The law is intended to constrain our actions. It is the box that companies have to operate within. Stay within the lines and all is well. Stray outside, and the potential for expensive problems rises the further outside of that box you go. In other words, this post is about compliance and managing risk. (Don't worry, the next post is about actually doing things that can help your company make money.)
So what do I see as the Top 10 mistakes?
1. Assume common sense and the law are the same. Business owners tell me all the time that they are just using common sense. Stop. There is no relationship whatsoever between the two.
2. Wage and hour. Paying people is tricky. The law was passed in 1938. The workplace was nothing like it is now. Wage and hour lawsuits are the single biggest liability a company has. Make sure your supervisors and payroll people are trained. You may think that your outsourced payroll vendor will keep you from making a mistake, but that is not the case. You need to know how to pay properly and do it, even though you don't think the rule makes sense (see Mistake #1.)
3. Employee misclassification. Yes, this is related to Mistake #2, but an mistake here may not only cause you a wage and hour problem, but carry over into ERISA and tax compliance. There isn't room here to get into details, but I am talking about exempt vs. nonexempt on one hand and independent contractor vs, employee on the other. The key thing to remember is that the going is assumption is that all of your workers are nonexempt employees. If you think they should be classified differently, be prepared to prove it. The consequences for being wrong can be onerous.
4. Interfere with employee concerted activity. Employers tend to think that if they do not have a union, employees have no rights. Not true. If you have 2 or more employees who want to talk about a work issue (pay, benefits, and conditions of work) then that action is protected activity. I had a CEO once who wanted to fire an employee because she asked a question about a wage freeze in a town hall meeting. Don't go there. Be sure your handbook doesn't have policies you cannot enforce (like prohibiting employees from discussing their pay.) The National Labor Relations Board has been busy the last few years, so if you haven't looked at your handbook lately, the likelihood is you have several policies that are not OK.
5. Poor selection, training and support of supervisors. This is a soapbox issue for me, so I will try to restrain myself. Don't just pick the best worker or the most senior employee as the supervisor. Some people are just not suited to the role. The needed skill sets are different. Choose wisely. Since your company is liable for what your supervisor says and does, provide training on all of the things that tend to get your supervisors (and company) into trouble. Then give them some ongoing support--continuing education, mentoring, and coaching are critical.
6. Don't take employee complaints seriously. This was the topic of my previous post, so I am not going into detail here. Listen.
7. Don't worry about compliance. Small business owners tell me they don't have to worry about compliance because the government only worries about the big companies. There is some validity to that. However, I have had several clients in the 3 - 50 employee range who have had audits or other interactions with government agencies. Often, because of employee complaints (See Mistake #6). Some, just because they were in a target industry. A few, just because....
8. Don't know what laws apply to your business. The bigger you are, the more laws you have to worry about. If you are a federal contractor, things are even more complicated. You need to know what laws apply to you and just as importantly, which do not. If you are small, you may be trying to follow statutes that just don't apply to you. I had a company with just 3 employees contact me to look at their handbook. They had taken a sample from the internet some years before and filled in the blanks and used it. One of the policies in the handbook was Family Medical Leave, which they thought they had to provide. This is just too much money for a small organization. Nonprofits sometimes think they don't have to comply with employment laws because they are charities. You have an exemption from certain tax liabilities--everything else you have to comply with, the same as your for profit brethren.
9. Don't do/don't document safety training. No matter what services or products you provide, training is required--before the employee starts to work. Even if that employee is a temp. This doesn't have to be complicated. For many organizations, the requirements are relatively few, but you have to document the training. First, because we don't want anyone to get hurt. Then, because we really don't want to have to pay the fines (which have gone up dramatically in recent months.)
10. Poor selection/oversight of outsourcing partners. Many companies outsource parts of their HR function. That's fine. The field is complicated and getting more so every day. Most business people just don't have time to keep up. Your outsourcing partners should. That's why you are paying them. However, in the end, if things aren't done correctly, you, not them, are on the hook. Pick your partners carefully and check up on them. If they put up any resistance to your oversight or make it difficult, find someone else.
Bonus: Yes, this is a top 10, but there is one more I'll give you as a bonus. Tolerate jerks. If you tolerate people at any level of the organization that are just jerks, you are asking for trouble. This seems so simple, but it happens in almost every organization. If they can't be coached out of their behavior, the sooner you jettison them from the organization, the better.
That's my Top 10. Someone else may have a different set, but if you start with these, you'll avoid most of the big dollar traps.
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