Economic troubles have put the squeeze on small businesses, and some are responding by offering promotions that don't include pay raises. But small-business owners should be careful with the practice, which can be demoralizing for employees and can land owners in legal trouble in certain circumstances, Karen Klein writes. The situation can be especially troublesome "if you're promoting someone with no pay raise and they're moving from an hourly position -- where they are entitled to overtime pay -- to a supervisory or management level where they get an annual salary," she explains.

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