What Are the Important HR Requirements for Small Business?

There are also some basic requirements you have to fulfill as a small business owner. When people come to work for you, it’s your responsibility to provide a safe and healthy workplace, to comply with relevant employment laws in your country, to keep good records, and to pay salaries and benefits promptly and effectively.

Small business team human resources

In this blog, we’ll dive into these topics and show you how to comply with these important human resource requirements in your small business. They may not be the most exciting things you’ll do in your small business, but they are critical if you want to have happy, productive employees—and avoid some organizational or legal headaches down the road.

Note: When you’re reading this blog, keep in mind that it’s aimed at a U.S. audience. Employment laws and other regulations vary widely depending on the country you’re based in—and sometimes there are local regulations to be aware of for your city, state, province, etc. So although we’re going to go through some general examples here, based on U.S. regulations, be sure to check your local situation, and ideally get professional legal advice to make sure you’re complying with all relevant laws in your area.

If you think occupational safety or “health & safety” regulations are just about annoying government red tape, here’s a shocking statistic for you: in the United States in 2015 alone, 4,836 employees died from injuries sustained in the workplace.

Let those numbers sink in for a while.

It should be clear, then, that your first and most important responsibility as a small business owner is to keep your employees safe. So in this first section, we’ll go through some basic principles of occupational safety.

Start by analyzing your workplace and the processes your employees have to follow. Look for potential dangers and make a comprehensive inventory.

Some workplaces are more obviously dangerous than others—the risks at a manufacturing site where workers handle toxic chemicals and heavy machinery are easier to see than those at an office, for example. But in any workplace, things can go wrong.

Every year in the U.S., for example, 27 people die and over 10,000 are injured by elevators. Thousands of people injure themselves, sometimes seriously, by tripping over loose wires, open desk drawers, objects left in passageways, and so on. Poorly designed workstations and office chairs can leave employees vulnerable to back pain, repetitive motion injuries, and other serious ailments. An old or badly maintained building can create any number of hazards, from faulty wiring to loose ceiling tiles.

So start by compiling a list of potential hazards. You may be able to have an experienced health and safety professional visit your workplace and conduct a free survey as part of a subsidized government program. Or you could pay for a private consultant to do it.

Encourage employees to alert you to anything they see in their jobs that is potentially unsafe—they are the best resource to help you compile the initial safety inventory and then keep it updated.

Once you’ve assessed the risks, try to eliminate as many hazards as you can, and where you can’t eliminate them, at least aim to control them and reduce their likelihood.

Usually this involves setting up particular procedures that every employee should follow (e.g. when you’re operating this machine, you must wear eye protection and check that the safety catch is functioning properly). Then make sure everyone knows the procedures, that they’re properly documented, and that signs or posters are in place to remind people.

Here are some other important steps:

  • Make a plan for regular maintenance of the building and of any equipment that employees use.
  • Have a plan for medical emergencies and post emergency numbers prominently.
  • Train some employees in first aid procedures and make sure people know who they are and how to reach them.
  • Have a procedure for reporting injuries and make sure people know it.
  • Train all employees in health and safety procedures to ensure they know what to do.
  • Create an emergency plan and conduct frequent drills.

Identifying the risks and putting controls in place is great, but what if your employees still don’t follow the right procedures? It’s critical that everyone takes workplace safety seriously, and you can set that tone by your own actions.

Demonstrating your commitment to employee workplace safety will encourage your staff to take the subject seriously too, and it may help avoid accidents. On top of that, it shows that you value them and their physical well-being, so it sends a powerful message that may improve their general happiness and job satisfaction.

So create a clear policy on workplace safety and health, and post it prominently around the office and on the intranet or company website. Hold meetings to communicate the policy in person, and hold managers and employees accountable for complying with it.

Keep reviewing and updating your policy and procedures regularly, encouraging input and suggestions from employees. And if you’re requiring people to do extra work to ensure procedures are followed, make sure they have the time and resources to do that effectively.

Following all of these steps will not immunize you from workplace accidents, but it will help reduce their likelihood and create a safer work environment for everyone.

