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Federal & state employment laws – and how an HRIS helps

Legislation compliance evolves with your small business's growth. Key federal and state laws become applicable at specific employee thresholds, impacting areas like family leave, health insurance, and safety. Embrace HRIS technology to navigate these complexities.

Keith MacKenzie
Keith MacKenzie

Passionate about human resources, employment, and business management, and an expert at sharing that expertise.

As a small business owner in the United States, it’s vital to understand that as your business expands, so do your legal responsibilities.

It’s not just about adhering to these laws; it’s about understanding their nuances and preparing for them in advance.

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One of the nuances to be mindful of is the number of employees in your company. It’s one of the key trigger points at which your company is required to be in compliance with certain legislations. Some legislations don’t apply to you when you’re running a team of fewer than 10 employees – but some will take effect as soon as you make that 10th (or 25th or 50th) hire.

These can happen at both the federal and state levels. Let’s look at a few examples.

Please keep in mind: Workable is not a law firm. This article is meant to provide general information and should be used as a reference. It’s not a legal document and doesn’t provide legal advice. Neither the author nor Workable will assume any legal liability that may arise from the use of this article. Always consult your attorney on matters of legal compliance.

Key federal legislation triggers

There are many federal legislations that your company must comply by regardless of size – but let’s look at the main ones that will affect your company once you’ve hit a certain number of employees.

1. Family and Medical Leave Act (FMLA)

Employee Trigger Point: 50 Employees

Once your business reaches 50 employees, the Family and Medical Leave Act (FMLA) mandates unpaid, job-protected leave for certain family and medical reasons.

Under FMLA, eligible employees can take up to 12 weeks of leave for the birth and care of a newborn child, for a family member’s serious health condition, or for their own serious health condition.

Failure to comply with FMLA can result in legal action, including fines and compensatory damages to affected employees.

2. Affordable Care Act (ACA)

Employee Trigger Point: 50 Employees

The Affordable Care Act (ACA) requires employers with 50 or more full-time employees to provide health insurance coverage.

This law aims to ensure that all Americans have access to affordable health insurance. If you don’t provide adequate health insurance under the ACA, you may face penalty fees, calculated per month and per employee.

3. Occupational Safety and Health Act (OSHA) Recordkeeping

Employee Trigger Point: 10 Employees

Small businesses with more than 10 employees fall under the OSHA’s recordkeeping requirements.

This regulation mandates the recording and reporting of work-related injuries and illnesses. Non-compliance can result in OSHA citations and penalties, impacting your business financially and reputationally.

4. Immigration Reform and Control Act (IRCA)

Employee Trigger Point: 4 Employees

The IRCA applies to employers with four or more employees. It prohibits employment discrimination based on citizenship or national origin and requires employers to verify the employment eligibility of their workers.

Violations can lead to significant penalties, including fines for failing to comply with the employment eligibility verification requirements.

5. Employee Retirement Income Security Act (ERISA)

Employee Trigger Point: Any Size (but often affects those with 25 or more employees)

ERISA sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. While applicable to businesses of any size that offer these benefits, it typically becomes relevant for businesses as they grow, often around 25 employees when they start offering such plans.

ERISA requires plan information to be provided to participants, sets minimum standards for participation, vesting, benefit accrual, and funding. The law also holds plan fiduciaries to a standard of conduct and provides for enforcement provisions to ensure plan funds are protected and participants who qualify receive their benefits.

6. Consolidated Omnibus Budget Reconciliation Act (COBRA)

Employee Trigger Point: 20 Employees

COBRA gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods under certain circumstances.

For small businesses with 20 or more employees, offering COBRA continuation coverage to employees who would otherwise lose their health benefits is mandatory. Failure to comply with COBRA requirements can lead to significant penalties, including excise taxes and potential legal action.

7. Title VII of the Civil Rights Act

Employee Trigger Point: 15 Employees

Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin. Small businesses with 15 or more employees are required to adhere to these guidelines.

