Shortly after the first factories rose a little more than two centuries ago in England and America, well-meaning people began trying to protect those who labored within, many of them children, from the soul-killing drudgery of 14-hour days, meager wages and hideous injuries from the thrumming, clattering machinery.

We have come a long way. First came child labor laws. Abolition of the 70-hour work week. Then workers' compensation. The minimum wage and the right to join a union. Equal opportunity. Occupational safety.

These days it's all so much more complicated. When, for instance, is an illness severe enough to qualify an employee for leave under the Family Medical Leave Act? Or how much should an injured worker get under workers' compensation?

Some business people argue that, in fact, in some areas, in some cases, we have come too far in this first decade of the 21st century, that businesses - especially small ones least equipped to wrestle with red tape - are being asked too much of and regulated too much. That the line between the breathing room businesses need to prosper and the welfare of workers is often buried in paper these days.

Certainly the owners and managers of small businesses surveyed recently by the National Association of Professional Employer Organizations, or NAPEO, think so. Almost nine of 10 said local, state and federal employment regulations have proliferated in the last decade; more than half said these regulations had grown faster than other types of rules; and more than half said they are spending at least 10 percent more time complying with these workplace regulations than they did a decade ago.

The quarterly NAPEO's Workplace Today survey shows that proliferating regulations frustrate these small businesses' executives, as they do many business people, but that - just as in the world at large - no clear consensus emerges about a solution.

And even though the business people in this survey find workers' compensation the hardest regulation to comply with, they also say it has been the one most helpful to workers. They criticized immigration laws that don't work.

NAPEO represents professional employer organizations, or PEOs, to which small and medium-sized businesses outsource their time-consuming and unprofitable human-resource chores, as simple as doing payroll or as complex as complying with cumbersome government regulations.

The trade association set out in its third quarterly survey of workplace trends to seek a more nuanced picture of employment regulations and how they affect the small-business people who are its members' clients. A total of 429 clients responded to the survey in mid-May.

These businesses may be small, but businesses with less than 500 people employ half the private-sector workers in the nation, according to the federal Small Business Administration, and account for the majority of new jobs.

A picture emerged from the survey of a group of small business people who fully recognize the importance of workplace regulations but chafe under their increasing complexity.

"We have absolutely no argument with regulations that keep workers healthier and safer," says Milan P. Yager, executive vice president of NAPEO. "What we want is for legislators and regulators to ask themselves: Do these rules always have to be so complicated?"

Question 1: In the past 10 years, have local, state and federal employment regulations increased?

Not surprisingly, 87 percent, or 365 companies, said yes, while 13 percent said no.

Since Teddy Roosevelt began busting trusts in the early 1900s and continuing on through recent presidents, businesses regularly complain that regulations smother their ability to grow and prosper - and that while the benefits of regulation are undeniable, they must be balanced against the costs of compliance.

The cost of compliance with federal regulations alone exceeded $1 trillion in 2004, a "hidden tax" equal to half the size of the federal budget, says the conservative Competitive Enterprise Institute.

There are signs, though, that things may be getting better. Last year there were 787 rules in the regulatory pipeline with an impact on small businesses, down from almost 900 four years earlier, says the institute.

"Employment regulations - one of the more complicated and potentially costly aspects for employers - are something that should be taken seriously and with caution. Working with human resource professionals provides peace of mind that a company is complying with the various laws and regulations," says Tim Doherty, president of Doherty Employer Services, a PEO based in Minneapolis, Minn.

Of the companies that said employment regulations were increasing, a little more than half - 53 percent - said these regulations were growing faster than other types of business regulations. The other 47 percent said they are not.

Federal regulation as we know it began in the late 19th century with the Interstate Commerce Commission, created to keep the railroads from gouging customers. It revved up during the New Deal with creation of agencies like the Securities and Exchange Commission and the National Labor Relations Board, designed to protect investors and workers.

