By Cher Merrill, Associated Industries
Vice President, Public Relations, Communications and Marketing

Several years ago, I owned my own public relations firm on the Olympic Peninsula. My business grew quickly from one part time contracted worker to three full time employees and half dozen contracted workers that I partnered with on a regular basis. I knew nothing about payroll taxes – of that, I was certain – and the paperwork alone was consuming way too much of my time.

I was not alone. In fact, according to the Small Business Administration, small business owners spend between 7 and 25 percent of their time handling employee-related paperwork. While that’s not likely the most productive use of their time, even more important, not knowing how to deal with HR issues can get small business owners into big trouble.
Here are the top three HR issues that can get a small business into big trouble.

• An Ounce of Prevention is worth a Pound of Paperwork. Because I remember things better when I write them down, I have always written– and kept filed – a lot of documentation, including when I hired people and for how much, when discipline was warranted, or when I let someone go. But, even as a compulsive writer, I seldom kept the proper documentation that would have protected me if I’d had an issue with a former employee. I’ve seen how many unemployment cases are lost because the owner didn’t have proper documentation of these processes. As they say, An ounce of prevention is worth a pound of cure.

• Ignorance is not bliss. Most small business owners are totally unfamiliar with the legal requirements that regulate the workplace, even though there are very few regulations – especially at the federal level – that don’t apply to them. If you asked most small business owners what Affirmative Action, EEO or AAP regulations apply to their business, it’s unlikely they would even know what these acronyms stand for, let alone which of the regulations involved apply to them and their employees.

• The Mystifying Misclassification of Employees. The most common and most expensive employer error in relation to wage and hour laws is the misclassification employees. The U.S. Department of Labor estimates that 10 percent to 30 percent of employers misclassify their employees. The Government Accountability Office estimates that the federal government loses $3 billion to $4 billion each year in federal income and employment taxes due to misclassification. States are also losing billions of dollars a year in tax and other revenue due to employee misclassification. Even though it’s a law that applies to almost all companies, regardless of size, the widespread misapplication of these laws has also resulted in countless lawsuits against employers, and has also prompted the U.S. Department of Labor to update regulations.

One way small companies can get around the issue of HR affordability is through a professional “leasing” option known as HR Outsourcing. The concept of employee leasing offers unique advantages. HR Outsourcing can provide a small organization the seasoned HR professional it needs to ensure employer-related paperwork is handled properly, business practices meet regulatory standards and any HR issues are resolved appropriately. Best of all, HR Outsourcing can get a small business owner back to doing what he or she does best – managing business.

Associated Industries offers a full range of HR-related services, including Outsourced HR. Associated Industries can provide your organization the seasoned HR professional you need to make your business run smoothly, and properly. The concept of employee leasing is not new. But applied in conjunction with the full range of resources provided by Associated Industries, it offers unique advantages. You may contact Associated Industries to learn about HR Services, including HR Outsourcing: ATT: HR Services, c/o Marla Fruit, Associated Industries, 1206 North Lincoln, Suite 200, Spokane, WA 99201, or 509.342.2169 or 800.720.4291 or mfruit@aiin.net.