HR Compliance Checklist: Federal and State Requirements

Compliance Isn't Optional

There's no grace period for being a small business. From the day you hire your first employee, you're subject to a stack of federal, state, and local employment laws. Violating them -- even accidentally -- can result in fines, lawsuits, back pay awards, and in some cases, criminal penalties.

This checklist covers the major compliance areas every small business with employees needs to address.

Hiring Compliance

Federal Requirements

[ ] EIN obtained: Required before hiring any employees (IRS Form SS-4)
[ ] I-9 Employment Eligibility Verification: Completed for every employee within 3 business days of start date. Retained for 3 years after hire or 1 year after termination, whichever is later
[ ] W-4 collected: Federal tax withholding elections for every employee
[ ] New hire reporting: Reported to your state within 20 days (some states require sooner)
[ ] E-Verify: Check whether your state requires it or whether federal contracts mandate it

State Requirements

[ ] State tax withholding registration and forms
[ ] State new hire reporting
[ ] Background check compliance (ban-the-box laws, restrictions on criminal history inquiries)
[ ] Salary history ban compliance (if applicable in your state/city)

Wage and Hour Compliance

Fair Labor Standards Act (FLSA)

[ ] Minimum wage: Paying at least federal minimum wage ($7.25/hour) or your state/local minimum, whichever is higher
[ ] Overtime: Paying non-exempt employees 1.5x regular rate for hours over 40 per workweek
[ ] Employee classification: Correctly classifying workers as exempt vs. non-exempt and as employees vs. independent contractors
[ ] Child labor: Complying with restrictions on hours and types of work for minors
[ ] Record-keeping: Maintaining accurate time and pay records for at least 3 years

State Wage Laws

[ ] State minimum wage compliance (many states exceed federal)
[ ] State overtime rules (some states have daily overtime or different thresholds)
[ ] Meal and rest break requirements (varies by state)
[ ] Pay frequency requirements
[ ] Pay stub requirements (what must be listed on each pay statement)
[ ] Final pay timing (ranges from immediate to next regular payday by state)

Tax Compliance

[ ] Federal income tax withholding: Calculated per W-4 elections, deposited per IRS schedule
[ ] FICA (Social Security and Medicare): Withheld from employees and matched by employer (7.65% each)
[ ] FUTA: Filed annually (Form 940), paid quarterly
[ ] State income tax withholding: Where applicable
[ ] State unemployment tax (SUTA): Paid as required by state
[ ] W-2s: Furnished to employees by January 31 of the following year
[ ] 1099s: Issued to independent contractors paid $600+ by January 31

Workplace Safety (OSHA)

[ ] General duty clause: Providing a workplace free from recognized hazards
[ ] OSHA poster displayed: "Job Safety and Health: It's the Law" poster
[ ] Injury and illness recording: OSHA 300 Log maintained if you have 11+ employees (some industries exempt)
[ ] Hazard communication: Written program, safety data sheets, and employee training for chemical hazards
[ ] Industry-specific standards: Construction, manufacturing, and other industries have additional requirements
[ ] Reporting: Fatalities reported within 8 hours, hospitalizations/amputations/eye losses within 24 hours

Anti-Discrimination Compliance

Federal Laws by Employee Count

These laws apply based on the number of employees:

1+ employees: Equal Pay Act (equal pay for equal work regardless of sex)
15+ employees: Title VII (race, color, religion, sex, national origin), ADA (disability), GINA (genetic information), Pregnant Workers Fairness Act
20+ employees: ADEA (age 40+), COBRA
50+ employees: FMLA (family and medical leave), ACA employer mandate

Requirements

[ ] EEO poster displayed
[ ] Anti-harassment policy in place with reporting procedures
[ ] Reasonable accommodation process for disability and religion
[ ] No discriminatory job postings, interview questions, or employment decisions
[ ] EEO-1 report filed (100+ employees or federal contractors with 50+)

State Laws

Many state anti-discrimination laws kick in at fewer employees than federal law. Some states prohibit discrimination based on additional protected classes (sexual orientation, gender identity, marital status, etc.). Check your state's civil rights agency for specific requirements.

Leave Requirements

[ ] FMLA compliance (50+ employees): Up to 12 weeks unpaid leave for qualifying reasons
[ ] State family/medical leave laws: Many states have their own family leave laws with lower employee thresholds
[ ] Paid sick leave: An increasing number of states and cities require it
[ ] Military leave (USERRA): Job protection for employees serving in the military
[ ] Jury duty leave: Most states prohibit penalizing employees for jury service
[ ] Voting leave: Many states require time off to vote

Benefits Compliance

[ ] ACA compliance (50+ FTEs): Offer minimum essential coverage or pay penalty
[ ] COBRA administration (20+ employees): Offer continuation coverage after qualifying events
[ ] ERISA compliance: If you offer a retirement plan, health plan, or other employee benefit plan
[ ] Section 125 plan documentation: If you offer pre-tax benefits
[ ] State-mandated benefits: Disability insurance (CA, HI, NJ, NY, RI, PR), paid family leave, etc.

Record-Keeping Requirements

Different records have different retention requirements:

Payroll records: 3 years (FLSA), 4 years (IRS)
I-9 forms: 3 years after hire or 1 year after termination, whichever is later
Tax records: 4 years after tax is due or paid
OSHA injury logs: 5 years
Employment applications: 1 year (EEOC)
Personnel files: Varies by state, but 3-7 years after termination is a safe target
Benefits records: 6 years (ERISA)

Workplace Posters

Federal posters required for most employers:

[ ] FLSA Minimum Wage poster
[ ] OSHA Job Safety and Health poster
[ ] EEO "Know Your Rights" poster
[ ] EPPA Employee Polygraph Protection Act poster
[ ] USERRA Your Rights Under USERRA poster
[ ] FMLA poster (50+ employees)

All federal posters are available free from DOL.gov. Your state will have additional required posters.

Annual Compliance Calendar

| Month | Task | |-------|------| | January | Distribute W-2s and 1099s. Update minimum wage if changed | | February | File W-2s and 1099s with government | | March | File OSHA 300A summary (post Feb 1 - April 30) | | April | Q1 payroll tax filings (Form 941) | | July | Q2 payroll tax filings | | October | Q3 payroll tax filings. Open enrollment planning for benefits | | November | Review employee handbook for updates | | December | Year-end payroll reconciliation. Plan W-2/1099 distribution | | Ongoing | New hire reporting, I-9 completion, workplace safety, regular pay cycles |

Don't Try to Do This Alone

This checklist is comprehensive but not exhaustive -- your state and local jurisdiction will have additional requirements. Build a compliance team even if it's informal:

Payroll provider: Handles most tax filing and deposit obligations
Employment attorney: Review your handbook, handle complex issues, and keep you updated on law changes
Insurance broker: Manage workers' comp, health insurance, and other benefits
CPA or tax professional: Year-end filings, tax strategy, and audit support

The cost of these professionals is a fraction of the cost of a compliance violation. Invest accordingly.