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Top 7 HR Mistakes to Avoid

It’s not easy managing your workforce, no matter how big or small your company is. If you’re trying to handle human resources (HR) yourself, it can be far too easy for some things to fall through the cracks, which can cost your small business a lot of time and money. Check out these common HR mistakes and learn how to avoid them.

1. Hiring the wrong staff

When your staff feels overworked and is begging you to hire additional team members, it can be easy to rush the hiring process to find someone as quickly as possible. Not taking your time, however, can lead to hiring someone that isn’t quite right for the position or your company. They might even end up leaving your company shortly after starting, which will put you in the same position you started in.

You can hire the right people for your team by creating a solid hiring plan, which should include

  • writing a detailed job description,
  • creating a profile of your ideal candidate,
  • asking a standard set of interview questions,
  • asking questions specifically about company culture, and
  • taking your time throughout the process.

2. Rushing the onboarding process

After you’ve found the right person for the job, you probably want them to start working as soon as possible, so you hand them a stack of new hire paperwork and let them loose. However, this won’t give them a chance to truly assimilate into your company and could lead to bigger problems down the road – like sloppy assignments or increased employee turnover.

To help ensure that each member of your team has all the tools they need to succeed, create a standard onboarding process that lasts throughout their first 90 days with your company. During that time, introduce them to their coworkers, offer them training, and start to assign them projects. If you don’t know where to start, talk to your current team and ask what resources and training they wish they had had when they first started.

3. Misclassifying your workers

You might be tempted to call someone an independent contractor to avoid paying payroll taxes. But, calling someone a contractor who is really an employee can end up costing you far more than their payroll taxes would have.

If you’re having a difficult time determining if someone is a contractor or employee, you can consider three categories outlined by the IRS:

  1. Behavioral control – If you control how work is performed (including when and where to work and what tools to use), you’ve likely hired an employee. If you only control the final product but not how the work is completed, you may have hired an independent contractor.
  2. Financial control – If you purchase equipment for the worker, reimburse their expenses, and pay them a regular wage, they’re probably an employee. If the worker supplies their own equipment, takes on other jobs at the same time, and is paid per job, then they’re likely an independent contractor.
  3. Relationship – If you provide the worker with benefits (like insurance or vacation pay) and expect the relationship to continue indefinitely, they are likely an employee. If you do not provide benefits and hire the person for a specific job, they’re likely a contractor.

If you still aren’t sure whether someone is an employee or contractor, we encourage you to speak to an employment attorney.

4. Not updating the employee handbook

Your employee handbook is a great way to share your policies with your team. You might include policies about at-will employment, discrimination, harassment, time off, etc. You’ll also want to include any current federal, state, or local employment laws.

Because employment regulations can change frequently, it’s important to update your handbook at least once per year. After you’ve updated your handbook, make sure to share it with your employees and ask them to sign an acknowledgement that they’ve read and understood the policies.

Learn more about how to write an employee handbook.

5. Not documenting problems

If you fire someone for performance or behavioral problems, they might decide to file for unemployment benefits. If you do not have proof that they aren’t eligible for benefits, then your unemployment insurance rate might increase. Even worse than that, your former employee might try to sue you for wrongful termination.

If someone is having performance or behavioral problems, make sure to document every conversation you have with them and every infraction. That way, if you do end up firing the worker, you will be able to challenge their unemployment benefits claim and have supporting evidence for a potential wrongful termination lawsuit.

6. Not verifying work eligibility

Every time you hire a new employee, you’re required to verify that they’re allowed to work in the U.S. by asking them to complete an I-9. If a staff member doesn’t complete the form completely or if you don’t file it properly and you get audited by a federal government agency, you could face a hefty penalty.

When you hire someone, verify that they’ve completed the form entirely and submitted appropriate documentation. Then, file all your I-9 forms in a separate, centralized location that you can access quickly if needed and keep them on file for three years after an employee’s date of hire or one year after their termination, whichever comes later.

Then, make sure you regularly review the files to ensure nothing is missing and that you have updated documentation. For example, if a team member has temporary work authorization, make sure to reverify their documentation every time it expires. Don’t forget to keep the forms on file for three years after an employee’s date of hire or one year after their termination, whichever comes later.

7. Not displaying workplace posters 

There are federal, state, and local labor posters that businesses are required to display for their staff to see. These posters inform your team of their legal rights, and not displaying them could result in hefty fines or lawsuits.

To make sure you always have the most up-to-date posters, contact government agencies and ask what posters you’re required to display, where to display them, and how often the posters are typically updated.