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How small business owners can keep up with the changing legal landscape

January 26, 2018
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How small business owners can keep up with the changing legal landscape

January 26, 2018
View as PDF

Authored By

Rebeca López

Rebeca M. López


Employment law can be a complicated part of running a small business.

There have been many changes recently in this area of law, according to Rebeca López, Senior Attorney in Godfrey & Kahn’s Labor, Employment and Immigration Law Practice Group in the Milwaukee office.

Businesses need to keep abreast of shifting legal requirements, especially when, as in recent years, there has been a change in the political landscape.

“We have a president taking a significantly different approach than the prior president,” said López, explaining what is driving some recent developments in employment law.

To help entrepreneurs and small business owners wade through these legalities, SCORE SE Wisconsin is hosting an upcoming workshop. SCORE bills itself as a non-profit association dedicated to helping small businesses get off the ground.

The class, “Legal Basics - Hiring, Retaining and Terminating Employees”, will be held from 9 a.m. to 12 p.m. Saturday, Feb. 3, at Ottawa University in Brookfield. It will be led by López, who has been with Godfrey & Kahn for six years and worked with businesses of all sizes.

López has tailored the workshop material to apply to the legal obligations of small and medium sized businesses. Some points she suggests business leaders keep in mind in the current environment include:

  • Wage and hour laws: The Obama administration had proposed changing the salary basis test, increasing the the minimum salary qualifying for the so-called “white collar” exemptions to the Fair Labor Standards Act’s overtime pay requirements from $455 to $913 a week, wrote López, in a post on the Godfrey & Kahn website. A federal district court in Texas halted the rule’s implementation in late 2016 and the Trump administration has taken it off the table, according to López, but the current administration is open to other changes in this area, López said. “This is a significant area of liability. It’s important to get it right,” she said. With wide variance in types of employees and work, there is corresponding variety in when businesses have to provide minimum wage and overtime compensation. “Lots of times people incorrectly assume if they pay a salary they don’t have to pay overtime,” López said. Also, the identification of independent contractors is being more closely monitored, both by the IRS and on the state level. “The Wisconsin Department of Workforce Development is active in what they believe to be ‘misclassifications’ of freelance workers,” López said.
  • Immigration: The U.S. immigration office will start conducting more Form I-9 audits this year, according to SCORE SE Wisconsin. López said there has been an increase in such audits in all workplaces. “It’s part of the U.S. initiative to investigate employers of all sizes to make sure their paperwork is in order,” a release from SCORE said.
  • Employee non-competes: A Wisconsin Supreme Court decision handed down last week has far-reaching implications on how employee non-solicited restrictions are interpreted statewide, according to López. The employer, Manitowoc Company, used an employee non-solicit in its agreement that the Court found to be a restraint on trade as well as “overbroad on its face and unenforceable,” López wrote for Godfrey & Kahn. As a result of the decision, López said such provisions will be under much greater scrutiny under Wisconsin law and companies should carefully review existing covenants on this subject.
  • Sexual harassment: With the recent activism of the #metoo and #timesup movements, López said more businesses are aware of the need to have well-crafted policies regarding sexual harassment and abuse. The key to an effective policy is mutual understanding, to “make sure everybody is on the same page,” López said. The new federal tax plan also has an impact in this area, López said, as the legislation discourages confidential settlement agreements. Under the new plan, amounts paid or attorney fees are no longer tax deductible. “Based on the (Tax Cuts and Jobs) Act, employers must now weigh their desire to keep these agreements confidential against their ability to deduct the payments attributable to the settlement,” wrote López, in a Godfrey & Kahn blog post. López added that the new tax plan also includes a reduction of classification of certain expenses as business-related, such as relocating employees and deductions for employee parking.

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