Spring has sprung! It’s finally the growing season, and morel mushrooms (among many other edible plants and fungi) are here! Something else that might be in full swing is your business. With summer soon approaching, some businesses might be thinking of hiring employees for the first time or expanding their workforce. And, it’s good to think of these types of things well in advance because having employees comes with a lot of requirements and responsibility. So, this month, we’re attempting to help provide some of the basic requirements and information all employers in PA should know! This post covers the basic laws, regulations, and legal principles applicable to a small Pennsylvania business with employees. However, since we are not experts in tax law, we don’t go into detail about those requirements. Also, each employment requirement has different provisions for when and how the law applies, so keep track of these requirements so you can ensure compliance throughout your company’s growth. This also means some of these laws might not be applicable to your business. So as always, this post is meant to provide general information, if you want to make sure ALL your bases are covered for your specific situation, reach out to us or another attorney and definitely talk to your accountant (or get one!) ;)
Required New Hire Forms
Pennsylvania Department of Labor and Industry requires employers fill out and submit a new hire reporting form for each new employee hired. This form is required for all employees, whether part-time, full-time, or salaried. A copy of the form can be found here. Online reporting is also available through Pennsylvania Careerlink. This online resource can help ensure you file the correct forms under state and federal law requirements for new hires. It is recommended you review the Department of Labor and Industry’s website before submitting any paperwork for the most up to date information.
There are also necessary tax forms for new hires, so you should discuss with your accountant which forms will need to be filed with the relevant taxing agencies in regards to your employees.
Minimum wage and Overtime
Pennsylvania’s Minimum Wage law requires employers to pay at least the federal minimum wage. Therefore, you must pay your employees at least $7.25/hr as set by the Fair Labor Standards Act (FLSA) at regular intervals. However, there are some exceptions to the minimum wage requirement. Note that there are some exceptions under federal law are not available under PA law.
Overtime pay is required by the same regulations which require minimum wage. If an employee works more than forty hours in one week, you are required to pay that employee time-and-a-half (150% of their pay) for any time worked over forty hours during that week. 29 U.S.C.S. § 207(a). Because they are regulated by the same laws, some exceptions for minimum wage and overtime pay are the same. These exceptions are complex and have other requirements, so feel free to reach out to see if your employee is exempt.
Required Hours & Breaks
Of age employees (18+ years-old) can work as many or as little hours as they are able. An employer is not obligated to require or limit the hours employees work if they are over 18. That means that employers are not typically obligated to give breaks to anyone over eighteen.
However, there are a couple of instances where breaks will be required. If the employee is fourteen through seventeen, the employer must provide a thirty-minute break during a five or more consecutive hour shift. P.S. 43-40.3(a). Another required break is for nursing mothers within one year of a child’s birth. The FLSA requires employers to provide employees (who are not exempt from the overtime rules) who are nursing mothers with a place other than a bathroom to pump breast milk. However, this provision does not apply to a company with less than 50 employees if this obligation would cause undue hardship (which is a vague phrase and worth evaluating further if you have nursing mothers at your business). You can also read more about nursing mother breaks and the requirements and standards for undue hardship here.
Required Employment Records
One form you must retain for each of your employees is Form I-9. This form is used for verifying the identity and employment authorization of individuals hired for employment in the United States. The form is required for both citizens and noncitizens and the employer and employee must complete the form.The employer is not required to submit the form, but rather retain, and make available for inspection if requested. The form must be retained for each employee for either three years after the date of hire or one year after employment is terminated, whichever is later. Further information and access to the form can be found here.
Employers should also have their employees fill out a IRS Form W-4. This is where the employee provides information that helps make sure employers withhold the right about of Federal Income Tax from wages. More information and the form can be found here.
Additionally, FLSA has record keeping requirements which require an employer to maintain records. These records as well as payroll records must be kept for at least three years after termination of an employee in a central place either at the company’s place of business or a central location for record keeping.
Pennsylvania also has laws governing record keeping, including the Pennsylvania Unemployment Compensation law, which requires records must be kept for all employees. This document goes over some of the requirements under PA law. Pennsylvania requires a lot of the same types of records as Federal, with a few additions. These records must be available for any audit for at least four years.
