Insurance checklist as business owner


  • General Liability If your business has a vehicle in its name, most states require this coverage. Beyond that, arguably, you need this if you are in business at all. It will help you manage risks, safeguard against losses and even gain tax benefits. It covers legal issues due to accidents, injuries and claims of negligence.
  • Product Liability If you provide products, this covers financial loss as a result of a defective product that causes injury or bodily harm.
  • Professional Liability If you provide services, this covers malpractice, errors and negligence in provision of services to your customers. Also called "Errors and Omissions Insurance," some professions such as physicians or certain financial professionals are required to carry it.
  • Commercial Property Insurance If your business has property, this covers loss and damage of company property due to events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. "Property" is broadly interpreted and may include buildings, computers, papers and money.
  • Disability Insurance If you are concerned about the possible loss of income when an illness or accident makes it impossible to work, this is an important policy to have.
  • Key Individual Insurance If your business has a central person, without whom the business would fail to thrive, this policy covers loss of income when a key, indispensable person suddenly dies, is injured or takes ill.
  • Home Business Insurance If you are operating out of your home, this will provide added protection. Homeowners' insurance policies do not generally cover home-based business losses. Riders may be added, but may not cover certain types of general and professional liability

Heath care plans as business owner

Preferred Provider Organization (PPO)Are willing to primarily use providers on a set list, with higher costs for going outside of that network.Lower out-of-pocket costs than other plans, higher co-payments and higher cost of treatment outside the PPO network.
Health Maintenance Organization (HMO)Are willing to organize care through a primary care physician on a list provided by the HMO. Any outside care may not be covered, or may come at a higher co-pay.Lower co-payments and fewer fees than other plans; any treatment outside the network, however, is rarely covered.
Indemnity or Fee-for-Service PlansWant the greatest freedom in choosing providers and don't mind submitting bills for reimbursement.Annual deductibles and co-insurance, as well as out-of-pocket maximums; costs vary greatly depending on coverage.
Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP)Are younger and healthier and don't visit the doctor that often.A cheaper monthly premium, and a higher deductible.
Point of Service PlanAre not going to need a lot of specialists, because the plan requires you to choose a primary care physician from the network to monitor your health care, and get referrals for out of network treatment.Lower co-payments than other plans, low out-of-pocket costs and no deductibles for network care; high co-payments and deductibles for non-network care.

The variety of retirement planning options available to you as a business owner

Retirement Plan

On the chart below, you can find details about retirement plans that may suit you. Ultimately the ideal retirement plan for you is determined by a dynamic set of variables, and this chart is meant to demonstrate the variety of retirement planning options available to you as a business owner. Before implementing any plan, consider consulting with your tax or legal advisor.
PlanDetailsMaximum Annual ContributionTaxes and WithdrawalsAdministrationNumber of Employees
Payroll Deduction IRAAn IRA-based plan that allows employees to contribute an amount determined by them each pay period$5,000, with catch-up contributions of $1,000 for those 50 and overWithdrawals are permitted at retirement age (59½) and are taxed as ordinary income. Early withdrawals are subject to taxes plus penalties.Easy to set up and maintain. Only employees contribute.Any employer with one or more workers
Simplified Employee Pensions (SEP)An IRA-based plan with a greater maximum contribution than a Payroll Deduction IRAThe lesser of 25% of pay or $49,000Withdrawals are permitted at retirement age (59½) and are taxed as ordinary income. Early withdrawals are subject to taxes plus penalties.Easy to set up and maintain. Employer can opt to contribute a uniform percentage of pay for each employee, but not required to contribute each year. Only the employer can contribute.Any employer with one or more workers
Simple IRAAn IRA-based plan that allows employees to contribute a percentage of their salary and requires employer contributions$11,500, with catch-up contributions of $2,500 for those over 50Withdrawals are permitted at retirement age (59½) and are taxed as ordinary income. Early withdrawals are subject to taxes plus penalties.Bank or financial institution handles most of the administration and there is no annual filing requirement for employer. Employer must contribute, but they can opt to match employee contributions or contribute 2% of pay.Any employer with 100 or fewer employees
Traditional 401(k)A savings plan that allows employees to defer a portion of their pay and place it in a plan administered by the employer$17,000, with catch-up contributions of $5,500 for those over 50Withdrawals are permitted at retirement age (59½) and subject to ordinary income tax. Plan may permit loans and early hardship withdrawals, and may be subject to taxes and penalties.401(k) plans vary greatly in their complexity and are administered by the employer. Annual filing is required and some plans have other requirements. Employer may contribute according to the terms of the plan.Any employer with one or more workers
Profit SharingA plan allowing large discretionary contributions from the employerThe lesser of 25% of compensation or $50,000, according to terms of planWithdrawals are permitted at retirement age (59½) and are taxed as ordinary income. Plan may permit hardship withdrawals, but most withdrawals are subject to taxes and penalties.Profit-sharing plans vary greatly in their complexity and are administered by the employer. Annual filing is required. Employer contributes significant amounts.Any employer with one or more workers
Looking at this chart, we can pull out a few questions that may help you decide which direction to go.
  • How many employees do I have? As you can see, all of the plans will work for a single owner operator up to an organization with any number of employees. Only the Simple IRA caps at 100 employees.
  • Will my income be predictable? If it won't be when you start up or isn't currently, plans like the Payroll Deduction IRA, the SEP and profit sharing allow employers to be flexible with how much they contribute based on annual cash flow.
  • Do I have resources for administration? Profit sharing and 401(k) plans are more complex to set up, usually requiring the assistance of a financial institution or other advisor. They also require annual reporting to the IRS, whereas the IRA-based plans are established with a few forms and operate without significant administration.

