By creating a comprehensive, accurate budget, you can ensure your company has the HR and compliance funding it needs. Many major HR laws carry stiff penalties if they are violated. More importantly, it’s hard to have a positive organizational culture if you don’t have a strong HR department. By budgeting for HR and compliance services, you can ensure that your workers have a safe, uplifting place to work.
Why You Need to Budget for HR and Compliance Services
Whether you are a small business or a multinational corporation, the right HR and compliance services can help your company succeed. From getting employment law updates to avoiding non-compliance penalties, your HR budget protects your organization and saves you money in the long run.
Employment Laws Are Changing All the Time
In July 2024, the Fair Labor Standard Act’s (FLSA) minimum salary thresholds were updated. Under the rules, employers were expected to increase the salary threshold in July 2024 as well as in January 2025. Then, a Texas judge vacated this FLSA threshold in November 2024.
As a small business, you are obligated to follow major legal changes. However, this can feel impossible when HR laws whiplash back and forth between two extremes. FLSA thresholds are simply one example of how quickly HR policies can change.
By budgeting for HR and compliance services, you can get outside help with changing laws. Instead of hoping you notice unexpected updates, you can let a professional HR company track employment laws for you.
Businesses Can Focus on What They Do Best
Whether you make software for the latest tech widgets or manufacture steel billets, your company has carved out a specific niche. When you excel in one arena, it makes sense to focus on it. By hiring a professional HR provider, you can let an expert handle your compliance-related requirements so that you can focus on what you do best.
Penalties for Non-Compliance Are Steep
Penalties for non-compliance can add up, and not knowing about compliance requirements isn’t considered a defense. For instance, violating the FLSA’s minimum wage and overtime regulations incurs a $1,000 penalty per violation. Violating the Americans With Disabilities Act (ADA) can result in a maximum civil penalty of $92,383.
If there are multiple policy violations, the costs can quickly add up. For the majority of small businesses, complying with the law through better HR practices is less costly than the resulting penalties.
Companies Can Avoid Lawsuits
When businesses violate employment laws, it can cause expensive lawsuits. For example, a case of disparate treatment can lead to significant damages. According to the Equal Employment Opportunity Commission, a company with 15 to 100 workers may be subject to compensatory and punitive damages worth $50,000 for employment discrimination. Organizations that have 500 employees or more are subject to a limit of $300,000.
Workplaces Can Become More Competitive Among New Hires
Job applicants want to work somewhere where they are valued and treated well. By following employment laws, you can create a supportive, positive work environment. Workplaces that are known for discriminatory behavior or overtime violations will struggle to attract the same caliber of employees.
Today’s job market can be challenging for employers. Thanks to generational changes in the number of births, there are more workers leaving the workplace than entering it. This has led to a battle for talented workers. By investing in a better HR approach, companies can enjoy having an easier experience attracting top job applicants.
Improved HR Practices Mean Better Employee Relations
With better HR practices, you can enhance your company culture and create a more supportive work environment. In turn, these benefits lead to improved employee morale, better engagement, and higher retention rates. When you create a place where employees feel valued, it leads to better overall employee relations.
Businesses Can Educate Managers and HR Staff
The best HR and compliance services can help you train your managers. Your managers are your frontline defense against discrimination claims, lawsuits, and FLSA violations. With the best HR services, you can access a library of compliance-related materials and get help training your team on best practices.
What Are Common HR Compliance Issues?
While each company and situation is different, there are a few common HR compliance issues that can happen.
- Discrimination in Interviews: Managers may ask seemingly harmless questions, like how an injured interviewee’s health is doing, and end up violating anti-discrimination laws.
- I-9 Mistakes: Forgetting to fill in a blank or completing an I-9 form a few days late can lead to significant fines.
- Discriminatory Job Listings: Without the right compliance help, a job listing might inadvertently discriminate against workers based on their age, race, gender identity, religion, or other factors.
- Misclassifying Nonexempt Workers: Nonexempt workers must be paid overtime, so your company must be careful about who it classifies as exempt.
- Flawed Harassment Training: Onboarding is a good time to train people on anti-harassment and anti-discrimination measures. Improper training can increase the likelihood that your workplace ends up experiencing incidents of harassment.
- Incorrect Payroll Calculations: To avoid wage claims and upset workers, companies must pay their employees in an accurate, timely way.
- Improper Leave Policies: Other than the Family Medical Leave Act (FMLA), there are many state laws about paid leave that your workplace is obligated to follow.
More Ways to Improve HR Practices and Compliance
Besides budgeting for compliance services, there are a few other things you can do to enhance your organization’s HR practices.
- Spend 15 minutes a week researching new employment laws and regulations.
- Train managers on HR topics.
- Create an employee handbook with all of your policies.
- Review your handbook each year to make sure policies are up to date and accurate.
- Incorporate harassment and other compliance training into your onboarding.
- Regularly audit your job descriptions and exemption decisions for FLSA compliance.
- Review promotions, raises, and bonuses to make sure they are being awarded based on performance and not discriminatory qualities.
- Check your state laws for updates about paid leave, minimum wage, and other employment laws.
- Document your company’s policies. If there is a lawsuit in the future, this documentation will show that you have made a good-faith effort to comply with HR regulations.
Ensure Your Company’s HR Practices Are Fully Compliant
By being proactive about your HR practices, you can prevent lawsuits, avoid costly penalties, and ensure your company is in legal compliance. More importantly, you can build an uplifting workplace and a strong organizational culture. The right HR and compliance services can help with talent acquisition, employee retention, regulatory compliance, company productivity, risk mitigation, and employee management.
To learn more about the best HR and compliance services for your company, reach out to our team of small business HR and payroll experts today.