It’s important for all business owners to comply with federal law; failing to do so is a sure-fire way to slam the brakes on the development of even the most quickly growing companies. Fortunately for business owners, federal law is written down. Even more fortunately for small business owners, we’ve compiled a list of the most important federal employment laws that are enforced by the Department of Labor. We’ve even added insight specifically tailored to the needs of entrepreneurs.
Wages and hours
Work hour restrictions for children
Business types effected All businesses (government jobs and private firms, both profit and nonprofit).
What does the law say? The Fair Labor Standards Act (FSLA) applies to most types of businesses. It dictates a framework for paying employees. Except for certain exemptions, this law requires businesses to pay their employees at least the federal minimum wage ($7.25/hour) for regular work and “time-and-a-half” for overtime (over 40 hours a week) work.If you’re considering employing anyone under 18, check out the federal child employment guidelines here.
Tipped employees must be paid at least $2.13 an hour in direct wages.
Executive/administrative/professional employees are exempt from minimum wage and overtime pay.
Some seasonal employees are exempt from minimum wage and overtime pay.
Some commissioned employees are exempt from overtime pay.
Other niche industries may have specific exemptions.
Which agencies are involved? Wage and Hour Division To see their official website, click here.
How does this effect small businesses? Businesses must meet certain standards in order for the FLSA guidelines to apply. If your business operates with a sales volume of less than $500,000 a year, you are exempt from these guidelines.
Workplace safety and health
Business types effected All businesses (government jobs and private firms, both profit and nonprofit). Although most companies are required to meet certain safety standards, industries that require employees to work in more risky environments are affected most by these requirements. Construction, maritime, agricultural, and factory manufacturing businesses are a few of the more stringently regulated industries.
What does the law say? The Occupational Health and Safety Act exists to create safe work environments. The legislation ensures certain protections for workers, enforced through training and record keeping requirements. To read the entire Occupational Safety and Health Act (OSH Act), click here.
Governmental agencies at the state and local level
Other industries that are more strictly via other federal agencies
Which agencies are involved? Occupational Safety and Health Administration To see their official website, click here.
How does this effect small businesses? There’s a good chance that your small business may be exempt from some aspects of the OSH Act, especially if you have fewer than ten employees. A consultation with an attorney can help you figure out if you’re exempt from this legislation.
Business types effected All businesses that offer health or retirement benefits will likely be effected.
What does the law say? If your business provides any retirement benefits, the federal government will require you to meet criteria to ensure that those investments are dealt with properly. These benefits are dictated by the Employee Retirement Income Security Act (ERISA) and overseen by the Employee Benefits Security Administration.If your business offers health insurance benefits, you may be obligated to ensure continuation of coverage for your employees in the event that the provided health insurance benefits are terminated. This falls under the Consolidated Omnibus Budget and Reconciliation Act (COBRA) as well as the Health Insurance Portability and Accountability Act (HIPAA).
Businesses that aren’t required by law to provide healthcare or retirement benefits
Which agencies are involved? Wage and Hour Division To see their official website, click here.
How does this effect small businesses? Many small businesses operate without employees or are not required by law to provide health insurance. These businesses most likely would not be covered by the ERISA. One large caveat: if you own and operate a business with a partner that is not your spouse, and your business provides healthcare for both of you, your company would not be exempt from ERISA requirements.
COBRA, ERISA, and HIPPA regulations are very complex; we recommend a consultation with a specialist if your business planing to hire any employees.
Time off for employees
Business types effected All businesses with more than 50 employees.
What does the law say? In the event that one of your employees (or their spouse) adopts or gives birth to a child, or that your employee (or their immediate family) becomes seriously ill, the Family and Medical Leave Act (FMLA) dictates that they must receive 12 weeks of leave. This leave may be unpaid, but the employee must be guaranteed to have a job to come back to at the end of the leave. To read the entire FMLA, click here.
Businesses with fewer than 30 employees
Which agencies are involved? Employee Benefits Security Administration (EBSA) To see their official website, click here.
How does this affect small businesses? Most small businesses have fewer than 50 employees and are exempt from the FMLA.
These same issues are also regulated by the Americans with Disabilities Act (ADA), which applies to businesses with more than 15 employees. The ADA is not enforced by the federal Department of Labor, and so will not be covered in this article.
Many of the federal regulations enforced by the Department of Labor are incredibly industry-specific or only apply to very specific circumstances. We’ve compiled a quick list here:
Workers’ compensation These issues are usually governed by state regulations unless the business is:
Involved in maritime work: Click here to read the Longshore and Harbor Workers' Compensation Act (LHWCA)
An energy company subcontracted by the Department of Energy: Click here to read the Energy Employees Occupational Illness Compensation Program Act (EEOICPA)
A federal agency: Click here to read the Federal Employees' Compensation Act (FECA)
A mining operation Click here to read the Black Lung Benefits Act (BLBA)
Unions You might think only large manufacturing businesses would have any need to familiarize themselves with unions. But an increasing number of small businesses are seeing their employees unionize. The federal government has specific guidelines for a business owner to follow in the cases of unionization. If you hear any talk of unions, it may be wise to read up on legislation such as the Labor-Management Reporting and Disclosure Act (LMRDA) and to contact a specialist. The federal Office of Labor-Management Standards (OLMS) oversees enforcement of this act, and is also an excellent resource. To read the entire LMRDA, click here. To see the official OLMS website, click here.
Veterans All businesses are governed by The Uniformed Services Employment and Reemployment Rights Act (USERRA), which details the rights of veterans against job discrimination. To read the entire USERRA, click here.
Agricultural workers are governed by these federal guidelines, all administered by the Wage and Hour Division (click on each act to access the official government website with more information):
Government funds If your business accepts any government funding, it will be subject to governmental regulations, all administered by the Wage and Hour Division (click on each act to access the official government website with more information:
Government construction contracts are regulated by the Davis-Bacon Act
Service contractors hired by the federal government are covered by the McNamara-O'Hara Service Contract Act.
Companies that provide materials and supplies to the federal government are regulated by the Walsh-Healey Public Contracts Act
Hopefully, this information will help you remain compliant with federal labor laws! Staying compliant is one of the most important things you must do in order to ensure your business is as successful as possible.
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