Welcome back to the HR Connection, the podcast built solely for those managing human resources and a 1 to 500 employee headcount. Why do we speak only to that group? Because HR in a small business is its own discipline. It's not smaller HR; it's its own discipline, and resources for that group are quite limited. My name is Sabrina Baker, and today I'm getting into something that I do think gets small businesses in trouble from time to time. It's going to be a very practical episode. We have alluded to this in a recent episode, but today I'm going to dive deep because I think that it could be happening in your organization, whether you know it or not. So here's what I'm going to do to set this up. I'm going to say to you that I think most small businesses don't get sued. They don't get in trouble because they didn't have a policy or they didn't have some rules around some certain area. I think they get in trouble because they had the policy, they had the rules, but they didn't follow them. And so that gap is what we are talking about today, not the absence of a handbook or the absence of a policy, but the distance between what the handbook says and then what actually happens in practice, what leaders actually do. There are five different policies where I see the most gaps, and I want to share them with you here. If you are not already subscribed, please smash that button so we can get right into it. All right, let's start with a myth, because I really do hear this quite a bit from CEOs that are in my circle, and I hear it from managers, I hear it from leaders, I even sometimes hear it from HR practitioners who are maybe newer. And the myth is this: we have a handbook, so we're covered. We have policies, so we're covered. And that feels really logical, right? I did the work, I built the handbook, employees signed the handbook, we're so good. But the reality is that that handbook sitting in a drawer or a shared drive somewhere is not protection. It can actually be evidence against you if it's not being followed. So this is something that we see quite a bit when we go into organizations for handbook reviews. I want to actually reference an episode we did not too long ago on leaves of absence, and this is where I kind of alluded to this. It was called The Policy Nobody Talks About Until You Need It. And in that episode, I brought up the fact how the leave policy is almost always the place where what is written and what is practiced are two completely different things. It's one of the policies where that happens. So if you haven't listened to that one, go back, because that episode and this one is definitely a pair. But that one covers one specific area, the whole leave process, and this one is going to be about that broadened pattern behind all of it. And that pattern is this: the compliance question and the lawsuit question are two different questions. The compliance question is, do you have a handbook? Do you have those policies? Are employees signing acknowledgments? Those are important. You absolutely need those. But the lawsuit question is different. The lawsuit question is, can you prove the policy was applied consistently? That is where small businesses get exposed every single time. So let's talk about why inconsistent application is where the real legal exposure lies. And this is honestly, in 15 years of managing fractional support for small businesses, this is what I see get them in trouble more than other things. I think people hear discrimination lawsuit, and they think some big dramatic act, there was some awful egregious thing that happened and they got sued. A manager says something absolutely horrible, and that does happen, absolutely. Of course, there are no shortage of cases around that. But a ton of employment litigation that I've seen doesn't come from these massive dramatic moments. It comes from patterns. It comes from someone's attorney looking at how two employees were treated in similar situations and finding a difference. And when you, as the HR person or your business, cannot explain that difference with documentation, you have a massive problem. And here's the really critical piece of that: the difference does not have to be intentional to create liability. I can't tell you how many leaders have often said, "Well, I had good intentions." I know that. It does not require a manager who woke up and decided to treat someone unfairly. It has nothing to do with intentions. It has everything to do with inconsistency. That's it. And that inconsistency, combined with an employee in a protected class especially, that's often enough. So which is why the handbook becomes the problem instead of the protection. Because when an attorney asks, "What was your policy?" you hand them the handbook. And then the handbook says one thing, but the practice that was actually followed, that shows another. Now you've actually handed them their argument. Okay, so I want to walk through five specific policy areas where this gap shows up the most in small businesses. Again, we already talked about the leave policy. That's in a different episode. I do think you need to review your leave policies and make sure that what you say is happening is happening, because that's a really big deal. But I want to give you five others today where I see this gap showing up the most in small businesses. And they are the five that I think can create the most risk when you have things being managed inconsistently. And they may not be the five that you would guess. Some of them might not be, but they may not all be. But I just want to say before I get into them, one thing here. I often talk I have a YouTube channel where I talk CEO to CEO, and I often talk about how when small businesses do not put structure in place, when they do not ensure that everything is consistent and happening, that their word matches their actions, when they don't do that across