These are some of the most common HR mistakes that we are seeing small business owners make. At Employers Resource, we work to make the lives of small business owners easier.
This article isn’t meant to point out the things you might be doing wrong. We genuinely want to help free you and your business of pesky HR related tasks that you don’t need on your plate. These “mistakes” are so common, they’re really not mistakes at all, so let us take a little pressure off your shoulders. Read through this list and learn how to avoid making any of these yourself.
We’ll split this list up into two articles so we can take a good look at each topic and talk about how to prevent it. Here are the first four mistakes that we commonly see. Make sure to check back next week for the next four!
1. Employee Related Paperwork Mistakes
Let’s start at the beginning. When you start hiring your first employees, the paperwork and compliance hoops you jump through can make your head spin. Below is a list of the items you absolutely must have for any employee.
Your new employee packet should include the following:
- Application for employment.
- Employee record sheet.
- I-9 – accurate completion.*
- Alternative Dispute Resolution (ADR).**
- Employee Handbook acknowledgment.
- Benefits/Misc deduction authorizations.
- Employer specific forms.
- Disciplinary action forms.*
- Medical related file information.*
- Workers comp file.*
- CA “wage theft prevention act” form.**
*Keep in separate file
** If applicable in your state
2. Timekeeping and Overtime
According to TSheets, 33% of employees admit they are not required to accurately track their hours. It seems easy, but there’s actually a few intricacies and laws that come into play here that make things a little more complicated.
This information will help you sort through this confusion, and prevent any compliance issues.
What exactly is work time?
The period of time that you pay your employees for probably seems like a no-brainer. However, when you start breaking down all the ins and outs of these regulations, you will realize that it’s a more complex issue than you might have thought.
Accurate timekeeping is extremely important for your business. You don’t want to end up in a situation where you find out after the fact that something illegal happened, and now the Department of Labor (DOL) is telling you to pay up.
Most importantly, you should want to make sure each employee is treated fairly. Legally speaking, however, compliance with the DOL and FLSA (Fair Labor Standards Act) is essential. When mistakes happen, they can result in stiff penalties, and possibly even jail time.
The lists below should help ensure your timekeeping practices remain in compliance with current laws and regulations. Keep in mind, though, that some of these rules will be different in some states like California. Make sure and research the specific laws for your area in order to remain 100% compliant.
The entire time an employee spends performing job related activities, or if the employee is engaged to wait, is considered work time. This includes:
- On the clock work time.
- Off the clock work time.*
- Unauthorized or unapproved work time.**
- Time spent setting up or breaking down equipment.
- Time spent making deliveries.
- Time spent running errands for an employer, even after an employee leaves work.
- Work-specific travel time.
- Break time.***
- On-call time.
- Wait time.
*When the employee ends up working during hours when they are normally considered to be “off the clock.”
**Most commonly refers to overtime worked without advance permission from the employer.
***See specific facts for California here.
What is not considered work time?
- Traveling from home to work and back.
- Meal time or lunch breaks.*
- PTO/Sick/Vacation time.**
- If an employee can leave the premises and use time for their own purposes then it is not work time.***
- Training time. ONLY if it meets the following conditions:
- Outside the employee’s work hours.
- Attendance is voluntary.
- The employee is not doing productive work while at the training.
- The training is not directly related to the job.
- On-call time at home (in most circumstances).
*See specific facts for meal time and lunch breaks in California here.
**See specific facts for PTO, sick, and vacation time in California here.
***Example: an employer tells them they can leave and come back at 3 pm then that time is not work time.
How to properly track time:
- Have employees clock in and out.
- If an employee is going to go over 40 hours in a particular week, an employer can give them time off later that week so they don’t exceed 40 hours.
- This must take place within the same work week.
- Unauthorized or unapproved time must be compensated.
- However, this circumstance can be handled as a disciplinary issue if the time was unapproved.
- You can round up or down to the nearest 5 minutes as long as over time it balances out.
Overtime rules you need to know:
- FLSA has two pay rates: an overtime rate and regular rate.
- Overtime pay is typically 1 ½ times an employee’s regular rate.
- You can pay a non-exempt employee a salary, but the amount would be converted to a regular rate so overtime can be calculated.
- Regardless of pay type, overtime is calculated by dividing total pay in a workweek by number of hours actually worked.
- Always pay overtime in the same pay period it was worked. Each week stands alone.
Be aware of unique state regulations:
- California overtime is after:
- 8 hours per day.
- 40 hours per week.
- The 1st 8 hours on the 7th consecutive day of work in a workweek.
- California also requires double-time pay after:
- 12 hours in a workday.
- 8 hours on the 7th consecutive day of work in a workweek.
- Nevada has a different minimum wage when an employee has employer offered benefits.
