Today’s interview is with Jeffrey Cochran, Human Resource Consultant (https://www.hrperspectives.org/), and
will cover Human Resource Law compliance. Jeffrey specializes in working with small companies. The initial interview covered legal classifications for work performed, https://www.ctrchg.com/0002-wwc-are-you-a-solopreneur-or-an-employee/, and assessing if one is a solopreneur or actually an employee.
Jeffrey will talk about the alphabet soup of government regulations. He starts with a caution to all employers when it comes to Human Resource law, if it isn’t documented it doesn’t exist and never occurred. It is important to keep good records.
Today’s conversation will go back and forth between strategic and tactical considerations. Future podcasts will drive to deeper detail.
One point of confusion is that not only can there be differences between federal, state, and local laws a given law may have contradictory terms within it. Laws frequently don’t get vetted properly before being passed. Having an expert familiar with the regulations and their variances can give one peace of mind.
Common regulatory cutoffs are based on the number of employees a company has. But going against even this approach is the Fair Labor Standards Act (FLSA) which requires compliance if any of the following criteria are met:
- If a Federal, State, or Local organization
- If a medical service organization
- educational institutions from pre-school to university
- revenues for an annual report. If over $500,000 in revenue
These criteria can change over time so it is important to keep track of FLSA and other HR laws.
FLSA has an exempt/non-exempt test which looks primarily at whether or not hourly employees are being paid properly, e.g., overtime. Keep in mind the break point between hourly and salary can change over time. This means an employee may have been categorized as exempt, “salary,” but an increase in the point that separates hourly from salary may throw that employee into the non-exempt, “hourly,” category. This means overtime may need to be paid where it wasn’t before. A ripple effect may be re-organizing the company to save money.
Jeffrey recommends following the guidelines for larger organizations even if you currently are exempt. This way, when you do grow past that tipping point your organization is already in compliance and an HR upheaval is avoided.
Employee count is important as well. One to fourteen being the size of “small business.”
The Immigration Reform and Control Act (IRCA) requires filing an I-9 for every employee hired. It declares they are legal to work in the United States. It is easy to fill it out incorrectly. Fines can range from $178 to $3563.
The Employment Retirement Income Security Act (ERISA) requires giving any retirement plan or benefits program information to all employees. This helps protect employees.
The Federal Insurance Contribution Act (FICA) is another area. Using a qualified payroll company should take care of this.
The Equal Employment Opportunity Commission (EEOC) insure employees aren’t discriminated against. This includes the Equal Pay Act (EPA) saying that male and female employees must be paid the same amount for the same job. To explain the current pay discrepancy between men and women requires a separate podcast where we can dive deeper. Experience and/or tenure can be one explanation, i.e., a male employee may have 10 years with a company and the female employee with similar position may have only 1 year. Keep in mind that once your company exceeds 100 employees the EEOC collects information on position/salary/gender looking for discrimination. They do not look at tenure. Make sure to have your documentation in order. Having a defined payroll structure prior to hiring helps avoid a lot of issues associated with EEOC.
Fast-moving companies may want to consider retaining a fractional HR consultant who can take care of these issues and you can stay focused on your core competencies.
Family-owned businesses need to make sure that relatives and non-relatives are treated equally in terms of employment and compensation.
Other acts include:
- The Fair and Accurate Credit Transaction Act – dispose carefully of consumer credit information
- The Employee Polygraph Protection Act – can’t use a lie-detector on employees except in certain extreme circumstances.
- The Health Insurance Portability and Accountability Act (HIPAA) – protects medical information of individuals. If information is gained through another legal entity, e.g., workman’s compensation, then you can’t talk about it.
- It’s best to keep medical information in separate files from, say, employee reviews, to insure medical information is kept confidential.
- Workmen’s Compensation – even with 1 employee Workmen’s Comp must be paid. All states, except for Ohio, allow companies to provide Workmen’s Compensation Insurance through private insurance. Ohio’s plan is state funded.
With 11 employees OSHA requires posting your OSHA 300 Log. It shows the accidents you’ve had over that last 12 months.
All fo the above gets added to as the number of employees increases.
With 15 or more employees ADA, GINA, and Title 7 are added:
- Americans With Disabilities Act (ADA) – can get a job if they can do the job with or without reasonable accommodations. Having a good job description is important. Pregnant women can be included in ADA. It’s primarily designed, though, for a chronic situation. If a substantial material cost would be incurred for the disabled person to work then there is no requirement to employ them. General access to a facility does require being ADA-compliant.
- Genetic Information Non-Disclosure Act (GINA) – an employer cannot discriminate against an employee based on genetic information, e.g., a family history of cancer.
- Title 7 – Prohibits sexual harassment and other forms of sex discrimination in the work place. It also covers race, religion, color, and national origin. This works in conjunction with the Equal Pay Act (EPA) mentioned above.
With 20 or more employees:
- Age Discrimination and Employment Act (ADEA) – Employees or applicants 40 or older cannot be discriminated against.
- Consolidated Omnibus Budget Reconciliation Act (COBRA) – Continuation of benefits. If company-funded health plan can continue for 18 months with plan by paying full premium. Irony is there’s no requirement to have insurance until 50 employees but if you have 40 or more and are providing insurance then you must have COBRA. Must give notification you provide COBRA when an employee joins and when they leave. It’s important to inform the employee as dictated by COBRA guidelines.
Jeffrey has a schedule document he updates with changes to any of the laws and makes sure his clients are aware of the information.
Jeffrey works as a fractional HR consultant and gives them full-service at a much lower cost than having a full-time HR person.
With 50 or more employees
- The Affordable Care Act (ACA) – have to apply affordable insurance to all employees. The insurance is considered affordable if its cost is less than 9.9% of their total monthly income for the lowest plan. If too good of a plan is provided your company will be assessed a Cadillac tax.
- Family Medical Leave Act (FMLA) – Family member or significant other may require an employee to take leave. This act protects their position. This has been covered to include military assignments. There is an Intermittent FMLA. It all can be quite time consuming. If you have multiple locations there has to be 50 or more at a given location for FMLA to apply. If multiple locations within 75 miles of each other and a total of 50 or more employees across those locations then FMLA applies.
- Affirmative Action Program (AAP) – are specific to government contracts and subcontractors as well as some other employers.
Working with an HR consultant can minimize the time you need to spend on HR legal concerns while keeping your costs down.
Jeffrey mentioned in passing concerns when you have 100 or more employees. That will be addressed in a future podcast.
He wrapped up the interview by reviewing all the points covered.’
For more information you can contact Jeffrey at:
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