Owners and Senior executives often find themselves having to justify the spending of revenue on areas of their business that do not have a clear return on the investment. Human Resources falls into that “area of their business”. In most cases, there is not a true understanding of what is included in the essential and functional area of Human Resources for small to mid-size business owners.
Human Resources covers several functional areas of the employer – employee relationship, and some of those functional areas identified below can have a major impact on the organization if not addressed.
Every company in the United States has a responsibility to make sure each employee hired into the business meets the eligibility requirements to work in the country, and that eligibility is confirmed by completing the USCIS Form I-9. The Form I-9 is required of every new employee, and portions of the form must be completed on or before the first day of work for the new employee.
Each employee must present appropriate document(s) to the employer from a list of acceptable documents which provide the company with the employee’s identity and employment authorization to work in the United States. Without these acceptable documents, employees are not eligible to work in the country.
The area of employee classification can be confusing to many small business owners. Exempt, Non-Exempt and Independent Contractors are classifications most frequently used in the workplace. It is the employer’s responsibility to correctly classify each employee. However, it has been reported that many businesses misclassify their employees because the owner is not sure of the regulation for some of the different classifications. The misclassification of employees can be costly and detrimental to the company.
The non-exempt classification is the easiest to implement, because the company is paying for the actual hours that an employee works. Exempt and independent contractors can be more complicated to implement. Employees classified exempt must fit into a specific category and then meet the different rules for each of the categories. Each exempt category must also meet the basis test associated with that exemption.
It becomes a bit more complicated when certifying independent contractors. The State of Colorado has specific guidelines that each independent contractor must meet, and without meeting those requirements, the person should not be classified as an independent contractor.
Employee Personnel Files
The employee personnel files encompass required documents that the employer must keep on the employee. These documents can relate to health benefits, compensation, retirement and immigration. The employer is required to keep this information on each employee; however, the organization and housing of these documents varies. By housing these essential documents together in the employee’s personnel file, the company could could be exposed to unnecessary and expensive fines and penalties.
Employee relations is one area of Human Resources that business owners and executives give a lot of lip service to. “Our employees are our most valuable company asset” is a common declaration spoken in many company mission statements. However, when you look deeper into what is being done with the most valued company asset, very few organizations are true to their word.
Because there are numerous areas of the company that owners or leadership evaluate, the Human Capital side is normally taken for granted. Generally, there is not a qualified person within the company that handles employee questions and/or concerns. That communication responsibility typically falls on the shoulders of the supervisor, who most often has not been properly trained to deal with these situations. On the other hand, this situation is a routine responsibility for a Human Resource professional to handle properly and efficiently.
Company Handbook and Manuals
It is imperative that a company, regardless of size, provide each employee with a handbook or manual that outlines the company rules and regulations. Besides explaining employee expectations, the handbook highlights the company’s mission, vision, values and goals. In addition, it includes explanations of the necessary steps to take when certain situations arise like vacation requests, holidays, bereavement requests, and jury duty.
The bottom line is that even small companies need a Human Resource presence. Human Resources will address most of the Human Capital issues that arise between staff and management. When these issues are proactively and correctly addressed, it most often eliminates the need for employees to seek outside remedies from a third party. This proactive action saves companies the time and expense of having to address employee claims from the EEOC.
Wes Garnett is President and CEO of W. Garnett & Associates, a Human Resource consulting firm specializing in Human Capital Management Assessment (HCMA). HCMA are the systems, processes, policies and procedures that all companies should implement if they are managing a staff of employees.