As an employer, you must have the proper policies in place and enforce those policies effectively and consistently. The rules and regulations governing employers are complex and constantly evolving, so compliance can prove difficult. In addition to federal regulations there are also state regulations to consider that may be stricter than the federal regulations, for example in California.
Although recognized as a necessity, compliance is almost a dirty word in the business world. Yet, it is a massive risk to any company if their leaders and management do not adhere to or understand applicable regulations. Education and training notwithstanding, those of us long enough in this line of work see time and time again business leaders (owners and management) making decisions that present liability and often result in costly litigation. When that happens the savvy HR professional is only left to say “I told you so!” and hope they don’t also get called for deposition in court.
Believe me, we wish we didn’t have to say that. If there were less HR nightmares we would all have more time to focus on culture, retention, strategic planning, and organizational development – you know, the little things that better position organizations for growth. And now that HR is finally recognized as a respected profession, not only can business owners be held personally liable for their actions but so can their HR managers. So, how can we all minimize the headaches and keep our firms running smoothly? Familiarize ourselves with the below list of common employer pitfalls and avoid them.
- Worker misclassification: Are my workers employees or independent contractors? Are they exempt to overtime or non-exempt under the FLSA? It is not as simple as it may seem on the surface, and many often make the determination based on tax implications or overtime savings which is a very risky undertaking and can result in serious penalties. There are guidelines and national standards set by the federal government that employers should follow when determining classifications. Some important factors to consider regarding independent contractors are whether the organization has control over the individual’s work, and whether the individual can incur a profit or loss. As far as exempt or non-exempt classifications, this is often confused with salary or hourly employees, but it is not the same thing. In order to qualify for exempt status there is both a salary test and a duties test, and those vary depending on the specific position. Be sure to look not only at the federal requirements, but also those specific to the state you do business in.
- Overtime pay issues: Federal wage and hour lawsuits continue to increase every year and pose the greatest employment litigation threat to businesses today, according to legal experts. In the State of California, employers must pay overtime not only when an employee works more than 40 hours in a workweek, but also when they work more than 8 hours in one day. At a company I once worked for I had to train managers after hearing from several members of their staff that they were allowed to work during their 30 minute meal break to make-up for missed time from the previous day. Not only a did this violate meal break obligations, but because there was no make-up time policy in place it also caused the employees to incur overtime for which they were not paid. The company ended up paying the employees the overtime once alerted and we avoided a potentially serious liability, but talk about an HR nightmare! Another HR nightmare involves a friend of mine who runs a car wash in California. His employees requested to work 10 hours per day 4 days per week, allowing them a 40 hour workweek and a long weekend. He said sure why not and then 2 years later got sued by several of the employees for making them work more than 8 hours a day without paying them overtime. He had to pay back the overtime plus penalties and his business really struggled financially. Employers beware!
- Firing foul-ups: One thing I have discussed with many business owners is the misconception that because an employment contract is at-will they can fire an employee at any time for any reason. Particularly during the standard 90 day introductory period. Well, this is partially true because in a sense they can. However, if they want to avoid a wrongful termination lawsuit for example they should have policies and procedures in place that they follow before firing an employee. It may sound ridiculous but I have actually been told by a business owner that he wanted to fire an employee because she had bad breath! I have also been approached by managers who want to immediately fire an employee for performance reasons (not related to misconduct) when 2 weeks prior they had a shining review. If employers have policies in place and don’t follow them that is even worse than having no policies at all. Take a look at your policies. Are there procedures for discipline and termination? If so, follow them consistently and always document, document, document. When it comes to producing documents for litigation, attorneys can even pull emails, so everything is discoverable. If you have an HR department they should always be involved in disciplinary action and terminations.
- Leave of absence and disability accommodation misunderstandings: I won’t get into too much detail on this topic because I could write multi-volume articles on it, but I will just point out some key factors to consider. Leaves of absences can be very tricky for those who are not familiar with the law. If an employee is asking for 4 weeks off work because of their own serious illness, depending on the size of your company they will most likely qualify for a protected leave of absence under FMLA and CFRA (for California employers). Employers need to track the time their employees take under FMLA/CFRA and should have policies in place that explain the procedures the employee and employer are expected to follow. If your organization has under 50 employees they you are not subject to FMLA/CFRA but you should still have policies in place for leaves and follow those policies equally with all employees. As for disability accommodations, when an employee can show that he/she is disabled and cannot perform one or more of his/her essential job functions, an interactive process must take place. Many employers overlook this and simply say to an employee who has asked for accommodation that there is nothing they can do without even engaging in the process with the employee or asking for doctor recommendations. It is not always required that the employer accommodate an employee, particularly if it causes undue hardship for the company, but a process must be followed in order to determine what can be done in order protect the company from any liability.
- Discrimination and harassment unpreparedness: These issues can pop up unexpectedly at any time in any organization, despite the real intention, so it is important to be proactive vs. reactive. Employers should have a complaint procedure and harassment policy in place that employees are aware of. Whether the complaint procedure includes going to various managers or HR, employees need to know they have a safe place to take their complaints and that they will not be subject to retaliation. There are classes of individuals who have discrimination protection under the law. In California the Fair Employment and Housing Act (FEHA) prohibits harassment and discrimination in employment because of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, mental and physical disability, medical condition, age, pregnancy, denial of medical and family care leave, or pregnancy disability leave. Also in California, harassment laws were expanded this year to state that harassment does not have to be motivated by sexual desire. I have investigated claims involving careless mistakes that could have been avoided, so it is imperative to be prepared before issues arise, not afterward.