leadership, what happens is you can have different experiences for employees. So I usually talk about this in the spirit of accountability or performance management, where you can have one leader who holds tight to deadlines and another leader who is a little bit more relaxed with that, and one leader who gives a lot of feedback and one leader who gives not a lot of feedback. And what happens is that employees end up experiencing like five different workplaces inside the one workplace. And I think that can happen with this too. Not only do you have these policies in place, but then you have and the policies have a process. The policies say, so your harassment policy, for example, clearly says, "This is the steps you will follow." But then you have different managers or different people who have gone and done their own thing. They've kind of gone rogue. And when that happens, then you have employees experiencing different workplaces inside the one workplace, and now we've created some legal liability. And so it just compounds into an even bigger issue. So I just wanted to make sure that that's clear, that what we're talking about here is the employee experience. It always comes down to that. And when we are inconsistent, we are creating different employee experiences, even though it really should all be the same. So let's talk through these five policy gaps, and then I'm going to tell you what you should do to figure out, are yours aligned or are they not? So the first one we want to start with is PTO, paid time off. Handbooks usually say something like this: PTO requests will be approved based on business needs and submitted at least two weeks in advance. Pretty standard policy, right? Whether it's accrued time, whether it's unlimited, whatever, there's usually some kind of like, it's approved based on the business, and it has to be submitted in a certain amount of time. That looks fine on paper. But then what actually happens is the manager approves PTO whenever they feel like it. So their favorite employees get exceptions to the two-week notice requirement. One employee gets denied for a same request that someone else was approved. And now the issue is not PTO anymore. The issue then becomes inconsistent treatment. And if the employee who was denied happens to be in a protected class, and let's remember that protected class covers a lot of ground, right? We're talking race, gender, age, religion, national origin, disability, pregnancy, sexual orientation, sexual preference, so many areas. If the employee is in a protected class, the employee who got denied is in a protected class, and the employee who got approved is not, you've now created risk. Not because anyone intended to discriminate. It's usually not intentions, but because the process was not consistent, and it wasn't documented. And here's what I really want you to hear on this: the employee never has to prove intent. They just have to show the disparity and let you explain it. If you cannot explain it with documentation, that is a very hard position to be in. The second gap where I see this happening is progressive discipline. And this one is so very common. The handbook will maybe say something like, employees receive a verbal coaching, and then maybe a written warning, and then maybe a final warning, and then termination. Four steps, pretty clear. And then what happens in practice is one employee gets all four steps, and another gets fired immediately for fairly similar events. A third person gets six chances before anything is even documented. And when that third employee eventually gets terminated, their attorney is going to ask one question: Why was my client treated differently than other employees who committed similar offenses? The handbook then becomes that evidence. So now it's their evidence rather than your protection. It's their evidence that the process was not followed. This is one that I have absolutely seen go very badly for employers. It's unfortunate for me to say this, but we often will get called in when businesses are in trouble. It's happening less and less, but definitely in the early days of my business, maybe just based on how I was working with clients, I would get called in quite a bit when there was a lawsuit pending or something that was out of my control. I had nothing to do with the events, but then I would get called in to kind of help clean it up. I had partnerships with lawyers and things that would say, "My client's going through this. I want you to come and handle it from an HR standpoint." And this is one that I can really see going very, very badly and have seen, because the employer genuinely believed they were being fair. They were giving this employee an extra chance because they thought that they were trying to be fair or they were trying to help. Maybe they knew that the employee had something going on or whatever. But that kindness, the extra chances, the patience, that undocumented becomes a liability. We have done a whole episode on documentation. I don't want to beat a dead horse about that. I know you know as an HR practitioner how important it is. And I know that you also know that anytime we talk about documentation, people just roll their eyes. And it's hard to get them to see that this is not a punishment tool. It is a protection tool. It is protecting the organization. And in some cases, if we're talking about harassment, obviously, the leaders can be held liable. Employees can be held liable. So that documentation is really a protection tool for the employer and for the employee. When you document consistently, you create a record of fair process. Now it's no longer about intent. Nobody's questioning intent. This is the process because you have it documented. And when you don't have it documented, then you have nothing to stand on. There are valid reasons why one offense warrants immediate termination, and why