Behind every successful startup is a strong HR recordkeeping system. It may not be the most glamorous part of entrepreneurship, but it’s undeniably crucial for laying a solid foundation for growth, ensuring compliance with legal regulations, and safeguarding the well-being of your most valuable asset—your employees. In this article, we’ll look at the importance of HR recordkeeping for startups, exploring the key records you should maintain, when to capture them, and the potential pitfalls of neglecting this essential aspect of business management.
HR Compliance Checklist for Startups
- Employee Personal Information: This includes basic personal details such as full name, address, contact number, date of birth, and social security number.
- Capture Timing: Gather this information during the hiring process.
- Penalties: Failure to protect sensitive personal information can result in legal actions, fines, and damage to the company’s reputation.
- Employment Contracts: Formal agreements outlining terms of employment, including job roles, responsibilities, compensation, benefits, and termination conditions.
- Capture Timing: Prior to or during the onboarding process.
- Penalties: Breaching contract terms or failing to provide agreed-upon benefits can lead to lawsuits and financial penalties.
- Related Article: Employee Onboarding Roadmap for Startups
- I-9 Forms (Employment Eligibility Verification): Documents verifying an employee’s eligibility to work in the country, including proof of identity and work authorization.
- Capture Timing: Within three business days of hire.
- Penalties: Non-compliance can result in significant fines and legal consequences from immigration authorities.
- Related Article: HR Checklist for Startups
- Pay Transparency Records: Pay transparency laws vary from state to state but are becoming increasingly prevalent across the United States.
- Capture Timing: Disclose salary ranges to applicants in job postings and during the hiring process, and to current employees upon request. Be sure to familiarize yourself with your state’s particular requirements.
- Penalties: Fines for non-compliance can be anywhere from $100-$10,000 per violation, depending on the state and other factors like number of violations.
- Related Article: Avoid Fines: The Pay Transparency Checklist
- Payroll Records: Documentation of employee wages, deductions, bonuses, and tax withholdings.
- Capture Timing: Generated with each payroll cycle.
- Penalties: Inaccurate or untimely payroll records can lead to penalties from tax authorities and employee dissatisfaction.
- Related Article: What are the Important Financial Records for Startups to Keep?
- Training and Certification Records: Documentation of employee training, workshops, and certifications relevant to their job roles.
- Capture Timing: Recorded upon completion of each training or certification.
- Penalties: Failure to maintain required training records can result in non-compliance with industry regulations and potential legal consequences.
- Disciplinary Actions and Grievances: Records of disciplinary actions taken against employees, as well as any grievances or complaints filed.
- Capture Timing: Documented at the time of the incident or complaint.
- Penalties: Inconsistent or unfair disciplinary practices can lead to legal disputes and damage to the company’s reputation.
- Termination and Exit Interviews: Documentation of employee terminations, including reasons for termination and exit interview feedback.
- Capture Timing: Conducted and documented upon employee departure.
- Penalties: Wrongful termination claims or failure to conduct exit interviews can result in legal actions and potential financial penalties.
- Benefits Enrollment and Changes: Records of employee benefits enrollment, changes, and eligibility.
- Capture Timing: Updated during open enrollment periods or when employee status changes.
- Penalties: Inaccurate or incomplete benefits records can lead to non-compliance with benefits regulations and employee dissatisfaction.
- Beneficial Ownership Information (BOI): Name, date of birth, address, and official government ID number for each beneficial owner of the company.
- Capture Timing: Startups formed before January 1, 2024, must file their initial Beneficial Ownership Information (BOI) report by January 1, 2025. Startups formed any time in 2024 must file their initial BOI report with FinCEN within 90 days after receiving actual or public notice of their company’s creation or registration, whichever is earlier.
- Penalties: Failure to file on time can lead to civil penalties of up to $500 for each day the violation continues. Violators are also subject to criminal penalties of imprisonment of up to two years and fines of up to $10,000.
- Related Article: Tax Deadlines for Startups in 2024
It’s essential for your startup to maintain accurate and up-to-date HR records to ensure compliance with legal requirements, protect employees’ rights, and mitigate potential risks and penalties. Regular HR compliance audits and reviews of HR records can help identify any discrepancies or areas of non-compliance and enable you to take corrective actions promptly. Contact Burkland’s People Operations team to learn more about how we can help you stay compliant as you scale your business.