Crucial HR Compliance Tactics for Small Businesses

— April 4, 2019

Hiring an employee for your small business brings many emotions. You’re proud, because you’re successful enough and can afford the extra help. You’re anxious, because – what if you can’t find the right person? You’re confused, because you don’t actually know what you’re doing when it comes to paperwork, policies, etc.

Whether you just opened a business, bought an existing one, or are rapidly growing your client base, human resources play a huge role in shaping your company. HR functions help keep you compliant and keep your employees happy.

Jamie Press, SVP of Human Resources at PrimePay puts it eloquently: “Human resources is the connector between business needs and human needs. I believe HR can help business by bridging the gap between two factions that must be able to work together and understand each other for the broader success of the whole.”

Human Resources for beginners.

While you may not have the need to fill an entire HR department just yet, here are some common things a person in an HR role would handle for you.

Common HR functions:

• Recruitment
• Training and Development
• Compensation and Benefits
• Safety
• Employee Relations
• Compliance

So yeah, HR is pretty important.

Luckily, we’ve broken down all that important HR management stuff for you here. From hiring your next great employee to conducting that all-too-uncomfortable-yet-necessary exit interview. (And don’t worry if this seems overwhelming – we’ve got a solution for that too).

Before the hire:

Finding great talent starts with a great job description. Here are some tips on crafting the perfect one that’ll grab attention, and also be compliant.

Before you begin, do a job analysis.

Performing a job analysis will give you some guidance as to what the exact role is that you need fulfilled and thus lay the groundwork for the job description.

The Society of Human Resources Management (SHRM) suggests that gathering and examining data about the job’s tasks will give you the proper information to enable your business to perform efficiently.

Start with a catchy title.

Some candidates will quickly scan and move on if they don’t think your job title is what they’re looking for. Be descriptive, thorough and realistic. Give the job seeker a considerable amount of information in the title to motivate them to read more.

Include the necessities.

*Read below for ensuring compliance.*

A good job description should include an overview of the responsibilities, requirements of the position (including skills, education or special certifications), and whether the position is full-time, part-time or seasonal.

Begin the post with details about the job and mention your company towards the end. It’s not all about you. It’s about how the person can help your company reach its fullest potential.

Capture your culture.

In the meat of the description, describe how the particular role plays into your company mission and culture. You not only want to hire a person who has the right technical skills, but you want to also ensure he or she will be a great cultural fit.

Don’t overload the requirements.

Printing an exhaustive list of requirements and skills may deter a great candidate from applying. List your most important requirements and be open-minded if you decide to take the discussion further.

Grammar check – always.

Would you feel comfortable applying to a job where the company spelled its own name wrong? Don’t rush things and publish just to get it done. Have a second or third set of eyes read over your posting.

Keep mobile in mind.

Many job seekers are using their phones to look for new positions. To keep this audience in mind, stay away from lengthy paragraphs in your posting and instead opt for bullet points and subheaders.

Explain how to apply.

A great job description means nothing if you don’t have a quick, yet detailed explanation on how the candidate should actually apply. Do you want them to call, email or visit your career page?

Don’t forget one critical component – ensuring your descriptions are *compliant*.

When it comes to compliance, a job description is extremely crucial to ensure that you’re providing the appropriate information that will keep you on the right side of the law. This is especially true for requirements under the:

• Americans with Disabilities Act (ADA)
• Family and Medical Leave Act (FMLA)
• Fair Labor Standards Act (FLSA)

Include these key things in your job description: Summary, minimum required qualifications, essential job functions, benefits, a disclaimer, and whether the role is exempt or non-exempt.

After the hire:

Hooray! The candidate you interviewed has decided to come on board. Before you start crafting his to-do list, consider a few pertinent steps to making the onboarding experience enjoyable and impactful for the both of you.

One question to consider – Should you run a background check on your new hire?

Conducting a background check on your potential employee can help give you confidence in your hiring choice. However, before you decide to implement this type of screening, you should absolutely ensure that you’re doing it right. Compliance with background checks falls under the Fair Credit Reporting Act umbrella.

A best practice for issuing a background check is to do so post job offer. After you have sent the offer letter to your candidate is the most appropriate time so that you avoid any sort of discrimination issues.

Successful onboarding.

According to ThinkHR, 70 percent of your budget is spent on your people. And U.S. employers spend $ 5.5 billion annually on onboarding. That being said, you’re going to want to implement an onboarding program that actually engages your employees and sets them up for success.

