7 Employee Rights Small Business Owners Need to Know

Small businesses rarely have the means to manage their human resources department (if the department exists at all!). They can’t always refer to a lawyer on retainer in every situation.

For this reason, small business owners and managers should know basic employee rights to avoid unnecessary litigation and negative situations that reflect poorly on the business.

This creates a fair and enjoyable work environment that establishes mutual trust and ensures long-term, fulfilling employee-employer relationships. Here are 7 Basic Employee Rights Small Business Owners Need to Know.

Right 1: Fair Labor

According to the Fair Labor and Standards Act (FLSA) every employer is required by law to comply with certain fair labor practices. Even small businesses are not exempt.

Here are the rules established by the FLSA:

●      Minimum Wage – The current Federal minimum wage is set at $7.25 per working hour but can vary based on the type of business and by state, county, or city.

●      Overtime – Employers must pay a rate of 1 and ½ times the established hourly rate of an employee for hours worked beyond 40 hours in a workweek.

●      Hours Worked – This includes all times when an employee is performing an activity required by his or her job duties. It also includes time when an employee is required to be on premises or at any designated place of work. Here is a Department of Labor (DOL) reference sheet that clarifies this rule.

●      Recordkeeping – Employers are required to keep track of payroll records and employee timecards.

●      Poster – All employers must display the official DOL poster that outlines these requirements.

Right 2: Safe Workplace

The federal government passed the Occupational Safety and Health Act (OSHA) in 1970. The act proclaims that workers have a right to a “safe working environment.”

This means that a workplace must be free from dangerous equipment, excessive noise levels, and employers must not expose workers to toxic chemicals.

Employers are responsible for investigating potential safety and health threats and must remove them if possible. If not, they must inform their employees and provide proper safety training and equipment, specially when it comes to occupational health services.

If your located in Idaho and have been injured on the job, check out this Idaho workers compensation lawyer to find out what you should do next. Getting the compensation you are owed can be difficult, and they are there to help.

Right 3: Freedom from Discrimination

Mutual respect is key in the workplace, but this is even more important within a small business structure. Wes Herman of Woods Coffee is an outstanding example of an owner who understands this principle.

To attract and keep top tier talent, owners must create an enjoyable, trust-based work environment that is free of discrimination as he told UpFlip during a recent interview. That’s why Wes could grow his business to over 17 locations and over 350 employees.

Regardless of personal principles, there are rules established that prevent businesses from discriminating against employees.

As a general rule, it is illegal for employers to discriminate against candidates based on sex, religion, color, race, national origin, pregnancy, disability, sexual orientation, gender identity, or age.

This can vary based on state law and the number of employees, but here is a list of the key federal laws pertaining to discrimination:

  • Equal Pay Act (EPA)
  • Age Discrimination in Employment Act (ADEA)
  • Title VII of the Civil Rights Act of 1964
  • Americans with Disabilities Act (ADA)
  • Genetic Information Nondiscrimination Act (GINA)

Employers must also protect employees from sexual harassment with training and other procedures of accountability.

The U.S. Equal Opportunity Employment Commission has extensive resources on their site.

Right 4: Privacy

Employees and potential employees have privacy rights extended to them by several federal laws and regulations. This means that employers can’t take actions like search an employee or their belongings or run a background check on a potential employee without their written consent.

However, employers also have rights in this realm. Employers can monitor company emails, phones, and computer usage if their monitoring policies are transparent. For example, an inappropriate email sent on a company server is not protected.

Surveillance laws also vary by state, but most permit camera usage if an employer notifies employees that they are being recorded.

Right 5: Whistleblowing

Employees may inform authorities and testify about illegal actions taken by an employer. They can do so without fear of retaliation or retribution.

For example, if an employee reports your business for negligence regarding safety regulations or discriminatory actions, then the company has no legal grounds to retaliate against the employee.

Retaliation means an employer cannot:

  • Fire or lay off a whistleblower
  • Blacklist, demote, or reassign to affect promotion
  • Deny overtime, reduce pay, or deny benefits
  • Formally discipline
  • Intimidate or make threats

The National Whistleblower Center has extensive explanations of these rights.

Right 6: Unionization and Collective Bargaining

Whether you employ union or non-union workers, the National Labor Relations Act applies to your business. Specifically, it grants employees of private employers the rights specified in Section 7 of the Act:

  • The right to organize, form, join, or assist a labor union.
  • The right to collective bargaining by representation (of their choice).
  • The right to engage in activities related to “other mutual aid or protection.”
  • The right to abstain from any of these activities.

These rights include discussion of conditions of employment and wages.

With the rise of the Digital Age, some social media policies have come in the crosshairs of the National Labor Relations Board for violation of Section 7.

The Board can lean one way or the other based on their ideology, so carefully review any social media policy before distribution to ensure compliance. Ideally, employers should work with an attorney familiar with labor law.

Right 7: Employee Leave

The Family and Medical Leave Act grants employees 12 weeks of protected unpaid medical or maternity leave over a 12-month period. This means that under certain family medical conditions, an employee can take leave without risking their job security.

It’s up to employers to take an active role in monitoring FMLA claims. They may request forms and medical certifications to determine whether an employee’s absence is up to legal standards.

Only employers with 50 or more employees must worry about the FMLA. So, it may seem like this right doesn’t belong in an article that pertains to small businesses.

However, the SBA classifies businesses by industry and their average annual revenue or number of employees. The lowest limit for the number of employees in their table is 100, and they classify most business by revenue.

Therefore, the act applies to many businesses classified as small. All this information is fundamental if you are looking to sell your business online, as employees are part of the transfer.


While I’ve covered the key rights business owners should know, there are additional laws at the state, county, and city levels. Some of these laws are contradictory to federal regulations.

If in doubt of any law or regulation, consult with a certified employment lawyer for clarification.

Independent of federal regulations, it’s advisable for employers to write their core values into a business plan and work manual.

7 Employee Rights Small Business Owners Need to Know was last updated April 18th, 2024 by Elizabeth Leer