In a shop of 5 to 40 people, the common HR problems are rarely exotic. They are the same handful of headaches in different work boots: an overtime hour nobody logged, a contractor who looks a lot like an employee, a complaint that never got written down. Below, each one comes with a first resolution and the rule underneath, so you can tell a management problem from a legal one before it starts billing by the hour.
Common HR problems and resolutions at a glance
| Problem | First resolution | Rule underneath |
|---|---|---|
| Overtime mistakes | Record every hour; pay time and a half past 40 in a workweek | Federal: Fair Labor Standards Act (FLSA) |
| Contractor or employee | Decide by who controls the work, not by the label | Federal: IRS and Department of Labor tests |
| Final paycheck | Pay on the Texas clock, keys returned or not | Texas: Payday Law |
| New hire paperwork | Finish Form I-9 by the third business day | Federal: immigration law |
| Harassment complaint | Write it down, look into it promptly, protect the reporter | Federal and Texas |
| Coworker conflict | Meet each side separately, then record the agreement | Practice |
| Slipping performance | Written expectations, then documented coaching | Practice |
| Turnover | A real onboarding plan and regular check-ins | Practice |
Which HR problems are legal problems?
A problem turns legal when a statute already has an opinion about it, and which ones do depends partly on headcount. Federal discrimination law under Title VII applies to employers with 15 or more employees for each working day in 20 or more calendar weeks of this year or last. The federal age discrimination law starts at 20 employees, and the Family and Medical Leave Act at 50.
Texas closes one gap on purpose. Since September 1, 2021, the Texas Labor Code's sexual harassment rules reach any employer with one or more employees. Pay and paperwork rules care less about size, so never assume a small crew is exempt from them. The useful question is not whether a problem is big or small. It is whether a rule already decides it. If one does, follow it and write down that you did. If none does, you have a management problem, which is the better news: you get to decide.
Headcount triggers: which laws apply at your size
| Employees | Law | What it covers | Layer |
|---|---|---|---|
| 1 or more | Texas Labor Code 21.141 | Sexual harassment | Texas |
| 15 or more | Title VII of the Civil Rights Act | Discrimination based on race, color, religion, sex or national origin | Federal |
| 15 or more | Americans with Disabilities Act, Title I | Disability discrimination | Federal |
| 20 or more | Age Discrimination in Employment Act | Age discrimination | Federal |
| 50 or more | Family and Medical Leave Act | Job protected leave, for employees with 12 months and 1,250 hours at a site with 50 employees within 75 miles | Federal |
Federal counts use each working day in 20 or more calendar weeks of the current or preceding year.
Pay problems: overtime, contractors and final paychecks
Pay mistakes repeat every payday, which makes them the most expensive HR problem to ignore. Under the federal Fair Labor Standards Act, a covered non-exempt employee earns at least one and one-half times the regular rate for every hour past 40 in a workweek. A salary alone does not switch that off, as the guide to salaried overtime in Texas explains.
Contractors are the next trap. Worker classification turns on facts: the IRS asks who controls what the worker does and how, and who controls the business side of the job, such as how the worker is paid. A signed contractor agreement for someone who keeps your hours, uses your tools and follows your direction may not survive a closer look.
Endings run on a Texas clock. Under the Texas Payday Law, a final paycheck is due within six calendar days of a discharge, and by the next regularly scheduled payday after a resignation. Holding it until the shop keys come back is not allowed.
The clocks that do not wait: final pay and first week paperwork
| Event | Deadline | Layer |
|---|---|---|
| Employee is fired or laid off | Final pay within six calendar days | Texas: Labor Code 61.014 |
| Employee quits | Final pay by the next regularly scheduled payday | Texas: Labor Code 61.014 |
| Company property not returned | Not a reason to hold final pay past the deadline | Texas: TWC |
| New hire's first day of employment | Employee completes and signs Form I-9 Section 1 | Federal: USCIS |
| Third business day after the first day of work for pay | Employer completes Form I-9 Section 2 | Federal: USCIS |
Complaints and conflict: fix the problem, protect the person who raised it
Most complaints never reach the owner. In its 2016 report, the harassment task force of the Equal Employment Opportunity Commission (EEOC) found that roughly three out of four people who experienced harassment never even talked to a supervisor, manager or union representative about it.
