What is HR?
At its core, human resources is responsible for an organization’s most valuable asset, its employees. The team members responsible for HR manage the entire employee lifecycle and oversee fundamental HR programs that facilitate employee development and engagement while ensuring compliance with applicable employment laws at the federal, state, and regional levels.
What does HR do?
Effective Human Resources management is vital to the success of an organization. Whether your organization has an entire HR department, a single HR professional or small team, or an administrative employee managing your HR program, there are basic HR components that all organizations must address. Most of these essential HR functions are mandated by employment laws which vary from state to state. However, there are overarching principles and trends that govern these regulations to form the foundation for HR best practices that apply to all businesses regardless of size, industry, or location.
Here is an overview of six HR fundamentals your organization should be addressing.
Postings and Record-keeping
HR is responsible for posting labor law posters and HR record-keeping requirements under federal, state, and local laws.
Organizations must post required employment law posters in conspicuous locations easily viewable by all employees. It is important to stay up to date with regularly updated notices, and new posters must be posted promptly when the laws go into effect, which could be at any time during the calendar year. Failure to display the appropriate state and federal notices can result in penalties and lawsuits.
Each employee’s personnel and medical files should be maintained separately and retained for the appropriate time as determined by related employment laws and established best practices.
- For applicants that are not hired, resumes, applications, and related employment materials, including interview records and notes, are retained for three years.
- Resumes, applications, and related employment materials, including interview records and employee notes, are retained for four years after the date of separation.
- Background checks, drug test results, driving records, company employment verifications, letters of reference, and related documents are retained for six years.
- Employers must retain I-9 Forms for three years from the date of hire or one year following the separation of employment, whichever is later.
- Leaves of absence, including FMLA and USERRA, and related records and accommodation requests are retained for four years after separation.
- If employees took FFCRA leave between April 1, 2020 – September 30, 2021, related to the COVID-19 pandemic, these records are kept for at least four years, but the best practice is seven years.
- Compensation and job history records, including correspondence, policy acknowledgments, and contracts, are retained for four years after separation.
- Performance appraisal and disciplinary action records are retained four years after separation.
- Benefit records, including COBRA records, are retained for six years after the effective date of the documents, based on the information they contain.
- Records relating to disputed issues involving external agencies or parties, wage-hour investigations by DOL, EEOC charges, arbitrations, court actions, etc., are retained until the claim or other litigation is fully resolved and two years after that.
- OSHA and employee safety records are retained for five years after separation.
- Payroll, unemployment, and timekeeping records are retained for seven years after separation.
- Workers’ compensation claims and medical records are retained for 30 years after the date of injury/illness.
Compliance Reports and Records
- OSHA 300/300A records are retained for six years after posting.
- Workplace safety notices to employees are retained for five years.
- Benefits notices and documentation are retained for six years.
Allow employees access to their personnel files based on state law requirements. Many state laws require employers to provide current, and former employees access to the contents of their personnel files. Familiarize yourself with the requirements of the laws in the state(s) where your organization’s employees work and define internally the level of access permitted for states without regulatory requirements.
Recruiting and Employee Onboarding
Recruiting and onboarding are critical components of the employee lifecycle and hold significant potential for missteps. These processes often include non-HR team members who may be unfamiliar with employment laws. It is critical to ensure all employees involved in the hiring and onboarding process are trained and understand the applicable regulations.
Employees who are well-matched to their jobs will bring greater energy and interest to their roles and will apply more innovative skills. “On average, companies that did a better job of attracting, developing, and retaining highly talented managers earned 22% higher return to shareholders” (Michaels et al., 2001; The war for talent, Harvard Business School Press). Your HR department should be leading the charge by providing recruiting support that ensures a good fit for your organization and carefully managing the onboarding of new hires to ensure a smooth transition into their new role.
Employee Value Proposition
Be prepared to communicate your company’s employee value proposition (EVP). An EVP is vital to an employer’s brand, recruiting efforts, and maintaining an engaged workforce. At its most basic level, an EVP is what an employer provides in return for employees’ performance and discretionary effort. Setting clear and consistent expectations is a powerful tool for attracting and retaining employees.
