Employment Law Essentials for Online Businesses
Welcome to another episode of Answers with Autumn, your go-to resource for legal compliance insights tailored to 7-figure online businesses. This month’s episode features Michelle Coakley, an experienced employment law attorney, sharing actionable advice for CEOs and COOs managing high-growth teams.
Whether you're hiring your first W2 employee or scaling across states, this guide highlights key takeaways to help you navigate employment law complexities confidently and legally.
Watch the full Q&A
Key Takeaways from This Q&A
Transitioning Contractors to Employees: Legal Implications
Misclassifying workers as independent contractors instead of employees can lead to severe fines, penalties, or criminal liability. If a contractor's role aligns with employee status under federal or state laws, it's time to transition them.
- Example: The Department of Labor (DOL) uses a six-factor test to assess factors like economic dependence and control.
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Pro Tip: Review state and IRS guidelines to ensure compliance.
New Department of Labor Rulings: What You Need to Know
The DOL’s Final Rule (effective March 2024) introduces a six-factor test under the Fair Labor Standards Act (FLSA) to determine independent contractor status.
- Key Insight: State and IRS classification tests still apply.
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Pro Tip: Avoid paying independent contractors hourly; instead, structure agreements that emphasize independence.
Drafting an Employee Handbook: Setting Your Team Up for Success
Clear policies and procedures safeguard your business while fostering a compliant workplace. Essential topics include anti-discrimination policies, at-will employment, complaint procedures, and PTO guidelines.
- Essential Topics
- Anti-discrimination policies
- At-will employment
- Complaint procedures
- PTO guidelines
Featured Q&A: Answers to CEO Questions
During this Q&A, we answered key questions from CEOs and COOs like you, including:
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When should I transition a contractor to an employee, and what are the risks of misclassification?
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Answer: When they no longer meet independent contractor tests. This has a lot to do with how involved they are in your business, how essential they are, how you're paying them, etc. Misclassification risks include fines, penalties, and criminal liability in some states.
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How does the DOL’s Final Rule impact core business tasks for independent contractors?
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Answer: The new rule applies a six-factor test focusing on economic dependence but does not change state laws or IRS guidelines. The biggest rule to be concerned about for clients in our industry is the opportunity for profit or loss depending on managerial skill.
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What should I include in an employee handbook to avoid legal pitfalls?
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Answer: Handbooks provide really important protections for your business including policies on at-will employment, anti-harassment, and network usage, among others.
Have your own legal questions? Submit them here for a chance to be featured in an upcoming session.
Why Employment Law Compliance Matters
Employment law compliance is critical for scaling online businesses. Missteps in worker classification, policy implementation, or employee management can expose your business to significant risks, including fines, lawsuits, and reputational damage. With new Department of Labor rulings and evolving state laws, CEOs and COOs must stay informed to protect their growing teams and businesses.
Whether you’re hiring your first W2 employee or expanding a team across multiple states, understanding employment law ensures you can scale confidently and legally.
About The AWB Firm
We’re a modern, women-led law firm helping 7-figure online business owners protect their intellectual property, grow compliant teams, and navigate legal challenges with confidence. From trademarks and contracts to legal strategy, we’re here to ensure you can scale without worry. Learn more about our services here.
Not sure where to focus your efforts to make sure all areas of your business are legally compliant and protected? We’re currently accepting applications for our Legal Roadmap Strategy™. Click here to learn more and apply.
Category: Employment Law, Business Compliance, Team Growth
