Growing your business is like leveling up in a video game. Each stage brings new challenges and rewards. The 50-employee mark is a major level-up, but it comes with a new rulebook. Ignoring it can lead to serious penalties that can set your progress back. The key to winning this stage is knowing what happens when your company goes over 50 employees. This transition involves mandatory health coverage offerings, new reporting requirements, and specific leave policies you must follow. Think of this article as your strategy guide. We’ll outline the new rules so you can build a compliant and successful operation for the long haul.
Of course, company growth is the goal for any small fledgling business, but there comes a point where you need to make changes in accordance with the growing size of your operation. As you reach the 50 employee mark, there are a number of regulations you should be discussing with your legal team to ensure you are fully compliant. Employer Shared Responsibility Provision If you have fifty or more full-time or full-time equivalent employees working at your company, you have to abide by the ESRP. You may be forced to pay a fee/fine if you do not offer affordable health insurance to every qualified employee. The Affordable Care Act (ACA) ACA Reporting – You also have the responsibility to report information once you have more than fifty employees, as outline by the IRS. The IRS requires certain employers to report whether they offered health coverage to staff, and details of said coverage. More information can be found HERE. The Family Medical Leave Act (FMLA) FMLA is applicable to all public agencies, all public and private elementary and secondary schools, and companies with 50 or more employees. This law states that an employer must provide up to 12 weeks of unpaid, job protected leave each year for their staff. It also requires that the employee’s group health benefits be maintained during the leave. Affirmative Action An affirmative action plan is needed for any company that employees fifty or more people and has at least $50,000 in government contracts. More information on affirmative action plans can be found HERE. EEO -1 Reporting It is a requirement of the EEO (Equal Employment Opportunity) Commission that any federal contractor that has at least fifty employees must fill out an EEO-1 report. This includes counts of employees broken down by job category, race, gender, and ethnicity. Form 5500 This form is required by the US Equal Employment Opportunity Commission and is designed to collect data on various employee benefits, which can include insurance and pension plans. The Employee Retirement Income Security Act states that the form 5500 must be completed by any and all employers that sponsor a benefit plan. Benefit plans can include things such as dental, 401, medical, retirement plans, and more. For companies with under 100 employees, only the short version of the form (5500-SF) is required. While we have touched on some of the most common and important regulations that affect groups with fifty employees, a more comprehensive list can be found HERE
Frequently Asked Questions
Do I really have to offer health insurance once I have 50 employees? Yes, this is the most significant change you’ll face. Under the Affordable Care Act’s Employer Shared Responsibility Provision, businesses with 50 or more full-time equivalent employees are required to offer affordable, minimum-value health coverage. Failing to do so can result in substantial penalties from the IRS, so it’s crucial to get a compliant plan in place before you hit that number.
How do I count my employees? Do part-timers count toward the 50-employee threshold? It’s not as simple as counting heads. The government uses a calculation for “full-time equivalent” (FTE) employees, which combines your full-time staff with the hours worked by your part-time staff. For example, two employees who each work 20 hours a week would generally count as one FTE. It’s important to calculate this number correctly to know exactly when these regulations will apply to your business.
What are the consequences if I don’t comply with these new rules? Ignoring these regulations can be costly. For instance, not offering health insurance can lead to significant financial penalties from the IRS, which are calculated per employee. Similarly, failing to follow FMLA rules or submit required reports like the EEO-1 can result in fines and legal action. Staying compliant protects your business’s finances and reputation.
Besides health insurance, what other major policy change should I prepare for? The Family and Medical Leave Act (FMLA) is another big one. Once you have 50 employees, you must provide eligible staff with up to 12 weeks of unpaid, job-protected leave per year for specific family and medical reasons. A key part of this law is that you must also maintain their group health benefits during their leave, so it’s important to have a clear policy documented in your employee handbook.
This seems like a lot of new administrative work. Where do I even start? It can definitely feel overwhelming, but you don’t have to manage it alone. The best first step is to partner with an expert who understands the ins and outs of these regulations. A dedicated benefits broker can help you select a compliant health plan, manage the new reporting requirements, and ensure your benefits strategy grows smoothly with your company.
Key Takeaways
- Health Insurance Becomes a Must-Have: Once your team grows to 50 full-time employees, the ACA requires you to offer affordable, comprehensive health coverage. Skipping this step can result in costly penalties, so it’s crucial to get a compliant plan in place.
- New Federal Rules Apply to Your Business: You’re now responsible for following federal laws like the FMLA, which provides job-protected leave for employees. You’ll also have new reporting requirements, such as filing an EEO-1 report that details your workforce demographics.
- Benefit Plan Reporting is Now Required: Your administrative duties expand to include filing Form 5500 for your employee benefit plans. This annual report to the Department of Labor covers details about your health, dental, and retirement plans, ensuring transparency and compliance.