The growing burden of employment law and regulations on small businesses
In the United States in 1900, the only laws on the books that governed employment rules and regulations were a smattering of case laws based on individual court rulings. By 1980, there were over 30. Naturally, no one is looking to go back to the days of dust bowls and unregulated working conditions, but businesses in every sector would agree that perhaps the pendulum has swung too far the other direction. Today, there are over a hundred rules, and regulations business owners must contend with, including ADA, EPA, FDA, and OSHA just to name a few. While some, such as CRA 61’ and 91’ (civil rights) are necessary and somewhat self-explanatory, many of the regulations on the books are hard to decipher, harder to implement, and even harder still to stay in compliance.
This is a huge headache and time sink for small business owners who, on top of overseeing their firm’s day-to-day operations, must also expend precious time and resources just keeping their small business in compliance. The U.S. Small Business Administration (SBA), itself a government agency, reports that smaller firms spend 36 percent more per employee to comply with federal regulations than larger companies. They spend three times more per employee on tax compliance than their larger counterparts.
That’s a lot of wasted funds.
Of course, the risks of noncompliance can be even more costly and legally damaging. In the face of either burdensome regulation or crushing penalties, what’s a small business to do?
Hire a PEO
That’s right, there’s an entire industry comprised of hundreds of firms and generating tens of billions of dollars in revenue around helping other businesses, particularly small businesses, navigate the world of employment regulations. These third-party firms, known as Professional Employer Organizations (PEOs), provide critical infrastructure and services in the entire human resources spectrum ensuring not only compliance but capabilities that many small businesses do not possess such as expanded employee benefits, professional recruiters, and payroll management.
PEOs banish the red tape and take on the less savory aspects of running a successful business, including a significant portion of the paperwork. Consider them full-service HR departments and prospective business partners who can hold down the fort so that you, the owner, can focus on the aspects of your business that matter.
Want to eliminate red tape? Hire the right PEO.
