As a small or medium-sized business (SMB), staying compliant with labor laws is crucial to avoid legal troubles and ensure your employees are treated fairly. Even if you don’t have a large HR department, understanding and following key employment regulations is essential for smooth operations and protecting your business from penalties. Let’s dive into the key labor laws that every SMB should know.
1. Fair Labor Standards Act (FLSA)
The FLSA is a cornerstone of U.S. labor law and governs important aspects like minimum wage, overtime pay, record-keeping, and child labor. As an SMB, you need to ensure:
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Minimum wage compliance: Federal minimum wage laws apply, but some states have higher minimums.
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Overtime pay: Employees working over 40 hours a week must be compensated at 1.5 times their regular rate unless they’re exempt (e.g., certain salaried employees).
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Accurate record-keeping: You must track employee hours, wages, and overtime carefully.
2. Family and Medical Leave Act (FMLA)
If your business has 50 or more employees, you are required to comply with the FMLA, which provides eligible employees up to 12 weeks of unpaid leave for certain medical and family reasons. Key situations covered include:
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The birth of a child
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Serious health conditions of the employee or a close family member
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Military family leave for certain emergencies
Even if your business has fewer than 50 employees, it’s good practice to establish a leave policy that reflects compassion and flexibility.
3. Americans with Disabilities Act (ADA)
The ADA prohibits discrimination against employees with disabilities and mandates reasonable accommodations in the workplace. As an SMB, this means:
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Making necessary adjustments to the work environment (like modifying workstations or providing assistive technologies) to support employees with disabilities.
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Ensuring your hiring practices are non-discriminatory, focusing on qualifications rather than disabilities.
4. Occupational Safety and Health Act (OSHA)
OSHA ensures that businesses provide a safe and healthy work environment for employees. As an SMB, you need to:
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Identify workplace hazards and implement safety measures.
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Train employees on proper safety procedures.
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Report and document any workplace accidents or injuries. Even if your business operates in a low-risk environment, it’s essential to maintain a safe and compliant workplace.
5. Equal Employment Opportunity (EEO) Laws
Federal EEO laws prohibit discrimination based on race, color, religion, sex (including pregnancy, sexual orientation, and gender identity), national origin, age, disability, or genetic information. Your hiring, promotion, and employment practices must align with these non-discriminatory principles. Some important regulations under this umbrella include:
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Title VII of the Civil Rights Act: Prohibits employment discrimination based on race, color, religion, sex, or national origin.
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Age Discrimination in Employment Act (ADEA): Protects employees and job applicants who are 40 years of age or older.
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Genetic Information Nondiscrimination Act (GINA): Prevents discrimination based on genetic information in health insurance and employment.
6. National Labor Relations Act (NLRA)
The NLRA protects employees’ rights to organize, form unions, and engage in collective bargaining. While union activity may be less common in SMBs, it’s essential to understand that:
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Employees have the right to discuss wages, working conditions, and form organizations without employer retaliation.
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You must avoid policies or practices that may discourage or penalize employees for these activities.
7. Worker Adjustment and Retraining Notification (WARN) Act
If your business is growing and you plan to lay off employees or close a facility, the WARN Act may come into play. Businesses with 100 or more full-time employees must provide a 60-day advance notice of mass layoffs or plant closures. While this law generally applies to larger businesses, as your company grows, it’s important to be mindful of these obligations.
8. State and Local Labor Laws
In addition to federal labor laws, SMBs must comply with state and local regulations, which often provide more employee protections. For example:
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Paid sick leave: Some states and cities mandate that employers offer paid sick leave to employees.
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Family leave: Certain states, like California, offer paid family leave benefits.
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Higher minimum wage: Many states and municipalities set minimum wages above the federal rate.
Always check your state and local laws to ensure compliance, as they may be more stringent than federal laws.
9. Employee Classification: Exempt vs. Non-exempt
One of the most common HR compliance issues for SMBs is properly classifying employees as exempt or non-exempt under the FLSA. Exempt employees are not entitled to overtime pay, while non-exempt employees are. Misclassification can lead to costly penalties, so it’s important to:
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Understand the job duties and salary thresholds that determine whether an employee is exempt.
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Regularly review employee classifications to ensure compliance with the latest regulations.
10. Wage Garnishment Laws
If an employee has a wage garnishment order due to unpaid taxes, child support, or other debts, you are legally required to comply with the order. Familiarize yourself with both federal and state garnishment laws, which specify the amount of wages that can be withheld and other obligations you may have as an employer.
How to Stay Compliant as an SMB
HR compliance can be complex, but there are practical steps SMBs can take to ensure they are meeting their obligations:
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Create an employee handbook that outlines workplace policies and legal rights.
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Invest in HR software or a payroll service to help manage records and stay on top of compliance issues.
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Regularly train employees and managers on workplace laws and policies.
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Seek legal counsel or HR consulting services to review your practices and ensure they align with current labor laws.
HR compliance isn’t just a legal obligation for SMBs; it’s also a way to create a fair, positive, and productive workplace. By understanding and adhering to key labor laws, you can protect your business, avoid costly penalties, and build a strong foundation for growth. Make HR compliance a priority, and your business will be better positioned for success.
By staying informed and proactive, you can turn HR compliance from a challenge into a competitive advantage for your SMB. For more HR info and help, visit www.hrocinc.com.