Compliance may get a bad rap. It may not be as awe-inspiring as creating new innovations, but repeated non-compliance can wreak havoc on a company’s reputation, and ruin customer loyalty. Regardless of size, every business is subject to federal labor laws. Of course, other criteria can determine employer coverage such as whether a company offers health insurance or employs a third-party to conduct employee background checks. Periodically, all employers should be reviewing their human resource policies, data security, workplace safety and employee financial services. Just how well a business is covered under these 20 federal laws can mean the difference between a violation and compliance.
The Consumer Credit Protection Act of 1968 This law protects consumers and their credit. Since its inception the Consumer Credit Protection Act 1968 has protected consumer’s credit and their financial records (Title I). Currently, it is composed of the Truth in Lending Act (Title II), which protects consumers from severe credit transactions including exorbitant interest rates, and Title III which is related to restrictions on wage garnishment. Wage garnishment or the process of deducting money from an employee’s pay can occur for the reasons of child support, unpaid taxes, defaulted student loans or unpaid court costs.
Wage garnishment must be accurately calculated by employers. It is also their job to ensure that it continues until it expires. The federal limit on weekly wage garnishment is the lower amount of either 25 percent of an employee’s net income minus federal, state and FICA taxes and retirement contributions or the total amount by which the employee’s weekly wage exceeds thirty times the current federal hourly minimum wage.
Employee Polygraph Protection Act (EPPA)
This act prevents employers from asking employees to take lie detector tests as part of the pre-employment screening or as current employees. Nor can an employer discriminate, discipline, or discharge an employee or applicant for refusing to take one. If an employee or job applicant agrees to a lie detector test, the results or the use of the test results by the employer is prohibited. Nor can an employer fire or discriminate against an employee or job applicant because of the results.However, under certain restrictions of the Act, polygraph testing is allowed within private firms for employees suspected of involvement with theft or fraud that has resulted in injury or a severe economic loss for the employer. Under the Act, polygraph testing is held with strict standards. The polygraph examiner must be bonded, licensed and have liability coverage. Stringent codes of conduct are required throughout the entire polygraph testing process, and disclosure of the test results and other information learned throughout the process, and its use is severely limited.
The Employment Retirement Income Security Act of 1974 (ERISA)
The ERISA Act provides standards and protection to employees who participant in retirement and health plans offered by private industries. Under this act, there must be full disclosure of plan funding and features, it must provide fiduciary responsibilities to fund managers, have an appeals and grievance process and give participants of health and retirement plans the right to sue for breaches of fiduciary duty and benefits. Minimum standards under this Act also include disability insurance, life insurance and pension plans.While under this Act, employers are not required to offer retirement or health plans, but if they do they must meet compliance in their offerings. Employers must supply reporting to the government, have a written policy in place that explains how claims should be filed, provide participants with disclosures that list benefits, and most of all, it must protect those that invest. All these requirements must meet compliance according to the U.S. Department of Labor, and employers need to review plans with employee participants to avoid litigation or fines.
The Equal Pay Act of 1963
The Equal Pay Act of 1963 abolishes wage disparity among men and women who perform the same job. No company, regardless of size, shall discriminate by paying lower wages to one set of employees of a certain sex at a lower rate than the rate paid to members of the opposite sex performing the same job of equal skill and responsibilities under the same environment and work conditions. Under the following considerations, an employer does not have to give equal pay for equal work.
-
One employee has a higher educational degree or greater experience than another performing the same job in the same working conditions in the same location.
-
Employees must work in the same locations. For instance, one male employee could be doing the same job in New York City while another female employee performs the same job in Slackjaw, New Mexico. The employer is not required to pay both employees the same rate, since their jobs are not considered equal under the EPA Act.
-
If two employees perform the same job, but one employee supervises other employees while another does not, an employer does not have to consider their jobs equal. An employer can rightfully pay the employee with supervisory responsibilities more money.
Employers, on a regular basis, should review employee roles and their responsibilities considering location and an employee’s level of experience and education.
The Fair and Accurate Credit Transactions Act
Enacted in 2003, the FACT act under President George W. Bush amends the Fair Credit Reporting Act to provide consumers the tools necessary to protect themselves against identity theft and their financial information against unreliability, security risks and inaccuracy. So why does the FACT act matter to all businesses? Any employer, whose action or inaction, results in the loss of employee information can be sued in civil court not to mention fined by state and federal governments. This act would include both past and present employee information.