A second burst commenced in the late 1960s and 1970s with laws designed to protect consumers, preserve the environment and further safeguard workers. While these regulations covered everything from banning certain pesticides to what business activities banks could undertake, many recent laws concern employees and their rights as notions of how employers should treat their employees evolve and expand. In the last few decades major rules have included the Family Medical Leave Act, which allows workers to take up to 12 weeks of unpaid leave a year for family and medical emergencies; the Americans With Disabilities Act, which prohibits discrimination against the handicapped; and many others.

Around half - almost 55 percent - said they were spending up to 10 percent more time doing regulatory paperwork. A third - 31 percent - said it was up to 20 percent. A tenth said up to 30 percent, and 5 percent said they are spending over 30 percent more time complying with regulations.

That time is most burdensome to small businesses with fewer than 20 employees - typical, in fact, of the companies that responded to the survey. They spent more than $7,600 per employee complying with all regulations, compared with $5,300 for companies with more than 500 workers, the federal Small Business Administration estimated for 2005. Workplace regulations alone cost the smallest businesses more than $900 a year per employee compared with $840 for the largest companies.

"Today, businesses are spending more and more time on regulatory paperwork. However, it is the smaller businesses most adversely impacted by this demand, as these are the companies with fewest resources," says Dale Hageman, CEO/president of Accord Human Resources, Inc., in Oklahoma City, Okla. "So while a large business might commit five employees to meeting this challenge, these five employees represent only a small portion of the company's overall workforce and available resources. For a small business, however, five employees may represent one-quarter of its workforce."

One of PEOs' most important roles is to help businesses understand and improve compliance with employment regulations, saving clients' time so they can focus on important matters like making a profit and expanding sales. The PEO clients in the survey agree: 94 percent said their PEO saves them time on doing compliance.

"Employment regulations are complex; it is increasingly taxing to just build awareness, let alone understanding and ultimately, compliance," says Brian Fayak, president and CEO of Nextep, Inc., a PEO based in Norman, Okla. "We believe our client's management is more productive when they are free to focus on higher-level strategic HR issues, more effective when they can consider the implications of decisions rather than the nuances of the regulations, and more decisive when they have an HR team as a business partner. Management time is better spent."

Regulations can be complex; and the penalties for not complying, even unwittingly, can be stringent. A willful violation of certain provisions of the Fair Labor Standards Act - concerning the minimum wage and overtime - can be $10,000 for a first offense and a prison term for subsequent criminal violations. And that's not counting the cost of civil lawsuits employees may bring for these violations or infractions of other laws.

PEO clients comply with the laws better because PEOs have experts monitoring and improving compliance with such laws. Not to mention that the PEO can be on the hook for violations, too.

A little less than two-thirds, or 267 companies, rated their compliance as excellent; a third said it is good; and 2.5 percent said it is fair or could be much better. To be sure, the responses are probably skewed because companies that hire PEOs are likelier to be more concerned about compliance with employment regulations - and helping them comply is one of the major benefits of hiring a PEO.

The respondents weren't impressed. Only 3 percent, or 13, said government had put a dent in paperwork over the last decade. Almost half - 49 percent, or 199 - said government had been "somewhat effective" in clamping down on the profusion of paper. And another 48 percent, or 198, said government had been "not effective at all."

As far back as President Richard Nixon in the 1960s, presidents have tried to compare the costs of regulations to their benefits, a process President Jimmy Carter continued. President Ronald Reagan made what he called "regulatory relief" one of his four pillars of economic growth, and his vice president, George H.W. Bush, chaired a commission on regulatory reform.

President Bill Clinton got the Office of Management and Budget to speed up its review of new regulations, and depending on your perspective, President George W. Bush has either squelched important protections for consumers and the environment or kept regulators from gumming up the free market.

It's not just the profusion of new regulations, say critics. It's also the bureaucratese in which many of these rules are couched.