Types of Savings account as an employee

Type of AccountDescriptionTaxes on contributions?Taxes on withdrawals (principal)?Taxes on earnings?
401(k)An employer-sponsored account into which you can save pre-tax money from every paycheck. In retirement, the money you withdraw—including earnings—will be taxed in whatever income bracket you’re in at the time.NoYesYes
403(b)Operates almost exactly like a 401(k) plan, but is usually offered to those who work for public schools and tax-exempt organizations.NoYesYes
Traditional IRAAn Individual Retirement Account into which you can save money and receive a tax deduction if you meet certain income requirementsThe income limit is based on your modified adjusted gross income, which is based off your adjusted gross income. In 2012, if you're married filing jointly and your MAGI is less then $92,000, you can deduct your full IRA contribution. If your MAGI is between $92,000 and $112,000, you can deduct part of your contribution. If it's more than $112,000, you can't deduct any of your contribution. In 2012, if you file single, as head of household or married filing separately and your MAGI is less than $58,000, you can deduct your full IRA contribution. If your MAGI is between $58,000 and $68,000, you can deduct a partial amount. If it's more than $68,000, you can't deduct any of your contribution. or if you don’t have an employer-sponsored retirement plan—such as a 401(k)—available to you.NoYesYes
Nondeductible IRAAn Individual Retirement Account into which you can save money if you don’t meet the income requirements for a traditional IRA and you have an employer-sponsored retirement plan available to you. Your contributions to this plan are not deductible on your taxes, but that also means you won’t pay taxes on the money when you withdraw it in retirement. You will, however, pay taxes on any earnings.YesNoYes
Roth IRAAn Individual Retirement Account into which you can save after-tax money if you meet certain income requirements. In retirement, the money you withdraw—both your deposits and all of your earnings—is entirely tax free.YesNoNo
Roth 401(k)An employer-sponsored account that allows you to contribute after-tax money to a 401(k). As in a Roth IRA, both your deposits and earnings can be withdrawn entirely tax-free in retirement. The key difference between a Roth IRA and a Roth 401(k) is that the contribution limit for Roth 401(k)s is significantly higher: In 2012, only $5,000 can be contributed to a Roth IRA, while $17,000 can be contributed to a Roth 401(k). Also, people of all incomes can contribute to a Roth 401(k).YesNoNo
529 College Savings PlanAn investment account into which you can save after-tax money toward college education costs. As long as the money is used for qualified education expenses, you don’t have to pay taxes on any of the earnings.YesNoNo
Taxable accountAn account, such as a savings account or an investment account, that exists outside of your traditional retirement accounts. There is no limit to the amount of money you can contribute to these accounts every year, but you’ll owe taxes on any money you make in this account, in the form of earnings or capital gains. You might have this account at a bank or brokerage house.