WARNING: AVOID THIS COMMON MISTAKE:
Do not dock pay for violations of your specific overtime rules. Any time a non-exempt employee spends working is compensable time. Instead, handle violations as a disciplinary issue.
3. Exempt vs. Non-exempt
What is the FLSA?
For purposes of this discussion we will limit this discussion to the FLSA as it applies to general business operations, and not union or governmental operations.
Before we go more in-depth, here are some basic facts about the FLSA:
- Fair Labor Standard Act. Enacted in 1930.
- Governed by the Department of Labor.
- DOL issues directives regarding the FLSA.
- DOL can act through Presidential Memorandum.
The FLSA requires employers to pay at least minimum wage to all employees and time and a half for overtime work in excess of 40 hours per week (unless superseded by specific state laws).
However, employers are not required to pay minimum wages or overtime to executive, administrative, and professional employees who satisfy the salary level and other requirements to meet one of these white collar exemptions:
- Typically the easiest to qualify when analyzing “duties test.”
- Salary Basis of $455/week ($23,660 annually).*
- Primary duty of managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
- Must customarily and regularly direct the work of at least two other full-time or equivalent employees.
- Have the authority to hire or fire other employees.
*This could be increased to $913 per week or equivalent $47,476, but it is currently in litigation.
- Salary Basis of $455/week ($23,660 annually).
- Primary Duty must include the exercise of discretion and independent judgment with respect to matters of significance.
- Primary Duty:
The performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers.
- Matters of Significance:
Refers to whether an employee has the authority to formulate, affect, interpret, or implement management, policies or operating practices, whether the employee carries out major assignment in conducting operations and whether the employee has authority to commit the employer in matters of significant financial impact.
- Primary Duty:
Learned Professional Exemption:
- Employee employed in a bona fide professional capacity.
- Salary Basis of $455/week ($23,660 annually).
- Performance of work requires advanced knowledge.
- Must be in a field of science or learning.
- Must be customarily acquired by a prolonged course of specialized intellectual instruction.
Outside Sales Employee:
- Primary Duty is making sales or obtaining orders or contracts.
- Customarily and regularly engaged away from the employer’s place of business.
Note: Employees who do not fall within any of these bona fide exemptions are deemed non-exempt, and are subject to minimum wage considerations and overtime.
4. Disciplinary Process
It’s important to have clear and well communicated rules, standards, and processes for when unacceptable behavior occurs. Rules help employee know where they stand on a range of issues.
Having defined processes and procedures allows your managers to deal with employees fairly and consistently when these rules and standards are not followed.
7 Elements of a Successful Disciplinary Process:
- If it isn’t written down, then it didn’t happen.
- The palest ink is more reliable than the best memory.
- You can’t manage what you can’t measure.
- Every employee should understand one basic truth: a respectful workplace is more pleasant and more productive for everyone.
- Unarticulated expectations are a sign of ineffective leadership.
- Listen with the intent to understand the question.
- Behavior track:
- Instruct the employee so they know better moving forward.
- The employee behaves differently because of your instruction.
- The situation is resolved. End of story.
Here are 9 Common Disciplinary Issues in the Workplace:
According to ManageElite, here are the 9 most frequent disciplinary issues in the workplace, and what impact they can have on your company.
- Attendance problems
The leading cause of disciplinary actions. Poor attendance and tardiness affect productivity and morale.
- Poor performance
That’s also very common. It impacts other employees and the organization.
- Unacceptable behavior
That can be a lot of things, depending on the situation. For instance, it may be OK to blast the radio in the warehouse, but certainly not at the reception desk in the front lobby.
- Safety violations
Employees who take risks with their safety and the safety of co-workers must be corrected quickly to avoid an accident. Safety violations include rule infractions, carelessness, risk-taking, horseplay, and so on.
Whether it is sexual, racial, verbal, physical, or any other type of harassment, it is another situation in which discipline is frequently required. Compliance with nondiscrimination laws requires you to act swiftly and effectively in these cases, stop the harassment, and deal appropriately with the harasser.
- Abuse of equipment and materials
The damage may be deliberate, but could also be the result of carelessness or unauthorized use.
- Substance abuse
It’s a growing workplace challenge that must be dealt with promptly and effectively to protect everyone’s safety and well being.
Whether the property belonged to the organization or another employee, theft could require disciplinary action, along with criminal prosecution, depending on the nature of the infraction.
- Violence or threats of violence and fighting
This must be dealt with swiftly and decisively through the disciplinary process. Depending on the severity of the offense, disciplinary action might rise to the level of suspension or outright dismissal.
Don’t forget to check back next week for part two! We’ll be covering four more common HR mistakes, how to get back on track if you have made them, and how to avoid them in the first place.