An EVP is not static and can change over time due to shifting economic and labor markets, cultural changes, or rebranding.
Your job posting and initial communication to candidates should share the basic information a typical applicant wants. It is recommended to include:
- The salary range (this should already be known and budgeted, is required by law in some states, and is rapidly becoming an employment law trend)
- Work schedule
- Include information about whether the position is on-site, remote, or hybrid and whether those expectations are temporary or permanent.
Equal Employment Opportunity Statement
Implement an Equal Employment Opportunity (EEO) statement to communicate that your organization is an equal opportunity employer. Include it in applications, job postings, and the employment section of your organization’s website. While an EEO statement isn’t legally required unless contracting or subcontracting with the federal government, it is beneficial for showcasing compliance with EEOC regulations, establishing the organization as a diverse and inclusive workplace, and communicating an employer’s dedication to unbiased recruiting, hiring, and employment practices.
When interviewing an applicant, your goal is to get a clear picture of whether the candidate is qualified for the position, can perform the job functions, and is aligned with your company’s culture. It is easy to fall into compliance pitfalls during the interview process that can put yourself or your company at risk. While questions unrelated to the job functions may seem harmless from a personal perspective, they may be perceived as invasive, offensive, or discriminatory and violate EEOC and other employment laws.
Avoid the following topics during interviews:
Salary history is not directly related to a candidate’s ability to meet the job requirements. The current trend in employment law at the state level is to prevent organizations from asking about previous or current pay. While not yet a federal law, it is best to avoid salary history questions regardless of location. The pay for a position should be determined by the specific job responsibilities, the organization’s compensation structure, and the candidate’s skills and experience.
Alternatively, you may ask about the candidate’s salary expectations and compare their response with the established salary range.
Arrest and criminal records
So-called “ban the box” laws are becoming common at the state level. Avoid questions about criminal history and save any necessary pre-employment screenings until the interview process is complete.
Only consider criminal history if it is directly related to the job. If clearing a criminal background check is a condition of employment, wait until after the interview process is complete and before the official hire. Asking questions about prior arrests or convictions may lead the candidate to believe you are discriminating against them and not providing fair opportunities because of their past.
It can be challenging to avoid questions related to a candidate’s age. In fact, it may be indirectly revealed or hinted at by the candidate. Avoid further probing if a candidate brings up historical events, college affiliation, or other details that could reveal their age. You may be tempted to ask the year they graduated or what grade they were in when an event occurred, but the candidate may perceive this age discrimination.
Ensure that questions related to education, experience, or goals for the future are unrelated to the topic of age. These are all appropriate topics but should focus on the candidate’s suitability for the position.
Other topics to avoid
- Marital status or maiden name
- Health history, medical conditions, or workers’ compensation history
- Political or religious affiliations
- Gender or sexual orientation
- Citizenship, national origin, or ethnicity
- Financial status or history
- Family matters, number and ages of children, or childcare
A good rule of thumb is only to ask questions directly related to the candidate’s ability to perform the job’s functions and keep personal conversations to a minimum. If a candidate brings up personal information that should not be considered for employment, change the subject, and exclude it from written notes. We recommend training employees involved in the interviewing process and making them aware of topics to avoid. With a bit of planning, organizations can minimize risk and ensure they find the best-qualified candidates for available positions.
The job offer is an ideal opportunity to entice the candidate to accept the position. Elaborate on the aspects of the role, total rewards, or company culture likely to resonate with the candidate. Explain why they are the ideal person for the job and how the role and the organization align with what’s important to them. Knowing the employer “gets them” places you at an advantage over employers who aren’t connecting the dots between what the candidate has to offer and how they align with the role, team, and company.
When a job offer is presented, the salary should have already been communicated, so when declaring the pay, focus on what informed the pay rate (e.g., their qualifications, work location, internal pay equity).