Types of IRA as an employee

TypeEligibilityMax ContributionTaxesPenalties for Withdrawal?
Traditional IRAAnyone under age 70½For 2012: Up to $5,000 ($6,000 if you're 50+). Can't be more than your annual incomeIf you have an employer-sponsored plan: If you make less than $58,000, you can deduct the full amount you contribute. If you make between $58,000 and $68,000, part of your contribution is tax-deductible. (For this reason, people earning less than $68,000 will have what are called deductible IRAs.) If you make more than $68,000, your contributions are not tax-deductible at all (and your IRA will be called a non-deductible IRA). If you don't have an employer-sponsored plan: Contributions are fully deductible regardless of income. For all traditional IRAs: You aren't taxed on earnings until you withdraw from the account.10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); for higher education expenses for you or anyone in your family; for disability; or for death
Roth IRAAnyone with income under an amount defined by the IRSFor 2012: Depending on your income (see link to the left), up to $5,000 ($6,000 if you're 50+). Can't be more than your annual incomeContributions are nondeductibleTo deduct means to subtract that amount from your taxable income at the end of the year so that you pay less in taxes. So if you deduct $5,000 and you're in the 20% tax bracket, you'll pay $1,000 less in taxes.. Distributions from contributions are tax-free. Distributions from earnings are federally tax-free once you've had the Roth open for 5 years and you're over age 59½.Withdrawals of contributions are penalty-free. Withdrawals of earnings before age 59½ are penalized unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death.
Simplified Employee Pension (SEP-IRA)Anyone who is self-employed, has freelance income or is a business owner under age 70½For 2012: Up to $40,000 or 25% of an employee's annual compensation. You must have earned income equal to or greater than your contribution.If you already have an employer-sponsored plan, how much you can deduct depends on your income. If you don't, contributions are fully deductible regardless of income. You aren't taxed on earnings until you withdraw.10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death
Savings Incentive Matching Plan for Employers IRA (SIMPLE -IRA)Employers with 100 employees or fewer who do not maintain any other retirement plan, or any self-employed person who does not maintain another retirement planFor 2012: Up to $11,500 a year ($14,000 if age 50 or older); employers will match a portion of the employee's contribution Contributions are tax deductible. Earnings are not taxed until distribution.Withdrawals of contributions are penalty-free. Withdrawals of earnings before age 59½ are penalized unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death.
Spousal IRAA married person who has an annual income of less than $3,000, who is filing her taxes jointly with her partnerFor 2012: Up to $5,000 ($6,000 if age 50 or older), as long as the working spouse has enough earned income to cover the contributionThe same rules apply as with a Traditional or Roth IRA, depending on which kind has been set up.The same rules apply as with a Traditional or Roth IRA, depending on which kind has been set up.
Rollover or Conduit IRAAnyone who wants to roll over her 401(k) or other retirement plan from a former jobNo limit on the contributions transferred to a rollover IRA. Can be transferred to a new employer's qualified retirement planContributions and earnings are not taxed unless they are co-mingled with other assets.10% federal penalty tax on withdrawals before age 59½ unless for your first home (up to $10,000); higher education expenses for you or anyone in your family; disability; or death

