Startups and businesses are great opportunities for entrepreneurs to achieve their vision. In the pursuit of finding and retaining talented employees, many of these businesses overlook several "hidden" legal issues which can be detrimental to long profitability and viability.
Starting or running a business? Do not ignore these legal issues.
Franchises as Joint Employers-The Battle Continues
While recent National Labor Relation Board (NLRB) decisions have begun to impose liability on franchises as joint employers, there has been a backlash from Congress and the Courts against this legally unprecedented action. In January, a California judge held that the franchise, Massage Envy, could not be held liable for an individual franchisee's wage and hour violations. This holding follows a recent August 2014 California Supreme Court decision that Domino's could not be held liable as a joint employer in a former employee's sexual harassment suit. These cases are directly opposed to the NLRB's recent decision to hold both McDonald's and the franchisees accountable as joint employers in labor complaints against the chain.
Employee or Contractor? The Taxing Distinction
As tax season is well underway, employers are asked to define who is on their payroll. Employees or contractors? This is a seemingly simple distinction, but an employer may not have the same classification as the IRS or their respective state's department of treasury. This label defines the obligations of both the employer and the worker to the IRS.
