When times get tough the tough get swamped. Even in good times small-business owners shoulder multiple responsibilities. Concentrating on the revenue-producing and operational side of things is even harder when the economy turns down and there are fewer employees to share the burden.

“Business owners are looking to outsource some of the essential business processes they have historically done in-house so they can focus their efforts on their core business functions,” said Lori Underwood, San Diego district manager for Administaff Inc., a professional employer organization. “They don’t have to be subject matter experts in everything related to being an employer.”

Using outside human resources services such as payroll processing frees up in-house management time. Professional employer organizations take the outsourcing option several steps further by serving as co-employers for their client companies and providing comprehensive employment benefits. Through a contractual arrangement, the PEO handles HR management and compliance issues at the client’s workplace, while the small-business management staff continues to direct its employees in manufacturing, production and delivery of products and services, according to the National Association of Professional Employer Organizations.

Compliance issues loom large in today’s employment market

“Employers have HR concerns related to the economic rebound,” said Maria Black, general manager West Central region for ADP TotalSource. As business ramps up and they begin to hire again, “they want to know whether they are obligated to offer jobs to laid-off employees, what hiring criteria should be used and how to lawfully pay employees in compliance with federal and state wage and hour laws.”

The state of California has more than 300 government-related agencies with jurisdiction over how people are managed in the workplace, according to Underwood, and the rules are constantly changing. Gov. Arnold Schwarzenegger recently added 225 Department of Labor staff people who call on small- to medium-sized businesses to make sure they are in compliance. Fines can be significant — in some cases high enough to put a small-business owner out of business, Underwood said.