As the year winds down, most business owners are focused on closing the books and planning for growth. But here’s the truth, HR compliance is just as important and skipping it can lead to costly mistakes. If you’re running a small business without an in-house HR team, we can help you wrap up the year and start the next one strong, starting with this checklist.
Why Year-End HR Tasks Matter
Think of HR as the foundation of your business. If it’s shaky, everything else wobbles. Year-end is the perfect time to:
- Catch errors before they turn into fines.
- Update policies so you’re ready for new laws.
- Ensure your employees feel valued and informed.
Your Year-End HR Checklist
1. Update Employee Records
Ask your employees to confirm addresses, SSNs, and emergency contacts. If an employee moved and didn’t update their address, their W‑2 could go to the wrong place, leading to delays. Consider exploring a secure system for maintaining employee records.
Deadline Reminder: W‑2s must be distributed to employees by January 31 and filed with the SSA by the same date.
2. Payroll & Tax Prep
Run a payroll audit now to catch discrepancies before tax season.
- Distribute Form W‑2 to employees and file W‑2/W‑3 with SSA by Jan 31.
- Distribute 1099‑NEC/MISC to contractors and file with IRS by Jan 31.
3. Benefits Reconciliation
Review health insurance enrollments and provide Forms 1095‑B/C by Jan 31 for ACA reporting. If you have fewer than 50 employees, be sure to reach out to your benefit provider to ensure 1095-B forms distributed. If you have more than 50 employees, it is the employer responsibility to file these forms. If you need assistance filing, please reach out to the DK HR Team and we can provide guidance.
Ensure retirement contributions are within legal limits and request a year-end benefits report to reconcile with payroll.
4. PTO & Leave Balances
Calculate unused PTO, apply carryover or process payouts according to state law. Communicate your PTO policy clearly to employees.
Did you know that in California, unused vacation counts as wages and must be carried over at year end and paid at termination?
5. Make Handbook and Policy Updates
Update your handbook to reflect new laws. Check for minimum wage updates because many states update at year’s start.
Sick leave and overtime rules often change on Jan 1st as well. California’s minimum wage increased in 2025 so check for 2026 adjustments state-wide as well as for the cities where your employees work as those municipalities minimum wages hold higher rank than the state and federal minimum wages.
6. Performance Reviews
Wrap up annual evaluations and set goals for next year. Use a brief template focused on strengths, growth, and next-year objectives. This is a great time of year to check in on your employees’ performance.
7. Audit Employee Classifications
Review contractor vs. employee and exempt vs. nonexempt classifications. California’s ABC test under AB 5 affects contractor classification.
8. Schedule Mandatory Training
In California: Mandatory sexual harassment training if you have 5+ employees. Supervisors need 2 hours every 2 years; employees need 1 hour. Other states have different requirements but if out-of-state managers are managing California employees, they should be doing harassment training.
Did you know that if an out-of-state manager travels to California and performs supervisory duties while in state, they are temporarily working in California. This makes them a “California employee” during those periods — triggering training obligations
9. Review Labor Law Posters & Workplace Notices
Ensure all required federal, state, and local labor law posters are current and displayed in a visible location (or digitally for remote employees). Many states update posters annually for minimum wage, paid sick leave, and other regulations. Failure to display updated notices can result in fines.
Final Thoughts
Year-end HR tasks can be complex, and missing a step can lead to compliance risks or operational gaps. Our HR Consulting team is here to help you navigate everything from policy updates and audits to strategic planning for the year ahead. If you would like expert guidance or a customized checklist tailored to your business, reach out to us today and we will make sure you start the new year confident and compliant.