In some cases, a background investigation may be warranted for the individual to carry out the job functions. If it is necessary for the role, conduct pre-employment background investigations after the candidate accepts a contingent job offer. Pre-employment background checks can protect against negligent hiring lawsuits for some positions. Become familiar with and adhere to applicable state and federal laws.
When sending your candidate new hire paperwork, include the appropriate state W-4 alongside the federal W-4. You can see which states have their own W-4 on the Department of Labor website. It is crucial to ensure that your organization is set up as a business in that state and registered for a state income tax ID and unemployment tax ID. Additionally, it’s important to note that some local jurisdictions may have additional employment taxation.
Form I-9 must be completed for every employee and must adhere to strict procedures and timelines.
- Require all new hires to provide authorization to work in the United States.
- Ensure all employees complete, sign, and date Section 1 of Form I-9 no later than their first day of employment. Every field must be filled in, except the email address and telephone number, which are optional. Provide translator information if one was used.
- Fill out section 2 of Form I-9. The employer, or a representative for the employer, must verify that the documents provided align with section 1 and indicate the individual is eligible to work. The person verifying the documents must see the physical documents provided on the employee’s first workday.
- DO NOT backdate forms. Instead, enter the current date and your initials by the date field.
Handbook & Culture
Provide employees with a copy of your employee handbook, review key content, and have them sign an acknowledgment that they have received and read it. Your organization’s employee handbook is critical for setting the tone of your organization, laying a clear foundation for a healthy work environment, setting behavioral expectations for employees, and protecting your organization from unnecessary risk.
A well-written employee handbook should be easy to understand, compliant with applicable federal, state, and local employment laws, include all necessary policies, and be updated regularly to ensure ongoing compliance with employment laws.
Wage and Hour Compliance
HR representatives should thoroughly understand wage and hour laws to ensure compliance.
Create up-to-date job descriptions for all positions in the company and update them regularly. Include the essential functions of the position and the knowledge, skills, abilities, and other characteristics needed to perform well in the role. When jobs are clearly defined and documented, employees understand their responsibilities, and managers are better able to hold employees accountable. Job descriptions are also important for determining appropriate compensation.
Classifying and Compensating Employees
Ensure employees are correctly classified under the federal Fair Labor Standards Act (FLSA). Classifications are determined by how employees are paid, how much they are paid, and the type of work they perform, as determined by FLSA duties tests.
There are two general classifications of employees: exempt and nonexempt.
A nonexempt employee must be paid overtime for any hours worked over 40 a week. In addition to the federal requirements, more generous overtime laws apply in some states. These employees are typically paid an hourly wage but may be paid a salary or otherwise in some cases.
Exempt positions do not require employers to pay overtime when employees work more than 40 hours a week. Exempt employees must be paid a salary with few exceptions.
When determining employee compensation, in addition to federal FLSA requirements, some states have additional provisions that must be considered for job classification and compensation, such as:
- Pay equity laws
- Sick time laws
- Overtime laws
- Minimum wage laws
- State and local FLSA wage, salary, and overtime provisions
Evaluate the DOL’s wage and hour requirements for correctly classifying unpaid interns.
Payroll records should be kept for at least three years. The records for how wages were calculated must be kept for a minimum of two years. This includes timecards, time schedules, and any additions to or deductions from wages.
Carefully document hours worked (per day and week), overtime, vacation time or PTO, and sick time. Ensure nonexempt employees take meal and rest periods according to federal, state, and regional requirements.
Carefully document days worked, PTO, and sick time.
Employee Handbooks and Company Policies
An employee handbook sets your organization’s tone and establishes workplace standards that guide employee behavior and performance expectations. A well-written, compliant handbook may also prevent and serve as a defense against employee lawsuits, but only if the handbook accurately reflects the employer’s current policies, practices, and procedures. Your organization’s employee handbook should be maintained and updated regularly.
Employee Handbook Basics
Policies must be sufficiently detailed to protect an employer without making unnecessary commitments or restricting the organization to a single approach or response to situations.