Here are a few ways taking your onboarding online can help with that.

Less work for you and the employees.

When the paperwork is moved online, there’s less physical clutter to keep up with and less room for human error. Some platforms also sync certain information with other necessary parts of HR management, like payroll.

Helps with compliance.

Another huge benefit of going digital is that you can ensure compliance more easily on forms like the I-9 for example. The same goes for tax forms. People often forget to fill out certain boxes or sign off on the Form W-4, but the electronic process would require the necessary boxes to be filled in before it can be submitted.

Potentially cost-saving.

Depending on the type of platform you choose, you could end up saving some money by implementing digital onboarding. Getting rid of the paper trail and filing cabinets can open up some space in your budget for something else to make your processes more efficient.

More personal and engaging.

By moving everything online, you’ll free up time otherwise spent going through paperwork to have more personal discussions about your organization’s culture and dynamics. It also gives you the option to incorporate interactive videos or games that will help engage your employees.

Remember, engaged employees are happy employees and happy employees tend to produce their best possible work. According to Robert Half, businesses with a strong learning culture enjoy employee engagement and retention rates around 30-50% higher than those that don’t. The journey to happiness starts on day one.

During employment:

Thank goodness – all that paperwork (digital or not) is out of the way (for now).

Now, you must work to ensure you’re following compliant HR guidelines during your employees’ tenure at your small business. Let me just warn you, this can get pretty complex; I’d have to write a few manuals to cover it all. So, the following HR tips cover the basics of important terms, regulations, and compliance factors you should know.

HR management terms to know.

Some of these terms you may recognize from earlier in the article. In no way is this a comprehensive list of every single phrase, but it encompasses some of the more common ones you may come across.

1. Americans with Disabilities Act (ADA)
2. Applicant Tracking System
3. At-will Employment
4. Background Check
5. Benefits
6. COBRA
7. Department of Labor (DOL)
8. Employee (vs. independent contractor)
9. Employee Onboarding
10. Equal Employment Opportunity (EEOC)
11. Essential Job Functions
12. Exempt and Non-Exempt Employees
13. Exit interview
14. Fair Labor Standards Act (FLSA)
15. Family and Medical Leave Act (FMLA)
16. Full-Time and Part-Time
17. Handbook
18. Job Description
19. Labor Law Poster
20. Minimum Wage
21. Non-Compete Agreement
22. Occupational Safety and Health Administration (OSHA)
23. Overtime
24. Performance Review
25. Sexual Harassment
26. Workers’ Compensation

Along this same token, there are a number of small business HR regulations that you must comply with. Keep in mind that each law is complex, so it’s best to enlist the help of a trusted advisor before making any compliance decisions.

HR compliance for employers of all sizes.

• Consumer Credit Protection Act (CPPA)
• Employee Polygraph Protection Act (EPPA)
• Employment Retirement Income Security Act (ERISA)
• Equal Pay Act (EPA)
• Fair Credit Reporting Act (FCRA)
• Fair Labor Standards Act (FLSA)
• Federal Income Tax Withholding (FITW)
• Federal Insurance Contribution Act (FICA)
• Federal Unemployment Tax Act (FUTA)
• Health Insurance Portability and Accountability Act (HIPAA)
• Immigration Reform and Control Act (IRCA)
• National Labor Relations Act (NLRA)
• Newborns’ and Mothers’ Health Protection Act (NMHPA)
• Occupational Safety and Health Act (OSH Act)
• Personal responsibility and Work Opportunity Reconciliation Act (PRWORA)
• Uniformed Services Employment and Reemployment Rights Act (USERRA)

15 or more employees

• Americans with Disabilities Act (ADA)
• Genetic Information Nondiscrimination Act (GINA)
• Pregnancy Discrimination Act (PDA)
• Title VII of the Civil Rights Act (Title VII)

20 or more employees

• Age Discrimination in Employment Act (ADEA)
• Consolidated Omnibus Budget Reconciliation Act (COBRA)

50 or more employees

• Family and Medical Leave Act (FMLA)
• Mental Health Parity and Addiction Equity Act (MHPAEA)

Those 25 regulations really only scratch the surface of what an HR manager must deal with on a regular basis. As you can surmise from the list, the more employees you have, the more regulations come into play. And as these regulations pile up, so do the chances for errors.