Employment laws are a key part of small business human resource requirements and they can be very complex. These laws govern small businesses too, so you need to be up to speed and make sure you’re complying with all the regulations.

One of the most common forms of employment law deals with the issue of equal opportunity. Essentially, you should not discriminate in your hiring practices based on gender, race, religion, national origin, age, disability, etc. And you should have clear policies in place to guard against discrimination and harassment in the workplace. You may also be required to put up notices in the workplace to inform employees of their rights and your compliance with the relevant laws.

A few examples of the laws affecting this area in the U.S.:

  • Civil Rights Act
  • Equal Opportunity Employment Commission (EEOC) regulations
  • Uniformed Services Employment and Reemployment Rights Act
  • Equal Pay Act
  • Americans With Disabilities Act

Workers in many countries have the right to organize and bargain collectively or join a union. They often have the right to be paid overtime if they work extra hours, and to have a certain number of work breaks during the day.

There may be rules on how much vacation time or other benefits you have to provide—and if you provide paid vacation and employees don’t use it, you may have to pay them the monetary equivalent. And there are many more rights, both large and small, that workers have fought for over the years and had codified in law.

Sometimes there are exceptions—for example, in the U.S., salaried workers are generally exempt from the laws around overtime and work breaks, and independent contractors are exempt from many of the rules that apply to permanent employees. But you need to be careful about how you classify people, because there are rules about that too, and it’s easy to fall foul of them.

Also, don’t forget about things like parental leave and medical leave. You must allow employees to take time off according to the laws in your country, and make sure their job is still available for them when they return.

We covered the principles of workplace safety in the last section, but there may also be specific laws and regulations you need to comply with and posters you need to display in the workplace. So in addition to the work you do to provide a safe workplace, make sure you’re following all the relevant rules as well.

Filing is not the most exciting task you’ll ever do, but it’s important. The good news is that the requirements are quite simple—you just need to keep a file (or files, as we’ll see in a minute) for each employee, containing important information about their employment. And, most importantly, you’ll need to keep these files very secure, because they contain sensitive information.

Ideally, you’ll have two separate files for each employee: one for general employment information, and another for medical information.  Here’s what should go in each:

This file gathers all the information related to a particular employee in one place. You can start it when you hire them, by dropping in their resume and any hiring documents or forms they’ve signed.

Then you can add documents as you go along, such as:

  • training records
  • performance reviews
  • any disciplinary action
  • tax forms
  • payroll details
  • acknowledgement of receiving the employee handbook
  • other contracts or agreements the employee has signed

If an employee has a medical condition or disability that affects their work, you may need to keep medical records, but you should always keep them in a separate file in a very secure location.

That’s because medical information is very personal, and someone who may need to access the employee’s general file should not see their medical records. So keep this information in a separate file, and be very strict about who can access this file and why.

You need to keep proof of a worker’s eligibility to work in the U.S. This form is called Form I-9. Because immigration officials can ask to check these forms, you should keep them separate from the employee’s other information, so that you can just provide them to the government without giving access to all the employee’s personal data.

Another basic HR requirement for every small business is to pay people on time and provide any relevant benefits.

Small businesses often struggle with sufficient cash flow, but if you manage it carefully and make accurate forecasts, you can ensure you always have enough on hand. And if you need to delay any payments, employees’ salaries are not the ones to mess with. Paying someone late tells them that they’re not respected, and/or that the business is in serious trouble. Either way, it’s a sure way to get them updating their resume and looking for a new job.

But beyond that, you also need to make sure you calculate the right amount, make the correct tax deductions, keep and provide the right records, file the right forms with the tax authorities, and so on.

You also need to keep on top of benefits—give employees the right information and make it easy for them to access their benefits, and keep track of, for example, how many vacation days each person has taken out of their overall entitlement. Where benefits are provided by a third party, such as a health insurance company, you need to make sure that everybody is enrolled who should be enrolled, and that everything is running smoothly and people are able to access the help they need.

In this blog, you’ve seen how to comply with some important human resource requirements for your small business. You’ve learned how to keep your employees safe, how to keep on top of employment laws and regulations, how to keep good records, and how to provide pay and benefits efficiently.

