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7 Common HR Compliance Mistakes (and How to Avoid Them)

From employee misclassification to overlooking personal development milestones, here are seven answers to the question, "What are some common HR compliance mistakes, and how can we avoid them?"

  • Employee Misclassification

  • Not Paying for Time Worked

  • Not Updating Your Legal Knowledge Often

  • Failing to Comply With Wage and Hour Laws

  • Not Complying With Immigration Laws

  • Not Having an Employee Handbook

  • Missing Continuing Professional Development (CPD) Points

Employee Misclassification

Based on my 19 years of practice in the employment law field, I estimate that between 50-75% of the small and medium-sized businesses operating in Arizona misclassify employees, either intentionally or unintentionally.

We don't work with businesses that intentionally classify an employee as a 1099 when they know the employee is W-2 (typically to avoid paying payroll and other taxes). So I direct this advice to any business that takes legal compliance seriously.

To avoid misclassification, ensure your HR manager and team have appropriate training in classification and the surrounding legal issues. One cost-effective way is to engage in-house counsel, or outside counsel, to train the HR department and team on this subject in an interactive meeting. If you work with outside counsel on this issue, a flat fee is appropriate if your lawyer offers that billing option.

Robert Reder, Attorney, Blythe Grace PLLC

Not Paying for Time Worked

We must pay employees for time worked. This includes any time when the employee is working, even if the work is not directed by the supervisor. This can include time spent on a task before and after the employee is officially “on the clock,” working lunches and breaks, as well as a host of other items.

There are many reasons employees may not be paid for all of their time worked. These can include a lack of training, poor record-keeping, and failure to track time worked.

Not Updating Your Legal Knowledge Often

One common HR compliance mistake is not keeping up to date with the most current labor laws and regulations. As these laws are constantly changing and evolving, it's difficult to keep up with all the updates.

To help avoid this mistake, employers should consult a legal expert who is knowledgeable about local, state, and federal labor laws that apply to their business.

This role is crucial for any organization looking to avoid costly fines or other penalties because of non-compliance.

This will help them avoid costly fines or other penalties that could result from non-compliance.

Aviad Faruz, CEO, FARUZO

Failing to Comply With Wage and Hour Laws

This can occur when employers miscalculate overtime pay or require employees to work off the clock or during meal breaks. To avoid this mistake, employers should ensure that they properly classify their workers as exempt or non-exempt and that they are paid for all hours worked. Additionally, employers should review state and federal wage and hour laws to ensure their policies comply with all regulations.

Lukasz Zelezny, SEO Consultant, SEO Consultant London

Not Complying With Immigration Laws

At the moment, the US immigration laws are significantly more complex than they were a few years ago, and some businesses haven't caught up—both for verifying the eligibility of candidates from an official documentation perspective and shielding them from any possible discrimination because of their status.

The topic of immigration will only heat up soon, so HR leaders need to add this to their, no doubt, already long list of to-dos for the year. My suggestion would be to hire a specialist in this area, one whose job it is to be well-versed in changes to immigration law, as it changes rapidly.

Not Having an Employee Handbook

One of the most common HR compliance mistakes is not having an employee handbook. It provides guidelines for employees and establishes company policies and procedures, which can protect employers from potential lawsuits.

Employers must create a comprehensive employee handbook with all the necessary information to avoid this mistake. It should be written in plain language and be easily accessible to all employees. Additionally, employers should regularly update it as laws and company policies change.

Mariusz Michalowski, Community and Career Expert, Spacelift

Missing Continuing Professional Development (CPD) Points

Falling short on Continuing Professional Development (CPD) points at the end of a reporting period is one common compliance mistake. Many industries require a set number of CPDs, and not meeting the quota can make a surprise audit a nightmare.

The best way to ensure CPDs are up to date is to schedule training regularly each year and keep records in a central database for easy access and updating.

Alexandre Robicquet, Co-Founder and CEO, Crossing Minds