Once you hit the headcount milestone of 50, a lot changes for your company. New compliance requirements come into play. You probably want to add additional headcount to manage your growing team and all of the ramifications that come with it, like your expanded payroll.
New legal compliance requirements
At 50 employees, you hit some important thresholds. Specifically, you need to comply with:
- The Affordable Care Act (ACA): Once you reach 50 employees, you’re considered an applicable large employer (ALE). Under the ACA, ALEs have to offer employer-sponsored healthcare coverage to their employees. Specifically, under the ACA, you need to provide what’s called “minimum essential coverage” to your full-time employees. That’s anyone who works 30 or more hours a week for your company. To prove ACA compliance, you also need to start thoroughly tracking the hours each team member works — and flagging anyone who crosses over that 30-hour threshold so you can include them in your group plan.
- The Family and Medical Leave Act (FMLA): Under this Act, companies with 50 or more employees are required to offer 12 weeks of unpaid but job-protected leave. The FMLA covers leave employees might need it for reasons like having a baby or dealing with a serious medical condition, whether that’s their own or a loved one’s.
- The Fair Labor Standards Act (FLSA): Once you hit 50 team members, this Act requires you to offer both break time and private space for nursing mothers.
You might also have state-specific requirements at the 50-employee mark. In California, for example, that company size means you need to start offering sexual harassment training.
Thresholds for 100+ employees
If you grow to this size, some new compliance measures come into play.
- Reporting to the U.S. Equal Employment Opportunity Commission (EEOC): At 100 employees, you become subject to EEO-1 Component Data Collection requirements. This means you need to submit a report annually to give the EEOC a breakdown of your workforce demographics.
- Worker Adjustment and Retraining Notification Act (WARN) requirements: This Act mandates that employers with 100 or more employees have to provide advance notice before any mass layoff or plant closings. If any cuts will affect more than 50 employees at a single location, you need to give them at least 60 days of notice that it’s upcoming.
Expanded needs across departments
As your headcount grows, you probably want to think about making some strategic hires to manage all the requirements that come with it. At this stage, you should think about hiring for two roles: a dedicated HR Manager/Director of People and Controller or Payroll Manager.
It’s also important to work on your organizational chart (org chart) to allocate the right people to the right departments, and the right budgets to that human labor. You’re now managing a lot of human capital. Being strategic about it helps you minimize risks and capitalize on opportunities.
At this point, some of our clients also report that a larger payroll provider like ADP or Paychex better meets their needs.
Staying competitive with companies of your size
As your company grows, you need to keep pace with what other employers of your size are offering. A competitive benefits package helps you recruit and retain top talent — a huge piece of driving your company’s continued success.
As a result, you probably want to start exploring:
- Paid parental leave
- 401(k) matching
- Full medical benefits, including vision, dental, and an employee assistance program (EAP) for mental health coverage
- Equity refresh grants
Looking ahead: Managing mergers and acquisitions
As your company gets bigger, you might get approached with an offer. If your company gets purchased, don’t assume the merger or acquisition lets you off the hook. We’ve seen founders get a false sense of security that the new folks will handle everything once you’re in serious M&A talks.
In reality, though, there’s a cutoff date. After that date, yes, the company buying yours will handle payroll, tax filings, compliance with various Acts and other regulations, etc. But up until that date, it’s all still on you. Don’t let anything slip through the cracks so you don’t find yourself facing penalties down the road.
Support as you scale
As your company grows, some things get easier, and some get harder. One thing never changes once you bring on your first employee, though: the human capital in your business means you need to take certain steps. From payroll filings to legal compliance measures, there’s a lot your business needs to do to stay square here.
Ideally, this guide helped you dip your toe into all of it. You still might feel like there are a lot of moving parts here, though — because there are. Bringing the right people and solutions alongside you makes a big difference.
Here at ShayCPA, our team specifically focuses on working with tech startups. That means we have extensive experience with all of the different requirements that come with scaling up your headcount. We can step in to offer guidance and make recommendations to help you stay compliant while setting your company up for success.
As part of that guidance, we again want to highlight our payroll and PEO partners. We’ve chosen to work with these companies because we’ve seen the serious value-add they bring to founders. If you’re looking for help to pay and manage your team — whether that’s your first employee or a whole new wave of hires — we recommend exploring:
If you have any questions, we’re absolutely available to answer them. Because we work with founders from pre-seed to Series A to exit, we should be able to help you get the information you need. Contact our team to book some time with one of our experienced CPAs today.
Disclaimer:
The content provided on this blog is for general informational purposes only and does not constitute professional accounting, tax, or legal advice. Reading or accessing this material does not create a CPA-client relationship, nor should it be construed as a substitute for individualized guidance from a qualified professional. While we strive for accuracy, Shay CPA PC makes no warranties—express or implied—about the completeness, reliability, or timeliness of the information, and we expressly disclaim liability for any errors or omissions. You should not act or refrain from acting based on any blog content without seeking the advice of a qualified CPA or other professional who can address your specific circumstances. Links to external resources are provided for convenience only and do not imply endorsement. Shay CPA PC is under no obligation to update this content and disclaims responsibility for decisions made in reliance on it.