A rising number of micro and small businesses in California are having trouble with employee-related issues. If a staff member files a lawsuit against his or her employer, the company can potentially lose thousands of dollars on settlements. Most of the time, these employee-related problems are avoidable if these enterprises hire an HR department to handle their staff’s complaints. But most micro and small businesses cannot afford to employ a full-time HR specialist. We at Gale & Vallance have created a solution! Our HR on Demand team provides affordable consultation services for entrepreneurs on an as-needed basis.
How Important is an HR Departments to a Small Business?
In our many years of experience of having micro and small businesses as clients, we have observed that they all face similar problems. One of the most common issues these enterprises deal with is employee-related internal issues.
A prudent entrepreneur knows that having an HR department is essential to the success of any business. Human resources personnel are the ones who handle employee complaints. They also setup processes that can help companies avoid employee-related issues.
Business owners should take complaints of their staff members very seriously. If a disgruntled employee files a lawsuit through the Labor Department, a company can potentially lose a lot of money. Some enterprises in California have already gone bankrupt because of the costly settlements.
Many Small Businesses in California Opt Not to Hire HR Personnel
A human resources professional is a person who has been trained and is certified to provide quality HR services to businesses. Hiring an HR specialist usually costs three to five thousand dollars a month, which is too expensive for many solo entrepreneurs and family-owned companies. This is why the owners of these enterprises opt not to have an HR department in their businesses.
Having HR personnel is very important, especially if an employee sues a business through the Labor Department. It is a company’s HR staff that defends an enterprise from these lawsuits. It is also the HR department that sets up processes that will help businesses avoid employee-related problems.
A Case of a Disgruntled Employee Who Filed a Lawsuit Against His Employer
Recently, an accountant who owned an accounting firm based in California came to us for help. One of his employees went to the State’s Labor Department and filed a complaint. The angry staff member claimed that the accountant was overworking him. He reported that he was not allowed any break periods and was not being paid for overtime work.
California responds to employee-related complaints aggressively. The Labor Department sent a letter to our client informing him of the employee’s lawsuit. The accountant was also requested to attend a hearing to explain himself. Subsequently, our business attorneys accompanied the client to the trial.
The Hearing with the Labor Commissioner
At the hearing, the Labor Commissioner asked the accountant to present corporate records that show the break periods that were given to the employee. Documents that prove that the client paid the staff member for overtime work were also requested. The Commissioner also wanted the client to bring his Employee Handbook. Unfortunately, the accountant could not provide any of the requested documents.
The client revealed that he recorded all his employees’ payroll by hand only. Handwritten records are a very untrustworthy form of documentation. The accountant also confessed that he kept all corporate records internally, instead of hiring an offsite service. To add insult to injury, the client lost all of the rogue employee’s records. We highly suspected that the disgruntled staff member could have stolen the documents before he left.
The other employees of the firm helped witness against the disgruntled staff member’s claims. They testified that their employer always allowed them to take breaks and that they were paid overtime fees religiously. Regrettably, their testimony was not sufficient to win the entire case. The accountant had to pay 10,000 USD to settle the lawsuit.
How Client Could Have Avoided the Problem
The accountant could have avoided this problem if he had hired an HR department. HR personnel could have set up a comprehensive Employee Handbook for the firm’s staff members, which is a document that should be signed by all employees before they start working for the company. It contains all the guidelines and expectations from both employee and employer.
If the accountant had hired an HR specialist, he could have had a reliable record-keeping process setup. Corporate records should be kept properly because they can protect a business from employee-related lawsuits. A prudent business owner should accurately document the employees’ payroll, including all break periods granted and payments given for overtime work.
Fortunately, only one employee complained and filed a lawsuit against the accountant. If there were many employees involved, the firm could have become bankrupt from the amount of money that could have been needed to settle the cases.
Affordable On-Call HR Consultation Service for Small Businesses in California
All companies, whether big or small, will encounter internal problems that are employee-related. Most of the time, it’s the smaller businesses that are greatly affected by these predicaments. Big enterprises usually have an HR department that handles employee complaints full-time. Smaller companies, on the other hand, typically cannot afford to hire an HR professional to deal with these concerns.
We at Gale & Vallance have created a solution to help small businesses. HR on Demand is an affordable HR consultation service. For only 300 to 400 dollars a month, entrepreneurs can call an HR expert and ask for advice when needed.
Don’t have the budget to hire full-time HR personnel? You don’t have to worry! Our human resources specialists can provide quality HR services, from constructing an Employee Handbook to creating processes that can help your business avoid a number of employee-related problems.