HR Compliance for Small Business

HR Compliance for Small Business: Implementing Consistent HR Practices in Compliance with State and Federal Laws

Allow me to start my HR Compliance for Small Business blog with some staggering statistics.

• Small businesses (less than 500 employees) comprise 99% of all businesses across the United States.
• Firms with fewer than 100 workers accounted for 98.2 percent.
• Firms with fewer than 20 workers made up 89.0 percent.
• 54 percent of small businesses handle employment matters themselves, without an experienced HR designated staff person.
• 70 percent of businesses with five to 49 employees add Human Resources responsibilities onto the workload of employees with little to no experience in workforce issues, and
• 81 percent of these “HR delegates” aren’t confident in their HR skills and 82 percent have no formal HR training.

What are core functions of Human Resources?

1. Talent management: recruiting and onboarding
2. Staff development
3. Workforce engagement and performance management
4. Payroll and compensation
5. Compliance and employee relations

Does delegating HR Functions to inexperienced staff work?

As you can imagine, or more than likely are experiencing since you too work in a small business, the ability to manage these delegated core functions of HR are impossible to effectively deliver on and probably look more like a never ending guessing game.  Of course, having an HR professional per fifty employees is the recommendation, but if your organization is smaller than 50 employees or the resources are not there yet for one HR staff, then at least make sure you are in compliance with State and Federal laws and for these legal reasons, consistent in your HR processes and treatment of employees.

How can you make your small business compliant and consistent?

Contract with an HR expert who can advise and assist you on how to get your house in order.   When shopping for a good HR expert, look at the consultants formal education and experience.  At minimum, an HR consultant should have a four-year degree in Human Resources and better yet, look for a Masters degree-level Industrial/Organizational Psychologist.  Plus at minimum, five years HR management-level experience.  And, icing on the cake would be for the consultant to have the Professional Human Resource certification from the Society of Human Resource Management.

What should you expect an HR expert to address when ensuring HR compliance for small business?

There are several areas a HR consultant will want to address with you to ensure compliance and consistency.  It’s not always easy to put these areas in a linear order, and what gets addressed first will depend on other factors related to contextual urgency and what you may already have in place.  When I look at what needs to exist to ensure compliance and consistent practices, my order of addressing these processes include the following:

1. Department of Labor, Americans with Disabilities Act, Equal Employment Opportunity requirements, such has what has to be posted in a public area that all employees can access, plus defined processes for addressing related issues when they arise.
2. Employee Policy Handbook
3. Job Descriptions
4. Recruiting and onboarding
5. Performance Reviews
6. Corrective Action
7. Termination of employment

Though the list could go on, I do find these seven HR practices to be foundational to having an organization that is compliant and knows what to do should a related issue arise.  In my upcoming blogs, I will dive deeper into each of these seven HR areas to explain why the area impacts compliance and consistency.  And, I will discuss the details of how a consultant can help you get the task accomplished with minimal time and money.