Most small companies should have someone owning HR by 15 employees and senior HR leadership by about 50. At 15, federal anti-discrimination law starts to apply; at 20, age discrimination law is added; at 50, FMLA leave applies. Before you can fill a full-time HR seat, fractional HR covers the gap at a fixed price.
What changes at 15, 20 and 50 employees?
- 15 employees: federal laws that prohibit discrimination based on race, color, religion, sex and national origin apply, along with the ADA (EEOC). Utah’s own antidiscrimination act also uses 15 employees (Utah Code 34A-5-102).
- 20 employees: the Age Discrimination in Employment Act is added (EEOC).
- 50 employees: FMLA applies to private employers with 50 or more employees for each working day in 20 or more weeks (29 CFR 825.104).
This is general information, not legal advice. Coverage rules have details; check with your employment attorney.
Should our first HR hire be full time or fractional?
If you have under about 50 people or hiring is lumpy, fractional usually fits first: senior judgment for 5 to 24 hours a week. A full-time hire makes sense when managers need daily support and you hire steadily.
What should a first HR person build first?
Offer letters, a handbook, a hiring process and a way to handle complaints. Our Foundations project builds these once for $3,500 to $7,500.
You are past 15 people. Someone is still writing offer letters at midnight. The handbook lives in a Google Doc nobody opened since onboarding. Hiring is a scramble every quarter. A board member or peer says: “Time to hire HR.”
Maybe. Or maybe that seat is early, late or the wrong first hire. This piece is the operator checklist for companies with 15 to 150 people that want the decision, not the buzzword.
The three failure modes
1. Hire too early. You post a generalist HR role before you have volume, risk or a clear scope. You get a coordinator who becomes the default owner of everything founders still will not let go of. Cost lands. Clarity does not.
2. Hire too late. Founder-default HR runs past about 25 people. Policy gaps, messy terminations, inconsistent offers and manager guesswork pile up. You pay in turnover, legal exposure and founder hours you never get back long before the job post goes live.
3. Hire the wrong first seat. You need recruiting horsepower and hire an employee-relations generalist (conflicts and complaints). Or you need foundations (handbook, compliance, manager cadence) and hire a recruiter. Wrong seat, right budget: still a miss.
Most teams hit one of these because they treat “HR” as a single role instead of a stack of jobs with different timing.
Decision checklist
Score yourself honestly. If two or more are true, you are past founder-default.
| Signal | Hire full-time sooner | Stay fractional / foundations longer |
|---|---|---|
| Headcount | Sustained growth past 40 to 50 people with managers owning people work daily | Under about 25 people, or growth is lumpy |
| Hiring volume | Steady 2+ hires/month or multiple open roles across functions | Episodic hiring spikes you can staff project-style |
| ER / manager risk | Active issues, weak managers or recent messy exits | Low incident rate, founders still close to every people decision |
| Compliance / multi-state | Multi-state, benefits complexity or audit pressure | Single location, simple benefits, light policy need |
| Founder hours | 8+ hours/week on HR-adjacent work that is not strategy | Occasional admin you can batch or hand to fractional |
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 checkAlso ask: what do you need in the next 90 days? Recruiting throughput? Handbook and policy? Manager coaching? Payroll/benefits ops? The first seat should match the bottleneck, not a vague “we need HR.”
What a seat really costs
A premature full-time seat is not just salary. Count:
- Base plus burden: salary plus about 43 percent for benefits and payroll taxes, so a $100,000 salary is roughly $143,000 all-in
- Ramp time: 60 to 90 days before the seat is useful if scope is fuzzy
- Opportunity cost: budget locked into the wrong profile while hiring or compliance stays broken
Fractional foundations flip the sequence. You pay for scoped work (policies, hiring process, manager cadence, compliance hygiene) without owning a permanent seat until the volume justifies it. Pair that with flat-fee recruiting when you have open roles, so you are not stuffing recruiting into a generalist job description that was never going to close the pipeline.
For a quick view of what a bad hire or slow fill costs, use the cost-per-hire calculator. Run your own numbers before you post the job.
Rule of thumb: if you cannot write a 90-day scorecard for the seat, you are not ready to hire it. Buy clarity first.
Before you post the role, move the repeatable work off the founder calendar. See what to hand off first.
When full-time is the smarter move
Go full-time when:
- Hiring or ER volume is continuous, not campaign-based
- Managers need a named internal partner, not a rotating fractional calendar
- Multi-state or benefits complexity needs daily ownership
- You have a clear scorecard and the budget to match the right profile (generalist vs recruiter vs People Ops (the HR admin side))
Until then, fractional HR plus targeted recruiting usually beats a premature seat. You build the system first. Then you staff the system.
Which side are you on?
Not sure which side of the line you are on? Take the 2-minute fractional HR quiz. Whatever your result, book a free 20-minute HR check below and we will map the seat (or the no-seat plan) against your headcount and hiring load.
Questions
At what size should a company hire HR?
What laws apply at 15 employees?
Is fractional HR a good first HR hire?
- First HR hire checklist
- When should a 40-person company hire HR?
- Fractional HR vs a full-time hire
- Fractional HR quiz
Want this as a talk for your team? Ask about “Your first HR hire” on a free 20-minute HR check.