# HR Compliance Checklist for Startups **Your Essential Guide to Federal and State Requirements** --- ## Introduction Navigating HR compliance as a startup can feel overwhelming. Employment laws are complex, vary by state, and carry significant penalties for non-compliance. This checklist provides a practical roadmap to help you build a compliant foundation and avoid costly mistakes. ### Who This Guide Is For - Startups with 1-100 employees - Founders handling HR responsibilities - First HR hires building compliance programs - Small businesses expanding to new states ### Disclaimer This guide provides general information and is not legal advice. Employment laws change frequently, and requirements vary by location, industry, and company size. Consult with an employment attorney for guidance specific to your situation. --- ## Section 1: Federal Compliance Requirements ### Employment Eligibility (All Employers) - [ ] **Form I-9:** Complete for every employee within 3 days of hire - [ ] **E-Verify:** Required for federal contractors; optional but recommended for others - [ ] **I-9 Retention:** Keep I-9 forms for 3 years from hire date OR 1 year after termination (whichever is later) - [ ] **Avoid discrimination:** Cannot request specific documents; employee chooses which acceptable documents to present ### Tax Forms & Withholding (All Employers) - [ ] **Form W-4:** Collect from employees for federal tax withholding - [ ] **State W-4 equivalent:** Required in most states (see state section) - [ ] **EIN:** Obtain Employer Identification Number from IRS - [ ] **Payroll taxes:** Set up federal income tax, Social Security, and Medicare withholding - [ ] **Quarterly filings:** File Form 941 quarterly - [ ] **W-2s:** Distribute to employees by January 31; file with SSA by January 31 ### Required Federal Posters (All Employers) Display in a conspicuous location where employees can see them: - [ ] Fair Labor Standards Act (FLSA) - Minimum Wage - [ ] Employee Polygraph Protection Act - [ ] Uniformed Services Employment and Reemployment Rights Act (USERRA) - [ ] Equal Employment Opportunity (EEO) - [ ] Family and Medical Leave Act (FMLA) - 50+ employees - [ ] OSHA Safety and Health Protection **Tip:** The Department of Labor provides a free "All-In-One" poster. Remote employees should receive electronic versions. ### Fair Labor Standards Act (FLSA) - All Employers - [ ] **Minimum wage:** Pay at least federal minimum wage ($7.25/hr) or state/local rate if higher - [ ] **Overtime:** Pay non-exempt employees 1.5x for hours over 40/week - [ ] **Exempt classification:** Ensure exempt employees meet salary AND duties tests - Salary threshold: $684/week ($35,568/year) as of 2024 - Duties: Executive, Administrative, Professional, Computer, or Outside Sales - [ ] **Record keeping:** Maintain accurate time records for non-exempt employees - [ ] **Child labor:** Follow restrictions for workers under 18 ### Equal Employment Opportunity (All Employers) - [ ] **Title VII (15+ employees):** No discrimination based on race, color, religion, sex, national origin - [ ] **Pregnancy Discrimination Act (15+ employees):** Treat pregnancy like other temporary disabilities - [ ] **Age Discrimination (ADEA) (20+ employees):** No discrimination against workers 40+ - [ ] **Americans with Disabilities Act (ADA) (15+ employees):** Reasonable accommodations required - [ ] **Equal Pay Act (All employers):** Equal pay for equal work regardless of sex - [ ] **Genetic Information (GINA) (15+ employees):** Cannot use genetic information in employment decisions ### Family & Medical Leave Act (FMLA) - 50+ Employees Applies to employers with 50+ employees within 75 miles - [ ] **Eligible employees:** 12 months of service, 1,250 hours worked - [ ] **Leave entitlement:** Up to 12 weeks unpaid leave per year for: - Birth/adoption/foster care placement - Serious health condition of employee - Care for family member with serious health condition - Military family leave - [ ] **Job protection:** Return to same or equivalent position - [ ] **Benefits continuation:** Maintain health insurance during leave - [ ] **Documentation:** Provide required notices and certifications ### Immigration Compliance (All Employers) - [ ] **I-9 Completion:** Within 3 business days of hire - [ ] **Document review:** Examine original documents; don't specify which