10 HR Mistakes That Can Cost Your Company Money

By Anita Buchanan, MBA, Owner, Transform! Workplace

Navigating employment law is a serious responsibility for business owners. From hiring and wages to workplace safety and harassment, business owners must navigate complex federal and state laws to protect both their employees and their business. Federal labor laws apply to an employer based on its total number of employees.

This article raises awareness of key employment laws that every business owner should know.

1. Stay educated on employment laws

There are more than 180 federal laws that govern workplace activities. These laws are primarily enforced by the U.S. Department of Labor and are complicated! They regulate wages, non-compete agreements, discrimination, medical and military leaves, benefits, background checks, and many other employee rights. In addition, states, counties and municipalities may have local laws. Know which laws apply to your business.

2. Pay wages in compliance with the Fair Labor Standards Act (FLSA)

The FLSA has specific regulations for paying wages. In addition, each state has its own set of regulations concerning pay frequency and how employees must be paid. For example, some states allow employers to pay employees through direct deposit, as long as the employee has a means of withdrawing the full amount on pay day.

Employees fall under two FLSA categories: non-exempt and exempt. There are extensive requirements for correctly classifying employees.

Non-exempt employees are paid an hourly rate for all hours worked. They receive overtime pay (regular hourly rate plus 50 percent) for all hours worked over 40 in a workweek. Common mistakes to avoid:

• Overtime must be paid even if the employer didn’t authorize the extra hours.

• Don’t allow “off-the-clock” work. Require employees to report all hours they work. If an employee is clocked out for lunch, they should be fully relieved of work duties and not do any work.

• Exempt status under the FLSA refers to employees who are not entitled to overtime pay and the hourly minimum wage. To qualify as exempt, employees must meet certain criteria and earn a minimum salary of at least $684 per week. They typically receive an annual salary that doesn't change based on the number of hours worked. Common mistakes to avoid:

• Don’t make deductions from pay for poor performance, missing partial days of work or working less than 40 hours.

3. Don’t pay someone as an independent contractor who should be an employee

An independent contractor is a person who provides services to another entity under a contract, but is not considered an employee. They typically have more control over how and when they work, and are responsible for their own taxes and expenses. Both the Department of Labor and the IRS scrutinize independent contractor status.

4. Train supervisors on basic employment law

A supervisor is your first line of defense against employment law claims. Your supervisors don’t need to be experts, but they do need to be educated on their role in preventing and reporting potential problems and violations. A good training program should include topics such as harassment, discrimination, the Americans with Disabilities Act (ADA), workers’ compensation, wage and hour laws, leaves of absence laws, hiring laws, OSHA, etc.

5. Follow up on employee complaints and concerns of uncivil behavior

If you become aware of potential harassment, discrimination, disability, bullying, etc., follow up and take quick, appropriate action. Conduct a thorough investigation and keep records documenting findings and actions taken. It is best to have a neutral third party conduct the investigation.

6. Handle work-related injuries promptly and compassionately

Carry workers’ compensation (WC) insurance and follow your WC companies’ instructions for reporting and handling injuries. Don’t treat the employee negatively because they had an injury. If so, you could have a discrimination claim on top of the workers’ comp claim.

7. Maintain I-9 Forms for all employees

Form I-9, Employment Eligibility Verification is a U.S. government form used to verify the identity and legal authorization to work of all paid employees in the United States. It must be completed correctly.

The employee presents their employer with acceptable documents as evidence of identity and employment authorization. The I-9 form includes a list of documents the employee can present. The employer cannot dictate specifically what documents the employee chooses to use. The employee must present this documentation within their first three days of employment or they aren’t allowed to continue working until they present documentation.

8. Display current labor law posters

Both the federal and state governments require employers to display information on laws such as minimum wage, workers' compensation, genetic information privacy, rights to unionize, medical leaves, and more. This information can change so an employer should review the requirements regularly. There are options for digitally posting the information for employers who don’t have a central location or have remote workers.

9. Treat pregnant and breastfeeding employees fairly

There are a number of laws protecting the rights of pregnant and new mothers including the Pregnancy Discrimination Act, Pregnant Workers Fairness Act, Americans with Disabilities Act and the PUMP Act - Providing Urgent Maternal Protections for Nursing Mothers Act. Some states have additional laws. For example, Kansas has a law requiring accommodation and job re-instatement that applies to employers with as few as four employees.

In addition, the Family and Medical Leave Act (FMLA) allows eligible employees to take up to 12 weeks of unpaid, job-protected leave for specific family and medical reasons, such as caring for a newborn, the employee’s own medical condition or a seriously ill family member. It ensures that employees can return to their same or equivalent job after their leave. FMLA applies to companies with 50 or more employees within a 75-mile radius.

10. Comply with the Americans with Disabilities Act (ADA)

The ADA applies to employers with 15 or more employees and makes it unlawful to discriminate in employment against a qualified individual with a disability. One of the ADA’s most important aspects is its requirement for employers to provide “reasonable accommodations” to employees with disabilities. A reasonable accommodation is any change or adjustment to a job or work environment that enables the employee to perform essential job functions. It’s important to note that the definition of disability under the ADA is broad. Examples of disabilities include chronic illnesses like epilepsy or diabetes, migraine, sleep disorders, back issues and depression and anxiety disorders. Even temporary impairments, depending on their severity, can sometimes be covered.

Disclaimer: This article provides general information and is not legal advice. Please consult a legal professional for advice specific to your situation. The author is not responsible for any actions taken based on this content.