If you're starting a business, make sure you develop a comprehensive labor and employment compliance plan. Why spend the time and expense? Because a misstep, be it in hiring, firing or other employment issues, could cost millions of dollars if you're sued by a current or former employee.

Your plan should include:

1. A current employee handbook that spells out procedures and policies.
2. A detailed anti-harassment policy that is distributed to employees and complies with state and federal laws.
3. A method to solicit employee feedback, including any type of harassment complaint.
4. A method of evaluating employee job performance at regular intervals, such as every six months or annually.

Action Steps
The best contacts and resources to help you get it done

Make yourself an expert – or run expert software

You never know when an employment issue will come up. Be prepared.

I recommend: The federal Department of Labor's Employment Law Guide for small business takes you from soup to nuts, including health benefits, wage garnishment, retirement standards and union issues. The Cornell Law School gives a useful overview of labor law. Or run CompliancePro software on your PC; it generates forms for tracking every sort of employment issue, while giving expert advice along the way on how to act within the law.

Conduct background checks without violating rights

It makes sense to conduct a background check of a potential employee. You don't want the risks or the liability that come from making a bad hire. But you also don't want to violate a prospective employee's privacy rights by doing it the wrong way.

I recommend: Privacy Rights Clearing House tells you what's on and off-limits in running a check. Wackenhut will run the check for you.

Don't discriminate

Make sure you and your managers do not discriminate on the basis of age, race, pregnancy, religion, national origin or disabilities by keeping up with the latest federal and local regulations.

I recommend: See the Equal Employment Opportunity Commission site for fact sheets spelling out what are discriminatory practices.

Comply with wage and hour regulations

Learn what the minimum wage laws are in your state.

I recommend: The U.S. Department of Labor is the gateway to all the state wage regulations.

Meet the immigration laws

Immigration laws require companies to verify a person's eligibility for employment. To do so, you need an Employment Authorization Document (EAD) form, also known as an I-9 check.

I recommend: U.S. Citizenship and Immigration Services lays out the rules on I-9.

Post state and federal labor laws

Each workplace should have a poster with the latest federal and state labor laws.

I recommend: You can order both state and federal posters at the Labor Law Center or the Federal Wage and Labor Law Institute.

Consult your state's labor office

Every state has a labor office that can be a source of information about labor and employee law.

I recommend: Click on this federal Department of Labor site to get details on your state's labor office.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Do not publicly embarrass an employee, even if he or she has made a mistake.
• •  Avoid giving out negative references for former employees. Tell a reference checker that your company only allows you to verify a former worker's dates of employment.
• •  Keep problem-employees issues private. Discuss them only with managers or supervisors who need to be kept in the loop.
• •  Treat all employees equally.