Many shed businesses, including manufacturers, dealers, and haulers, are smaller entities with fewer than 10 employees.
Being smaller, it’s too easy for these operations to overlook important human resource (HR) rules and regulations. This can result in these businesses being found in violation of federal, state, and other laws.
So, what do smaller shed industry businesses need to know about HR rules?
Shed Business Journal asked Rue Dooley, SHRM-SCP, HR Knowledge Advisor for SHRM (Society for Human Resource Management), about small businesses and their HR responsibilities.
Are there certain numbers of employees to which certain HR regulations apply? What are the cutoffs and why the different levels?
Yes, HR regulations often depend on the number of employees, as certain laws are designed to balance the protection of employees while reducing the burden on smaller businesses.
In other words, legislation usually recognizes how unfair it would be to burden smaller employers with the same requirements that larger employers are equipped to bear. So, often, employment laws do differ based on the size of the organization by number of employees.
When laws are proposed by citizens or politicians, they are not generally proposed to injure or harm any individual or entity but to help individuals and entities to be better versions of themselves and to be fair and representative of the type of society those who proposed the laws want to have.
Here are some common thresholds:
1 Employee
Basic laws apply, including wage, hour, and safety regulations:
• Fair Labor Standards Act (FLSA): Minimum wage, overtime pay, and record-keeping.
• Occupational Safety and Health Act (OSHA): Workplace safety.
• Equal Pay Act: Equal pay for equal work between genders.
15+ Employees
Anti-discrimination laws begin to apply:
• Title VII of the Civil Rights Act (Title VII): Prohibits discrimination based on race, color, religion, sex, and national origin.
• Americans with Disabilities Act (ADA): Prohibits disability discrimination and requires reasonable accommodations.
• Pregnancy Discrimination Act: Prohibits pregnancy-related discrimination.
20+ Employees
Health and age-related protections are added:
• Age Discrimination in Employment Act (ADEA): Prohibits discrimination against individuals 40 and older.
• Consolidated Omnibus Budget Reconciliation Act (COBRA): Allows continuation of health benefits for terminated employees.
50+ Employees
Family leave and health coverage provisions kick in:
• Family and Medical Leave Act (FMLA): Requires unpaid, job-protected leave for qualifying medical/family reasons.
• Affordable Care Act (ACA): Employers must offer health insurance to full-time employees.
The thresholds reflect a balance between protecting employee rights and not overburdening small businesses. Smaller businesses typically have fewer resources to comply with complex laws.
Do the regulations change for different types of businesses, such as shed builders, sales/dealers, and shed haulers/transportation?
Sometimes. While federal laws generally apply uniformly across industries, state laws or specific industries (like construction and transportation) may face additional or specialized regulations.
Shed Builders (Construction)
• Subject to OSHA regulations for workplace safety, including protective equipment, fall protection, and machinery safety.
• FLSA ensures proper pay for overtime, especially for hourly workers.
Shed Sales/Dealers (Retail)
• (State and federal) Wage and hour laws apply, and commission-based pay (when applicable) must comply with FLSA rules.
• Anti-discrimination laws (e.g., Title VII, and any state anti-discrimination laws) apply (usually based on the number of employees).
Shed Haulers/Transportation
• Compliance with Department of Transportation (DOT) regulations, including driver safety, rest breaks, and vehicle maintenance.
• OSHA may also apply for loading/unloading safety.
• State-specific regulations (e.g., California or New York labor laws) may add further requirements depending on business type.
In short, many of the same laws apply to all, but there can sometimes be distinctions:
• For shed builders, certain safety rules might uniquely apply.
• For sales/dealers, certain wage payment rules might uniquely apply.
• For shed haulers/transportation, certain rules pertaining to drivers might uniquely apply.
Many shed-related businesses have 1-10 employees. What HR regulations apply to them?
For businesses with 1-10 employees, the following core regulations typically apply:
Fair Labor Standards Act (FLSA):
• Minimum wage and overtime pay for hourly employees.
• Accurate timekeeping and pay records.
Occupational Safety and Health Act (OSHA):
• Maintain a safe working environment.
• Employers must address hazards like falls, heavy lifting, or power tools (for builders/haulers).
Equal Pay Act (EPA):
• Requires equal pay for equal work between men and women.
Immigration Reform and Control Act (IRCA; I-9):
• Employers must verify employee eligibility to work in the U.S. (Form I-9).
State and Local Laws:
• States may have additional wage, leave, or safety requirements.
