5 HR Mistakes Small Businesses Make in Q1 — and How to Fix Them Before They Become Legal Issues

The beginning of the year is when many small businesses reset goals, review finances, and refocus operations. Unfortunately, it’s also when unresolved HR issues from the prior year tend to surface — often catching employers off guard.

While HR challenges don’t always feel urgent, small missteps early in the year can quietly turn into compliance risks, employee frustration, or costly disputes later on. Here are five of the most common HR mistakes small businesses make in Q1 — and what to do instead.

1. Assuming Last Year’s Policies Are “Good Enough”

Many employers roll over employee handbooks and policies without reviewing them. The problem? Employment laws change frequently at the federal, state, and local levels — and policies that were compliant last year may not be today.

Fix: Review your handbook at least annually, with particular attention to PTO, leave, pay practices, and workplace conduct policies. Even small updates can make a meaningful difference in compliance and clarity.

2. Waiting Too Long to Address Performance Issues

It’s common to hope that performance issues will resolve on their own after the holidays or with a fresh start in January. Unfortunately, delays often lead to inconsistent documentation and employee confusion.

Fix: Address performance concerns early and document them consistently. Clear expectations, timely feedback, and written follow-up protect both the employee and the business.

3. Treating PTO and Leave Requests Inconsistently

Q1 often brings an increase in PTO planning and medical leave requests. Inconsistent approvals or informal decision-making can quickly create morale issues — or worse, legal exposure.

Fix: Apply PTO and leave policies consistently and ensure managers understand the difference between discretionary time off and legally protected leave. When in doubt, pause and seek guidance before responding.

4. Overlooking Required Employee Notices and Updates

Employers are required to provide certain workplace postings, wage notices, and policy acknowledgments — many of which change at the start of the year.

Fix: Confirm that all required federal and state notices are current and properly distributed. If you made compensation or policy changes effective January 1, make sure employees formally acknowledged them.

5. Waiting for a Problem Before Calling HR

One of the most common Q1 mistakes is viewing HR as a reactive function — something to involve only after an issue escalates.

Fix: Proactive HR support helps identify risks before they become problems. An early-year HR check-in or audit can uncover gaps in documentation, compliance, and manager practices while there’s still time to course-correct.

A Smarter Way to Start the Year

Q1 is the ideal time to clean up loose ends, strengthen your HR foundation, and set your business up for a smoother year ahead. Addressing these common missteps early can save time, money, and stress — and create a more consistent experience for your employees.

If you’re unsure whether your current HR practices are keeping pace with your business growth or legal obligations, a brief review can go a long way.