Compliance issues as you near the 50-person mark, other growth stages

A lot of laws and regulations come into play when your employee count hits 50, which in turn means more reports and compliance risks.

“Most companies that are around that size are thinking about growing their business and hiring new people. They are not thinking, ‘Oh, when I hire my 50th person, I have to comply with all these other federal and state regulations,’” says Colleen Bement, vice president of Business Development at PayBridge.

Smart Business spoke with Bement about how to be prepared for the compliance that your growth may trigger — whether it’s 50 employees or another threshold.

What’s the first step to preparing?

First, the organization needs to take time to learn what will happen when it hits a mark. A company that has fewer than 100 people usually doesn’t have a compliance department or someone internally dedicated to that role. That’s why it’s critical for small and midsize employers to identify a trusted payroll provider, employment law attorney, HR consultant and/or benefits administrator to guide their company through the steps for complying with all applicable regulations.

What are examples of where 50 employees triggers additional compliance?

With the Affordable Care Act (ACA), once employers hit 50 employees, they are required to either offer health insurance that is affordable or pay a penalty.

Additional end-of-the-year reporting also is required, such as providing employees with statements that show whether or not they were offered health care coverage, how much that coverage costs the employee and whether that employee enrolled in it. This information is reported to the IRS as well.

Remember that no matter what happens in the future, employers must still follow the ACA for their 2016 taxes.

Another example is the Family Medical Leave Act, where at 50 employees, employers are required to provide any employee up to 12 weeks of unpaid job-protected leave each year.

The other piece that is triggered at 50 is Form 5500, which must be completed for benefit plans subject to the Employee Retirement Income Security Act of 1974, or ERISA — typically medical, dental or retirement plans. The short form is required for those with 50 to 100 employees and a longer one is required for larger companies.

State laws also may kick in at 50 employees and every state will be different. For the most part, California is the one that requires more — sexual harassment training and education, for example.

What other stages of growth can create compliance issues?

Another stage that triggers compliance is 100 employees, such as having to notify employees at least 60 calendar days in advance of workplace closing and mass layoffs. But there are also triggers for smaller employers, once they are over:

  • 10, they must maintain records in compliance with the Occupational Safety and Health Act.
  • 15, they’re subject to Americans with Disabilities Act, Genetic Information Nondiscrimination Act and Title VII, Civil Rights Act of 1964.
  • 20, they must follow the Age Discrimination in Employment Act and comply with the Consolidated Omnibus Budget Reconciliation Act or COBRA.

How can this be further complicated with federal/government contracts?

These employers have to comply with more, such as having an affirmative action plan, filling out other equal opportunity employer reports, having a drug-free workplace, and following work hour and safety standards. It all depends on how many employees and the amount of government contracts the company gets annually.

How often do employers need to do updates to ensure they’re compliant?

With the exception of those with government contracts, business leaders should consult their advisers at least once a year on what new requirements they must follow, based on their growth or new regulations that were handed down.

They should be proactive with their compliance risks and communicating with their advisers, that way there’s time to put everything in place before the company reaches a compliance threshold.

Insights HR Solutions/Payroll is brought to you by PayBridge