How can your company stay compliant?
Let’s get something out of the way right now: companies with 1-100 employees are not too small to have an HR problem. Even with just one employee, you have legal obligations. These obligations begin the moment you bring someone onto your payroll.
And the companies that get into the most trouble aren’t usually the ones doing something intentionally wrong. They’re the ones who just didn’t know or assumed the rules didn’t apply to them yet. As a business owner, you assume that HR support is expensive.
The team at 45 Solutions is here to help you put the right systems into place to protect you from common pitfalls. We operate on a fractional (consultant) basis to keep your costs and long-term commitments low.
Here are four of the most common — and most costly — HR compliance gaps we see in small and mid-sized businesses.
1. Misclassifying Employees in Your Small Business.
Misclassifying employees is one of the most common issues we see with small business owners. Misclassification happens when a worker is labeled an independent contractor when they should legally be considered an employee, or when a salaried employee is classified as exempt from overtime when they don’t actually meet the legal criteria. In some states, you cannot have independent contractors doing work if an existing employee is already responsible for those assignments.
The solution: You need firm agreements and contracts with your employees to clearly spell out their roles and responsibilities while also obeying state laws (which differ from state to state).
The consequences of misclassifying employees? Back pay, penalties, tax liability, and, in some cases, lawsuits. The IRS and Department of Labor take this seriously, and so should you. If you’re not sure whether your contractors or salaried staff are correctly classified, we can help.
We can take a look at your current staff and their responsibilities, in addition to how outside contractors are filling in your bench.
2. Verbal Agreements About Hours and Wages
“I told her she’d get a raise after three months.” “We agreed he’d get paid for travel time.” “She knew the job was full-time; we talked about it.”
Verbal agreements feel easy in the moment, but they are a liability that depends on two people remembering information. Common issues include disputes about pay, hours, and job responsibilities, all of which can put you in a very difficult position.
Wage and hour disputes are a common complaint to the Department of Labor, and reasons include underpaying employees, failing to track overtime, and failing to pay for all hours worked.
Our solution helps you document everything. Offer letters, pay rates, schedule changes, agreements about remote work or flex time, and job descriptions can all be put in writing for protection (and also for your sanity).
3. Missing Documentation — for Employees and in the Workplace
Do your employees have signed offer letters? Do you have I-9s on file? Are performance conversations being documented? Is your workplace posting the required federal and state notices where employees can see them?
If you answered “I think so” or “probably” to any of those, it’s time for us to step in and clean up your HR. Missing or incomplete documentation is one of the fastest ways to create an HR legal headache. When you decide to terminate an employee, a complaint is filed, or someone files a grievance triggering an audit, you will need your paperwork in order and proof that you are following all laws.
As mentioned, this includes what’s happening in your physical workspace, too. Required federal and state labor law posters must be displayed in a location where all employees can see them. Yes, even if it’s just you and two other people in a small office.
4. No Process for Handling Complaints
What happens in your company when an employee has a complaint? If the answer is “they talk to me” or “I’m not really sure,” that’s a problem. Without a clear, documented procedure for handling workplace complaints involving harassment, discrimination, pay disputes, or interpersonal conflict, your company is exposed to real legal trouble.
Employees need to know there is a safe, defined process for raising concerns and an independent, unbiased individual to talk with about the issues. Your team needs a way to easily document complaints and demonstrate they were investigated, appropriately handled, and resolved. Without that structure, even a minor complaint can escalate quickly into something much larger.
The good news? None of these issues require a full HR department to fix. They require intention, consistency, and the right partner to help you get it right. That’s exactly what we do.
Here at 45 Solutions, we are ready to help you fix these issues quickly so your business is protected and your employees know you care about how you are running the people side of your business. Get started today by booking a call with T.J. Butler: https://schedule.45solutions.net/.
