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Legal Issues
Feb 15, 2015

What You Need To Know As You Grow: More Employees = More Regulation

Sponsored Content provided by Benton Toups - Attorney, Cranfill Sumner & Hartzog LLP

When I am approached by a new business client with an employment issue, one of the first questions I ask is, “How many employees do you have?” I ask this because many of the various employment laws kick in only once a business reaches a certain size. For instance, Title VII of the Civil Rights Act of 1964, the statute which created the classic sexual harassment claim, applies only to employers with 15 or more employees. That in no way implies that sexual harassment in a 14-employee shop is a good idea (it most certainly is not), but many are surprised to know it also might not be illegal. 

Below is a breakdown of what employment laws apply as a business’ number of employees increases:

One employee:

  • Federal Fair Labor Standards Act (minimum wage, overtime, recordkeeping)
  • N.C. Wage and Hour Act (pay deductions, vacation pay, wage payment)
Three employees:
  • North Carolina Workers’ Compensation Act (including requirement to carry workers’ compensation insurance)
15 employees:
  • Title VII of the Civil Rights Act of 1964 (prohibiting discrimination/harassment on the basis of race, sex, religion, color or national origin)
  • Americans with Disabilities Act (prohibiting discrimination against qualified, disabled individuals, and in some cases requiring that accommodations be made for such individuals)
20 employees:
  • Age Discrimination in Employment Act (prohibiting discrimination against individuals age 40 and over)
50 employees:
  • Family and Medical Leave Act (allowing for protected leave under certain circumstances, most commonly for serious health conditions)
  • Affordable Care Act (requiring an offer of coverage to avoid penalties; this starts in 2016)
100 employees:
  • Affordable Care Act (requiring an offer of coverage to avoid penalties; this starts in 2015)
This is certainly not an exhaustive list of all laws and regulations governing the employer-employee relationship, but this list does illustrate the point that the considerations for a three-person shop are vastly different from those of a 103-person shop. 

Keeping that in mind, here are some pointers that will help your business stay compliant:
  1. Have your “ducks in a row” before you cross the applicable thresholds. For instance, employers who are FMLA covered (50 or more employees) must maintain a written FMLA policy. A week after hiring the fiftieth employee is not the best time to start working on such a policy.
  2. Look for “stragglers” on the payroll. Do you have employees who haven’t actually worked for six months but who are still technically on the list of employees? If so, they may be subjecting your business to laws it otherwise would not be subjected to if they were eliminated from the payroll list.
  3. If you’ve experienced significant growth since you last had your employee handbook reviewed, have a professional look at it. 
For businesses experiencing growth, a minimal investment in hiring an attorney to review current policies and practices will cost a little now, but it will almost certainly same money in the long run.

This content has been prepared for general information purposes only. This information is not intended to provide specific legal advice. Legal advice is dependent upon the specific circumstances of each situation. The information provided cannot replace the advice of competent legal counsel by a licensed attorney in your state.

Benton L. Toups is a partner at Cranfill Sumner & Hartzog LLP and serves as vice-chair of the Employment Law Practice Group. His practice concentrates on representing businesses in all aspects of labor and employment law. A firm believer in the adage that “an ounce of prevention is worth a pound of cure,” Toups counsels employers on day-to-day issues and assists them in developing and implementing policies to avoid employment litigation. To contact Toups, call (910) 777-6011 or email him at [email protected].

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