HR software for a US small business

Layer one: the federal floor

The DOL says it plainly for minimum wage: many states also have their own laws, some give employees more protection, and employers must comply with both. The federal minimum is $7.25 per hour, in effect since July 24, 2009. If your state's number is higher, the higher one is your number.

Coverage is the first question. The FLSA applies to businesses with at least two employees and at least $500,000 in annual sales or business done, and to hospitals, schools and government agencies regardless of sales. Other tests exist, and individual employees can be covered even when the business is not, so a small shop below that figure should not assume it is out of scope. Ask your state labor department or an employment lawyer.

Overtime and hours

Nonexempt employees get at least one and one-half times their regular rate of pay after 40 hours of work in a workweek. The week is a fixed, recurring period you define. There is no federal daily overtime, and weekend hours are not premium unless they push the week past 40. Your state may add daily overtime.

Hours count even when nobody asked for them. The DOL says work not requested but suffered or permitted is work time that must be paid for. Staying on to finish a task is work time, so late-night work an employee does for you can count.

Exempt or not

Exempt status removes the overtime right. It depends on duties and a minimum salary. After a federal court vacated the 2024 rule, the DOL announced on May 14, 2026 that it had restored the 2019 regulations, which require a salary of at least $684 per week for most executive, administrative and professional employees. A salary above the line is not enough on its own, because the duties must fit too, and some states set a higher line. Confirm the current figure on the DOL site before you classify anyone.

Employee or contractor

The DOL judges the relationship by economic reality, and its fact sheet says what the worker is called is not relevant. Calling someone a contractor does not make them one.

Pay records

The DOL's recordkeeping fact sheet lists what to keep for nonexempt staff, including hours worked each day, total hours per workweek, the regular rate, overtime earnings, deductions and the pay date. Retention is split in two:

Records may be kept at the workplace or in a central records office, and they must be available for inspection by the Wage and Hour Division. A cloud tool that holds your time records satisfies the "central" part only if you can actually produce them on request, so test that before you need it.

Form I-9

USCIS requires that all US employers properly complete Form I-9 for every individual they hire, citizen or not. Two deadlines belong on your onboarding checklist.

• Section 1 is completed by the employee no later than their first day of employment.
• Section 2 is your part, due within 3 business days of the date of hire. USCIS's example: if someone starts work for pay on Monday, Section 2 is due Thursday. If the job lasts less than 3 days, Section 2 is due no later than the first day of work for pay.

Keep each form for 3 years after the hire date or 1 year after employment ends, whichever is later. The calculators below do the date arithmetic, but the USCIS calculator is the authority.

Withholding is a separate duty. The IRS tells employers to withhold federal income tax from each wage payment according to the employee's Form W-4. That is payroll work and sits outside HR FLARE.

Layer two: where your state takes over

Vacation and PTO

The DOL's position is that the FLSA does not require payment for time not worked, such as vacations, sick leave or federal or other holidays. Those are matters of agreement between you and your employee. A business that offers 10, 15 or 20 vacation days is choosing to, and the policy you write is the rule you must then follow. Put it in writing and apply it the same way to everyone. What happens to unused vacation when someone leaves is a state question, so ask your state labor department before you write the payout clause.

Paid sick leave

The DOL notes there is no federal law guaranteeing paid sick leave. As of December 2024, it counts 18 states and Washington, D.C. that require covered private employers to provide it. That count is a snapshot and states keep adding laws, so check your state labor department's site for the current list, then your city or county.

Two examples show how different the rules are.

California

The state's labor agency says employers must provide at least 40 hours or five days of paid sick leave per year. Under an accrual policy employees earn at least one hour for each 30 hours worked, so an employee who has worked 90 hours has accrued 3 hours. An employee qualifies after working 30 days for the same employer within a year in California, and can use accrued leave after the 90th day of employment. Employers may limit annual use to 40 hours or 5 days.

New York

The state's page says employers with 5 to 99 employees give up to 40 hours of paid sick leave per calendar year, and 100 or more give up to 56. Employers with 4 or fewer employees and net income of $1 million or less in the previous tax year give up to 40 hours of unpaid sick leave. The same size band with higher net income gives 40 paid hours. Headcount and income both matter, which a flat checklist would miss.

Family and medical leave

The FMLA gives job-protected, unpaid time off of up to 12 workweeks in a 12-month period. It covers private employers with 50 or more employees in 20 or more workweeks in the current or previous calendar year. An employee also needs 12 months with the employer, at least 1,250 hours of service in the 12 months before leave starts, and a worksite with 50 or more employees within 75 miles. A business with 10 people is typically outside it, though a state may have its own family leave law. If you are heading toward 50, track hours worked per person from day one, because eligibility is built from hours and headcount history.

