Employees who were/are involuntarily terminated between 9/1/2008 and 3/31/2010 are eligible for up to 15 months of COBRA subsidies now. As you know, this means your company is paying 65% of the COBRA [...]]]> The Temporary Extension Act of 2010 has been approved and signed into law. This Act, once again, extends subsidies for certain COBRA participants.

Employees who were/are involuntarily terminated between 9/1/2008 and 3/31/2010 are eligible for up to 15 months of COBRA subsidies now. As you know, this means your company is paying 65% of the COBRA premium but can receive reimbursement from the government. You’re merely having to go through the administrative nightmare, then having to wait months for reimbursement.

Given this Act, I won’t be surprised to hear that the subsidies are extended even longer given the current high unemployment rates. I guess we’ll have to wait and see!

You can check out the details of the law at http://www.dol.gov/ebsa/cobra.html.  

 

Recently I had a business owner call me in a panic. He was a one-person business who happened to be using an unemployed friend once in [...]]]> I know there are some of you business owners who think you can wait to worry about HR until you’re a little bigger. My question is, “what are you waiting for?”

Recently I had a business owner call me in a panic. He was a one-person business who happened to be using an unemployed friend once in a while for the past few months. The friend was paid in cash. 

One afternoon the business owner had to run home for an emergency and had his friend hold down the shop while he was gone. As luck would have it, a rep from the Labor Board stopped by and learned the friend was working for this company… off the books. The business owner returned to his office to find a $1,000 fine for not having workers’ compensation insurance and a stop-work order, preventing him from using his friend until he was legit.

I was able to give the business owner the advice he needed to deal with this situation and to prevent future problems. Sadly, I also had to let him know that he should expect a visit or call from EDD and the feds regarding the unpaid payroll taxes, plus fines and penalties for not hiring legally in the first place. (Make a note that state and federal government offices are real touchy about not receiving their share!)

This particular business owner was lucky. Because he had only used his friend on occasion and for only a few months, the total he’ll owe will probably be fairly low (under $2,500) between the state and federal government offices involved. In some cases, you can be hit with four years’ worth of unpaid overtime, missed meal or rest breaks and, of course, the money and interest the state and feds should have been receiving all that time. That’s before the fines and penalties.

The really bad news is that his business is now known to those government offices and he’ll have to be sure to be legit going forward. This was a wake-up call for him and an expensive lesson.

So, in the words of Dirty Harry… do you feel lucky?

This new I-9 form expires August 31, 2012, so it looks like we can stop worrying about which version [...]]]> We’ve been waiting for an update to the Immigration and Naturalization Services’ (INS) I-9 form since the last version expired and it’s finally here. Delete the version you’ve been using and replace it with this NEW I-9 Form!

This new I-9 form expires August 31, 2012, so it looks like we can stop worrying about which version to use for a while. However, with Homeland Security calling the shots on what’s considered the best documentation, don’t be surprised if we see changes before 2012.

Remember that every employee needs to complete this form upon hire and, if they used identification that needs to be renewed, make sure you get the updated information as needed. You don’t have to have current employees fill this out again. However, read the instructions that are part of the form whenever you have questions about what to do.

This federal law affects [...]]]> The feds passed the Genetic Information Nondiscrimination Act (GINA) and it took effect on 11/21/09… which means you should add it to your wall of employment law posters immediately. (Note: California already prohibits this type of discrimination, so you may be covered if the “EEO and The Law” section of your posters includes genetic information.)

This federal law affects you if your company has 15 or more employees. GINA is intended to prohibit genetic information (such as genetic tests and family medical histories) discrimination by insurers and employers. Although this isn’t the type of information you just trip across, review your forms to check that you aren’t asking a question that could fall into this category. Your to-do’s for GINA include:

• Adding the GINA poster to your wall (or confirming it’s already included in your current posters). Here’s a copy for you: Give me GINA!
• Update your non-discrimination policy to include genetic information.
• Audit yourself to ensure you aren’t asking employees for information that’s not allowed by GINA. You may request sufficient information to meet certification requirements for state or federal medical leaves but be sure what you’re asking for doesn’t cross this line.
• Separate genetic information, including family and medical leave certifications, from other personnel documents and place it in a confidential medical file accessible only to employees with a need to know the information. For your company’s protection, make sure that’s a really short list that needs to know!

I haven’t yet met the business owner who gets excited about writing an in-depth job description. Go figure! The most frequent excuse is that they don’t see the value in spending much time on it.

The job description is your starting point when hiring and, later, in managing the employee. How [...]]]> Why GOOD job descriptions will save you money

I haven’t yet met the business owner who gets excited about writing an in-depth job description. Go figure! The most frequent excuse is that they don’t see the value in spending much time on it.

The job description is your starting point when hiring and, later, in managing the employee. How do you know specifically which skills, experience, and education the job requires? Many people start interviewing with only a mental snapshot of who they need instead of really thinking about it. A generalization isn’t going to result in a good hire.

