Staying current on laws regulating how your employees are compensated and managed is essential for small business owners
Key Takeaways
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Employment laws are frequently updated. Staying current on laws regulating how your employees are compensated and managed is essential for small business owners.
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The federal government passed several bills during the pandemic to assist small business owners that also impact employment policies.
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The Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief and Economic Security Act (CARES) may affect both your tax filings and workplace policies.
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Other 2020/2021 changes to track are minimum wage increases and revisions to employee and contractor status definitions.
If you own a business and have any employees, you must comply with federal and state labor laws. Failure to keep up with rapidly changing legislation is no excuse for non-compliance.
Your employees depend on you for their livelihood, and their rights are protected by federal, state, and local governments. On the federal level, the U.S. Department of Labor (DOL) regulates employers in part through the Fair Labor Standards Act (FLSA).
In times of crisis and economic downturn, legislation is often passed to lessen systemic problems worsened by the current circumstances. During the pandemic, the federal government passed several bills designed to assist small business owners.
Within many of those regulations were revisions to laws concerning employee benefits and wages. And in addition to these changes, 2020 ushered in revisions to some other employment laws that were already in the works. Here are details about those amendments and what actions you may need to take to remain compliant.
Changes related to coronavirus relief acts
If your business or your employees received assistance under the Families First Coronavirus Response Act (FFCRA) or the Coronavirus Aid, Relief and Economic Security Act (CARES), you need to be in compliance with the terms of these aid packages. Participating in these programs will impact your tax filings and also certain employee-centered policies.
The Emergency Paid Sick Leave and Extended FMLA requires emergency paid sick leave and expanded medical leave for employees affected by COVID-19 or who need time off to care for family members. Private businesses with less than 500 workers must comply. The terms of the original FFCRA were in effect through December 31, 2020, but many believe Congress will extend them.
Similarly, if your company received a loan through the Paycheck Protection Program (PPP), you must comply with the loan’s legal requirements. Payroll practices that will receive extensive scrutiny are overtime compensation and adherence to minimum wage standards.
Updates to the FLSA in 2020
This past year, many states passed laws concerning the status of employees. Among the federal actions, one final ruling and one proposal stand out.
The final rule to revise the definition of joint employer status was passed on January 12, 2020. The U.S. DOL stated, “when an employee performs work for the employer that simultaneously benefits another person, that person will be considered a joint employer when that person is acting directly or indirectly in the interest of the employer in relation to the employee.” This ruling may dictate how small businesses manage payroll and assign hours to workers.
On September 22, 2020, the U.S. DOL proposed changing the legal definition of “employee” in the FLSA. In this proposal, the DOL suggests an “economic reality test” to determine whether a worker is an employee under the terms of the FLSA or an independent contractor. After the public comments period on the proposed rule ended on October 26, 2020, the proposal is in legislative limbo, pending the installation of a new Congress and executive branch in January.
The employee vs. independent contractor ruling will have tremendous consequences for small business owners. Payroll tax responsibility, benefits, and worker scheduling are all dependent upon how these roles are defined.
Possible changes happening in 2021
Twenty-five states increased their minimum wage beginning in 2021 through labor laws passed this year or earlier. At the federal level, watch for a push to increase the minimum wage nationwide, along with extensions to COVID-19 relief legislation and the possibility of federal mandates concerning tipping.
Changes to current immigration laws and the almost certain repeal of several workplace-related executive orders will have trickle-down effects on small businesses. Likewise, the proposed strengthening of the Affordable Care Act and additional workers’ protections.
Expert help is recommended
In addition to new legislation and updates brought about by economic or social conditions, numerous labor standards apply to small businesses the moment you hire your first employee. These are not always easy to manage, and the consequences for falling on the wrong side of these laws can be costly.
There are steps you can take to increase your awareness of legislation changes and remain in compliance, starting with seeking the help of a legal professional. Internal checklist and tickler systems help, as does using the right automated solutions that fit your business’s legal and financial compliance needs.
For peace of mind concerning your company’s financial health, look to the small business experts at Franco Blueprint. We specialize in guiding small and medium-sized businesses during startup and assist with managing your company’s accounting needs as it grows. We will help you strategize for success and help you cover all the bases for financial compliance.
It is our business to assist small business owners and help them secure their livelihoods. Contact us for a free consultation today.legal requirements