Employment Law Basics for Small Business Owners

 

Running a small business comes with many responsibilities, and one of the most important is managing your employees in compliance with employment laws. Navigating the complexities of state and federal regulations can be challenging, but understanding the basics can help you avoid costly mistakes and create a positive workplace environment. Here’s an overview of key employment law considerations for small business owners in Oregon and Washington.

 

1. Hiring Employees: What You Need to Know

When hiring employees, you must comply with anti-discrimination laws and other regulations that protect candidates during the hiring process.

• Anti-Discrimination Laws: Both Oregon and Washington, as well as federal laws like Title VII of the Civil Rights Act, prohibit discrimination based on race, gender, age, disability, religion, or other protected characteristics.
• Job Descriptions: Clearly define roles and responsibilities to ensure transparency and avoid misclassification issues.
• Employment Eligibility: Verify that all new hires are legally authorized to work in the U.S. using Form I-9 and comply with E-Verify requirements if applicable.

 

2. Employee Classification: Avoid Common Pitfalls

Misclassifying employees can result in significant penalties. Small business owners must understand the distinctions between:

• Employees vs. Independent Contractors:
  • Employees are subject to payroll taxes, minimum wage laws, and benefits.
  • Independent contractors work for you on a project basis but are not entitled to the same protections as employees.
  • Misclassification can trigger audits by the IRS, Oregon Bureau of Labor and Industries (BOLI), or Washington State Department of Labor & Industries (L&I).
• Exempt vs. Non-Exempt Employees:
  • Exempt employees (e.g., managers or professionals) are not entitled to overtime pay.
  • Non-exempt employees must receive overtime pay for hours worked over 40 per week.
  • Misclassification can lead to wage and hour disputes.

 

3. Wage and Hour Laws

Oregon and Washington have some of the highest minimum wages in the country. As a small business owner, it’s critical to comply with wage and hour requirements.

• Minimum Wage:
  • Oregon’s minimum wage varies by region (e.g., $15.45/hour in the Portland Metro area as of 2025).
  • Washington’s statewide minimum wage is $16.39/hour as of 2025, with annual adjustments for inflation.
• Overtime Rules:
  • Non-exempt employees are entitled to overtime pay at 1.5 times their regular rate for hours worked over 40 in a workweek.
• Paid Sick Leave:
  • Oregon and Washington both require employers to provide paid sick leave, with accrual rates of at least 1 hour for every 30-40 hours worked.

 

Oregon-Specific Employment Considerations

 

Equal Pay Act Compliance:

Oregon’s Equal Pay Act prohibits pay discrimination based on protected characteristics, such as gender, race, or age, and requires that employees performing comparable work be paid equally. Businesses must conduct regular audits to ensure compliance and document justifications for pay differences based on factors like education, experience, or seniority.

 

Predictive Scheduling Laws:

Oregon’s Fair Work Week Act applies to certain industries, such as retail, hospitality, and food service. It requires covered employers to:

• Provide employees with at least 14 days’ notice of their work schedules.
• Compensate employees for schedule changes made with less than 7 days’ notice.
• Offer additional hours to current employees before hiring new staff.

 

Failing to comply with these laws can lead to penalties and claims through the Oregon Bureau of Labor and Industries (BOLI).

 

4. Employee Handbooks: Set Clear Expectations

An employee handbook is a critical tool for communicating workplace policies and setting expectations. Include:

• Anti-discrimination and harassment policies.
• Sick leave, vacation, and family leave policies.
• Disciplinary procedures and performance expectations.
• Information about benefits and workplace safety protocols.

 

A well-drafted handbook ensures consistency, protects your business in disputes, and keeps employees informed about their rights and responsibilities.

 

5. Workplace Safety and Compliance

Both Oregon and Washington require employers to maintain a safe workplace under the Occupational Safety and Health Act (OSHA).

• Safety Standards:
  • Conduct regular safety training and document compliance with OSHA standards.
  • Address industry-specific risks, such as construction hazards or chemical exposure.
• Workers’ Compensation Insurance:
  • Oregon and Washington both require employers to carry workers’ compensation insurance to cover workplace injuries.

 

6. Anti-Harassment Policies

Employers are required to prevent and address workplace harassment and discrimination. Failure to do so can result in lawsuits or investigations by state agencies.

• Training: Provide regular anti-harassment training for employees and managers.
• Complaint Procedures: Establish a clear process for reporting and addressing complaints.
• Documentation: Keep thorough records of training sessions and complaint investigations to demonstrate compliance.

 

7. Termination Best Practices

When terminating an employee, follow these steps to reduce the risk of legal claims:

• At-Will Employment: Oregon and Washington are at-will states, meaning you can terminate employees for any legal reason. However, avoid terminations based on discriminatory or retaliatory motives.
• Final Paycheck:
  • In Oregon, final paychecks are due by the end of the next business day if the employee is terminated.
  • In Washington, the final paycheck must be paid by the next regular payday.
• Document Reasons: Keep detailed records of performance issues or policy violations that lead to termination.

 

Work with an Experienced Attorney

Employment laws are complex and ever-changing. Non-compliance can lead to costly lawsuits, penalties, and damage to your business’s reputation. At Bridgeport Law Group (BLG), we help small business owners in Oregon and Washington navigate employment law with confidence. Whether you need help drafting employee handbooks, reviewing policies, or addressing disputes, our team is here to protect your business.

 

Contact Us Today

Don’t leave your business vulnerable to employment law pitfalls. Schedule a consultation with BLG to ensure your policies and practices comply with state and federal laws. Let us help you build a strong foundation for your business’s success.

 

Note: This article is for informational purposes only and does not constitute legal advice. For personalized guidance, please consult with a qualified attorney.