The Tyranny of Small Business
Edoc Service, Inc. began 27 years ago from a forward-thinking idea Jim Mullaney, the founder, had to start a company whereby people could work at home thus, allowing workers to have a career and life autonomy. The company has now established an attractive culture for staff to experience and outsiders to admire. The company is successful, employing many associates (all of whom work remotely), nationwide. We have created, taught, and published a model entitled “Virtual Business Culture”, based on five pillars of foundational principles. The company follows good business practices, operates ethically, and has created an “Ethical Business Guide” for us and like-minded businesses to follow. We all enjoy being a part of this organization.
Recently, our founder attended an NFIB (National Federation of Independent Business) webinar entitled “Wage and Hour Compliance for Small Business” on May 1, 2024. The webinar presenters were Bradford Kelley and Mike Paglialonga, both attorneys for the law firm, Littler. Attorneys generally present “disturbing scenarios” to encourage new client participation and this presentation was no exception.
Upon listening to the numerous rules, regulations and possible litigation and penalties for non-compliance, Jim came away with the following summary and thoughts:
Small business is at a distinct disadvantage to defend against worker charges brought forth. It was stated during the webinar that, “No (labor) judge will rule in favor of the business over the concerns of the worker”.
Overtime requirements are strict and complicated. The rules can vary by state, region, and industry. It applies to hours, days worked, sleep time, remote work communications, etc.
Recent rules regarding independent contractors make these associates nearly impossible to justify in their current status. Edoc Service does not have the infrastructure to support onboarding our Independent Contractors as employees. We are fully compliant with contractor accounting and 1099 tax reporting requirements.
It is entirely up to the business to provide detailed documentation and proof in defense of a worker charge brought against the company.
A single worker can sue an employer corporately on behalf of the entire workforce. In other words, if the labor authorities rule on the side of the worker compliance violations, it extends to the entire workforce with fines, penalties, back wages, taxes going back over numerous years.
Reasonable tracking and record keeping will not hold up under defense scrutiny. Only extreme detail tracking and record keeping that most small businesses cannot afford will suffice. This would include exact hours/days worked for each worker, exact travel time, exact supervisor communication to workers and time. Etc.
Minimum wage and overtime rules vary by state, region and can be complicated.
In addition, the FTC finalized a rule banning noncompete agreements, thus removing critical trade secret protection from the business community.
Heavy compliance rules force companies to forfeit a positive culture offering worker life-balance freedom at home or onsite, along with a career such as our culture at Edoc Service, Inc. Rules designed to prevent worker abuse by large company organizations are tyranny to small businesses. Company start-ups become difficult stifling innovation across the U.S. economy. It is our belief that the Federal and State Departments of Labor and the FTC have gone too far and must be reined in!
Small business contacts who are not members of NFIB should be encouraged to join (NFIB is well connected politically and has a strong lobbying arm for the small business community.) This allows our “small business voice” to amplify. In addition, small business owners should personally stay connected to local, state, and federal elected officials to voice their concerns of government overreach harming business success.
A recent article in the Cincinnati Business Journal states, “Legal experts expect many of the rules finalized by agencies recently will be challenged in court and may be thrown out”. Therefore, there is no need to over react to this seismic compliance shift.
Our best defense is a company culture with confidence the entire employee team will stand up in company defense should a charge be brought forth by a disgruntled staff member or rogue “trolling DOL audit”.
