5 Numbers Every Business Owner Needs to Know
When you were a kid, your address and phone number were probably the most important numbers you needed to know.
Now, as a business owner, you have a new set of numbers that matter just as much: 1, 15, 20, 50, and 100. These numbers determine what laws you have to follow.
They're the exact employee counts that trigger major federal employment laws and compliance requirements. And missing them can mean costly penalties, lawsuits, and headaches.
At Whirks, we've helped hundreds of businesses stay ahead of these thresholds without getting blindsided. In this article, we’ll show you what laws kick in at each stage, what compliance steps you need to take, and how to get prepared.
Why Your Employee Count Matters
Your employee count isn't just a number on your payroll report. It's the key factor that determines which federal employment laws you’re required to follow.
The U.S. Department of Labor uses specific staff size thresholds to determine your compliance requirements and obligations. Cross those lines without a plan, and you could face significant penalties.
Important: This article covers federal requirements only. Many states have additional laws with different thresholds, so check your state rules too.
Federal Compliance Begins With 1 Employee
The Fair Labor Standards Act (FLSA) Applies Immediately
The moment you hire your first employee, the Fair Labor Standards Act kicks in. It's the law, regardless of your company size.
FLSA covers:
- Minimum wage requirements
- Overtime pay calculations (time-and-a-half for hours over 40 per week)
- Child labor restrictions (including how many hours minors can work during school weeks)
- Record-keeping requirements for hours worked and wages paid
The Cost of Non-Compliance
Don't underestimate FLSA penalties. The Department of Labor can impose civil monetary penalties of up to $2,014 per employee, per week for willful or repeated violations… plus back wages owed to workers.
Quick Take: 1 Employee
The moment you hire even one employee, you’re on the hook for federal wage, overtime, and child labor laws. There’s no “small business exemption” for the basics.
15 Employees: Major Anti-Discrimination Laws Take Effect
Counting Your Staff: The 20-Week Rule
This one can get tricky. If you have fewer than 15 employees when a lawsuit is filed, you could still be liable if you had 15 or more employees at any point during the previous 20 weeks.
Title VII of the Civil Rights Act of 1964
When you reach 15 employees, Title VII prohibits employment discrimination based on:
- Race and color
- Religion
- Sex (including sexual orientation and gender identity)
- Pregnancy (including childbirth, lactation, and related medical conditions)
- National origin
Penalty warning: Intentional discrimination violations can cost up to $50,000, plus back pay, reinstatement, and retroactive seniority.
Quick Take: 15 Employees
At 15 employees, you can be sued for discrimination claims under federal law. Your hiring, firing, and workplace policies need to meet stricter standards.
20 Employees: COBRA and Age Discrimination Protection
COBRA Health Insurance Continuation
When you have 20-49 employees, COBRA requires you to extend group health insurance to employees after qualifying events like termination. This means you have additional administrative responsibilities and notification requirements.
Age Discrimination in Employment Act (ADEA)
The Age Discrimination Act protects employees 40 years and older from discrimination in:
- Hiring and firing decisions
- Promotion opportunities
- Compensation discussions
- Working conditions
Best practice: Always document specific, job-related reasons for employment and advancement decisions, regardless of age.
Quick Take: 20 Employees
At 20 employees, you’re required to offer COBRA health insurance continuation and protect employees over 40 from age-based discrimination. These two areas often catch businesses off guard.
50 Employees: FMLA and ACA Compliance Requirements
When you reach 50 employees, two major compliance areas are triggered that significantly impact your HR operations.
Family and Medical Leave Act (FMLA)
FMLA provides eligible employees with up to 12 weeks of unpaid, job-protected leave for:
- Birth and care of a newborn child
- Adoption or foster care placement
- Caring for immediate family members with serious health conditions
- Employee's own serious health condition
Employee eligibility requirements:
- Worked for you at least 12 months
- Worked at least 1,250 hours in the past 12 months
- Works at a location with 50+ employees within 75 miles
Affordable Care Act (ACA) Compliance
The ACA applies to employers with 50 or more full-time equivalent (FTE) employees on average during the previous year.
Key ACA requirements:
- Offer affordable health insurance to 95% of full-time employees
- Provide minimum essential coverage and minimum value
- Supply required employee notifications and forms
FTE calculations:
- 30 hours per week = full-time
- Part-time hours are converted to FTE (e.g., one 15-hour employee = 0.5 FTE)
Required documentation:
- Notice of coverage and available benefits
- Summary of Benefits and Coverage
- Form 1095-C (annual confirmation of offered benefits)
Quick Take: 50 Employees
Crossing 50 employees triggers some of the most burdensome and visible laws: the Family and Medical Leave Act and ACA mandate. You’ll need new systems for leave tracking and health insurance.
100+ Employees: Maximum Compliance Requirements
EEO-1 Reporting Requirements
Once you reach 100 employees, you’re now responsible for annual EEO-1 reporting to the EEOC and U.S. Department of Labor by April. This government form requests detailed information about your employees':
- Job categories
- Ethnicity and race
- Gender
For more information, visit www.eeoc.gov/data.
Worker Adjustment and Retraining Notification Act (WARN)
At this milestone, you also need to understand your responsibilities with the WARN Act, which requires 60 calendar days advance written notice for:
- Plant closings
- Mass layoffs affecting 50+ employees at a single location
WARN applies to businesses with:
- 100+ full-time workers (excluding those with less than 6 months tenure or working fewer than 20 hours/week)
- Combined 4,000+ work hours per week
- Private for-profit, private nonprofit, or quasi-public entities
Quick Take: 100 Employees
At 100 employees, you face increased government reporting and must give advance notice of large layoffs. Missing these requirements can lead to costly fines and bad publicity.
3 Smart Strategies for Managing Employment Law Compliance
Strategy 1: Plan Ahead, Don’t Wait Until You Hit the Threshold
If you're approaching any of these employee count milestones, implement the new requirements now. This gives you time to iron out processes before compliance becomes mandatory.
Strategy 2: Audit Your HR Risks Regularly
Evaluate where you are currently and what you'll need when you reach the next employee threshold. Understanding your compliance gaps early prevents costly scrambling later.
Strategy 3: Get Help If Compliance is Getting Too Complex
Managing multiple employment laws becomes exponentially more complex as you grow. Outsourcing HR and payroll to specialists can ensure you stay compliant without dedicating internal resources to constantly changing regulations.
The sooner you prepare, the smoother your growth will be… and the less you’ll pay in penalties or stress later.
Don't Let Employee Growth Catch You Off Guard
Growing your business and your team should feel exciting, not stressful.
By staying aware of these five employee count milestones, you can keep your business compliant, avoid penalties, and focus on what you do best: growing your business. Proactive compliance is always easier (and cheaper) than fixing mistakes later.
Want to simplify compliance and take one more thing off your plate?
Let’s talk about how Whirks can help you stay compliant while you grow.
Now that you know when key employment laws apply, learn which common HR mistakes could still cost you big… and how to avoid them: “6 HR Compliance Mistakes That Could Cost You Millions (And How to Avoid Them).”
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