HR Question:

My organization is growing and we are about to reach 50 employees. I understand that certain laws apply when businesses reach 50 employees. What do I need to consider as I approach this benchmark?

HR Answer:

Congratulations! Reaching a workforce of 50 employees is a terrific milestone; and likely the result of business growth and success! In the employment arena, there are a few laws that apply when businesses reach 50 employees or more:

Family Medical Leave Act

The Family and Medical Leave Act (FMLA) applies to all public agencies, all public and private elementary and secondary schools, and companies with 50 employees or more. FMLA is designed to help employees balance their work and family responsibilities by allowing them to take reasonable unpaid leave for certain family and medical reasons. It also seeks to accommodate the legitimate interests of employers and promote equal employment opportunities for men and women.

An employer is not immediately covered under the FMLA when it reaches 50 employees. Instead, the employer needs to maintain 50 employees or more on the payroll for a period of 20 or more calendar work weeks (not necessarily consecutive work weeks) in either the current or preceding calendar year.

What to do:  If you expect your headcount to remain steady at 50 employees or more, you’ll need to monitor your headcount closely. Once you satisfy the 50 employees over 20 or more calendar work weeks, you’ll need to implement an FMLA policy and begin offering the benefit to your workforce. It is recommended to draft the policy ahead of time and be ready to implement it once it becomes a requirement.   

The Affordable Care Act (ACA)

The Affordable Care Act (sometimes known as ACA, PPACA, or “Obamacare”), is a comprehensive health care reform law enacted in March 2010. The law has 3 primary goals:

• Make affordable health insurance available to more people.
• Expand the Medicaid program to cover all adults with income below 138% of the federal poverty level. (Note: Not all states have expanded their Medicaid programs.)
• Support innovative medical care delivery methods designed to lower the costs of health care generally.

Employers with 50 or more full-time and/or full-time equivalent (FTE) employees must follow the Employer Shared Responsibility Provision. Employers with 50 or more full-time employees and/or FTEs that don’t offer affordable health insurance to qualified employees may be subject to penalties.

What to do:  First, determine if you are an “Applicable Large Employer” (ALE) under the ACA which equates to 50 or more full-time employees and full-time equivalent employees (FT/FTE). The ACA classifies “full-time” employment as 30 hours a week of work or more. So, when you’re calculating your total number of employees, you need to include both full-time employees as well as those who work the equivalent of full-time hours.

Secondly, review your health plans to determine if they meet ACA requirements. Providing access to “affordable” health insurance of “minimum value” is one of the core purposes of the ACA. Review ACA requirements against your current benefit plans and work with your human resources professional or insurance broker to identify what changes (if any) need to be made to reach compliance. 

ACA Reporting:

Once you have 50 or more full-time employees and/or FTE employees, you also have new responsibilities for information reporting.

What to do: The IRS details the pertinent information about your potential reporting requirements. To learn more about ACA reporting, you may find these articles helpful:

• How To Follow ACA Reporting Requirements & Avoid Penalties
• What Are the Latest ACA Reporting Changes and Deadlines?
• What to do if the IRS notifies you of Affordable Care Act (ACA) penalty fees

Federal Contractor Requirements

If you’re an employer who works on federal contracts, there are additional federal requirements once you reach 50 employees or more:

• Affirmative Action Plans (AAPs) outline an organization’s policies and procedures for proactively recruiting, hiring, training, and promoting women, minorities women, minorities, people with disabilities, and veterans to ensure that all individuals have equal opportunities in employment. Employers with 50 employees or more and $50,000 in government contracts must have an Affirmative Action Plan.
• EEO-1 Reporting – The Equal Employment Opportunity Commission (EEOC) requires all federal contractors who have 50 employees or more to fill out and submit the EEO-1 Report. The report requires employers to provide a count of employees by job and then by race, ethnicity, and gender.

State and Local Requirements

An organization could be subject to state and municipality regulations as some local laws have specific requirements for employers with over 50 employees, especially for a variety of leave laws such as parental leave, bone marrow/organ donor, bereavement, and sick leave. Therefore, you’ll want to be sure to understand and follow your state and local requirements.

It can be exciting to work for a growing organization! At the same time when your organization reaches certain milestones such as this, it’s important to pay attention to relevant federal, state, and local laws for businesses with 50+ employees to support your compliance. As in any legal matter, be sure to consult your attorney or legal counsel should you have questions.