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Understanding Employment Laws: Exceptions & Provisions for Small Businesses

Complying with federal employment laws is complicated, especially for small businesses. In our previous blog post, “Understanding Employment Laws: A Guide for Small Business Owners,” we outlined federal employment laws that small businesses need to know. While these federal employment laws apply to all businesses, there are some exceptions and provisions that may benefit small businesses. For this blog post, we list several of these exceptions and provisions you will want to consider and leverage for your small business. 

  • Small Business Exemptions: Some federal employment laws have exemptions or modified requirements for small businesses based on factors such as the number of employees or annual revenue. For instance, certain provisions of the Family and Medical Leave Act (FMLA) do not apply to businesses with fewer than 50 employees.

  • Small Business Health Care Tax Credit: The Affordable Care Act (ACA) includes a provision that offers a tax credit to eligible small businesses that provide health insurance coverage to their employees. Small businesses with fewer than 25 full-time equivalent employees and average annual wages below a certain threshold may qualify for this credit.

  • Simplified Employment Taxes: The Internal Revenue Service (IRS) offers options for small businesses to simplify employment tax reporting and compliance. For example, the IRS provides the option to use Form 944 (Employer's Annual Federal Tax Return) instead of filing quarterly employment tax returns for certain small employers.

  • Small Business Size Standards: The Small Business Administration (SBA) establishes size standards for determining eligibility for various federal programs, including contracting opportunities and certain regulatory requirements. Small businesses that meet these size standards may be subject to different rules or thresholds under federal employment laws.

  • Training and Assistance Programs: The federal government offers resources and programs specifically designed to help small businesses understand and comply with employment laws. These may include online guides, training seminars, and compliance assistance materials provided by agencies such as the Department of Labor (DOL) and the Equal Employment Opportunity Commission (EEOC).

  • Flexible Work Arrangements: While not mandated by federal law, small businesses may have more flexibility in implementing alternative work arrangements such as telecommuting or flexible schedules. This can help small employers attract and retain talent, particularly in competitive job markets.

  • Government Contracting Requirements: Small businesses that contract with the federal government may be subject to additional employment-related requirements, such as affirmative action obligations under Executive Order 11246 or compliance with the Service Contract Act (SCA) or Davis-Bacon Act for construction projects.

Understanding federal employment laws is no easy task. Your small business may be subject to certain exceptions and provisions including tax credits and filing frequency, eligibility for federal programs, and requirements for government contracting. There are a plethora of resources from federal and state government websites to help you understand your rights and opportunities as a small business owner. However, if you want to cut through all the legal terminology, consider Atlas Services to guide you. We offer comprehensive services for businesses of all sizes and cover federal and state employment law compliance. Contact us today to learn more about how we can help your small business thrive while staying compliant with employment laws.


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