Here are few common HR compliance issues small businesses face (but don’t worry, if you keep reading, we have a solution for you so that you’re less likely to make these mistakes).

Wage and hour

From minimum wage changes, to overtime rules, work scheduling, hiring minors, meals and rest breaks, (and on and on) – there are a lot of factors that full under wage and hour compliance. Because of the complexity of pay rules at the state and local levels, if your HR representative doesn’t have access to up-to-date resources, you could run into some problems.

Benefits

The challenges in providing benefits to employees include rising costs, administration, and compliance with changing regulations (especially when it comes to health care). Other common mistakes involving benefits include: paid sick leave, FMLA, ERISA, and COBRA.

Data entry

Accuracy is critical when it comes to doing any job effectively, but especially when it comes to human resources. Whether you’ve implemented digital onboarding or use hard copies of all kinds of paperwork, entering key employee data will ensure the right information is stored – saving you and your employees from headaches down the road.

Misclassification

Do you know the difference between contract workers, and full-time and part-time employees? It’s a good idea to familiarize yourself with the classifications and stay in line with DOL and IRS guidelines. By enforcing these clear job definitions, you will not only be in compliance with the law, but each employee will better understand what they’re accountable for.

Performance reviews.

Staying compliant with regulations is one (huge) role that HR fulfills. But another part – employee engagement – is arguably equally as important. According to CBI, 55 percent of businesses think that stronger engagement would improve their ability to either retain, recruit, or carry out succession planning. Those are all pretty important factors, wouldn’t you say?

One way to improve employee engagement is to conduct periodic performance reviews so that you can keep a pulse on how your employees are feeling. They are great for career development, recognition, and feedback. These conversations will help you build relationships and ensure you’re all working towards the same goals for your business.

If you decide this is a path you’d like to take for your small business, you’ll want to make sure you’re not stepping over any discrimination boundaries or making the employee uncomfortable in any way.

Here are a couple of tips to help you keep compliant.

• Ensure performance reviews are conducted for all employees on a regular basis.
• Clearly communicate job expectations and responsibilities to all employees, including the measured performance standards.
• Put systems into place for measuring performance – based on job related functions and criteria that were illustrated in the employee’s job description.
• Review and update job descriptions at least once a year.
• Document with accuracy and detail the records regarding performance to support personnel decisions.
• Make certain that performance reviews are based upon specific job related criteria.
• Provide honest, factual, and complete notes.
• Compare performance against job descriptions and goals.
• Offer ongoing feedback.
• Ensure review processes for measuring performance is equal amongst all employees.

How you structure these meetings is completely up to you. Whether it’s a monthly one-on-one with each employee, or a quarterly in-depth review, keep these HR tips in mind.

After the exit:

Unfortunate fact: your employees probably won’t be working at your small business forever. Life changes, career moves, and other factors play into why your employees might make the switch. Yes, it’s devastating – especially if he was a critical employee. But it also provides you with a great opportunity to learn. No matter if you have one employee or 100, exit interviews can provide you with that opportunity, so long as you structure the conversation right.

Thanks to our partners at ThinkHR, here’s a general outline of how the process should work. Note: your small business might not have all of these roles, but these steps explain a good overview to follow.

1. Supervisor notifies whomever handles HR that the employee is terminating or transferring to another department.
2. Supervisor encourages employee to complete a questionnaire and schedule the exit interview. Find an example of questionnaire here.
3. HR manager sends questionnaire to employee and sets up the interview.
4. During the interview, both parties confidentially discuss information gathered from the questionnaire.

Because there is so much fear about coming forward with issues during employment, the exit interview is sometimes the best chance to get information.

Here are a few things Press suggests in order to obtain the most valuable information.

How to get the most out of an exit interview.

• Conduct a truly anonymous exit survey to elicit honest feedback (both positive and negative).
• Call the termed employee a few days to a week after they exit to try to learn as much as possible about the employee’s experience. A phone call is less confrontational and intimidating since she’s on her own “turf” and has had some time to reflect.
• Keep the conversation positive by letting the termed employee know that they only purpose of soliciting the information is to try to make improvements at the company, not get anyone in trouble.

The information collected can be used to find patterns and trends (ex. what do most people think about our benefits compared to other companies?) to help shape decision-making in the future.

This post was originally published on PrimePay.com

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