"The most frequently cited problem by small business when complying with federal regulations is unclear or confusing instructions," says the National Federation of Independent Business, the small business lobby. "Simplicity can save small business and the federal government time, effort and money."

Right now Congress passes a law and then requires the relevant federal agency to draw up and enforce the regulations. Some conservatives want Congress to make the agencies submit their regulations for approval, too, an approach critics say is cumbersome and completely unrealistic.

More than a third of the businesses in this survey agreed this idea has merit - 37 percent, or 158 companies. Another third, 30 percent, disagreed, while the remaining third, 33 percent, had no opinion.

The conservative Competitive Enterprise Institute says sunlight - disclosure - is one solution to proliferating regulations. "Regulations should be treated like federal spending," writes Clyde Wayne Crews Jr., a vice president at the institute, in "Ten Thousand Commandments: An Annual Snapshot of the Federal Regulatory State." "Whenever possible, Congress should be held accountable for the compliance costs - as well as the benefits - of federal regulations. A way to maximize congressional accountability is to require Congress to vote on agency rules - in an expedited fashion - before they become binding."

Adding another step to the regulatory process might not be the most practical way, Crews admits. Then how about at least requiring agencies to be far more open and specific about what their regulations actually cost?

Almost two-thirds, or 62 percent, said yes. The other third said they were staying the same, and nobody said they were decreasing. States that see the federal government not doing enough about air pollution, like California, or immigration, like Colorado, have increasingly passed their own, tougher standards recently.

Consumer activists who contend, for instance, that the Congress has not done enough to crack down on predatory sub-prime mortgage lenders have worked to have laws far tougher than the federal standards passed in more than a dozen states.

In human resources, some states have already moved ahead of the federal government (states can make laws tougher than federal laws, though not weaker). For instance, Massachusetts has raised its minimum wage to $7.50 an hour and Maryland is already at $6.15.

"In Nevada alone, the state implemented a minimum wage based on whether or not the employer provided and paid for 'qualified' medical benefits on behalf of the employee," said Bill Rosado, president of ManagedPAY, a PEO based in Las Vegas. "The minimum wage here depends on the size of the company and the amount the employee pays for medical benefits - a complicated and convoluted process."

By far the most respondents named workers' compensation, the mandatory state-federal employer's insurance program to cover on-the-job injuries - 38 percent, or 147 companies.

At the beginning of the last century, injured workers' only recourse was to sue their employers, slow, costly, uncertain for both workers and employers. Moreover, it choked the courts with injury cases.

Far fairer, reformers thought, was to remove the legal wrangling for both sides and simply make businesses carry workers' comp insurance - a form of "no-fault" coverage. The states started adopting this system from Europe in the early 1900s. By 1949 all states had some kind of program and the argument has continued since over how much businesses should pay and how much workers should get when they are hurt on the job.

However, in some states the insurance premiums for workers' comp have ballooned into a major expense, especially for small businesses with fewer resources financially and fewer people to cope with the complicated requirements of the claims process.

"From workplace reports to dealing with the state to getting people to report back to work, workers' comp regulations are complex and they're definitely not malleable," says Jay Keegan, president and CEO of Adams Keegan Inc., a PEO in Memphis, Tenn.

As well as being complicated, workers' comp can be controversial. Consumer groups and unions say some state programs are unfair to workers, compensate them insufficiently and are tilted in favor of business.

"Workers' compensation is an unfortunate example of how a seemingly fair program can be manipulated by political forces into a nightmare for those it was originally meant to help," wrote Amy Widman in a report last year for the liberal Center for Justice & Democracy.

Businesses, on the other hand, have seen costs of workers' compensation continue to escalate in many jurisdictions, and fraudulent claims by employees have increased.

Reporting and paying federal income and employment taxes for employees ranked as the second most onerous human resources chore, said 28 percent of the respondents, or 109 companies.