you would not follow your documented process, right? There are absolutely valid reasons for that. But you need to make sure your policy has a line about the process being able to be escalated, should it need to be, and that your reasons for going down one path over another with progressive discipline are well documented each and every time. Gap number three is harassment reporting. I kind of talked a little bit about this one earlier, just kind of mentioned it. But the handbook often will say, employees should immediately report concerns to HR or management. And then what happens actually is that managers tell employees to work it out themselves. Complaints get made verbally, and nothing gets written down. Nothing gets shared with HR. Investigations that needed to happen never happen, or they happen very informally with no record. And now the company is in a situation where they had a policy, they received a complaint, and they cannot demonstrate they did anything about it. And that is a very different legal position than having no policy at all. When you have a policy, it sets an expectation. It tells employees, "This is how we handle this." If you then don't handle it that way, you have broken a promise that is in writing. And courts treat that differently than an organization that had nothing documented, no policies. So your managers have to be trained on how to handle these things and reminded. And when they don't handle them the way they should be, they have to be coached. And really stressing the importance of, if we're going to say this in a policy, we have to do this, because legally, it's almost better sometimes or easier to not even have the policy. Not that I'm suggesting you don't have policies. I definitely am not. But again, the court is going to look differently on somebody who didn't have a policy at all versus someone who had a policy and didn't even follow it, or follows it differently based on who the employee is or what part of class they are a part of. Gap number four is performance reviews. Now I could get on a huge soapbox about performance reviews. I'm not going to. I'm just going to say that the handbooks often say employees receive annual performance evaluations. That's pretty standard. I don't like annual performance evaluations as just a whole. The way that we do them, I think, is usually not effective. But typically, most businesses have their annual performance evaluations, and the handbook says that they will happen. And then the reality is that nobody has had a review in three years. And the only documented performance conversation that exists in the file is one that happened right before the termination. Which that kind of tells a very specific story, right? The story it tells is, this employee was fine until we decided to let them go, and now we need to build a paper trail quickly. Look, the reality is, you know that. Employees know that. Everybody knows that. That once the paper trail starts happening, now we're getting serious about things. Now, whether or not that's what actually happened, that is what the documentation shows, meaning that you could have been having conversations for months. You could have been you could have had a performance review and then been coaching off of that for months, but you didn't document it until right before termination. And so the documentation shows that it wasn't important until we were getting ready to terminate them. And again, if the employee being terminated is in a protected class, the timing and the timing looks like it aligns with some protected activity. So a pregnancy announcement, a medical leave request, some complaint that made, that story becomes very compelling for their attorney. For the HR practitioners listening who are nodding right now because you are dealing with exactly this situation, a termination where the manager wants to move forward and there is no documentation, I want you to know that you do have some options. You're absolutely not helpless here. But the time to create documentation is not right before the termination. So I'm not suggesting that we prolong terminations. I'm not suggesting that you go back and start over and follow the process. I'm saying that documentation piece is something that we have to get better at over time. So the time to create documentation is right when an issue starts. It's right when some kind of performance issue starts. If we say we're doing annual reviews, we need to do annual reviews. And if there are coaching issues, they need to be addressed in the annual review. So the time to create it is consistently over time for every employee. If that's not happening now, or you have a manager who shows up tomorrow and says, "I'm terminating this person, and no, I haven't documented anything," it's okay to move forward from there. I get that this is one of those uphill battles. It's one of those things that you're going to be fighting for probably the length of your HR career. Not to be a Debbie Downer here, but it is something that we certainly fight with clients. We document a lot of things for us, but getting them to document can be really, really difficult. And so again, we have an episode on documentation. I would encourage you to check that out. And just know that every single time that you have an opportunity to coach somebody on the documentation, why it's important, why we need it, how it is protecting them and the employer, I would really encourage you to do it. The last gap, gap number five is remote work and flexibility. So this one, this was never a thing early on in my career, but certainly since the pandemic, this has become such a big thing. Remote work, return to the office, hybrid roles, flexibility. There for a while, it's all we talked about. Now all we hear about is AI. Back in a year or two, all we heard about was RTO and hybrid and flexibility and all of these things. And so it