A magic number in HR Compliance that every startup and growing small business should pay attention to.

We have all heard the phrase “growing pains” when it comes to business expansion.  This can pertain to the need to raise more working capital, add more office space, or acquire additional employees.  However, there is another area that is easily overlooked when it comes to expansion planning and that is human resource compliance.

In the world of human resource compliance “50” is a magic number.  Many federal, state and local employment laws hinge on businesses having 50 or more employees.  At the federal level, a number of major statutes have provisions regarding size including, the Affordable Care Act (ACA); Family Medical Leave Act (FMLA); Affirmative Action Plan; EEO-1 reporting; and Form 5500 compliance


There are often a number of conditions or factors that go into determining how that number is derived.  For example, under the ACA, if a company employs at least 50 full-time employees or a combination of full-time and part-time employees that equals at least 50 (for example, 40 full-time employees employed 30 or more hours per week on average plus 20 half-time employees employed 15 hours per week on average is equivalent to 50 full-time employees), it would be subject to the ACA.  Employers need to determine each year, based on their current number of employees, whether they will be considered a large employer for the next year. The number of employees is averaged across the months in the year to see whether they meet the large employer threshold. The averaging can account for fluctuations that employers may experience in their workforce across the year.  In addition, for purposes of determining whether the 50 full-time employee threshold is met, employers need not count individuals for any month in which they already receive medical coverage through Tricare or the Veterans Administration.


Under the FMLA, any private sector company that employs 50 or more employees in 20 or more workweeks in the current or preceding calendar year and who is engaged in commerce or in any industry or activity affecting commerce—including joint employers and successors of covered employers, would be subject to FMLA requirements.  An eligible employee would have to have worked for a covered employer for at least 1,250 hours over the previous 12 months and worked at a location where at least 50 employees are employed by the company within a 75 mile radius.


Many state laws also utilize the “50 or more employees” requirement.  For example, California has a requirement for employers to provide supervisory employees with sexual harassment training and education.  Another California statute requires employers to give eligible employees up to 12-weeks leave during a 12-month period under certain circumstances.


Of course, not all statutes have the same minimums and many apply even when there are fewer employees.  The main point is that employers need to factor in HR compliance issues when planning growth.  The time and money invested in pro-active compliance planning is far cheaper than defending compliance violations. 



Let Back Office Remedies assists you in reviewing and planning your HR compliance requirements. We offer subscription-based HR compliance consultation as well as All-in-one HR outsourcing solutions. Contact us today for more information.

Written by Paul McFarling - Legal Counsel

Updated on May 8, 2017 11:52