Ranked third was the controversial Family Medical Leave Act, which requires companies of more than 50 employees to provide up to 12 weeks a year of unpaid leave for family and medical emergencies. Another 26 percent thought it was tough to comply with.

The act is complex. For example, one provision allows employees to take their leave in small increments, which businesses complain complicates their record-keeping. Workers say they shouldn't have to take an entire day for a doctor's appointment.

"The act is a minefield," says Sandra Dickerson, CEO of Your People Professionals, a PEO in Santa Maria, Calif., who nevertheless thinks the law is worthwhile. "It's very difficult to monitor, and there can be a lot of open leaves at any time. My managers and I have to use charts to keep up with it."

And California has its own family-leave laws that sometimes overlap, making the act even trickier to administer, as do the Americans with Disabilities Act, workers compensation law and others.

Tied for third in the survey with 26 percent of respondents was the complex Health Insurance Portability and Accountability Act, or HIPAA, which allows employees who change jobs access to medical coverage and ensures employees' medical records stay private to encourage electronic record-keeping.

Ironically, almost half, or 47 percent, picked workers' comp as the regulatory program most beneficial to employees.

Without the system, employees and their employers would have to roll the dice in the legal system, a slow, cumbersome and sometimes unfair process. Instead the presumption under the workers' comp system is that workers injured on the job have an absolute right to medical care and compensation, and if there's a dispute it's first heard informally by the state workers' comp agency.

The controversial Family Medical Leave Act, which many businesses say lets employees take too much time off - many for situations that are not emergencies - ranked second with 42 percent. This law, too, deals with emergencies, in this case granting leave if a worker or a family member becomes ill.

The act is one area where a PEO benefits small-business workers directly. A number of small-business employees become entitled to the act's benefits because of their contemporaneous employment with the larger PEO. This is one reason small businesses seeking both efficiency and enhanced employee benefits use PEO services. "The things that qualify people for leave under the act often shock our clients," says Jay Keegan of Adams Keegan. "You can get a 'shoot-the-messenger' response when you tell them. But business isn't just all balance sheets and black-and-white. You have to consider the welfare of your employees, too."

The third most beneficial regulation, survey respondents said, is the Health Insurance Portability and Accountability Act, one of the newest employment regulations, passed by Congress in 1996. It ensures the privacy of medical records and is supposed to cut metastasizing medical costs by computerizing medical records. Thirty-two percent cited this as the most useful government regulation.

More than a third of the companies - 35 percent - named the Immigration Reform and Control Act, the 1986 law that made it an offense for employers to knowingly hire illegal aliens in an attempt to curtail an earlier wave of migration. The law also granted amnesty to almost 3 million people in the country illegally at the time.

But it's hard to prove an employer knowingly hired an illegal immigrant; and a market in fake IDs has boomed since 1986. So workers remain in the shadows, subject to deportation by the government and gouging by unscrupulous employers, and almost half a million more people enter the country every year, experts estimate, in search of work.

Also not getting much respect from this survey's respondents were the involuntary deductions that courts and government agencies require employers to make, like garnishing wages to collect child support or unpaid taxes. A third - 32 percent - said this was the least helpful regulation for employees.

Another third - 31 percent - said also of little use is the Worker Adjustment and Retraining Notification Act, or WARN, which requires large employers to give employees a minimum of 60 days written notice of layoffs and plant closings.

WARN is supposed to mitigate the pain of losing a job but does little to address the fundamental problems that are pushing good jobs overseas. Wisconsin, for instance, lost one of every nine of its factory jobs in just the three-and-a-half years to mid-2004, most of the losses were trade-related. And the jobs replacing them paid on average a quarter less.

Statistics like these, says the AFL-CIO, are a "wake-up call for America's policy-makers."

On May 25, 2007, President Bush signed the bill to continue funding the Iraq war and, with the bill, a proposal to increase the federal minimum wage from $5.15 to $7.25 an hour over the next two years. The increase, the first in nearly a decade, ends the largest stretch without a raise in the minimum wage since it was established in 1938. It was a major goal for Democrats, who won control of Congress last year and made raising wages part of an eight-point agenda they wanted to accomplish in the first 100 hours.

