After nine successful seasons, NBC’s “The Office” called it quits earlier this year. Catch an episode in syndication, though, and the administrative missteps of Dunder Mifflin’s branch managers and the valiant efforts of the paper company’s downtrodden HR guy to counsel his misguided bosses will still leave you laughing. HR mishaps and insensitive gaffes make for timeless television comedy, but in reality, a disregard for employees’ rights can be high-stakes drama.
Government regulations dictate how companies treat their employees and potential employees. A systemic disregard for these regulations, or “noncompliance” in HR-speak, can have costly consequences. Below is a sample of some common violations along with their consequences.
Wage Payment
A small business owner works her hourly, non-exempt employees nearly 50 hours each week, but only pays them for 40 hours. A competing business owner also works his employees 50 hours each week, and although he pays them for 50 hours, he only pays the regular straight time rate rather than incorporating any overtime pay.
Consequences: Several employees file Wage and Hour charges, which in turn lead to audits of all payroll records. Both employers are found to be non-compliant under the Fair Labor Standards Act. One is required to repay two years of back pay, while the other is required to repay three years of back pay because it was determined that the violations were knowingly and willfully committed.
Unemployment Compensation
A small company terminates an employee for work-related misconduct. The company, however, never provided the employee with an employee handbook, so he never signed a policy and procedure acknowledgment. In addition, the company neglected to maintain a written file of the employee’s misconduct.
Consequence: Because the company cannot present documented evidence of the employee’s misconduct or demonstrate that the employee should have known of the company policy, the company is charged with a wrongful termination claim that it cannot dispute.
Hiring
During a job interview, an owner of a small business casually asks the applicant if he has children. The applicant is not hired, and he assumes it is because he responded that he has three small children.
Consequence: The applicant files an EEO charge and ultimately a suit against the business. The business owner is forced to pay extensive legal fees to defend against the suit.
Harassment
A supervisor at a midsized manufacturing company continually makes sexist comments and tells subordinates off-color jokes that offend a number of employees. One employee complains, but the company does nothing and the negative behavior continues.
Consequence: The employee files an EEO charge, and later, a harassment suit. After incurring sizable legal fees, the company ultimately agrees to a significant settlement.
The most effective way to ensure your business is complying with today’s complex employment laws is to retain knowledgeable HR professionals. Whether you hire in-house or outsource HR, having access to experts whose job it is to stay current on HR issues and help train and monitor your managers can help you avoid costly pitfalls and prevent poor practices that could damage your company’s reputation. If you think you can’t afford a professional HR adviser, ask yourself whether you can afford not to have one, because the cost of noncompliance is no laughing matter.
John Allen, is president and COO of G&A Partners, a Texas-based HR and Administrative Services company that manages human resources, benefits, payroll, accounting and risk management for growing businesses. For more information, about the company visit www.gnapartners.com.
This article was featured in the October 2013 issue of *Smart Business Magazine.