Types of retirement accounts

Types of retirement accounts

You should have an understanding of what kind of account you have. Find out which type is the one offered by your employer, and learn about how it works, so you know what it can do for you, and what it can't, in terms of getting you to your retirement goals.
401(k)403(b)457Roth 401(k) or 403(b)401(a)
Available ToPrimarily employees of private companiesEmployees of public education institutions, non-profits and ministersEmployees of state and local governments, tax-exempt governments and tax-exempt employersEmployees of companies that offer the Roth 401(k)Employees of companies that offer 401(a)s, also called "money purchase plans"
How It WorksContributions are made pre-tax from paychecks.Contributions are made pre-tax from paychecks.Contributions are made pre-tax from paychecks.Contributions are made after tax from paychecks.The company contributes to the plan on its own or mandates that all employees deduct a set percentage from their paychecks as a contribution.
Contribution LimitsFor 2012, $17,000. If you are 50 or older, you can contribute an extra $5,500 in a "catch-up" contribution.For 2012: $17,000. Limits may differ for ministers, church employees and those with 15 years of service with an educational organization, hospital, health and welfare service agency, church, or association of churches. (Find out more from your employer or on the IRS web site.)For 2012: $17,000. If you have a 401(k) or 403(b) in addition to your 457, you can contribute up to the maximum toward both accounts. If you're 50 or older, you can also contribute the additional $5,500 catch-up contribution toward each plan.For 2012: $17,000. If you are 50 or older, you can contribute an extra $5,500 in a "catch-up" contribution.N/A. A 401(a) does not allow the employee to choose the amount he or she contributes to the plan.
Tax ImplicationsBecause contributions are made pre-tax, you’ll pay taxes when you take the money out, not when you put the money in. Also, they'll lower your taxable income now, so the more you contribute to your 401(k), the less income you'll be taxed on.Same as 401(k). Same as 401(k).The Roth 401(k) is desirable for taxpayers who will pay less on their taxes now than they will on future withdrawals. This includes people who are in a lower tax bracket than they will be during retirement. Contributing with post-tax dollars (i.e. paying taxes now) could also be beneficial if U.S. tax rates go up.Voluntary contributions made by employees are done on an after-tax basis. Mandatory contributions required by the employer are done on a pre-tax basis.
Matching?Some employers will contribute money to your retirement account if you do, “matching” your contribution. You should always contribute the minimum necessary to get the match--it's free money!Same as 401(k)s.Employers do not match 457 plans.Same as 401(k)s, except that an employer's match is contributed pre-tax and therefore held separately and taxed as ordinary income upon withdrawal.Same as 401(k)s.
Early WithdrawalsIf you withdraw money from your 401(k) before age 59 1/2, you will pay taxes on it and be fined a 10% penalty.Same as 401(k).No penalty for early withdrawals, though they will be subject to income tax.Early withdrawals (before 59 1/2) are subject to a 10% penalty, but only for the amount considered earnings. Early withdrawals (before 59 1/2) are subject to a 10% penalty.

list of the major laws impacting Human Resources Management

Human Resources Legal Issues

The following is a list of the major laws impacting Human Resources Management.

Equal Employment Opportunity Laws

  • Title VII of the Civil Rights Act of 1964 prohibits private employers, state and local governments, and education institutions, and companies with 15 or more employees from discriminating against their employees and job applicants on the basis of race, religion, color, sex and national origin. The Federal government, private and public employment agencies, and labor organizations, also must abide by the law. Most discrimination lawsuits allege a violation of this law. This law is enforced by a federal agency, the Equal Employment Opportunity Commission (EEOC).
  • The Civil Rights Act of 1991 expands the ability of victims of discrimination to collect awards for compensatory and punitive damages, including emotional harm and future losses. Punitive damages may be awarded to victims of intentional discrimination. Plaintiffs are allowed jury trials.
  • The Americans with Disabilities Act (ADA) became effective in 1992. The law "prohibits employment discrimination against qualified individuals with disabilities. A qualified individual with a disability is defined as an individual with a disability who meets the skill, education, experience and other job-related requirements of a position held or desired, and who, with or without a reasonable accommodation can perform the essential functions of the job."
  • The Rehabilitation Act prohibits companies from discriminating against individuals with a disability and requires the establishment of an affirmative action plan for individuals with a disability. Affirmative Action plan hiring goals are not required.
  • The Vietnam Era Veterans' Readjustment Assistance Act of 1974 provides veteran re-employment rights and requires that an Affirmative Action plan be written for veterans. Affirmative Action plan hiring goals are not required.
  • Executive Order 11246 was signed by President Johnson in 1964. It created Affirmative Action. Executive Order 11246 applies to "federal contractors and subcontractors having a contract or contracts with an executive branch agency or department exceeding $10,000 during any 12-month period. Federal contractors with 50 or more employees and at least one covered contract for $50,000 or more are also required to prepare written affirmative action plans for their establishments. Affirmative action plans must be updated at least annually." Companies are required to establish female and minority hiring goals and to demonstrate that a "good faith" effort is being made to attract and retain females and minorities, especially into positions that they have not traditionally held. Consulting firms are available to write Affirmative Action Plans. The cost is generally a few thousand dollars per year, depending on the size of the organization. Software packages are also available to help write an Affirmative Action Plan.
  • The Equal Pay Act of 1963 "prohibits sex discrimination in the payment of wages to men and women performing substantially equal work under similar working conditions in the same establishment."
  • The Age Discrimination in Employment Act (ADEA) "prohibits private employers having 20 or more employees from discriminating against their employees and job applicants who are at least 40 years old on the basis of age."
  • Harassment law is based on court interpretation of the Civil Rights Act of 1964. The first regulations were written by the EEOC in 1980. Harassment occurs if an individual perceives to have been harassed, even if the alleged harasser did not intend to harass. Harassment includes "verbal or physical conduct which results in a hostile or intimidating work environment that interferes with work performance or otherwise adversely affects employment opportunities." Examples of harassment may include jokes, name calling, derogatory comments, and offensive pictures. The law states that if the company knew, could have known, or should have known of the harassment, and if the harassment unreasonably interfered with the individual's work performance or created an intimidating, hostile or offensive work environment, then the company is liable.
  • State Equal Employment Laws typically provide the same anti-discrimination protections as federal laws, plus some additional. For example in the state of California, it is illegal to discriminate in employment on the basis of marital status and sexual orientation.

