Skip to Main Content

6 Key HR Issues for Small Businesses


Most Common HR Mistakes for Small Businesses:



Although most reporting requirements through MIOSHA start with 11 or more employees, a small business is required to comply with MIOSHA the same way a large business is required. The only exception is when there is a rule or standard that contains a restriction to size.

What Does This Mean? It means organizations will need to comply with MIOSHA requirements such as: mandatory posters, safety programs, hazard communication programs, personal protection programs, extensive workplace safety assessments, and training programs to name a few.

  • Organizations that fail to ensure they are maintaining a safe workplace may face huge fines. Take a dollar store in Bolivar Ohio for example, who failed to have clear exits and marked fire extinguishers. Their fine? $156,772! Nationwide, this dollar store chain has paid more than $1,000,000 in safety fines. (Source)

    To see a list of Michigan enforcement cases with fines greater than $40,000, click on the following link click here.
  • There is mandatory reporting directly to MIOSHA for serious injuries such as in-patient hospitalizations, loss of an eye or amputation or death.
  • If your organization had a hazardous communication program in place that was written prior to 2015, it is likely out of date.
  • ¬ More to come: OSHA has added new rules which take place in 2016 and 2017. Michigan will have 6 months to implement these changes which will require certain employers to electronically submit injury and illness directly to the state. There are also new anti-retaliation protections which, along with many other practices, will require employers to look at how they drug test their employees after an accident.


The I-9 form seems simple enough. It is really only two pages with a lot of instructions… During an initial audit, many small employers don’t know what it is.

For those that do make attempts to complete the form, here are the most common mistakes:

Mistake #1: Asking the new employee to bring in their driver’s license and social security card (or any specific document).

  • These are two types of documents that can be used, but if an employer simply asks for just these two forms of proof that a person is eligible to work in the US, it can be seen as discrimination. Examples of fines for requiring specific documents to complete I-9’s:
    • A fast food franchise paid - $355,000 (Source)
    • A beef processing company paid - $200,000 (Source)
    • A major retailer paid - $250,000 (Source).

Mistake #2: Missing information or having incorrect information.

  • There is a tendency for employers to fail to fully complete the form, and this can be very costly. Simple errors like not signing, dating or completing the employer’s address can, and will, bring substantial fines if audited. Moreover, the fines are per occurrence.
    • Consider a small restaurant with about 55 employees with average turnover for the restaurant business. This employer did not complete any I-9’s which translated to 134 paperwork violations and the hiring of 4 unauthorized individuals. The initial fine for this small restaurant: $131,554.
    • A small daycare employer did not complete I-9’s, although they did thorough background checks and retained copies of things like driver’s licenses and work authorizations. Their fine for not having complete I-9’s was initially $55,352. (Source)
    • A large events planning company was ordered to pay more than $600,000 in fines for paperwork violations primarily from the employer failing to sign the bottom of the form! (Source)


When a small business owner begins to grow, more employees are needed. The tendency in many cases is to hire relatives, friends or acquaintances. Small business owners may do this because they “know” them, but they also may not be as thorough in following hiring processes like completing an employment application, checking backgrounds or putting offers of employment in writing. This can create serious headaches by not hiring the right person for the job or not establishing the employment relationship appropriately from the onset.

It is critical that a business owner decide the job requirements for each position, which background checks are related to each position, and employment policies (like employer “at will” relationship with employees and who/how employment “promises” are made or changed).

Failure to consistently complete this process can lead to:

  • Unexpected Turnover. This can cost annually from $2,000 - $10,000 per position.
  • Discriminatory Hiring.
    • A staffing company in Tennessee agreed to pay $580,000 to settle allegations that they engaged in race and national origin discrimination when they were accused of giving Hispanics preferential treatment in hiring and placement . (Source)
    • An automobile processing facility agreed to pay $350,000 to settle an EEOC Race Discrimination suit for relying on word-of-mouth recruiting that deterred qualified African Americans from applying. (Source)


Most small employers don’t focus on things like handbooks. They either don’t have one or they may, but it was completed long, long ago. Considerable time and effort must go into the development of a handbook. Invariably, after all the work is put into it, it quickly goes onto a shelf, never to be dusted off again. The problem with that concept is that labor laws change constantly and most handbooks contain policies primarily related to labor law. An outdated handbook can be just as bad for an organization as not having one at all! Here is an example:

