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Apr 01, 2023 Cheryl Cushman

4 Things Small Businesses Need to Know About Staying Compliant with HR Rules

4 Things Small Businesses Need to Know About Staying Compliant with HR Rules

Explain for Employees

Launching a small business means stepping into a whole new world. There’s new jargon to learn, unfamiliar documents to fill out and logistics to take care of that have seemingly little to do with the widgets you’re selling or the service you’re marketing. One of those things is HR compliance. “The common theme I see for small organizations is that the business owner just really wants to focus on their core business,” Megan Taylor, HR consultant and attorney at Taylor HR Group says, “and often they fail to pay enough attention in the beginning to set up a good HR framework.” 

Staying compliant with HR rules is something you should take seriously, and doing so is absolutely achievable. These are the essentials you need to know in order to stay ahead of compliance challenges. 


1. Provide employees with a handbook 

An employee handbook is a roadmap to what employees can expect from employers, and vice versa. It will usually outline essential policies like anti-discrimination; sick, family and medical leave; and vacation. A handbook might also include policies about things like mobile devices, credit cards, and company vehicles. For instance, when staff can use their own phones for work matters; when and under what circumstances a purchase qualifies as a company expense; and which party is responsible if an employee driving a company vehicle gets a speeding ticket. A handbook doesn’t have to be complicated, but you want to make sure these rules are clear and in writing in case anything happens. 


2. Make sure to have written job descriptions 

Having well-crafted, detailed job descriptions — not copied and pasted from another website — is crucial when posting job ads and interviewing candidates. But job descriptions are also good for expectation-setting and accountability — they serve as great guidelines to use during regular check-ins. It’s also very important that employers take the time to update them as roles change, so again, employees know what’s expected of them and vice versa. 


3. Properly classify your employees as exempt or nonexempt

The Department of Labor has very specific regulations about who is exempt and who is not. A lot of employers get this wrong, however, by making the assumption that everyone is exempt rather than taking the time to find out. (Exempt employees are paid a set amount for their job regardless of how many hours a week they work; and nonexempt employees, even if they’re salaried, are entitled to overtime.) If you fail to correctly classify your employees and you don’t pay overtime properly, a disgruntled former employee can complain to the attorney general and demand back-overtime, penalties and damages, including attorney’s fees. “You’re way better off properly classifying your employees and paying overtime if appropriate than just classifying every single person in the company as exempt and really rolling the dice about whether or not you’re in compliance,” Taylor says. 


4. Distribute a sexual harassment policy and provide training

You don’t have to be a giant company to have issues around sexual harassment, so putting guidelines in place to educate employees greatly behooves you. In many states, it’s now required, and even when it isn’t, it’s best practice to educate your staff on what’s considered appropriate workplace behavior and what to do if they are subject or witness to unlawful behavior. “These things happen in small organizations all the time,” Taylor says, “and you’re putting a blind eye that might cost you money, frankly, if you don’t comply with the law.”


Part of running a small business means it’s your responsibility to stay compliant with these critical rules, but it doesn’t mean you have to do it in a silo. The key is to find a resource that fits your size, need and budget. That might mean hiring an in-house HR specialist, or for smaller companies, it might look more like meeting with an HR consultant or an employment lawyer intermittently. Whatever the case is, it’s important to surround yourselves with good resources so you can focus on what you do best and leave the rest to the trusted advisors who can guide you in the right direction. 


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Published by Cheryl Cushman April 1, 2023