Almost two-thirds, or 60 percent, of the respondents said the raise would have no impact on them - not surprising, because businesses that hire PEOs tend to pay better than minimum wage. A quarter, or 27 percent, said it would be a minor problem. (Some economists predict the raise will seriously hurt small businesses, especially the restaurant business and other large employers of low-wage workers.) and one in 10 said it would be a major problem. Two percent viewed it as a positive.

The majority (90%, 383 companies) said that the increase would not require them to reduce their work forces.

Business doesn't like this 1993 law, the first bill signed into law by President Bill Clinton. Every few years, including this year, business lobbyists try to trim it. (The Labor Department just finished receiving comments on a long list of questions about changing the law.)

The U.S. Chamber of Commerce says the law has "led to widespread employer confusion and employee abuse, as documented in at least seven Congressional hearings. The Labor Department's regulations and sometimes conflicting interpretations of the law have resulted in significant administrative challenges, costs, and abuse by a small, but growing, portion of the workforce."

Business groups like the Chamber are lobbying to tighten the law's provisions while labor unions press Congress to expand them to, for instance, businesses that employ fewer than the 50 people the law covers now.

Supporters of the law say workers should have the right to take time off when seriously ill or to care for a child for up to three months a year. "If a member of your family gets sick, you should be able to take time off from work to take care of them without being afraid of losing your job," says the AFL-CIO.

Several states are even considering a version of a California law that provides for paid leave for emergencies - the state replaces half a worker's pay for as many as six weeks up to almost a $900 limit. Paid emergency leave is something other industrialized countries routinely offer workers.

The survey respondents were almost evenly split. A surprisingly large 49 percent favored leaving the law unchanged (41 percent) or even expanding employees' ability to take leave (8 percent). The other half said they would support cutting the leave time available from the 12 weeks the law allows (21 percent) or would support narrower reasons for taking leave (30 percent.)

One in 10 (almost 12 percent) of the respondents reported employees abused the act, such as taking time off for an insignificant illness. But that hasn't been the experience of some PEOs.

"I can think of only one situation where an employee manipulated leave," says Sandra Dickerson, the CEO of Your People Professionals. "We just don't see abuse, partly because medical certification of a serious health condition can be required to get leave."

Two-thirds, or almost 300 companies, said the passports, green cards and other permitted documents that job applicants use now to establish their right to work legally in the U.S. are sufficient. However, it's not terribly surprising that businesses would say this, since many wouldn't want the additional bother of requiring more documents or doing more extensive checks on job applicants.

But a third, or 130 businesses - reflecting a larger national debate over how to curb illegal immigration - said the system now isn't sufficient to fully enforce the law. Congress is once again grappling with the entire immigration issue. A bipartisan group of Senators and the White House agreed on a compromise in May that must still wend its way through Congress if it's to become one of President Bush's major legislative accomplishments of his second term.

Republicans are arguing for a get-tough approach to enforcement - including cracking down on employers who hire illegal immigrants and beefing up border security - and Democrats are pushing a more welcoming approach that includes an amnesty for everyone in the country illegally now.

The proposal would also require the government to create an efficient way to check Social Security numbers and other ID within the next 18 months, a requirement businesses worry will impose onerous new burdens on them.

The National Federation of Independent Business, the small-business lobby, also wants a verification system that "recognizes the differences in size and infrastructure of big businesses and small businesses, for which a $10,000 fine can be ruinous," and gets employers off the hook for fines "who make a good-faith effort to comply with the law."

Congress already passed, in 2005, the Real ID Act, creating a national digital ID card that people will eventually need to open bank accounts, enter federal buildings or fly on planes. The act was designed to deter terrorists, but opponents of illegal immigration hope it will also curtail illegal entry into the country.

