A Reference Guide of the Employee Number Thresholds Triggering the Applicability of Popular Federal Employment Regulations

Hiring more employees for a growing business can be exciting. However, adding additional employees can change the palette of employment regulations applicable to your company. In the intricate landscape of federal employment laws, understanding which regulations apply to your company is not always straightforward.

This quick reference guide will lay out a general summary of the most popular federal workplace regulations and specify how many employees must be employed at a company to trigger applicability of each regulation. Though this list is not a full and complete list of all regulations that could impact a company’s employment operations, it should provide sufficient guidance for a growing company to generally determine the important regulations to be aware of as a growing number of employees are enlisted at the organization.

Title VII of the Civil Rights Act of 1964 (Title VII)

Regulatory Overview: Title VII of the Civil Rights Act of 1964 prohibits employment discrimination, harassment, and retaliation. Under Title VII, it is illegal for employers to make decisions regarding hiring, promotion, compensation, or any other terms and conditions of employment based on an individual’s membership in a protected class (for example, race, color, religion, sex, national origin, etc.). Title VII also established the U.S. Equal Employment Opportunity Commission (EEOC), the federal agency responsible for investigating claims of discrimination, harassment, and retaliation.

Employee Number Threshold: Title VII applies to businesses with 15 or more employees.

The Fair Labor Standards Act (FLSA)

Regulatory Overview: The Fair Labor Standards Act (FLSA), enacted in 1938, mandates payment of the minimum wage and overtime wages for non-exempt employees. The FLSA also imposes wage and hour recordkeeping requirements and child labor standards. The FLSA is administered by the Wage and Hour Division of the U.S. Department of Labor.

Employee Number Threshold: Not applicable.

Applicability of the FLSA is focused on whether the employee qualifies for coverage rather than whether the business is of a certain size to trigger applicability, and numerous exemptions and classifications under the FLSA further complicate matters.[1]  Generally speaking, a non-exempt employee is covered by the FLSA if:

1. The employee works for an enterprise (i) with at least two employees that (A) has annual dollar volume of sales or business done of at least $500,000.00 or (B) is a hospital, business providing medical or nursing care for residents, school, preschool, or government agency; or
2. The employee’s work regularly involves the employee in commerce between states (“interstate commerce”).

In other words, almost all employers are subject to FLSA regulation to the extent that they employee any non-exempt employees.

The Americans with Disabilities Act (ADA)

Regulatory Overview: The Americans with Disabilities Act (ADA), enacted in 1990, prohibits discrimination against individuals with disabilities. The ADA ensures equal opportunities in various aspects of public life, including employment, public accommodations, transportation, and telecommunications. In the realm of employment, the ADA mandates that employers provide reasonable accommodations to qualified individuals with disabilities to prevent their employment from being terminated on account of their disability.

Employee Number Threshold: The ADA applies to businesses with 15 or more employees.

The Age Discrimination in Employment Act (ADEA)

Regulatory Overview: The Age Discrimination in Employment Act (ADEA), enacted in 1967, protects workers aged 40 and older from discrimination in the workplace. The ADEA prohibits employers from making employment decisions based on an individual’s age and covers various aspects of the employment relationship, including hiring, promotion, compensation, termination, and prohibiting mandatory retirement based on age.

Employee Number Threshold: The ADEA applies to businesses with 20 or more employees.

Family and Medical Leave Act (FMLA)

Regulatory Overview: The Family and Medical Leave Act (FMLA), enacted in 1993, mandates employers provide eligible employees with unpaid leave for specified family and medical reasons. Under the FMLA, eligible employees are entitled to take up to 12 weeks of leave in a 12-month period for the birth or adoption of a child, the serious health condition of the employee, or the care of an immediate family member with a serious health condition.

Employee Number Threshold: FMLA applies to businesses with 50 or more employees working within 75 miles of each other.

Affordable Care Act (ACA)

Regulatory Overview: The Affordable Care Act (ACA) was signed into law in 2010 and is also known as Obamacare. The ACA mandated significant operational changes, particularly for large employers, with “shared responsibility” provisions. These provisions mandate that applicable large employers provide affordable and adequate health insurance coverage to their full-time employees or potentially face penalties. The law also necessitates employer reporting of healthcare coverage information, enhancing transparency in employer-sponsored plans.

Employee Number Threshold: Generally speaking,[2] ACA compliance is required for businesses with 50 or more full-time employees.

National Labor Relations Act (NLRA)

Regulatory Overview: The National Labor Relations Act (NLRA), enacted in 1935, establishes the rights of employees to engage in collective bargaining, organize or join labor unions, and otherwise discuss the conditions of their employment even if not directly establishing a union or participating in union activities. The NLRA also establishes the National Labor Relations Board (NLRB) to oversee and enforce its provisions, investigate unfair labor practices, and conduct elections for union representation.

Employee Number Threshold: Not applicable.

Applicability of the NLRA to a particular company depends upon “gross annual volume of business” that is specific to the industry in which the company operates. The minimum volume amounts vary widely across industries, set by the NLRB as its Jurisdictional Standards.

Conclusion

In conclusion, tracking the changing federal employment regulations is an important consideration for any expanding business. While not exhaustive, this summary can serve as a reference guide for growing businesses aiming to maintain regulatory compliance.

The excitement of hiring new employees should be complemented with an understanding of the associated implications on corporate compliance requirements. Of course, the next step is ensuring that the company is compliant with each regulation mentioned herein. That task is a greater undertaking, and should be tackled with the help of competent legal counsel.

[1] One such exemption, the “executive” exemption, is explained in What Employers Need to Know About the “Executive” Exemption Under the Federal Fair Labor Standards Act (FLSA) | Jimerson Birr (jimersonfirm.com).

[2] There are many factors contributing to the triggering of ACA reporting requirements beyond the number of employees employed at a business. See IRS, Affordable Care Act Tax Provisions for Employers, March 15, 2023, Employers | Internal Revenue Service (irs.gov).