3 Expensive Myths About HR Compliance Small Businesses Can’t Afford to Believe

HR compliance may not always be a top priority for small businesses, but believing false assumptions can cost you more than you might think. From unexpected lawsuits to fines for misclassification or missing documentation, the risks are real—and expensive.

Let’s bust three of the most common myths small business owners believe about HR compliance and explore how you can protect your business from costly mistakes.

Myth 1: "We're Too Small to Need an Employee Handbook"

The Truth: Even businesses with just a handful of employees can face employment disputes or legal claims. In Ohio, companies with as few as four employees are subject to discrimination laws enforced by the Ohio Civil Rights Commission. Without an employee handbook to document workplace policies, your business could be left defenseless.

Real Case: A small retail business in Cleveland faced a $35,000 discrimination settlement after a former employee claimed they were passed over for a promotion due to their race. The owner had no documented promotion policy or anti-discrimination statement, making it impossible to refute the claim.

The Cost of Believing This Myth:

• Settlements for discrimination claims can range from thousands to hundreds of thousands of dollars.
• Without clear policies, you could lose employee trust and credibility.

The Fix: An employee handbook provides a documented framework for fair treatment, anti-discrimination policies, and consistent procedures. At the HR Foundations Workshop, you’ll leave with a $3,500 employee handbook tailored to your business.

Myth 2: "Verbal Agreements Are Enough for Hiring"

The Truth: Relying on verbal agreements for employment terms or role expectations is a recipe for misunderstandings—and potential lawsuits. Job descriptions and written agreements protect both you and your employees by clearly outlining responsibilities, compensation, and classification.

Real Case: A construction company in Dayton hired workers on verbal agreements, only to face a $50,000 lawsuit when employees claimed they were owed overtime pay. The company had misclassified them as independent contractors but had no job descriptions or contracts to defend their position.

The Cost of Believing This Myth:

• Misclassification penalties and back wages can drain your resources.
• Disputes over undefined job roles can lead to costly turnover and legal battles.

The Fix: Legally compliant job descriptions and onboarding documentation are critical to protecting your business. The HR Foundations Workshop will teach you how to create and implement these tools effectively.

Myth 3: "HR Compliance Isn't a Priority Until We're Bigger"

The Truth: HR laws apply to businesses of all sizes, and small businesses are especially vulnerable to compliance risks because they often lack formal HR processes. Waiting until your business grows to prioritize HR could mean facing avoidable lawsuits or penalties in the meantime.

Real Case: A startup in Columbus with only six employees faced a $10,000 fine for failing to properly complete I-9 forms for new hires. The owner admitted they weren’t aware of the requirements, assuming they didn’t apply to such a small team.

The Cost of Believing This Myth:

• Compliance fines can quickly erode profits, especially for small businesses.
• Non-compliance damages your reputation and ability to attract quality employees.

The Fix: Implementing HR policies and practices early on saves you from future headaches. The HR Foundations Workshop is designed to help small businesses lay a strong foundation, regardless of their size.

Don’t Let Myths Cost You Thousands

Believing these common myths can put your business at risk of lawsuits, penalties, and employee dissatisfaction. The good news is that you don’t have to navigate these challenges alone.

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:

• Customizable Employee Handbook
• Job Description Template
• New Hire Onboarding Checklist
• HR Confidence and Knowledge
• Actionable Solutions

Ready to Bust the Myths and Protect Your Business?

Join our HR Foundations Workshop and get the tools to move from risky assumptions to smart, compliant HR practices.