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Survey Results Spotlight Employment Law Challenges, Concerns for Small Businesses

Published on 7/9/2018 12:00:00 AM
biggest employment law concerns for small businesses

The second annual National Small Business Compliance Pulse Survey, sponsored by ComplyRight, revealed that small business employers continue to be troubled by the growing complexity of employment laws. According to the study, managing federal, state and local laws is their top concern — more than any single, specific regulatory topic.

The survey was conducted with small businesses across the U.S. Specifically, the participants were identified as being responsible for employee recordkeeping and HR tasks in workplaces with five to 100 employees.

State of Confusion

New limitations on questions they can — and can’t — ask job candidates (55%)
Expanded requirements for paid medical leave (52%)
New requirements for tax reporting, such as the Affordable Care Act (51%)

Lesser yet still significant issues include the potential for employee lawsuits (30%), increased risk of harassment complaints (27%) and enforcement related to Form
I-9/immigration (25%).

The Compliance Conundrum

It’s no surprise that small business employers readily admit they are not experts in HR legal matters. Less than half of the respondents said they are fully confident in their employment law knowledge. However, 64% reported being very confident in their readiness for a labor law investigation or legal action.

According to the survey, employers, although lacking awareness of the laws, believe they are prepared. This belief presents potential risks as small businesses particularly are vulnerable in a legal dispute because they have no HR or legal professionals on staff.

Unsettling as well is that employers are overly trusting of sources of information that can be unreliable when it comes to employment law. Among the findings:

78% say they find written notifications from federal and state agencies useful — yet the vast majority of agencies do not provide such notifications
69% rely on friends and colleagues for advice on topics related to HR compliance — although these individuals are not necessarily well-versed in complex employment laws
60% rely on accountants, lawyers or other business advisors — professionals who may have limited knowledge of rapidly changing employment regulations

Other Key Findings

Despite the risk that inadequate recordkeeping and careless errors can result in legal actions and fines, most small businesses use outdated methods for managing employee-related tasks. Nearly one-half (46%) use paper and sticky notes. Only 17% of small business employers report using contemporary or current human resource information systems (HRIS), possibly because the majority of these systems are engineered and priced for larger businesses.

On a positive note, the study found that 84% of small businesses have an employee handbook or formal policies in place. The vast majority provide a printed handbook, and 22% offer an electronic version available online. However, according to the survey, many of these handbooks do not include recommended policies to address trending workplace issues:

47% do not address social media use in the workplace
35% do not address the use of personal electronic devices
33% do not address pregnancy accommodations

Most surprising, the survey revealed that over the past year, the number of small businesses with weapons policies has declined significantly. In 2017, 67% of small employers had a weapons policy in place. This year, this number decreased to 56%. This decline could be a sign that employers are uncomfortable addressing this controversial issue and are choosing to ignore it.

Download the full executive summary to learn more about the attitudes, pain points and responses of small businesses when it comes to managing the constantly evolving landscape of employment laws and trends.

Jaime Lizotte
Presented by: Jaime Lizotte,
HR Solutions Manager
Many businesses choose to work with independent contractors, which is perfectly acceptable. But only if you follow the legal parameters. The IRS has strict worker classification rules regarding who is a contractor and who is an employee. Get it wrong and you could face severe penalties, including back taxes, steep fines and, in some cases, even prison.
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