Critics, however, say it's not the answer; rather, it's an expensive and unwarranted intrusion on privacy. Several states, including Washington, have already voted not to adopt the ID card unless Congress pays for it, ensures the information on the cards won't be abused and that it won't impose an undue burden on people.

"This is another unfunded mandate from the federal government," Gov. Chris Gregoire told the Associated Press recently, "and, even worse, it doesn't protect the privacy of the citizens of Washington."

Congress, alarmed by a boom in illegal immigration, in 1986 passed the Immigration Reform and Control Act, for the first time making it illegal for U.S. employers to knowingly hire illegal immigrants.

However, the law has not worked to stem the influx of illegal immigrants. Under the amnesty provision of the 1986 law, about 2.7 million illegal immigrants were granted citizenship. Yet now there are 12 million more people illegally in the U.S., the government and most experts estimate.

Surprisingly, the employers surveyed agreed that businesses must share some of the blame and shoulder some of the burden. Seven of 10 said government should hold employers more accountable for hiring illegal aliens.

Colorado recently experimented with cracking down further on employers by passing the first state immigration law of its kind - and touted as the toughest - in the nation in an attempt to put more pressure on businesses not to hire illegal immigrants. As of January 1, 2007, it requires employers to keep copies of their workers' documents and sign a form attesting that they've scrutinized the documents.

The state can levy stiff fines, conduct random audits or ask to see documents if they have reason to believe an employer is hiring illegal immigrants. So far it's unclear how much impact the new law will have.

"If employers were hiring illegal immigrants before, having them sign another document stating basically the same information…will not stop them from continuing with the same practice," says Christine Holmes, chief operations officer at LMC Resources Inc., a Denver-based PEO. "But, once fines are assessed, there may be some changes."

A third of the 429 companies responding to the survey employ 10 or fewer; a quarter employ 11 to 20; 22 percent employ 21 to 50; 10 percent employ 51 to 100; and 9 percent employ more than 100.

Twenty-seven percent of the companies are headquartered in the south-Atlantic region: Delaware, Washington, D.C., Florida, Georgia, Maryland, the Carolinas, Virginia and West Virginia. Twenty-five percent are in the west-south-central region: Arkansas, Louisiana, Oklahoma and Texas; and 20 percent are the east-north-central region: Illinois, Indiana, Michigan, Ohio and Wisconsin. Smaller percentages (8% or less) are in other regions.

By far the most respondents are in services - 30 percent. Sixteen percent are in construction; 10 percent, manufacturing; and 7 percent are nonprofits. Other trades with at least five percent each are technology, medical providers and financial services.

* Here are the 13 major employment laws and regulations cited in the NAPEO survey:

• Federal employment taxes and reporting
• State and local taxes and reporting
• Fair Labor Standards Act (FLSA), or your state wage and hour laws if they supersede the federal law: sets minimum wage and overtime regulations
• Workers' compensation: compensates employees for on-the-job injuries
• Employee Retirement Income Security Act (ERISA): sets minimum standards for pension plans
• Immigration and Reform Control Act (IRCA): requires employers to complete an I-9 form to ensure new hires are authorized to work in the U.S.
• Consolidated Omnibus Budget Reconciliation Act (COBRA): Extends health insurance to employees who are laid off or quit
• Americans With Disabilities Act (ADA): prohibits discrimination against people with disabilities
• Title VII: prohibits discrimination by race, color, religion, sex or national origin
• Family Medical Leave Act (FMLA): requires employers of more than 50 workers to give up to 12 unpaid weeks a year for medical emergencies
• Involuntary deductions: employers are required to garnish wages of employees to collect child support, unpaid taxes and the like
• Health Insurance Portability and Accountability Act (HIPAA): ensures employees' medical records stay private to encourage electronic record-keeping
• Worker Adjustment and Retraining Notification Act (WARN): requires large employers to give employees a minimum of 60 days written notice of layoffs and plant