Avoiding Personnel Issues After the Hire: a Guide for Small Businesses

As I wrote in my previous article, you can avoid most personnel issues by following some simple pre-hire steps that ensure you have the right person doing the right job.

Now that you’ve hired the right employee, how can you reduce the likelihood that you will face a lawsuit or other action by an employee?

Obey all laws.

This seems like it might be a no-brainer statement, but you would be surprised at the number of employers who do business in a less-than-ethical (or legal) manner. After all, employment laws were written out of necessity to protect employees from overzealous and overreaching employers. There are several governmental agencies and organizations that oversee employment and labor relations, including The Department of Labor, the Equal Employment Opportunity Council (EEOC), and most states have an Employment Department. All of these agencies have handbooks and pamphlets designed to help small business owners stay compliant with the law.

Don’t discriminate.

Wake up everyone, it’s the new millennium and there is no room in your business for bigoted, sexist, or racist ideals. Your employees should be valued and rewarded for their contribution to the company and its goals not judged based on gender, sexual orientation, race, or handicap. Any impropriety on your part, whether it be in task assignments, salary discrepancies, or other reward will immediately lose the trust of your employees and expose you to expensive litigation.

Have a written employee policy/procedures manual.

A written policy and procedures manual is probably the most important tool a small business can use to avoid personnel problems. The manual dictates everything from employee behavior to what an employee can expect from you as an employer. It doesn’t have to be a gigantic volume of rules and regulations, but it should at the very least detail:

• Your non-discrimination statement.
• An “at-will” employment clause.
• A dress code (if appropriate).
• Description of benefits, including who is eligible (if applicable).
• Definition of the employment “probationary period.”
• Other business-specific rules, such as an email privacy statement, employee meals, and personal phone calls.

You should have your lawyer examine the manual and any future revisions to avoid any possibly contradictory statements and ensure the legality of the rules.

Hire a payroll service.

A small business owner can save herself a lot of time, money, and headache by hiring a payroll company to handle documentation and tax preparations for new hires. Missing a tax deadline, failing to file the proper forms, or forgetting to process this week’s payroll can lead to all sorts of personnel problems. For a relatively small amount of money, a payroll service will take on the often confusing tasks of dealing with state employment agencies, filing federal forms, making quarterly FICA and unemployment insurance payments, as well as reminding you when it is time to pay your employees for all their hard work.

Don’t make friends.

This can be a hard rule to follow, especially for small businesses with a small handful of employees. There should be a clear delineation between the boss and the employees. This doesn’t mean that you have to compete for the “Worst Boss Ever” award, it just means that you should keep your distance. Many lawsuits have resulted out of failed employee-employer friendships. Let your employees have a personal life that doesn’t include dinner and drinks with you on the weekends.

Consult a lawyer.

If despite your best efforts, an employee files a complaint or a lawsuit, you should immediately consult with a lawyer familiar with small businesses and employment law. The money you spend on a retainer and an office visit can help save you tons of time and money down the road. There is no substitution for the counsel of an expert.