!5 OVERLOOKED WAYS

RISK INCREASES AS YOUR COMPANY GROWS

PLUS, SIMPLE STRATEGIES TO PROTECT YOUR BUSINESS

Business growth is a good thing. But the more employees you have, the greater likelihood something will go wrong.

How do you grow your team without also growing your risk?

YOUR SMALL COMPANY ISN’T SO SMALL ANYMOREMost companies start off small. Processes and systems develop organically and are custom-fit to the people performing them. When a company expands, however, it outgrows the jack-of-all-trades mentality that is deeply rooted in its systems and processes.

For example, many small businesses start out with an office manager who juggles it all to keep the small, tight team running smoothly – handling payroll, recruiting new hires, overseeing the employee benefits plan, and filing Workers' Comp claims — along with a dozen other things.

As the company grows, the office manager spends more time recruiting and hiring. But more employees mean additional regulations and less time to figure out how to maintain compliance. That one person is now worrying about payroll laws and reports, labor law issues, employee accommodations, OSHA requirements, and all sorts of potential problems, sometimes with no formal training or education in these critical functions.

A 2015 report from insurance provider Hiscox indicated that one in five small and medium-sized businesses would face employee-liability charges. The cost just to defend this type of case, regardless of culpability, could exceed $125,000. Are you willing to roll the dice?

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11. Bigger Team, Higher Legal RiskAs your workforce grows, so does your risk of exposure to employee-related lawsuits that may allege sexual harassment, discrimination, wrongful termination, failure to employ or promote, wrongful discipline, mismanagement of employee benefits plans, workplace retaliation and a host of other potential risks.

The first step to avoiding potential lawsuits is to have comprehensive company policies and procedures that are clearly spelled out in a company manual and employee handbook. Make these policies easily accessible and hold regular staff trainings to review them. Mandatory manager and employee trainings go a long way toward eliminating the “I didn’t know” excuse, as does a written company policy on how to document employee disputes, handle disciplinary problems and provide warnings, and manage career growth opportunities.

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5 Ways Your Employee-Related Liability Risk GrowsYour company is at greater risk for lawsuits and other forms of liability exposure simply because your team is growing. The following are some of the most common ways these risks escalate for companies like yours.

How the law changes as you grow It’s wonderful that your business is growing - but are you keeping up with the laws that govern your business as you add each new hire?

1+ 15+ 20+ 50+ 100+

1+ EMPLOYEE• Consumer Credit Protection Act• Employee Polygraph Protection Act • Employer Posting Requirements • Equal Pay Act • ERISA - Employee Retirement Income Security Act • Executive Order 11246 - Affirmative Action Plan • Fair Credit Reporting Act• FLSA - Fair Labor Standards Act• HIPAA - Health Insurance Portability and Control Act• IRCA - Immigration Reform and Control Act• National Labor Relations Act • New Hire Registry Reporting• Occupational Health and Safety Act • USERRA - Uniformed Services Employment and Re-employment Rights Act• VETS 100 Report

20+ EMPLOYEES• Age Discrimination in Employment Act • COBRA – Consolidated Omnibus Budget Reconciliation Act

50+ EMPLOYEES • FMLA – Family Medical Leave Act• Patient Protection and Affordable Care Act

100+ EMPLOYEES • EEO-1 Report • Worker Adjustment and Retraining Notification Act

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15+ EMPLOYEES• Americans with Disabilities Act• Genetic Information Nondiscrimination Act• Pregnancy Discrimination Act• Title VII of the Civil Rights Act of 1964

11+ EMPLOYEES• OSHA Form 300A

322. More People = More Accidents & InjuriesLarger workforces also require larger workplace premises that can lead to a higher risk of employee accidents and injuries. And as your employee base grows, naturally more jobs are added. Without thoroughly verifying class codes for each new position, jobs may be improperly classified, creating problems with your insurance policy.

In the event of an injury, even just one workers' comp claim can sink a small business, particularly when there is no return-to-work program established. Unless you stay on top of your workers' comp program administration, it can quickly escalate out of control.

3. Contractors vs. EmployeesMany growing businesses take on contract workers instead of hiring additional employees. But if you don’t know the critical differences in the legal interpretation of “employee” versus “contractor” you can find yourself in extremely hot water. In recent years, a growing wave of lawsuits around this topic has hit both small businesses and high profile firms. Judgements, settlements and legal fees hover in the millions — CNN Money reported that U.S. businesses paid more than $79 million in 2014 for employee/contractor misclassifications.

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With growth comes greater liabilitySmall organizations have limited risks. Each added employee has the potential to interact with other employees and management, which means risk grows exponentially.

