No HR Department? Here's Where to Start

You started your business to do what you love — not to become an employment law expert. But the moment you hire your first employee, HR becomes your responsibility whether you're ready for it or not.

The good news: you don't need a full HR department to do this right. You need a solid foundation. And that's exactly what this guide will walk you through.

Employment-related lawsuits are one of the top legal risks for small businesses. According to the U.S. Equal Employment Opportunity Commission (EEOC), the agency received 67,448 workplace discrimination charges in fiscal year 2023 — and small businesses are not exempt.

In California, the stakes are even higher. The state has some of the most employee-protective laws in the country, and violations — even unintentional ones — can result in penalties, back pay, and litigation costs that can cripple a small operation.

The businesses that get into trouble aren't usually the ones acting in bad faith. They're the ones who didn't know what they didn't know.

Not every employment law applies to every business. Size matters — a lot.

• Title VII, ADA, ADEA (discrimination protections): Apply to employers with 15 or more employees
• FMLA (Family and Medical Leave Act): Applies to employers with 50 or more employees
• FLSA (Fair Labor Standards Act — minimum wage, overtime): Applies to virtually all employers

• FEHA (Fair Employment and Housing Act — discrimination, harassment): Applies to employers with 5 or more employees
• CFRA (California Family Rights Act — leave): Applies to employers with 5 or more employees — far broader than federal FMLA
• SB 1343 Sexual Harassment Training: Required for employers with 5 or more employees
• Cal/OSHA: Applies to all employers, regardless of size

If you're in another state, check your state's Department of Labor website for state-specific thresholds. Many states have their own family leave, pay equity, and anti-discrimination laws that go beyond federal minimums. States like New York, Washington, Colorado, and Massachusetts have particularly robust employee protections.

Hiring someone without the right documentation is one of the most common — and costly — mistakes small business owners make.

• Form I-9 (Employment Eligibility Verification) — must be completed within 3 days of hire
• Form W-4 (Federal Tax Withholding)
• FLSA Notice if applicable to your industry

• DE 4 (California Employee's Withholding Allowance Certificate)
• Notice to Employee (Labor Code §2810.5) — required at hire and when terms change
• Paid Sick Leave notice
• Workers' Compensation carrier information
• DFEH (now CRD) Sexual Harassment pamphlet

Missing these documents doesn't just create administrative headaches — it can result in fines and make it harder to defend yourself if an employee dispute arises later.

If you have employees and no handbook, you're operating without a rulebook — and that ambiguity almost always works against you.

An employee handbook doesn't need to be 100 pages. It needs to clearly cover:

• At-will employment statement (critical in most U.S. states)
• Anti-harassment and anti-discrimination policy
• Paid time off, sick leave, and holiday policy
• Code of conduct and disciplinary process
• Meal and rest break policy (especially important in California)
• Leave of absence policies (FMLA/CFRA, pregnancy leave, bereavement)
• Remote work or hybrid work expectations (if applicable)

California employers must address several policies that aren't required in other states, including:

• Mandatory Paid Sick Leave (at least 40 hours/5 days per year under SB 616, effective January 1, 2024)
• Pregnancy Disability Leave (PDL) — up to 4 months for employers with 5+ employees
• Lactation Accommodation policy
• Workplace Violence Prevention Plan — required for most California employers under SB 553, effective July 1, 2024

Misclassifying employees as independent contractors is one of the most expensive HR mistakes a business owner can make.

The IRS uses a behavioral control, financial control, and relationship framework to determine worker classification. If you control how, when, and where someone works, they're likely an employee — not a contractor.

California applies one of the strictest worker classification standards in the country. Under AB 5, a worker is presumed to be an employee unless the hiring business can prove all three of the following:

A. The worker is free from the control and direction of the hiring entity
B. The worker performs work outside the usual course of the hiring entity's business
C. The worker is customarily engaged in an independently established trade or occupation

Misclassification in California can result in back wages, unpaid benefits, tax penalties, and civil lawsuits. If you're using contractors regularly, have an HR professional or employment attorney review those relationships.

Even with the best intentions, workplace issues happen. What separates businesses that handle them well from those that end up in litigation is having a clear, documented process before a complaint is filed.

At minimum, you need:

1. A designated person employees can report concerns to (and an alternative if that person is the subject of the complaint)
2. A written policy explaining how complaints are handled and that retaliation is prohibited
3. A basic investigation protocol — who investigates, how findings are documented, and how outcomes are communicated

You don't need an HR department to do this. But you do need it in writing, and you need to follow it consistently.

The most common thing I hear from business owners is: "I didn't think I needed HR help until something went wrong."

By then, the cost — financially and emotionally — is far higher than it needed to be.

An HR consultant can help you:

• Audit your current practices and identify gaps before they become liabilities
• Build compliant onboarding and offboarding processes
• Train your managers on harassment prevention and documentation
• Handle a workplace investigation when you can't be objective
• Update your handbook when laws change (and in California, they change often)

You don't need to hire a full-time HR director. Fractional or outsourced HR support gives you expert guidance exactly when you need it — without the overhead.

Whether you're in California or another state, here's a starting point:

All Employers

• I-9 completed for every employee within 3 days of hire
• W-4 on file for every employee
• FLSA poster displayed (required by federal law)
• Workers' compensation insurance in place
• Written anti-harassment policy in place
• Employees classified correctly (employee vs. contractor)

California Employers (Add These)

• DE 4 on file for every employee
• Notice to Employee (LC §2810.5) provided at hire
• Paid Sick Leave policy meets SB 616 minimums (40 hrs/5 days)
• Sexual harassment training completed (SB 1343)
• Workplace Violence Prevention Plan in place (SB 553)
• Handbook reviewed for California-specific requirements

HR compliance isn't something you should have to navigate by yourself — especially when the rules are this complex and the stakes are this high.

At Solis Consulting Management, I work with business owners who are exactly where you are: growing, busy, and aware that HR matters but unsure where to start. I help you build the foundation that protects your business and your people — without the overhead of a full-time HR team.

Ready to get your HR house in order? Book a free 30-minute discovery call and let's talk about where you are and what you actually need. No pressure, no jargon — just a practical conversation about your business.

You can also download the free California HR Compliance Checklist to see exactly where your gaps are right now.

Marlene Solis is the founder of Solis Consulting Management, an HR consulting firm serving small and mid-size businesses in California and nationwide. With 15+ years of Fortune 100 HR experience, she helps business owners build compliant, people-first workplaces.