7 Federal HR Laws You Need to Know

Nearly 200 federal laws and regulations govern labor and HR compliance matters, and your state may also have its own restrictions. Violating these laws can lead to severe penalties. You may face consequences that include four and five digit fines, having to pay back pay or compensation, lawsuits, the loss of your business license, and even jail time.

Here are the seven you need to focus on the most, due to their importance and the fact that they are easy to violate.

Affordable Care Act (ACA)

The Affordable Care Act has many provisions, but the one you need to worry about is called "shared responsibility" or the "employer mandate." This applies to "applicable large employers," but the definition of large is not incredibly generous. The law applies once you reach at least 50 full-time employees in a given calendar year, with full-time defined as working at least 30 hours per week or at least 130 hours of service. This also includes full-time equivalent employees (for example, if you have a position occupied by two part-timers, it counts as one full-time employee).

If the mandate covers you, you are required to offer a certain level of minimum coverage to your full-time employees and their dependents, or pay a tax. The coverage has to be affordable and cover at least 60% of expected costs. Again, you don't have to worry about this until you hit 50 full-time employees or equivalent, but when you do it can come as a shock if you aren't prepared for it.

Age Discrimination in Employment Act (ADEA)

The ADEA forbids discrimination against individuals 40 years or older. It forbids you from failing to hire, discharging, segregating, or reducing employees’ wages based on age. Like most anti-discrimination statutes, it requires careful reading. You should not feel pressured to hire or promote an older employee who isn't suitable, but you should do your best to ignore age when deciding between qualified candidates. You run the risk of being sued if it looks like you took age into account, except for certain rare circumstances where age might be a bona fide qualification.

Americans With Disabilities Act (ADA)

The ADA covers wide areas of life, but also has provisions concerning employment. Under the ADA, you can't discriminate against a qualified individual who has a disability, unless the disability makes it impossible for them to perform the job’s specific duties. 

You also have to provide "reasonable accommodation" to allow the disabled person to do their job. This might include a modified work schedule, making the workplace accessible, etc. For example, providing your employee handbook in braille or an audio format to a blind employee would be a reasonable accommodation. This shouldn't be an undue hardship on you (you don't have to go so far it would risk your business). 

You also can't ask a prospective employee if they are disabled, or how they are disabled, only whether they can do the job and whether they need any accommodations. You can't ask them to take a medical exam unless it's standard for the position.

Fair Labor Standards Act (FLSA)

For most employers this is the big one. The FLSA is the law that sets minimum wage and required overtime. It also covers a lot of reporting and record keeping requirements. The biggest problem under the FLSA is often establishing the line between non-exempt employees (who must get overtime pay) and exempt employees (who aren't required to receive it). 

The FLSA technically only applies to companies engaged in interstate commerce. However, in today's connected world it's hard to avoid interstate commerce (such as the second you start selling things over the internet). 

As a note, most states have their own labor laws that are similar, and some have a higher minimum wage, so you need to check state requirements.

Family Medical and Leave Act (FMLA)

The FMLA entitles employees to unpaid leave for illness or certain life events. It covers anyone with 50 or more employees. If an employee takes FMLA leave, you are required to reinstate them to their original position or an equivalent when they return. They are entitled to leave around the birth or adoption of a child, because they are too sick to work, or because they are caring for a sick child, spouse, or parent. You are not obligated to provide paid leave, only unpaid. However, you can't take retaliatory action of any kind. FMLA is limited to 12 weeks in a given 12-month period.

Occupational Safety and Health Act (OSH Act)

The OSH Act requires that you provide a place of employment free from recognized hazards and provide appropriate safety equipment. You have to record any work-related injuries and illnesses that result in medical treatment, death, loss of consciousness, or time off. Each employer has to check the standards for the type of workplace (including offices) they operate.

Title VII of the Civil Rights Act

Title VII of the Civil Rights Act prohibits discrimination based on race, color, religion, national origin, or sex and makes it illegal to retaliate against employees who complain. It also requires that you provide reasonable accommodations for an employee's religious practices. For example, Title VII would require that you avoid scheduling a Jewish employee on the Sabbath unless doing so would represent an undue hardship.

While not in the original wording, the Supreme Court has held that Title VII also covers sexual orientation and gender identity.

The Challenge of Staying Compliant

Keeping track of all of these federal requirements can be hard for small and medium-sized businesses. Even a violation that happens when you accidentally break employment laws can lead to significant consequences such as fines, lawsuits, and even jail time. To find out more about the mistakes you are likely making and how to improve your compliance efforts, download our ebook, 7 Mistakes You Are Probably Making When It Comes to HR Compliance today.