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What are some common HR mistakes that small businesses make?

Whether you are a small business or not often depends on the industry you are in. For example, in finance and insurance, the Small Business Administration considers you a small business even if you have up to 1,500 employees. If you provide professional, scientific or technical services, your business might be considered small even if you have 1,000 employees and bring in $20 million a year.

So, really, a small business could be anything from a sole proprietor working from home to a thriving company that has locations in several cities. No matter what a small business looks like, though, its HR staff may be susceptible to some common errors.

Misclassifying contractors as employees

You run many risks when you misclassify workers as contractors instead of employees. The tax ramifications alone could mean a difference of hundreds of thousands of dollars. You could also be liable to the misclassified workers themselves for things like workers' compensation, overtime pay and the like.

Often, these mistakes happen when a growing business contracts with workers who eventually become true employees, only they are still under 1099 paperwork instead of W-2s.

An incomplete or outdated employee handbook

An employee handbook is a great way for HR to explain company policies and to empower workers. All too often, these handbooks were incomplete to start with or were okay at first but have since become out of date. Incomplete or outdated handbooks can look old-fashioned, showing the company as out of touch, but perhaps more importantly, can get the company in legal trouble. The law changes fairly quickly, so HR should revisit handbooks once a year. In 2018, potential issues to look out for include disability accommodations, parental leave and sexual harassment.

Shoddy employee tracking

It is a big problem if HR fails to track employees' hours, overtime, vacation time, paid leave, breaks and so on. It could be that the company ends up owing employees for time worked.

A knowledgeable business lawyer can help with all of these issues, getting your HR department back on track and reducing your risk of costly litigation.

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