Small businesses usually don’t have HR departments, so compliance with federal, state, and local laws falls to owners. This responsibility is onerous, especially since these laws are continually changing. On top of laws themselves, there are regulations, administrative pronouncements, and court decisions that affect what you can, can’t, or could do. The following checklist is designed to alert you to the vast array of obligations and opportunities that employers have in managing their staff. The entries are not listed in any particular order and are certainly not exclusive. They are items covered in Idea of the Day® year to date.
Do’s
- Determine which workers are now exempt from minimum wage and overtime rules under an increased wage threshold.
- File annual reports for employees, including W-2s and, where applicable, Form 1095-B or C for employer health coverage.
- Display posters for federal and state laws showing minimum wage and other laws.
- Make reasonable accommodations to employees with a disability to avoid violation of the Americans with Disabilities Act .
- Make reasonable accommodations (mandatory for employers with 15 or more employees) for pregnant workers and those recovering from childbirth or a miscarriage, such as additional breaks, temporary reassignments, telework, and time off.
- Deposit trust fund taxes—withholding of employees’ income taxes and FICA—to avoid the trust fund recovery penalty (100% personal liability).
- Classify workers correctly as employees or independent contractors.
- Correct mistakes on federal employment tax returns. The IRS explains which form to use. For example, for Form 941, use Form 941-X to make corrections. For Form 940, use the same form and check the amended return box.
- Provide parity for mental health benefits under an employer-sponsored medical plan. It’s the law.
- Determine whether you’re an applicable large employer (ALE) for 2025; it’s based on 2024 payroll.
Don’ts
- Hire anyone under age 18 if it violates federal, state, and/or local law. Check for restrictions.
- Don’t hire anyone that’s not authorized to work in the U.S. Have new hires sign Form I-9 to verify eligibility.
- Don’t allow an improper refund claim for employee retention credit (ERC) to linger; withdraw it under a second IRS program through November 22, 2024, that will avoid penalties.
- Don’t allow any workplace harassment, which can also include “the denial of access to a bathroom or other sex-segregated facility consistent with the individual’s gender identity” or harassment of employee decisions on lactation, contraception, or abortion. Check EEOC guidance.
- Don’t violate pay transparency laws that require employers to be transparent about salary and hourly wage rates. Check whether you have such a requirement in your state.
Maybe’s
- Post job openings on LinkedIn Jobs.
- Adopt business practices to ensure remote workers are part of your team.
- Offer health coverage even if you aren’t a large employer required to do so (or pay a penalty). If you don’t already do so, offering health coverage helps employees and is a way to attract and retain good workers. There are many health coverage options for small businesses, including health savings accounts (HSAs), qualified small employer health reimbursement arrangements (QSEHRAs), and individual coverage HRAs.
- Consider hiring disabled individuals. The DoL has a Toolkit of Practical Strategies to recruit, hire, retain, and advance workers with disabilities in good jobs in construction, manufacturing, and clean energy.
- Reimburse employees for student loan repayment (principal and interest) if your business offers an education assistance program. Tax-free reimbursement to employees can be up to $5,250 annually in 2024 and 2025.
- Consider making employer matching contributions to a 401(k) or SIMPLE-IRA for student loan payments. Find details from the IRS.
- Train employees on certain safety hazards, such as snow removal and heat injuries.
- Round up employees’ pay if they clock in a little before or after their expected start time, but watch the conditions for making this practice okay.
- Offer a Pension-Linked Emergency Savings Account (PLESA) tied to the company’s 401(k) plan. It permits non-highly compensated employees to have an emergency savings account.
- Check social media posts of job applicants or making other employment decisions, provided it does not violate the law. New York bars employers from this action.
- Offer work-life referral services, such as identifying education, care, and medical providers, locating home services professionals, and connecting employees with local financial planners. The IRS says these services are tax free to employees.
- Consider a 4-day work week. The majority of workers would prefer it, and are willing to take a pay cut.
Final thought
Sir Richard Branson offers some important advice for employers:
“Clients do not come first. Employees come first. If you take care of your employees, they will take care of the clients.”
“Train employees well enough so they can leave, but treat them well enough so they don’t want to.”
“A company’s employees are its greatest asset, and your people are your product.”
Need I say more?
