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Human Resource Compliance

Human Resource Compliance Mistakes That You Should Always Avoid

Managing a small business comes with several challenges, and staying up to date with Human Resource Compliance is one of the most significant challenges. With several rules and regulations to follow, it’s easy for small business owners to make mistakes that could prove to be quite costly in the long run. Non-compliance with HR laws can result in business shutdowns, audits, and heavy fines. The last thing any business owner wants is to hurt their business with a legal mistake, so in this blog post, we’ll go through some of the most common Human Resource Compliance mistakes and explain how to avoid them.

Misclassification of Employees

Small business owners sometimes misclassify employees as independent contractors due to a lack of understanding. However, this mistake can have severe consequences, resulting in missed taxes and benefits. Owners of small businesses in need of HR guidance must have a clear grasp of independent contractor classification to prevent misclassification issues.

Not Adhering to Hiring Laws

Small business owners must adhere to hiring laws and regulations when adding new employees. The Equal Employment Opportunity Commission and federal anti-discrimination laws prohibit workplace discrimination based on factors like age, gender, religion, race, and national origin. Compliance with state hiring regulations is crucial, including proper form completion and required background checks for candidates. To ensure compliance with employment law, stay informed about changing legislation that affects your company and employees.

You may also like to read: Before the Offer: 5 Things HR Checks Before Hiring You

Unsafe Workplace Practices

Properly assessing safety risks to employee well-being is the employers’ responsibility to have a safe work environment. Workplace hazards are often the result of poor training or supervision. Most severe accidents could have been avoided if companies had correctly followed safety regulations.

Ensure safety compliance with the ultimate HR checklist by incorporating regular safety checks, implementing effective workplace practices, and consistently reviewing employee awareness of essential safety protocols.

Failing to Document Performance Issues

Many small businesses fail to properly document performance issues with employees. While the intention to avoid conflict is understandable, it is important to have a formal record outlining any problems and to obtain employees’ acknowledgement by signing off on evaluations. Failure to document employee issues can leave businesses vulnerable to lawsuits and discrimination complaints. Therefore, small business owners should ensure regular documentation of employee performance issues by the HR department.

Not Adhering to Record-Keeping Requirements

Small business owners must maintain detailed records to comply with employment laws and regulations. Failing to do so may lead to legal sanctions. Keep accurate records of employees’ wages, work hours, benefits, taxes, insurances, and personnel files. Create an organized and secure record-keeping system, including necessary documentation required by the law.


For small businesses to avoid penalties and maintain their reputation and stability, Human Resource Compliance is crucial. Business owners must understand employment laws and regulations, as common compliance mistakes can have serious consequences. Implementing proper HR policies and procedures enables smooth operations and growth. Avoiding these five HR compliance mistakes allows small business owners to focus on growth and hiring the right candidates. Check out this HR Compliance Resources from the Society of Human Resource Management

Contact HR Business Partners a Minneapolis, MN-based HR Consulting firm specializing in HR Outsourcing / Fractional HR services today to discuss your individual HR needs.