Transitioning from Under 50 Employees to Over 50

November 30, 2020

Small businesses are a huge part of our national, state, and local economy. We love seeing the success small businesses experience as they continue to grow. With growth often comes an increase in the employee count which means new business practices and laws to consider. Small businesses approaching or surpassing the 50 employee count must be prepared for the increased complexities of complying with federal, state, and/or local laws.

The implications of crossing the 50 employee count may vary from state to state and even from county to county. Some important information to consider has been outlined below, based upon Washington state and federal regulations, including general business impact. Please note, this list does not address every law to which an employer may be subject. Rather, this list addresses specific things an employer should consider when approaching or surpassing the 50 employee count.

Family Medical Leave Act (FMLA):

The FMLA applies to private-sector employers, with 50 or more employees in 20 or more workweeks in the current or preceding calendar year, including a joint employer or successor in interest to a covered employer; public agencies, including a local, state, or Federal government agency, regardless of the number of employees it employs; or public or private elementary or secondary schools, regardless of the number of employees it employs. General FMLA information can be found here.

Washington State Salary Threshold for Exempt Status

Employees considered exempt from the Washington Minimum Wage Act must perform specific duties and be paid a salary meeting a specific threshold level. The Washington state salary threshold is different for employers with 1-50 employees and those with 51 or more employees. Employers must ensure their exempt staff meet the minimum salary threshold and make adjustments as necessary if/when the employee count surpasses 50. The Washington state salary implementation schedule can be found here.

Washington Paid Family Medical Leave (PFML)

Under PFML, there are different requirements for employers with 50 or more employees and employers with fewer than 50 employees. Those with fewer than 50 are not required to pay the employer portion of the premium. Employees of organizations with 50 or more employees are eligible for job protection provided they have worked for the same employer for 12 months or longer, and have worked at least 1250 hours in the year before the first day they take paid leave. Additional information can be found here.

EEO-1 Reporting

Federal contractors and subcontractors with 50 or more employees are required to complete the EEO-1 report. The EEO-1 report is required for nonfederal contractors or subcontractors with 100 or more employees. Additional information about EEO-1 reporting can be found here.

Affirmative Action Plan

Federal contractors and subcontractors with 50 or more employees and a contract of at least $50,000 are required to have an Affirmative Action Plan. Please note, there are other instances in which an employer may be subject to an Affirmative Action Plan such as serving as a depository of government funds. For questions about whether your organization may be subject to an Affirmative Action Plan, please reach out to Associated Industries or visit our AAP page.

Harassment Training

Harassment training is recommended at any size, but more employees can lead to more risk and this training is highly recommended. Annual training should be provided to all staff and a manager specific training should also be provided to each manager and/or supervisor. Please note, Washington employers of all sizes in retail, hotel, motel, security, and property services industries must adopt a harassment policy and supply training. Associated Industries offers custom harassment training from our legal team, you can learn more here.


The employee handbook will need to be updated based on Internal changes and new legal requirements. Associated Industries can help with your handbook changes, contact us for more information.

Affordable Care Act (ACA):

There are some changes to benefit requirements under the ACA when an employer is considered an applicable large employer with 50 or more full-time or full-time equivalent employees. Under the ACA, large employers are required to provide health insurance to all of their full-time employees and their dependents. The coverage must also be deemed “affordable.” Applicable large employers must cover enough of the monthly premium costs for company-provided health insurance to keep the employee’s portion of the premium to below the maximum amount allowed by the ACA. Benefit brokers can provide additional assistance in reviewing potential changes needed for specific plan documents. Employers may also have additional reporting requirements under the ACA. This IRS link outlines some of the ways employers with 50 or more employees are affected.

Retirement Plans

Employers should consult with their 401k/retirement plan administrator to determine if there are any changes needed based upon the employee count or ERISA requirements.

Internal Structure

How does employee growth impact the organization’s internal structure and strategic planning needs? For example, questions to ask may include:

  • Will the current management structure continue to support a growing employee count?
  • Do we need to create a mid-level management layer?
  • Will hiring additional staff create unreasonable direct reports structure for any of the current management?
  • In what areas of our business are we growing, and do we have the intellectual property to support these growing areas?
  • What will be the financial impact of recruiting, hiring, and training additional staff and how will the organization support these costs?
  • Is there internal staff that can be better leveraged to support some of the growth demands?
  • Will additional support staff be needed to support the growing organization (i.e. accounting/finance, human resources, operations, administration, etc.)?
  • Are there any technology platforms to invest in to increase efficiencies and aid in supporting a larger workforce?

Growth is exciting, challenging, and complicated. Taking a proactive stance on understanding business impact and legal obligations will aid in successful, compliant, and sustainable growth. Please don’t hesitate to reach out to the Associated Industries HR and legal teams for questions.