• For example, some states require paid sick leave even for small businesses.
While businesses under 15 employees are generally exempt from federal anti-discrimination laws like Title VII and ADA, they should still ensure fair hiring and employment practices to avoid state-level violations.
What is the purpose of these regulations?
The primary purposes of HR regulations include:
• Protecting Employees: Ensures fair wages, safe working conditions, and protection from discrimination.
• Creating Workplace Equality: Laws like the EPA and Title VII aim to prevent unequal treatment based on gender, race, or other protected categories.
• Promoting Safety: OSHA ensures employees are not exposed to unnecessary hazards.
• Preventing Exploitation: Wage and hour laws protect workers from unpaid labor or unfair wage practices.
Historically in the United States, our employment laws have evolved out of who we once were as a society into who we are now and hope to become. Where once in this society we exploited the labor of children and adults especially by race and gender, paying women less than men for the same work, requiring and using the manual labor provided by minors, and exploiting labor by way of indentured servitude and even slavery, as we evolved as a society, and as unions emerged more and more, the country matured and became less exploitative and more fair, largely as a result of laws like the ones mentioned above.
The Fair Labor Standards Act in 1938 for example outlawed employment of children under 14 and regulated the employment of children between 14 and 16. The FLSA also imposed a minimum wage and a penalty for requiring work beyond 40 hours in a week and we call that overtime. This major legislation shifted how we operate in American business and industry.
Likewise, there became a need for environmental protections and the reduction of safety hazards and securing the rights of union formation and general sense of equity in business administration. From these needs, we derived these laws. For small businesses, compliance helps build trust, reduce legal risks, and improve employee retention.
What regulations are common for smaller businesses to violate? Why?
Small businesses often struggle with:
Misclassifying Employees:
• Improperly classifying employees as independent contractors to avoid payroll taxes or overtime.
• Violates FLSA and state laws.
Wage and Hour Violations:
• Failing to pay overtime or minimum wage due to informal payroll processes.
OSHA Safety Violations:
• Small businesses often lack formal safety training or written safety protocols, especially in construction or transportation.
I-9 Non-Compliance:
• Failing to verify employment eligibility can lead to fines from the federal government.
Discrimination or Harassment Issues:
• Even though businesses under 15 employees are exempt from federal anti-discrimination laws, state laws may still apply. Informal HR practices can expose them to liability.
These violations are mostly due to the lack of business acumen, which includes knowledge of employment law.
• Limited HR knowledge or dedicated HR staff.
• Misconceptions that small businesses are exempt from all labor laws.
• Informal processes and record-keeping.
How can a small business best evaluate its HR policies to stay in line with current regulations?
Small businesses can do many things to help themselves:
Conduct an HR Audit:
• Review payroll, employee classifications, timekeeping, and safety policies.
• Ensure all required employee records (e.g., I-9s, pay stubs) are up to date.
Understand Federal, State, and Local Laws:
• Use resources like the U.S. Department of Labor (DOL) website and state labor offices for guidance. (Members of SHRM can use SHRM)
• Small Business Administration (SBA) offers resources for compliance.
Invest in HR Software or Consultants:
• Small businesses can use HR software to manage timekeeping, payroll, and compliance tracking.
• Hiring an HR consultant for an annual review can identify gaps.
• SHRM members can use the HR Knowledge Center—a service that supports HR and people managers
Create Written Policies:
• Develop a basic employee handbook covering wage policies, safety rules, and behavioral expectations.
• Members of SHRM have free access to these.
Stay Informed:
• Subscribe to newsletters or attend webinars from DOL, OSHA, or local chambers of commerce.
• Join SHRM.
Provide Training:
• Train employees on safety, harassment prevention, and wage policies.
• SHRM People Manager Qualification—PMQ teaches people managers to empower teams, transform workplaces, and cultivate a high-performing staff. Equally educational and entertaining, PMQ is an experience unlike any other. Invest, and your organization will be on the path to success.
• SHRM also has presentation (training) material and access to material that can be used for training of various types.
Small businesses can strengthen their HR practices by conducting audits to review payroll, safety, and employee records, while also ensuring compliance with federal, state, and local laws through available resources like the DOL, SBA, and SHRM. Investing in HR software, consultants, and creating clear written policies, such as employee handbooks, helps streamline processes and address compliance gaps.Â
Staying informed through webinars, newsletters, and providing employee training on safety, harassment prevention, and management skills ensures businesses remain compliant and foster productive, high-performing workplaces.    Â
