Most HR problems don’t announce themselves with sirens and flashing lights. They sit quietly in the background, waiting for you to trip over them. And usually it happens right before a big client pitch or during your first real vacation in years.
If you’re a founder, you’ve probably already stepped on one or two of these landmines. And if you haven’t yet, it’s only a matter of time.
The good news? Most of these risks are predictable and preventable if you know where to look. Here are three of the biggest HR landmines we see founders hit, and how to defuse them before they cost you time, money, or credibility.
Landmine #1: Contractor Misclassification
You call them “contractors”. The government calls them “employees”. That gap in definitions can cost you five or six figures in back pay, benefits, and penalties.
Take Austin, a marketing agency founder we know. He built his team with “contractors” because it felt easier and cheaper. And it really is easier and cheaper… in the short term. This is why so many founders do it. Unfortunately, a year later, one of them filed for unemployment. The state reclassified them as an employee, and suddenly Austin owed back wages, benefits, and penalties. That “flexible arrangement” turned into an expensive lesson.
Why? Because Austin’s “contractors” were working set hours, using his equipment, doing work central to the business (like client campaigns), and couldn’t realistically work for competitors simultaneously, they were employees under most state and federal tests, regardless of what the contract said.
Quick fix: Audit your contractor relationships. Ask who sets their hours, who provides their tools, and whether they can work for other clients. If the answer is you across the board, you’ve got risk.
In our playbook, we call this the Issues Inventory. It’s your chance to catch these risks before they come back with interest.
Landmine #2: The Copy-Paste Handbook
Somewhere out there, a founder is Googling “free employee handbook template” and feeling very proud of themselves. They are beating the system!
Adam did the same. He borrowed a handbook from a larger company, swapped out the logo, and thought he was set. The problem? Half the policies didn’t apply to his 20-person team, and a few promised benefits he couldn’t possibly afford to deliver, like mat leave top-up. When an employee pointed it out, it turned into a trust issue inside the team. What looked like a shortcut actually damaged credibility. Then, removing the policies that weren’t appropriate became “takeaways” from the team’s perspective. Essentially, worse than never having offered them in the first place.
Policies are legal and cultural guardrails, not just paperwork. If they are outdated or don’t fit your stage, they’re a liability waiting to bite.
Quick fix: Review your handbook every year. Make sure your policies reflect your actual practices, your company size, and the laws in your jurisdiction.
Landmine #3: No Documentation Trail
“If it’s not written down, it didn’t happen.” That’s the reality of HR disputes.
One founder we worked with had a high-performing but toxic employee. Managers kept “having chats” about behavior issues, but never wrote anything down. When the termination finally came, the employee claimed discrimination. Without documentation, the company had no defense. What should have been a clean decision turned into months of stress and legal fees. Leaders often claim a “clear pattern of behaviour” but, to quote Tom Cruise in “A Few Good Men”, “it doesn’t matter what you believe, it only matters what you can prove.” (That line was a gift to all HR people; I quote it often.)
Quick fix: Start a simple decision log. Record the date, the decision, the reasoning, and the outcome for every major HR move. It takes five minutes and can save you tens of thousands.
The Pattern: “I’ll Deal With It Later”
Every founder has a list of HR tasks they plan to get to “someday.” Those are the exact items most likely to explode into lawsuits, resignations, or regulatory headaches.
Sam’s list used to include everything from updating contracts to clarifying time-off rules. He pushed them off because client work always came first. But every one of those items eventually came back bigger and messier than they needed to be. It can literally be something as simple as EVERYONE wanting the days between Christmas and New Year’s off. Now what? How do we frame our decision when there’s no fair policy to back it up, and every team member has expectations? And plans.
That’s why in our playbook, we push founders to write down the top three HR issues they’ve been avoiding and tackle at least one this week. Small, consistent steps beat big, expensive cleanups every time.
Your Next Step
You don’t need to obsess over HR. But you do need to protect your business from silent risks before they turn into six-figure headaches.
- Grab our playbook, Less Drama, More ROI, for practical checklists and quick wins to keep your team happy and your business protected.
- Or if you already know you’re sitting on a few landmines, book a Founder’s HR Reality Check with us. We’ll spot the risks, prioritize what matters, and help you build systems that scale without drama.
Because the best time to deal with HR landmines is before you step on them.