Whether you are a start-up or an established organization, there are certain employment laws that you must follow and best practices that (if implemented) will prevent you from facing major problems. Implementing these strategies will allow you to focus on your business – not cleaning up issues or worse yet, your defense in court! Here are the Top 8 HR mistakes employers make when it comes to managing their workforce (no particular order):
#1: Misclassification of Employees
One of the most common mistakes companies make is misclassifying their employees. Per the Fair Labor Standards Act (FLSA), it is critical for the administration of compensation and benefits that employees be correctly classified per federal and state wage/hour and benefit laws. Factors to consider include the amount of hours worked, hourly/salary rate, and type of duties provided. To learn more, click here.
#2: Incomplete I9 Forms
The purpose of the Employment Eligibility Verification Form I-9 is to verify an employee’s identity and to confirm the person is eligible to work in the U.S. Missing or inaccurate I-9 forms can result in fines ranging from $110 – $1,100/per occurrence! For more detail, refer to my past note on Form I-9 here.
#3: Poor 401(k) Plan Design and Administration
401(k) plans are a great benefit for your employees. Accurate record keeping of your 401(k) plan is crucial as you will need to file the plan’s annual return/report with the Federal Government. Ensure your 401(k) plan fits your organization’s needs and is set for success. Click here for more detail.
#4: Not Adhering to Payroll Deadlines
Payroll and payroll taxes are subject to federal, state, and local regulations and considerably affect a company’s net income. Not to mention, employees expect to be paid accurately and in a timely manner. Make sure your payroll administrator/department is complying with the necessary regulations as they pertain to salary payments, withholdings, and deductions to keep your company out of legal trouble.
#5: Having Little or No Documentation on Employee Performance Issues
Failing to document performance issues can be a costly mistake. Should an employee be terminated for performance issues, you will need adequate documentation supporting your decision. Make sure to include dates, specific examples, and have the employee sign off on any performance-related discussions.
#6: Failing to Investigate Employee Complaints
When an employee comes to you with a complaint, they expect you to investigate it quickly. Failing to do so or doing so inadequately can be costly should the complaint result in a lawsuit. During an investigation, you need to interview relevant witnesses, document your findings, and take corrective action if necessary.
#7: Having Inaccurate Job Descriptions
Job descriptions are necessary for a multitude of reasons – employee classification, recruitment, performance management, succession planning…the list goes on. They are also critical should you find yourself in court. Make sure your job descriptions are accurate and keep them up-to-date.
#8: Not Updating or Having an Employee Handbook
Employee handbooks outline the policies and guidelines of the organization. Operating without an employee handbook is risky and could land you in a sticky situation regarding an employee dispute. Ensure your employee handbook is always up-to-date and that your employees have access to the latest version.
If your company is making any of these mistakes, take the time now to correct them. Don’t put it off. Ensuring you are implementing these best practices and compliant in these areas now will save you significant stress, many sleep-less nights, and big sums of money!