5 Hidden HR Risks Small Businesses Face—And How to Fix Them

As a small business owner, you might think HR is something only larger companies need to worry about. But even businesses with just a handful of employees are subject to state and federal employment laws. Without clear policies and processes in place, your business could be exposed to costly risks that drain your time, money, and resources.

Let’s explore five common HR risks small businesses face—and how you can protect your business with proactive solutions.

1. Misclassification Lawsuits

The Risk: Misclassifying employees as independent contractors or exempt from overtime can lead to fines, back pay, and lawsuits.

Real Case: A small cleaning service in Ohio faced $20,000 in back wages and penalties when the Department of Labor discovered they had misclassified workers as contractors. These employees worked set schedules, used company tools, and performed duties that made them employees under federal law.

The Fix: A well-crafted job description clearly defines an employee’s responsibilities and classification. By attending the HR Foundations Workshop, you’ll learn how to align your roles with legal standards, ensuring compliance and avoiding costly mistakes.

2. Lack of Written Anti-Harassment Policies

The Risk: Without formal anti-harassment policies, employees may not know how to report issues, leaving your business vulnerable to claims of negligence.

Real Case: A retail store in Ohio was hit with a $50,000 lawsuit after an employee claimed they faced repeated harassment without a way to report it. The employer had no handbook or documented process, making it difficult to mount a defense.

The Fix: An employee handbook that includes anti-harassment policies and reporting procedures creates a safe, compliant workplace. At the HR Foundations Workshop, you’ll leave with a completed handbook tailored to your business needs.

3. Inconsistent Onboarding Processes

The Risk: Missing critical forms, like I-9s or W-4s, during onboarding can lead to compliance penalties and poor employee experiences.

Real Case: A café in Cleveland was fined $10,000 for failing to properly complete and retain I-9 forms for new hires. The owner admitted they didn’t know what forms were required and had no checklist to ensure compliance.

The Fix: Standardizing your onboarding process with a checklist ensures you collect all required paperwork and set employees up for success. Our workshop provides you with a ready-to-use onboarding guide, so you’ll never miss a step again.

4. Vague or Missing Job Descriptions

The Risk: Without clear job descriptions, employees may underperform, misunderstand expectations, or claim unfair treatment during performance reviews or terminations.

Real Case: A small manufacturing company in Dayton paid $15,000 to settle a wrongful termination lawsuit after firing an employee for not meeting expectations. Without a job description or documented performance criteria, the company struggled to prove their case.

The Fix: Job descriptions are more than hiring tools—they’re your first line of defense in managing performance and legal risks. At the HR Foundations Workshop, you’ll learn how to create detailed, legally compliant job descriptions for your team.

5. Failure to Update Policies

The Risk: Outdated or nonexistent policies can leave your business exposed to new laws and regulations. For example, changes to Ohio’s employment laws could require updates to your handbook or practices.

Real Case: A local tech startup faced penalties after failing to provide updated sick leave policies required under state law. They weren’t aware of the change because they didn’t have an HR professional monitoring compliance.

The Fix: Regularly reviewing and updating your policies keeps your business compliant with changing laws. The HR Foundations Workshop ensures you leave with a handbook built on best practices and legal standards, so you’re always prepared.

How to Fix These Risks Once and for All

Managing HR doesn’t have to be overwhelming. The key is having the right tools and processes in place to protect your business and empower your employees.

That’s where our HR Foundations Workshop comes in:

HR Foundations Workshop Details:

Dates: February 11 & 25, 2025 

Time: 10:00 AM - 1:00 PM EST

Location: Troy, Ohio
Cost: Free

What You'll Walk Away With:

• A $3,500 employee handbook tailored to your business

• Legally compliant job description templates

• An onboarding checklist to simplify hiring

• Confidence in your HR processes and peace of mind

HR risks can cost you thousands of dollars—but they don’t have to. By investing in the HR Foundations Workshop, you’ll gain the knowledge and tools to protect your business, comply with regulations, and build a thriving workplace.