Adding employees to your business is an achievement. It means your business is growing, you can serve more customers, and you can earn more revenue.
There are legal requirements for employers, even if you only hire one employee. Not following your employer obligations can result in penalties, criminal charges, and business closure.
The employment laws for small businesses can be difficult to understand and implement. There are dozens of laws, and each has its own requirements to remember. To make it simple, here’s a breakdown of the federal labor laws by number of employees.
Laws to follow if you have at least one employee
Here is a list of employment laws that you must follow if you have one or more employees.
Equal Pay Act
The Equal Pay Act requires you to give equal pay to men and women for equal work. To determine equal work, both employees must do jobs in the same establishment, and their jobs must require substantially equal skills, effort, responsibility, and working conditions.
Lilly Ledbetter Fair Pay Act
You are not allowed to use discriminatory employment practices that affect your employees’ wages. If you ever do start using a discriminatory practice that affects wages, the affected employees can receive back pay for the wages they lost.
Fair Labor Standards Act
The FLSA sets many employment laws. The act requires you to pay employees at least a minimum wage, grants overtime wages to employees who work overtime hours, restricts the jobs children can do, and determines what employee records you need to keep on file.
Uniform Guidelines on Employee Selection Procedures
The Uniform Guidelines say you cannot make your employment decisions based on a person’s race, color, religion, sex, or national origin. The guidelines apply to all employment decisions, including hiring, promotions, and terminations.
Immigration Reform and Control Act
The Immigration Reform and Control Act requires you to determine the work eligibility of all employees by using Form I-9. You cannot knowingly hire an illegal immigrant. Also, you cannot make hiring decisions based on a person’s national origin, citizenship, or immigration status.
Uniformed Services Employment and Reemployment Rights Act
The USERRA military leave policy prohibits you from making discriminatory employment decisions against people who were or are in the military, or employees who apply for military service. If an employee leaves for military service, they likely have a right to their job when they return from service.
National Labor Relations Act
The National Labor Relations Act allows employees to organize, bargain with you, and create a union if there isn’t one already. Employees are protected from employer and union misconduct.
Employee Polygraph Protection Act
In most cases, you cannot use a lie detector test on candidates during pre-employment screening, nor on employees during employment. There are a few rare exceptions of when you can use a lie detector test.
Consumer Credit Protection Act
Because of the Consumer Credit Protection Act, you cannot fire an employee because there is a garnishment against their wages. You must garnish the wages. Also, the act limits how much you can withhold from wages for the garnishment.
Fair Credit Reporting Act
The Fair Credit Reporting Act lets you look at an employee’s or potential employee’s consumer report under certain conditions. You must give the person a disclosure saying that you might obtain their consumer report. And, you must receive written authorization from the person.
Fair and Accurate Credit Transactions Act
This act adds to the Fair Credit Reporting Act. You can view an employee’s consumer report if the employee is under investigation. You do not need to give a disclosure nor do you have to receive authorization from the employee. You do not need to give any information to the employee until you take action based on the report.
Health Insurance Portability and Accountability Act
You must follow HIPAA if you offer health benefits as part of your small business employee benefits package. The act sets limits on exclusions and discrimination, creates special enrollment abilities, and protects employee privacy.
Occupational Safety and Health Act
Your business needs to be a safe place for employees to work. The Occupational Safety and Health Act requires you to have a safe and healthy workplace environment. Also, you must train employees on safety measures.
Employee Retirement Income Security Act
If you offer a retirement plan to your employees, you must follow ERISA. The act sets the minimum standards for small business retirement plans. Because of ERISA, you must manage the retirement plans in an objective and financially fair way.
Federal Insurance Contributions Act
FICA requires you to withhold Social Security and Medicare taxes from employee wages. The taxes fund old-age, survivors, disability, and hospital insurance. You must also pay a matching employer contribution.
You must pay several employment taxes. Some you withhold from employee wages and others you will pay. In addition to Social Security and Medicare taxes, there is federal income tax and federal unemployment tax. You might also need to remit state and local employment taxes.
More federal labor laws by number of employees
Do you have more than one employee? There are other federal employment laws that you might need to follow. To find out what those laws are, download our free guide “The Federal Employment Laws to Follow as Your Staff Grows.” The employment laws list also has additional information about who counts as an employee plus links to useful resources for each law.
This is not intended as legal advice; for more information, please click here.