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If you have a small or medium-sized business, you might frequently incur the question of which federal laws apply to you. From the Americans with Disabilities Act (ADA) to the Family Medical Leave Act (FMLA), many federal laws only apply if your business has enough employees. If your company has 50 employees or more, chances are that the extensive federal laws will likely apply. But what if you have less than 50 employees? What if you have a lot of seasonal employees? Which federal laws apply?
While each business is unique in its staffing, some general rules exist. Generally, temporary employees count, but there are exceptions. For example, in some instances, temporary or part-time employees are calculated in proportion to their hours. True independent contractors do not count. However, it’s best to watch for the trap of individuals you have classified as independent contractors who are not true independent contractors.
Employee counting means taking a headcount of a company’s total number of employees within a defined period of time. It’s necessary for determining the employer’s duties under specific legislation, helping employers avoid governmental sanctions and litigations for noncompliance with the law. Employee counting also helps employees know whether they are entitled to certain rights under the law.
For example, an employer may be subject to the FMLA without realizing that is the case. That employer, mistakenly believing the FMLA does not apply, could breach a requirement under the Act. Even if a harmed employee and the employer don’t realize the FMLA applies, the law is nonetheless enforceable if the threshold and other relevant preconditions are met.
Despite their unfamiliarity with their duties or rights under the law, as the case may be, the Act continues to be enforceable, provided the threshold and other relevant preconditions are met.
Here are five laws that require employee counting, each enforced by the Equal Employment Opportunity Commission (EEOC):
Title VII of the Civil Rights Act prohibits workplace discrimination based on color, race, religion, national origin and sex. Title VII applies to employers with 15 or more employees. It defines an “employer” as a person engaged in an industry affecting commerce with 15 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Those 20 weeks do not need to be consecutive.
Employees on approved paid or unpaid leaves of absence still count, provided there is a reasonable expectation that the employee will return to work. Also, you would not count the first and last week unless an employee works the full week. Part-time and temporary employees are treated the same as full-time employees for counting purposes so long as they are on the payroll.
Regardless of the number of employees in the workplace, each individual receives protection against discrimination. In other words, employers who do not meet the Title VII employee threshold are not free to discriminate. Other laws prohibit discrimination in workplaces aside from Title VII. For example, the Fair Labor Standards Act (FLSA) governs minimum and overtime wages and prohibits certain types of discrimination, which also applies regardless of the number of employees under the employer.
The Age Discrimination in Employment Act outlaws employment discrimination against individuals 40 years or older. The Age Discrimination in Employment Act applies to employers with 20 or more employees.
Under the Act, an “employer” is a person involved in an industry that affects commerce and has 20 or more employees for each working day in each of 20 or more calendar weeks in the current or preceding calendar year. Like Title VII, those 20 weeks do not need to be consecutive. Also, the paid or unpaid leaves of absence, first and last week and part-time and temporary employees rules of Title VII apply to the Age Discrimination in Employment Act.
The Americans with Disabilities Act prohibits state and local governments, private employers, labor unions and other employment institutions from discriminating against qualified individuals with disabilities in job application procedures, hiring, firing, compensation, advancement, job training and other terms, conditions and privileges of employment. 
The ADA employee threshold is 15 or more. The same rules that apply to Title VII regarding work weeks, paid or unpaid leaves of absence, first and last week and part-time and temporary employees apply to the Americans with Disabilities Act. Although the law expressly applies to employers with at least 15 employees, those with fewer than 15 employees should reasonably comply with the ADA as much as possible, especially if looking to expand their employee count.
The ADA protects individuals with a broad spectrum of disabilities. Titles I and V of the ADA protect persons:
Examples could include those with a visual and hearing impairment, cancer, epilepsy, diabetes, bipolar or cognitive challenges. To qualify under ADA, the individual must be qualified to perform essential job functions and perform with or without reasonable accommodation.
The Family Medical Leave Act permits eligible employees of covered employers to take job-protected, unpaid leave for defined medical and family reasons with the continuance of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. The FMLA covers employers with 50 or more employees. However, counting an employee for FMLA does not necessarily mean they are eligible for FMLA. There are other requirements.
As an example, 50 or more employees must be within 75 miles of the organization, and the employee seeking to claim under the law must have been employed for one year. The employee must have worked at least 1,250 hours within the last 12 months.
FMLA counts those employees who are on the payroll during 20 or more calendar weeks in the current or preceding calendar year. A person must be considered employed each working day of the calendar year if their names appear on the employer’s payroll and counted whether or not they receive compensation for the week. However, like the other laws, employees in the first or last week of employment would not count if they were not on the payroll for the full workweek.
Each employee is counted regardless of whether they are full or part-time. An employee from a temporary help agency is counted if the employer shares control of the work the temporary employee performs, whether directly or indirectly.
According to the FMLA regulations, an employer cannot:
The U.S. Department of Labor’s Wage and Hour Division administers and enforces the FMLA. State and local government and federal and private employers who meet the threshold are under the agency’s supervision. The Department of Labor may bring an action to court to compel compliance for any violations that can’t be resolved satisfactorily. Eligible employees may also initiate a private civil action to address alleged violations.
The statute bound to cause pause to even the most excelled math student is the Affordable Care Act’s Employer Shared Responsibility provisions. According to “the pay or play provisions” or “employer mandate,” employers referred to as “applicable large employers,” or ALEs, must provide their full-time employees and their dependents with affordable health insurance coverage with a minimum value or potentially pay the IRS an employer shared responsibility tax.
An employer should have had an average of at least 50 full-time employees during the preceding calendar year to be an ALE for a particular calendar year. This includes full-time-equivalent employees.
For Affordable Care Act’s Employer Shared Responsibility provisions, an employer first determines its full-time employees based on each employee’s hours of service. For counting purposes, an employee is considered a full-time employee for a calendar month if they average at least 30 hours of service per week or 130 hours in a calendar month.
A part-time employee is counted on a proportional basis, dependent upon the hours of service per month divided by 130. Those part-time employees are then added to determine if the 50-employee threshold is met. As an example, a part-time employee who works 48 hours a month would count as 0.37 of an employee, that is, 48 divided by 130 when counting employees. Seasonal employees who work less than 120 days per year are excluded from calculations for purposes of the 50-employee threshold.
Buzgon Davis Law Offices of Lebanon is a full-service law firm providing solutions for employers and employees in Pennsylvania. Our employment and labor attorneys assist in various legal challenges, including unfair hiring practices, labor disputes, employment discrimination, sexual harassment and retirement claims. Contact us now for an individualized legal partnership!
The information is this blog is for informational purposes only and is not to be construed as legal advice and does not create an attorney/client relationship.
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