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Carnival of HR: The Top 5 HR Mistakes Small Companies Make

Career Innovations is proud to host this week's Carnival of HR.  Carnival of HR is dedicated to bringing together the best posts from the HR blogging community!  This post was submitted by Michael D. Haberman. Michael is an HR expert, Consultant, Advisor and Writer.  He uses creative human resource solutions to provide answers to time, money and service issues with employers and their employees.


Many small companies face issues when it comes to hiring because many do not having a clear definition of the job for which you are going to hire them.  Here are the Top 5 HR Mistakes Small Companies make:


number one 400 clr 9875 Not Hiring the Right Person

Hiring someone just because you know them

-You brother, son, friend,in-law, neighbor and even spouse may not be your best employee and
can often be your worse nightmare.

-If you don’t get along with them in your personal life you will not get along with them in
your business life.


Not having a clear definition of the job for which you are going to hire them

-Have a current job description and know whatknowledge, skills and abilities are needed.

-Match your candidates background to these KSAs

-Then decide if they are a potentially good employee.


Feeling sorry for someone. Hiring someone just to help them out.

-Making your company a charity is not the road to prosperity.

-There is nothing wrong with helping people. But consider alternatives to putting them to work in your company.


Not reference checking them

-Do a criminal check at a minimum. Avoid negligent hiring.



number two 400 clr 9869Ignoring Government Regulations


There are 26 or more Federal laws/regulations that apply to companies. Only two of them deal with companies larger that 100 employees. These include:

-Title VII of the Civil Rights Act, Pregnancy, ADEA, Sexual harassmentAmerican Disabilities Act, FMLA


-FLSA or the Wage and Hour laws


-Davis-Bacon and other Executive Orders controlled by the OFCCP

They all require some sort of recordkeeping, the failure of which may lead to fines, lawsuits and even jail time.


Consequences of Ignorance

In 2010 the USDOL, the EEOC and the IRS have all announced increased investigative and compliance efforts. No longer satisfied with civil remedies they are seeking criminal charges. These charges may include:

-Increased fines
-Seizure of personal property, including vehicle and houses of officers
-Charges of felonies of conspiracy and harboring
-Charges of tax evasion
-Loss of Federal contracts
-Jail sentences


How To Avoid Problems

-Know what laws apply to you. Different laws apply to different size companies.

-Constantly update your knowledge. These laws are not static. They get added to or new laws get passed. 

-If you can do it, have a good HR person on staff or a good consultant to call.


number three 400 clr 9871Misclassifying Employees


The Fair Labor Standards Act requires that employees classified as non-exempt be paid overtime.

Solis reiterated this by saying, "If someone is stealing your wages, you can and should call the Department of Labor….We can help, and we will help. If you work in this country, you are protected by our laws. And you can count on the U.S. Department of Labor to see to it that those protections work for you"


 Exempt vs. Non-Exempt

To be considered an Exempt employee:

-Must be paid a salary of at least $455/wk

-Must meet the duties test for executive, administrative, professional, computer or outside sales definitions.

-Non-exempt employees must be paid for hours worked greater than 40 in a week.

-Can be paid on a salary basis or an hourly basis.

-You cannot avoid overtime by paying someone a salary. Salary DOES NOT MEAN Exempt.

-Title means NOTHING, it is duties that are important.


Independent Contractors

Calling someone an independent contractor does not make them so.
The general rule is that an individual is an independent contractor if you, the person for whom the services are performed, have the right to control or direct only the result of the work and not the means and
methods of accomplishing the result. Facts that provide evidence of the degree of control and independence fall into three categories:

Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?

Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)

Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance,
vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the


The ABC Test


Under statute and case law, an "employment" relationship will exist (unemployment insurance coverage is required) unless and until the employer is able to demonstrate that all three parts of the so-called "ABC Test" are met. Those tests are:

ASuch individual has been and will continue to be free from control or direction over the performance of such services, both under his contract of service and in fact; and

B. Such service is either outside the usual course of the business for which such service is performed or that
such service is performed outside of all the places of business of the enterprise for which such service is performed; and

C.Such individual is customarily engaged in an independently established trade, occupation, profession or business.


number four 400 clr 9877Documentation

Documentation is the bane of managers and supervisors. They hate doing it and HR hates keeping track of it. But PROPER documentation will save youmoney, heartache and time.

First step in documentation is an Employee Handbook

Hiring requiring certain documentation:

-1-9- Required by Immigration
-Payroll Records- required by FLSA
-Tax Records- Required by IRS
-Termination requires certain documentation
-Records of disciplinary actions

Keys to Proper Documentation


Document as situations happen

-Keep notes on all employees, not just a few
-Use objective criteria
-Support job-related observations with facts, but avoid conclusions
-Focus on deficiencies, not causes
-Remember that others will read your document


number five 400 clr 9878Not Rewarding Employees


In a poll conducted by human-resources consultant Right Management at the end of 2009, "60% of workers said they intended to leave their jobs when the market got better." WSJ Online 5/25/2010


Taking “advantage”of employees during a recession is bad for business. It causes turnover. Turnover is expensive.
And many companies are finding that people are harder to find the second time around....


-Not paying people their “worth” is a short-term solution that causes turnover
-Proper evaluation is not just about money. It is about encouraging good work behavior and results and correcting “not-so-good”behavior
-Communicating constantly is rewarding
-People like to be informed
-Recognition and appreciation is rewarding too


Food For Thought


Federal Government is Stepping Up Compliance Efforts



-The USDOL has hired 250+ Wage and Hour investigators
-OSHA has hired 100+ new inspectors
-The IRS has hired more investigators to seek out contractor classification violations
-The EEOC has stepped up efforts to search out wage discrimination
-The White House has formed the National Equal Pay Enforcement Task Force and will be targeting Federal Contractors



Legislation Does Not Go Away

We are dealing with laws that have been in existence since the 1930’s. There are 14 or more pieces of HR related legislation (other than Healthcare) pending at this moment.

Biggest among these are:

-Employee Free ChoicAct
-Paycheck Fairness Act
-Healthy Families Act
-Paid Vacation Act
-Patriot Corporations Act

Once enacted we live with these. Educate yourselves and contact your legislators.

Omega HR Solutions, Inc

Original Post


A blogging carnival is a social media meme in which a group of bloggers submit blog posts to a “host” who compiles the posts into one collection that they then publish on their site on the prearranged day. The posts and bloggers are generally focused on an similar area of interest, such as Human Resources, and may or may not have a theme which unites the posts on a specific question or topic. Carnivals occur on a regular schedule, monthly/biweekly/weekly, and the carnival hosts change after each event. You can find more information about blog carnivals here.

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