Common HR Mistakes in the Cannabis Industry

HR Mistakes in Cannabis Industry

Within the cannabis industry, simple mistakes made by HR can greatly affect the organization. Businesses can potentially face enormous costs from the results of such mistakes; anywhere from the cost of employee turnover to more serious repercussions like legal costs for failing to comply with federal and state laws. Six of the most common HR mistakes seen within the cannabis industry include: falling into personal relationships with an employee, not having a written fraternization policy, not having a written health and safety plan, not tracking breaks and hours, misclassifying employees, and tolerating toxic behavior from management.

Falling into Personal Relationships

It is certainly important for HR professionals to make ties with employees; building and maintaining relationships while assisting employees to navigate their own relationships the workplace. However, it is just as important for HR to maintain professional behavior and avoid bias within these relationships.

When a member of HR has a personal relationship with an employee, finding that balance ensures that all employees are still treated with fairness and respect, that the organization succeeds, and that all parties avoid legal risk. Friendships and personal relationships may seem enticing and may even potentially increase engagement in the beginning, but it later runs the high risk for other employees to believe HR is biased towards certain employees, or even legal repercussions. 

According to SHRM, there are a few pieces of advice for HR professionals who still hope to foster relationships within the workplace. First, build a trusting, diplomatic network with all employees, not just a select few. Second, avoid emotionally close relationships, even if your intentions are good, this is the best way to avoid legal risk. Third, if you do have close friendships with some colleagues, excuse yourself from situations that could be perceived as conflicts of interest. Finally, consider instilling a written fraternization policy (SHRM, 2020).

Not Having a Written Fraternization Policy

The purpose of a fraternization policy is to minimize the impact of the things that can go wrong in the workplace. As such, HR should utilize a written fraternization policy to identify relationships that are forbidden due to their potential impact at work. Not only is it important for employees to have some direction regarding acceptable workplace relationships and behaviors, it is twice as important for management to have the same understanding and knowledge of what behavior is deemed appropriate and inappropriate.

According to SHRM, managers who are dating or romantically involved with an employee (even if that employee is in a different department) is never a good idea. It does not bode well for the company, the manager, the employee, or the employee’s coworkers. The relationship often limits how the manager can then promote or demote that employee accordingly. There’s also the potential of having to deal with a discrimination or sexual harassment suit for a relationship that once began as a consensual, but spirals out of control (SHRM, 2019).

These situations can severely negatively impact not only the employee involved, but also the surrounding coworkers, as discomfort in the workplace inevitably ensues. As such, having a written general fraternization policy laid out for all employees can drastically help the situation.

Not Having a Written Health and Safety Plan 

One of the primary functions of HR is to ensure that the organization invests in a proactive safety culture to prevent injuries, incidents, and other health-related issues in the workplace. HR professionals have a duty of care under the Health and Safety at Work Act 1974 to take steps to protect anyone connected to the organization. Therefore, having a written health and safety policy ensures that the employer complies with the Occupational Safety and Health Act and any relevant state legislation by providing guidelines for establishing and implementing programs that will reduce workplace hazards, protect lives, and promote employee health (OSHA).

In addition, some states like California require a written IIPP (Injury and Illness Prevention Plan) by law, which must be followed accordingly. Cal/OSHA requires all employers to provide their employees or authorized representatives with a written copy of the company’s IIPP within 5 business days, in a reasonable time, place and manner, at no cost to the employee upon request. In addition, employers are required to provide training to notify employees of their right to access (CAL/OSHA, 2020).

The overall effectiveness of workplace safety and security measures will depend on the organization’s ability to effectively communicate safety and security goals and objectives, as well as the applicable policies, practices, and processes. Workplace safety and security is effective only when such objectives are successfully communicated between management and employees and is followed accordingly.

Not Tracking Breaks and Hours

As an HR professional, ensuring the accurate tracking of breaks and hours for employees is often an essential aspect detailed within the job function. It is also important for establishing employee trust and mitigating legal risk as not properly tracking an employee’s breaks and hours or changing an employee’s punch card can lead to hefty fines and penalties for the employer, particularly within the state of California.

According to the Division of Labor Standards Enforcement (DLSE), California’s nonexempt workers are entitled to a 10-minute paid rest break for every four hours worked. Additionally, employees must also receive a 30-minute unpaid meal break for every five hours they work. As such, when tracking these break periods, California employers are prohibited from rounding time-clock punches.

If it so happens that an employee has not received a compliant break, or it is found that the employer has tampered with their time sheet, the employee is then entitled to one hour of pay for each day a rest-period rule was violated and one hour of pay for each day a meal-period rule wasn’t followed. That means workers can receive up to two hours of premium pay per day (Wage and Hour Division).

To ensure compliance, and avoid these costly repercussions, employers must have up-to-date policies and train supervisors to apply those policies uniformly. Employers should audit their systems for meal and rest break compliance to find out if and why there are violations; depending on the type of violation, companies should pay workers the premium when their breaks are missed, interrupted or otherwise noncompliant and should have separate codes for these payments in their payroll system (SHRM, 2020).

Misclassifying Employees

For HR professionals, ensuring the proper classification of workers is a concern for many reasons; taxes, employment laws and employee benefits, are just a few to note. Regarding such, SHRM writes that proper employee classification makes sure that all legal requirements are maintained so that there is no discrimination in terms of benefit plan eligibility and payment of compensation in accordance with federal and state laws (SHRM, 2021).

Improper classification of an employee can have a major impact on employers, regardless of whether the misclassification is due to an honest mistake or intentional on the employers’ part. If an organization is audited and it is discovered that there has been a misclassification, that organization can expect serious financial consequences. Penalties for employee misclassification are based on the severity of the situation and how big of a gap there is in the classification rates. These penalties can come in multiple forms, including: the collection of unpaid wages, back taxes, additional penalties for failing to deduct and withhold taxes for misclassified employees, civil lawsuits, and punitive damages from lawsuits for unpaid wages and taxes (Department of Labor).

Moreover, once a business is caught misclassifying an employee or employees, they’re known as a potential repeat offender. That offense raises a red flag for the Department of Labor and OSHA which leads both organizations to target that business.

Tolerating Toxic Managers

Most employees have experienced a bad manager, and as HR professionals, it should be top priority to ensure the organization is not tolerating such behavior. Often, employee-manager relationships start out fine, but then an issue arises and nothing constructive is done to resolve the problem. Typically, employees will succumb to avoidance as to circumvent conflict, and as a result, the problem festers and grows. Eventually, the employee-manager relationship degenerates into aggression, passive aggression, or both. 

Unfortunately, HR practitioners often succumb to the avoidance instinct as well. Although they may be aware of the toxicity of the manager, they either don’t intervene or are wary of interfering into others’ relationships. This can lead to even more issues within the workplace, creating even more drawbacks.

According to SHRM, there are several costs to tolerating toxic behavior from management. First of which would be personal suffering as both parties become equally disengaged as the conflict escalates. Toxic relationships hinder the quality of work and create higher states of presenteeism (the state in which employees are not focused on their work and instead dwell on the negativity). Additionally, employees who witness the toxic exchanges also suffer, experiencing secondhand anxiety and loss of productivity as well. Overall, this increase of workplace stress and anxiety leads to higher absenteeism and turnover rates. However, perhaps the greatest drawback is the risk management, compliance, and legal claim component. Tolerating toxic behaviors from managers can lead to costly legal repercussions down the road if management behavior is considered harassment or discriminatory.

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