Introduction

Hitting 50 employees is a major milestone. You’re growing. You’re hiring. Maybe you’re prepping for Series A or closing big enterprise deals. But beneath the excitement, your risk profile just changed.

At Zecca Ross Law, we help scaling startups stay ahead of legal landmines—and we’ve seen firsthand what gets overlooked when teams cross the 50-employee threshold.

Here’s the compliance checklist most founders don’t know they need—until it’s too late.

1. Employee Classification and Overtime Rules

When you're small, the risks of a misclassified employee or contractor might seem manageable. But with 50+ team members, one mistake can trigger a class action.

  • Re-audit all W-2 vs. 1099 classifications
  • Review exempt vs. non-exempt status
  • Ensure timekeeping systems and overtime policies are compliant

California? New York? Remote employees in multiple states? You may be subject to different rules in each.

2. Affordable Care Act (ACA) Requirements

Once you hit 50 full-time (or full-time equivalent) employees, you’re an “Applicable Large Employer” (ALE) under the ACA. That means:

  • You must offer “affordable” health insurance that meets minimum standards
  • You must report coverage details to the IRS via Forms 1094-C and 1095-C (IRS ACA Reporting)
  • Penalties for non-compliance can be steep

Even startups with great culture and benefits can accidentally violate ACA rules—especially if you’ve scaled quickly or rely on PEOs.

3. Federal and State Leave Laws

With 50+ employees, you may now be subject to:

  • FMLA (Family and Medical Leave Act): Up to 12 weeks of unpaid, job-protected leave for qualified employees
  • State equivalents, like California’s CFRA (California Family Rights Act) or New York Paid Family Leave (NYS PFL)
  • Pregnancy accommodation laws, which vary by jurisdiction

If your employee handbook hasn’t been updated in the last year, it’s probably out of date.

4. Anti-Harassment and Discrimination Training

Many states (including CA, NY, IL, and CT) require:

  • Mandatory harassment prevention training for all employees
  • Specialized training for supervisors and managers
  • Regular renewals (often every 1–2 years)

With more employees, you’re more exposed to internal complaints—and poor documentation or missed trainings can lead to litigation.

5. Data Privacy and Security Obligations

Once your team expands, so does the volume of personal data you collect and process—from employees, customers, and vendors.

  • Comply with state-level privacy laws such as California’s CPRA (California Privacy Rights Act)
  • Provide employee data disclosures
  • Implement internal data access policies and incident response plans
  • Ensure vendors and contractors sign data processing agreements

6. Equity, Stock Option, and Cap Table Hygiene

At 50 employees, your equity plan is under pressure. Now is the time to:

  • Review your 409A valuation
  • Ensure option grants match board resolutions
  • Formalize exercise windows, termination rules, and vesting schedules
  • Catch cap table inconsistencies before they spook investors or trigger audit issues

If you’ve been using spreadsheets to track equity, it’s time to level up.

7. Workplace Policies and Documentation

What worked at 15 employees doesn’t scale to 50. You need:

  • A compliant, state-specific employee handbook
  • Job descriptions that reflect essential duties and ADA compliance
  • Signed IP and confidentiality agreements for all employees
  • A remote work policy that addresses equipment, data privacy, and wage/hour compliance

Don't assume your PEO or HRIS platform covers all of this.

8. Employee Relations and Internal Reporting

As your headcount grows, so does the need for structured HR practices:

  • Create a clear complaint and escalation process
  • Appoint a person or team to handle internal investigations
  • Train your managers on how to document performance issues and terminate legally

A single mishandled termination can turn into a costly wrongful termination lawsuit.

Final Thought: Growth Is a Legal Inflection Point

50 employees isn’t just a number—it’s a shift in legal complexity, liability, and scrutiny. Ignoring it because “we’re still a startup” doesn’t cut it anymore.

At Zecca Ross Law, we help scaling companies stay compliant without killing momentum. From updating your handbook to preparing for ACA, data privacy, and equity audits—we’ve got you covered.

Just hit 50 employees—or getting close?

Let’s make sure your legal foundation grows with you.

Book a compliance check-in with Zecca Ross Law.