Non-compliance with Title VII can result in lawsuits, substantial legal fees, and potential damages for unlawful discrimination. This law upholds a workplace free from discrimination and requires employers to take appropriate measures to ensure this standard.

8. Age Discrimination in Employment Act (ADEA)

Employee Trigger Point: 20 Employees

The ADEA protects certain applicants and employees 40 years of age and older from discrimination on the basis of age in hiring, promotion, discharge, compensation, or terms, conditions, or privileges of employment.

Small businesses with 20 or more employees must comply with the ADEA. Violating the ADEA can lead to legal consequences, including financial penalties and damages awarded to affected employees.

This is by no means an exhaustive list – rather, this is a compilation of major examples of legislations that your company will be required to abide by as it grows in size.

State-level legislation examples

A complete list of state-level legislation would multiply the length of this article by a hundred times or more. So let’s just quickly go over five examples from major states that have specific employee number trigger points, some as few as five.

1. California’s Pregnancy Disability Leave (PDL)

Employee Trigger Point: 5 Employees

In California, the PDL mandates unpaid, job-protected leave for businesses with 5 or more employees. Similar to FMLA but with a lower threshold, it allows eligible employees to take a minimum allowable leave in the case of pregnancy.

Non-compliance can lead to legal actions and significant financial penalties.

2. Illinois Human Rights Act (IHRA)

Employee Trigger Point: 15 Employees (1 for sexual harassment)

In Illinois, the IHRA, applicable to businesses with 15 or more employees, prohibits employment discrimination. The act covers sexual harassment claims for businesses with even just one employee.

Violations can result in severe legal consequences, including damages and fines.

3. Massachusetts Paid Family and Medical Leave (PFML)

Employee Trigger Point: 25 Employees

Massachusetts requires employers with 25 or more employees to provide paid family and medical leave.

Failure to comply can result in penalties, including fines and potential legal action.

4. Colorado Healthy Families and Workplaces Act (HFWA)

Employee Trigger Point: 16 Employees

In Colorado, businesses with 16 or more employees must provide paid sick leave.

Non-compliance can result in legal consequences, including fines and penalties.

5. Washington Paid Family and Medical Leave

Employee Trigger Point: 50 Employees

Washington State mandates that employers with 50 or more employees provide paid family and medical leave.

This includes leave for personal or family health issues. Non-compliance can lead to fines, penalties, and potential legal actions against the employer.

HRIS: your path through the compliance maze

An HRIS isn’t just a software; it can become a necessity in today’s complex legal environment especially when the number of employees in your business grows.

If you’re new to this concept, think of an HRIS as a comprehensive system that manages all your HR functions digitally or online. You won’t need a hardcore, expensive system packed with bells and whistles – simply having a system in place that stores and manages your employees’ information can go a long way in terms of compliance with the dizzying array of legislations in the United States.

Here’s how:

  • Automated record-keeping: It ensures accurate and updated employee records, especially vital for FLSA and FMLA compliance, as well as ensuring compliance with rapidly evolving data privacy legislations including CCPA.
  • Benefits administration: More robust HRIS softwares help you manage the complexities of ACA health insurance requirements.
  • Training and development: Offers modules for employee training on compliance-related policies.
  • Time and attendance tracking: Provides precise tracking of hours worked and hours taken off work – particularly useful when managing non-exempt employees in compliance with overtime laws.

Embracing HRIS: a strategic decision

As you navigate the growth of your business, it’s crucial to understand the importance of legal compliance at both federal and state levels. An HRIS is more than just a technological upgrade; it’s a strategic tool that ensures your business remains compliant, efficient, and primed for growth.

Starting the journey with an HRIS may seem daunting, especially if you’re new to it, but the transition is crucial for safeguarding your business’s future. And it doesn’t have to be an expensive option – a quick plug-and-play option may be all you need to start.

Remember, staying ahead in compliance is not just about avoiding penalties; it’s about building a solid foundation for your growing business.

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