HR FoR Colorado businesses
HR and Employment requirements for your CO Small BUsiness
When forming your new, small business, organizing a human resources (HR) department or outsourcing HR services may be one of the last items on your checklist. But once your company begins to grow, having a strong HR department (whether it’s just one employee or a team) is essential.
Part of an HR employee’s job is to listen to other employees’ concerns and help navigate inter-personal conflict in the workplace, but that’s just a small piece of the pie when it comes to what a good HR department does.
HR employees are also responsible for making sure payroll is accurate, training employees, and keeping up with the ever-evolving employment laws in Colorado.
The state of Colorado does not require businesses to have an Human Resources Department, but that doesn’t mean you should go without. Setting up a strong HR system for your business is key to your company’s success.
In order to successfully support your business, a good HR department should:
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WHEN DOES MY CO SMALL BUSINESS NEED HR?
The state of Colorado does not legally require businesses to maintain an HR department, however it is strongly encouraged. Why? The state has a long list of labor statutes that your business will need to keep up with when hiring employees. Failure to abide by these laws could lead large fines, lawsuits, dissolution of your business, and even criminal prosecution.
When your Colorado LLC is in its seed stage, it’s easy to delegate HR responsibilities between employees. For example, your LLC’s manager may take care of training new employees while your accountant takes care of payroll. But once you’ve hired 10 employees, it is generally advised you hire at least 1 full-time HR staff member.
And if you can, it’s not a bad idea to set up HR before you reach 10 employees. The bigger your company gets, the more important your HR department becomes. In fact, having a solid HR department can save you money in the long run.
Luckily, the Colorado Department of Labor and Employment has put together a New Employer Checklist. This makes it easy for new Colorado business owners to stay on top of everything they need to do to stay in compliance with the state. A lot of these tasks, like reporting new hires, verifying employment requirements, and ensuring that employees are classified correctly, can be taken care of by HR.
How does having an hr department help my business?
A good human resources department is there to support your employees and take care of important administrative tasks, like managing payroll and benefits and training new workers. These tasks can be time consuming, so delegating these to an HR employee can free up time that you can use to focus on your business. But what exactly is HR responsible for?
Keep Up-to-Date with CO Employment Laws
When starting a business in Colorado, it’s important that you are familiar with the state’s labor laws. The Colorado Department of Labor and Employment has put together a convenient list of labor statutes, but even glancing over it can be a little overwhelming.
All in all, there are at least 16 laws your business will need to follow when hiring employees, if not more (depending on what industry your business belongs to). The kicker? These laws are often updated, and while keeping up with the changes can sometimes feel like a never-ending task, these changes will often directly affect your business.
Having an employee or a team dedicated to keeping track of these updates and adjusting company protocol accordingly can not only save you the headache of reading through state statutes, but also keep your company in compliance with the state.
Here are a just a handful of the laws your HR staff will need to keep an eye on:
1. Colorado Wage and Hour Laws
These laws govern the wages you’re required to pay employees, how long your employees can work during a work day, and overtime pay. For example, the Colorado Wage Act establishes that minimum wage in Colorado is $14.81 an hour unless you’ve hired tipped employees, then it’s $11.79. (However, the minimum wage may be higher depending on where your business is located.) As a business owner, you are required by law to pay your employees at least minimum wage.
The Colorado Wage Act also lays out requirements for how many hours your employees can work before you are required to pay them overtime. Employees can work up to 40 hours a week or 12 hours a day, but if they surpass this time limit, you are required to pay them 1.5 times their regular wages for the hours they work.
2. Colorado Workers’ Compensation Requirements
All employers in Colorado are required to get and maintain Workers’ Compensation Insurance. State law makes it clear that the cost of this insurance cannot be taken from employee wages, and failure to have Workers’ Compensation Insurance means hefty fines from the state. Seriously–$500 a day for every day your aren’t insured.
3. Colorado Paid Leave Laws
The Colorado Healthy Families and Workplaces Act (HFWA) requires all employers to provide sick leave for their employees. Specifically, for every 30 hours worked, an employee gets 1 hour of paid leave, up to 48 hours a year.
4. Workplace Posting Requirements
As an employer in Colorado, you are required to inform your employees of their workers’ rights. These transparency statutes require your company to post certain posters in the work place where employees will have access to them.
These posters are for a variety of topics, from everything to overtime and minimum pay standards to anti-discrimination to notice of injury. You can find a complete list with links to pdfs of the required posters on the Colorado Department of Labor and Employment website.
5. Anti-Discrimination and Harassment Laws
The Colorado Anti-Discrimination Act (CADA) prohibits businesses from discrimination through both the hiring process and against employees. As an employer, you are required by this law to prevent and address workplace discrimination and harassment, as well as post the Colorado Anti-Discrimination poster in your workplace.
Cultivate Company Culture & Support Staff
Your HR employees are also responsible for creating and maintaining a positive company culture, as well as keeping employees engaged in their jobs. HR also acts as a kind of third party when it comes to resolving inter-personal conflict in the workplace. By addressing problems directly, a good HR employee can really make a difference when trying to retain well-trained and talented employees.
Why is it important to invest in employee retention? High employee turnover can be one of the biggest unexpected costs your company faces. While it may not seem like it, it is by and large more expensive to hire a new employee than it is to retain current talent. Generally speaking, it costs anywhere from 6 to 9 months of that employee’s salary to train their replacement.
