The Legal Environment
Small businesses operate in a complex legal environment that places many constraints on recruitment, selection, placement and other personnel practices. Laws may specify what is required, what is acceptable or what is prohibited. Every personnel system must consider the statutes relating to these issues. One of the most important laws the small business owner should be aware of is the Occupational Safety and Health Act (OSHA 1970). This law is aimed at reducing the number of safety and health hazards in the American workplace. Businesses must comply with health and safety standards set by the U.S. Department of Labor for individual industries.
The past sixty years have been characterized by laws that encourage collective bargaining and that try to bring about a better balance between management and labor. Many of these laws apply to small businesses:
- Norris-LaGuardia Act (1932) -- Protects the rights of unions to organize. It also prohibits yellow-dog contracts -- an employment practice where the firm requires employees to promise they will not join a union if hired by the company.
- Wagner Act (1935) -- Guarantees workers the right to engage in union activities, to organize and to bargain collectively without interference from employers. A small business manager may not prohibit employees from union activity.
See the discussion of other applicable laws in the first section under Recruiting and Compensation Issues.
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