1. Altering the At-Will Nature of Employment
What is at-will employment? At-will employment means that an employee can be terminated at any time, for any reason – with or without cause. On the other side of the coin, it means that the employee can leave his or her position without any repercussion. For most employees, it is presumed they are employed at-will, unless he/she can show evidence to the contrary.
Have you given your employees reason to believe that their employment is not at-will? This commonly takes place during performance reviews or during meetings announcing promotions or pay increases. Making comments either verbally or in writing that employees will not be terminated as long as certain goals are met, or if certain events do not occur, can alter the nature of at-will employment. Avoid doing this, and make sure that employment is described as being at-will in both new-hire paperwork and your employee handbook.
2. Failing to obtain workers’ compensation and disability insurance
Worker’s compensation and disability insurance are two separate policies that cover different issues. Worker’s compensation insurance covers any injuries that employees incur while working. Disability insurance (in both short-term and long-term versions) covers non job-related illness or injury, and typically offers a payment that is a portion of the employee’s total wages.
Nearly all employers are required by state laws to carry worker’s compensation insurance. The opt-outs are few and far between, such as some states granting an exemption to employers with fewer than three employees. Only a handful of states require disability insurance, but it can be a great investment that reduces turnover, and can potentially protect you from Americans with Disabilities Act (ADA) related litigation.
It can be easy to let these forms of coverage lapse, particularly if you have employees performing very low-risk clerical actions. Your coverage can also become insufficient as your company grows in a manner that leads to having employees covering different duties, or in different states. Consult with you counsel to make sure you are maintaining the correct coverage for your needs.
3. Not maintaining recruitment and hiring documentation for prospective employees
After you hire a new employee, what do you do with the resumes and interview notes on the people you did not hire? If you think you can toss them, think again. Many federal laws, such as the ADA and Age Discrimination in Employment Act (ADEA), control how long you must keep the records of your hiring process.
For most employers, records must be kept for one year after the hiring decision has been made. Why? Hiring decisions cannot be discriminatory. Do you have enough documentation to show that your hiring processes are fair? This means maintaining resumes, correspondence, email correspondence, meeting calendars, and meeting notes of all candidates for filled and unfilled positions.
4. Keeping personnel, medical, and citizenship records of employees all in one mixed-up file
A new supervisor in your facility is having issues with an employee’s performance, and asks HR for the employee’s file in order to review it. What information will HR be giving to that supervisor?
Both medical and citizenship records can contain information that touches on protected classes. Having this information separated will allow you to easily provide supervisors with only the information relevant to workplace performance. This can help ensure that the supervisors are making decisions based only on pertinent information.
Most employers have at least three or four different filing systems for employment records: the main personnel file that contains employee performance information, the medical/confidential file that contains protected/non-job-related or confidential information, and the payroll records that are usually maintained separately by the payroll administrator(s). Form I-9 files should always be maintained separately.
Additional files may be necessary to maintain hiring records, investigations, drug test results, and other documents. Employers must give special consideration to where and how they maintain these files, limiting access to only those with a need to know, and protecting applicants and employees from discrimination, identity theft, breach of privacy, and Health Insurance Portability and Accountability Act (HIPAA) violations.
5. Failing to Document Overtime Exemption Qualifications through a Job Description
The most common classifications for employees are hourly and exempt. Hourly employees must be paid for overtime, exempt employees are “exempt” from this and other wage requirements due to the nature of their jobs. It might be tempting to classify numerous employees as exempt to get around this, but there are requirements to follow. Exempt employees are typically those in executive, administrative, professional, IT, and sales positions.
Job descriptions can be helpful in justifying an exempt position. Do you have detailed job descriptions for all of your exempt positions, and are they up to date? As employees take on new duties and their jobs fundamentally change, make sure that their job descriptions change to match.
