“Natural,” “clean label,” “green,” “sustainable,” “organic,” “GMO-free” and “antibiotic free” are just a few of the buzzwords health-conscious consumers are looking for when making decisions on what to put in (or on) their bodies. As consumers continue to become more health-conscious and focused on consuming natural and organic health food products, natural food product companies are growing at exponential speeds.   

But, fast-growing natural food companies should think seriously about making hasty or uninformed decisions relating to employment law matters. There are federal, state and local county and city employment laws that may apply to your business. Employment law mistakes can result in serious legal and financial consequences distracting from your overall business goals. This article discusses top employment law considerations natural food product companies should account for to avoid common employment law workplace pitfalls.

Misclassification of employees

Many fast-growing companies hire independent contractors rather than employees and/or misclassify employees as exempt under the Fair Labor Standards Act to avoid payroll obligations that come with the traditional employment relationship, such as the duty to pay minimum wage and overtime, as well as payroll and other taxes to the government. For each classification, whether it is an independent contractor or exempt employee, there are very specific requirements that must be met to support the classification. It is important for employers to review any such classification with an employment attorney to ensure the classification complies with any federal or state law.

There are serious liability implications for the employer that can result from these misclassifications, including substantial wage repayment going back as far as three (or, in some states, four) years and other harsh penalties. The fact that a worker requested or preferred to be classified as an independent contractor or receive a salary is no defense.

Failing to pay employees timely or correctly

Most states have specific laws outlining the timeframes under which employers must pay their employees. These timeframes often depend on several factors, such as the circumstances of the termination and the written personnel policies of the company. Multi-state employers should also keep in mind that different states have different legal requirements concerning various pay-related issues, including whether fringe benefits (commissions, bonuses, etc.) are “wages” for purposes of final pay requirements.

Further, most states also have their own minimum wage requirements all employers should be aware of. Multi-state and even multi-city or -county employers should also be on the lookout for the applicable minimum wage in the city or county in which they do business. In addition to minimum wage requirements, another common workplace pitfall is the failure to properly pay overtime and double time, which can lead to harsh penalties.

Finally, one of the most frequently litigated wage and hour law issues focuses on an employee’s meal and rest periods. It is imperative to stay on top of all the new state case law and statutory requirements relating to meal and rest periods to ensure compliance. Proper documentation and a more conservative stance toward an employee’s meal and rest periods can go a long way.

Failing to implement an employee handbook

Many fast-growing companies often overlook implementing an employee handbook. An employee handbook is essential to defining the policies on how employees are to interact with your company. Further, there are many local, state and federal laws an employer must follow, and including these laws in the handbook can establish them as company policy, protecting the employer from legal action in the future. Typical things to include in an employee handbook are your company’s anti-discrimination, retaliation and harassment policies, including procedures through which employees can make complaints to management and the HR process in general.  

Failing to keep employee files or document performance issues

Many states have certain requirements regarding the maintenance of an employee’s files. Depending on an employer’s state, the failure to properly maintain employee records can subject an employer to different types of penalties. In addition to maintaining employee files, it is important to document an employee’s performance issues. There are many instances where an employee performs poorly and none of the employee’s performance issues are documented. Without proper documentation, it can be difficult to overcome retaliation lawsuits when an employee thereafter engaged in some protected activity (i.e., filed a complaint, took a medical leave of absence, etc.). The failure to properly document performance issues and maintain employee files can expose the company to extensive liability.

Failing to train employee or comply with required trainings

Failing to train your employees properly can create risks for your entire company. Mistakes by employees can result in lawsuit, fines and other consequences. For example, a supervisor who does not understand federal anti-discrimination laws may not know when it is appropriate to offer a reasonable accommodation to an employee. A poorly trained employee may fail to uphold basic OSHA standards in your workplace, leading to a serious accident that injures multiple employees or results in fines relating to food handling and care. Many states also require mandatory manager or employee training obligations, such as sexual harassment training and/or anti-bullying training. Ensuring workers receive proper training protects not only your investment in your employees but also your business itself.

Failing to keep apprised of applicable leave laws

Many employers are not aware of the mandatory leave laws under both federal and state law. Employers must provide medical leaves of absence to protected employees. Federal law, such as the Americans with Disabilities Act (ADA) and Family and Medical Leave Act (FMLA), require employers to provide employees with specific timeframes of time off as an accommodation. For example, FMLA requires employers to provide up to 12 weeks of leave for a serious health condition of employee or family member, and the ADA requires employers to provide reasonable accommodations to disabled employees, which includes time off. There may also be state statutes that have similar or more stringent requirements.

Not consulting with an employment attorney

Employment laws are nuanced and specific, and they can differ under federal, state and local county/city ordinances. Unfortunately, in a misguided effort to minimize expenses, many fast-growing companies ignore employment-related issues altogether or rely solely on human resources functions or inexperienced legal counsel to handle this nuanced area of the law. In doing so, a business jeopardizes its ability to address the issues in the most strategic and cost-effective manner.

Many labor and employment laws can easily be overlooked in a fast-growing business. However, consulting with an experienced labor and employment attorney and being aware of the applicable laws in your state and city or county can be key to minimizing the risk of lawsuits and legal problems to allow for a prosperous business venture.

Disclaimer: This article is intended to provide high-level educational information and is not intended to, nor does it, constitute legal advice.

Sarina Saluja is a partner with labor and employment law firm Fisher Phillips in Los Angeles, defending employers in a variety of matters. She may be reached at [email protected].

Marianna Bertikian is an associate with Fisher Phillips in Los Angeles. She may be reached at [email protected].