Failure to comply with employment laws and to keep up with changes in the HR arena can result in serious and costly mistakes for employers. Understanding what you can, can’t and shouldn’t do regarding employee issues can be a time-consuming and frustrating task for small business owners. An HR compliance review by a trained professional can uncover existing problems, provide solutions and help avoid lawsuits.
According to a recent article by Theresa Minton-Eversole in HR Magazine, “Most lawsuits can be traced to issues related to hiring, performance management, employee discipline or termination.”
How much does an employment lawsuit cost?
In addition to the time spent preparing the company’s defense, bad public relations and poor employee morale that result from an employment lawsuit, the actual monetary damages can be devastating for a business. According to the Nakase Law Firm, “The average cost of out of court settlements for employee lawsuits is approximately $40,000. Approximately 10% of discrimination and wrongful termination cases will have a $1 million settlement. The majority of employment cases, when taken to court, are ruled in the employee’s favor.”
Some of the most common HR problems:
- Misclassification of exempt and non-exempt jobs – “salaried” does not mean exempt from overtime requirements!
- Misclassification of employees as independent contractors – a worker may actually be an employee if the employer controls how, when and where the work is done
- Inadequate records retention
- Personnel files that are incomplete
- Form I-9 (Employment Eligibility Verification) errors – government fines range from $234 to $2,332 per mistake
- Outdated (or missing!) federal and state labor and employment law posters
Company policies that should be reviewed:
- Payroll deductions
- Final pay practices
- Jury duty leave
- Medical marijuana – legal in 36 states, District of Columbia, Guam, Puerto Rico and U.S. Virgin Islands
- Harassment prevention – company must have a written policy with complaint and investigation procedures and provide employee training in order to have an affirmative defense against a lawsuit
An HR professional can help you with all of your human resource needs.
From hiring the right employees, running background checks, creating employee handbooks that include anti-harassment policies and procedures, and so much more, Next Level Solutions can work with you to provide the services that you need to run your business.
For more information about our accounting and human resource services, contact Next Level Solutions at email@example.com or (225) 330-8347.