As a business owner, you need to be ready for anything. You never know when you may be approached by investors offering growth capital or faced with a changing economic landscape that requires scaling your team up or down. To make sure you have the freedom to react quickly and efficiently when situations arise, having a handle on HR is critical.
There are aspects of managing your business that are clearly central to its health – product development, sales, and market expansion, for example – but keeping HR fundamentals in good shape will keep your organization agile.
Below, I’ve outlined 10 aspects of HR management to have in line before change arrives on your doorstep.
Review the State of Your HR: Where to Look
To get started, you’ll need to do a deep dive into your employee benefits, structures, and documentation. We could devote an entire article to every item below, but this list is intended to be a non-exhaustive resource that you can use as a starting point. Let’s dig in.
Employee Files and I-9 Files
One of the most straightforward places to begin is with your employee files and your I-9 forms. Make sure you have completed and stored your employees’ I-9 files following government guidelines; these must be kept separately from the rest of your employee files.
Do an appraisal of your compensation structure. The discussion about fairness in compensation today is centered around gender equity. Can you prove that everyone at your company is compensated in a fair and equitable manner? Whether you’re hoping to sell, raise money, or simply avoid lawsuits, you should be able to.
Wage and Hour Claims
Check whether any wage and hour claims have been filed against your business with the Department of Labor. If you haven’t heard anything, it’s likely because no claims have been filed. But it’s better for you to check proactively than to find out about one from a prospective investor or buyer.
Payroll Laws / Workers’ Compensation
Do you have any employees on severance? What about any current or pending workers’ compensation claims on your books? Whatever your situation, you should be able to answer the following:
How many states do you do business in and where do your employees live?
Are you registered with the Department of Revenue in every state where you have employees? Payroll laws vary by state, so you must register individually.
Do you have workers’ compensation coverage in every state in which you have employees?
Do you have three to five years of workers’ compensation loss runs?
Ensure that your payments for all benefit plans are in balance. In other words, are you keeping up on all “adds” and “deletes”?
Dental, vision, health, etc.: you should know which healthcare plans you offer through which carriers, how much you’re contributing, and how much your employees are paying.
You should also know how many former employees are in COBRA or be able to access this information in short order.
Have you complied with the Affordable Care Act? Have you performed filing requirements in good faith?
Qualified Plans (i.e., Retirement)
Information organized about any qualified plans you offer your employees should be organized and easily accessible. This includes defined benefit plans like pensions and defined contribution plans like 401(k) retirement plans.
Check Your Payroll Taxes
Of course, the orderliness of your taxes will depend somewhat on the time of year, but taxes must be paid out in their entirety at the local, state, and federal level.
If you’ve been working with a reputable payroll provider or PEO, employee withholdings should not be an issue. Just make sure there are no outstanding notices relating to late payments from the IRS or any of the Departments of Revenue or Unemployment Security Offices for states in which you file payroll taxes.
Your employee handbook is a written document that captures your business’s house rules. This should lay out company policies and workplace expectations.
Your employee handbook should also include sexual harassment policy language, anti-discrimination language, and a description of your Paid Time Off (PTO) policy.
This document sets the tone of your company culture: employees can turn here for your diversity and inclusion statement, as well as information about the dress code and your company’s core values.
Add Value to Your Business
Proactively handling these HR basics forces you to stay well organized, pay attention to detail, and manage risk well – all of which contribute to making you a more agile company. And if you’re not comfortable handling these aspects of HR yourself, it’s appropriate to contract with someone who is, whether that’s an accountant, employment counsel, or an HR specialist.