According to a new survey from Paychex, a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services, 21 percent of small business owners lack confidence in their organization’s ability to keep current with HR compliance.
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Of the core functions that make up HR, they are the least confident when it comes to onboarding (38 percent), employee handbooks (36 percent), and background checks (26 percent).
Lack of Automation
“New hire onboarding is one of the first and most important HR processes for an employer and employee,” said Jackie Hoyt, HR consultant at Paychex. “From Form I-9 to the W-4 withholding form to state withholding form(s) to direct deposit, think about all of the documents a new hire needs to complete before even getting their first paycheck. An electronic, paperless new hire onboarding process can be a big time saver, increase efficiency, and provide an electronic paper trail for both the owner and employee to reference down the road.”
Lack of automation could be one indicator for low confidence when it comes to key HR functions.
The Paychex study finds only 30 percent of small businesses rely on technology to automate the onboarding process. Additionally, 38 percent of those surveyed report tracking time and attendance manually rather than via an automated system. Embracing automation to accomplish such critical tasks not only saves time, but can also reduce the risk of human error.
Lack of Awareness
Confidence is one thing, but awareness and compliance is another – especially since a lack of compliance, many times, can lead to costly fines and penalties.
According to business owners surveyed, the top three employer regulations they’re either not complying with or not aware of are: youth employment standards (42 percent), employee classification laws (37 percent), and overtime laws (36 percent).
“In my experience, many small businesses don’t know what they don’t know,” said Dorene Crimi Lerner, HR consultant of Paychex. “They think that because they have less than 10 employees, they don’t need to comply with things like proper employee classification and overtime rules. The truth is HR becomes a reality when you add your first employee.”
On the positive side, the majority of small business owners report being aware of and complying with the following laws: minimum wage (76 percent), OSHA and workplace safety (75 percent), non-discrimination (74 percent), and retaining employee time and pay records (72 percent).
The Paychex survey, administered by a third-party research firm, includes responses from 250 principals of U.S. companies with two to 500 employees.