Running a business is a lot like owning and driving a car. You have, obviously, your mechanical elements like your engine, transmission, power steering, etc. This stuff is essential and is the backbone of your business, so things like your employees, any materials or programs you need in order for your business to run, and other things. Of course, a good amount of that is happening under the hood, behind the scenes. This is because your customers are spending a lot more time in the interior of the car. This includes the customer-facing elements of your business, so a well-designed leather interior is like offering good customer service or having a welcoming business space. The only problem is that someone needs to know how to keep the car running. This makes you, the business owner, kind of like the mechanic: you probably know how to perform the basic maintenance, but every once in a while, a problem will come along that will just stump you. Having the ability to know what’s wrong as well as the knowledge to fix it can sometimes be easier said than done.
At Payday HCM, we don’t know too much about cars, but we do know a lot about what it takes to run a business. The clients we serve—whether they be new small businesses just getting off the ground or established franchises with years of experience—are constantly approaching us with questions about a variety of different issues or situations they’ve encountered that they may not know how to solve. We want to ensure that everyone, whether they are our client or not, has the tools they need to get the answers they need. Owning a car isn’t all mechanical maintenance, though: you still need to get the car registered and obey the rules of the road. For a business, this is where labor laws and compliance come in.
So, in this article, we’ll be providing you with a general overview of what you need to know when it comes to compliance. We’ll be going over some of the most important labor laws that are vital to know in order to ensure your business is checking every box it needs to. This includes things like the Fair Labor Standards Act, the Occupational Health and Safety Act, workers’ compensation, and more. We’ll go over the basics of what these laws mean and how you can remain compliant with them, as well as resources for when you need answers to any of your compliance questions.
In this article, we will cover compliance in three key areas:
FLSA: Wages and Hours
First up, the Fair Labor Standards Act. We’ll go over how this 1938 piece of legislation affects working hours and wages, and what you need to know to stay compliant.
Minimum Wage and Overtime Laws
While the FLSA introduced a large swath of different labor laws and regulations, the most impactful and notable ones are the ones relating to minimum wage and overtime. While it’s likely that you have a basic understanding of both of these laws, it can still be helpful to take time to ensure you’ve got all the bases covered when it comes to knowing what you need to do to achieve compliance.
When it comes to minimum wage, the federal minimum wage, as set by the FLSA, is $7.25 an hour. Of course, most states have their own state minimum wage law, which may change the minimum wage amount. Covered employees are entitled to this minimum wage to be paid on the regular payday for the covered pay period.
When it comes to overtime, the FLSA requires that nonexempt employees be paid at a rate that is at least one and a half times their regular rate of pay for any hours worked above forty hours a week. The FLSA outlines covered employees as those working for an “enterprise” (any business that makes more than $500,000 annually), a hospital or healthcare facility, or a public agency.
The FLSA makes specific requirements for employees who don’t fit within the enterprise definition (referred to as individual coverage) and for “domestic service workers.” Tipped employees also have a different minimum wage rate set at $2.13 an hour, although this may also vary by state.
What Are Employers Required To Do Under the FLSA
Aside from following the minimum wage and overtime laws, there are a number of other things that employers are required to do under the FLSA. The FLSA has certain recordkeeping requirements, which require employers to document and record certain information, including:
- Personal information, like name, home address, occupation, etc.
- When each workweek begins
- Total hours worked each workday and each workweek
- Total daily or weekly earnings
- Regular hourly pay rate
- Total overtime pay for the workweek, if applicable
- Deductions or additions to wages
- Total wages paid each pay period
- Date of payment and pay period
Employers are also required to provide employees who are nursing a child a reasonable break time and a private place to pump breast milk. The FLSA also prohibits wage differences based on sex. The FLSA also prohibits retaliation in cases where employees have filed complaints against their employer.
The Wage and Hour Division of the Department of Labor is responsible for enforcing the FLSA. Employers who fail to comply with the FLSA may be required to issue back wages in cases where minimum wage laws were violated or issue civil money penalties. Employers may also be subject to criminal charges depending on the situation.
Workplace Safety and Workers’ Compensation
Next, we’ll dive deeper into the laws surrounding workplace safety and workers’ compensation, and what you need to do to remain compliant.
