EP 146: HR Compliance Checklist - The 6-Question Self-Check | HR Compliance Series Ep1

PodcastDon't Waste the ChaosHR StrategyHR for Small Business
Written By Kerri Roberts

Series: HR Compliance Without an Attorney (1 of 8) · Host: Kerri Roberts · Run time: ~25 minutes

🎧 Listen on Apple Podcasts · Spotify · Buzzsprout

📺 Watch on YouTube https://youtu.be/l2p7tGgCdDA?si=ZXGol4X48KEFEk-Q

📖 Read the full transcript below

Episode Summary

Are you compliant? Not “do you like working here.” Compliant. Everyone wants to talk about culture, but if the Department of Labor knocked on your door next Monday morning, would you be fine? Most small and mid-sized businesses don’t employ anyone who understands this stuff, so owners end up blissfully ignorant, aware and not caring, or aware and stressed. This episode, the first in an eight-part series on HR compliance without an attorney, gives you an honest six-question self-check. Every “no” is a gap, and every gap has a dollar figure attached. Kerri covers headcount thresholds, exempt vs non-exempt and 1099 vs W-2 classification, I-9s, handbooks, labor posters and minimum wage, and time tracking, with Missouri as the working example of why “check your state” is never a throwaway line. This is HR education, not legal advice, but it is a map. Compliance is the foundation, and you can’t call your culture a good one if the paycheck is wrong.

In This Episode

  • Why you need to know your exact headcount, and the thresholds that quietly turn laws on (15, 20, 50, and Missouri’s six)

  • Why misclassification is usually the most expensive “no” on the list, with the DOL recovering about $142 million in back wages in one recent year

  • The 2026 federal salary floor for exempt status ($684 a week, about $35,568 a year) and why the duties test matters just as much

  • Why an incomplete I-9 is a per-form fine multiplied across your team

  • Why a policy written after the incident is a lawsuit waiting for a plaintiff

  • Why the state where your employee sits sets the minimum wage, and why rounding time and comp time don’t hold up

  • A Missouri gut check: discrimination law at six employees, $15 minimum wage, and final pay rules

  • What to do with your number of no’s, and a preview of the whole eight-part series

Chapter Timestamps

0:00 Are you actually compliant?
1:15 Not legal advice, and who I am
3:02 Why compliance is the foundation
6:55 Check 1: Headcount and what it triggers
8:02 Check 2: Exempt vs non-exempt, 1099 vs W-2
11:47 Check 3: Correctly completed I-9s
13:17 Check 4: A written handbook before you need it
14:02 Check 5: Labor posters and minimum wage
15:47 Check 6: Tracking hours and overtime
18:17 What your gaps cost
19:37 A Missouri gut check
22:07 How to read your score
22:47 What’s coming in the series
24:07 Your one thing this week

Resources Mentioned

Episodes in the HR Compliance Without an Attorney Series

  1. The 6-Question Compliance Self-Check (you’re here)

  2. Do you have to post salary ranges in job listings? (coming next week)

  3. 1099 contractor vs employee: the test

  4. The handbook that actually protects you

  5. Interview questions that can get you sued (and the ones to use)

  6. Exempt vs non-exempt and overtime

  7. Leave laws: which ones apply to you

  8. How to let someone go without getting sued

Your Action Item

This week, run the six-question check on your company and write down your number of no’s. Don’t fix anything yet. Just get honest about the starting line, or take the free HR Audit if you want a score.

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Full Transcript

Are you actually compliant?

Now here’s the question that nobody really wants to answer out loud. And that is, are you compliant? Everyone wants to talk about their culture and how fun that is. But are you actually compliant from an HR perspective? That is something that people do not want to talk about. Do you like working here? We like to talk about that. But if the Department of Labor knocked on your door the very next Monday morning, would you be fine? And I’m not trying to use scare tactics here. I can’t stand when I see HR people prey on people’s fear, but it is reality. We do have to talk about being compliant. Nobody hands you a rule book when you first get started. And what I see with small to mid-sized businesses is they aren’t employing someone who understands this kind of stuff. And they’re either blissfully ignorant, or they’re aware and they don’t care, or they’re aware and they do care and they’re stressed.

