Non-compliance with HR regulations can result in significant penalties, financial losses, and damage to your business’s reputation. For many small businesses, keeping up with constantly changing labor laws, payroll regulations, and employee rights can be overwhelming. According to Up Counsel 64% of HR Managers feel they don’t have the time or the resources to meet the increasing challenges to HR compliance. That is why a growing number of businesses are turning to HR outsourcing. Outsourcing HR functions to an expert partner can reduce these risks and ensure your business stays compliant.
How Outsourcing HR Can Help Mitigate Compliance Risks
1. Keeping Up with Changing Regulations
Constantly evolving labor laws and regulations can make it difficult for small businesses to keep track of the changes. An HR management partner stays up-to-date with these laws, ensuring your business stays compliant.
- Avoid penalties and fines for misinterpreting new regulations
- Stay current with local, state, and federal employment laws
- Protect your business from lawsuits related to compliance issues
2. Reducing Payroll and Tax Errors
Many businesses run into trouble with payroll compliance. Improper payroll processing or misreporting taxes can result in large fines and audits. An HR expert makes certain your payroll is handled correctly and on time.
- Guarantee accurate payroll processing and tax filings
- Avoid costly mistakes with overtime pay and wage calculations
- Stay compliant with labor laws related to employee classification
3. Certifying Compliance with Employee Benefits Laws
Offering employee benefits such as healthcare, long-term disability, and worker’s compensation comes with its own set of complicated regulations. By outsourcing to an HR management partner, you can guarantee these benefits are administered in line with current laws.
- Comply with healthcare laws (e.g., ACA requirements)
- Administer retirement plans and benefits accurately
- Stay compliant with workers’ comp and unemployment insurance requirements
Additional Benefits of Outsourcing HR for Compliance
1. Expert Legal Knowledge
- HR partners consult with legal experts who ensure your business adheres to employment laws.
- Gain peace of mind knowing your HR processes are backed by expert oversight.
2. Proactive Risk Management
- Outsourced HR providers identify potential compliance risks before they become major issues.
- Regular audits and updates keep your business aligned with the latest laws and regulations.
3. Comprehensive Documentation
- Maintain that all employee documents (contracts, payroll records, etc.) are compliant.
- HR management partners can assist in maintaining accurate records for audits or legal inquiries
4. Reduced Liability
- Mitigate the risk of employee lawsuits by ensuring fair practices and legal compliance.
- HR partners help ensure proper handling of terminations, leave policies, and harassment claims.