In start-ups or small businesses, business owners face a lot of issues. They are the ones responsible for managing the business, overseeing the accounting processes, recruitment and selection of the employees, and even determining the marketing strategies. Business owners wear so many hats since their responsibilities cover many different functions.

However, business owners can face a number issues when it comes to human resources. They may confuse it with other facets but this article is here to share some information on how business owners should deal with employment law.

These tips are not legal advice but serve as general guidance regarding ways to avoid facing legal action and litigation as well as to protect intellectual property rights.

Distinguish Freelancers or Independent Contractors from Employees

Startups and small businesses alike hire freelancers or independent contractors to complete the tasks that they have not accomplished yet. One of the most common reasons why they hire freelancers is that it lessens the overhead cost. Employers or business owners who hire independent contractors or freelancers are not required to comply with the wage or even the hour requirements that are stated in employment laws. Moreover, medical insurance coverage is not mandated as well.

Yet, what commonly happens is that employers mistakenly categorize their employees as freelancers in order to refrain from fulfilling the obligations mandated by law. In the end, this puts them in possible risk of litigation, which could be very expensive on their part.

But how can employers distinguish between the two?

Freelancers or Independent Contractors Employees
The person has a specific skill that is different from the company or the business itself The company has the overall control and gives the directions as to how the job is done
Expenses on materials and other related expenses are shouldered by the freelancer Employees use the equipment provided by the company
Hours are not fixed, they are free to choose what hours they will be working There is a fixed schedule mandated by the company or guidelines about when work will be done
Skill sets may focus on a specific skill that the freelancer has; usually paid by project Wages are fixed according to the hours to be rendered; termination depends on the company guidelines


Consider Creating an Employment Contract or a Non-Disclosure Agreement

Businesses are unique from each other because of what they have, sell or offer as a service. There are particular recipes or techniques that may be quite confidential that would greatly affect the business if word gets out. One of the priorities of the business is to protect these as they may be one of its pillars.

In order to protect confidential information, a provision in the employment contract or non-disclosure agreement (NDA) is specified to instruct the person to keep things private, especially about the work they do. This reduces the risk of potential corporate espionage that could sabotage the whole business.

The contents of the document should also clarify and specify the kind of information that the business deems to be confidential. Some of which could be about the client list, financial statements, product prototypes and blueprints. It may also restrict the distribution of these pieces of information.

#3 Recruit the best

Every business owner aspires to have the best team that would allow them to grow and be the best in the industry. In running a startup, it entails a lot of tasks spanning from advertising, marketing, planning, and even recruiting.

When it comes to recruitment, there are various platforms that companies may use to find them the best candidates for the position. From job fairs, to school career fairs, print ads and even online job sourcing, these platforms may be used to find the best candidate for the vacancy. For higher positions, it is best to use a headhunting firm since they will personally do their best to find the most qualified person for that position.

If hiring is not an immediate need, you may also consider pooling candidates, which will make the selection process easier.

Establish Company Policies and Standard Operating Procedures

Companies have their own way of managing their people, establishing rapport among themselves, and even operating procedures that must be learned by every employee.

Establishing these policies will let the whole team know how will they be able to access the equipment and accomplish tasks properly and will even protect them from possible casualties and abuse from rude superiors. Not only that, but it will also serve as the handbook that would include the fundamentals in the workplace operations. If you’re looking into the possible legal aspects of personal injuries and accidents in the workplace, click here for more information.

What you may include:

Equal opportunity clause Provisions against harassment and discrimination
Policies on sick leaves or vacation leaves Benefits – such as allowance, medical coverage, transportation allowance
Work hours and holiday coverage Employee conduct
Company policies alongside state laws Employment status


In starting a new chapter in your lives, getting employed is a phase that most people go through. For businesses, this means that it is critical to provide legal and fair employment arrangements. These are tips that may help you in running your business better and in lawfully seeking new employees.

Timothy Garret

Timothy is a budding law writer who enjoys all aspect of the law industry. He’s currently studying to become a lawyer and is applying his law knowledge into what he writes about. He spends time with his friends and swimming in his spare time.