It’s a great feeling. You’ve grown your business to the point where you have 50 people working for you. But there’s a downside to this growth: complying with a maze of federal (and state) laws. You can do it alone, hire a full-time SHRM-certified HR employee for anywhere between $70,000 and $98,000, or outsource your HR to a company like Asure.
However, the one thing you can NOT do is ignore the laws that now apply to your business.
Important Employment Laws for Businesses With 50+ Employees
When a business reaches the critical milestone of 50 employees, several compliance rules come into play. Let’s explore some of the key regulations and obligations.
Affordable Care Act (ACA)
Under the ACA, businesses with 50 or more full-time equivalent employees are required to offer affordable health insurance coverage to their employees. Under the ACA, an employee is considered full-time if they work 30 hours per week or 130 hours per month.
You likely know how many full-time employees you have. But what about full-time equivalent (FTE) employees?
To calculate your full-time equivalent employees (FTEs), mark down all of your part-time employees for the month. Add up all the hours (up to a maximum of 120 hours per month per part-time employee) and divide the total hours by 120. Those are your FTEs for each month.
Now add your full-time employees and FTEs for all 12 months and determine the monthly average. Companies with a monthly average of 50 are subject to ACA guidelines. ACA compliance involves navigating complex rules regarding coverage eligibility, affordability, reporting, and documentation.
Family and Medical Leave Act (FMLA)
A private-sector employer is subject to FMLA rules if it employs 50 or more employees in 20 or more workweeks in the current or previous calendar year. An employee is considered to be employed each working day of the calendar week if the employee works any part of the week. The workweeks do not have to be consecutive.
You might be surprised to learn that for FMLA purposes, this includes any employee whose name appears on payroll records, whether or not any compensation is received for
the workweek, any employee on leave, and part-time, temporary, and seasonal employees. The Department of Labor gives this example to follow when determining if your business must follow FMLA regulations:
“For example, last year during its busy season from June 1st to October 31st, a restaurant
had more than 50 employees on payroll. In the current year, the same restaurant employs
fewer than 50 employees when an employee requests FMLA leave. Because the restaurant
employed more than 50 employees for more than 20 workweeks in the previous year, the
restaurant is considered to be covered at the time of the request and must offer the FMLA
benefits and protections to its employees, if eligible.”
Under the FMLA, your employees may take unpaid, job-protected leave for specific family and medical reasons. Their group health insurance coverage must stay the same as if the employee had not taken leave.
The FMLA permits your employees 12 workweeks of leave in a 12-month period for:
The birth of a child and to care for the newborn child within one year of birth
The placement with the employee of a child for adoption or foster care and to care for the newly placed child within one year of placement
To care for the employee’s spouse, child, or parent who has a serious health condition
A serious health condition that makes the employee unable to perform essential job functions
Any qualifying need due to the employee’s spouse, son, daughter, or parent being a covered military member on covered active duty
The FMLA also allows for military caregiver leave. This is up to 26 work weeks of leave during a single 12-month period to care for a covered service member with a serious injury or illness if the eligible employee is the service member’s spouse, child, parent, or next of kin.
The EEO-1 Component 1 report is a mandatory annual data collection that requires all federal contractors with 50 or more employees (all employees count, whether part-time or full-time) to submit demographic workforce data, including data by race/ethnicity, gender, and job categories. To file this report, your business will need a process to conduct an employee survey. All employees, both part-time and full-time, must be included in your report. File the EEO-1 report here.
Form 5500 must be completed by any employer who sponsors a plan subject to the Employee Retirement Income Security Act (ERISA). This generally includes medical, dental, 401(k), and retirement plans. If your plan has under 100 employees, you may only need to fill out the short version of the form 5500-SF.
This provides the government with details about your plan’s financial condition and operations to make certain employee contributions and investments are protected. The penalty for failure to file Form 5500 series and Form 5310-A is $250 per day, up to a maximum of $150,000 from the IRS. Learn more about Form 5500 from the IRS.
However, the Department of Labor can also issue a penalty for failing to file. Currently, this penalty is $2,400 per day. There is no maximum limit to the penalty.
Depending on your state, you may face new regulations once you employ 50 people. For example, in New York, your business must adhere to the WARN Act to give early warning of closings and layoffs.
Employers with 50 or more employees and $50,000 in government contracts must have an Affirmative Action Plan.
Tips for Maintaining Compliance For Businesses With 50 or More Employees
Stay Informed and Seek Guidance
Regularly monitor changes in federal and state regulations to ensure compliance. Consider consulting with legal counsel or partnering with the HR experts at Asure, who can provide guidance on compliance obligations.
Establish Policies and Procedures
Develop clear policies and procedures. Communicate these policies effectively to employees and regularly review and update them as necessary. Your Employee Handbook is a great place to include this information.
In our 2023 survey of 2,065 businesses, we found that nearly 40% of companies that didn’t grow last year do not have an Employee Handbook updated in the past 12 months. Contrast this to the fact that 8 in 10 Fast Growing companies DO have an Employee Handbook updated in the past 12 months.
Invest in HR Technology
Implementing HR software or platforms can streamline compliance processes, automate reporting, and help maintain accurate records. These tools can simplify administrative tasks, minimize errors, and improve compliance efficiency. You’ll need precise records to properly comply with the Affordable Care Act and other regulations.
Train Managers and Supervisors
Provide comprehensive compliance training to managers and supervisors. In our 2023 HR survey, we found Fast Growth companies are 22% more likely to train managers about HR laws compared to companies that experienced a Down Year. Download your free copy of our 2023 Small Business HR Benchmark Report here.
Conduct Regular Audits
Regularly audit your policies, procedures, and documentation to identify compliance gaps or potential issues. Address these concerns promptly to avoid fines and federal investigations into your business. This is where an outsourced HR solution can really save your business. Learn more about how Asure can keep you safe for a fraction of the cost of a full-time HR employee here.
Fifty employees is an important threshold for business owners. That’s because at 50 employees, there are additional compliance concerns for employers. At this number of employees, your business needs to educate itself about FMLA requirements, ACA compliance, EEO-1 reporting, Form 5500 reporting, Affirmative Action, and state laws that kick in once you have 50 employees.
Compliance isn’t a one-time event. It’s an ongoing commitment requiring regular reviews and staying on top of ever-changing regulations.