5 HR Mistakes Small Businesses MakE & How To Fix Them
Whether you have 3 employees or 30, even one small mistake can lead to costly penalties, poor morale, or high turnover. But you don’t need a full-time HR person to protect your business — just a few smart strategies. These mistakes are incredibly common — and incredibly avoidable. Here’s what to watch out for, plus some simple fixes to protect your practice, your people, and your peace of mind.
Mistake #1: No Employee Handbook (or Using a Generic One)
Why it’s a problem: Without clear policies, misunderstandings, inconsistent treatment, and legal exposure are all more likely.
Quick Fix: Get a handbook tailored to your state and team size. It doesn’t have to be fancy — just clear and compliant.
Mistake #2: Misclassifying Workers (W-2 vs. 1099)
Why it’s a problem: Accidentally classifying someone as an independent contractor when they’re actually an employee can lead to major fines and back wages.
Quick Fix: If you control when, where, and how someone works, they’re probably an employee. When in doubt, ask us!
Mistake #3: Mishandling Terminations
Why it’s a problem: Letting someone go without documenting performance issues, giving required notices, or paying final wages properly can trigger lawsuits.
Quick Fix: Always have a paper trail and double-check state-specific rules for termination pay and notice periods.
Mistake #4: Wage & Hour Issues
Why it’s a problem: Things like unpaid overtime, missed meal breaks, or misusing salaried roles are common — and expensive if challenged.
Quick Fix: Keep clear records, pay overtime correctly, and avoid “off-the-clock” work. California especially has strict rules.
Mistake #5: No Complaint Process
Why it’s a problem: When there’s no safe way for employees to raise issues, small problems become big legal risks (especially around harassment or safety).
Quick Fix: Have a simple policy and a private way for staff to report issues — even if you're a team of 3.
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