No matter what size your business, if you have employees, you have human resources and payroll compliance and reporting requirements. Large enterprises have designated HR, legal and payroll departments to handle traditional workforce management and compliance requirements. However, for small businesses, those responsibilities often fall to the business owner or another executive. When your time is already stretched thin and your focus is squarely on business growth and survival, it can be difficult to manage HR compliance effectively.
There’s no question that growing your workforce creates HR administration and compliance challenges. It requires detailed record keeping, event management, and reporting to be successful. Without effective human capital management and processes, small businesses are exposed to risk in the form of noncompliance penalties, inefficiencies, and talent shortages.
Many small business owners are leveraging automated HR systems to keep up with all of these complex responsibilities. Find out why small businesses are using HCM systems that automate processes to hire, manage, and engage employees. Discover how businesses like yours can keep up with all the nuances that go along with growth and compliance.
Payroll and benefits present common compliance challenges
Small businesses must follow federal, state, and local regulations—yet failure to comply is all too common and costly. From laws covering medical coverage and paid leave to minimum wage and overtime requirements, small businesses must keep current with legislative updates, variances between the federal and local levels, and changes that take effect as your workforce grows.
For example, the federal minimum wage provisions are included in the Fair Labor Standards Act but many states (and some localities) have their own minimum wage laws which set a higher wage. In this case, the employee is entitled to the higher wage and small businesses must comply. According to the National Conference of State Legislatures, 21 states began the year 2020 with a higher minimum wage than the federal wage of $7.25 per hour.
There’s no question that keeping up with legislation changes, effective dates, and reporting requirements is challenging. According to the US Department of Labor, nearly 30 percent of audited businesses were noncompliant due to employee misclassification issues. Though often unintentional, the mistake can still be costly to small businesses.
Compliance issues related to hiring
Hiring is another area where small businesses can encounter compliance issues. Take job applications as an example. Across the US, 35 states and more than 150 cities and counties prohibit employers from asking candidates about arrest and conviction records. This law, also known as “ban the box,” is intended to ensure employers consider a job candidate’s qualifications without the stigma of a record. Additionally, small businesses need to keep questions about salary history, age, and disability status off of their job applications in order to comply with laws such as the Equal Pay Act, Age Discrimination Act of 1967, and the Americans with Disabilities Act.
Simplify applicant tracking and hiring practice compliance
Small business owners can improve the quality of new hires by 70% by investing in a strong candidate experience and ensure compliance. Using HCM, you define the entire application process and gain visibility into each applicant’s progress. By maintaining a library of offer letter templates and other candidate communications, your business ensures accuracy and compliance with hiring practice regulations.
Consider these insights from McKinsey:A fast-growing tech company is hiring employees rapidly and generating numerous offer letters manually, requiring quality checks. The company automated the entire process and used built-in compliance and accuracy checks to limit human involvement to the ‘occasional exception and quality control.’ As a result, processing time fell 66% and compliance improved.
An automated applicant tracking process helps small businesses keep current with employment laws and trends such as pay equity. It ensures your business is keeping “banned” questions off of your job application.
Standardize performance review processes
After hire, small businesses must continue working to maintain a fair and equitable workplace. A standardized performance review process allows small businesses to provide ongoing feedback to employees as well as document results. A HCM system helps organize and track the performance review process—from setting a regular frequency to providing objective rating criteria—and offers a place to record notes and store supporting documentation that may be needed to prove compliance with EEOC and other employment laws.
HR automation relieves administrative burden
As your business grows, manual processes become unsustainable. Paper-based files and Excel spreadsheets require time-consuming manual intervention and are prone to error. Automating human resource processes can simplify applicant tracking, onboarding of new hires, benefits enrollment, reporting, and compliance.
Human capital management (HCM) systems provide a unique combination of employee communication and traditional workforce management tools. The system generates automated notifications that alert managers of important due dates and send reminders to employees of upcoming certification expirations, benefits enrollment deadlines, and PTO balances.
Additionally, HCM solutions offer employee self-service which minimizes manual-based paper processes. Using a single login, employees can access their self-service dashboard from any device to view company announcements, pay stubs, and important employment documents like W-2s and W-4s.
Small businesses can also use HCM systems to organize and safely store important policy documents in the cloud like new hire packets and the employee handbook. In addition to eliminating paperwork by going fully digital, your business can prove compliance with important employment laws using e-signature capabilities in HCM to maintain records of signed Non-Disclosure Agreements (NDAs) and more.
Focus on growth—leave the admin and compliance to Asure
When your business is growing, you need software and services that work as hard as you do. It takes hard work to keep accurate records, determine proper withholdings, make timely payments, and stay in compliance. Asure can help.
Asure sees human capital management (HCM) through the lens of both entrepreneurs and executives with an owner’s mentality. Download our HR roadmap for growing your business to find out exactly how your company’s compliance burden will grow as you scale up.
