As a company grows, a myriad of challenges present themselves — scalability of operations, technology enablement, talent acquisition, and expansion into new markets.
While growth can present exciting new opportunities, your HR department (if you have one) is likely preoccupied with a suite of federal regulations that directly affect your employee base.
Consider the nature of at-will employment, which is the basis for the vast majority of employment relationships in the United States. The at-will doctrine specifies that either the employee or employer can terminate the employment relationship at any time, with or without notice, for any or no reason. However, that’s not the whole story.
Get the full guide on how PEOs work for small businesses.
A Brief Employment Law Breakdown
All of the laws below (with the exception of EEO-1 reporting) constitute what are referred to as “statutory limitations to the at-will doctrine.” They encompass various circumstances in which the motivation for executing a termination or adverse employment decision might be deemed unlawful.
This list is just a sampling of the major pieces of federal legislation that will guide (or restrict) your company’s employment decisions as your employee count grows.
Equal Employment Opportunity under Title VII of the Civil Rights Act of 1964
Eligibility (for private employers): Employer must have 15 or more employees who worked for the employer for at least twenty calendar weeks (in this year or last).
Benefits: When first enacted, the law was designed to protect most U.S. employees from employment discrimination based upon that employee's (or applicant's) race, color, religion, sex, or national origin. Title VII has since been expanded to include protections against discrimination based on other protected classes such as disability, age, and genetic information.
The EEOC (Equal Employment Opportunity Commission), the government agency that oversees these protections, also protects employees from acts of retaliation for alleging or reporting acts of discrimination based on a protected class. Fun fact: more EEOC charges are on the basis of retaliation than any individual protected class. (Race is the next most common.) Employers should be particularly sensitive to adverse employment decisions that could be construed as a retaliatory act.
Eligibility (for private employers): 15 or more employees
Benefits: This law provides similar protections as EEO against discrimination on the basis of an employee’s disability or perceived disability. Employers will be most concerned with the requirement of covered employers to provide a “reasonable accommodation” via an “interactive process” to employees with disabilities.
For example, an employee may have a disability that precludes them from being able to sit for extended periods of time. They would request a reasonable accommodation, and the employer and employee would come to agree on a mutually amenable solution. In this case, the employer providing a standing desk might work out perfectly. This is an easy one, and situations get much trickier than this, but keep in mind that reasonable accommodations shouldn’t cause “undue hardship” to the employer.
Terminating employees with a disability or chronic medical condition can be a very sensitive matter. It’s essential that you are able to justify the termination or adverse employment decision on the basis of performance, position elimination, or some other business reason so that it’s not construed as a discriminatory decision.
Eligibility: Employers with 20 or more employees
Benefits: Requires that if a severance agreement contains a waiver of age discrimination claims, an older worker’s acceptance of the terms be "knowing and voluntary.”
Along with a number of additional notice requirements, the meat of the OWBPA is that workers over 40 years of age be given 21 days to consider a waiver of age discrimination claims in exchange for severance benefits, and have at least 7 days to revoke the agreement after signing.
The older workers who are laid off (but not the younger employees part of the same layoff) must be given the job titles and ages of all other employees who were laid off. This is so that the employees can be better informed when deciding whether to sign the severance agreement and waive their age discrimination claims.
Part of the ADEA (Age Discrimination in Employment Act), the OWBPA also prohibits employers from denying benefits to older employees.
Eligibility: Employer has 50 or more employees in a 75-mi. radius, and the employee must have worked at least 1,250 hours during the 12 months prior to the start of FMLA leave.
Benefits: Allows eligible employee to take up to 12 weeks of job protected, unpaid leave during any 12-month period to attend to:
- The serious health condition of the employee themself
- The serious health condition of a parent, spouse, or child of the employee
- Pregnancy or care of a newborn child, or for adoption or foster care of a child
There are additional provisions which allow for job protected, unpaid leave for family members of a military servicemember.
For a short introduction to the Family and Medical Leave Act, check out this 60-second explainer video by Justworks.
A handful of states and the District of Columbia have laws in place that provide job protected unpaid leave to employees under certain circumstances related to their own medical condition or the serious medical condition of a family member. Very similar to FMLA, these state laws have their own eligibility criteria which vary slightly from that of FMLA. Be sure to consult with a legal advisor as to state and local laws that may affect your employees based on their work location and/or residence.
These state-level laws providing job-protected unpaid leave for care of self or a family member are not to be confused with Statutory Disability or Paid Family Leave laws, which provide wage replacement to employees in select states who go on leave for certain family-related circumstances.
Eligibility: Most employers with 100 or more employees who have worked at least 6 of the last 12 months and work an average of 20 or more hours/week
Benefits: Requires employers to provide 60 days notice to employees who are terminated due to a mass layoff or plant/office closing.
WARN most commonly affects startups when an expansion office fails. You might have 150 employees in New York and open your first satellite location in Chicago with 10 employees. Should the new office close and the Chicago employees be laid off, they would likely be entitled to 60 days notice under WARN.
Who must file: Most private companies with 100 or more employees, and most federal contractors with 50 or more employees
What it is: The EEO-1 Report is a compliance survey required by federal statute and regulations. The survey requires certain companies (based on number of employees and/or federal contractors) to report employment data categorized by race/ethnicity, gender and job category. Federal agencies use the EEO-1 Report data to support civil rights enforcement and to analyze employment patterns, such as the representation of women and minorities within companies, industries, or regions.
If one or more of your employees do not self-identify their gender or race/ethnicity by completing the survey, your company is still required to include such information about each employee in the EEO-1 Report. To do so, you can use existing employment records or other permitted means to do so.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.