Employers can reduce their liability by introducing policies on document shredding, careful screening of job applicants who will handle employee information, locking drawers with highly sensitive information and setting up firewalls on computer software and equipment. Consider training current employees on identity theft and protection of sensitive company information and offer identity theft coverage to your employees.
Fair Credit Reporting Act of 1969
The Fair Credit Reporting Act of 1969 is a federal law that stipulates how consumer credit information should be released, collected and used. Consumers have the right to dispute inaccurate information on their credit file as well as have access to their credit reports when requested with any credit reporting agency.
Employers, during the pre-employment phase, may run a credit report as part of a background check on an applicant. Bad credit can pose a problem if the job role requires an employee to handle sensitive financial data, money or other critical and confidential information. Under the FRCA, employers must gain permission of the applicant before they can run a credit report. Full disclosure must be made by the employer if the report is used as a basis for hiring. They must also inform applicants if they do not get the job because of what they found on the credit check. Employers can mitigate loss by always ensuring that background checks have the permission of every candidate that applies for a position.
Fair Labor Standards Act of 1938
The FLSA determines minimum wage, overtime pay, recordkeeping and the standards required for youth employment. The basics of the Act require that nonexempt workers be paid a minimum wage of $7.25 per hour. Federal law requires employers to pay overtime pay at no less than one and one-half times the regular rate of pay for a 40-hour work week.
Businesses should be aware that if an employee works in a state where minimum wage is higher than the federal minimum wage than the employee is paid the higher wage. For instance, Oregon’s minimum wage is $10.75, three dollars and fifty cents more than the federal law stipulates.
Overtime pay is required by law for any hours worked over 40. As long as the employee is over the age of 16, there is no limit to the amount of hours they can work. Weekends, holidays and days of rest are not included unless overtime is worked. On March 7, 2019 the Department of Labor released a rule that allows a million more workers eligible for overtime.
Employers must keep all pay records and employee time on record for each non-exempt worker and display a federal official poster outlining the FLSA requirements. Payroll records should be kept up to three years.
The FLSA determines child labor laws that are designed to protect minors from bad working conditions that may endanger their health. It is also specifies that hours are limited to protect educational opportunities a child may have.
Federal Insurance Contributions Act (FICA) of 1935 (Social Security)
The FICA/Social Security Act is a payroll tax that requires a deduction from an employee’s paycheck and a contribution by the employer. These deductions and contributions fund both Medicare and Social Security. Payments of FICA are dependent upon an employee’s income. An engineer making $90K will pay more in FICA taxes than a waitress who earns $30K annually.
Employers need to verify that the deductions from payroll for each employee are accounted for at the correct percentage rate. Employer’s contributions are 6.25% for Social Security and 1.45% for Medicare. Employers are also responsible for reporting and depositing social security and Medicare taxes. The amount of taxes withheld can be identified by using Form W-4 and other methods described in Publication 15, Employer’s Tax Guide and Publication 15-A Employer’s Supplemental Tax Guide.
Health Insurance Portability and Accountability Act (HIPAA) of 1996
As federal law, the HIPAA Act protects employees’ health information from being disclosed without their consent. Developed by the U.S. Department of Health and Human Services, the core of the Act is a Privacy Rule that maintains standards for the right of individuals to understand and control how their health information is used. One facet of the ‘Privacy Rule’ is to allow important uses of health data while protecting the privacy of people who seek healthcare.
The other facet of HIPAA is the Security Rule which protects health information created, used or disclosed by certain entities such as health plans, health providers, healthcare clearinghouses and business associates. This applies to those who perform medical billing, data analysis and claims. Of course, this Act only applies if a company offers health benefits.
If an employer provides a health plan or acts as an intermediary between its employees and healthcare providers, it may handle PHI or protected health information that falls under HIPAA.
Protected electronic health information means those who work for covered entities must adhere to the HIPAA ‘security rule.’ Failure to comply may mean criminal or civil penalties. So, at best PHI privacy procedures must be in place, such as PHI security training for all employees who handle PHI, require all business associates to sign confidentiality agreements and establish a process for handling HIPAA complaints. Lastly, PHI must never be used to make employment or business decisions.