Enforcement Agencies

  • The Equal Employment Opportunity Commission (EEOC), which is a part of the Department of Justice, is the main enforcement agency of Equal Employment Opportunity Laws. The process to file a complaint is simple. Employees (or applicants, etc.) who allege discrimination go to the local EEOC office to file a complaint. An EEOC representative works with the employee to formulate a charge. The charge is sent to the Employer, requesting a response within a specified time period. Refer to the section below on responding to a discrimination complaint.
  • The Office of Federal Contract Compliance Programs (OFCCP) is a branch of the Department of Labor, and is responsible for auditing Affirmative Action Plans. The most common type of audit is called a "compliance review." Compliance reviews are conducted to determine if adverse indicators are present that suggest employment discrimination exists. A detailed review of the Affirmative Action Plan is conducted. Generally, if the percentage of females and minorities within any job group inside the company is less than the percentage of females and minorities in the labor market with the required skills, then the OFCCP will consider this to be an "adverse indicator." Next they will determine if adequate "good faith" measures are being taken. Failure to comply with Affirmative Action Requirements can ultimately lead to the loss of government contracts and individual or class action lawsuits. More information on Affirmative Action Plans is shown above. .
  • State Human Rights Commission offices will also process discrimination complaints. In the state of California the agency that handles discrimination complaints is the Department of Fair Employment and Housing (DFEH). Complaints filed with a state agency are coordinated with the EEOC and vice versa, to avoid duplicate handling.

Responding to a Discrimination Complaint

Usually an employer will have an advanced indication that a formal discrimination complaint is being filed with a government enforcement agency. That's because employees usually try resolve the complaint inside the company before filing. In fact, it helps the employee's case if he/she can demonstrate that they tried to resolve it internally. Therefore the best way to respond to a discrimination complaint is to start early, when the employee first brings forth the complaint, which is usually long before a formal complaint is filed. Investigate the complaint thoroughly. Interview all the parties involved including witnesses. Bring the conclusions of the investigation to the complainant. If the result of the investigation supports the employees complaint, then try to reconcile the problem: give them the promotion that was denied them due to discrimination, discipline a discriminating or harassing manager or employee, move the harassing party, inform the employees that harassment is unacceptable, remove the offending posters, etc. Often the result of the investigation will not be clear. If so, inform the complaining party that the results were inconclusive. Perhaps a mutually agreeable accommodation can be reached. Perhaps the employee who complained can be counseled on things he/she can do differently (e.g. complete your degree to qualify for the next promotion). Above all, document every step of the process as a defense against a possible lawsuit. If you receive a formal complaint from a government enforcement agency, contact a lawyer who specializes in employment law.

