During a flat economy, employment laws concerning overtime, health care benefits and employment terminations may become a lesser priority as businesses focus on increasing efficiency.

No matter how your business is faring in the current economy, familiarity with recent employment law changes can benefit your bottom line and reduce the risk of costly legal battles.

Generally, federal and state wage and hour laws require that hourly employees be paid at least minimum wage and an overtime premium if they work more than 40 hours in a work week.

Employees are exempt from the overtime premium requirement if they perform certain types of managerial, administrative or professional duties and if they are paid on a salary basis, but many employers incorrectly classify employees, creating costly overtime liability.

Recently, the U.S. Department of Labor proposed new rules designed to make it easier to determine whether an employee is eligible for overtime. The proposed rules update the original overtime rules, which were established more than 50 years ago.

Most employers’ health benefit plans are subject to COBRA, which allows eligible employees to continue coverage in their group health plan at their own cost. The Department of Labor proposed rules requiring covered employers — generally, those with 20 or more employees which offer employees a group health benefits plan — to update the forms they use to notify employees and their dependents about their COBRA rights as well as the procedure for notification.

Another health care issue arises under the Health Insurance Portability and Accountability Act, which imposes privacy rules on employers’ group health plans to protect individual health care information and control the way such information can be used or disclosed.

HIPAA regulations became effective for most employers in April, and in April 2005, new security rules will require policies to prevent improper disclosure of protected health information.

As our economy wanders along, some employers face staff reductions. It’s best for employers if personnel are “at-will,” meaning the employer or employee may terminate the relationship at any time, with or without cause.

Employers should strive to maintain the at-will status of their employees by using appropriate language in employment application forms, policy manuals and other written materials pertaining to employment-related benefits.

But even at-will employees cannot be discharged for reasons prohibited by law — for example, because of age, sex, race, national origin, color, pregnancy and disability — so it is important to thoroughly and accurately document the reasons for a termination decision.

Employers should also create and circulate harassment and discrimination policies and train employees regarding such policies to avoid liability for harassment and other discriminatory conduct.

Knowledge of these and other employment law issues can help employers avoid costly legal pitfalls and take advantage of the benefits of having employees. Daniel L. Bell ([email protected]) is a partner with Brouse McDowell. Reach him at (330) 535-5711.