How a $13,000 fine finally got me to take my employee files seriously

Organize your employee files and send the Dept of Labor and IRS packing when they come to double check your paperwork

Let’s talk about staff paperwork. Yes, I can hear you groaning in the background. Paperwork is no fun.  I finally got serious about my employee files the day I got a letter from the city and a fine for $13,000! My workers compensation lapsed for two weeks. I didn’t even realize I forgot to pay the bill. Turns out the government takes its labor laws pretty seriously.  I definitely wanted to make sure this never happened to me again. I hope it never happens to you at all.

So what do we do to make sure that our staff paperwork is up to date? And how do we ensure that all the legal requirements are met? We ask the expert!

Employment Law for Small Businesses

Eric Sarver, Esq. is an attorney with 20 years of experience. He specializes in employment and business law for small to mid-sized business owners.  I signed up for his workshop, “Employment Law for Small Businesses”, shortly after this workers compensation mishap.

The workshop was a godsend. Eric broke down all the labor laws in my city (New York). So I made a checklist of all the requirements. Now I run through my staff paperwork monthly. Just double checking that those w4’s, I9’s, employment contracts, background checks etc. are all up to date. 

I reached out to Eric and asked if he would share his knowledge with all of us. Luckily, he said yes! Read on below to find out Eric Sarver’s five key tips on keeping your paperwork and legal documents up to date, particularly for your staff (employees or freelancers). 

Five New Year’s Resolutions to Help Your Business Thrive

Guest Post by Eric Sarver, Esq.

Many articles address New Years’ Resolutions for your personal life; exercising, de-cluttering your closets, or cutting down on coffee. I want to discuss New Year’s Resolutions For Your Business. After all, shouldn’t your company be better protected this year? Shouldn’t your company be healthy and happy, just like you hope to be?

Specifically, I’ll address five legal steps and actions that you can take, to strengthen and protect your business’ employee relations. These steps are concrete actions that are feasible and attainable – and they have predicted positive benefits for your business.

1. Revise and Update Your Employee Handbook:

Remember that employee handbook that you drafted for your business back in 1999?I believe you that it was a great handbook at the time. Right now, however, with all of the recent changes to the federal, state, and city laws, regarding sexual harassment, equal pay, paid sick leave, and other issues, I would imagine that your employee handbook might be in dire need of revisions.

Legislation has changed drastically in the past two years alone. If your employee handbook is not up to speed with these laws, then it would be incomplete. That could cost you in fines, penalties, or problematic lawsuits.  Your old employee handbook probably fails to address key legal issues for your employees. For New York-based businesses, I’m presuming the New York State’s Paid Family Leave Law of 2018 is nowhere to be found in your outdated employee handbook.  Or perhaps your handbook is missing the 2014 New York City Paid Sick Leave Law

Updating your company’s Employee Handbook is a relatively simple process. An employment law attorney can do it for you.  An updated handbook will ensure that your employees’ expectations match the legal requirements. This action can protect your business from employee disputes.

2. Review Your Independent Contractor Arrangements:

If you have independent contractors working for you, ask a professional to review your contracts. He or she should also review  these contractors’ actual working conditions. Including hours scheduled, the type of work that your independent contractors perform, supervision, and payment arrangements. The goal of this review is to ensure that your contractors are correctly legally classified as “1099” independent contractors. If they are not, then an employment law attorney can help you to make sure that your workers are properly classified.

If you don’t have written contracts with your hired independent contractors, be sure to have some contracts drawn up. Perhaps your New Year’s Resolution can simply be to draw up a contract between your company and your independent contractors. It’s a simple process. The benefit?  It is better to proactively correct your independent contractors’ working conditions, before the Department of Labor or the I.R.S. correct any deficiencies for you.

3. Make Sure Your Legal Requirements and Workers Compensation are Covered:

As a business owner it’s easy to lose track of a few details. Such as a notice from your worker’s compensation carrier, reminding you that your workers’ comp insurance needs to be renewed. Or perhaps you’ve missed a brochure from the Department of Labor, outlining the requirements for registering your business for unemployment insurance withholding? Make sure to consider other government tax and insurance requirements, including OSHA requirements, ACA requirements, federal tax withholdings for employees, self-employment tax, and payroll tax.

Have your accountant, employment lawyer, or trusted advisor make sure that there are no Workers’ Compensation carrier lapses or other overlooked items in 2018. This will result in tremendous savings, and it might result in your being spared the hefty penalties from the government, when these items lapse or are not properly in place.