AZ HR Hub is your HR partner so you can focus on your business.  Call us today for a free consultation.

Blockchain Will Become a Necessity for HR

We are already living in a digital age but soon a wave of technological disruptions will change the current HR scenario. While AI is already making it big, Blockchain will revolutionise the way data is shared. Apart from this, the most uplifting part of Union Budget 2018 is the fact that AI and Blockchain became buzzwords not only within the technology community but also the wider world and common man. The words which were only used by some communities, these days they are known by all.

What is Blockchain?

Blockchain can be seen as a transparent and secure transaction ledger where transactions are both recorded and confirmed. All participating parties in a distributed network can share access to this continuously growing database to address their needs for information. Users in the network can contribute to the database by adding new transactions (or blocks) to the ledger stream. And, more importantly, every transaction across the network is recorded and stored without the ability to alter it, whether intentionallyor accidentally. This level of security in technology creates a beautiful new reality for a decentralized trusted information source in a landscape of broken global trust.

More than 40 leading financial firms and a growing number of companies across industries are already using Blockchain, according to The Wall Street Journal.

While there are numerous reasons that Blockchain is a game changer, here are few which will change Human Resource industry:

  • Blockchain will be very helpful in verifying and assessing the educational credentials, skills and performance of potential recruits – enabling those recruits to be allocated to the most appropriate roles, thereby reducing the amount of time recruiters spend cross checking and verifying information
  • Blockchain has always been seen as a quicker cross-border payment option. It is very efficient in  cross-border payments, including international expenses and tax liabilities, with the potential for organizations to create their own corporate currencies.
  • Blockchain can trigger an increase in wages. Also, when an employee becomes eligible for health coverage, they could be used to initiate the benefit; when a probationary period is satisfied.
  • For international employees, Blockchain can process payroll faster and less expensively, skirting international currency trade fees. By cutting out the intermediary, payments could come within hours rather than days.
  • Blockchain also increases productivity, by automating and reducing the burden of routine on the employees, data-heavy processes like VAT administration and payroll.
  • It enhances fraud prevention and cyber security in HR, including both employees and contractors.
  • For aspirants/ candidates, Blockchain will act as a concept of “self-sovereign identity.” They will be able to store their identity data on their personal devices and share it with those who need to validate it. Through this technology, individuals will be able to have complete control over the data of their lives, providing access keys when they apply for jobs. They could include degrees, certifications, courses taken, grades, employment history, salary and more.

Finally, we can say that technology has surely come a long way and the journey of Blockchain has just begun. The relevance of blockchain will soon be required knowledge for all job seekers, regardless of industry or position. Knowing where to fill the gaps of knowledge is one area where a certified career coach, such as those offered by outplacement and career transition service providers, can help job seekers ensure they are the most qualified candidate for any new role.

For the HR professional, knowing how blockchain can be used to streamline processes, create higher levels of security, and innovate processes will ensure future personal success and further position you as a strategic partner in your organization.

Marijuana in the workplace: Balancing competing obligations

How can you reconcile conflicting laws and keep your workplace both safe and compliant?

California Supreme Court Ruling Latest Blow to Independent Contractor Model

The California Supreme Court’s ruling in a case exploring how workers should be classified—either as independent contractors or as employees—means California businesses will have a tougher time justifying independent contractor classifications.

The court ruled on April 30 in the appeal of Dynamex Operations West, Inc. v. The Superior Court of Los Angeles County.Dynamex, a package and document delivery company, had classified drivers as contractors instead of employees, meaning the company was relieved of its obligations under California Industrial Welfare Commission wage orders related to the wages, hours, and other working conditions of the drivers.

The court’s ruling significantly toughens the test used to determine whether a worker can be classified as a contractor. The change is expected to have a big impact on gig economy workers.

“The big takeaway is that even if you exercise no control over a worker, and even if that worker has other clients in an independent business, [she is] still an employee if [she] perform[s] work that is part of your usual business,” says Mark Schickman, the editor of California Employment Law Letter and an attorney with Freeland Cooper & Foreman LLPin San Francisco. “I don’t see how driving businesses like Uber or Lyft could designate a driver as anything but an employee.”

