At 40 people you need real HR coverage now, but you rarely need a full-time HR hire yet. The work at this size fills part of a week, not all of it, and several big federal rules switch on at 50 employees, so the right move is senior part-time help before you cross 50 and a full-time hire once the work fills 40 hours a week. Data on 973 venture-backed UK startups shows most hire their first HR person at 40 to 50 people, and almost all have one by 100 (startup HR study).
Why is 40 people the tipping point?
Because the law starts counting. By 40 you are covered by most federal employment rules, and the next set lands at 50.
| Headcount | What applies | Source |
|---|---|---|
| 1 or more | Equal pay law, a Form I-9 for every hire, Utah new hire report within 20 days | EEOC, Utah DWS |
| 15 or more | Federal discrimination laws (Title VII, ADA, GINA) and the Utah Antidiscrimination Act | EEOC, Utah Labor Commission |
| 20 or more | Age discrimination law (40 and older) and COBRA continuation coverage | EEOC, DOL |
| 50 or more | FMLA leave (50 employees within 75 miles) and the ACA employer mandate and reporting | DOL, IRS |
| 100 or more | Annual EEO-1 workforce report | EEOC |
The ACA line catches companies early because it counts part-time hours. The IRS’s own example: 40 full-time employees plus 20 part-timers at 60 hours a month counts as 50 full-time equivalents, which makes the company an applicable large employer for the next year.
How much HR work does a 40-person company have?
More than founders think. The same study put the HR workload at a 30-person company at about 28 hours a week, or about 17 hours after software takes the admin. At 40, it is higher.
That work is hiring, offer letters, onboarding, leave questions, pay and classification calls, manager coaching, complaints and exits. At most 40-person companies it lands on a founder, the COO or the controller. One commenter on r/startups described a company with no HR until about 40 people, where the owner was personally approving every medical benefit request until he hired part-time help (thread).
What does a full-time HR manager cost?
The median HR manager earned $149,280 in May 2025, with the top 10% above $267,810 (BLS). Wages are 70% of what private employers spend per worker; benefits are the other 30% (BLS, June 2026). So a median-paid HR manager costs about $213,000 a year before recruiting fees.
At 40 people, that buys a full week of HR for a job that fills part of one.
What are the signs you need HR help now?
Check each line that is true for you:
- A founder or ops lead spends more than a few hours a week on people issues.
- You expect to pass 50 employees, counting part-time hours, within 12 months.
- You have employees in more than one state.
- Your offer letters and handbook came from a template and were never reviewed.
- You pay 1099 contractors for ongoing, core work.
- A manager is sitting on a termination or a complaint and does not know the next step.
- You cannot say what your turnover was last year.
Two or more checks means the gap is already costing you time or risk.
Stuck on this at your company?
Twenty minutes. We’ll tell you what to fix first, and whether we’re the ones to fix it.
Book a free 20-minute HR checkPart-time senior HR or a full-time hire: which fits?
| Senior part-time HR | Full-time HR hire | |
|---|---|---|
| Best fit | 15 to 150 people | Past 150, or constant hiring and employee issues |
| Hours | 5 to 24 a week, set in advance | 40 a week |
| Time to start | This month | Often 60 to 90 days to hire |
| Seniority | Senior from day one | Set by what you can pay |
| Cost | Fixed monthly plan | Salary plus about 30% for benefits |
The usual path: part-time senior help now, then that same help writes the job description and runs the search for your first full-time HR hire when the work fills a week.
What should a 40-person company do first?
Find out what is broken before you pick a model. Our People Audit costs $2,500 and takes 10 business days. We review your offer letters, handbook, worker classification, personnel records, final pay and leave practices, and state notices, then hand you a written report with every gap ranked by risk, the fix for each, and a fixed-price plan. If you sign a DMD engagement of $3,500 or more, or month one of a monthly plan, within 30 days of the readout, the $2,500 is credited.
From there, our monthly plans run 5 to 24 hours a week and are quoted on the free call. If you need to hire, our flat-fee search is $5,000 to $12,000 per role, never a percentage.
Who wrote this?
Deven Downey, our founder, has built HR from zero four times, including across a 13-brand portfolio. On one team we cut turnover from 40% to 10%. Building in-house recruiting saved $1.5 million in agency fees across more than 100 hires.