I don’t know where this episode is finding you, but we are going to talk about compliance without an attorney. That’s essentially what we’re focusing on. I’m doing an eight-part series. Just got out of my AI series, so if you didn’t catch that, I’d love it if you’d go back. I’m going to go through an honest six-question compliance self-check. Every time you answer a no, that’s a gap in your organization. I just want to make it super practical for you today. Every gap has a dollar figure attached, so let’s go find yours before somebody else does. Quick honest note before we dig in: this is HR education, not legal advice. I’m not an attorney. I’m a 20-year HR pro.

Not legal advice, and who I am

Welcome back to another episode of Don’t Waste the Chaos. I’m your host, Kerri Roberts, a 20-year corporate HR and operations executive turned entrepreneur. I launched my own business about four years ago. It’s called Salt and Light Advisors, and I focus on HR foundations for small to mid-sized business owners. What is an HR foundation? It’s everything from what I call cradle to grave of an employee. So everything from hiring to termination and everything in between. If you want to know more about what the foundation of human resources is, I did write a book. It’s called The HR Easy Button. This is the first part in a three-part series. Type in HR Easy Button book on Amazon and you can pick that up.

I’ve also got coursework out there for you if you want to dive into HR foundational work, HR operating systems, or strategic HR. I’ve got those three segments out on my website, saltandlightadvisors.com/resources, where you can find some free resources as well as my coursework. But nothing here that I’m going to mention today is a ruling on your specific company, because I’ve never talked to you before. Treat it as a map, not a verdict.

Check your state labor agency. Of course, there’s a lot of gray area. We’re going to talk about the differences between federal and state. I actually practice HR in the state of Missouri, but I’m going to talk about a lot of federal things today too. But you should keep a real employment attorney in your corner. I recommend that to my clients, even when they’re working with me. I’ve got somebody who’s working through an H1B situation. They need to speak to an immigration attorney. There are times when I have really sensitive situations come up where, let’s say, we need to make a call for a termination, but the person that we want to terminate also has made a complaint against the organization recently. I’ll want to run that by an attorney just to make sure. I have my opinions and I’m pretty sure that I’m right, but to protect the organization, I do like bringing in an attorney when it’s appropriate, not all the time. I don’t lean on that all of the time. I will say organizations who use attorneys to write their handbooks, their handbooks are snooze fast and way too long. So it just depends. I do have a few attorneys that I partner with, and I always partner with yours as well. You want an HR partner that knows where the edges are, so that they’re not saying they’re an attorney. I’ve worked with HR pros before who took some law classes and tried to act like they were an HR attorney. While a lot of us have seen a lot of things, being in HR for over 20 years, I can tell you the way I’ve seen courts swing, I’ve seen where certain states land, if they’re employer friendly or employee friendly, all of that stuff. But I’m not an attorney, and you shouldn’t let an HR pro tell you that they are one. Let me get off that soapbox.

Why compliance is the foundation

Everybody wants to talk about culture. Nobody wants to answer the plain question: are you compliant in your business from your people practices? So let's get into it today. Compliance is the foundation. When I am starting to work with clients, most of the time they want to go straight to retention issues, they want to go straight to culture issues. And I just start asking some simple questions. How do we clarify expectations with our employees? What does that look like? How often are we meeting with them? Do they have clear job descriptions? When's the last time that was reviewed? Have you ever done a compensation data study to make sure that you're paying accurately? When's the last time we analyzed our benefits? When's the last time we asked our employee population if they're engaged, if they're satisfied? There's a number of questions we can ask to help us understand if they are engaged or satisfied, if they understand their expectations, if they understand what career growth looks like in the organization, if they feel like they've been trained properly, if they know what success looks like. When's the last time you did a performance review cycle? And are your managers scoring those accurately, or are they trying to be buddies? There are so many questions that I ask that help me understand if you have the foundation built, and compliance is the foundation. HR metrics are finance metrics. These all matter. They all impact the bottom line. They're very, very important.