  • The NLRB found the following handbook confidentiality rule to be unlawful: “You must not disclose proprietary or confidential information about the employer, or other associates if the proprietary or confidential information relating to the employer’s associates was obtained in violation of law or lawful company policy.”
  • The NLRB found the following rules unlawfully overbroad since employees would construe them to ban protected criticism or protests regarding their employer or its employees:
    • "Be respectful of others and the company."
    • "No defamatory, libelous, slanderous or discriminatory comments about the company, its customers and or competitors, its employees or managers."
  • The NLRB declared the following policy’s prohibited conduct ambiguous:
    • "Material that is fraudulent, harassing, embarrassing, sexually explicit, profane, obscene, intimidating, defamatory or otherwise unlawful or inappropriate may not be sent by e-mail."
  • Now look at social media: The NLRB found the following unlawful:
    • At a popular hot wings restaurant, the employer’s policy prohibited any social media post that “negatively affects, or would tend to negatively affect, the employee’s ability to perform his or her job, the company’s reputation, or the smooth operation, goodwill or profitability of the Company’s business.” (Source)
  • In many cases, the NLRB will order changes to your handbook/policies, require you to post a notice in your workplace that you violated the law, order you to re-hire the person if you terminated them for unlawful reasons and provide back-pay for the time they missed work. For a real live example of this see: (Source)


Many times, small business owners have to talk with their employees who are not performing to the required standards. Where this simple act of communication can go awry is when that conversation goes undocumented. This often happens because there is an expectation that the employee will make the necessary corrections. Unfortunately, this is not always the path this issue takes. In many instances the employee may continue to make the same mistakes until the issue boils over one day, and they are asked to leave. If the repeated concerns and the corrective actions which were discussed weren’t documented, an employer might have a very difficult time defending itself against a law-suit. In many cases, if there was no documented reason for the performance concerns, or the termination, the employee could claim that the termination occurred for reasons other than performance, like discrimination.


Generally, under FLSA, all time spent by an employee performing activities which are job-related is potentially “work time.” It typically does not matter if the extra time spent working was “approved” by the supervisor or not for payment.

Some of the biggest issues a small employer may face under FLSA include:

  • A big issue is classifying most workers as “salaried exempt” and paying them a standard wage without looking at their duties to determine if they are truly “exempt” by legal definition. Organizations need to clearly define the meaning of “salaried exempt.” This includes providing clear details as well as categorizing all other job categories.
  • Using the honor system for paying employees can be costly. If you have no records signed by the employee attesting to the hours worked, you could be facing large fines should the employee claim they worked overtime and you as their employer didn’t pay it and cannot prove that they did/didn’t work the over-time. For example:
    • The US Department of Labor settled its own $7,000,000 wage and hour lawsuit. Employees who worked for the department of labor were either misclassified as salaried or as hourly employees, and they did not receive overtime compensation for hours worked in excess of 40 hours in work week (Source)
    • A St Louis motel is ordered to pay $200,000 in back pay and damages to employees to remedy minimum wage and overtime violations. (Source)

Not only can employers be subject to civil and criminal fines for willful violations of labor laws, they may also appear in the news or at least online. To view more department of labor actions against employers, click here. Be smart, and don’t end up on this list!

6 Tips to Help Improve Your Cybersecurity

We all know the importance of cybersecurity these days, but the phishing attempts and other scams have gotten increasingly hard to detect.  Cell phone numbers are even being targeted where individuals are receiving text messages that appear to...

A Time To Celebrate. But!

Michigan will open on June 22nd to full capacity and the mask mandate is no longer required for residents.  YES!  It has been a long hard road for most all businesses.  Time to rip off that mask and celebrate?  Not so...

How to Lose Thousands of Dollars in Just One Day

The year 2021 is already proving to be a complex one for business owners.  There’s extended closures, new laws and rules to consider, PPP round two, and last but certainly not least, extremely sophisticated hackers looking to steal your...

COVID-19 Pandemic: Return To Work Plan

8 Tips for Bringing Your Employees Back to Work Safely and Successfully Now that more and more businesses are re-opening, it's important to understand how to safely bring your employees back to work. Here are 8 tips to keep in...

The New Form I- 9- What You Need to Know

  As of January 31, 2020 the Department of Homeland Security- U.S. Citizenship and Immigration Services announced the release of the new version of Form I-9, Employment Eligibility Verification. While this form is ready for...

What’s the 4-1-1 on the 2020 W-4?

Recently the IRS released the official W-4 that will be used starting January 1, 2020. The new form “uses the same underlying information as the old design, but it replaces complicated worksheets with more straightforward questions that make...


