People don’t start businesses with dreams of doing paperwork – but as your business and your employee count grows, so does the HR paperwork. With a 400% increase in employment lawsuits over the past 20 years, staying in compliance with employment law and evolving local, state, and federal regulations is critical to your long-term success.
While standards may vary based on industry, company size, and location—most compliance challenges come down to a few key areas of HR.
- Recruiting & Hiring
A common area where businesses can get into hot water is hiring practices. Maintaining equal opportunity employment for job candidates is enshrined in federal law.
When recruiting, you cannot use language that shows preference based on protected characteristics, including but not limited to race, gender, religion, national origin, political affiliation, age, or disability. Online tools are available that can help you write unbiased job descriptions.
You must also not ask discriminatory questions during interviews with job candidates. Avoid asking questions about protected classes and avoid asking in-depth information about a candidate’s personal life. Questions should instead focus on their past experience, relevant skills, work style, and career goals. If a candidate does disclose a disability and requests a reasonable accommodation, you cannot refuse to hire on that basis.
- Employee Classification
Misclassifying an employee can result in steep penalties. You must determine and accurately report whether each worker is an employee or a contractor, and whether they are exempt or non-exempt. The Fair Labor Standards Act (FLSA) is what governs rules around employment classifications and stipulates whether employees are entitled to things like overtime pay.
- Employee Record-keeping & Required Paperwork
Proper documentation is key in preventing compliance issues and having the required information to defend your business in the case of an employee lawsuit is vital. You must retain hiring and employment records, as well as certain kinds of legally required paperwork when you hire someone new. For example, it’s critical to ensure that you are correctly completing I-9’s for new hires and there are specific federally mandated guidelines on how to do this. Failure to complete I-9 paperwork correctly and maintain the required records is an area that businesses often fall short in, and making mistakes here can lead to hefty fines.
- Benefits Administration
Employee benefits help attract people to work for your company. Some are mandatory to offer, and some don’t become required until your business meets certain criteria. It’s important to review federal, state, and local laws to see what requirements apply to your business. Essential benefits can include medical benefits, paid time off and sick leave, parental leave, and workers’ compensation insurance, in addition to things like the Family and Medical Leave Act (FMLA), and short term and long term disability.
- Workplace Management
Establishing clear policies and procedures that set expectations for employee behavior while at work is another area that can cause compliance issues for businesses if not done well and if not handled consistently. Policies should be communicated to all employees and the most common way to do this is through an employee handbook, which should be a continual work-in-progress that you, as the employer, update frequently to meet the needs of your business and to reflect changing laws and regulations over time.
How Can Keep Your Business in Compliance?
Keeping your organization compliant, paperwork complete, and people happy while running and growing your business is difficult. If you’re struggling to keep up, here are a few ideas to help:
- Build a relationship with a local employment law firm and find a resource that you can go to for critical issues when they arise (this is good for smaller companies).
- Subscribe to the Society for Human Resource Management (SHRM) which is the professional association for HR professionals; you can scope out trending issues and how people are navigating them, and find general advice on most major areas of HR.
- Hire an HR representative—even a part-time one if you can’t justify a full time employee dedicated to HR just yet.
- Start training an existing employee to help you manage some of the HR related tasks; ideally this would be someone with great attention to detail, strong writing and communication skills, an ability to build rapport easily with others, and most importantly, someone who has an interest in HR. This way, as your company grows, this role can expand accordingly.
- Outsource some or all of your HR; this can be helpful for companies experiencing high growth quickly, and those who want HR Support in a range of contexts—and companies who don’t want to have to hire or add another employee.
Whatever path is right for your business today, know that HR compliance, paperwork, and people management in general are tremendously important at any stage—not only for protecting your organization financially, but also for helping you maintain a great reputation, hire and retain great people, promote a healthy work environment, and minimize risk.
Ask us your Human Resources and talent management questions via the online chat tool in the lower left corner of your screen. We love helping companies align their people with their business needs, and we love to share what we know.
