5 HR Actions Every Emerging Business Should Take in 2010

Posted by Kenneth N. Winkler on

  1. Implement and/or Review Employment Policies. Every business, no matter what the size, should have its personnel policies clearly set forth in writing, ideally in either an Employee Handbook or Personnel Manual. There are several reasons why it is critical for a company to have an Employee Handbook or Personnel Manual. Foremost, a handbook or manual is the most effective way to communicate to employees the company’s rules, procedures, benefits and expectations. Also, established policies are a valuable tool to ensure fair and consistent treatment of employees. This is important because inconsistent application of rules and confusion over unclear policies often leads to lawsuits. Furthermore, in order to keep unemployment insurance rates as low as possible, it is important for employer’s to prevail before the Department of Labor (“DOL”) on unemployment claims.  To win such a claim with the DOL an employer must, as a threshold, be able to prove that the claimant had knowledge of the rules that led to the termination. This burden is difficult to meet without the existence of written rules.Some of the most common and important provisions that should be contained in a handbook include the following: Employment at-will statement; a disclaimer that the handbook is not a contract; Equal Employment opportunity policy; non-discrimination and non-harassment policies; codes of conduct; email, internet and communication policies; safety rules; a drug testing policy; and a description of any company benefits such as vacation and insurance, if applicable; It is a good practice to have employees sign acknowledgment forms stating that they have received the handbook and to keep the acknowledgments in the employees’ personnel files.
  2. Protect your Confidential Information and Business Relations. Many business owners do not understand that employees may lawfully make plans to enter a competing business while they are employed. Absent enforceable restrictive covenants in an employment agreement, the employee is entitled to make arrangements to compete, even before he/she ends their employment, and, upon termination of their employment, immediately compete. One way to protect your business against such conduct is to have key employees sign agreements containing restrictive covenants that protect customers, clients and competitive information of your business. Such agreements can contain covenants against competition, solicitation of clients, recruitment of employees, and use of confidential information.  For example a non-disclosure covenant can prohibit the use of confidential information for any purpose other than the advancement of your business.  Confidential information is generally information related to your business which does not constitute a trade secret, but as to which you have a legitimate business need to protect.  Such information can include client contacts, preferences and pricing, and marketing plans, for example.  Georgia courts are among the strictest in the country when it comes to enforcement of restrictive covenants in employment agreements and, therefore, professional advice from an attorney familiar with Georgia law in this area should be sought and form agreements should not be used.
  3. Comply with Wage and Hour Laws. The number of wage and hour lawsuits continues to rise. Misclassifying employees as exempt from overtime continues to result in multimillion-dollar settlements and verdicts against employers.  The Fair Labor Standards Act (“FLSA”) requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.  However, the FLSA provides an exemption from both minimum wage and overtime pay for employees employed in bona fide executive, administrative, professional and outside sales positions as well as certain computer positions.It is a common misconception that if an employee is paid a salary as opposed to an hourly rate the employee is exempt.  In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the DOL’s regulations.  To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week.  Job titles do not determine exempt status.  For 2010, employers should conduct audits to determine whether their employees are properly classified and the business is not running afoul of the FLSA.Other common pitfalls to avoid include failing to maintain pay records as required by law, not paying employees for working off- the- clock, failure to pay overtime, using comp time in lieu of overtime, and making improper deductions from exempt employee paychecks.
  4. Document Performance and Disciplinary Issues and Resolve Conflict. If you have employees, certain problems will inevitably arise that require counseling and discipline.  If not dealt with up front, these problems will escalate and cause further problems. Indeed, many employment discrimination claims stem from rather trivial incidents that are not resolved.  Employers can avoid many lawsuits by making sure that problems are addressed and not ignored.It is essential that management properly document problems and the steps the company takes to resolve these problems so there is no confusion or dispute later on as to what happened.  A well written disciplinary warning, memo or performance review can be all that is needed to thwart a frivolous claim.
  5. Train! Train! and Train! Having a handbook or policy is never enough.  It is crucial that a company train its supervisors about how to avoid major mistakes regarding personnel issues.  Don’t assume that supervisors know what to do when a problem arises. Case decisions make clear that employers who fail to properly train their staff about fair employment practices do so at their peril and may be subject to punitive damages.  While employees do not have to be lawyers and understand the nuances of every law, they do need to know how to recognize a problem and resolve it.  Training is essential, but it need not be expensive.  Even a one hour training session that reminds employees to act professionally and not ignore known problems is simple and can be extremely effective.  The bottom line: Effective training has a positive ROI.  Any savings made by cutting training costs will be lost by the costs of litigation and an unhappy workforce.