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Top HR Risks

...and how to avoid them

The economic horizon continues to shift,  small and medium-sized companies — who typically have between 10 to 500 employees and represent 99.7 percent of all employer firms according to the U.S. Small Business Administration (SBA) — may wind up being so focused on core business issues that they overlook one of their most potentially serious and costly issues — human resource compliance.

1.    Exposure to Workplace Litigation

According to the Equal Employment Opportunity Commission (EEOC), race and sexual discrimination are the first and second most prevalent forms of workplace discrimination. Yet despite the possibility of being sued, small business owners are not addressing the problem head-on.


2.    Current Benefit Regulations and Laws

The cost of compliance with benefits regulations is often a bigger burden for small companies, primarily because the associated overhead expense is spread over a smaller workforce. According to a U.S. Small Business Administration survey, small companies spend up to 80 percent more per employee on federal regulatory compliance than large companies


3.    No Qualified Guidance.

For a small to medium-sized business, the human resource “department” is usually one person who wears many hats. This HR generalist may be responsible for compensation and benefits, HR management, labor relations, legal issues, staffing, HRIS, training and much more. Besides, keeping up with all of these tasks, though independent research often falls into the “nights and weekends” environment, which can become both costly and time-consuming.


4.    Substantial Errors.

With every new hire comes a mountain of paperwork. If a company doesn’t have access to online services and must deal with hard copies, errors can multiply. Similarly, what happens when an employee enrolls in benefits?


5.    Functions not Coordinated.

As demonstrated above, in order for the correct amount of deductions for benefits to be taken out of an employee’s paycheck, accurate information must flow to and from the payroll software. Payroll data and benefits recordkeeping need to work in sync. Otherwise, payroll deductions can be wrong.


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