Judges Or Auctioneer Gavel And Money On The Wooden TableHR has a lot of responsibility in the workplace, to say the least. They manage everything from hiring new employees, to choosing a benefits plan, to making sure that company policies are in compliance with federal and state laws. With so many responsibilities, it’s easy to understand how some things might fall through the cracks – however, these cracks can be costly.

BenefitsPro reported that in 2014 alone, over 7000 lawsuits were filed under the Employee Retirement Income Security Act (ERISA), totaling $1.3 million in settlements. In other words, when HR messes up, it costs the company a lot of money.

If you are a manager or C-suite executive, it’s important for you to help your HR department avoid costly mistakes. To help you out, we’ve rounded up the 5 most common mistakes in HR so that you can know how to avoid them.

Asking illegal questions during an interview

While most employers know that it is illegal to ask an interviewee about their age, race, gender, pregnancy or disability status, that doesn’t mean it doesn’t happen. Sometimes, interviewees let it slide; other times, they decide this is a company they don’t want to work for. And yet other times, they sue for discrimination.

To avoid this pitfall, keep your questions limited to the professional arena. You can even have HR draft a list of permissible questions, and stick solely to that list. You should also have HR help you when drafting the initial job description, making sure it doesn’t list requirements that could be viewed as discriminatory.

Not being clear on your overtime policy

Employers who are not clear about their overtime policies often end up with employees working unapproved overtime hours. While employees may say they needed to work overtime in order to get the job done, most companies do not want to pay unplanned overtime wages. So one of two things can happen: You can pay, and cut into your budget, or you can refuse, and risk a lawsuit.

Another overtime issue is when HR wrongly classifies an employee as being ineligible for overtime pay. In fact, the Fair Labor Standards Act has very specific guidelines for what renders an employee ineligible, and it’s up to HR to apply those guidelines accordingly.

To keep within legal overtime frameworks, set a clear overtime policy for employees. Whether it is setting a blanket ban on overtime, always allowing it, or requiring employees to receive individual approval for each overtime assignment, make sure you have a policy, and that your employees sign on it.

To check if your employees are exempt from receiving overtime pay or not according to the Fair Labor Standards Act, read here, and then have HR do their own due diligence.

Thinking that not all laws apply to your company

It’s true that not all federal laws apply to all companies, but HR needs to do proper research in order to determine which laws apply, and which don’t. Assuming that certain laws don’t apply because, for example, you have fewer than 50 employees, or you are affiliated with a non-profit, is a recipe for disaster.

In order to stay in compliance with the law, hire an HR professional who is 100% familiar with the laws, or outsource to a consulting company, broker or agent who can do an assessment for you. They should be well versed in EEOC, Department of Labor, OSHA requirements, and any other relevant laws.

Not documenting performance problems or complaints

Sometimes managers have issues with employees, but HR is not so keen to record them. They think that it will blow over on its own, or that a warning will do the trick. This is not a good HR practice, and here’s why: Let’s say a number of managers have come to HR to report the lackluster performance of a certain employee. However, the last documented performance review of this worker was 11 months ago, and it was great. If you fire him, he may have cause to sue – after all, there are no documented cases of poor performance – only a sterling report!

Therefore, be sure to record any performance problems or complaints that occur, even though it means more paperwork.

Messy Firings

When the time comes and you need to fire an employee, there is a wrong way and a right way to do it. The wrong way is firing an employee in public, or during a private meeting, to get emotional and drag out the conversation. The right way is to make sure you have legal back-up to what you are doing, and then to arrange a private meeting and state the facts with as much consideration as possible without becoming critical or apologetic.

Some examples of laws to review are: Is this person pregnant? Disabled? Have they filed a Worker’s Compensation claim in which firing can affect the claim? Do you have documentation supporting your reasons for firing this employee? Has this employee received warnings in the past? What about the employee’s contract? Is it time-restricted in any way?

If HR has made sure you are in the clear in all these aspects, you can then proceed with the termination process. A good way to ensure that you don’t stumble during this incredibly difficult meeting is to rehearse beforehand. Practice with someone from HR or in front of the mirror alone. As usual, rehearsing can ensure you are better prepared.

Other HR Tips

Additional HR tips include making sure that employees have filled out all their paperwork and that  managers have regular training regarding sensitivity and discrimination. If you have any questions regarding the HR practices of your company, feel free to contact Corporate Financial. We have over 20 years of experience in HR consulting and would be happy to help ensure that your company is in compliance with all necessary laws.