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Why is HR compliance important?
HR compliance is critical to protecting the time, energy and investment it takes to start a new enterprise. Discrimination laws take effect with only 15-20 employees, but many employment laws take effect with only one employee. Leaders of small organizations need to know what regulations apply to them to avoid expensive pitfalls.
The types of pitfalls small organizations tend to face include Contractor vs. Employee decisions, Hiring-Firing decisions and Salary vs. Hourly decisions. Audits are easy to trigger and agencies share information that trigger additional audits. All it takes is a complaint by a disgruntled employee to have an OSHA inspector show up at your door.
So how do you manage the risks of being a small employer? Educate yourself. Learn which regulations apply to your business and which do not. Make sure you have the right policies and procedures in place before you hire. Attend HR sessions at your local SBDC and PTAC office.
If you are already in business, consider hiring an expert to get your organization up to speed. It is very difficult to run a business and retro-fit HR compliance at the same time. It is even more difficult to stay in compliance when the rules keep changing.
If you are unsure of where you might be out of compliance, contact My HR and request a HR Assessment. We conduct an in-depth HR audit of your organization from a risk perspective and provide you with a HR RoadMap on how to mitigate those risks.
What is a compliance audit?
All it takes to trigger an audit is an unemployment claim. Let’s say you hire a contractor for a short-term project. You have the contractor sign an agreement that they are responsible for their own taxes and insurance. But, when the project is over the contractor files for unemployment against you. Who pays? That depends.
How did you pay them? Who else do they work for? Who provided their tools and training? The state labor commission will ask all these questions, and more, to make a determination. If the state rules the contractor should have been an employee, you will be on the hook for back taxes, penalties and interest.
In Texas, the Texas Workforce Commission (TWC) will trigger an audit of the rest of your contractors and employees. If errors are found, back taxes, penalties and interest will be owed in addition to the actual unemployment claim. Many small businesses have closed their doors because of this scenario.
Avoid time-consuming audits and expensive unemployment claims by attending our FREE TWC Decoded session at the Small Business Development Center (SBDC) every quarter. It is guaranteed to blow your mind!
How to maintain HR compliance?
Educate yourself before hiring. If you have already hired, take time to education yourself and key managers. What do you need to know? How to hire smart. How to fire smart. How to classify employees. How to fight unemployment claims. Your safety bet is to educate yourself and lay a smart HR foundation before hiring employee #1.
If your business is growing fast, hire an expert like My HR to lay your HR groundwork and guide your decision making. If you are in a highly regulated industry or an industry with tight profit margins, call an expert like My HR to avoid expensive pitfalls.
Attend a local Texas Business Conference (TBC) to learn about HR, Payroll and Safety compliance for small business. Check out our FREE three-part course on HR compliance: TWC Decoded, Hiring Smart and HR Solutions. You will learn tips and tricks on how to stay in compliance without breaking the bank.