What Size Company Needs to Worry About Labor Law Compliance?
Sorry to answer like a lawyer but—that depends on your jurisdiction.
Federal workplace protection laws usually have simple answers to this question.
For example, any company with employees needs to ensure that they are compliant with the Fair Labor Standards Act and the tax laws pertaining to tax withholdings. Companies with independent contractors need to worry about the laws pertaining to classification of a position as an independent contractor position. Most private employers with two or more employers need to comply with certain provisions in the National Labor Relations Act, even if they don’t have any union employees.
For other laws a lot depends on where you are located or where your employees are located. The simple rule for federal laws is that you need to worry about Title VII of the Civil Rights Act (no discrimination on the basis of race, color, national origin, sex including pregnancy, and religion) and the Americans with Disabilities Act or ADA (no discrimination on the basis of disability) if they have 15+ full-time employees. Companies with 20+ employees need to comply with the Age Discrimination in Employment Act (ADEA). Companies with 50+ employees are subject to the Family Medical Leave Act and applicable large employer provisions in the Affordable Care Act. However many states and localities have laws which mirror these federal statutes but apply to employers with fewer employees than the federal laws require.
Typical examples include:
A company with remote employees in New York State needs to worry about New York state anti-discrimination laws.
A bricks and mortar store in Philadelphia with as little as one employee needs to ensure it’s compliant with the Philadelphia Fair Practices Ordinance which mirrors Title VII, the ADEA, the ADA, and extends protections to victims of domestic violence and their family members.
A company employing four or more employees in Pennsylvania or Delaware have to comply with the state anti-discrimination laws which mirror Title VII, the ADEA, and the ADA.
A company with one or more employees in New Jersey needs to comply with the New Jersey Law Against Discrimination which mirrors Title VII and the ADA and extends protects employees from discrimination based on marital status. NJ also has a bill pending that will extend these protections to encompass height and weight too (New York City and Michigan have similar protections).
Where does the small business owner start?
Figure out if your company is subject to state or local anti-discrimination laws by doing a simple internet search by putting in the name of your state, city or county with the search time “anti-discrimination laws.” If you contract with any federal, state or local agency or municipality, review your contracts for anti-discrimination requirements. Most states and localities have agencies with straightforward information on which employers are covered and which characteristics are protected.
If your company is subject to anti-discrimination protections, speak with your insurance broker about an employment practices liability policy. This will cover you if you get blindsided with a claim under one of these laws and will cover any legal defense fees over your retention (deductible) amount. Defense costs can quickly rack up in these cases, especially if the complainant proceeds to court and you can expect to pay anywhere from $50,000 to $100,000 to defend even a completely baseless claim. This does not include any settlement or judgment amount you may end up needing to cover.
If you don’t have competent experienced HR personnel, you should seriously consider hiring at least an experienced HR Generalist. If you do not have enough employees to keep a Generalist busy full time, or you lack personnel to oversee the Generalist, we will be happy to discuss our small business HR options with you which will allow you to get similar services at the fraction of the cost of one HR employee. See our Services page or speak to us directly by calling us.
Invest in training your workforce and managers on what discrimination looks like, how to guard against engaging in seemingly innocuous conduct that may create an inference of discrimination, and when to escalate issues to an HR person. In my experience doing legal defense work, I have never worked on a case where the purported wrongdoer actually intended to discriminate against someone or create a harassing environment but that did not stop government agency investigations into the complaint or litigation in state or federal courts.
Policies, policies, policies! Part One: Review every policy to ensure there is nothing in them that raises an inference of discrimination. For example, a dress code that requires “neat professional hair styles” could be discriminatory, particularly if a manager frowns upon a person wearing braids; enforcement of a policy barring job transfers within an employees first six months of employment can be deemed discriminatory in violation of the ADA if a disabled employee is denied a transfer to an open position for which they are qualified if that transfer is needed to accommodate for their disability. At CHRO, LLC, we are experienced in drafting workplace policies that further your company objectives while also ensuring compliance with applicable labor laws.
Policies, policies, policies! Part Two: If you don’t have them already, draft policies that clearly identify misconduct and disciplinary action that can be expected if employees engage in this misconduct, then apply these policies uniformly. There is no room for discretion for one employee if you terminated another employee for exactly the same misconduct. For example, if your rule is that you will terminate an employee for not showing up to work without calling out first, and you intend to use this discipline when someone doesn’t show up, you cannot excuse a long-time employee for committing this same misconduct because that can be evidence of discrimination if you subsequently terminate another employee with different protected characteristics for not calling out.
CHRO, LLC, can provide your growing business with a comprehensive suite of HR services so that you can focus on your goals while we ensure your HR function aligns with your desired culture and reduces the risk of legal liability associated with employee issues. Contact us today for a free consultation.
