Based on the latest U.S. Census data, more than five million new businesses were registered between 2023 and 2024. And let’s face it, when entrepreneurs launch a business, HR compliance likely isn’t the first thing on their minds. But if you’re hiring employees, understanding your human resources responsibilities is essential.
This guide is designed to help new small business owners navigate HR compliance with confidence. From legal requirements to helpful resources, here’s what you need to know to stay compliant, and focus on growing your business.
What is HR compliance? HR compliance refers to establishing policies and procedures that ensure your company adheres to federal, state, and local employment laws. This includes everything from fair hiring practices to workplace safety, wage rules, tax responsibilities, and how you handle employee terminations. Simply put, compliance means treating your team fairly, staying legally sound, and managing your tax obligations properly.
Pro tip: Regulations can change throughout the year, not just on January 1. New Department of Labor posters, minimum wage updates, and leave laws may be released midyear. Make it a habit to follow your HR or payroll software provider, like Beyond, and regularly check state and federal labor websites for updates.
How do small businesses stay on top of compliance? In most small businesses, the owner wears the HR hat, especially early on. Our data suggests that small companies usually wait until they reach about 50 employees before hiring a dedicated HR manager.
Start by developing an HR compliance checklist to keep everything organized. Your checklist should include:
- Key laws and regulations that apply to your business
- Who is responsible for tracking each rule
- Important compliance dates or deadlines
- Guidelines for storing and maintaining employee records
- Contact details for the relevant regulatory agencies
Review your checklist every six months to ensure your policies are still current and effective.
What are common HR compliance issues? Here’s a rundown of the most frequent HR compliance areas to monitor:
Anti-discrimination laws Before you even start recruiting, be sure your hiring practices don’t cross any legal lines. The Equal Employment Opportunity Commission (EEOC) enforces laws that prohibit discrimination based on:
- Race or ethnicity
- Gender (including pregnancy)
- Age
- Disability
- National origin
- Religion
- Genetic information
In many states, additional protections apply to sexual orientation and gender identity. These laws govern how you hire, fire, promote, pay, and manage employees. Also, retaliation against workers who file discrimination claims is prohibited.
Do these laws apply to small businesses? Often, yes. For example:
- The Equal Pay Act applies if you have at least one employee.
- The Americans with Disabilities Act and Title VII typically apply to businesses with 15 or more workers.
- The Age Discrimination in Employment Act kicks in when you reach 20 employees.
Hiring and onboarding compliance When bringing on a new employee, there are several compliance items to check off your list:
- Verify employment eligibility using Form I-9
- Collect tax information via Form W-4
- Ensure the employee is covered under your workers’ comp insurance
- Report the new hire to your state agency
Need a more detailed breakdown? Our new hire checklist and onboarding resources can help you stay organized and compliant.
Wage and labor laws The Fair Labor Standards Act (FLSA) governs:
- Federal minimum wage (currently $7.25/hour)
- Overtime (1.5x pay after 40 hours/week)
- Child labor standards
- Required recordkeeping
Some workers are exempt from minimum wage and overtime if they meet specific criteria, like salaried administrative or executive positions. Beyond offers tools to help ensure your classifications are accurate.
The Family and Medical Leave Act (FMLA) provides eligible employees at companies with 50+ employees up to 12 weeks of unpaid, job-protected leave for major life events like:
- Childbirth or adoption
- Caring for a sick family member
- Recovering from a serious health condition
You must continue health coverage during FMLA leave and return employees to their same (or equivalent) job.
Workplace safety The Occupational Safety and Health Administration (OSHA) requires you to:
- Post an OSHA notice in a visible location
- Maintain records of serious workplace injuries (if you have 10+ employees)
- Follow all applicable health and safety standards
Need help with OSHA regulations? Visit their website or contact your regional OSHA office.
Other employment laws to watch:
- Affordable Care Act (ACA)
- COBRA (health insurance continuation)
- National Labor Relations Act (NLRA)
- State-specific paid leave rules
- Local ordinances for minimum wage or scheduling
Payroll tax responsibilities If you’re paying employees, you’re responsible for:
- Withholding the right amount of income and employment taxes
- Filing forms with the IRS and your state agency
- Providing W-2s to employees by January 31
Make sure you classify workers correctly — employees versus independent contractors, to avoid legal or tax headaches. Need a deeper dive? Check out our guide to payroll taxes and classification.
Final thoughts Mastering HR compliance might seem overwhelming, but having the right processes in place will save you stress, time, and money. Using software like Beyond can help automate tasks, send reminders, and keep your small business on the right side of the law. Looking for more tips? Read our guide to setting up and managing employee personnel files to stay even more organized.
