How an HR Department Works: Functions and US Compliance
Last Updated on October 21, 2026 by chada sravas
The HR department is responsible for all personnel issues in the organization and involves a lot of processes, from recruiting a new employee till the last day in the company. The clearest way to illustrate how this works is to observe one example of persons hired, i.e., a designer named Maya during her first year in a fictitious small company based in the US.
Before day one: finding and hiring Maya
The process begins with the manager indicating a need for a designer. HR is involved in developing the job description, publishing the position, screening applicants, and setting up interviews. After Maya is selected, HR offers her the position, runs a background check if this is done in the company, and makes sure the pay meets the expectations of similar positions. For the recruiting side, see how to attract talent to companies.
Day one: paperwork and onboarding
Maya fills out two forms. Form I-9 verifies her identity and her eligibility for work in the U.S. She fills in Section 1 by the first day of work and HR fills Section 2 in the next three business days after verifying her documents. Form W-4 informs the payroll department how much tax to deduct from her paycheck for federal purposes. HR also enrolls her in benefits, shows her around the employee’s handbook, and prepares her first week schedule.
Month one and after: pay and benefits
At the end of every pay cycle, HR or a payroll processing company processes Maya’s paycheck, deducts taxes and records overtime hours. The Fair Labor Standards Act prescribes the principles of minimum salary, overtime pay and payroll records applicable to nearly all companies. Perks generally include health insurance, the retirement scheme and paid leaves. If there are 50 or more employees in an organization, the company is obliged to provide affordable health insurance according to the Affordable Care Act. Currently, Maya’s employer employs only 40 people.
In addition, several companies provide attractive features like flexible hours, budgets for training, reward programs, or an EAP (employee assistance program), which includes confidential counseling for personal and work issues. Since employees place different values on perks, HR tries to get their opinions and adjust them.
If Maya is the first employee in the company, accounting issues, payroll taxes, and classification of workers are some of the reasons to consult with a tax advisor.
Months three to twelve: reviews, training and problems
Human resources organizes evaluations of staff performance, allocates budget for training programs and assists leadership with the process of promotion and adjustment of salaries. This department serves as received of complaints, too. If Maya indicates that she has been subject to harassment by her colleague, HR takes the complaint, investigates it and gathers necessary data confirming the results of investigation.
Company size decides which federal rules apply:
15 or more employees: Title VII bans discrimination and harassment, and the Americans with Disabilities Act requires reasonable accommodation for disability.
20 or more employees: the Age Discrimination in Employment Act protects workers 40 and older.
50 or more employees within 75 miles: the Family and Medical Leave Act gives eligible employees up to 12 weeks of unpaid, job-protected leave.
A number of states established lower levels of coverage so that a small entity can be protected by law in its state jurisdiction.
The feedback is provided regularly by the top managers. The Human Resources Department develops assessment criteria and administers the assessment process. If Maya is failing to perform her duties accordingly, the solution might be something as simple as clarification of the expectations and teaching and coaching. Otherwise, the HR department can assist her supervisor with developing a performance improvement plan (PIP) after defining the goals for it.
This is largely documented in the employee manual which covers topics like attendance, paid leave (PTO), behavior, filing complaints, and disciplining measures. The manual presents managers with a guideline to follow and employees appropriate expectations.
HR does not favor employees or companies. It safeguards the organization against legal risks, and the company complies with laws and rules to protect its employees as well. When it comes to serious issues like discrimination, HR can involve an employment attorney.
The last day: offboarding
During the exit process, HR is responsible for handling Maya’s exit interview, final pay, taking note of her benefits, and returning any company property. Each state decides on final pay deadlines. HR also maintains Maya’s Form I-9 for three years post-employment or one year after she leaves, whichever takes longer.
How HR changes with company size
The founder or an office manager is in charge of HR in companies with up to 10 people as payroll is outsourced. With 10 to 49 employees, the usual practice is to hire an HR Generalist and have an employee handbook written. At the range of 50 to 99 people, the company begins having an HR team, and FMLA begins to apply. At or above 100 people, the company has to file an EEO-1 report and is likely to hire HR specialists and take care of HR software. If the company does not exist yet, start with how to start a business from scratch.
Why some companies say “People team”
It is the same function with a different emphasis. “People team” or “People Operations” puts more weight on employee experience and culture than on paperwork. HR software helps with that shift: it handles forms, time off, payroll and benefits enrollment so HR has more time for conflicts, coaching and sensitive cases.
Managers shape the employee experience as much as HR does, through workload, feedback and everyday communication. HR gives them the policies and training to do that well.
