Being part of a family business is part of the American dream for many families. It represents an opportunity to work with loved ones toward a common goal of making it as a family and supporting each other. Unfortunately, in some situations, there is a fine line between supporting your family and being exploited. If you are working for your family and feel that something is not right, it is important to understand that you have legal rights.
What is the Family Relationship?
The Federal Fair Labor Standards Act (FLSA) and the Department of Labor establish that employers who are entirely staffed with certain family members are exempt from wage and overtime laws. Those family members include the owner's parents, spouses, children, siblings, grandparents, grandchildren, and in-laws. The only real exclusion is "distant relatives from separate households." This means under federal laws, if you work for your brother's family business, who only employs family members, are unprotected by federal wage laws. However, If your brother happens to employ non-family members, then your brother is required to comply with wage and overtime laws.
In contrast, the California labor code 226(2)(D) does not require that an employer only employs family members for the wage and overtime exemption to apply. However, the exemption is limited to the employer's "parent, spouse, child, or legally adopted child of the employer provided in any applicable order of the Industrial Welfare Commission." Family members are therefore a more limited group of people under California law than under federal laws. This is significant as siblings, grandparents, grandchildren, and in-laws are therefore protected by California wage orders. So if you work for your grandfather's business, you are entitled to wage protections.
What Kind of Business?
Significantly, corporations and limited liability companies (LLC's) are required to comply with wage laws without exception to family membership. This is because corporations and LLC's are treated as people, but do not have family members.
Worker's Compensation Insurance Required
The California Labor Code requires that all employers maintain worker's compensation insurance for their employees. This includes for employees who happen to be family members. This is because it makes no sense to allow an employer to shirk their responsibility to any employee who is injured or develops a condition in relation to their employment.
Work Permit Required for Minor
Regardless of the business structure, if a family employs their minor child (below the age of 18), the employer is mandated to obtain a work permit from the child's school to allow the minor to work. The employer must submit a Department of Education form to the school and the school can decide whether to issue the permit. These permits expire at the beginning of each school year and must be renewed.
Protect Your Legal Rights
Complaining when you work for a family business can be a tricky and delicate prospect. After all, it is difficult to separate family from business in this situation. However, even if you work for a family business, you still have certain legal rights. The attorneys at Moss Bollinger have spent years standing up to employers and may be able to help you. If you believe that your rights are being violated, we understand that you are in a difficult position and can approach your employer in a firm, respectful manner. Call Moss Bollinger at 800-249-1175 to schedule an appointment or contact us online.