws
Following employment law doesn’t just help avoid negative consequences, it also leads to a better functioning and healthier work environment. When you follow employment laws, your employees are likely to feel like you respect and value them. This can result in an employee group who works harder, has better job satisfaction and higher morale.
Over time, you may attract a higher caliber of employees and see good workers stay at the job for longer. Employers who violate employment law tend to see higher turnover rates, which leads to lost productivity time training new employees and dealing with their growing pains as they learn the job.
Adhering to employment laws is a pillar of creating a stable and successful business. Being able to avoid the host of negative consequences is key to profitability, and by creating a productive and positive working environment, you’ll get the most out of your employees. Make sure to learn all the applicable employment laws in your business area and do your best to comply with them.
