While hiring employees can be an exciting milestone for your small business, being an employer comes with certain risks. There are certain worker rights and protections you must provide under federal, state and local laws and, failure to do so can mean dire consequences for your company.
That's why it's so important to prioritize risk management for both internal and external risks to your business. Below, 13 members of Forbes Human Resources Council explained what every small business owner should know about risk management, particularly as it relates to worker protections.
Forbes Human Resources Council members share their advice.
Photos courtesy of individual members.1. Prepare In Advance
While it’s impossible to eliminate all risks, small businesses can mitigate its effects with advanced preparation. First, identify risk by evaluating the business to determine where it may occur. Second, assess risk by determining its likelihood and consequence. Third, manage risk by developing cost-effective options for dealing with it. Lastly, monitor and review the risk management plan regularly. - John Feldmann, Insperity
2. Form Policies Early
Size does not absolve responsibility for creating a culture that encourages good behavior. Early formation of policies that uphold alignment with federal, state and local laws as well as values that distinguish the business from its competitors is a great move, regardless of company size. If it is true that an ounce of prevention is worth a pound of cure, then small businesses will think forward. - Phyllis Wright, Vendor Resource Management Mortgage Services
3. Pay Attention To Wage And Hour Compliance
One risk management concern for small business owners would be wage and hour compliance. In addition to ensuring compliance with hourly pay, small businesses should pay special attention to their salary structures and engage in thorough internal audits. This is because small businesses may have an unstructured salary model that requires consistent review as salaried positions grow to ensure equity. - Alden Coffin, Forward Merch LLC
4. Protect Your Assets
Every business owner should know that right now is a very troublesome time for many. This is a time when your employees, friends, partners and even loved ones look out for everyone but you. You do have your honest and dedicated ones as well but we must be careful and protect our assets along with every inch of our company during these times from HR to accounting to the plant workers. - Melissa Bolton, JB Martin
Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?
5. Account For Safety And Well-Being
All businesses have a "duty of care" to their employees, which is a moral or legal obligation to ensure their safety or well-being. Safety can often be a very tangible risk, but it can extend when employees are traveling. Well-being can be as much cultural, but solutions for this can exist within medical or other insurance plans. Directors need to consider this along with other business risks. - Alan Fergusson, WBN Global
6. Learn To Mitigate Risks
It is much easier and cost-effective to mitigate risks than it is to get out of costly mistakes already made. Small businesses often tend to see risk management and worker protection rights as an expense not needed or assume they have it under control and learn the hard way why it is so important. - Tiersa Smith-Hall, The Hartling Group
7. Have Access To Legal Experts
"Ignorantia Juris non-excusat"—ignorance of the law does not excuse. You don't know what you don't know, and what you don't know can get you in legal hot water, even if you didn't know! One employment lawsuit for a small business owner can put you out of business. The best risk management strategy is to ensure you have access to a legal expert to protect yourself and the rights of your employees. - Kelsey Griffis, Loyal
8. Invest In An HR Team Or Consultants
Laws vary widely. In addition to this, laws change constantly. Small business owners wear many hats, especially those with national populations. Small business owners should not assume that policies can be implemented across the board. Because of this, small business owners should invest in a human resources service or consultant. This would assist in ensuring organizational compliance. - Nakisha Griffin, Neustar Security Services
9. Be Aware Of All Rules
Many local and state jurisdictions have adopted laws and regulations that prohibit employers from requesting salary history information from job applicants. Small business owners should be keenly aware of the rules, especially if they employ remote workers in other locations. While owners may innocently ask salary history questions to compete for talent, they risk the potential for fines and penalties. - Niki Jorgensen, Insperity
10. Respect Workers' Rights, Period
At the very basic level, respecting workers' rights is not only the right thing to do but it is the best way to mitigate risk in the company. Research has shown that what is good for employees is good for the business and creates better business results. Respect workers' rights and you will be clear of risk and see more success. - Kelly Loudermilk, BuildHR, Inc.
11. Obtain General Liability Insurance
Once you bring on your first employee, besides you, it’s time to invest in general liability insurance. Employees are afforded specific rights by federal and state governments, and ensuring things like worker’s compensation and unemployment insurance are covered is critical for small business owners, especially those who may not have the extra capital to pay for these expenses should the need arise. - Laura Spawn, Virtual Vocations, Inc.
12. Incorporate Educational Tools
Creating a human-centric culture should not be sacrificed by risk management or compliance. Partnering with the right resource to help mitigate the compliance issues with the right policies and procedures is key. Incorporate educational tools that help employees stay current on compliance topics to enlist their help in compliance as well. - Loren Rosario-Maldonado, Claro Enterprise Solutions, Inc.
13. Hire An Attorney
Employees may not recognize or be concerned with the differences between suing a small business or a large corporation if they feel their rights have been violated. All businesses are responsible for following federal and local employment laws and, if you are unsure of your compliance, consult an attorney or HR professional who can advise you to reduce liability. - Courtney Pace, FedEx Employees Credit Assoc.
