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Davis Brown Employment and Labor Law Blog

Growing Beyond 49 Employees - Compliance with Employment Laws - November 5, 2019

When an employer experiences growth and is projected to employ 50 or more employees, an employer can and should enact policies and assess its practices for compliance with employment laws. Fifty employees is the triggering number for Family Medical Leave Act compliance and the Affordable Care Act and therefore is an important threshold. One important first step is updating employee handbook and job descriptions.


The following is a list of considerations of legal and operational changes that are necessitated by a transition to having a larger number of employees.


Equal Opportunity Laws (Title VII, Iowa Civil Rights Act)

Any employer with more than four employees is subject to these laws which create liability for discrimination and retaliation based on protected characteristics and applies for hiring, promotion/demotion, and termination. An employer should have a handbook outlining a reporting policy, a process for investigations if reports are received, and either an in-house HR point of contact or the understanding and comfort to call counsel when these situations arise. The employer should also consider whether Employment Practices Liability Insurance (referred to as EPL or EPLI) is advisable to mitigate the liability which comes from these types of expensive claims.


HR Documents

Written job descriptions are preferred to communicate the essential functions of all jobs and expectations.



An employer with more than 50 employees (that work within 75 miles) is subject to the FMLA meaning they are required to grant 12 weeks leave for qualifying conditions and job protection and restoration. This is best accomplished through a meaningful handbook policy.


Americans with Disabilities Act (ADA)

The ADA provides protections for disabled workers such that the employer is obligated to engage in an interactive process and determine if a reasonable accommodation is needed to assist with their employment. This is also best accomplished through a meaningful handbook policy.



With more people there is a higher likelihood of turnover and unemployment claims. Planning for turnover and unemployment claims is important. This includes well thought out discharge and reduction in force policies that delineate misconduct as a method to try to control unemployment costs.  


Wage & Hour

Certain employees must be hourly, and others may be salaried. This line is not always clear and when drafting job descriptions, this is an important distinction. This is also true if there is a need for contractors versus employees – this could create liability if incorrectly decided. If there is any doubt on which classification is appropriate, consulting with your attorney to review the job description in question is advisable.



Workers will have some level of expectation for benefits and federal law may require benefits be available. Consult with your attorney regarding health insurance, retirement plans, and other benefits to determine which you are obligated to provide your employees and a plan for doing so.



Anyone supervising other employees should be given some baseline supervisor training. There are a number of efficient ways to obtain this training from bringing in consultants and offering web-based training to your own HR providing training, but overlooking it creates liability that can be assigned back to the company.


This list is intended to be an overview and not all encompassing. The common themes are written job descriptions and a solid handbook with meaningful policies. This would be best first step for an employer moving towards employing a larger workforce. 

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