is something and it is a practice that we see there being some inconsistency in still, and something that I think is important to review. So sometimes a handbook will say remote work requires approval. It could be revoked at any time, or it's only for certain roles or only for certain circumstances. And then the practice is that some employees work remotely full time without any kind of approval. Others are denied without explanation. Decisions are often made based on manager preference or personal relationships. Sometimes we have managers who just feel like this employee can work from home because they get their work done, and I trust them, and so they let them do it. And this employee does not. I don't trust them, and I don't think they can get it all done. Or there's some kind of interpersonal relationship there. And again, the inconsistency that cannot be explained with documentation applied to employees differently is a huge liability. And when I say explained with documentation, I don't mean just that we're letting John work from home and not Susie. I mean, why? Is it because John is in a different role? Is it because it's a limited option, meaning we're only allowing John to do this for two weeks, where Susie asked for two months? There are valid reasons why you might allow one employee to do something that you don't allow another employee to do. There are. You just got to make sure they're written down. What makes this one particularly tricky is that remote work denials can intersect with disability accommodation. If someone is requesting remote work because of a medical condition, and that request is being handled the same way a casual scheduling ask is, you may need to be having a parallel conversation that you're not having, which is the ADA accommodation conversation. We talked about this a little bit in the leave episode too, but the way leave and accommodation intersect is real, and there's a line there that you have to understand. These things absolutely can come in pairs, and if your process is not designed to recognize that, you can absolutely end up mishandling both. So let's talk about what you actually do with this. What does all this mean? Okay, here's my five gaps that I usually see that we see the most in what the policy says versus what the practice actually is inside the organization. Now that you've heard those, what now? And so I think I want to share what I think you should do because I think the instinct when you hear all this could be, I need to rewrite my handbook. And I don't know that that's necessarily true. The handbook is probably not the problem. The practice might be the problem. It could be either/or, but what we find more often than not is that it's the practice. The handbook is how the story should go. The handbook is what leaders want to be doing or that the CEO founder you think should be done. It's just that nobody's actually doing it. You can rewrite the handbook all you want, but if you don't actually change the practice, and if you don't actually make sure that people are being held accountable to following them, you're just creating a more detailed document that you're also just not going to follow. So the audit you need to do is not a paperwork audit in your handbook. It's a practice audit. You are asking a very different set of questions, not do we have this policy, but is this policy being applied consistently? And here's the bigger part, can we prove it? When we have denials, when we have different treatment than what our policy says, can we document why? Do we have valid reasons that are documented for why that is? For most small businesses, that answer is going to be absolutely not on the proof side. There is no proof, even when the intent is good, even when the intent has been consistent, there is no documentation because documentation is the thing that absolutely falls apart under pressure. You're moving fast. Leaders are moving fast. Leaders don't want to document. And so it just absolutely falls apart. When you are busy, you're short-staffed, when a manager is handling something they were never trained to handle, absolutely, then the documentation is just it's the first thing that goes. Which is why this is a systems problem, not a character problem. I kind of will often hear and we do this too. I've done this with clients, and I'll hear my employees say something about that leader, this leader doesn't want to do this, this leader doesn't want to do that. And yes, there could be some character issues with that person, but more than likely, it's just a systems problem. The manager who managers, most of them who are handling things inconsistently, they're almost almost never doing it out of malice. They are doing it because they were not trained. They don't know the process. They're making judgment calls in real time, or they feel like they have no time. And we see this so constantly. And it is the same dynamic I talked about in that leave episode. Managers giving verbal approvals that were never documented, making promises they had no authority to make because no one told them what their role actually was. So the solution is the same here. You want to train, process, right? So create a process, train on that process. You want to make sure that they understand the documentation. If there are templates, if there are things that you want them included in that documentation, make sure that you give them the process, that you train them on the process, and that you're holding them consistently accountable to the process. So I want to close this today with three questions. And these are not rhetorical. They are questions you should actually sit down and answer honestly about your own organization. So question one, is this happening consistently? You can pick any one of the five areas. I know many of you are HR departments of one. You don't have a ton of time. Pick any one of