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The Basics of Human Resources for Small Businesses

February 15, 2001

The United States Supreme Court has indicated that good human resources
practices can help employers defend against legal claims brought by
their employees. Yet, in these days of fast-paced business operations
and constantly changing employment laws, it is often difficult for a
small business without full-time Human Resources assistance to
adequately assess its employment practices. Although an in-depth audit
of such practices is always worthwhile, for employers who are not yet
able to commit the time to such an audit, a basic understanding of some
of the most common areas of concern can be extremely useful.

Wage and Hour Classifications

Perhaps one of the most common mistakes made by employers

is the failure to properly pay employees overtime because they have

been misclassified as exempt from this requirement. Contrary to many

employers’ understanding of overtime requirements, simply placing an

employee on salary does not make him/her exempt. Unless the primary

duties that are being performed by the employee are of an exempt nature

as defined by state and federal law, the employer must pay the employee

time and a half for all hours worked beyond forty in a workweek. If the duties

do, in fact, allow the employee to be classified as exempt, a Connecticut

employer must also be certain that the employee receives his/her full salary

for any week in which he/she performs any work. Reducing a salary in any

week that a Connecticut employee performs work, with very limited exceptions,

may result in the loss of the exemption. Unlike certain other wage and hour violations
that may result in only minor fines, misclassifying an employee can
result in substantial liability.

Time Records

Connecticut law requires all employers to keep a true and
accurate record of all hours worked by non-exempt employees. It is not
sufficient to assume that employees have worked their scheduled hours
unless otherwise noted, and it is similarly unacceptable to have
employees turn in virtually identical time sheets each week (e.g., 9 to
5 with a half hour for lunch noted each day). Time sheets should be an
entirely accurate record of when the employee began and ended work,
including whether he/she started five minutes early or left ten minutes
late. Employers who use time clocks, should be certain that the clock
does not automatically deduct any time, and when employees forget to
punch in or out, the proper times should be handwritten in and initialed
by both the employee and supervisor. As with misclassification of exempt
employees, failure to keep accurate time records can result in serious
liability.

Documentation

Employers often either fail to complete or improperly complete documentation.

For example, all employees must complete an I-9 form within three business

days of hire. A review of such forms will likely indicate that some are missing

and others have not been accurately or fully completed. Similarly, employment

applications may ask for too much information (e.g., questions related to medical
conditions, date of birth, immigration status, etc.) or, alternatively, too little

information (e.g., has the applicant signed any agreement that would prohibit or

limit his/her ability to work for the company). Employers who use employment

agreements of any kind should be certain that their practices and the agreements

are providing them with necessary protection. For example, a non-competition

agreement that is signed after hire may be unenforceable. A simple review of

documents and related practices can save employers from fines, penalties and the risk
of entering into unenforceable agreements.

Personnel Files

In addition to the failure to properly complete other types of documentation, a

review of personnel files often reveals inadequate written records regarding

performance problems. Performance evaluations and written warnings are

important tools for communicating with employees. Too often verbal exchanges

result in a supervisor believing that a certain message has been conveyed, but

the employee leaving the meeting with a completely different understanding of what
occurred. Written documentation underscores the importance of an issue
and leaves the employee with a better understanding of the steps he/she
must take to be a success at his/her job. Detailed, complete
documentation of any performance issue that leads to a negative
employment action is essential when a business is called upon to defend
an employment-related complaint.

Written Policies

A basic review of Human Resources practices must include a review of

written policies. Written policies, whether reflected in a few informal ones

or a detailed employee handbook, often have not been carefully reviewed to

ensure that the policies allow for appropriate flexibility. Policies should not be

susceptible to an argument that they create a contract of employment, and

they should be periodically revised and updated to reflect actual practice. On the
other hand, many small employers have the incorrect impression that if a
practice is not reduced to writing, then it cannot be used against them.
As a result, these employers decline to create any written policies.
Employers without written policies should consider whether the lack of
writings is not, in actuality, interfering with the protection the company is seeking.

Proper administration of human resources issues is complex and ever
changing

The time spent assessing policies and practices can, in most instances, help

businesses avoid or greatly limit liability.

For further information, please contact John Zandy at 203.498.4330 (jzandy@wiggin.com) or Marcia Keegan at 860.297.3733 (mkeegan@wiggin.com)