Human Resource Guidelines for Small Business

How is Human Resource Management (HRM) different in a small business -vs- a bigger business?

The fundamental goal of the Human Resources (HR) position in a company of any size is similar if not the same; strive to meet daily goals with company employees to build a successful future. While the goals may be the same, implementing them in small companies that average 1-5 employees differs from a larger business.

Managing HR in a small business is generally impacted by budgetary constraints. Simply put, a smaller company usually does not have the financial means for the HR position to cover only one task.  More often, one HR person is required to wear many hats and perform other duties such as payroll management, bookkeeping, benefits administration, staff recruitment as well as organization development and planning for growth. As a small business owner searching for an ideal candidate to fill an HR position, the ability for the new hire to multi-task, becomes paramount.


Advantages of Human Resources (HR) for Small Business:

In some respects, HR for a small business can be an advantage when it comes to compliance. Mandatory laws and restrictions required for larger businesses are often not imposed on smaller companies. On the other hand, a smaller company may not be able to offer competitive benefits and salaries found at a larger business. However, allowing for casual dress days and other activities with little or no cost, can mean that self-expression can be attractive for prospective employees. It may even mean happier, longer-term employees with less turn-over…especially after discovering “Cindy” likes to wear her bright- green, flannel pajama top every third Friday.


HR Responsibilities in a Larger Company:

In a larger company, the head of the HR generally directs all aspect of the department including:

  • Recruiting employment candidates including market analysis, consulting stakeholders, and managing budgets.
  • Hiring the right employees, conducting interviews and overseeing completion of the proper paperwork.
  • Process payroll, deducting the proper taxes, overseeing bonuses, raises, expenses and reimbursables.
  • Conducting disciplinary actions; investigating complaints, tardiness, truancy, suspensions, and firings. In some cases, recommending counseling and deciding if an employee is right for the company.
  • Updating company policies, implementing them, and informing employees of all changes.
  • Maintaining employee records. Often HR is responsible for safeguarding personal information including emergency contacts and other details that require professionalism and discretion.
  • Conducting benefit analysis; Attracting the top talent can require research into what the competition offers, and then compare it to what your company can offer. Like a fluffy pet romping pen in the workplace–because let’s face it, a happy, fluffy pet can make for a happier employee.


What HR guidelines are impacted by employee size?

According to the Texas workforce commission The following are compliance guidelines for businesses according to size:

  • 1 or more employees:
    • Protect against racial discrimination
    • Protect benefit rights of retirement income and security
    • Minimum wage/overtime pay
    • Occupational hazard and safety standards (OSHA)
    • New hire reporting within 20 days


  • Any private sector employer:
    • Texas payday law
    • Reporting minimum wage
    • Overtime
    • Timely wages
    • Illegal deductions


  • Any for profit government employer
    • Unemployment compensation


  • 4 or more employees:
    • National origin/U.S. Citizenship compliance


  • Non-profit:
    • Unemployment compensation


  • 2-50 employees:
    • Health benefits continuation (cobra)


  • 15 Employees:
    • Genetic non-discrimination act: For race, color, gender, religion, national origin, age, disability, genetic information


  • 20 Employees or more:
    • Age discrimination
    • Cobra


  • 50 Employees or more:
    • Family medical leave


  • 100 Employees:
    • Advance notice of plant closing or mass layoff
    • Private sector: Statistical survey of employees

For a more complete description of compliance requirements Click HERE


Do I have to offer sick leave if I’m a small business?

According to the U.S department of labor; Currently, there are no federal legal requirements for paid sick leave. For companies of 50 or more subject to the Family and Medical Leave Act (FMLA), the Act does require unpaid sick leave. FMLA provides for up to 12 weeks of unpaid leave for certain medical situations for either the employee or a member of the employee’s immediate family. In many instances paid leave may be substituted for unpaid FMLA leave.

If a company decides to offer paid sick leave, they are creating a legal obligation to grant it. A duty of HR is to update and inform employees of any changes to the company’s sick leave policy.


What benefits should a small business offer?

To be competitive, a small business should consider offering benefits for their employees. Often with small or new businesses, budget constraints dictate what benefits can be offered. Most companies consider the following:

  • PTO – Personal time off. A modern concept to paid sick leave or vacation time, a company can determine days and amounts of PTO allotted. This can be taken as sick days, vacation, mental health days taking as much paid time off as allowed, as long as it does not jeopardize the company’s workflow. Be reasonable here, Janice cannot have a month of PTO because she broke a nail.


  • Health and medical benefits. While health insurance may be one of the highest expectations for a new candidate, there can be costly obstacles for a business to offer insurance such as high premiums or limited programs if only a few employees should opt into the insurance program.
    • There are often guidelines with limits as to when an employee must decide to join the insurance program, usually within 90 days. If a company has a 30-trial employment period, the insurance will generally start after successfully completing the trial period.
    • When possible, look for a collective of small business owners willing to join together for a group insurance rate. This can help achieve competitive pricing with optimal benefits.


  • 401 K or Roth IRA. Offering a retirement saving program with an employer match can be enticing for a potential employee. While considering the company’s budget, HR can predetermine a matching contribution percentile that is feasible.


  • Other perks a small business might offer:
    • Commuter benefits
    • Adoption assistance
    • Fitness reimbursements
    • Student loan repayment
    • Extended maternity leave
    • Paternity leave


Need more information on the benefits you should or must offer as a small business? Paris SBDC can help you understand the best practices for human resources, and how to manage your employees effectively. Contact Paris SBDC today – serving Paris area:  Lamar, Hunt, Hopkins, Delta, and Red River counties.