One of the most frustrating things I encountered back when I practiced law was just how often I would see small business owners in my office, in trouble, because they had bad information.
Example: One fellow decided that, in order to be friendly, he would ask job candidates about their holiday plans – “So, what are your family Christmas traditions?” or “Hanukkah eh? That’s interesting, how do you celebrate that exactly?”
Now, I knew the guy. He didn’t have a malicious bone in his body. But the Christian woman who didn’t get the job didn’t know that; she was convinced that she wasn’t hired due to religious discrimination. Even though she was incorrect, she seemingly had “proof.” It cost my client a pretty penny to learn the hard way that you cannot ask religious questions when hiring.
That experience is but one reason why the most recent ComplyRight National Small Business Compliance Pulse Survey is so interesting. The survey surveyed owners, CEOs and others charged with handling HR responsibilities at 300 small businesses (five to 100 employees) across the U.S. One of the first things that jumped out at me was that less than half of the small business owners surveyed said that they were “very confident” that they were aware of all federal, state, and local labor laws that could affect their businesses.
That’s really dangerous because the fact is, what you don’t know can hurt you.
And, what’s worse, is that when they do want to learn more about employment law, small business owners often turn to sources that are not always the best:
- First, the survey found that entrepreneurs look to written notifications from federal and state agencies. The problem with this is that agencies rarely provide such notifications or updates.
- Next, better, small business owners look to their own lawyers, accountants, or other business advisors. The problem here is that many of these advisors have limited knowledge of labor laws due to the complexity and rapidly changing nature of the beast.
- Finally, respondents reported that they rely of the knowledge of friends and colleagues. No commentary even necessary here.
So, the situation is this: Even though we are in an era of increasing employment law intricacies, a time of ever-changing state, local, and federal regulations, many small business owners have no set processes in place for staying up-to-date with those changes, let alone learning what it is they need to know.
But even so, at least they have state-of-the-art processes for managing their HR issues, right?
Get this: Almost half of small business employers surveyed (46%) rely on “pen, paper and sticky notes” for their HR process. Indeed, only 17% have invested in contemporary HR systems — technology that can manage HR-related information in one place with one program. The problem with an analogue process in a digital world is that not only can this lead to significant legal and financial problems, it also translates into stress and reduced productivity among the employees who are managing compliance.
So, the question then is this: What should small business owners and office and HR managers do to manage all of these regulations such that they are never forced to sit across from their own lawyer, lamenting their lack of HR savviness?
I would suggest that the best practice is actually fairly simple:
- Take time to investigate, and invest in, up-to-date technology and processes such as web-based HR solutions
- Choose compliance-minded vendors and partners who fully understand the importance of labor law regulations
- Protect your company by regularly updating employee policies to cover and address new developments that have a direct impact on the business and employee
The bottom line is that the smart small business owner will invest in a modern HR solutions knowing that in reality, it doesn’t cost, it pays.
Steve Strauss is a Senior small business columnist at USA TODAY and author of 15 books, including The Small Business Bible.