4. Investigate, Address, And Resolve 2018 Employee Concerns:

I always counsel my clients to immediately address any concerns raised by employees. Alleged discrimination, harassment or retaliation in the workplace requires complex investigation and remedying of wrongdoings. Make sure to address the issue and document the steps taken. If any of your company’s employees raised concerns about unlawful discrimination, I would recommend promptly beginning and heavily documenting a full investigation.  The investigation should be geared towards ending any discrimination that may have occurred, or confirming the lack of any discriminatory acts.

Employers faced with an internal complaint of discrimination, are legally required to take specific steps to resolve the situation under various federal, state and City anti-discrimination law. Those laws include steps such as:

  1. Speaking with the employee who voices concerns of discrimination.
  2. Interviewing potential witnesses to events.
  3. Identifying any possible perpetrators of harassment.
  4. Rectifying discriminatory pay inequities.

Does your company have any unresolved complaints of discrimination from this past year? Take the step to investigate such matters. Hiring an experienced employment law attorney  to address these issues is the safest and wisest route to go.

5. Have Your Business’ Shareholder Agreement Reviewed:

In order for a company to address human resource issues with employees, you must be clear internally that the relationship between the shareholders of the corporation is on solid footing. Many companies that include partners or investors have a shareholder’s agreement. The shareholder’s agreement is a binding contract between the shareholders [or owners] of a company. It defines the shareholders’ rights, privileges, protections, and obligations . For instance, it will state how to proceed when a partner wants to sell their share of the business.

Does your company’s current shareholder agreement accurately reflect the value of your business? At what fee will your company be valued, if you must sell it for some reason? Have you had your business appraised? What if your partner who owns substantial shares becomes ill, disabled, or dies? Does your business’ present-day shareholder agreement address these concerns? If not, ask an attorney to review and revise your shareholder agreement. It may make a world of difference to your business, if anything happens involving a majority shareholder in 2019.

Or maybe your New Year’s resolution is to draft a shareholder’s agreement? Don’t be intimidated. It is quite common for new or small companies to let the shareholder’s agreement fall through the cracks. Now is the time to change that.

How a $13,000 Fine Got Me to Take My Employee Files Seriously

To Summarize:

The New Year is a time for revitalization. We assess which habits and actions lead us to growth, health, and happiness. And we look at which behaviors and patterns are holding us back from achieving our full potential. For a small business owner, the New Year can be an equally ideal time for improving your company’s legal compliance, protection, and smooth functioning.  Take small, steady actions. The Five New Year’s Resolutions For Your Business may provide you with some valuable touchstones to professional progress.

Happy New Year to everyone. May we all prosper!


Eric M. Sarver, Esq.
Law Offices of Eric M. Sarver

Eric M. Sarver, Esq.
Principal Attorney at the Law Offices of Eric M. Sarver

Eric Sarver is an attorney practicing law for twenty years – and is the Principal Attorney at The Law Offices of Eric M. Sarver. Mr. Sarver’s practice areas include: labor & employment law – including defense from employment law suits and New York State Department of Labor Investigations – and business law – such as drafting contracts, setting up LLC’s and corporations, and counseling small and mid-sized businesses on business law issues and transactions. He is admitted to practice law in the State of New York and in the federal courts, in the Eastern and Southern Districts of New York.

For questions involving a specific contract, an employment law-related matter, or other legal issue that your business may encounter, feel free to contact Eric M. Sarver, Esq. / Law Offices of Eric M. Sarver / Tel: 917-930-8684 / E-mail:; Web: / *LinkedIn:

Disclaimer: The information contained in this Article is provided for informational purposes only, and should not be construed as creating an attorney-client relationship, nor as legal advice on any specific matter that a person or business entity may be dealing with. Recipients of content from this article and / or website — clients or otherwise — should neither act nor refrain from acting, based on any content included in the article or on this site, without first seeking the appropriate legal or other professional advice from an attorney licensed in the recipient’s state, with respect to their particular facts, claims or circumstances at issue. The Law Firm (The Law Offices of Eric M. Sarver) and the author of this article (Eric M. Sarver, Esq.) each expressly disclaim all liability, in respect to actions taken or not taken, based on any or all the contents of this article and / or website.

Looking for other ways to protect your business? Check out this article on trademark law.

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