When you lose an employee, you’re losing more than just a worker. You’re also losing a well of institutional knowledge, as well as the time and effort that onboarding, training, and developing cost your company.
Other HR duties can include:
- Recruiting, Onboarding, and Training New Employees. HR is usually in charge of the hiring process. Your HR department will sift through job applications and (hopefully) find and interview the best possible candidates for the job position you’re hiring for. They may also train new employees, too.
- Providing Employees Professional Development Opportunities. On top of hiring and training new employees, your HR employees also focus on investing in the workers you already have. Offering new coursework, seminars, or trainings gives employees the opportunity to grow and better your business.
- Organizing Employee Incentives and Company Events. Creating company-wide incentives and events promotes office camaraderie and keeps up employee morale. A good HR department, whether it’s a single employee or a team, works to help employees feel appreciated. And showing appreciation can be as simple as ordering a catered lunch or as complicated as organizing a company-wide business trip.
Manage Internal Documentation
There are several important internal documents for your business that HR is responsible for. As always, an HR team’s responsibilities vary depending on a company’s structure, but for the most part HR employees are responsible for the following internal documentation:
- Writing and Maintaining the Employee Handbook. Your company’s employee handbook is one of your most important internal documents. It includes the business’s expectations for employees, job descriptions, and management organization. It should also inform employees of workers rights as laid out by the state, like Colorado’s Anti-Discrimination Act and Healthy Families and Workplaces Act.
- Managing Performance Reviews. HR is also responsible for developing performance reviews and managing how those reviews are processed. The specifics will depend on your company and how it’s organized, but it can be helpful to have someone who is not directly involved (a.k.a. the manager or the employee) take a look at performance reviews with a more objective point of view.
- Keeping Track of Compensation and Benefits. One of HR’s biggest responsibilities is to keep track of employee payroll and make sure everyone is compensated correctly. This includes wages and overtime pay, as well as health insurance, life insurance, employee retirement, and other benefits provided to employees by the company.
A lot is involved when setting up an HR department. While we can’t do this for you, we can take some other business concerns off your plate as your Colorado registered agent.
When you hire us, we’ll immediately scan, upload, and notify you when you receive important reminders from the state. You’ll be able to access and manage all of your important state paperwork in your online account, making it easy to stay on top of state requirements.
How much does HR cost for Colorado businesses?
The cost of human resources varies greatly from business to business because it depends on a variety of factors like the size of your business, how many employees you need to hire, and how much training they need. You will also need to purchase certain kinds of HR software to help your team manage their tasks.
Generally speaking, you have two options when it comes to setting up an HR department for your business.
Internal HR
Setting up HR within your company involves more than just delegating HR tasks to an employee. On average, HR duties (like payroll, recruitment, hiring, professional development, etc.) take up about a quarter of the work week, but as you hire more employees, this time demand will only grow.
Designating at least 1 HR employee for every 50 people will save other employees with other responsibilities a lot of time, and allows other workers more time to focus on their work. According to ZipRecruiter, the average base salary for a Colorado HR specialist right now is $46,500 (or around $22/hour), but an HR Director can make upwards of $100,000.
Another cost to consider if you’re setting up and internal HR department is the cost of HR and Payroll software. There are a lot of options out there, and the price will vary depending on the size of your business and your specific needs, but generally speaking, HR software charges your company per employee. For example, a mid-level plan may cost anywhere from $50 to $100 a month for the software license, and then an additional $2 to $15 per employee.
Outsourced HR
As a business owner, you also have the option to outsource your company’s HR to a third party. If you want to do this you have several options. You can hire an Administrative Services Organization (ASO) or a Professional Employer Organization (PEO) to help with business operational needs (like payroll and tracking PTO), both of which provide software that allows you to easily manage HR tasks without having to sacrifice a lot of your time.
Outsourcing HR is a little pricier than doing it in house. It can cost anywhere from $50 to $100 per month per employee. Overall, the cost depends on how many employees you have and which specific services you need for your business.
Whether you set up an internal HR department or outsource, it’s the HR software that will cost you the most. Most businesses, especially small businesses, find all-in-one HR services to be the easiest. It may not always be the cheapest option, but being able to manage all of your company’s HR needs in one place is a valuable time saver.
HR For CO Businesses FAQ
The cost of getting an HR department up and running depends on a variety of factors: the size of your company, the number of employees you have, the benefits you offer as an employer, the training process, onboarding tools, professional development, and company incentives. When budgeting for HR, you’ll want to take into account HR employee wages, department budget, and the cost of essential HR software.
Technically, you are not required in the state of Colorado to have an HR department in your company. However, a good HR team is the backbone of your company.
There is a lot to keep track of when it comes to human resources: ever-changing state laws, labor requirements, payroll, hiring and training new employees, employee benefits, and much, much more. Failure to do these tasks correctly can have disastrous results, ranging in anything from state fines to lawsuits to criminal prosecution.
When you establish HR for your Colorado business is entirely up to you, but make a note that the general advice is to hire a dedicated HR employee or third party HR service provider when you reach 10 employees. The more your business grows, so will your HR demands. Having one or more employees completed focused on HR matters will not only save you a lot of time, but also help you make sure you’re keeping up with state employment requirements and staying in compliance with the state.