Schickman says other businesses also will be affected, such as retail stores hiring gig workers to sell merchandise and law and accountancy firms that hire independent contract lawyers and accountants. “Independent contract arrangements were always tough to justify and now it is even tougher,” he says.

ABC Test

Todd R. Wulffson, an attorney in the Irvine office of Carothers DiSante & Freudenberger LLP, explains that the Dynamex ruling is significant for California employers because it adopts the “ABC test” to make the determination. Previously, the state used a multifactor test focusing on the level of control the hiring entity had over the worker’s performance of the work.

The ABC test presumes a worker is an employee unless the hiring entity proves the following:

(A)       The worker is free from the control and direction of the hirer in connection with the performance of the work, both under the contract for the performance of the work and in fact;

(B)       The worker performs work that is outside the usual course of the hiring entity’s business; and

(C)       The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity.

“Under this new test, the majority, if not the vast majority, of current independent contractors should be reclassified as employees—particularly people driving in the gig economy,” Wulffson says, adding that if a California employer has more than a few independent contractors, it should conduct an audit—with the assistance of counsel to keep it privileged—to determine liability.

Misclassifying independent contractors is a common class action issue, Wulffson says, “and those are very expensive, time-consuming, and painful lawsuits that are almost never covered by insurance.”

In its decision, the court noted that the ABC test is used in other jurisdictions to determine worker status, but Wulffson says it isn’t very prevalent, “most likely because it is so strict.” Thus, the ruling will be a blow to both businesses and contractors.

“California, unfortunately, has proven yet again that but for the weather, no one would want to start a business here,” Wulffson says.

Impact Beyond California

Wulffson doesn’t expect the ruling to have a major impact beyond California since most states don’t follow California’s example on employment laws. He points out that California is one of just three states with daily overtime, plus the state “has a panoply of employment regulations and laws found almost nowhere else.”

The independent contractor test used at the federal level also differs from California’s new test. Wulffson says the U.S. Department of Labor (DOL) uses the economic reality test, which looks primarily at seven factors focused on the level of control the hiring entity has over the contractor.

Wulffson says the DOL also has focused on misclassification in recent years because of concern that businesses are wrongfully avoiding payroll taxes. “It has not, however, gone anywhere near the ABC test,” he says.

5 Critical Components Every Job Description Must Contain

A job description need not account for every task that might ever be done. Here are the most critical components of a good job description.

  • Heading information.This should include job title, pay grade or range, reporting relationship (by position, not individual), hours or shifts, and the likelihood of overtime or weekend work.
  • Summary objective of the job.List the general responsibilities and descriptions of key tasks and their purpose, relationships with customers, coworkers, and others, and the results expected of incumbent employees.
  • Qualifications.State the education, experience, training, and technical skills necessary for entry into this job.
  • Special demands.This should include any extraordinary conditions applicable to the job (for example, heavy lifting, exposure to temperature extremes, prolonged standing, or travel).
  • Job duties and responsibilities.Only two features of job responsibility are important: identifying tasks that comprise about 90 to 95 percent of the work done and listing tasks in order of the time consumed (or, sometimes, in order of importance).
    • The first task listed should be the most important or time-consuming one, and so on.
    • Employers can cover 90 to 95 percent or more of most tasks and responsibilities in a few statements.
    • It’s more important to list what must be performed and accomplished than how, if there is more than one way to do it. Being too specific on how to accomplish a duty could lead to ADA issues when an employee asks for an accommodation.

Bottom Line

Creating and maintaining job descriptions isn’t difficult. In fact, sometimes businesses use the development of job descriptions as a means of opening new lines of communication with employees. Employees want to be heard, and the development of job descriptions is a perfect opportunity to increase employee involvement.

If employers approach the process correctly, it can even be fun! The reward for management is a useful tool that helps guide many critical employment decisions and serves as an important consideration in the defense of administrative actions and lawsuits.

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