- Size Does Not Matter: The Legal and Business Case for HR April 17, 2017
Business owners often assume that they do not need an HR department or employment policies because they are too small, their business is family-owned or run, or because the company is founded by a group of old friends. Think again. As we are painfully reminded every year at the conclusion of Thanksgiving, sometimes dealing with family and friends can be the pits – especially when we disagree about how to handle a problem. One common source of angst for new business owners centers on their greatest resource – employees. As the old adage goes – good help is hard to find. With the rise of gig culture, and the millennial side-hustle, it is increasingly hard to identify high potential talent, and even harder to retain talent once you have invested time and resources into their development and training. Luckily, these concerns can often be addressed with a little forethought and planning. All businesses should consider the following three action items before hiring, and especially before firing any employees.
First, identify and meet with an employment lawyer or HR professional to make sure your internal employment culture matches your public image and branding. In the case of a new business, many owners want to correct a problem that they have seen at their old jobs, or in the case of a startup, offer non-traditional forms of compensation that match the lifestyle and values of their owners, like in-office yoga, or, for some Philly startups, team-building ax-throwing classes. Working with a professional will help you understand how to structure internal employment policies, or how to structure employment offers that include stock options or commission based pay. This conversation is important to avoid conflict with wage and hour laws and regulations, or other Federal, State and Local laws and regulations that are aimed at prohibiting employment discrimination. For example, employees are increasingly seeking the flexibility to work from home or remotely as a benefit, whereas other employees request the ability to work from home as an accommodation for a disability. Understanding the difference is often nuanced, and employers need to have a firm grasp on whether, and under what circumstances, employees may be permitted to work from home. Working with a professional can help you understand how to structure and word employment policies so that there are no unrealistic expectations as to what the company can and will offer to its employees, and what employers are required to consider under the law.
Second, work with an HR professional to develop an employee handbook, and update it periodically. Many employers use an employee handbook to explain how they discipline employees, how they approach employee development, as well as to give employees a sense of business culture. This handbook should be functional, meaning that it should be updated whenever there is a change in employee policy, or a change in the law that affects your employees. However, care should be taken to follow the guidelines of the handbook, and to apply the policies consistently and equally to similarly situated employees. Many confuse an employee handbook with an employment agreement, but they are distinct. An easy way to think of it is that an employment agreement is a legal contract, whereas an employee handbook is more akin to guidelines, really. Care should be taken to identify within the body of the handbook that it is not intended to be legally binding, and employees should be required to acknowledge in writing that they have read, reviewed, and understood it. A copy of this acknowledgement should be maintained by your business’ HR professional to avoid misunderstandings and to build a paper record that an employee was on notice about a particular policy if a conflict arises.
Third, consider whether it makes sense to have an in-house HR department, or whether it is easier to outsource HR issues to a third-party HR provider. This decision is largely dictated by the number of employees you have, as well as how your employees interact with one another. For example, small teams that work closely together might benefit from having a third-party HR provider because it feels more neutral, whereas others need an on-the-ground referee. Regardless of form, every employer should have a designated professional for employees to reach out to in the case of inter-employee conflict, leave requests, or to explain benefits. For example, in the case of reports of employee harassment or intimidation, an employer has an obligation under the law to investigate the claim, and to provide some kind of relief to the affected employees if warranted. If employers ignore the complaints, or do not investigate complaints promptly, they open themselves up to a variety of harassment, and retaliation lawsuits. Retaliation lawsuits are often more successful than the underlying claim of discrimination, making these claims harder to litigate or settle. It should be noted that employees often do not feel comfortable coming forward to their boss regarding claims of harassment, or it could be the owner or employer that is the source of the harassment. As such, it is a best practice to have a neutral HR to turn to for resources, and to investigate the claims thoroughly and promptly to minimize risk.
In closing, when in doubt about how to build and maintain a great business culture, or to ensure that your business is an attractive and fun place to work, consider reaching out to a professional, and implementing the action items above.