Immigration Reform and Control Act 1986
Signed into law by President Ronald Reagan, this federal law enacted criminal and financial penalties to employers who knowingly hired unauthorized aliens or illegal immigrants. The law is based on the theory that low employment prospects would decrease undocumented immigration. Employers must confirm the immigration status of every employee they hire. This act introduced the I-9 form, now required when hiring any new applicant.
Immigration and Nationality Act (INA)
INA or the Hart-Cellar act stopped the quota system that had been a part of America’s immigration policy since 1920. The change to immigration quota system no longer discriminated against southern and western Europeans, Africans and Asians. While the new Act continued to maintain a per-country quota, it also developed visa categories allowing immigrants’ skills and their US relationships to citizens hold preference. While the bill set quota restrictions to 170,000 per year, special circumstances such as relatives in America and immigrants with ‘specialized’ status had no restrictions.
Under INA, employers can only hire those who can legally work or who are authorized to work in the United States. Employers must verify the identity and employment eligibility of every applicant.
Recordkeeping, reporting, posters and notices requirements depend upon the classification of alien or foreign worker being hired. They must also keep I-9 forms for three years, or if the employment ends before the three years, one year after separation.
Failure to complete and keep I-9 forms can subject employers to penalties. The Department of Homeland Security enforces INA and employment eligibility requirements, while the Department of Justice enforces the anti-discrimination policy covered by INA.
Lilly Ledbetter Fair Pay Act of 2007
The Lilly Ledbetter Fair Pay Act is an amendment to the Civil Rights Act of 1964. The law addresses when the statute of limitations can be placed on presenting an equal-pay lawsuit. The original law gave employees 180 days to present an equal-pay lawsuit from their first day of work. Under the Lilly Ledbetter Fair Pay Act the window of time an employee can file an equal-pay lawsuit resets every time that employee receives a paycheck under an employer’s discriminatory action or practice.
So, how are employer practices and recordkeeping requirements affected? All records under the act must be archived for 3 years for all current and former employees. Documents considered as a ‘3-year primary source’ would be work certificates, payroll records, collective bargaining agreements and any individual employment contracts. Employers must also store additional records for at least 2 years. Examples of documentation that falls under this category include piece-rate schedules, work schedules, wage rate tables, production cards and timecards. While accurate records of wages earned and hours worked is encouraged, there are no specific recordkeeping requirements under the Ledbetter Act. Retaining performance reviews, job descriptions, internal memos, handbook policies and other documentation about wage practices and job classifications can mitigate risks in the event of an audit. Employers, specifically those who are covered, must post a notice in the workplace about requirements under the FLSA.
Mental Health Parity and Addiction Equity Act of 2008 (for group health insurance plans)
The Mental Health and Addiction Equity Act of 2008 apply to businesses that offer group insurance plans. The act requires health plan insurers and group health plans to ensure that the financial requirements of benefits and treatment limitations offered for mental health or addiction disorders are equivalent to those offered for medical and surgical benefits.
Unfortunately it is up to employers to ensure that their group health plans comply with MHPAEA by ensuring that they disclose all information pertaining to mental health, medical, surgical and substance use disorder as required by law. Employers can avoid non-compliance by verifying with their health group plan that a parity analysis has been conducted on all six classifications of benefits. Financial requirements under the MHPAEA Act can include out-of-pocket expenses, coinsurance, deductibles, and copayments. Limitations to treatment can include the days of coverage, the number of days in a waiting period, treatment frequency and other limits to the duration and the scope of treatment. For more in-depth information from the Department of Labor website, visit https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/compliance-assistance-guide-appendix-a-mhpaea.pdfto download their self-compliance tool.
National Labor Relations Act 1947
The National Labor Relations Act of 1947 or the Taft-Hartley Act is a law that restricts the power and activities of labor unions. Under the law, US presidents can now stop strikes if the national safety is in jeopardy. President Reagan used this act to stop the air traffic controllers strike and break union power.
