Small businesses must navigate numbers of fiscal challenges as well as labor law compliance issues.
Businesses in California are subject to an every increasing number of CA labor laws and regulations that govern the employment relationship. And their HR managers are tasked with understanding and complying with them to avoid costly fines and other penalties.
In addition, they are often the buffer between the company actions and any potential harm to the organization’s reputation. But it requires diligence and ongoing efforts to stay abreast of the various state and federal labor laws.
CA Labor Laws and Maintaining Compliance
Some of the more common labor laws regulating the labor relationship include:
- The Fair Labor Standards Act, which establishes the minimum wage and rights to overtime pay for certain workers.
- The Family and Medical Leave Act (FMLA), which grants certain employees the right to take up to twelve weeks of unpaid leave each year in specific circumstances, as well as the right to be restored to the same or equivalent position upon returning from such leave.
- Federal civil rights laws, which prohibit employers from considering race, gender, age, or other “protected” status when making hiring and firing decisions or otherwise setting the terms and conditions of employment.
- The Uniform Services Employment and Reemployment Rights Act (USERRA), which establishes certain rights and protections for employees who are called to active military duty.
Compliance is Everyone’s Responsibility
While CEOs and smaller business owners need to be focused on growth and profitability, they also need to know what issues to be aware of in order to protect the company. Here is an infographic illustrating five of the most common HR compliance issues that small businesses typically face:
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Five Common Areas That Create HR Compliance Issues
There are many reasons businesses may fail to be in compliance with the myriad of rules, regulations and labor laws imposed upon them. But there are typically five areas that commonly lead to compliance issues for HR personnel.
Not Following Benefit Regulations and Laws
Compliance with benefits regulations is often a bigger burden for small companies. According to a survey by the U.S. Small Business Administration, smaller companies spend up to 80 percent more per employee on federal regulatory compliance than large companies. Consequently, poor management of personnel-related tasks can make compliance even more costly.
Failing to Safeguard Against Employee Litigation
Race and sexual discrimination are the two most prevalent forms of workplace discrimination, according to the Equal Employment Opportunity Commission (EEOC). But far too few businesses provide training regarding racial and sexual harassment policies, and this can leave companies subject to complaints, or wrongful termination when employees leave their jobs.
For example, only 23 percent of small businesses provide employment discrimination and sexual harassment training according to a random survey conducted by Chubb Group of Insurance Companies.
Lack of Coordination in HR Functions
In order for the correct amount of deductions for benefits to be taken out of an employee's paycheck, accurate information must flow to and from payroll. Payroll data and benefits record keeping need to work together seamlessly and accurately, or else payroll deductions can be wrong.
If your company is making use of different vendors for the payroll and benefits record keeping function, then you are the one who must ensure that everything is coordinated and running smoothly.
No Qualified Guidance for HR Policies and Procedures
For many small to medium-sized business, the “HR department” is often just one person who has many roles. This individual may be responsible for compensation and benefits, HR management, labor relations, legal issues, staffing, HRIS, training and much more.
In addition to keeping up with all of these tasks, researching new and changing rules, regulations, and legislation often involves overtime, which is both costly and inefficient. Reliable HR guidance is essential because of the demands of agencies such as the Internal Revenue Service (IRS), the Department of Labor (DOL), or the EEOC.
Lack of HR Automation Resulting in Errors
When a company takes on a new hire this generates a large volume of paperwork. If a company isn’t using an online service and must deal with hard copies, errors can multiply. These administrative processes tend to occur in different parts of the organization, but they're dependent upon each one being carried out accurately and promptly. And at each step, when information is transferred from one HR process to another, there is a possibility for errors.
Improve Your Own HR Management Practices
One of the informal roles of the HR manager is that of being a bellwether of change. Staying informed and up-to-date not only of regulatory and legislative changes, but of the social and technological shifts that spell opportunity for a business, is essential.
In addition to a growing and demanding role in recruiting, hiring, and continually training employees, the HR staff will still be responsible for every other function they are typically tasked with such as payroll management, tax filings, employee records compliance, and so forth.
Considering alternatives such as outsourcing is increasingly becoming a cost-effective and strategic option. Accuchex can help you in managing your HR needs, payroll processes, and staying on top of compliance demands. Get your Free Download: Payroll Outsourcing Guide to help you make an informed decision or call Accuchex Payroll Management Services at 877-422-2824.