Legal Compliance Based on Your Company Size: What You Need to Know

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Every business owner has one primary goal: growth. But, growth comes with tricky consequences. More than half of senior executives at mid-market companies consider risk and compliance as their two most significant barriers. The larger your business grows, the more legal compliance issues you face.

As you add new employees and expand into new markets, you start to attract more regulatory bodies. Unfortunately, many businesses are unprepared. Let's look at how legal compliance varies by company size, and why growth can put you at a regulatory disadvantage without the right help.

Legal compliance for small businesses with 1-10 employees

These are requirements that every small business must meet. Whether you have one employee or 5,000 employees, these regulatory requirements apply to all organizations.

  • Immigration Reform & Control Act (IRCA) — The IRCA requires you to only hire employees who can legally work in the United States, which is verified by current and up-to-date I-9 forms.
  • Fair Labor Standards Act (FLSA) — The FLSA sets standards for pay, child labor, overtime, breaks, and other wage or labor-related items. Adherence to FLSA includes both following specific wage guidelines and record keeping for wages and hours as specified by the DOL.
  • Employment Retirement Income Security Act (ERISA) — ERISA sets minimum standards for voluntary retirement/health plans. From providing the correct information on features and funding to setting minimum standards and providing fiduciary responsibility, ERISA has many unique requirements. In addition, this act sets forth the pathway to litigation for employees.
  • Federal Income Tax Withholding — Businesses of every size must comply with tax withholding standards. A percentage of each employee's paycheck must go towards specific tax requirements, and it's your responsibility to meet these standards.
  • Federal Insurance Contribution Act (FICA) — In addition to Federal Income Tax Withholding, FICA requires employers to set aside funds (currently 1.45% and 6.2% respectively) for Medicare and Social Security.
  • Equal Pay Act (EPA) — EPA (SEC. 206) requires you to pay the same wages to male and female employees that are in the same position and possess the same skills. This can get complicated, so it's best to have a trusted HR professional to help you navigate the nuances of this act.
  • National Labor Relations Act (NLRA) —The NRLA prevents you from disciplining employees for forming unions and sets some unique union requirements. This act is crucial. Unions can quickly become major cost burdens for employers, and understanding the intricacies of this act can protect your business.
  • Uniformed Services Employment & Reemployment Rights Act (USERRA) — USERRA requires you to make specific accommodations for active military personnel as well as provide specific accommodations for veterans.
  • Uniform Guidelines for Employment Selection Procedures — This is an anti-discrimination act that prevents you from discriminating based on race, sex, religion, color, or origin.
  • Employee Polygraph Protection Act (EPPA) — With a few rare exceptions, you can't use lie detector tests during the screening process for candidates.
  • Health Insurance Portability and Accountability Act (HIPAA) — Unless you run a healthcare business (in which case this gets incredibly complicated), HIPAA makes sure that you can't get healthcare information on your employees.
  • Sarbanes-Oxley Act (SOX) — SOX sets requirements for fraud prevention and corporate responsibility.
  • Consumer Credit Protection Act (CCPA) — This deals with how you handle and dispose of employee credit information.
  • Fair and Accurate Credit Transactions Act (FACT) — FACT sets employee wage garnishment requirements for employers.
  • Occupational Safety and Health Act (OSHA) — This is a biggie. OSHA is a long-standing, heavily-regulated act that sets safety standards. There are far too many standards packed in this act to cover succinctly. You should reach out to your HR partner for help with OSHA.

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Legal compliance for small businesses with 11-14 employees

In addition to the acts covered above, there is one new requirement for employees with more than 10 yet fewer than 15 employees.

Legal and safety compliance for businesses with 15-19 employees

Once you hit 15 employees, you're required to follow additional compliance requirements.

  • Civil Rights Act — Again, this is another complicated, nuanced, and large piece of legislation that contains amendments added in 1991 and the Lilly Ledbetter Fair Pay Act. In a nutshell, you can't have any sexual discrimination in the workplace. But, of course, it's more nuanced and specific than this, and there are unique requirements (both in terms of paperwork and action) that you must take to comply with this act. The Civil Rights Act is one of the most heavily enforced pieces of legislation in the business space.
  • Americans With Disabilities Act (ADA) — From accommodation requirements to nondiscrimination and paperwork, ADA sets forth standards that employers must follow to provide equal opportunity to individuals with disabilities in the workplace.
  • Pregnancy Discrimination Act — This one is relatively simple: You can't discriminate based on pregnancy status.
  • Genetic Information Nondiscrimination Act (GINA) — This is an interesting one. You can't discriminate based on genetic information. This is a newer standard that arose due to the prevalence of DNA and genetic testing.

Legal compliance for small businesses with 20-49 employees

At 20 employees, you must follow both ADEA and COBRA.

  • Age Discrimination in Employment Act (ADEA) — You cannot discriminate based on age. This can be a hard standard to prove, so it's important you discuss the specifics with your HR partner.
  • Consolidated Omnibus Budget Reconciliation Act (COBRA) — COBRA gets tricky. This act requires you to continue health insurance for 18-36 months after employee termination. However, there are exceptions, and the way that premiums are paid varies by the situation. Consult with your HR partner to learn what compliance with this looks like for your business.

Legal compliance for businesses with 50-99 employees

In some industries, the low end of this benchmark means yours is no longer a small business. However, that can vary based on several different factors. At this point, you're required to follow almost all regulatory requirements outside of WARN and EEO-1.

  • Family and Medical Leave Act (FMLA) — You must offer up to 12 weeks of unpaid but protected job security for childbirth, adoption, family illness, and foster placement.
  • Affordable Care Act (ACA) — When you hit 50 employees, you are required to offer affordable health insurance options. Again, there are variables, and you should consult your HR partner.
  • Affirmative Action Program (AAP) — You must establish specific programs meant to train and hire women, disabled individuals, and minorities.

Legal compliance rules for businesses with 100+ employees

At 100 employees, you'll deal with WARN and EEO-1 requirements, in addition to others listed previously.

Employers with federal contracts, any size

In addition to the regulatory requirements listed above, federal contractors must comply with unique labor standards. In addition, federal contractors may have to deal with some of the legislation above regardless of their size (or via different sizing standards). Some federal contract compliance requirements include the Davis-Bacon Act, SCA, the Walsh-Healy Act, the Copeland Act, and Executive Order 11246 among others.

You Need Help Maintaining Legal Compliance

Whether you have 1 employee or 100, your business has compliance needs. As your business grows, those needs multiply. Here's the scary part: fines and rulings on these regulatory requirements can cost you hundreds of thousands of dollars and jail time. Between focusing on marketing and sales, dealing with HR duties, and growing your brand, putting time aside to ensure that you adhere to your compliance needs can be headache-inducing.

Outsourced HR partners like PEOs can help you manage your compliance needs across all of these regulatory bodies. Not only will PEOs handle payroll, workers' compensation, and benefits, but they keep you compliant so you can focus on what really matters — growing your business. To learn more about how PEOs can help with compliance, visit our blog.

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