Workplace Safety Requirements
The Occupational Safety and Health Act (OSH) established what we know and think of as our modern workplace safety guidelines. Now, you may be thinking, “Didn’t you forget an ‘A’ at the end of that acronym?” Actually, no, we did not: OSH is the act, the Occupational Health and Safety Administration, or OSHA, is the organization that administers the OSH (although “OSH Act” definitely doesn’t roll off the tongue like “OSHA” does).
Generally speaking, the OSH Act requires employers to, “provide employees with an environment free from recognized hazards such as exposure to toxic chemicals and infectious agents, excessive noise levels, mechanical dangers, heat or cold stress, and conditions that are causing or are likely to cause death or serious physical harm to employees,” according to the Center for Disease Control.
That last bit about conditions causing death or serious physical harm feels a bit vague, and it kind of is. It’s hard to summarize the OSH Act and OSHA standards as they differ by industry—construction, maritime, agriculture, healthcare—and are continually evolving.
Two things we can talk about, however, are Personal Protective Equipment and employee safety training. These two things, listed under the subpart for general industry, outline that employers must provide employees who need PPE with PPE, and that employers provide employees with training so that they understand workplace safety standards.
Another large component in the OSH Act and OSHA is the hazard communication standard. This requires that the identities and hazards of chemicals in the workplace be made available to and understandable by employees in the workplace. This includes things like hazard classifications, labels, safety data sheets, and training.
Workers’ Compensation Laws
When it comes to workers’ compensation, you want to be looking more at state laws rather than federal laws. When it comes to federal workers’ compensation laws, the Department of Labor’s Workers’ Compensation Programs only apply to certain maritime employees, certain Department of Energy employees, federal employees, and coal miners who are afflicted with pneumoconiosis (also referred to as black lung disease).
As such, workers’ compensation laws are determined by the state and their respective workers’ compensation agencies. Nearly every state requires employers to offer workers’ compensation insurance, with Texas being the only state where it is not required by law. In Payday’s home state of New Mexico, for example, state contractors, any business registered as an LLC or incorporated, and businesses with three or more employees are required to have workers’ compensation insurance.
The ADA and ACA
Now that we have a better understanding of FLSA and workplace safety compliance, we’ll dive into what it takes to be compliant with the Americans with Disabilities Act and the Affordable Care Act.
How To Be ADA Compliant
Compliance with the ADA mostly revolves around eliminating discrimination in the workplace on the basis of a disability. Hiring, firing, promotions, benefits, and all other employment-related activities are all protected under the ADA. The ADA also prohibits retaliation by an employer or an employer to discriminate against an applicant or employee because of their relation to someone with a disability.
While there are many different components of the ADA, one important one for employers to know is the provision of reasonable accommodations. Employers are required to provide such accommodations in cases where an individual may need them in order to perform essential job functions. Accommodations can include acquiring specific equipment or devices, flexible work schedules, or job restructuring, and applies to both job applicants and employees.
ACA Compliance
Compliance with the ACA will depend on how big of an employer you are, as the size of your business determines what it is you are required to do. For businesses with fifty employees or more, you are considered an applicable large employer and are required to offer your employees an affordable health plan.
Businesses with fewer than fifty full-time employees are not required to offer health insurance in the same way that ALEs are, but are still certainly encouraged to and may be eligible for certain tax credits. ALEs also have certain reporting requirements that they must meet, providing employees with Form 1095-C and filing Form 1094-C.
Don’t Get Complacent With Compliance
As a business owner, you’ll almost always be doing two things at once, maybe even three or four. There are so many moving parts you need to keep track of at any given moment, from ensuring your customers receive the highest level of service to ensuring your employees feel appreciated and taken care of. Of course, neither of these things can happen without first ensuring that your business is compliant with any laws and regulations that it may need to follow. Compliance is the first step to both ensuring your business is offering every customer or guest exceptional service and that your employees are well taken care of. With the knowledge provided in this article, you’ll have what you need to get your business started on its compliance journey and ensure your business is doing everything it needs to be doing.
Nothing makes compliance easier than a trusted partner who has all the compliance knowledge you could ever need. After all, remaining compliant is all about understanding what laws you need to be compliant with and how you achieve that compliance. Sometimes, though, that partner may not always be someone within your organization. Looking for outside resources to help your business with all aspects of human resources, including compliance, can sometimes be easier said than done, though. Check out our article on the three features to look for in an HR provider to make your search just a little bit easier.
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