U.S. and State Labor Laws

• Federal labor laws, such as Equal Employment Opportunity, the Employment Law and Assistance for Workers and Small Businesses (ELAWS), and workplace safety and health regulations must be followed. A good place to check for all U.S. labor specifics is the U.S. Department of Labor (DOL) website, which has an easily accessed listing of all labor specifics.
  
  Each state also has specific labor and licensing requirements with which your pawnshop must be in compliance. For example, while most states have usury laws which a pawnshop must follow, some do not. In Florida, pawnshops are exempt from state usury laws.
  
  All states have labor and licensing requirements available online. The Texas Pawnshop Act is a good example of one state's specific set of licensing requirements.
  
  

Labor and Hiring Practices

• Most pawnshops are normally considered small businesses, and as such operate without a union. Small businesses like pawnshops are considered "open shops" --employees do not need union membership as a condition of their employment. An open shop is also known as a "merit shop."
  
  However, there are pawnshops that may not qualify as a small business. Some are even publicly traded companies that operate in more than one state. Cash America Investment is one example.
  
  As a small, open-shop business, you are free to hire anyone you want, with respect to Equal Employment Opportunity guidelines. Be advised however, that under most state licensing guidelines for pawnshops, your employees must undergo a background check in terms of criminal records because your business deals with valuables and money.
  
  

Pawnshops And Firearms

• If your pawnshop deals in firearms, as many do, the background check for your employees will be more stringent by state law. Also even though your shop has a Federal Firearms License (FFL),some states require that no employee younger than 21 shall be allowed to sell firearms.
  
  

Minimum Wage

• The current federal minimum wage, provisions for which are contained in the Fair Labor Standards Act (FLSA), for nonexempt employees is $7.25 an hour (effective July 24, 2009).
  
  Many states also have a minimum wage law, so you will need to check federal and state wage requirements. Where an employee is subject to state and federal minimum wage laws, he will be entitled to the higher of the two wages, whether it is state or federal.
  
  

Licensing, Bonding AndInsurance

• Your pawnshop business must be licensed, bonded and insured. State laws in all 50 states require that you, your pawnshop and your employees must all be licensed by the state. These licensing requirements are available online from the individual states.
  
  Because pawnshops are businesses that handle money and valuables, you must be a bonded service and the bonding agent you use often requires your employees to be bonded as well.
  
  

What is Bonding?

• Bonding is a guarantee of performance that helps protect your clients against losses from theft or damage done by your employees. Since pawnshops deal with property and money, this is important to have. Bonding will help your clients feel more secure about doing business with you and helps ensure your employees do the job that you hired them to do.
  
  

ERISA, COBRA And Your Employees

• You are not required to offer employees a pension program, but if you do, you need to be in compliance with ERISA, which sets minimum standards for a pension plan in private industry.
  
  If you offer your employees health care, you may need to look into COBRA coverage if you terminate their employment. COBRA is set up so terminated workers can continue to cover their health benefits for a specific length of time after termination.