When employees have work-related injuries, the Pennsylvania Workers’ Compensation Act applies. All Pennsylvania employers, no matter the number of employees, are required to have insurance covering workers’ compensation claims. Employers are liable for all work-related injuries to employees; liability includes covering medical costs as well as work compensation for lost time. 77 P.S. § 431. You can read more about the requirements here. Insurance is available through private insurance companies or through the State Workers’ Insurance Fund. Also, Employers may also be liable for the conduct of their employees with individuals outside of the business. This form of liability is called respondeat superior and falls within the vicarious liability category. The Pennsylvania Workers’ Compensation Act also states an “employer shall be liable for the negligence of all employees, while acting within the scope of their employment....” 77 P.S. § 51. Thus, employers may be liable for the negligent, intentional, or even criminal conduct of their employees.
Occupational Safety and Health Act (OSHA)
Employers are also subject to the requirements of the United States Department of Labor Occupational Safety and Health Administration (OSHA). The employer’s responsibilities vary based on the size of the employer’s business, the industry they operate in, and risk. It is recommended that you review the OSHA laws and requirements via this guidebook put out by the US Department of Labor, which also contains links to further information.
Employers are required to post required notices at their worksite so employees may have access to information about applicable labor laws. Notices are in the form of posters which may be downloaded from the Pennsylvania Department of Labor website, or mailed to you for free by calling 717-783-8794. The posters must be posted in a conspicuous place so that they are easily visible and available to all employees. Failure to post such notice can result in substantial fines. There are certain Federal requirements for posters as well. A list of the required posters can be found on the Pennsylvania Department of Labor website here. The site lists the Pennsylvania required posters and then there is a link at the bottom for Federally required posters.
Under PA law, you are not required to give your employees off any days, or to give them leave for any reason. But, if you did have more than 50 employees during any 20-week period, you have to comply with Family Medical Leave Act (FMLA) as a “covered employer” for the remainder of the business. A 12-week leave during a 12-month period must be granted for various situations. For more information, check out this link with frequently asked questions.
One thing to keep an eye on is if Pittsburgh will be permitted to move forward with a “Paid Sick Days Act” the city council passed in August 2015. The case was argued last October in front of the State Supreme Court. If the Court upholds the ordinance, then all employers within the city will be required to provide workers with 3-5 days of paid sick leave yearly. Here is a fact sheet with more information.
If your company is smaller than 50 employees, you do not have to provide health insurance. However, if you do choose to provide your employees with healthcare insurance, or have 50 or more employees, the Affordable Care Act will be applicable to your benefits. This means that you will be required to provide minimum coverage among other requirements.
Under the Pennsylvania Human Relations Act, employers with four or more employees are prohibited from discriminating on the basis of “race, color, religious creed, ancestry, age, sex, national origin or non-job related handicap or disability or the use of a guide or support animal because of the blindness, deafness or physical handicap of any individual or independent contractor.” This includes a prohibition from discriminating during the hiring, promotion, and termination periods. Federal Regulation (Title VII of the Civil Rights Act of 1964) applies to employers with more than 15 employees. The federal regulation is largely echoed by the PA regulation.
There are more requirements for employees under eighteen, so please reach out to an attorney before employing minors.
This is just an introduction to some of the important legal considerations of becoming an employer, but trust us, it’s not as scary as it seems and can be a great way to reduce the number of hats you’re wearing as an employer and expand your business. Just make sure you’re doing things the right way from the start! As always, feel free to reach out to us if you need help for your specific business.
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Just to make sure it’s clear: as we are not able to give tax advice, this does not include payroll, withholding, PA Department of Revenue, Federal Tax, and other related requirements that may be applicable. We advise that you consult with an accountant to ensure compliance with all Federal, State, and Pittsburgh tax reporting, withholding, and other requirements. Also, this blog is not comprehensive, and is not intended to provide individual legal advice to any entity or person. If you have specific questions about your employment practices, please reach out to an attorney for further guidance.