Practical HR Essentials for Every Small or Privately Held Business Owner

As we recognize National Small Business Week on May 3-9, RCO Law celebrates the hard work and dedication of the many small, family-owned and privately held businesses that support our region’s economy.

Our professionals have been advising clients, including small and family-owned businesses, for more than 150 years. We’ve guided clients and human resource (HR) professionals through a variety of human resource (HR) challenges, including audits, disputes, arbitrations, lawsuits, handbook creation and many others.

We know how hard local business teams work. Most operational risk doesn’t come from bad intentions, but from inadvertently missing the basics. To help lighten the load, we’re sharing some tips to help deliver the greatest protection and operational return for growing organizations.

RCO Law’s Tips to Consider:

1. Use written offer letters for every hire

Document compensation, title, classification, and at-will status before day one. This single step helps prevent "promised salary" disputes and sets enforceable expectations.

Have counsel review a template to get started, with periodic reviews thereafter.

2. Maintain an updated employee handbook

A handbook sets the rules of the employment relationship and provides employees with reasonable expectations. It doesn’t need to be lengthy, but it can help set conduct standards, outline complaint procedures, and document harassment and leave policies.

Review it annually; federal and state laws and regulations, as well as internal practices, change faster than most owners realize.

3. Classify workers correctly

Misclassifying employees as independent contractors is one of the more costly mistakes in small business HR. The IRS and Department of Labor apply an economic reality test — if you control the work, they're likely employees.

Accurate classification helps to prevent severe tax liability and penalties.

4. Document performance issues in real time

Verbal corrections are invisible after the fact. Write brief, dated notes after every coaching conversation and ask the employee to acknowledge your conversation by signing.

Documentation can be the difference between a defensible decision and a costly wrongful-termination claim.

5. Audit your wage, hour and leave practices

Overtime miscalculations, off-the-clock work, and FMLA and ADA accommodation missteps are among the most common claims against small employers. Conduct a simple internal audit of pay practices and federal and state-mandated leave obligations annually, ideally with counsel.

Prevention is a fraction of the cost of litigation.

Each case presents its own challenges, and each business faces its own unique circumstances. These general guidelines can help small businesses set expectations, meet state and federal requirements, and prevent disputes – which means spending more time focused on the work they care about.

If you have questions on a specific situation, we’re always here to help!