Under this law, it is unlawful for an employer to discriminate against employees’ union affiliations or activities. It is also unlawful for employers to threaten employees for union activities and/or grant increased wages, benefits or promotions in exchange for their nonparticipation in union activities. This law also extends to employees who participate in concerted protected activity. Concerted protected activity includes conduct that intends to improve working conditions or other terms of employment. Other activities that are considered within the realm of concerted protected activity include discussions between employees about benefits and wages. Rules mandated by employers that prohibit these discussions violate the NLRA. Employers cannot videotape peaceful union activities nor keep employees from wearing union hats, shirts or other clothing. Nor can employers take adverse action against employees for participating in union activities by closing the workplace, reducing their hours, firing them or questioning them about union activities.
Newborns’ and Mothers’ Health Protection Act of 1996 (for group health insurance plans)
This law applies to businesses that offer group health plans. This legislation required group health plans that offer maternity coverage to pay for at least a 48-hour hospital stay for vaginal births and a 96-hour stay for births by cesarean section. In essence, the Act forbids coercion or persuasion of the mother or the provider for anything less than the minimum protections.
Employers with group health insurance plans must identify any preauthorization requirements that seem ambiguous or broad in scope. Since health practitioners are not required to obtain preauthorization from their plan. The health plan must stipulate in clear language that preauthorization for hospital stays of 48 hours or 96 hours, in the case of a cesarean section, are not required. However, there are no preventions under the Mothers’ and Newborn’ Act that states a provider should not obtain authorization beyond the 48 hour or 96 hour hospital stay.
Occupational Safety and Health Act (OSHA) of 1970
This federal law keeps employees safe from hazardous and unhealthful working conditions. This law ensures that the workplace is free of excessive noise, exposure to toxic substances such as fumes, dangers from machinery, unsanitary conditions and extreme heat and cold.
All employers must abide by the OSHA standards. Violating any rule, regulation, standard or order given by OSHA results in a citation and a fine. Repeated violations can result in civil penalties. Employers should pay attention to the General Duty clause which states that employees’ working environment should be free from ‘recognized’ hazards that are likely to result in serious physical injury or death.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002, known as the Public Company Accounting Reform and Investor Protection Act, is a complex piece of US legislation that adjusted and presented new standards for U.S. public companies and their board members. This law was enacted in reaction to the accounting and corporate scandals surrounding Enron and WorldCom. Some sections of the Act covers the responsibilities given to board of directors’ of corporations. Other sections of this bill state the penalties for criminal conduct and require the SEC (Securities and Exchange Commission) to enact rules and standards that assist corporations in their ability to comply with the law.
Under the SOX Act, payroll system controls, and its establishment, must be accounted for under section 404. Accountability, in regards to salaries, benefits, incentives, paid time off and training costs, must be documented. Employers are required to develop ethics programs that include training and a communication plan. In section 806 otherwise known as the whistleblower protection provision, there is now retaliation protection in fraud cases. In essence, this prevents any officer, employee, contractor or agent from retaliating against an employee for disclosing potential fraud evidence including mail fraud, wire fraud, securities fraud, bank fraud or any violation of a SEC regulation. Even ‘outing’ the identity of a whistleblower can lead to a violation.
Under SOX, auditing firms for publicly held companies can no longer conduct that same company’s business violations, taxes or accounting, keeping a full audit separate from a company’s daily accounting.
Uniformed Services Employment and Reemployment Rights Act of 1994
This law protects military personnel, and those in the reserves, who leave their civilian positions for active duty. It ensures no loss of employment occurs, and that pay and benefits continue. It also protects them against discrimination because of their military service. This law also provides protections for disabled veterans ensuring that all employers make reasonable efforts in accommodations
Together, the Veterans’ Employment and Training Service and the US Department of Labor, ensure that those veterans with issues regarding their civilian employment information get assistance as well as help employers with questions.
American Taxpayer Relief Act of 2012
Under this law, tax cuts enacted between 2001 and 2010 became permanent while also extending other forms of tax relief up to five years.
This law became effective as of January 1, 2013. For employers, this meant an increase from 4.2 percent to 6.2 percent in Social Security withholding taxes. The tax credit for employer-funded childcare services and facilities became permanent as did the education assistance provided by employers up to $5,250. Employers can now deduct that amount each year, provided the educational expenses qualify, when paid for on the behalf of an eligible employee. Other federal tax reductions for employers included work opportunity credit, research credit and alternative fuel vehicle refueling equipment.