As an employer or human resource representative, you probably use the USCIS Form I-9 constantly as you hire new employees.  Even though this is a familiar form, you may not have looked at the expiration date in a while. Well…if you...


We live in a time where stress is all around us.  Stress at work can come in the form of deadlines, heavy workloads and work conflicts.  Stress at home may be the result of relationship issues, health challenges, packed kid schedules or...

4 Ways Flexibility in the Workplace Really Works!

  With 2019 upon us, many businesses may be evaluating their business and human resource practices to prepare for what is to come in the year ahead.   As advancements in technology continue to give employees the opportunity to...

Cleaning Up Your Digital Footprint

What is a digital footprint, you ask?  It is the unique set of traceable digital activities, actions, contributions and communications that are manifested on the Internet or on digital devices. One aspect of your digital...

Employment News- Michigan Ballot 2018

Michigan businesses need to be aware that there are two initiatives being considered for the 2018 Michigan Ballot that could have significant implications for small businesses. The Michigan Paid Sick Leave Initiative (2018) and Michigan...

Recruiting in 2018

Finding the right talent and efficiently filling positions is harder today than ever before.  There are many factors that make this statement true. First, according to the New York Times, the unemployment rate in the US hit a new low...

Marijuana Use in the Workplace

There is no doubt that recreational use of marijuana is on the rise. For example, it’s not uncommon to stop at stoplight, only to be hit by the smell of marijuana wafting into your car. Or when was the last time you went out to enjoy a...

Sage Solutions Group Airs on Michigan Entrepreneur TV

Sherri McDaniel, CEO at Sage Solutions Group completed her second interview in a three-part series focused on Human Resources with Tara Kachaturoff of Michigan Entrepreneur TV. This second interview will air on Tuesday, January 16 at 11:00 am and...

OSHA Required Reporting Deadline- December 15

December 15th is fast approaching and if that date does not mean anything to you, you may need to listen up. OSHA made changes to the required reporting of work related illness and injury for many employers. This enhanced tracking method is...

How Outsourcing HR Services Can Help Your Business

Human Resources encompasses a wide swath of the corporate landscape, and it seems that every firm has its own definition of the department's duties and responsibilities. Many efficiency experts believe that recruitment and employee retention are...

Harassment Policies Need to be Reviewed

It is nearly impossible to turn on any news channel or social media news feed without hearing the latest in the saga of celebrity sexual harassment claims. With this type of attention to this serious topic, it is a reminder to every organization...

Fall is a Great Time to Review Your HR Compliance

As the weather begins to change and the fall colors are bright, it is time to put the fun of summer behind us and make a plan to review our HR files to be sure they are up to date and in compliance. An annual audit of company handbooks, policies...

Employee Handbooks

The National Labor Relations Board (NLRB) has increased its attention and focus on employee handbooks recently. While most think of the NLRB in terms of unionized employers, its...

What Does An HR Audit Measure?

The greatest asset of any business is its employee. An effective HR department provides stability and structure and is an integral part of both small and large companies. The objective of the HR or Human Resource office is to ensure businesses and...

When Should I Hire An HR Consultant?

When you were a kid, you dreamed about becoming an entrepreneur someday. Two years ago, you turned this dream into a reality. Sitting at the desk in your office, you realize how quickly your business has blossomed. You sense some changes need to...

Posters 101

Do you find complying with labor posters to be a real maze of red tape? As many employers have found, determining the correct posters requires a fair amount of research. Not only do you have to ensure you have the correct federal posters but you...

Changes… Changes… Change

The year 2016 has been a big year for change in labor laws. Poster requirements have changed … Effective August 1, 2016 the Department of Labor (DOL) revised the Federal Minimum Wage Poster to remove specific civil monetary penalty amounts...

Recruitment Tips…

The economy is doing better…. That’s a good thing…. Right? It is, unless you’re a recruiter. Because in good economic conditions, there are real challenges to attracting talent. Some new businesses have had to delay opening...

Time to Audit…

Winter is just around the corner. Daylight savings time is coming soon. Many of us will arrive to work in the dark and leave in the dark. This brings many new hazards into the workplace. It is time to look around and see the trip-fall hazards...

Insurance, with benefits?

Many small businesses purchase quite a lot of insurance; from workers’ compensation to directors and officers to general liability. While the main benefits of insurance are obvious, there are often additional benefits that are rarely take...