You may be wondering what benefit an HR consultant can bring to your business. The answer depends on what level of confidence you have in the legal compliance and effectiveness of your existing policies, procedures and practices. If you have had a competent trained professional or consultant review these recently, and feel comfortable, please stop reading this. Still with me? Good! The next question you should ask yourself is “What is my risk tolerance level?” If you are not a daredevil immune to fear, then consider these risks to your bottom line caused by noncompliance:
1) Department of Labor Audit (if you are lucky) or an FLSA lawsuit.
The legal tab of a small employer DOL audit will easily cost $5000. In an individual FLSA lawsuit, fees can easily exceed 6 figures and far more if you fight and lose. FLSA (overtime and minimum wage) noncompliance causes major financial exposure (you will be paying both your lawyer and the employees’) Going to trial is hazardous, especially since you likely will be paying both sides’ lawyers. Accordingly, these cases tend to be settled for semi- extortionate amounts rather than incur the risk of paying a far greater sum over the course of the litigation. I have counselled many a client through the unpleasantness of paying an undeserving employee more money (along with his lawyer) because the amounts that would be paid to your lawyer to fight the case far exceed the settlement. My personal frustration has always been that the cost of compliance most likely is cheaper than the settlement amount paid for just one FLSA claim.
2) A discrimination lawsuit.
These claims, which include sexual harassment, inevitably have a strong emotional impact on many employees, including management. It does not feel good to be labeled a bigot and these cases can be as unpleasant as a bad divorce! Not to mention, they are very expensive to fight. The good news is that with the right policies and procedures in place, these claims can be minimized and often resolved more civilly for less.
3) Other government audits.
From OSHA (job safety) to Department of Homeland Security (Immigration Law compliance). These audits are not only time-consuming; they can bring hefty fines. For instance, did you know that you can be fined $1800 for having a faulty I-9?
4) Prevention is cost effective.
I cannot stress enough how much more economical it is to be compliant than to take your chances, regardless of your risk tolerance level. Depending on the number of employees your company employs, you can have an FLSA audit for as little as $1000; surely a fair price for peace of mind.
IN SUMMARY, laws and regulations that impact even small employers create a risky environment for employers. Considering the potentially devastating expense of ignorance, it makes sense to involve a savvy HR risk consultant to assess and correct your policies to assure compliance. Please don’t set yourself up for an “I told you so”.