OWNER

EMPLOYEE

OWNER

EMPLOYEE

EMPLOYEE

EMPLOYEE

MISCOMMUNICATION

MISMANAGEMENT

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RETALIATION

HARASSMENT

544. Non-compliance with the ACAAs your company grows, it may be reclassified as an "applicable large employer," or ALE, which means it’s required to provide the team with healthcare benefits under the terms of the Affordable Care Act. As of 2016, businesses with 50+ employees are now required to provide insurance to full-time employees. How many employees need to be covered? What coverage is required? What’s a full-time employee in the terms of the law? Definitions and laws change, as do the ever increasing penalties, all of which make it important to stay on top of regulations. Non-compliance — in both participation and mandatory reporting — is too expensive to risk.

5. Improper and Unsecure Record KeepingGrowing businesses easily outgrow their record-keeping systems. Record keeping requirements mandated by a number of laws and government agencies (FLSA, I-9 Eligibility Verification, Workers' Comp, NLRB, and the EEOC, to name a few) continue to change. Storing these in a physical form is daunting and can be confusing and risky. Moving these records online can result in security and privacy concerns. So what do you do?

For a growing business, adding HR and legal staff will certainly help, but results in overwhelming costs that, at the end of the day, may still lack the resources to adequately solve everything. But running "business as usual" ensures your risk exposure will continue to grow. If you feel lost as an employer, here are some options.

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Says the owner, “I also get to work with Stratus.hr’s experts to create unique programs to help me address my real HR problems: turnover, employee burnout and creating a values-based work environment - issues I couldn’t address when I was mired in day-to-day HR stuff I didn't even want to do!”

Needing to Scale Fast When You're Small How a Small Healthcare Facility Scaled Quickly to Meet Patient Demand

Salt Lake City, Utah – Growth can be a good thing ... usually. But one small healthcare facility discovered that anytime they needed to scale up or down to accommodate patient demands, their state and federal regulatory requirements would change, too. Not only were they struggling with managing unemployment claims and new hire reporting, they were now at risk of violating the Affordable Care Act requirements.

Their solution: partner with Stratus.hr for all day-to-day human resources requirements, including new-hire reporting, payroll, health care and other benefits plans, workers’ comp and more.

Take Control of Employee-Related Risk and Breathe EasierTo protect your growing business and reduce your risk exposure, partner with a PEO like Stratus.hr®, which offers scalable services for businesses of all sizes. As the size of your business changes, you simply pay for the services you use while maintaining access to a full team of industry professionals.

Even if you choose to have minimal growth, your small business will be protected against employee-related risks and gain direct access to the very latest guidance regarding labor relations, workers' rights, drug testing procedures, workplace safety and human resources functions. From liability reduction to improved employee retention, Stratus.hr will help your business run smoother and be better protected, which in turn allows you to get back to your core business.

Bottom line: You know your business, and Stratus.hr has the expertise to keep your company running smoothly and securely. With scalable administration fees and menu-driven custom solutions, Stratus.hr will help you safely grow your business every step of the way. You benefit through reduced administrative costs, managed risks, processes that protect both your business and your employees, and a workload relieved of administration and legal requirements. In other words, Stratus.hr gets you back to the core business you run.

Contact Stratus.hr today for a free risk assessment.

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Sources:

Fuscaldo, Donna. “ACA Changes: More Small Business Owners to Offer Coverage, Face Increased Compliance.” http://health.usnews.com/health-news/health-insurance/articles/2016-01-06/aca-changes-more-small-business-owners-to-offer-coverage-face-increased-compliance

“Hire a Contractor or an Employee?” U.S Small Business Association. https://www.sba.gov/starting-business/hire-retain-employees/hire-contractor-or-employee

“Real-Time Risk Management.” Stratus.hr. 2015. https://stratus.hr/services/risk-management/

Sahadi, Jeanne. “When an Independent contractor is really an employee.” http://money.cnn.com/2015/07/16/pf/independent-contractors-employees/

Simpson, Andrew. “What Are Chances a U.S. Business Will Face an Employee Lawsuit?” http://www.insurancejournal.com/news/national/2015/10/28/386321.htm

“Small Business Encyclopedia: Liability.” http://www.entrepreneur.com/encyclopedia/liability

BEFORE AFTER

Company is liable for all employee administration and law compliance, including payroll tax submitting and reporting, Workers' Comp, record keeping, training and procedures, and so on.

PEO holds the listed liabilities while company is surrounded by a shield of protection.

A Shift of Liabilities