Okay, so compliance is the foundation. This is very, very important. So many times when I'm talking to clients, they ask: is there an I-9 in the employee's file? You can't call your culture a good one if their paycheck is wrong, if we aren't building a sustainable workforce. Today we're going to check the foundation, not to make you feel behind, but just to make it knowable. Like, what is HR compliance? What's HR law for you as a small business owner? So I'm going to give you an honest six-question self-check, and you're going to self-score this. Every no that you come up with is a gap. You need to keep a running count of how many no's you have.

Check 1: Headcount and what it triggers

So let's start with this one. One: how many employees do you have? I'm kind of blown away, and I'm not trying to put anybody down or knock small business owners, but I'm shocked at how many times I will be talking to a CEO and I'll ask them how many employees they have, and they just don't know. And I'm like, well, okay, what about the difference between part-time and full-time? How many contractors do you have? And usually it's, gosh, I just don't know. We need to know. If you don't know, that's fine, if you have an office manager, an HR person, or a payroll person who knows. But somebody's got to know. Usually it's, gosh, we better pull a report, and it's kind of unclear. There are a number of reasons why it matters how many employees you have: what laws apply to you, and when, is determined by head count.

Here's what nobody tells you. The rules switch on as you grow, and nobody sends you a memo when that happens. The state isn't going to say, you just hit 15, you just hit 50, now you're an applicable large employer. As long as you're submitting your new hires with your tax information, that's great, but nobody's calling you. It would be so cool if they did, but they don't. So if you hit 15 employees, Title VII and the ADA start to apply. At 20, age discrimination law, the ADEA, kicks in. If you've got 50 employees within 75 miles, now you're on the hook for FMLA leave, the Family and Medical Leave Act. Most owners cross those lines without ever noticing. And your state could start lower. Here in Missouri, where I'm recording, our state discrimination law, the Missouri Human Rights Act, covers employers with a count of six employees, not 15. So you might be too small for federal law and still be fully on the hook at your state. If you can't tell me what number you are at and what it triggers, this is your first no. And that's okay, don't freak out. If you can't say off the top of your head what your number is and what laws are associated with it, that's a gap. We need to work on that.

Check 2: Classification

Second one: classification. And this one is usually the most expensive no on the list. Exempt versus non-exempt, 1099 versus W-2. I see issues with this all of the time. Usually what I hear owners saying is, it just makes it easier if they're exempt, or they just want to be a contractor. That's not the way this works. There are actual legal standards, and the Department of Labor would have tons of opinions on that if it was submitted to them. If you've listened to my podcast for any amount of time, I have mentioned many times that I was audited back when I was an HR person for a corporate organization. It was hundreds of thousands of dollars of fines and back pay, because we had an employee population of software developers. We had them classified as exempt, therefore they were not getting any overtime pay. They were not hourly. That was misclassified. We misunderstood that, and they actually should have been non-exempt, clocking in and out, and eligible for overtime pay. They were able to go back and guess how many hours of overtime they had worked for two years, and then we had to pay it, plus some healthy fines. This matters. I have seen it get reported in organizations, and that was an organization that actually cared and was doing it with intentionality and just misinterpreted the law. Because there are duties tests. There are five criteria you want to go through.

To put somebody on salary and skip overtime, they generally have to hit a federal salary floor. I'm recording this in October 2026, and it's $684 a week, which is about $35,568 a year. And they have to pass a duties test. Pay is just one of the five criteria I was talking about. Your state might set the bar higher. And then if you look at 1099 contractors, some of them are really an employee and they're just wearing a different hat. In one recent year, this is data I saw from the Department of Labor, the Department of Labor recovered around $142 million in back wages for minimum wage and overtime violations. This impacted about 122,000 workers that were misclassified, either classified as exempt when they should have been non-exempt, salary when they should have been hourly and eligible for overtime, or classified as contractors when they should have been W-2. When that happens, they should also have been eligible for the benefits that employees are eligible for, and tax withholding. So that's a whole problem. That's a real price tag on an "I'm pretty sure she's exempt" situation. I hear it all the time. Even when I run audits for clients, they still tell me how they're going to do it, and what I do is put in writing what my recommendation is. If they want to do it differently, I don't love it, but I try to make it very clear. So do you feel confident in your exempt versus non-exempt, your 1099 versus your W-2? If no, this is a gap. This is a second gap.

