Compliance is one of the trickiest areas for small business owners. With ever-changing state and federal laws, it’s easy to overlook small but critical areas in your HR operations. Unfortunately, even minor mistakes can result in big fines—or worse, lawsuits.
Here are five common compliance errors we see all the time:
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Misclassifying Employees as Independent Contractors
Many businesses mistakenly label contractors who meet employee criteria. This can trigger IRS audits and penalties. Always review IRS and Department of Labor guidelines before classification. -
Outdated or Incomplete Employee Handbooks
A handbook from 2019 won’t protect you today. Laws change quickly, and missing or outdated policies can weaken your legal standing during disputes. -
Failure to Track and Pay Overtime Correctly
Non-exempt employees are entitled to overtime. Not calculating hours properly or not paying promptly can lead to wage claims or lawsuits. -
Improper I-9 Documentation
Form I-9 must be accurately completed and stored for every employee. Errors or missing documents during an audit could result in hefty penalties. -
Lack of Clear Disciplinary or Termination Procedures
Inconsistent enforcement or missing documentation during terminations may be seen as discrimination or wrongful termination. Have a clear, documented process—and stick to it.
Avoiding these mistakes isn’t about perfection—it’s about awareness and consistency. At The Face HR, we help ensure your policies, documentation, and practices stay on track and in line with today’s regulations.