Small Companies Don’t Have to “Fly Blind” when it Comes to HR

Small companies are often “flying blind” when it comes to employment law compliance, and the vast majority of them don’t have the luxury of employing a full-time, professionally-trained Human Resources manager.  The reasons for this harsh reality vary, but it is most often linked to the significant expense associated with another full-time hire.  As a result, the HR function in small companies is often (reluctantly) assumed by the owner, office manager, bookkeeper, administrative personnel, executive assistant, etc.  The HR duties are added on to primary job duties, oftentimes as an afterthought.  The in-house support is sometimes supplemented with some sort of one-size-fits-all HR outsourcing, such as payroll or HR software.  Regardless of the size of your company, there are a number of critical components of HR of which you should have basic knowledge.

Payroll

The payment of wages is an area of high risk for small employers, and many are not doing it correctly.  This is most often outsourced to a payroll company.  There are complexities of federal and state wage and hour laws, compliance with overtime calculations (there is a new calculation of what is included in the regular rate of pay), meal and rest breaks, and record keeping that that all companies must comply with.

Federal/State Laws And Compliance

These laws include the definition of non-exempt vs. exempt employees – i.e., those hourly employees who must record their time worked and are eligible to be paid overtime at one and one-half their regular rate of pay for hours worked over 40 in one week vs. those who do not have to track time and may be paid a salary.  As an example of ever-changing laws, the overtime regulations just recently changed.  Effective January 1, 2020, employees who earn less than $35,508 annually are now eligible for overtime pay. See WLG’s recent blog post on this change.  As additional examples, there are federal and state law requirements that relate to family and medical related leaves of absence, accommodation of disabilities, and pregnancy accommodation, and more. Compliance with the federal and state laws is one of the key components of an HR function, it takes a considerable amount of time and effort to stay on top of, and is a significant area of risk.

Handbooks

Although writing a handbook may seem to be an overwhelming task, it can be one of the most valuable resources for your company.  Small companies don’t need a 100 page handbook, instead they can get away with having just the several key policies that are necessary for their business without overwhelming the handbook.  Decisions about the extent of the handbook are best made with advice of HR experts and outside counsel. 

A well written handbook may prevent employee issues before they arise and provide consistency in practices and policies such as employment at will, discrimination, harassment and equal employment opportunity. Consistency is especially important for companies with employees in multiple locations. Some laws are dependent upon the number of employees in your company: e.g., Americans with Disabilities Act, Pregnancy Discrimination, Family and Medical Leave Act, Title VII (Civil Rights Act of 1964), WARN Act.  A handbook should also provide definitions for employment status, eligibility and descriptions for benefits, and guidelines for code of conduct.  You should have your employees acknowledge receipt of the handbook in writing.  Always, the handbook should be used to reiterate that employment is “at will,” meaning the employer and employee can end the relationship at any time and for any reason, or no reason at all.  A legal review of your handbook is also vital. 

Onboarding New Employees Effectively

An effective onboarding program for new hires followed by a small company can can set the stage for continued positive employment well into the future.  The employee is provided the tools and information to be successful.  S/he is provided a glimpse of the company culture.  This is a time for initial training and job expectations.  There are simple things that companies can do to improve their onboarding process, including:

  • Use of an application that is both legally compliant, tailored to the company’s specific needs, and that provides useful information to the employer
  • Using prepared forms designed to make interviews more effective and informative (and to keep inexperienced interviewers out of legal trouble)
  • Completion of the I-9 Form
  • W-4 form and other payroll information
  • Benefits explanation and completion of appropriate forms
  • Receipt and acknowledgement of the handbook and at-will statement

Personnel Files

The personnel files for all employees should be maintained in a secure area.  Some of the items to be included are:

  • Resume/application for employment
  • Offer letters, contracts and agreements
  • Payroll information
  • Benefits Information
  • Termination documents
  • Performance reviews and any notes on performance or disciplinary action

The I-9 Forms and any files that may contain medical information about the employee (medical notes, insurance applications, disability information) must be maintained separately.  The medical information in particular needs to be kept in locked/secure file storage to protect privacy.

Benefits

Your company may offer voluntary benefits such as health insurance, dental insurance and time off.  There are other benefits that are mandatory: workers’ compensation, unemployment insurance, MA Sick Leave, MA Family and Medical Leave.

Posters

You are required to post mandatory federal and state posters where employees have access to review them.  There are a wide variety of vendors that provide posters that meet each state’s requirements and will send you updated posters when the laws change.

Job Descriptions

Job descriptions provide the essential duties of the employee’s job, qualifications, and physical requirements.  They enable employees to know what the expectations are for job performance and are important for pay equity.  Job descriptions are key in developing pay for your employees, for handling performance issues, and when dealing with disability accommodation.

Salaries

Paying your employees an appropriate hourly wage or salary is key for recruiting and retention.  You need to determine market pay for your positions and where you want to pay vs. the market.  Salaries should be reviewed at least annually for market pay and internal equity.

Training, Feedback and Mentoring

You may have all the components of HR above.  However, training, feedback and mentoring are instrumental in retaining and developing your employees.  All those who oversee or manage employees should be trained on best practices for providing feedback and managing performance.  The culture/environment you create can assist with company growth, employee loyalty and performance, and make you a desired company to work for.

Small employers do not have to fly blind — WLG is Here to Help!

The several topics discussed above are just a few of the key HR issues that small companies should remain aware of on a day-to-day basis.  WLG is here to help small companies who may be “flying blind” with respect to HR compliance, and at very reasonable cost.  WLG employs an experienced HR consultant (Rita Vogel) who can meet with you and conduct a quick and cost-effective HR audit. She can quickly identify areas of need and risk. Our HR consultant can help your company put together a policy manual that is tailored to the specific needs of your business, not a “one-size-fits-all” handbook. WLG’s HR consultant is readily available by phone or in person to assist your company with day-to-day HR decisions, and often help you avoid creating problems or unintentionally making situations worse.  Finally, WLG’s seasoned employment lawyers work closely with its HR consultant and can step in when necessary to provide more in-depth legal advice, as well as to defend against claims that may be filed at government agencies or in court.

Click here for more information about WLG’s HR consulting and employment law compliance services.

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