Check 3: Correctly completed I-9s

So, first one, your headcount and what laws apply. The second one, classification. Third one: do you have correctly completed I-9 forms for every single person that you've ever hired? I think people don't take this one very seriously because it's just a one-page form and the employee has to submit their identification. It's either a passport, or a driver's license and a Social Security card or a birth certificate. Every employee, no exceptions. And this has to be done within the first three days they were hired, or you're out of compliance. It's not, "I've known this guy for years and I know he's obviously not an illegal immigrant, he's legal to work in the United States for good." That's not the way this works.

And this one gets to be really expensive. In 2026, immigration enforcement reclassified a stack of what used to be minor paperwork slip-ups, and now they're called serious violations. Paperwork errors alone can run from a few hundred to a few thousand dollars per form. Now picture a team where half of the I-9s are done and half of them aren't. They might be missing a date, they might be missing a signature. That's not one fine. That's one fine times everybody, and that gets expensive. So where are your I-9s? Do you know where they are? Are they all completed? If the answer is "I don't know," that's another gap.

Check 4: A written handbook before you need it

Fourth one: do you have a written handbook with policies that protect you before you need them? So many times we want to write the policy after the issue comes up. Then we've got emotions, and we've got a person attached to it that we're trying to fix. We want to write the policies before the issue arises. That no-call, no-show attendance policy that you want to fire somebody for, is it written down somewhere? Do you know? PTO, you figured you'd just handle case by case. You allowed this person to be off, and now you're not allowing this person to be off. Now you've got a discrimination case. Is it documented? A policy that you make up after the incident isn't a policy. Based on my experience, it's a lawsuit waiting for a plaintiff. If it's not in writing before you need it, it doesn't exist. I'm going to spend a whole episode on this later, and I've done a few other episodes on HR law, compliance, policies, AI policies, all kinds of stuff, so go back and listen to those as well.

Check 5: Labor posters and minimum wage

Fifth one: labor posters, and I'm going to lump minimum wage in here. Do you have those posted somewhere that's visible, and are they up to date? And are you paying at the correct minimum wage, the correct floor where people actually work? The federal minimum wage is $7.25 an hour. Now, I mentioned I'm recording in the state of Missouri, and your state is what actually governs. Missouri's minimum wage right now is $15 an hour as of January 1st, 2026, more than double the federal floor. Are you paying accurately based on your state? If you're writing $7.25 paychecks to someone who's working in Missouri, then you're underpaying them by law. Now, where does your organization sit versus where your employee sits if they're remote? It's where the employee sits. This is what we're paying them based off of. This is why, when people say it's great, you can hire remote people anywhere, okay, but your HR pro better know what is going on. You need to know exactly what states you're operating in, and where your employee sits is where it matters, based off of the legal advice I have gotten.

Here's one Missouri wrinkle that I see. A very small retail and service business under $500,000 in revenue or annual sales can fall back to the federal rate, but most of you aren't that, so don't assume you're the exception. You need to do some research on that and ask an attorney. That number matters wherever your employee physically sits, not where your office is sitting. Let me stop and say before I move on to the next one: do you have labor posters? Are they up to date? What is the minimum wage in your state compared to federal? Do you know the answer to these things? If the answer is no, that's another gap.

