Human Resources Basics For Small Businesses

April 2019

People are essential to the success of any business. If you’re not willing to take care of your employees, your business will suffer. Big companies have entire departments devoted to Human resources, while the smallest companies may just have an office manager who also handles HR.

In general, if you have 40-50 employees, you’ll need an in-house or outsourced HR department. Smaller companies that are confident about their ability to meet regulatory demands and manage payroll and benefits may not need a dedicated HR person.

What Does HR Do?

Any form of interaction with your employees falls under human resource management. Examples of these interactions include, but aren’t limited to:

• Safety and wellness of staff

• Hiring

• Performance reviews

• Communication between staff and management

• Payroll

• Dispute management

• Regulatory compliance

With any HR program, there are three basic requirements that must be met:

1) Employee handbook with company policies

Your HR program wouldn’t be complete without an employee handbook. An employee handbook covers the ins and outs of your organization – your policies, procedures, expectations of behavior in the workplace, etc.

Try not to overdo it with too many regulations and policies. If your employee handbook is about the same thickness as a college textbook, you could probably do a bit of trimming to tone it back a bit.

Here are a few policies that an employee handbook should cover:

• Dress code • Work hours • Social media policy • Sick leave • Alcohol/drug policy • Confidential policy • Insurance information • Workplace safety • Benefits • Ethics • Company mission

This list is by no means all-inclusive, but it should give you an idea of the most vital information that belongs in your employee handbook.

Regulatory Compliance

HR handles hiring and firing, benefits, and balances the well-being of employees and employers. There are federal and state regulations that must be met, and paperwork, training and information that must be maintained.

The basic paperwork to have on file for each employee includes:

• Employee file • Employee medical file • I-9 file

Employee file

Every one of your employees should have a file filled with basic, but essential information. This information will include performance evaluations, information for payroll purposes, employment applications (including resumes), and employment agreements and contracts. This information is private in nature and should be kept in a safe place.

Employee medical file

Create a separate medical file for each of your employees. Having a medical file on hand will allow you to act appropriately in the case of an emergency situation. Information contained within an employee medical file includes disability information, applications for insurance, and information about medical examinations.

I-9 file

I-9 employment eligibility verification files are required by law for each of your employees. At any time an authorized United States government official can inspect your employee I-9 file, so keep them orderly and available for inspection at all times.

2) Post required notices of laws and regulations

There are so many state and federal laws and regulations regarding human resources that it may feel impossible to keep up every time a new law or regulation is implemented. This site is a good source for the notices you need to post.

Changing your approach to HR

There’s much more to implementing HR in your business, but the above information is the bare minimum of what you need to know to ensure you stay compliant with the law. But frankly, you need to know about Anti-discrimination laws such as the Americans with Disabilities Act (ADA), wage laws such as the Fair Labor Standards Act, Leave laws such as Family and Medical Leave Act (FMLA), Immigration laws, benefits and safety laws. Unless you have a very small business, you may want to consider outsourcing some HR activities to an agency or – at the least - purchasing small business HR software to show you did your due diligence.

But how do you afford the costs of HR? One Park Financial works to help owners of small and mid-sized businesses access the funding that meets their needs. We understand the challenges associated with small businesses and their owners need for working capital. Visit or call 855.218.8819 and connect with a funding expert to discover the options that make sense for you and your business.