Complex HR rules may require outside assistance

Solopreneurs don’t need a lot of human resources advice. Once that first employee comes aboard, however, the entrepreneur’s responsibilities change, and an awareness of HR rules and requirements becomes important.

The Fair Labor Standards Act, which sets the boundaries for exempt and nonexempt employees and their pay, is among the first issues a small business is likely to face, says Lori Kleiman. The Equal Employment Opportunity Commission becomes a factor if an employee files harassment or discrimination charges against your company, an action Kleiman says is “very easy to take.”

There also is the matter of recruiting — and retaining — qualified workers for your business. Perhaps not too far down the road, the need to address performance issues may arise.

The combination of managing people and staying within HR rules and regulations “is a challenge for small businesses,” says Alan Cohen, CEO, Aaron Equipment Co., Bensenville. The 77-year-old company, which buys and sells processing and packaging equipment, has about 60 employees.

Aaron Equipment this summer outsourced its human resources function to HRadvantage, a unit of Gallagher Benefit Services Inc., Itasca, itself part of the worldwide Arthur J. Gallagher & Co. that provides insurance and HR risk management services.

“As the business has grown, putting a structure in place became more important,” Cohen says.

Kleiman says compliance is the reason to bring some type of HR assistance into the business. Cohen agrees. “Compliance with the regulations that keep coming out“ and the “policies and employee manuals” that HR management requires were factors in the outsourcing decision, he says.

“I think you need an outside HR resource after 20 employees,” Kleiman says. “A lot of HR laws come into play about the 20-employee level.” Where, though, can the typical small business turn for help? Kleiman, whose business is Lori Kleiman HR, Glenview, has some ideas.

Among Kleiman’s suggested resources: Your payroll services provider, because some offer packages of human resources support and benefits; an attorney with employment law knowledge; or a part-time HR consultant.

“There are a lot of stay-at-home Moms who are HR experienced and would like to work while their kids are in school,” Kleiman says. “Technology makes them reachable in seconds.”

While part-time outside help may work for smaller businesses, once the employee head count gets to 50 or more the HR time involvement becomes greater. The Family and Medical Leave Act (FMLA), which provides up to 12 weeks of unpaid but job-protected leave to employees providing care to a family member, kicks in at that level, and supervisors and department managers need more guidance, Kleiman says.

Often those HR duties fall to the office manager or CFO, who take on HR responsibilities as an extra duty. That structure can work, Kleiman says, but HR duties take time. “I have a lot of CFOs tell me they’re sick and tired of doing HR,” she says.

Ÿ Jim Kendall welcomes comments at his new email address, Jim@kendallcom.com. © 2013 Kendall Communications, Inc.