The essential elements of employee handbooks are mandated by statutes, regulations, or court decisions and apply to employees based on their state of residence. These essential elements include, but are not limited to:
- Employment at-will language
- EEO Statement
- Workplace anti-harassment/anti-discrimination policies
- Wage and hour requirements
- Sick leave program
- Complaint procedure
- Reasonable accommodations
In addition to the legally required components, employee handbooks should include policies establishing overarching expectations for employee conduct in key areas. We recommend including policies that establish workplace norms and equity, such as:
- Monitoring and use of electronic communications
- Employee privacy
- Employee classification policy
- Drugs and alcohol policies
- Health and welfare benefits and insurance
- Holidays, PTO, and PTO requests
- Dress and grooming
- The performance review process
- Conflict resolutions
- Compensation practices
Updating Your Handbook
As your business grows, practices inevitably change. New technologies, shifts in the work environment, and new employment laws unravel established policies. These must be addressed quickly to avoid compliance issues and unnecessary risk. Review your employee handbook annually, at minimum, to ensure continued compliance with state and federal employment laws.
Require all employees and new hires to sign an acknowledgment that they have received and understand the employee handbook and require a signed acknowledgment from employees for all subsequent updates.
Employee Relations and Performance Management
Establish an effective performance management program. It should include a system for informal, day-to-day feedback and a formal framework for performance assessment and improvement. Include feedback on performance since the last cycle. Set objective goals for the coming cycle. Communicate performance expectations moving forward.
Appropriate expectations keep employees focused and help uncover growth opportunities. This results in increased employee productivity and fewer issues to address down the road. Regularly scheduled feedback builds trust between a manager and a direct report and offers guidance on how to succeed in a position. Done well, it provides opportunities to correct any performance concerns before they become an issue and develops skills for the employee’s continued success.
Require new hires to complete harassment prevention training and continue to participate annually. Employers can establish an affirmative defense should a claim arise if they provide regular harassment training to all employees.
Provide separate harassment training for supervisors that includes legal responsibilities for recognizing inappropriate behavior and reporting pathways. Employers may be liable if harassment is committed or not properly addressed by a supervisor or manager, as they are considered an “agent” of the company.
Some states have specific requirements for employee and supervisor anti-harassment training, such as who can provide the training, the length of the program, and the content that must be covered. Ensure that the training provided meets these requirements.
Workplace investigations are essential for mitigating organizational risk, addressing employee complaints, and maintaining a harmonious work environment.
It is vital to recognize circumstances that could result in organizational or personal liability and trigger a workplace investigation. This can help prevent costly fines and lawsuits and protects your organization’s reputation and position in the marketplace.
Employers are required to investigate allegations of discrimination and harassment; however, several other areas should trigger a workplace investigation, including:
- Unofficial and official reports of misconduct
- Whistleblower and anonymous reports
- Suspicion of misconduct
- Accidents or incidents
- Findings from an audit or uncovered during routine operations
- Citations from a government agency
Ensure any in-house investigators are trained to conduct evidence-based and impartial investigations.
Develop and document clear and comprehensive disciplinary procedures and include them in your employee handbook. Address misconduct promptly and document all disciplinary proceedings. We recommend having a witness in any disciplinary meetings. In the event of a termination, the employer and HR personnel must be able to show that the misconduct in question was sufficient to justify dismissal when a claim of unlawful termination is levied against the organization.
Exit interviews with employees who voluntarily resign from the company can provide candid, constructive insight into employment practices, supervisor management effectiveness, satisfaction levels with compensation and benefits, and even the waste of important resources or time.
Payroll and Benefits Compliance
Managing payroll requires diligence to comply with changing regulations and field employee questions accurately and promptly. Review your payroll administration process regularly and communicate with third-party administrators to stay compliant with new laws and updates that impact the payroll process.
- Ensure that employee names and Social Security numbers are accurately matched to Social Security records.
- If an employer offers direct deposit, obtain written authorization from the employee to deposit wages into their checking or savings account.
