As Texas experiences significant economic growth, small to medium-sized businesses face challenges managing human resources, compliance, and employee-related risks. Neil Katz, CEO of Exceptional HR Solutions, explained in a recent interview how fractional HR services provide expert support without the cost of a full-time department. With over 25 years of HR experience, Katz emphasizes that business owners often spend 10–50% of their time on people-related issues, diverting focus from core operations. Fractional HR services help companies navigate hiring, onboarding, investigations, compensation, and compliance, allowing leaders to concentrate on growth.
Katz advises business owners to hire experts in their disciplines and get back to what they love because they probably don't love dealing with HR matters anyway. A major area of risk for Texas businesses is the misclassification of employees as 1099 contractors. Katz warns that if a worker uses company email, equipment, or receives majority income from one employer, they should likely be classified as a W-2 employee. People don't get to choose if they want to be a contractor. The law defines what a contractor is and what is not. If you're not sure, the rule of thumb is to hire them as an employee.
Exceptional HR Solutions also supports municipalities, such as the City of Bonham, providing expertise without the overhead of a full-time HR director. Katz highlights that fractional services are ideal for small cities and businesses that need professional HR support but lack the budget for a dedicated department. Businesses and municipalities seeking HR support can visit ExceptionalHRSolutions.com for more information. The full interview with Neil Katz is available on The Building Texas Show's YouTube Channel where he discusses 1099 versus W-2 classification issues that could significantly impact small businesses.
