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Checklist: When New Hires Mean New Regulations

Originally published: 10.01.10 by Jeff Fenster

As your company grows, so does the level of compliance in human-resource management.

Most business owners know they must comply with the employee-management laws in their industries and locales. But many are surprised to learn that the laws are different based on the size of a company.

If you’ve been cruising along with 24 employees for several years and decide to hire an additional administrative assistant to support your sales team, your level of compliance has just changed. This is true whether you have a dedicated human-resource manager or not, so as an hvacr company owner or other leader, you need to make sure compliance matches growth.

Here are some broad guidelines on human-resource compliance changes as your company grows:

Fewer than 25 employees

When you have fewer than 25 employees, you work like crazy — but chances are, you’re not spending much of that time worrying about employercompliance issues. That’s because you have the bare minimum of rules to live by.

25 to 49 employees

When your company expands to this level, there are a few more issues to be concerned with: Employees with addictions are entitled to certain rehabilitation rights. Abused spouses are entitled to domestic violence leave to relocate, seek counseling and the


Employees with children are entitled to 40 hours per school year to attend their children’s school activities. These are just a few examples; other family and military leave statutes and illiteracy programs also apply at this level.

50 to 74 employees

Hiring your 50th employee is a big moment for any entrepreneur. The upside: You’ve achieved a level of success that few businesses realize.

The downside: Steering clear of regulatory mishaps can become a full-time job. You must now maintain annual Equal Employment Opportunity (EEO) tracking and reporting compliance; provide mandatory sexual harassment training (SB1825); participate in affirmative action; and grant leave under the Family Military Leave Act (FMLA), California Family Rights Act (CFRA), and voluntary firefighters’ leave requirements.

There’s more. You’re also subject to the Worker Adjustment and Retraining (WARN) Act, a schedule of rules and regulations that pertain to providing advance notice of plant closures and layoffs.

75 to 99 employees

California WARN compliance becomes more critical at this stage, and the numbers alone can sometimes make regulatory compliance a bit more difficult.

100 or more employees

When you hire your 100th employee, you can certainly say you’ve made it. Everything is on a larger scale now, from sales to liability. Your numbers expose you to greater risk, as the workplace provides more opportunities for employees to become injured or disgruntled.

It’s easier to make costly clerical errors relating to payroll, or management oversight that fails to notice a missed lunch break. Doing what you’ve always done may no longer be effective. Keeping your eyes on the big picture requires a watchful eye on detail and depth as it relates to sound business practices.

4 Crucial Categories

The rules and regulations that change as you grow fall into four broad categories: wage and hour, time off, benefits and training. Here’s a brief rundown of the kinds of things you must include in your plans for company growth.

Wage and Hour

Anything and everything that relates to payroll — from how you pay to when you pay and how much you pay your employees — must comply with state and federal employment laws.

There are laws that govern how quickly you must pay a terminated employee (voluntary versus involuntary termination) and how to handle paycheck errors. Cutting corners in the payroll department can cost you a lot more than it saves.

It’s absolutely vital that the management of these important aspects of your business are handled by someone who knows the laws in your industry and locale.

Time Off

Any time off that you grant employees, including leaves of absence, vacation and sick days (and whether and how much you pay them), can be affected by a number of regulations. A variety of statutes designed to protect employees’ rights apply differently based on how many employees you have.

Sick days, vacation time, leaves of absence and other time off must comply with the law and should be granted fairly to all eligible employees, regardless of gender, race, age and the like.


Every perk you provide is governed by regulation. You can’t avoid the law by eliminating benefits altogether; some benefits are statutory. Things like disability coverage, workers’ compensation insurance, health insurance, and company vehicles can open you up to serious liability if they’re managed carelessly. Ensure that every resource you allocate is handled thoughtfully (and legally).


Your company must meet applicable laws such as safety, sexual harassment, OSHA standards, and other training required for your industry and in your state of operation. Requirements fluctuate with your employee count.

From Tactical to Strategic Human Resources

The larger your company grows, the more crucial it is that your human resources team focuses on strategic efforts rather than tactical administrative tasks. Getting caught up in policy rather than finding common-sense solutions is a common pitfall. Use these tips to craft your plans:

  • Prepare for your 25th new hire; start strategizing for the future before you’re under the gun.
  • The best handbook in the world can’t replace smart management. Use your manuals as guide posts, not bibles.
  • Avoid a cookie-cutter approach. Handle each employee and their circumstance uniquely giving consideration to a win-win outcome.
  • Create policies that are more interactive than rigid. Refusal to bend can leave you vulnerable to breaking. Whether you go it alone or outsource human resources expertise, the stakes are too high to simply cross your fingers or to throw up your hands.

Failure to comply with state or federal employment regulations puts all you’ve worked for at risk. 

Jeff Fenster is president of CanopyHR Solutions, based in Irvine, Calif. CanopyHR Solutions is a payroll and human resources company dedicated to helping its customers maximize the power of their people, increase business efficiencies, lower costs and focus on what they do best. For more information, visit www.canopyhr.com

Articles by Jeff Fenster

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Checklist: When New Hires Mean New Regulations

Here are some broad guidelines on human-resource compliance changes as your company grows.
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