Check 6: Tracking hours and overtime

And here's the last one. Is someone actually tracking hours for your hourly staff, and tracking overtime for your non-exempt team? Rounding it to keep it simple is not legal. We can't do that. I have clients that have said, well, it benefits the employees if they work less. Right, but it benefits you if they work more, and that's what the state is going to care about. They are not going to care that, let's say, 10 weeks out of the year that employee made hay over the winter. Let's say you're construction, and they worked way under 40 hours a week and you just kept paying them at 40 hours, and so they benefited. That is wonderful. But the rest of the year they worked at least 40 or more, you didn't have them track, you have them classified incorrectly, or they're classified correctly but you're not actually tracking hours. You are out of compliance and you're going to get fined.

All it takes is one disgruntled employee. Think with me here. Is there one employee on my team right now who doesn't love everything about working here? And is it possible that even a happy employee could get upset and file a complaint? Friends, the answer is yes. I've seen it over and over again, and they do it anonymously, and they get to. You will never know who it is, but you can guess. And if you can guess, it's probably because you had that person classified wrong, right? She just worked through lunch, and you're handing out comp time instead of overtime at a private company. That's not going to get it done. That's a quiet compliance issue, but it's still a compliance issue nonetheless. Missouri has its own overtime law layered on top of the federal one, time and a half over 40 in a week, and your employee can't waive it even if they offer to. Why would they offer to? Because they want flex time or comp time. No. If you're in the state of Missouri, you can't do that. That reminds me of that stupid basketball cheer when people travel: you can't do that. Same thing applies here.

Remember that $142 million I talked about that the Department of Labor collected and dispersed to employees? Most of it is exactly this: ordinary wage and hour mistakes. Not villains, not anybody embezzling anything. It's just accidents. Do you track your employees' time and their overtime accurately? If the answer is no, there's another gap for you.

What your gaps cost

So now count your no's. We're going to talk about what that number means in a second, but first, this is a money question. Every one of these gaps is a line item on your P&L. A misclassification is back pay plus penalties. A missing handbook could be a settlement. A bad I-9 file is a per-form fine times your head count. HR metrics are finance metrics. I always say that. A compliance miss is a number that lands on the P&L, and you never budgeted for any of these. I don't care if you have EPLI and errors and omissions and all of these professional insurances. I've got them too. Still, you're going to have a claim, and then your insurance company is going to jack up your premiums or cancel you. The good news is that the reverse is also true. Close the gaps and you remove the risk that you were carrying. So that's great, we're going to close the gaps. That's what we're going to do. But ignorance is not bliss in this case. We have to know what's going on.

A Missouri gut check

Here's a Missouri gut check I want to mention. My state is a perfect example of why "check your state" is not a throwaway line that I bring up. You have to know where you're operating and where your employees are operating. Missouri's state discrimination law starts at six employees, not 15. Our minimum wage is $15, like I said, not $7.25. And just last year, Missouri voters passed a paid sick leave requirement. That went in place in May, and then the legislature repealed that piece, but it moved so fast. In May I was advising clients, my gosh, we've got to get this set up and tracked. Most of them had one vacation bank, which is what I recommend. I can't believe that our state voted for that. Then it was repealed, and everybody was upset that it got repealed. But I'm telling you, from an HR perspective, that is very burdensome, to have two separate leave laws. I would rather the state say you have to give a minimum threshold of leave. But to say that you have to have two separate banks and track that, especially for small businesses that don't have an HRIS, I just felt like that was an undue hardship. So sue me. I am employee friendly. I just felt like that one was going to be really complicated. Small to mid-sized businesses are missing the mark on compliance all over the place, and adding another thing was going to be overly complex. If you set your policies to federal and you walk away from them, you can be wrong on three counts, in this case what I'm talking about in the state of Missouri.

One more Missouri one worth noting. When you let somebody go, state law says you owe them all the wages at the time of dismissal, but only if they request it. You have to pay them all of their earned wages, period. I usually recommend you put it in the next direct deposit, or however you usually pay. But if you're separating somebody and they say, I want my money, you've got to cut a check. And you're going to be fined if it takes you more than seven days to get that money into their bank account. So you need to be ready if you're going to terminate somebody. That's a Missouri law. Again, know your state's laws on that kind of thing, or keep somebody in your corner who knows how to track all of that.

