State and federal employment laws and labor regulations are continually being updated. Therefore, it can become more complicated for small businesses to keep current in regard to HR and payroll trends.
Be mindful of the following things as a basis of implementing best practices.
- Paid Leave – States are passing paid leave legislation at a rapid rate – Michigan was first among these – and it may be a challenge for a small business to monitor having fewer resources than a larger business. The most notable change in Michigan is that businesses with 50 or more employees must offer leave to all types of staff, including temps and independent contractors. This may not apply to your business at the onset, but that may change whether it be through regulatory changes or the success and growth of your business.
- Payroll Fraud – It happens much more frequently in small businesses than in larger companies. Payroll fraud can be committed by employers, who engage in wage theft; employees, such as those who work in the payroll department; third parties, such as cyber criminals. There are certainly things a business can do, here, to combat this, from routine audits of payroll, implementing safeguards against timecard manipulation and segregating payroll duties to a few people and having a “checks and balances’ policy, as well as providing cyber awareness training to your employees, including your payroll staff.
- Timekeeping – Whatever the size of your business, federal law strictly mandates that employees who should be paid, i.e., those who are not volunteers, are to be paid the contract wage for each hour worked.
- The New W-4 – Without the W-4 form, payroll processors cannot make the correct deductions from an employee’s wages. The form has been in place for decades, but for the tax year beginning 2020, an updated version is being issued.
- Exempt versus Nonexempt – Determining whether an employee is exempt or nonexempt under the Fair Labor Standards Act (FLSA) and state law can be a chore –which is probably why some small businesses simply pay their entire staff a salary and then treat everyone as exempt – but identifying everyone as salaried-exempt without considering their job duties, these small businesses risk violating federal and state wage-and-hour laws. That’s why it’s always best to consult an expert like Dunham Tax Services to know how to proceed.
- Pay Satisfaction – Always ensure you pay your employees fairly and accurately, on time, and when contractually obligated to do so. Moreover, make sure to offer convenient methods of disbursement, e.g., paper check, direct deposit, pay card.
- Outsourcing – this may be an option for a small business to use an outside service provider than to hire staff to do this.