When one does come in, treat it as rare information, not an interruption. Listen, write down what was said, and use your workplace complaint process to set a date to follow up. A serious allegation calls for a real harassment investigation.
The bigger risk is often what happens next. In fiscal year 2023, retaliation was alleged in 56.8 percent of all charges filed with the EEOC, more than any other basis. Moving a shift, trimming hours or going quiet on someone right after a complaint can look like punishment even when you meant it as distance. For a plain coworker clash, meet each person separately, then together, and write down what each one agreed to change.
"Workplace culture has the greatest impact on allowing harassment to flourish, or conversely, in preventing harassment."
Chai R. Feldblum and Victoria A. Lipnic, EEOC Commissioners and co-chairs of the Select Task Force on the Study of Harassment in the Workplace, in the task force's June 2016 report
Performance, attendance and turnover
Performance problems usually start as expectation problems. If the standard lives only in your head, the employee is aiming at a target they cannot see. Put it in written expectations, give specific feedback in a coaching conversation, and note each step the day it happens. If the work keeps slipping, a performance improvement plan names the gap, the help on offer and a date. Texas generally follows at-will employment, which leaves you room to decide, but the record is what shows the decision was about the work.
Turnover in a small shop often starts in the first weeks, when a new hire gets a key, a vague tour and a coworker to shadow. A real onboarding plan and a regular retention check-in catch trouble while it is still a conversation instead of a two week notice.
The documentation ladder: from first talk to final decision
| Step | What to write down |
|---|---|
| Expectation set | The standard, the date, and how you shared it |
| Coaching conversation | What happened, what should change, and by when |
| Written warning | The gap, the earlier talks, and the next consequence |
| Improvement plan | Measurable goals, the support offered, and the review date |
| Decision | The reason, the record behind it, and the final pay date |
This guide is general guidance, not legal advice. If a complaint names you or a manager, a firing would follow closely on a complaint, or you are unsure how to classify a worker, talk to an employment lawyer before you act. For the rest, see how to handle hard people moments, take the four question checkup, or ask Jennifer to help sort your top three.
Frequently Asked Questions
What is the most common HR problem in a small business?
No agency ranks HR problems for small businesses. The ones that most often turn into legal trouble are pay mistakes and how complaints get handled. In fiscal year 2023, retaliation was alleged in more charges filed with the EEOC than any other basis.
Do HR laws apply to a Texas business with fewer than 15 employees?
Many do. Title VII starts at 15 employees, but the Texas Labor Code's sexual harassment rules cover employers with one or more employees, the Texas Payday Law sets final pay deadlines, and every new hire needs a Form I-9.
Can I hold a final paycheck until an employee returns equipment?
No. The Texas Workforce Commission says failure to return company property is not a legal reason to hold a final paycheck past its deadline: six calendar days after a discharge, or the next regular payday after a resignation.
About Common HR Problems
- Texas Workforce Commission: final pay deadlines under the Texas Payday Law
- EEOC: report of the Select Task Force on the Study of Harassment in the Workplace
- USCIS I-9 Central: completing Section 2
- IRS: independent contractor or employee
Sources: 29 U.S.C. 207, 29 U.S.C. 2611, 42 U.S.C. 2000e, 42 U.S.C. 12111, 29 U.S.C. 630, Texas SB 45, 87th Legislature, adding Labor Code 21.141, Texas Workforce Commission, Final Pay, USCIS, Completing Section 1, USCIS, Completing Section 2, IRS, Independent Contractor or Employee, IRS, Common Law Employee, Texas Workforce Commission, Wrongful Discharge, EEOC, Select Task Force on the Study of Harassment in the Workplace (2016), EEOC, Charge Receipts by Basis, FY 1997 to FY 2023, 29 CFR 795.105