documents - [ ] **Reverification:** Track document expiration for reverification - [ ] **No document abuse:** Don't request more or different documents than required - [ ] **Retention:** Proper storage and timely destruction ### Workplace Safety - OSHA (All Employers) - [ ] **General duty:** Provide workplace free from recognized hazards - [ ] **Training:** Safety training appropriate to job duties - [ ] **OSHA 300 Log:** Maintain for employers with 11+ employees - [ ] **OSHA 300A posting:** Post annual summary Feb 1 - April 30 - [ ] **Injury reporting:** Report fatalities within 8 hours; hospitalizations within 24 hours - [ ] **Access to records:** Allow employee access to medical and exposure records ### Required Employee Notices - [ ] **COBRA (20+ employees):** Notice of continuation coverage rights - [ ] **HIPAA:** Notice of privacy practices for health plans - [ ] **FMLA:** Employee rights notice - [ ] **USERRA:** Military leave rights - [ ] **State unemployment:** Information about unemployment benefits --- ## Section 2: Size-Based Federal Requirements ### 1-14 Employees | Requirement | Applies? | | ------------------ | -------- | | I-9 Verification | Yes | | FLSA (Wage & Hour) | Yes | | Equal Pay Act | Yes | | OSHA | Yes | | IRCA (Immigration) | Yes | | EPPA (Polygraph) | Yes | ### 15-19 Employees All of the above, plus: | Requirement | Applies? | | ---------------------------- | -------- | | Title VII (EEO) | Yes | | ADA | Yes | | GINA | Yes | | Pregnancy Discrimination Act | Yes | ### 20-49 Employees All of the above, plus: | Requirement | Applies? | | ---------------------------------------- | -------- | | ADEA (Age Discrimination) | Yes | | COBRA | Yes | | OWBPA (Older Workers Benefit Protection) | Yes | ### 50+ Employees All of the above, plus: | Requirement | Applies? | | ---------------------------------------- | ------------------------------------ | | FMLA | Yes | | Affordable Care Act (Employer Mandate) | Yes | | EEO-1 Reporting | Yes (100+ or federal contractor 50+) | | Affirmative Action (federal contractors) | Yes (50+ and $50K+ contract) | ### 100+ Employees All of the above, plus: | Requirement | Applies? | | ------------------ | -------- | | EEO-1 Reporting | Yes | | WARN Act (layoffs) | Yes | --- ## Section 3: State-by-State Requirements ### California **Overview:** California has the most comprehensive employee protections in the country. If you have even ONE employee in California, these laws apply. #### Wage & Hour - [ ] Minimum wage: $16.00/hr (2024); some cities higher (SF: $18.67, LA: $16.90) - [ ] Overtime: 1.5x after 8 hours/day AND 40 hours/week; 2x after 12 hours/day - [ ] Meal breaks: 30-min unpaid for shifts 5+ hours; second break for 10+ hours - [ ] Rest breaks: 10-min paid for every 4 hours worked - [ ] Paystubs: Itemized wage statements required - [ ] Pay transparency: Salary ranges required in job postings #### Leave Requirements - [ ] Paid Sick Leave: Minimum 5 days (40 hours) per year - [ ] California Family Rights Act (CFRA): 12 weeks for employers with 5+ employees - [ ] Pregnancy Disability Leave: Up to 4 months for employers with 5+ employees - [ ] Paid Family Leave (State Insurance): Up to 8 weeks, funded by employee payroll deductions - [ ] Kin Care: Use sick leave for family members - [ ] Domestic Violence/Sexual Assault Leave - [ ] Bereavement Leave: 5 days for employers with 5+ employees #### Other Requirements - [ ] Sexual harassment training: 2 hours for supervisors, 1 hour for non-supervisors (5+ employees) - [ ] Expense reimbursement: All necessary business expenses - [ ] CalSavers: State retirement program (5+ employees, no other plan) - [ ] Cannabis: Cannot discriminate against off-duty use (some exceptions) - [ ] Non-compete: Unenforceable (with narrow exceptions) - [ ] Final pay: Immediately upon termination; within 72 hours if quit without notice --- ### New York **Overview:** New York has strong employee protections with additional requirements in New York City. #### Wage & Hour - [ ] Minimum wage: $16.00/hr (NYC, Long Island, Westchester); $15.00 rest of state (2024) - [ ] Overtime: 1.5x after 40 hours/week (standard federal rules) - [ ] Spread of hours: Extra hour at minimum wage if workday exceeds 10 hours - [ ] Frequency of pay: Manual workers paid weekly #### Leave Requirements - [ ] Paid Family Leave: Up to 12 weeks (all employers with 1+ employees) - [ ] NY SAFE Act: Paid sick leave (5-56 hours based on employer size and income) - [ ] Disability Benefits: Short-term disability insurance required - [ ] Jury duty: Cannot penalize; unpaid leave protected - [ ] Voting leave: Up to 2 hours paid if insufficient time outside work #### NYC-Specific Requirements - [ ] Salary history ban: Cannot ask about prior compensation - [ ] Pay transparency: Salary ranges in job postings - [ ] Scheduling: Predictive scheduling for retail/fast food (fast food employers) - [ ] Freelance Isn't Free Act: Written contracts for freelancers #### Other Requirements - [ ] Sexual harassment: Annual training required (all employers) - [ ] Harassment policy: Written policy required (all employers) - [ ] Handbook acknowledgment: Recommended - [ ] Non-compete: Limited enforceability (pending legislation may ban) --- ### Texas **Overview:** Texas is an employer-friendly state with fewer regulations than coastal states, but federal laws fully apply. #### Wage & Hour - [ ] Minimum wage: $7.25/hr (federal rate; no state minimum above federal) - [ ] Overtime: Federal rules apply (1.5x after 40 hours/week) - [ ] Payday: Twice monthly for most employees - [ ] Final pay: Within 6 days of termination #### Leave Requirements - [ ] No state-mandated paid sick leave (but some cities have requirements) - [ ] Austin, Dallas, San Antonio: Local sick leave ordinances (currently enjoined/uncertain) - [ ] Jury duty: Unpaid leave; cannot retaliate - [ ] Voting leave: Paid time off to vote if insufficient time outside work hours #### Other Requirements - [ ] Workers' compensation: Not mandatory (but highly recommended) - [ ] Right to work: Cannot require union membership - [ ] At-will employment: Strong at-will doctrine - [ ] Non-compete: Enforceable if reasonable - [ ] No state income tax: No state withholding required --- ### Florida **Overview:** Florida has minimal state employment laws beyond federal requirements. #### Wage & Hour - [ ] Minimum wage: $13.00/hr (2024); increases $1/year until $15.00 in 2026 - [ ] Overtime: Federal rules apply - [ ] Tip credit: Allowed - [ ] Payday: No specific requirements beyond federal #### Leave Requirements - [ ] Domestic violence leave: Up to 3 days for employers with 50+ employees - [ ] Jury duty: Unpaid protected leave - [ ] No state FMLA equivalent - [ ] No state-mandated paid sick leave #### Other Requirements - [ ] Workers' compensation: Required for 4+ employees (construction: all employees) - [ ] E-Verify: Required for employers with 25+ employees - [ ] Reemployment tax: State unemployment insurance - [ ] Drug testing: Voluntary; drug-free workplace program available for workers' comp discount - [ ] Non-compete: Enforceable if reasonable --- ### Washington State **Overview:** Washington has robust employee protections, particularly around leave and pay. #### Wage & Hour - [ ] Minimum wage: $16.28/hr (2024); Seattle and SeaTac higher - [ ] Overtime: 1.5x after 40 hours/week - [ ] Tips: No tip credit (full minimum wage before tips) - [ ] Salary threshold for exempt: Higher than federal #### Leave Requirements - [ ] Paid Family and Medical Leave: Up to 12 weeks (up to 16-18 for combined circumstances) - Funded by employer/employee payroll contributions - Applies to all employers with 1+ employee - [ ] Paid Sick Leave: 1 hour per 40 hours worked (all employers) - [ ] Domestic Violence Leave: Reasonable leave required (all employers) #### Seattle-Specific Requirements - [ ] Minimum wage: $19.97/hr (large employers, 2024) - [ ] Secure scheduling: Predictable scheduling for retail/food service (500+ globally) - [ ] Fair Chance Employment: Ban the box (all employers) - [ ] Paid sick leave: More generous than state requirements #### Other Requirements - [ ] Pay transparency: Salary ranges in job postings (15+ employees) - [ ] Long-term care: WA Cares Fund payroll tax (employee-funded) - [ ] Non-compete: Strict limitations; unenforceable below $116,593.18 salary - [ ] Final pay: Next regular payday --- ## Section 4: Hiring Compliance Checklist ### Before Posting the Job - [ ] Write job description with essential functions (ADA compliance) - [ ] Determine exempt vs. non-exempt classification - [ ] Research salary ranges for pay transparency requirements - [ ] Review for discriminatory language - [ ] Determine