As another year draws to a close, it can be a good time to review your company policies. Regular updates are vital; changes to your company, your team, as well as changes to labour laws can catch even the most prepared employers off guard. Some of the most common (and costliest) HR mistakes include:
In recent years, the government has begun to take a closer look at situations where an individual, categorized on paper as an independent contractor, is in fact an employee and should be classified as such. Incorrectly classifying an employee as a contractor can have significant repercussions for employers, including having to pay any payroll source deductions, plus interest and/or penalties, that were not correctly withheld from the start. Take a close look at anyone your organization classifies as an independent contractor to ensure this classification is accurate within the definition of current labour laws.
Further along, you may also want to take a closer look at your definition of a manager in comparison with legislation. Specifically, if you have operations in the United States where overtime pay eligibility in the Fair Labor Standards Act (FLSA) just got changed for those that hold a true managerial position. Within the law there are many exceptions and small details that can turn into large and damaging headaches that can cripple a business. Depending on the extent of violations, it may take years to fully recover. We can not stress enough that misclassified or miscategorized employees are a very common problem. It pays to arm yourself with the knowledge you need to build your team effectively.
Time Management: Overtime, Vacation Pay, Holiday Pay
It is crucial that employees are fairly compensated for their time and that they receive the pay they are entitled to for vacation and holidays. Often these matters become confusing for employers, as in some industries the standard practice does not align with labour law and thus employers choose to turn a blind eye to missteps. This approach can be costly; in 2019, RBC Insurance and Aviva General Insurance faced the possibility of an $80 million class action lawsuit, alleging violations regarding how vacation pay entitlements were calculated. Avoid putting your company in this position by ensuring policies regarding pay are designed in accordance with your legal obligations.
Knowledge is truly what makes the difference in setting up your time off policies. In some jurisdictions, there is also a distinction between time off entitlements and pay eligibility for certain leaves of absence. With changing laws, there is also a greater emphasis on job protection requirements on the behalf of employers that comes into effect. Hence, it is paramount that your internal time tracking systems are correctly programmed to categorize and track all work hours and time off that each employee takes throughout the year.
Moving along in terms of some of the common messes we see across companies large and small, we also want to take the time to emphasize the importance of clean recordkeeping. Not only is it important in terms of effective business governance, depending on the type of record there are actually specific data fields that you need to collect. It can be confusing for employers to understand which records need to be kept, what level of detail is required, and how long records need to be kept for. Many may also fail to understand their obligations for keeping records securely (both physical and digital records), and requirements surrounding the prevention of unauthorized access to employment records.
Going back to the topic above around time tracking, a very costly situation that happens if you choose to forego appropriate checks and balances is time theft. It is such a great problem that there is a term for it. Do not let yourself be a victim to it. Essentially, it happens because an employer practically gives permission to their employees to steal from them. Unfortunately, it generally starts small and goes unnoticed if no one pays attention. A first step may be to look at your current time tracking and reporting requirements to see if they are sufficient. If you find yourself a victim of time theft, do the math to determine the extent of the problem. Then determine if it is worthwhile to fix it. If your coffers are huge, it may not matter that you lose potentially tens or hundreds of thousands of dollars per year. If the dollar value is large enough that it could be used elsewhere then it may indicate a need to resolve it.
The end of the year is a good time to review your record keeping process and make any necessary improvements, both for the protection of your employees and for the company itself. Part of year-end is routine tasks, but if you take the time to take it to the next level where you add strategic thinking and make the effort to push forward you will be better positioned year after year to enhance business practices and ultimately business performance.
Here to Help
Would you like more information on HR processes, work rules, and documentation? We can be reached for a free confidential consultation at +1-403-470-5350 or [email protected].
For further details on how Honiva can help ensure your policies and procedures are up to date, please view our service offerings.
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