How to read your score

So here's what compliance looks like. I don't want you to feel overwhelmed, but if you're counting more no's than yeses in those six things that we went through, headcount and what laws apply, classification, I-9 forms, written handbooks, labor law postings and minimum wage, and tracking hours, this isn't a minefield. It's just a checklist. Compliance doesn't mean fully perfect, and it doesn't mean lawyered up necessarily. It just means you know which laws apply, you know where everybody's classified, the I-9s and postings are current, the handbook exists and it's relevant, and somebody owns wage and hour. That's a system you can build, or we can build it together.

What's coming in the series

One episode at a time, I'm going to go through this eight-part series, and we're starting here. If you haven't subscribed already, make sure you do. Apple, Spotify, Buzzsprout, YouTube, wherever you catch my show, because we're going to step through this. This is the starting point, and then we're going to go deeper into all of these. Over the next seven weeks, we're going to build into the big ones. We're going to go into whether you have to post salary ranges and where, the 1099 versus employee test, the handbook that actually protects you, the interview questions that can get you sued and the ones you should be using, exempt versus non-exempt and overtime, leave laws if you don't know that they all apply to you, and how to let somebody go without getting sued. One a week, every single Tuesday, I launch a new episode, and by the end you're going to have a real compliance calendar instead of a knot in your stomach wondering if you're getting it all right.

When I take on a new client, I do some bare minimum things inside of AI that you should also be doing. I will usually say, I've got this new client. They have this many headcount, this many full-time versus part-time, this many exempt versus non-exempt, this many contractors. They operate in this state, in this industry. They get these state and federal contracts, or they have grants or donors, or whatever that looks like. I lay it all out and then I say, give me the laws, and they operate in this state, or they have employees in these states. The human has to own the final call. AI can give you a draft. A human has to own the final call. You need to verify, there are gray areas, and you need to have counsel confirm at times, but that is a really good jumping-off point that you should use.

Your one thing this week

If you came up with a lot of no's, hear me clearly on this. That doesn't mean that you're bad at this. It means that you're too busy running the business to track these kinds of things, and I totally understand that's normal. Nobody expects an owner to be a compliance department. But like I said, ignorance is not bliss. You're still on the hook for being a good employer, and we want to make sure we get you taken care of. This week, do one thing: run that six-question check on your company and write down your number of no's. Don't fix anything yet. Just get honest about the starting line. That's where I'd want you to start.

Or you can hop on and do my free HR audit. Go to saltandlightadvisors.com/hraudit. It's a quick 10 questions, it takes just a few minutes, and I'll give you a score: if you're at a risky place, if you need attention, or if you are doing great. That's a great place to start.

Next week we're going to take the first gap head on. Do you actually have to post salary ranges in your job listings? Some states are requiring it, some states aren't, and I'll give my hot take on that. It depends on where you are, and it's spreading to more states faster than I thought, so we are going to get into that.

Listen, I know that compliance can feel like chaos, but this work is worth it. So don't waste the chaos, friends. Embrace it. I will see you next Tuesday.

Resources To Keep Building

If you counted more no's than yes's, take the free HR Audit to see where your people systems actually stand. → saltandlightadvisors.com/hraudit

Resources to keep building:

🎯 Take the free HR Audit — Score your HR systems in 5 minutes and see exactly where your gaps are. 👉 saltandlightadvisors.com/hraudit

🎙️ Listen to Don't Waste the Chaos — This episode: [per-episode link]. More at the show feed. 👉 [per-episode URL]

📚 Explore the HR coursework — Self-paced courses, tools, and resources to build your HR systems step by step. 👉 saltandlightadvisors.com/resources

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Kerri Roberts https://saltandlightadvisors.com
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EP 145: Your 90-Day AI Roadmap for HR - Turn the Whole Series into a Plan | AI in HR Series