I am an attorney. That said, the thought of putting together a will or providing advice on the impact of a bankruptcy strikes fear in my heart. I know just enough about those areas of law to be dangerous. The area of expertise on which I focus is employment law. When a friend or client asks me for guidance outside of my practice area, I tell them they are asking a foot doctor to practice brain surgery and refer them to an appropriate specialist.
Over the years, I have had a surprisingly high number of law firms and solo practitioners as clients. Unfortunately, every one of them has come to me after an issue has arisen. Each has been focused on practicing law. Along the way, though, they have forgotten that they are also managing a business and, consequently, employees. Perhaps they have just enough knowledge of employment law to be dangerous or, perhaps, the issues never occurred to them. Each made mistakes that could have been avoided with a little preventive care.
● Wage and Hour Laws. The most prevalent mistake my law firm-clients have made is no different from the mistake many employers make; they did not consider the implications of wage and hour laws on their business. Too many are paying a paralegal and/or an office administrator a “salary” and presuming that this covers any overtime pay requirements. This mistake has the potential to sneak up on them in one of two painful ways. Either the employee becomes disgruntled and sues, or, on a more frequent basis, the Department of Labor & Industries conducts an audit. The Department then demands fines and back payment of all the taxes that should have been paying into the system all those years. Then the auditor usually refers the matter to his counterpart at the Department of Revenue where this agonizing process starts all over again.
● Employment Contracts. The number of law firms that have “employment contracts” with associates continually surprises me. An employment contract is no different from any other contract; there are financial repercussions if it is breached. But in the employment arena, an employment contract is rarely necessary and, if not thought out thoroughly, can cost the firm both financially and emotionally. An employment relationship can generally be governed at the employer’s discretion. But if there is a contract, it takes on the characteristics of a business relationship and the employer has signed away a host of rights. Granted, there are occasions when a contract is to the benefit of both parties. I worked for a number of years at a general practice firm and, on occasion, a corporate lawyer negotiating a deal would think to have one of us in the employment law department review the executives’ contracts. There was always astonishment at the number of revisions we made. With our different practice focus comes knowledge of a variety of potential prognoses that should be considered.
● Handbook and Performance Reviews. Once a lawyer-client told me that he thought he should avoid documentation whenever possible. Documentation is, however, the best friend of anyone handling HR issues. Just like having a contract at the outset of a partnership gives all of the parties notice of the expectations of that relationship, a well‑formed handbook notifies employees of their employer’s expectations. Well‑written performance reviews are notice of whether the employee is meeting those expectations at various points along the way. Further, documentation is proof: proof of performance issues, proof of communication, proof of the relationship and its struggles and triumphs.
These are some of the most prevalent HR gaffes I have seen when working with small employers. There are others but most, if not all, are avoidable. Most can be resolved with minimal pain via consultation with an employment law practitioner. The good news is that a little preventive care can protect what you are working so hard to accomplish: a strong and healthy business.
