How to be a Legal and Lawful Employer

If you hire other people to work for you in your business, you are an employer. As an employer, you have certain responsibilities under various state and federal laws. These responsibilities fall primarily in the areas of wages, unemployment compensation, taxes, labor practices and standards.

Tennessee encourages you, the employer, to be prepared to handle the responsibilities that come with hiring other people.

In addition to responsibilities, you also have certain regulations you must follow. These regulations vary depending on the type of business you are in or service you offer.

Chapter Four can guide you through the general responsibilities and regulations you must follow. It has the information you need to estimate employee expenses (wages, benefits, taxes, and unemployment premiums) for use in the cash flow projection of your business plan.

Responsibilities

The Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record keeping and child labor standards affecting your full and part-time workers.

FLSA Regulates:

Minimum Wage. Minimum wage rates are set by the U.S. Congress and are adjusted by statute periodically. The minimum rate, as of summer 1998, is $5.15 per hour.

Overtime Pay. Overtime pay is at a rate of not less than one and one-half times the regular rate of pay. It is required after 40 hours of work in a work week.

You can find information on wage and benefits prevalent in your geographic areas and industries by contacting your nearest Tennessee Department of Employment Security Labor Market Information Field Office. See the contact list at the end of this chapter for more information.

Employment of Minors. Business owners should contact the U.S. Department of Labor for regulations pertaining to the employment of minors.

FLSA Does Not Regulate:

As an employer, you can determine the following:

Occupational Safety and Health

All employers are covered by the provisions of federal and state OSHA regulations. Standards vary with the three broad classifications of businesses: agricultural, construction, and general industry. If your firm has 11 or more employees, you must maintain records in accordance with OSHA rules.

Workers Compensation

If you employ the services of five or more persons for pay, you must provide Workers Compensation insurance coverage. General contractors are required to have Worker's Compensation for even one person because of their liability for uninsured subcontractors.

Workers Compensation is acquired through insurance agents who obtain the actual coverage through licensed insurance companies. Due to rating deregulation (effective 1997), rates and premium amounts will vary between insurance companies. Employers unable to procure coverage in this manner may obtain Workers Compensation by having an agent submit an application to the Tennessee assigned risk plan.

Initial premiums are based on industry classification as well as specific job classifications within industries. Subsequent premiums factor in a company's accident rate and claims experience.

Regulations

Regulated Areas and Agencies

Different types of business activities are regulated at the state and federal level. These regulations deal with licensing of certain jobs, as well as protecting the public welfare in such areas as business practices, standard weights and measures, and pollution control.

Municipalities generally regulate or zone the location of different types of businesses. Entrepreneurs are encouraged to contact their local zoning boards, county executives or mayors for this information.

Review the following charts to determine which (if any) category fits your business endeavor.

Regulated Professions

Different types of professions are regulated at the state and federal level. The Tennessee Department of Commerce and Insurance licenses and regulates certain nonmedical professions in order to insure a standard level of skills and business practices for the safety of the general public. The address of each board includes the general address below as well as the last four digits of the zip code listed with each board.

Review the following chart to determine which (if any) category fits your business endeavor.

Health-Related Boards

The Tennessee Department of Health is charged with the responsibility of regulating health care professionals to help assure the quality of health care and protect the public's health, safety and welfare.

Review the following chart to determine which (if any) category fits your business endeavor.

Contact List

Fair Labor Standards Act

The U.S. Department of Labor has made available a booklet entitled New Business Package about the Fair Labor Standards Act which you will find helpful. It also provides the publication Handy Reference Guide to the Fair Labor Standards Act for employers. Regulations implementing the FLSA are available as well.

U.S. Department of Labor
Wage and Hour Division
1321 Murfreesboro Rd., Suite 511
Nashville, TN 37217-2648
Office: 615-781-5343
Fax: 615-781-5347

Tennessee Occupational Safety and Health Administration (TOSHA)

Tennesee Department of Labor and Workforce Development
Occupational Safety and Health Administration
Andrew Johnson Tower, 3rd Floor
710 James Robertson Parkway
Nashville, TN 37243-0659
Phone: 615-741-2793