these that I've talked about today: PTO, discipline, harassment, performance reviews, remote work. Pick one. And ask yourself honestly, if I pulled records for the last 12 months, would I see consistent application of this policy across employees? Not perfect. It doesn't have to be perfect. A one-off is not a killer. But consistent. If the answer is no or you don't know, then that's your starting point. Question two, and this one's a harder question, is can we prove it? Because sometimes the answer to question one is yes, we have been pretty consistent. But the answer to question two is no, we cannot prove it because we did not write it down. And in an employment dispute, those two things are not the same. What you did matters. What you can demonstrate you did is what the case absolutely lives and breathes on. Question three, would we make the same decision for a different employee? I would often have leaders come to me and say, if I make this decision, am I setting a precedence? And I love it when they're that self-aware that we can talk through that. Because that's what this question is getting to. Would we make the same decision for a different employee? So that would allow us to do this gut check. It would allow us to talk through this scenario we have with this employee and say, if the exact same scenario happened again, would we have the same answer? And I think that's the gut check that I'm trying to get to here. When a manager makes a call on PTO, on a discipline step, on a remote work request, the question they have to ask before they make that decision is, would I make this same call with a different employee? If the answer is yes, document it and move forward. If the answer is no, that's kind of a flag to stop back and say, hold on, is there something that's unique about this? And is that uniqueness valid? Is it defensible? That's the moment to really pause, make sure hopefully in their minds, hopefully they would get you involved at that point, involve HR before that decision is made and say, am I making a precedence here? Am I setting a precedence where I'm going to have to say this to yes to other employees and I'm not going to want to? And if that's the case, then we need to review this and we need to think about what the right answer is here. So there's your three questions. Is this happening consistently? Can we prove it? And would we make the same decision for a different employee? Now, when I say can we prove it, I'm not saying that every ounce of your day has to be documented. I understand that it probably sounds like what I'm saying is you need to keep a journal of every moment of your time and every conversation you had. And that's not what I'm suggesting at all. Simple emails. So when I say can we prove it, it's you've had five employees across different departments ask for the same holiday off that is a blackout day on your calendar, and you've said no to all of them. There's some process where they ask time off. They know it's a blackout date. You have said no to all. Or you said yes to one because of a special circumstance that was valid. What is that? There's just an email or there's a paper trail. It doesn't not everything has to be a journal entry. That's certainly not what I'm suggesting. But there's some way that you can, before a lawyer, before a judge, show documentation that proves absolutely this has been done consistently. Or when we were not being consistent, here's why, and this is a valid reason. I know you might be doing this alone. Again, I know we have a lot of solo HR practitioners who listen to this podcast, and you're trying to build capacity in your day. And so here again, as always, what we say is the practical version of this, just pick one policy. The one that feels most vulnerable to you right now, go look at what that policy says, then go look at what's actually happening inside the business. Talk to two or three of your managers. Ask them how they handle it. Talk to a few employees who have been through the process. You may find a gap. And when you find it, you have to figure out how to close it. Not by rewriting the policy. That could be the answer, but nine times out of 10, what I find is it's not. It is by training the managers and building the documentation process that makes consistent application possible. Then you do it again with the next policy. At 1% better every time. That's all we can do. We operate with our clients on a limited hours per week. We don't have 40 hours with any client. We're working anywhere between 12 and 30 with any given client. And so oftentimes my team will say to me, I just don't have enough hours in the week. I can't. I want to do all the things. And I know you feel that too, whether you're an HR department of one, or even if you have a smaller team. I know in a small business, you feel like I can't do all the things, and you can't, and that's okay. We just want to do 1% better every single time. And if you try to do that, just over time, focus on one thing at a time and make that better and then move to the next and then move to the next. We've obviously talked about this a lot on the podcast. Then eventually, things feel like they're in a better place, and that's how you start to build that capacity within yourself. A policy sitting in a handbook, it's not protection. Please remember that. A policy consistently applied, documented, and enforced, that's your protection. So there could be a gap there, and that is where risk lives. And that is what I want you to walk away thinking about today. So go back and listen to the policy nobody talks about until you need it, or our documentation policy to kind of help or I'm sorry, our documentation episode to kind of help you think about how you can move through these. Both of those are really good companions to this episode. I hope this was helpful. Thanks so much for being here. I'll see you next time.