Layer three: city and county

Cities and counties can add rules on top, so a business in a state without a sick leave law can still be covered locally. Size thresholds also differ by law: the FMLA starts at 50 employees, New York's sick leave tiers start at 5, and some state laws cover every employer regardless of size. This is why one national checklist never fits, and why a tool needs to let you set your own rules instead of assuming them.

The formulas, written out

• Overtime: weekly pay = 40 × rate + overtime hours × 1.5 × rate, where overtime hours = max(0, hours − 40). Round to cents at the end. Example: $20 an hour for 45 hours = 800 + 5 × 30 = $950. If hours are 40 or fewer, pay = hours × rate.
• I-9 Section 2: the date of hire is day zero. Count 3 business days forward, skipping Saturdays and Sundays. Start Monday, due Thursday. For a job under 3 days, due on the first day. This tool skips weekends only, so check holidays against USCIS guidance.
• I-9 retention: keep until the later of (hire date + 3 years) and (end date + 1 year). Hired 4 March 2024 and left 10 June 2026: 4 March 2027 against 10 June 2027, so keep until 10 June 2027. Hired 5 October 2026 and left 1 December 2026: 5 October 2029 against 1 December 2027, so keep until 5 October 2029. With no end date, only the 3 year date is known.
• California accrual: hours accrued = hours worked ÷ 30, so 90 hours gives 3. An employer may limit use to 40 hours or 5 days a year. Employees can use accrued leave from day 90 of employment.
• New York tier: 5 to 99 employees = up to 40 paid hours a year; 100 or more = up to 56 paid hours; 4 or fewer with net income over $1 million = 40 paid hours; 4 or fewer with $1 million or less = 40 unpaid hours. Examples: 12 employees = 40 paid; 150 = 56 paid; 3 employees with $800,000 net income = 40 unpaid.

When the result can differ: an employment contract, a union agreement or a state or city law can give more than these floors. Exempt employees are not paid by this overtime formula. None of this computes tax.

What to record, whatever your state says

Map the three layers to a short set of records and the software question gets smaller.

• Classification per person: employee or contractor, exempt or nonexempt, and the date you last reviewed it.
• Hours: daily and weekly hours for nonexempt staff, plus any work done outside normal hours.
• Leave: balances, requests and approvals for whatever your policy and state law promise.
• Hiring paperwork: the date of hire and the I-9 Section 2 due date for every new person, with a place to note that the form is done.
• Pay records: payslip history and deductions, kept for at least the retention periods above.
• Documents: signed offer letters, policy acknowledgements and handbook receipts.
• Headcount history: because thresholds such as 5, 50 and 100 employees change what applies to you.

HR software or payroll provider?

These are two jobs. Payroll means withholding and paying tax. HR records mean who works for you, when they worked, what leave they have taken and which forms are on file. A small US team can keep the second job in one tool and leave the first to a payroll provider or an accountant. Some products do both, so ask any vendor what is actually included.

Where HR FLARE fits, and where it stops

HR FLARE is a records and workflow tool for small teams. It is free to get started for up to 5 employees, with every feature and no credit card. Paid plans are flat and priced by headcount on the pricing page: Starter is $29 a month for up to 10, Growth $79 for up to 30 and Business $149 for up to 75.

It can hold employee profiles, documents and onboarding checklists (you can add your own I-9 reminder step), browser, Mac or phone time tracking with manager-approved timesheets, and leave with requests, balances, accrual and carry-over. Employees give a free-text reason when they ask for leave, and each person plans their own week; there is no manager-built rota. Payroll in HR FLARE means records and payslips only.

It does not calculate or withhold federal, state or local tax, file returns or pay your people. It does not enrol anyone in health or retirement plans, and it is not a PEO. It also has no legal rule engine: it does not know your state's sick leave law or tell you when overtime is due. You set the policy and the balances, and it keeps the record. A typical setup is a payroll provider for withholding and filing plus a records tool such as this one.

HR FLARE is hosted in Europe and DSGVO-ready, which matters only if you also employ people in the EU.

Sources

Sources checked on 6 October 2026.

• DOL: Vacation leave
• DOL: Paid leave (sick leave states, FMLA)
• DOL: Family and Medical Leave Act
• DOL: Minimum wage
• DOL: Overtime
• DOL news release, 14 May 2026: restored exemption regulations
• DOL fact sheet 14: FLSA coverage
• DOL fact sheet 13: Employment relationship
• DOL fact sheet 21: Recordkeeping
• DOL fact sheet 22: Hours worked
• USCIS: Form I-9
• USCIS: Section 1
• USCIS: Section 2
• USCIS: Retention and storage
• IRS: Publication 15
• California DIR: Paid sick leave
• New York State: Paid sick leave
• HR FLARE: Pricing

This page is general information, not legal advice. Laws change, so confirm with the agency or a lawyer.