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Are You Exposed? The HR Compliance Gaps That Put Businesses at Risk

By Jim Welsh, CPA, SHRM-SCP

September 16, 2025
Current image: HR Consulting Article Image

Human Resource (HR) Consulting Services are designed to help small and mid-sized businesses reduce risk, stay compliant, and create healthier workplaces. Compliance with California labor laws, payroll practices, and employee management requirements can feel overwhelming for many companies, especially those without a dedicated HR professional. By partnering with an HR consultant, you gain practical guidance on policies, procedures, and best practices that protect your business from costly mistakes and support long-term employee retention.

Why HR Consulting Matters

If you’re running a thriving small business, chances are HR has been managed by an office manager, bookkeeper, or even by you as the owner. Your approach may have worked in the early stages—but as your business grows and scales to new heights, the complexity of California’s HR and labor laws quickly outpaces the capacity of those stop-gap solutions.

From wage and hour laws to employee classification rules, one overlooked detail can lead to penalties, lawsuits, or even the closure of your operation. HR consulting helps you identify these risks before they become expensive problems.

Common Compliance Mistakes

Here are some of the biggest risks:
  • PAGA lawsuits (Private Attorney General Act): Repeat offenders can be penalized up to $200 per employee per pay period. However, with the needed reform to the law last year, employees can remedy their violations with reasonable steps that can significantly reduce penalties. We can help prevent violations, resolve issues quickly, and build compliance records to mitigate any future risk.
  • Wage and hour violations: Not paying overtime correctly, failing to provide legally required meal and rest breaks, or misclassifying employees as contractors.
  • Termination errors: In California, a terminated employee must receive their final paycheck immediately. Even mailing it a day later can result in fines.
  • Outdated handbooks: Policies that don’t reflect current state law can expose your company to liability if challenged.
  • Recordkeeping gaps: Employee files, payroll records, and health information must be stored properly and separately, with employees having the right to review their records upon request.
  • New risks are always on the horizon: California employers also face new requirements like workplace violence prevention programs. SB 553, effective July 1, 2024, can expose a company to new categories of risk.

These risks aren’t just theoretical—they appear in everyday business operations. Here’s one example of how a small oversight can quickly become a compliance issue.

A small business in California terminated an employee on a Friday but didn’t provide a final paycheck at the time of departure. Instead, they overnighted the check, which arrived on Monday. That seemingly minor delay resulted in fines under state labor law.

Working with an HR Consultant can help businesses avoid these costly mistakes by having clear policies, updated procedures, and proactive compliance audits in place.

Where Do You Start?

California’s employment laws are among the nation’s most stringent and dynamic, from strict wage and leave requirements to Assembly Bill 5’s (AB5) contractor rules. With over 700,000 job openings reported by the Bureau of Labor Statistics in June 2025, the state’s dynamic labor market adds another layer of risk for employers, from misclassification to costly wage claims. An outsourced HR consultant helps you stay compliant, strengthens leadership, and builds retention strategies—protecting your business while keeping your team engaged.

Ask us how an HR Consultation with Grimbleby Coleman can reveal gaps, reduce risk, and strengthen your workplace. We partner with businesses to assess and improve key areas of their HR operations. Whether you want to stay compliant, improve employee experience, or strengthen culture, we provide insights, recommendations, and hands-on support tailored to your goals.

Contact us to schedule a call!

Are you in compliance? Take our free HR Compliance Assessment!