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Small Business HR Basics

Written by: PeopleKeep Team
April 14, 2014 at 12:00 PM

You've started a business and hired your first few employees. Setting up a human resources (HR) program is necessary, but can seem daunting. So what are the small business HR basics you need to have in place?small_business_hr_basics

A smart place to start is compliance with HR rules and regulations. For most small businesses there are three basic considerations for your HR program:

  1. Create and maintain employee files
  2. Create and maintain an employee handbook
  3. Post required state and federal notices

Here's a look at what each of these should include.

1. Employee Files

In general, there are three separate types of employee files to create and maintain: an I-9 File, Personnel Files, and Medical Files. It's best to assume all this information is confidential, so keep these files in a secure location. Only people with a compelling business reason should have access to these files.

Form I-9 Employment Eligibility Verification File: The law requires that you have a completed I-9 on file for each of your employees. Keep all I-9s in a single file for easy access and reference.

Personnel Files: Create and maintain a separate personnel file for each of your employees. This file is where you keep employment information, such as:

  • Resumes and employment applications
  • Offer letters, employment agreements or contracts
  • Payroll information
  • Basic employment data including W-4s
  • Information about participation in benefit programs
  • Awards, recognition or disciplinary documents
  • Performance evaluations
  • Termination documentation and exit interview information

Medical Files: Create and maintain a separate medical file for each of your employees. This file is where you keep any information related to health or medical issues, such as applications for insurance, notes from a doctor excusing a person from work, medical examination information, and information related to disability.

Note: The employee medical file must be separate from the personnel file. Keep this file secured in a locked cabinet. For small businesses, there is usually no reason for anyone (other than the owner or HR manager) to have access to this file.

2. Employee Handbook

The employee handbook explains your company's policies and procedures, and communicates your expectations to employees. It also helps protect your business in the event of a dispute. The following list covers the basics for most small businesses. It's a good place to start.

General Employment
  • Purpose of the Handbook and At-Will Employment
  • Equal Opportunity Policy
  • New Hire Policy
  • Policy Against Harassment and Discrimination
  • Confidential Information
  • Computer & Social Media Use Policy
  • Immigration Law Compliance
  • Work Hours & Employment Categories
  • Alcohol and Drug Policy
  • Dress/Attire Policy
  • Return of Property
  • Solicitation Policy
  • Violence in the Workplace
  • Workplace Safety
  • Drug Free Workplace Policy
  • Employee Conduct and Disciplinary Action

Timekeeping and Payroll

  • Timekeeping Procedures & Paydays
  • Pay Deductions
  • Sick Leave
  • Personal Leave
  • Vacation
  • Holidays
  • Bereavement Leave
  • Jury Duty Leave
  • Military Leave
  • Maternity/Paternity Leave
  • Health Benefits
  • Worker's Compensation Insurance
  • Healthcare Continuation
  • 401K
  • Business Expense Reimbursement

In addition to having an employee handbook, it's important that employees sign off that they have read and understand the company's policies and procedures outlined in the employee handbook.

3. Posting of Required Notices

There are various required state and federal workplace notices to post at your business. There are several online vendors who, for a minimal cost, will provide state and federal required notices to post.

Getting Started

These three basics will help your small business get an HR program up and running. If you'd like some help getting started, there are  numerous HR companies who specialize in small business HR, compliance, and payroll. From employee handbook templates to comprehensive employee time off and benefits tracking, they can help streamline these HR tasks - and are the pros on HR compliance considerations.

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Topics: Human Resources

Additional Resources

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