LAST REVIEWED Feb 25 2020 7 MIN READ
In the midst of launching a new business, first-time small business owners might be tempted to postpone developing a human resource plan until they have a significant number of employees. Unfortunately, delayed decisions in this important area may eventually lead to serious issues.
We’ve created this HR checklist specifically to help small business owners get started on the right path when it comes to HR compliance. Human Interest is a small business as well, so we’ve lived through this! We recommend starting by approaching HR compliance for your company based on your company’s typical employee lifecycle, from pre-hire/recruiting to end of employment.
Small business employee classification and compensation
As you launch your business, it’s essential that you know the difference between full-time (exempt) and part-time (non-exempt) employees. As you determine your human resource structure, this information will help you accurately classify employees based on their job duties and remain in compliance with FLSA regulations. Furthermore, it helps you determine the potential cost of the wage and benefits package you offer to employees, based on their classification.
Review the Fair Labor Standards Act (FLSA) for information about minimum wage, hours worked, and overtime pay for non-exempt workers.
Use this checklist to figure out how to categorize your staff: Independent Contractor vs. Part-time Employee Checklist
Benefits and time off
Providing Social Security and workers’ compensation benefits are required, while benefits such as health care coverage and 401(k) plans are optional. Those optional benefits can make a difference in whether or not people want to work for your company, so don’t dismiss them. As your business grows, contdinually evaluate your benefit programs to ensure they are competitive for your industry.
Do some research to find out what the most requested benefits are for your ideal employees, assess tax benefits for those options, and make a plan for how you can offer the benefits that make sense for your budget.
Use this Employee Benefits Survey Template to find out what’s most important to your current team
Office work environment and safety (OSHA)
Ensure that the workplace you provide meets the conditions outlined by the Occupational Health and Safety Administration (OSHA) (linked below!). These guidelines aren’t limited to manufacturing environments; they also cover safety concerns related to every business such as ergonomics, air quality, workplace violence, and sanitation.
Review the OSHA requirements
Be sure you have an emergency action plan, first aid supplies, sufficient exits, and safe working areas for standing and sitting.
Small business HR policies and standards
Don’t put off writing policies and standards. Spend time to outline the expectations and guidelines for how business gets done in your company. These documents don’t need to be exhaustive but they need to provide clear direction and information which employees can use, and to which you can refer should an issue arise. Documented policies take time but eventually make it easier to manage performance and to demonstrate employer due diligence.
Draft an employee handbook that contains policies which outline your standards regarding wage and hour laws, benefits, time off, and a safe work environment.
Look in to topics that are relevant to your business. Examples: vacation policies, etc.
Recruiting, hiring, and onboarding
Even if you have a small number of employees, it’s important to determine where and how you’ll post open positions, who will make hiring decisions, and how you will onboard new hires. If you have aggressive goals for growth, consider finding a scalable online solution that will help you facilitate and streamline these processes.
Have a structured plan for onboarding and training new employees.
Training also helps you set expectations which are used to manage and maintain performance throughout the year. You need a performance management method that includes a scheduled review of their performance, a method for providing rewards, recognition, and incentives, and details for the termination process.
Start here: Determine the timeline for regular performance conversations (e.g., monthly, quarterly, yearly) and create a system for documenting those conversations and commitments between managers and employees.
Successful small businesses owners understand and see the value in addressing HR compliance earlier rather than later. This checklist is a good start, but to ensure you have everything in place when it comes to your human resources, consider hiring an HR manager, an HR consulting firm, or an employment attorney who can assist you in setting this area of your business up for success. When your company starts to grow, you’ll witness firsthand what a difference it makes to have a solid HR approach in place.
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Image credit: Taylor Lahey
The Human Interest Team
We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.