Laws Affecting Benefits and Pay

  • The Employee Retirement and Income Security Act of 1974 (ERISA) governs qualified benefit plans including health and retirement plans. ERISA requires that benefit plans be made available to all eligible employees equally and on a non-discriminatory basis. ERISA also requires that the financial performance of the plan be reported to employees on an annual basis (Summary Annual Report), and that specific information on the plan be distributed to employees (Summary Plan Description). In return for complying with ERISA, companies can deduct the cost of qualified plans from their taxable income. A reputable insurance broker or plan administrator can assist establishing a plan, making necessary filings with the Internal Revenue Service (IRS) and completing the Summary Plan Description and Summary Annual Reports.
  • The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires employers with more than 20 employees and their insurance companies to provide covered employees and family members, the opportunity for a temporary extension of health insurance benefits when the coverage is lost due to certain "qualifying events." The employee or family member must pay the cost of continuing the insurance coverage, which cannot exceed 2% of the employer or insurance company cost. "Qualifying events" include: employee's loss of employment (for reasons other than gross misconduct), reduction in hours of employment, divorce, or a child ceasing to be a "dependent" under the health plan. The company must provide the employee with a notice of their health insurance continuation rights. A reputable insurance company or broker can provide help in complying with the COBRA requirements.
  • The Fair Labor Standards Act (FLSA) requires that covered employees be paid 50% more than their base hourly rate for the time worked in excess of 40 hours in a week. Certain employees are "exempt" from the FLSA. Exempt employees include managers, professionals (whose position requires advanced education, discretion and independent judgment), administrative employees (who independently establish company policy or practices and do not directly work on the company products), sales people, certain computer employees, and teachers. Exempt employees must be paid on a salary basis. That means they must be paid the same rate regardless of the number of hours they work (with some exceptions). Determining which jobs are exempt from the FLSA is difficult, because the definitions are subject to interpretation. To avoid non-compliance with the FLSA, error on the side of defining positions as "non-exempt" from the FLSA. That can be difficult because most employees prefer to be in an "exempt" position, perhaps because of perceived status or because the requirement to track hours is removed. Some states have their own overtime pay requirements (e.g. California) which can exceed the requirements of the FLSA.
  • State Regulations deal with all aspects of pay including when paychecks must be issued and overtime pay requirements. The Chamber of Commerce is a good source of information on state regulations.

Other Employment Laws

  • The Immigration Reform and Control Act (IRCA) is intended to eliminate the employment of "illegal aliens." All new employees are required to complete form I9 (available from the local Immigration and Naturalization Office (INS)). The employee must provide documented proof of their eligibility to work in the United States. The employer has the obligation to review the documents supplied by the new employee and attest to their eligibility. The forms must be kept on file. It's advisable to keep the forms in a separate file to facilitate government audits. The Office of Federal Contract Compliance audits I9 forms, typically when conducting an Affirmative Action Compliance Review.
  • The Family and Medical Leave Act of 1993 (FMLA) provides eligible employees with up to 12 weeks of leave within a 12 month period for 1) the birth, adoption, or foster care placement of the employee's child; 2) the employee's serious health condition; or, 3) the serious health condition of the employee's spouse, son, daughter, or parent. Typically a doctor's certification is required. Health benefits must be provided to the employee taking leave at the same cost as regular employees. Employees who elect a family leave are entitled to return to the same or equivalent job.
  • Posting Requirements are established by State and Federal law. Employers are obligated to post on company premises, in a visible location, information on employees' rights and obligations. Some private companies and the Chamber of Commerce have done a nice job of consolidating the required information for posting onto a few posters. It's a good idea to read these posters to be aware of your obligations as the employer. The Department of Labor's web site lists Federal Posting Requirements and most states publish posting requirements (See State of California posting requirements).
  • Reporting Obligations. Companies with at least 100 employees or companies with 50 or more employees and government contracts of $50,000 or more, must submit an EEO-1 report annually to the Joint Reporting Committee (EEOC and OFCCP). The EEO-1 report lists the number of employees by race and sex for each EEO Job Category. Companies with Federal contracts or subcontracts of $100,000 or more must submit a Vets-100A report by September 30 of each year. For federal contracts initiating before 2003, the veteran reporting rules are different. The forms can be submitted electronically via the Internet. The Vets-100 report lists the number employees and recently hired employees by veteran status. Annual qualified benefit plan reporting is outlined above.
  • The Occupational Safety and Health Act (OSHA) requires the Department of Labor to create safety and health standards in the workplace. All private employers who engage in interstate commerce must comply. OSHA inspectors issue citations for violations. The Department of Labor can seek an injunction to stop unsafe practices. The Hazard Communications Act requires employers to establish a training and information program for personnel who work with hazardous chemicals, to label containers and areas where "reactive materials" are stored or used, and to maintain files of OSHA Materials Safety Data Sheets (MSDS) in work areas where reactive materials are used. The Toxic Substances Control Act was passed in 1976 requiring the Environmental Protection Agency (EPA) to regulate chemicals that present an "unreasonable" risk of harm to human health or the environment. The EPA has imposed various reporting, record keeping, and training requirements. The state of California requires organizations to create an Injury and Illness Prevention Program which includes a training and communication system, a process for identification and evaluation of workplace hazards, periodic inspections, procedures for investigating occupational injuries and illnesses, procedures for correcting unsafe or unhealthy conditions, and record keeping.

