Employer compliance must-do’s for every small business

By: Carla Savchuk

For a small business owner, employer compliance is just one of many things on a very long to-do list. However, compliance is no simple matter—keeping up with the latest federal and state business laws is much easier said than done. From COBRA and HIPAA to the ACA, it can be hard to navigate through the alphabet soup to ensure employer compliance with regulations.

Employer compliance continues to be a pain point for organizations of all sizes. It’s not only time-consuming to stay on top of ever-evolving regulations, but also costly. One study revealed that, on average, it costs a company between $40,000 and $100,000 to prepare for labor-related regulatory change.

What is employer compliance?

So what exactly is employer compliance and why should it be an area of focus for businesses big and small? Employer compliance means following the laws and regulations that are required to govern business. The laws vary depending on the company size, industry, business location, and the structure of the organization.

While some of the compliance laws do differ for small businesses, many regulations are applicable regardless of a company’s size. Below are some of the major federal regulations that must be complied with, broken down by business size.

For businesses with one or more employees:

• Fair Labor Standards Act (FLSA) covers minimum wage, overtime, meal breaks, and child labor laws.
• Health Insurance Portability and Accountability Act (HIPAA) mandates that employers cannot receive employee information from health care providers. (Check out this employer HIPAA compliance checklist to ensure compliance.)
• Occupational Safety and Health Act (OSHA) says employers must provide safe employment conditions.
• Immigration Reform & Control Act (IRCA) says employers may only hire those who can legally work in the U.S. and must maintain up-to-date I-9 forms.
• Equal Pay Act (EPA) ensures employers must pay the same wage for female and male employees.
• Uniform Guidelines for Employment Selection Procedures says employers may not discriminate on the basis of race, color, religion, sex, or national origin.
• Consumer Credit Protection ACT (CCPA) says employers must follow employee wage and garnishment requirements.

For businesses with 20 or more employees:

• Americans with Disabilities Act (ADA) says employers may not discriminate against people with disabilities.
• Age Discrimination in Employment Act (ADEA) says employers may not discriminate against potential hires age 40 and over.
• Consolidated Omnibus Budget Reconciliation Act (COBRA) mandates that employers must offer covered employees and their families the option to continue health insurance coverage that might otherwise be terminated due to separation of employment.

For businesses with 50 or more employees:

• Affordable Care Act (ACA) says employers with 50 or more “full-time equivalent” employees must offer affordable health insurance options and keep records for reporting.
• Family and Medical Leave ACT (FMLA) mandates that employers must offer up to 12 weeks of unpaid, job-protected leave to eligible employees, following the birth of a child or a serious family illness.
• Affirmative Action Program (AAP) says certain employers must create programs to recruit and train minorities, women, disabled persons, and veterans.

While these are some of the major federal regulations, there are still additional federal laws, as well as state and industry-specific regulations. (Here is a full list of the major federal employment laws.) Despite the complex nature of employer compliance, a small business (defined by the Small Business Administration as 250 employees or less) can stay on top of changing compliance laws by following a few guidelines.

How can a small business ensure compliance?

While compliance is challenging for every business, it can be especially difficult for small businesses with limited resources. If you’re struggling with employer compliance at your organization, a few must-do’s will help you meet the requirements.

1. Learn the federal and state laws. There are not only federally mandated employer compliance laws, but also state- and industry-specific requirements. To avoid hefty fines and other negative consequences, it’s essential that you learn all the employer compliance laws, as well as how they apply to your organization.
2. Perform an employer compliance audit. After learning the federal and state laws, you should perform an employer compliance review to determine whether or not you’re currently compliant with all federal and state regulations. This will help give you an idea of any changes you may need to make to ensure compliance.
3. Stay up-to-date on compliance changes. Getting an initial education in employer compliance isn’t enough. Because regulations are constantly evolving, it’s imperative you stay up-to-date on state, federal, and industry-specific laws.
4. Utilize technology to simplify the process. Technology can simplify the complex process of ensuring employer compliance. By investing in an HR software solution, you can reduce your risk and ensure your business is compliant with all applicable laws.

Employer compliance is challenging for small businesses, but with the right tools and processes in place, it’s not impossible! At Genesis HR, we can help demystify employer compliance and ensure you’re in front of all relevant regulations. Contact us today for a free consultation to learn more.