With ever-changing employment laws and the complexities of hiring employees, it’s difficult for businesses to keep the many different elements of Human Resources functioning efficiently, without help from an in-house HR team, or an outsourced HR provider.
Performing a critical role within companies large and small, HR can help businesses remain competitive in an increasingly challenging world, and prevents them from receiving hefty fines and penalties for employment law violations. But what if a business doesn’t invest in HR? What impact can this have?
- Risk of litigation
For any business operating without an HR department or outsourced HR representative, should they find themselves in a position where they need to defend themselves against discrimination or a harassment lawsuit, for example, they may not be in a good position to do so. Even if a company pays its employees fairly, has a sound equal opportunities policy in place, and has a positive culture within the business as a whole, litigation is always a risk, and not having HR professionals to resolve the matter legally, can leave you high and dry.
It’s not uncommon for an employee to file a personal injury lawsuit, and even if they’re covered by compensation insurance, having a HR representative can help ensure that the matter is handled appropriately, and by organizing relevant training for all employees, they can avert litigations that may be caused by negligence on the part of the employer.
- Issues surrounding non-compliance
If a company doesn’t have a HR department, or engage with any external providers of HR services, they may be in violation of Department of Labor (DOL) laws and attract not insignificant fines related to issues surrounding non-compliance.
Also, the risk of fines and issues surrounding non-compliance may be present in relation to the Occupational Safety and Health Administration (OSHA), and there are a number of consequences for companies in violation of OSHA regulations, such as lawsuits from injured employees, among others. Arguably the biggest risk, however, pertains to reputational damage, as partners and customers may not view a company favorably if it doesn’t have adequate health and safety standards.
- Violation of US Immigration and Customs Enforcement laws
It is the employers responsibility to verify the eligibility and identity of all employees, and use the Employment Eligibility Verification Form I-9 to document the data, under the US Immigration and Customs Enforcement law. Any company found to be in violation of such laws, could incur hefty fines and a number of lawsuits which could seriously hamper operations.
- Loss of employees over workplace issues such as bullying
Should an employee experience any problems with workplace bullying or harassment, for example, they usually take their concerns to the HR department or representative, but if there isn’t one, this can serve to exacerbate the problem and employees may even decide to quit over it.
- Toxic business culture
Unless an employer is actively engaged on a regular basis with their workforce, a toxic work culture can easily develop, and this can contribute towards employee turnover. With HR to handle the development and promotion of a healthy business culture, toxicity should never become a problem.
HR are also there to answer questions related to salaries, bonuses and benefits. To prevent these from becoming an issue with your employees, or from causing your company to incur fines, it simply makes sense to ensure that you have a fully functional HR department or outsourced service provider.