Learn the rules of the road when you're growing your staff.
By: Jeff Fenster, President of CanopyHR Solutions
Did you know that the laws governing a business with 20 employees are vastly different from the ones that apply to a 30-employee venture? What you don't know can do more than hurt you-it can bring a thriving company to its knees.
As countless American companies tiptoe toward recovery in a treacherous economy, it pays to be cautious. Of course, if you're considering adding employees to your team, then you're doing something right. Safeguard that success with the strategic use of human resources. It's your most valuable tool in navigating re-growth, one careful step at a time.
READING THE SIGNS
Like any key area of your business, human resources can work as a huge asset as long as you manage things properly and comply with the rules and regulations that apply. Laws vary based primarily on company size and location.
Those rules and regulations fall into four broad categories: wage and hour, time off, benefits and training. Here's a brief rundown of the kinds of things you must include in your plans for company growth.
Wage and Hour
Anything and everything that relates to payroll-from how you pay to when you pay and how much you pay your employees-must comply with state and federal employment laws. There are laws that govern how quickly you must pay a terminated employee (voluntary v. involuntary termination) and how to handle paycheck errors. Cutting corners in the payroll department can cost you a lot more than it saves. It's absolutely vital that the management of these important aspects of your business are handled by someone who knows the laws in your industry and locale
Any time off that you grant employees, including leaves of absence, vacation and sick days (and whether and how much you pay them), can be affected by a number of regulations. A variety of statutes designed to protect employees' rights apply differently based on how many employees you have.
It should go without saying that sick days, vacation time, leaves of absence and other time off must comply with the law and should be granted fairly to all eligible employees, regardless of gender, race, age and the like.
Every perk you provide is governed by regulation. You can't avoid the law by eliminating benefits altogether; some benefits are statutory. Things like disability coverage, workers' compensation insurance, health insurance and company vehicles can open you up to serious liability if they're managed carelessly. Ensure that every resource you allocate is handled thoughtfully (and legally).
Your company must meet applicable laws such as safety, sexual harassment, OSHA standards and other training required for your industry and in your state of operation. Requirements fluctuate with your employee count; more on this later.
Just as there are compliance issues related to growth, there are regulations that go along with downsizing. Plant closures and layoffs require 60 days' notice. If you have large layoffs on the horizon, be sure to review the regulations to ensure that your plans meet all related legal requirements.
PLAYING THE NUMBERS GAME
Most employers know they must comply with the laws in their industries and locales. Many are surprised to learn that the laws are different based on the size of your company. So if you've been cruising along with 24 employees for several years and decide to hire an additional administrative assistant to support your sales team, you'd better know that the rules of the game have changed. Adding one more employee just bumped you out of the smallest category and into the next level of compliance.
Very Small Business (Fewer than 25 employees)
When you have fewer than 25 employees, you work like crazy-but chances are, you're not spending much of that time worrying about employer compliance issues. That's because you have the bare minimum of rules to live by. But when you hire a 25th worker, you may notice a few changes.
Moderately Small Business (25 to 49 employees)
When your company expands to this level, there are a few more issues to be concerned with. Employees with addictions are entitled to certain rehabilitation rights. Abused spouses are entitled to domestic violence leave to relocate, seek counseling and the like. Employees with children are entitled to 40 hours per school year to attend their children's school activities. These are just a few examples; other family and military leave statues and illiteracy programs also apply at this level.
Small Business (50 to 74 employees)
Hiring your 50th employee is a big moment for any entrepreneur. The upside: You've achieved a level of success that few businesses realize. The downside: Steering clear of regulatory mishaps can become a full-time job. You must now maintain annual Equal Employment Opportunity (EEO) tracking and reporting compliance; provide mandatory sexual harassment training (SB1825); participate in affirmative action, grant Family Military Leave Act (FMLA), California Family Rights Act (CFRA) leaves; and provide voluntary firefighters' leave.
There's more. You're also subject to the Worker Adjustment and Retraining (WARN) Act, a schedule of rules and regulations that pertain to providing advance notice of plant closures and layoffs.
But just remember, the grass is always greener on your side of the fence-at least it is to the folks with even more employees!
Medium-Sized Business (75 to 99 employees)
California WARN compliance becomes more critical at this stage, and the numbers alone can sometimes make regulatory compliance a bit more difficult. Things step up again, of course, when you reach the triple digits.
Large Business (100 or more employees)
When you hire your hundredth employee, you can certainly say you've made it. Everything is on a larger scale now, from sales to liability. Your numbers expose you to greater risk, as the workplace provides more opportunities for employees to become injured or disgruntled. It's easier to make costly clerical errors relating to payroll, or management oversight that fails to notice a missed lunch break. Doing what you've always done may no longer be effective. Keeping your eyes on the big picture requires a watchful eye on detail and depth as it relates to sound business practices.
YOUR GPS FOR SUCCESS
The larger your company grows, the more crucial it is that your human resources team focuses on strategic efforts rather than tactical administrative tasks. Getting caught up in policy rather than finding common-sense solutions is a common pitfall. Use these tips to craft your plans:
• Prepare for your 25th new hire; start strategizing for the future before you're under the gun.
• The best handbook in the world can't replace smart management. Use your manuals as guide posts, not bibles.
• Avoid a cookie-cutter approach. Handle each employee and their circumstance uniquely giving consideration to a win-win outcome.
• Create policies that are more interactive than rigid. Refusal to bend can leave you vulnerable to breaking.
Whether you go it alone or outsource human resources expertise, the stakes are too high to simply cross your fingers or to throw up your hands. Failure to comply with state or federal employment regulations puts all you've worked for at risk.
If you have a human resources guru on staff, invite them to the strategy table. Provide human resources with technology tools to manage employee data so that HR can provide real time data to forecast business needs and drive results.
But if you're not so sure you have the bench strength in HR, not to worry. There are firms who specialize in navigating these waters for you or with you. They know the territory well, as they've helped many clients handle the precise concerns you're grappling with. Trusted firms can share the benefit of their experience in areas where you're just getting your feet wet.
It's a mistake to believe that human resources is another cog in the business wheel. Imbue your human resources team-whether that's one person or a specialized company you've engaged-with a sincere vision of who you are and where you want to be.
About CanopyHR Solutions:
Based in Irvine, Calif. CanopyHR Solutions is a progressive payroll and human resources company dedicated to helping its customers maximize the power of their people, increase business efficiencies, lower costs and focus on what they do best. Canopy HR Solutions first disrupted the status quo of the payroll and human resources in 2008 with a customer-first business model that allowed its customers to select only those service modules they need. Their innovative style and superior, consultative approach to service has allowed the agile company to thrive by arming customers with the tools and technology to support their payroll, benefits and HR administrative needs from recruitment to retirement at an unbeatable price point. For more information, visit www.canopyhr.com.