if background check is job-related ### During Recruitment - [ ] Include required salary range (if applicable in your state) - [ ] Follow "ban the box" rules (don't ask about criminal history early) - [ ] Avoid salary history questions (where prohibited) - [ ] Keep application forms job-related - [ ] Document legitimate, non-discriminatory reasons for decisions ### Making the Offer - [ ] Provide written offer letter with key terms - [ ] Include at-will statement (where applicable) - [ ] Specify start date, compensation, and status (exempt/non-exempt) - [ ] Outline benefits and eligibility dates - [ ] Include any contingencies (background check, drug test) ### First Day Paperwork - [ ] Form I-9 (complete Section 2 within 3 business days) - [ ] Form W-4 - [ ] State withholding form - [ ] Direct deposit authorization - [ ] Benefits enrollment forms - [ ] Emergency contact information - [ ] Employee handbook acknowledgment - [ ] At-will employment acknowledgment - [ ] Any state-required notices (see state sections) ### Within First 30 Days - [ ] Complete I-9 verification - [ ] Enroll in benefits - [ ] Complete required training (harassment prevention, safety) - [ ] Add to payroll system - [ ] Register for state unemployment (if new state) - [ ] Report new hire to state (required within 20 days in most states) --- ## Section 5: Ongoing Compliance Checklist ### Payroll (Every Pay Period) - [ ] Calculate hours correctly for non-exempt employees - [ ] Apply correct overtime calculations - [ ] Withhold appropriate federal, state, and local taxes - [ ] Process wage garnishments correctly - [ ] Provide itemized pay statements (where required) - [ ] Ensure timely payment per state requirements ### Monthly Tasks - [ ] Review employee status changes (promotions, terminations) - [ ] Update benefits enrollments - [ ] Monitor leave balances - [ ] Address any open complaints or investigations - [ ] Review pending policy updates ### Quarterly Tasks - [ ] File Form 941 (federal payroll taxes) - [ ] File state unemployment tax returns - [ ] Review contractor classifications - [ ] Audit overtime calculations - [ ] Update new hire reporting ### Annual Tasks - [ ] Distribute W-2s (by January 31) - [ ] File EEO-1 report (100+ employees, by deadline) - [ ] Review and update employee handbook - [ ] Conduct required harassment training - [ ] Post updated OSHA 300A summary (Feb 1 - April 30) - [ ] Review and renew workers' compensation insurance - [ ] Update labor law posters - [ ] Review minimum wage changes - [ ] Audit exempt classifications - [ ] Review I-9 reverification needs - [ ] Open enrollment for benefits - [ ] Provide ACA required notices ### As Needed - [ ] Investigate complaints promptly - [ ] Process FMLA requests properly - [ ] Handle reasonable accommodation requests - [ ] Document performance issues - [ ] Conduct exit interviews and off-boarding - [ ] Update job descriptions --- ## Section 6: Documentation Requirements ### Employee Personnel Files **Include:** - Job application and resume - Offer letter and employment agreements - W-4 and state withholding forms - Emergency contact information - Performance evaluations - Disciplinary records - Promotion and compensation history - Training records - Signed acknowledgments (handbook, policies) - Termination documentation **Do NOT Include (separate files):** - I-9 forms (separate file for all employees) - Medical records (separate confidential file) - Background check reports (separate file) - EEO data (separate file) - Workers' compensation claims (separate file) ### Record Retention Requirements | Document Type | Retention Period | | ---------------------------- | ------------------------------------------------------------------ | | I-9 Forms | 3 years from hire OR 1 year after termination (whichever is later) | | Payroll records | 3 years (some states require longer) | | Tax records (W-2, W-4) | 4 years after tax due date | | Personnel files | 7 years after termination (recommended) | | FMLA records | 3 years | | OSHA records | 5 years | | Benefits/pension records | 6 years after plan year | | Job applications (not hired) | 1-2 years | | EEO-1 reports | 3 years | --- ## Section 7: Risk Assessment ### High-Risk Areas for Startups **1. Worker Misclassification** - Risk: Classifying employees as independent contractors - Consequence: Back