Starting an HR Department in Your Small Business

Suzanne Lucas

Starting an HR Department in Your Small Business

When your business is just you and your college roommate, HR is the last thing on your mind, but when should you start thinking about starting an HR department? Ideally it would be before you hire your first employee, but that’s not practical. So here’s a guide for what you actually need:

Recommended:

Your First Hire

When you bring the first employee on board, think about what he or she would expect from a human resources perspective. Having one employee doesn’t require someone on site to make sure things are legal and in line, but you should consult with an employment law attorney or an HR consultant before you make your first job offer. Pay the person correctly, either as a salaried exempt employee or as someone who’s eligible for overtime, and don’t inadvertently make an employment contract.

15 Employees

When you hire your 15th person, you’ll start being subject to several federal laws. For instance, GovCon noted that when you reach 15 employees, you must follow the Americans with Disabilities Act, the Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act. These laws are serious, and if you don’t follow them, you’re liable to receive lawsuits and fines. It’s always cheaper to hire someone to help you out than it is to defend yourself in a lawsuit. You don’t need a full-fledged HR department at this point, but you should have either a part-time, experienced HR person or an HR consultant on retainer.

50 Employees

By the time you reach 50 employees, you should have a full-time HR person on staff. This is when you become subject to the Family Medical Leave Act and the Shared Responsibilities Provision of the Affordable Care Act. Like the laws that go into effect at 15, these laws are complex and must be followed or you’ll face grave consequences. By the time you have 50 employees, you’ll also have all the other employee and management issues that come with running a business. You’ll have conflicts that need counseling and coaching. You’ll be hiring and firing on a somewhat regular basis, even if you have low turnover.

When You’re Growing

If you only have 10 employees now but plan on having 25 in the next six months, one of those new hires should be an HR person. When you’re growing quickly, you not only need someone who can do recruiting but someone who can help with onboarding and develop your culture. Starting an HR department early on can help your business succeed.

Employment issues and employment laws are complex, so make sure your business is always protected with professional HR help.

Stay up to date on the latest health care regulations and trends for your small business: subscribe to our monthly e-newsletter.