- Acquire an employee acknowledgment before withholding any contributions; this is typically completed during the onboarding or open enrollment process.
- Ensure state and federal minimum wage and wage and hour laws are followed according to pay frequency, lag time, and overtime requirements.
- Confirm that all payroll tax codes, tax withholdings, wages, and deductions are correctly classified in payroll systems and recorded on employee W-2s, which should release by January 31st of each year.
- Final paychecks can be an area of risk for employers. Some states have specific laws regarding how and when final paychecks must be issued to departing employees. Employers who operate in multiple states may face challenges that require extra effort to maintain compliance. Be aware of and carefully comply with regulations in the states where you have employees.
- Benefit deductions are a part of payroll processing. Payroll, benefits, and human resources team members must communicate any notable changes impacting their respective processes. This includes benefit deduction changes that may occur out of sequence or because of a qualifying event.
Employee benefits administration is a traditional HR function. It is important to select benefits and total rewards that are desirable and appropriate to your team members. Depending on your team’s demographics, location, and industry, this may vary widely. It is important to work with a benefits broker that understands your organization, the make-up of your team, and your budget.
Communicate available benefits plan options during employee onboarding, when an employee becomes eligible for benefits, and during the open enrollment process. Employers often use a software platform, benefits broker, or third-party administrator services to help manage these functions and ensure a smooth open enrollment process.
Provide ongoing benefits support before, during, and after open enrollment. This includes distributing information and resources that will help employees understand their benefits plan and take full advantage of the total rewards the organization offers.
Companies with 20 or more employees are subject to COBRA (Consolidated Omnibus Budget Reconciliation Act), which allows employees to temporarily continue their benefits coverage after experiencing a qualifying life event. Provide your employees with the required notification of COBRA rights under federal law.
Initial COBRA Rights Notice
An initial COBRA rights notice informs an employee that the plan they enrolled in can be continued if they experience a qualifying event. The notice also explains that dependents may be eligible for continuation of benefits coverage under certain circumstances. This Initial COBRA Rights Notice must be provided to employees within 90 days of enrollment and included in the Summary Plan Description (SPD), which should be provided to employees each year at renewal.
COBRA Eligibility Notice
Employers must notify their employee and their dependents of their COBRA eligibility within 14 days of their benefits ending due to separation from the company or if they have experienced a qualifying event resulting in the loss of benefits coverage. The COBRA Eligibility Notice must include a breakdown and total premium cost for eligible plans. Employers are encouraged to check individual state laws for their specific timeline and notification requirements.
State continuation coverage and mini-COBRA
State continuation coverage is very similar to COBRA. Generally, it applies to companies with less than 20 employees who are not subject to federal COBRA regulations. Certain states have the equivalent of a “mini-COBRA,” which may have slightly different rules, so employers should be mindful of their obligation to provide employees with the required COBRA notice of rights under state and federal law. This coverage can be used in some states after exhausting federal COBRA benefits. In others, an individual must be able to continue coverage until the Medicare eligibility age is reached.
Employers are highly encouraged to contact the state agency responsible for regulating COBRA, including state agencies in every state the employer has employees.
Comply with required annual Affordable Care Act (ACA) reporting to the IRS for Applicable Large Employers (ALEs).
Medicare Part D disclosures
Distribute and report Medicare Part D disclosures to the Centers for Medicare and Medicaid Services within 60 days of the start of the plan year.
Take your HR program to the next level
In addition to these foundational HR elements, it is important to implement programs that further develop and engage your employee population. We recommend implementing a compensation structure that assists with attracting and retaining top talent. This is helpful for maintaining equity and making defensible pay decisions.
You may choose to establish an employee training and development program to ensure your workforce progresses in their career goals and remains at the top of their game. Consider DEI, cultural norms, and other programs that foster a respectful work environment, engaged employees, and a thriving work culture.
Over time, as an organization grows, policies and practices change, new laws go into effect, and the needs of the team evolve; therefore, It is critical to regularly evaluate your HR program, uncover gaps, and make appropriate updates to your HR strategy.