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Top 5 Most Important HR Compliance Tasks for Small Businesses

No one gets into business because they’re excited to learn about employer laws but HR compliance tasks for small businesses are an important part of doing business.

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No one gets into business because they’re excited to learn about HR laws but HR compliance tasks for small businesses are an important part of doing business. In order to protect themselves from fines and potential lawsuits, employers must know and understand all current laws and regulations that apply to their business. There is a long list of employment laws and regulations in Hawaii. Working with an experienced HR expert, whether in-house or in a partnership with a Professional Employer Organization (PEO), is the best way to ensure that your business is compliant.

HR Compliance Tasks for Small Businesses

What is HR compliance? HR compliance is the process of defining and implementing policies that allow an organization to comply with all applicable employment laws and regulations. Some examples are medical leave, overtime, minimum wage, anti-discrimination, and equal employment.

Common small business compliance challenges

Many small businesses face compliance challenges starting with the amount of time and effort it takes to keep up with all the federal, state, and local employer rules and regulations. Many employers don’t know where to even start to create compliant policies and procedures. Other issues come up with employee behavior like sexual harassment, discrimination, and disability claims.

Top 5 Most Important HR Compliance Tasks for Small Businesses

Let’s take a look at the top 5 Most Important HR Compliance Tasks for small businesses:

1. Correctly classify all workers

The IRS expects employers to correctly classify their workers. Failure to do so can result in fines and other problems. There are many categories to consider. Are your workers employees or contractors? Are they paid by the hour or by salary? Are they exempt or nonexempt? It’s common to have workers fall into different categories so each worker must be classified separately.

2. Provide required documents to all new hires and departing employees

One of the most important HR compliance tasks for employers is providing both new and departing employees with specific documents. Small businesses are required to stay on top of all paperwork that they must legally provide to their employees. In addition, there may be other paperwork that could be helpful to avoid disputes or other employee issues down the road.

3. Obtain all mandatory federal and state posters

Federal and state laws require businesses to obtain and hang up specific posters that list some labor laws so their whole staff can see them. Any time labor laws change, these posters must be replaced. The easiest way to stay on top of this compliance task is to buy federal and state “all-in-one” posters on a regular basis.

4. Update your employee handbook

While it is not a legal requirement to have an employee handbook, HR experts recommend them. If your company has an employee handbook, it must be reviewed on a regular basis to ensure that all policies are following current employment laws. For example, an employer may include their sick leave policy in the employee handbook but over time, changes to the state’s sick leave laws make the business’ policy illegal. By updating the employee handbook to comply with changing laws, a business can help prevent employment lawsuits.

5. Follow all “final paycheck” laws

There are “final paycheck” laws in place to protect employees who are leaving a business. Under Section 388-3(b), HRS, Hawaii employers must provide full payment for the employee’s wages in full no later than the next regular payday. In cases where the employee gives at least one pay period’s notice of intention to quit, the employer must pay all wages earned at the time of quitting.

Partnering with Makai HR

Not excited about employer laws and HR compliance tasks? That’s okay; we’ve got you covered through HR outsourcing! When you partner with Makai HR you can get on with the business you are trying to grow while we take care of your employee needs from payroll to taxes, health insurance/benefits and worker’s compensation. You also gain peace of mind that you are compliant with all of Hawaii’s employer laws (if you’ve ever looked you know that the list is very long and changes happen). When choosing a PEO to partner with, there are many things to consider including cost, services, and technology solutions. 

With the cost of doing business in Hawaii at record highs, we know how important it is to keep labor costs in line with revenue. Our plans are priced competitively and include value-added services like time-in/time-out systems. Our three tiers of PEO service plans are tailored to the size of your business and specific needs. We offer a 100% paperless solution which means that your employees can manage their needs through a computer, tablet, or phone. We can truly improve your employees’ work benefits while freeing you up to run your business.

What are you waiting for? Companies that partner with a PEO benefit from 7-9% faster growth, 10-14% lower employee turnover; and they are 50% less likely to go out of business. Contact us today to get started!

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