    Federal OSHA standards are grouped into four major categories: general industry (29 CFR 1910); construction (29 CFR 1926); maritime (shipyards, marine terminals, longshoring--29 CFR 1915-19); and agriculture (29 CFR 1928). While some standards are specific to just one category, others apply across industries. Among the standards with similar requirements for all sectors of industry are those that address access to medical and exposure records, personal protective equipment, and hazard communication.
    • Access to Medical and Exposure Records: This regulation requires the employer to grant the employee access to any medical records the employer maintains with respect to that employee, including any records about the employee's exposure to toxic substances.
    • Personal Protective Equipment: This standard, which is defined separately for each segment of industry except agriculture, requires employers to provide employees with personal equipment designed to protect them against certain hazards. This equipment can range from protective helmets to prevent head injuries in construction and cargo handling work, to eye protection, hearing protection, hard-toed shoes, special goggles for welders, and gauntlets for iron workers.
    • Hazard Communication: This standard requires manufacturers and importers of hazardous materials to conduct hazard evaluations of the products they manufacture or import. If a product is found to be hazardous under the terms of the standard, the manufacturer or importer must so indicate on containers of the material, and the first shipment of the material to a new customer must include a material safety data sheet (MSDS). Employers must use these MSDSs to train their employees to recognize and avoid the hazards presented by the materials. Also see the Department of Labor's Basic OSHA Provisions and Requirements.
  • National Labor Relations Act applies primarily to unionized workplaces and deals with union organizing, collective bargaining, strikes and lockouts. However, the law also applies to non-union settings, providing protection to non-union workers "to engage in protected, concerted activities for their mutual aid and protection." The action of employees approaching their management as a group (or one employee speaking on behalf of a group of employees), to discuss pay, hours of work, or working conditions, is protected. No adverse action (e.g. discharge, demotion, or punitive measures) can be taken against the employee(s) for raising such an issue.
  • Workers Compensation provides benefits to employees injured on the job, including medical benefits, disability benefits for lost wages (typically two thirds of wages up to a specific limit - $1010.50 per week in California as of 2012), death benefits for dependents, and in some circumstances, job retraining necessitated by the work related injury. Workers compensation premiums are paid by the employer. The amount of the premium depends on the mix of positions held by the employees (e.g. administrative, manufacturing, field service, etc.). Both the employee and employer must promptly report injuries by completing and submitting a Workers Compensation form. Information on reporting work related injuries or illnesses must be posted on company bulletin boards.


Payroll is a highly regulated and thankless function. It takes considerable knowledge and effort to issue paychecks correctly and on time. Yet employees expect their paychecks to be completed correctly and delivered on-time. If not, the company can have serious morale and legal problems. Regulations affecting payroll include the Fair Labor Standards Act which regulates overtime pay requirements, the IRS which regulates income tax withholding (determining what types of compensation and which individuals are subject to withholding can be challenging), and other federal and state laws which regulate state income tax withholding, workers compensation premiums, and unemployment insurance. Payroll record keeping is also critical for, among other reasons, the issuance of W2 forms at the end of the year.
Outsourcing payroll is an excellent solution to the legal compliance issues. The payroll services can provide assistance in complying with the law and in most cases fulfilling legal requirements, such as issuing W2's and filing periodic reports. There are a number of payroll services from which to choose, including ADP, Ceridian, and Pro-Business.