taxes, penalties, benefits owed, lawsuits - Prevention: Use IRS tests, document relationship, consult attorney **2. Overtime Violations** - Risk: Misclassifying non-exempt employees as exempt - Consequence: Back wages (up to 3 years), penalties, class actions - Prevention: Audit classifications annually, document duties **3. Discrimination Claims** - Risk: Inconsistent treatment, lack of documentation - Consequence: EEOC complaints, lawsuits, reputation damage - Prevention: Train managers, document decisions, apply policies consistently **4. Harassment** - Risk: Failure to prevent or properly address harassment - Consequence: Lawsuits, turnover, toxic culture - Prevention: Clear policy, training, prompt investigation **5. I-9 Compliance** - Risk: Improper completion, missing forms, discrimination - Consequence: Fines up to $2,507+ per violation - Prevention: Train hiring managers, audit regularly, use E-Verify **6. Wage and Hour** - Risk: Improper pay practices, missed breaks - Consequence: Back wages, penalties, class actions - Prevention: Clear policies, accurate time tracking, regular audits --- ## Section 8: Compliance Resources ### Federal Agencies | Agency | Website | Purpose | | ------------------- | --------- | -------------------------- | | Department of Labor | dol.gov | Wage/hour, FMLA, OSHA | | EEOC | eeoc.gov | Discrimination, harassment | | USCIS | uscis.gov | I-9, E-Verify | | IRS | irs.gov | Payroll taxes | | SSA | ssa.gov | W-2 filing | ### State Agencies Each state has a labor department or equivalent. Key resources: - California: dir.ca.gov - New York: labor.ny.gov - Texas: twc.texas.gov - Florida: floridajobs.org - Washington: lni.wa.gov ### When to Seek Professional Help Consult an employment attorney when: - [ ] Facing a government audit or investigation - [ ] Sued by a current or former employee - [ ] Terminating an employee in a protected class - [ ] Conducting a reduction in force - [ ] Expanding to a new state - [ ] Dealing with harassment complaints - [ ] Questions about complex leave situations - [ ] Drafting employment agreements --- ## Appendix: Quick Reference Checklists ### New State Expansion Checklist When you hire your first employee in a new state: - [ ] Register for state unemployment insurance - [ ] Register for state income tax withholding - [ ] Research state-specific employment laws - [ ] Update workers' compensation coverage - [ ] Update labor law posters - [ ] Review state leave requirements - [ ] Check local (city/county) requirements - [ ] Update employee handbook for state-specific policies - [ ] Set up state-specific payroll withholding ### Employee Termination Checklist - [ ] Document legitimate business reason - [ ] Review for potential discrimination claims - [ ] Calculate final pay (state-specific timing) - [ ] Prepare severance agreement (if applicable) - [ ] Provide COBRA notice (20+ employees) - [ ] Return company property - [ ] Deactivate system access - [ ] Conduct exit interview - [ ] Process final paycheck - [ ] Provide state-specific required notices - [ ] File termination paperwork - [ ] Update benefits records ### Annual Compliance Audit Checklist - [ ] Review all job classifications (exempt/non-exempt) - [ ] Audit contractor classifications - [ ] Review and update employee handbook - [ ] Update required postings - [ ] Complete required training (harassment, safety) - [ ] Review I-9 compliance - [ ] Audit personnel file organization - [ ] Review and update job descriptions - [ ] Assess pay equity - [ ] Review benefits compliance --- ## Ready to Simplify Compliance? Managing HR compliance manually gets harder as you grow. **LVL Up Performance** helps startups stay compliant while focusing on what matters most: building great teams. Our platform helps you: - Track and automate compliance deadlines - Generate required documents and notices - Maintain proper documentation - Stay current with law changes - Onboard employees in any state - Manage leave requests compliantly --- _This checklist is provided by LVL Up Performance._ **LVL Up Performance** | Elevate Your Team's Potential Website: [lvlupperformance.com] Email: hello@lvlupperformance.com _Copyright 2024 LVL Up Performance. This guide is for informational purposes only and does not constitute legal advice. Consult with an employment attorney for advice specific to your situation._