What Are Federal Employment and Anti-Discrimination Laws? Employer Rules and Employee Thresholds

As a small business owner, your legal obligations grow as your company does. Understanding which rules apply at each stage is essential to staying compliant and avoiding costly legal issues. This guide breaks down the major federal employment laws by employee count. Remember that state and local laws may offer even greater protections for workers. Visit FindLaw’s Small Business Discrimination and Harassment page for more information on anti-discrimination laws.

When You Hire Your First Employee (1+ Employees)

From the moment you hire your first employee, several key federal laws immediately apply to your business.

Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act applies to nearly any business that engages in interstate commerce or has more than $500,000 in annual gross sales. The FLSA sets basic standards on:

• Federal minimum wage
• Workweek hours and overtime
• Child labor
• Recordkeeping and reporting

State laws may be more restrictive and require higher minimum wages and overtime pay. Business owners should consult state labor laws when setting wages and hours.

Equal Pay Act

The Equal Pay Act applies to any business with one or more employees. Employers must pay male and female employees the same wage for equal work. However, the Equal Pay Act permits wage differences based on seniority, merit, production, or other factors besides sex.

Employee Retirement Income Security Act (ERISA)

The Employee Retirement Income Security Act affects employers who offer employees health insurance or retirement plans. ERISA sets rules for notifying employees of plan changes, recordkeeping, and filing claims with insurance carriers. ERISA applies to any employer offering retirement or health care plans.

When You Reach 15+ Employees

Once your business has 15 or more employees for at least 20 calendar weeks, several major federal anti-discrimination laws apply.

Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act prohibits discrimination based on:

• Race
• Color
• National origin
• Religion
• Sex (which includes pregnancy, sexual orientation, and gender identity per a 2020 Supreme Court decision in Bostock v. Clayton County)

This law also prohibits harassment that creates a hostile work environment, where unwelcome conduct is so severe or pervasive it becomes a condition of employment. A bona fide occupational qualification (BFOQ) is a very narrow exception that allows employers to hire based on a protected trait if it’s essential to the job, such as a church hiring only clergy of its own faith.

Americans with Disabilities Act (ADA)

The Americans with Disabilities Act bans discrimination based on the presence or perception of a disability. A “disability” is a physical or mental impairment that substantially limits one or more major life activities. A covered employer must make “reasonable accommodations” for people protected under the act unless doing so would cause an undue hardship on the business.

Pregnant Workers Fairness Act (PWFA)

The Pregnant Workers Fairness Act (PWFA) requires employers with 15 or more employees to provide reasonable accommodations for a worker’s known limitations related to pregnancy, childbirth, or related medical conditions, unless the accommodation would cause an undue hardship. This might include more frequent breaks, a modified work schedule, or being excused from strenuous activities. The PWFA operates similarly to the ADA but is specifically for pregnancy-related conditions.

Genetic Information Nondiscrimination Act (GINA)

Title II of the Genetic Information Nondiscrimination Act bans discrimination based on a person’s genetic information. The law bars employers from requesting, requiring, purchasing, or disclosing genetic information except in very limited circumstances.

When You Reach 20+ Employees

As your team grows to 20 or more employees, you also become responsible for additional laws on age discrimination and health insurance continuation.

Age Discrimination in Employment Act (ADEA)

The Age Discrimination in Employment Act bans employers from discriminating against workers or job applicants over 40 in hiring, firing, or promotions. Employers may not selectively fire older workers to avoid paying retirement benefits. The act allows age to be a factor only when it is a bona fide occupational qualification.

Consolidated Omnibus Reconciliation Act (COBRA)

The Consolidated Omnibus Reconciliation Act allows workers to keep their group health plan after leaving their job. Employees can continue coverage for themselves and their families, but they must pay the full insurance premium. COBRA applies after termination of employment or reduction in hours, but not for termination due to an employee’s gross misconduct.

When You Reach 50+ Employees

Crossing the 50 employee threshold triggers the Family and Medical Leave Act, one of the most significant federal employment laws. The Family and Medical Leave Act requires covered employers to give eligible employees up to 12 weeks of unpaid leave every 12 months for:

• The birth or adoption of a child
• Care for an immediate family member with a serious health condition
• The employee’s own serious health condition

After leave, the employee must return to the same or an equivalent job. Some state laws provide similar leave for smaller companies.

Best Practices for Compliance and a Healthy Workplace

Understanding the laws is the first step. Next, implement policies to ensure compliance and protect your business.

Create an Anti-Discrimination Policy

The Equal Employment Opportunity Commission (EEOC) recommends that all businesses have a written anti-discrimination and anti-harassment policy. Include this policy in your employee handbook. It should define and provide examples of prohibited conduct and outline a clear procedure for reporting a complaint.

Handle Complaints Promptly and Professionally

Take all discrimination and harassment complaints seriously. Designate a specific person (often in HR) to investigate all claims. Your process should ensure confidentiality to the greatest extent possible and protect employees from retaliation for making a complaint. Follow your written policy for any disciplinary action, and refer any criminal behavior to law enforcement.

Get Legal Advice

Federal, state, and local employment law is complex and constantly changing. An experienced employment law attorney can help you conduct a compliance review, draft an employee handbook, and provide guidance on handling sensitive workplace issues. Connecting with a local attorney can help you identify and fix potential problems before they become costly legal disputes.