Managing a small business often requires juggling multiple responsibilities—from payroll and accounting to marketing and human resources. While some of these tasks can be handled with ease, others come with steep learning curves and potential legal exposure. For small employers, understanding the most common employment policy mistakes—and how to avoid them—is essential to protecting your business and ensuring long-term success.
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Insufficient Documentation.
You’re only as good as your record keeping. Your business should (and is required to) keep accurate reports of hours worked, wages paid, and worker classification. This helps avoid claims of unpaid wages, overtime non-compliance, and audit risks. A bookkeeper, CPA, and attorney can help support your documentation needs.
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Lack of an Employee Handbook.
All companies should have a bespoke employee handbook created with state and federal laws in mind. This handbook communicates policies, processes, regulations, and benefits, setting employee expectations while also ensuring compliance with certain regulatory requirements. It should be updated regularly to ensure that it continues to meet the needs of your growing company and is in alignment with applicable law. An attorney can assist with developing and maintaining employee handbooks for your company.
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Misclassifying Employees as Contractors.
Is that contractor an employee? It’s all too common for small businesses to misclassify employees as independent contractors or as exempt from overtime as a way to minimize taxes and benefit payments. The IRS has specific tests to determine whether someone is a contractor or employee, and the Department of Labor has definitive overtime regulations. Improper pay practices come with costly legal penalties, so understanding and adhering to these policies is vital.
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Inadequate Complaint Management
Employee complaints are increasingly common as awareness of workplace rights continues to grow. To mitigate risk, establish clear, companywide policies and procedures for addressing concerns. Ensure employees understand how to file a complaint and, if possible, have more than a single recipient for complaints. Implement a structured process for documenting, investigating, and resolving issues. When complaints arise, act promptly, maintain thorough records, and consult legal counsel to ensure all matters are handled in compliance with applicable laws and best practices.
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Lack of Employment Policy Training.
Employment policies might come from the top, but all members of your staff should be aware of them. Comprehensive training programs help ensure that your staff are knowledgeable about laws and regulations regarding anti-discrimination, harassment, workplace safety, and wage laws, as well as your internal policies. Training can help reduce misunderstandings, inconsistencies, and the unwitting violation of rules, all of which could prove costly.
Get Ahead of Policy Mistakes with Warner PLLC.
Spend time growing your business rather than focusing on the ins and outs of employment policy. Whether you’re hiring your first employee or managing a small team, Warner PLLC offers trusted counsel grounded in deep labor and employment law experience. We assist with drafting and implementing personnel policies, navigating disciplinary and termination matters, resolving contract disputes, and more. Contact us to learn how we can support your business.
