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What Happens When You Add to Your Staff?
April 1, 2010

As we emerge from the Great Recession and companies start to staff up, they may cross some important thresholds that can impact their legal responsibilities. Here are some federal laws to note as you grow:

2 employees

The Fair Labor Standards Act (FLSA) imposes minimum wage and overtime law requirements to companies with at least two employees.

The Equal Pay Act (EPA) says that equal wages must be paid to males and females performing substantially equal services in a company with at least two employees.

10 employees

The Occupational Safety and Health Act, which is administered by the Occupational Safety and Health Administration (OSHA), requires businesses of all sizes to comply with safety and health standards. However, "small employers" (10 or fewer employees) are exempt from reporting requirements on workplace accidents and illnesses.

Penalties can be imposed for violations of OSHA rules. The penalties depend in part on the number of employees:

  • 60% penalty reduction may be applied for 25 employees or fewer;
  • 40% penalty reduction for 26-100 employees; and
  • 20% penalty reduction for 101-250 employees.

15 employees

Title VII of the Civil Rights Act of 1964 prohibits employment discrimination on the basis of race, color, religion, sex, or national origin. While no one should engage in discriminatory practices, private-sector employers are subject to the law and their sanctions if they have at least 15 employees.

Under the Americans with Disabilities Act (ADA), businesses are prohibited from discriminating against individuals on the basis of having a disability and must make reasonable accommodations for the disability in the workplace. Companies with at least 15 employees are subject to this law.

20 employees

Employers with at least 20 employees are subject to the Age Discrimination in Employment Act (ADEA). This means companies can't discriminate against an employee or job applicant who is at least 40 years old.

COBRA, which requires continuation of health coverage for workers who leave a company that has health benefits, applies if there are 20 or more employees in the prior year. For details on employer responsibilities with respect to the federal subsidy for involuntarily terminated workers, see my blog.

50 employees

The Family and Medical Leave Act (FMLA) requires companies to give employees up to 12 weeks of unpaid leave for the birth or adoption and care of a newborn, for the care of a family member with a serious health condition, or for the employee's own serious medical condition. The law applies to companies with at least 50 employees.

The Patient Protection and Affordable Care Act requires companies with at least 50 full-time employees to offer affordable health coverage starting in 2014 or pay a penalty of up to $2,000 per employee.

UPDATED May 1, 2014: The employer mandate has been postponed until 2015 (2016 for companies with 50 to 99 employees). Depending upon the situation, the penalty can be $2,000 or $3,000 per employee.


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