Most small businesses out there are “building the engine while flying the plane” with regard to their operations, and human resources is no exception. In many cases the HR process isn’t even considered until after employees have been hired, and even then not so much.
For some reason many owners believe they don’t have to comply with much of anything until they’ve hired 50 employees (or they get their first unemployment or Worker’s Comp claim).
Nothing could be further from reality. If you hire even one employee, you are subject to no less than 14 federal laws, not counting state and local laws! Just when it feels like you’ve got this down, the laws change, new precedents are set and new mandates are being imposed upon your business without you even realizing it’s happening.
So in the spirit of not knowing what you don’t know, here are a few HR FAQ’s sure to spark some conversations within your organization:
Q: Which law should we focus on first?
A: The Fair Labor Standards Act. This law is the most basic federal law you must comply with after the addition of even one employee to your staff. This law covers minimum wage, postings which must be provided for your employees, recordkeeping, and much more. This law applies to both private and public sector employees and usually dovetails with state specific laws. This law also bears review if you’re using contractors (1099) workers as well.
Q: How do we handle personnel files?
A: Separately and Securely. Many employers believe that as long as they have their employees’ information locked up, they have covered their bases. This is an inaccurate perception. Employee files should consist of their basic paperwork in one file (application, W-4, payroll info, on-boarding paperwork, etc.), their medical paperwork in a second file (stored separately from the basic file) and the I-9 forms in a third file (stored separately again from the other files). In addition, you should craft a document destruction policy to be sure you are following legal best practices when destroying old employee files. This will help protect your company from possible costly liability in the future.
Q: I can pay all of my employees a salary, right?
A: Wrong. The Department of Labor has strict guidelines with regard to how you compensate your employees. Employee classification lawsuits are on the rise, especially among SMBs. According to the DOL in 2011 it recovered $225 million in back wages for employees, a number that was up 28 percent from the previous year, and this trend has continued upward every year since. It is worth your time and money to invest in making sure you get a review of your employee classifications, including how you handle any 1099 workers. These laws can also be state specific, so just checking DOL guidelines may not be enough.
Recently Robyn presented a webinar where she answered frequently asked questions posed by her clients. Watch an on-demand recording.
Want to attempt to Stump the HR Lady? Submit a question for Robyn to answer in a future column to email@example.com.
Robyn Porter is a Human Resources Manager of 20+ years and Consultant with HTG Peer Groups. Her background includes the IT, Hospitality, Distribution, Entertainment and Gaming industries, and from operations to ownership to corporate human resources. Her passion lies in the SMB space helping businesses to maximize HR processes and successfully navigate the challenges. You can reach her at firstname.lastname@example.org or find her on LinkedIn or Twitter at @RobynTheHRLady.
About HTG Peer Groups. HTG Peer Groups is an international organization of leading IT solution providers with nearly 300 member companies. In everything they do, whether running peer groups, coaching, or consulting with clients, the HTG team looks to make a positive difference in the lives and businesses of those they serve. Visit www.htgpeergroups.com or call 712-794-7994 for more information.