True Stories about Small Businesses with 2 very BIG HR issues

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Creative Commons License photo credit: Jacobo Tarrío

#1 One company in Vancouver, WA that grew faster than they could have ever dreamed forgot to stop and revisit the people side of their business. With year-over-year employee growth of 35% in sheer volume of staff they grew to over 50 employees quickly. When they started the company everyone was paid a salary and were exempt from overtime. By the time they got to 50 employees some of the employees were administrative and/or entry-level making them non-exempt from overtime. This company unknowingly had been paying everyone on an exempt basis and ineligible for overtime even though the Federal Law would have qualified them for the OT. There are all kinds of penalties that can be assessed in this situation so you don’t want this to happen to you.

Take Away: The first time you hire employees outside of the ‘owners’ of the company consider how you are paying them (exempt, non-exempt, incentive, bonus, etc.). With each threshold that your company meets…10 employees…20 employees…30 employees…revisit how you are classifying employees to make sure you are following federal and state wage and hour laws. For more information visit the FLSA website.

#2 It was late on a Friday evening in 2011 when I received a call from a new client in Portland, OR who we will call Jill. Jill’s company had only 5 employees and she was calling because she had been told that one of her employees had sexually harassed another. After significant dialog and an investigation the facts were as follows; one employee physically groped another employee on company property  and during work hours. Jill was astounded that her 5 person company had such a blatant sexual harassment issue to deal with and even more bewildered that she had not thought to put employment policies in place i.e. an Anti Harassment policy. The employee was put on immediate administrative leave during the investigation and relieved of their duties permanently shortly after the investigation was concluded.

Take Away: It’s a good idea to put employment policies in place as soon as you start hiring employees. This particular employer implemented an employee handbook soon after this incident for added guidance for employees and protection for the employer. Oregon is an at-will state which reduced the risk in this case slightly.

Both of these companies are still thriving in business after these issues. It’s always better to discover HR issues on your own than to find out from a federal or state agency audit, employee complaint or god forbid a lawsuit. This gives the company the control in how they manage and recover from the turmoil. An HR Assessment would have uncovered that the employer in the first story had not been paying their employees in accordance with the FLSA and in story two that they lacked the proper employment policies. Does your company need an HR Assessment? Contact me for more details.

*A few of the details have been changed for confidentiality purposes

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