Business managers and supervisors carry heavy responsibilities in organizations – especially in small- or medium-sized businesses where they are responsible for everything from hiring and onboarding new employees to making sure the production line is performing at its maximum capabilities. Managers also are on the frontlines for business when it comes to staying compliant with a myriad of local, state and federal labor regulations. Unfortunately, many companies lack the time and other resources to properly train all management about all the nuances labor laws encompass. Even managers who have a good grasp of the laws make mistakes – mistakes that can be very costly to a company’s bottom line. This is one of the reasons many businesses choose to outsource human resource management to a Professional Employer Organization (PEO).
Here are 3 costly HR mistakes managers make and how a PEO mitigates these risks for SMBs.
Staying on top of current rules and requirements for labor’s “alphabet soup” of federal regulations is difficult and time consuming. In fact, 69% of small business owners say they feel overwhelmed by regulations, rules and mandates, and 44% admit they are not confident in their ability to meet compliance requirements. If a manager violates workers’ comp, Family and Medical Leave (FMLA), American with Disabilities (ADA), OSHA or discrimination and harassment laws, the whole business is put into jeopardy. Take, for instance, the small business owner who fired an employee because of frequent absences due to health problems. Even though the owner rightfully calculated that the business was not subject to FMLA, she did not take into consideration that the employee was protected by the American with Disabilities Act. Result? An employee claim against the company for discrimination based on a disability.
- Workplace liability management
- Supervisory training
- Employee litigation responses
- EEO compliance
- OSHA compliance
- Title VII compliance
2. Payroll and Tax Administration
Other common mistakes made by businesses occur in the payroll and tax administration areas. Failing to pay overtime or to pay employees on time (or at all!) is very common and illegal, of course.
- Properly classify employees as exempt or nonexempt per FLSA regulations
- Develop and implement effective employment policies and procedures
- Payroll processing
- Filing withholding taxes and deposits
- State and federal unemployment insurance filings
- W-2 and W-3 management
Proper documentation of employee performance, interactions and complaints can head off future disputes or legal claims against a business. This tedious, time-consuming duty often is put aside by managers as they concentrate on raising production levels and growing the business.
- Employee files management
- Employee handbook development & compliance
- Employment agreements including confidentiality and non-compete agreements
- Safety manual development/updating
- OSHA log maintenance
- Annual wage and premium audit administration
- Compliance records retention and management
Everyone makes mistakes. Mistakes made in relation to employment laws can put a company under for good. Businesses using a PEO for at least four quarters are 50% less likely to go out of business when compared to the overall rate for similar businesses in the United States. For a targeted needs analysis and professional recommendation for a PEO solution tailored for your business, contact us at 888-623-3240 or online for more information.