Operating a business comes with a unique set of advantages and obstacles. In addition to managing the business, navigating the pitfalls of the Affordable Care Act and other regulations, a business owner is responsible for ensuring human resources issues are handled in a manner that reduces risk and ensures a stable workforce. In short, HR is the division of operations that manages human capital. This generally includes recruiting, hiring, training, workers’ compensation, regulatory compliance, unemployment insurance administration, employee benefits, payroll, and employee relations.
An integral part of effective HR management is complying with applicable federal, state, and local employment laws. In recent years, government agencies have added additional investigators to handle a record number of claims. For example, the Equal Employment Opportunity Commission (EEOC), the federal agency responsible for ensuring employees are protected from unlawful discrimination, received 89,385 charges of employment discrimination in 2015. Their efforts resulted in a resolution of 92,641 charges and monetary benefits of $356.6 million to charging parties. The EEOC alone has over 2,100 employees in 53 locations nationwide enforcing employees’ rights. With this, it makes sense that a business owner or operator proactively manages HR issues.
Business owners generally have three options for HR management: attempt to handle it themselves, hire in-house staff, or outsource these functions to experts. When a business owner chooses to personally manage HR, the majority of time is spent handling administrative minutiae rather than focusing on revenue growth. While this may seem cost effective, the adage that “time is money” remains true.
Hiring in-house HR personnel removes these administrative tasks from the owner but, for smaller organizations, this option may not be financially feasible. Salaries for a single HR employee can cost up to $90,000 depending on qualifications, experience, and the size and location of the business.
The third option of outsourcing certain HR functions to experts is a growing trend among small and medium-sized businesses. According to the Society of Human Resources Management’s research, companies outsource HR for reasons including a lack of in-house experience, saving money, improving compliance, and utilizing time to focus on business strategy rather than administrative tasks. Many businesses choose to outsource to a Professional Employer Organization (PEO).
A PEO relationship offers businesses back-office support, including payroll administration, employee benefits support, assistance with the Affordable Care Act, risk control and workers’ compensation insurance, and human resources consulting. The PEO concept allows a business owner to retain control of the daily activities of the employees and business while the PEO is designated as the employer-of-record for wage reporting, tax paying and workers’ compensation insurance purposes.
PEOs are generally staffed by an experienced team of professionals with expertise in all areas of human resources. For example, HR Managers at Modern Business Associates assist clients with compliance matters, employee issues, handbook and policy drafting, training management personnel, and assisting with responding to state and federal agency investigations and inquires (e.g. EEOC, NLRB, DOL). Partnering with a PEO gives owners the ability to focus their efforts on growing a successful business.
Author: Patrice Featherstone, Director of HR / Assistant General Counsel, at Modern Business Associates (MBA), received her J.D. degree from Florida A&M University and holds a Masters of Public Administration/Human Resources degree, with honors, from NC Central University. In law school, Featherstone interned with the EEOC and the NC Office of State Personnel.