Essential Small Business HR FAQs

Does my company even need an HR department?

Here's the truth: Small companies generally don’t really need to hire dedicated human resources staff. Many small-business owners choose to take on the responsibility of managing HR tasks when a company is just starting out (particularly if there aren't many other employees). Alternatively, the business owner may decide to allocate these functions allocate them to another employee (such as an office administrator).

Once a company grows to about 20 employees, however, managing HR internally becomes a real burden. This is the point at which many business owners start to think about hiring a dedicated HR professional. Increasingly, however, business owners are seeing the value of outsourcing human resources functions to an outside vendor (like a professional employer organization). Companies that outsource HR to a full-service provider like a PEO get access to a turnkey HR department without incurring the cost of building out their own HR infrastructure.

Companies that grow to hundreds or even thousands of employees often find that it makes sense to have some internal HR staff to implement strategic programs that target employee engagement, retention and productivity, while still augmenting those efforts with help from an HR outsourcing firm to handle the sheer volume of transactional HR tasks (processing payroll, managing employee paperwork, etc.) that come with having such a large workforce.

Does my company need a human resources (HR) audit?

A company needs regular audits to have an objective study of its HR practices, procedures, and policies. An HR audit can help to identify whether certain practice areas or processes are adequate, effective, and legal. The results of such a review can assist in identifying gaps in a company’s HR practices. The HR department can then work to resolve any gaps to minimize regulatory violations and lawsuits. It will also help to attain and maintain competitiveness in important practice areas.

Does my company need an employee handbook?

Yes. It’s good business practice to have an employee handbook. From a legal point of view, creating an employee handbook will help you avoid problems in the workplace. Employees will know what the company expects from them. The same rules will apply to all employees, which makes it easier to run your business. Written policies help show workers that your company values fairness. Finally, an employee handbook can assist in dealing with lawsuits.

Your company's employee handbook should contain several important sections and must include information about the organization's culture, policies, and procedures. To develop an effective employee handbook, it should be clear, consistent, comprehensive, current, communicated, and committed. A company handbook makes it easier for employees to understand the rules. The handbook should show consistency with the company’s practices and policies. It should align with current employment laws and be comprehensive enough to cover important policies. Also, the handbook should be communicated or distributed to every employee and the company should show commitment to enforcing the rules.

How should I go about making company rules and regulations?

Balance is crucial when developing workplace rules and regulations. For instance, you need not create a plethora of policies that control the actions of your numerous employees when all you require are sufficient policies to control the actions of a few. You don’t need to cover every contingency—you need guidance to handle certain situations. In short, ensure that your rules and regulations protect the company and lead to all employees being treated fairly.

Can a company refuse a holiday/time-off request?

As an employer, you can refuse to grant a holiday or time-off request. For instance, many of your workers in the same team or department ask to leave at the same time, particularly over the winter holidays. In such a scenario, it might not be practical to allow some requests because you have to make sure that the needs of the company are met. Employers may also need to take into account, however, when a refusal to grant a request for holiday time-off may run into a religious accommodation issue. (Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on religion.)

Are companies required to advertise jobs internally?

There’s no legal requirement for companies to advertise jobs internally. However, advertising a job internally is good business practice because your company can defend a claim against discrimination if existing workers are made aware that a certain post is available and they may apply.

Can a company loan money to employees?

Yes and no. It’s a risky proposition to lend money to an employee because you may be flooded with requests from others. Also, the employee who borrows money may find it difficult to repay. Based on their creditworthiness, you may lend money to one employee and refuse another, which might bring about discrimination concerns. Your tax obligations as an employer may increase if a loan isn’t done properly. So, you need to weigh these options before lending money to employees.

Can a company track its employees?

A company can track its employees to monitor their activities and engagement with workplace-related tasks. The legal scope around tracking employees is murky, and there’s no government privacy law that bars an employer from tracking an employee using GPS. In some states, it’s illegal to track someone’s car without their consent. Modern technology can allow your company to monitor employees’ activities and communications, which can help in making decisions about appropriate salary, product prices, and ideal team sizes among others.

Can a company refuse a resignation?

In strict terms, refusing a resignation isn’t legally possible. An employee should have the final say in the decision to resign - a company can’t decline to accept a resignation just like an employee can’t decline to accept their dismissal from work. In short, an employee has the right to resign at any time.

How can my company enforce non-competes?

A non-compete agreement is there to protect your company’s proprietary information or trade secrets. To make the agreement enforceable, it should be ancillary to another agreement and be reasonable. To enforce a non-compete agreement, you should show that there’s potential harm to your company and its interests need to be protected.

It’s also important to quickly evaluate whether an employee’s work with your competitor threatens your goodwill. Cease and desist letters coupled with demand letters should be sent to non-complying parties. You can also file a lawsuit and ask for a temporary restraining order while a court determines the outcome of the case.