Did you know that replacing a bad hire costs you somewhere between 1 to 3 times the annual salary of that person. No, I didn’t just make that up. Think about it. Even if you’re able to replace someone as inexpensively as possible, you still have a lot of expense in money or in the time of everyone involved.

Where you’re really throwing your money away is on the less obvious costs: your time (and others’) when interviewing, loss of productivity throughout the company, cost of training (whether in time or money), and it just goes on and on. Since so many companies have reduced the number of employees on hand, people are busier than ever. This means you may be adding responsibility onto the shoulders of employees who don’t want it or have time for it. As a result, your replacement costs will increase the longer it takes the new employee to get up to full productivity. Now double those costs… you went through the same thing with the employee you’re replacing, didn’t you?

How can an in-depth job description change this pattern? The simple answer is that you’ll make a much better hire and, therefore, have less need to replace that person down the road. A good hire isn’t just about what you’re getting; it’s also about what you provide that satisfies the employee’s needs. If neither of you have a good idea of how well the person fits the job that needs to be done, either of you could end up wanting to end that relationship.

If you only look at the surface of a job’s responsibilities, you’ll miss the background needed to accomplish the duties. For instance, a call center employee typically needs to be on the phone non-stop and, often, work in a small enclosed cube space. A receptionist needs to be able to deal with unruly visitors and to understand and convey messages clearly. A scientist needs to be able help you get a product on the market. Can you articulate the actual skills each of these need?

If it’s done right, the job description can survive ISO certification, a discrimination lawsuit, and an employee who wants to believe that what you’ve asked them to do “isn’t their job.”

Let’s see if this sounds familiar. Bob has been a fabulous employee but you’ve been concerned lately because he’s been in the same position for over two years and you’re afraid he might leave the company. The answer seems obvious… you’ll promote him. In fact, [...]]]> When promotions aren’t a reward or even a good career move

Let’s see if this sounds familiar. Bob has been a fabulous employee but you’ve been concerned lately because he’s been in the same position for over two years and you’re afraid he might leave the company. The answer seems obvious… you’ll promote him. In fact, you believe that he’ll be such a great influence on the people reporting to him that you’ll end up with a whole team that’s fabulous. You pat yourself on the back while thinking you’re pretty fabulous, too!

There are two big problems with this solution. The first problem is the way we think about promotions. We’ve all gotten wrapped up in the belief that success requires climbing the corporate ladder. Don’t take it personally; both employees and management have gotten stuck in that mindset. Since there are fewer and fewer positions available the higher you go in a company, it’s obvious that promotions are limited. Think of your business first: did someone leave to create a job opening or do you have a legitimate need for this new role? If you create new positions just for the purpose of rewarding someone, you’ve set a dangerous precedent that’s very hard to correct. It’s important to be creative in retaining your employees without constant promotions.

The second problem is the way we think about promotions. I’ve noticed a large percentage of companies that seem believe a new title magically gives an employee new skills. This can easily lead to disaster on several levels. Unless Bob has the right skills, he’ll probably be a poor supervisor and a legal risk to your company. Some of these skills may come naturally to Bob but real training is needed for many of the skills.

Putting Bob in a supervisory position removed him from a position he excelled in and put him in a position for which he has no experience or training… and, possibly, no aptitude. Even with training, he may never be a good supervisor if he doesn’t have the right aptitude for a supervisory role. Statistics say that 70% of employees blame their supervisor when asked why they left a company.

Let’s face it. Some people will never become a great supervisor, even with training. In fact, I know people who will do just about anything to avoid supervising people because it’s so stressful for them. This is where aptitude comes into play. A good supervisor really enjoys supervising people, including the challenges. These are the type of people who will benefit from a promotion to a supervisory position… and will be much more likely to be successful in the job.

So, let’s do a status check on Bob’s promotion. You no longer have fabulous Bob in his old position. You have not-so-great Bob as a supervisor. And you have less-than-fabulous Sam now doing Bob’s old job. Meanwhile, a lack of success in his new job could easily wear on Bob’s confidence and force him to leave your company. You could try to salvage this by offering Bob his old job back (assuming you still have an opening) but this is rarely successful because it looks like a demotion, no matter how you word it. How’s that brilliant idea of a promotion looking now?

Change your mindset about promotions. Determine whether or not your fabulous employee has the needed skills and knowledge or can be trained for ANY new position. Communicate with your employees to find out what they’d like to be doing in a year or two. You might be surprised to find that many are perfectly happy doing their current job and don’t have ambitious plans.

Don’t lose a good employee by making the mistake of thinking a promotion is the only or best solution for rewarding good performance. Either do your homework or plan to do some recruiting.

Did you know that [...]]]> I talk with a lot of small business owners who tell me they are using Independent Contractors (I/Cs) rather than hiring employees. But have they really thought it through? The one thing few companies are doing when making the decision between I/Cs and employees is checking the legal liability of their decision.

Did you know that the IRS, Department of Labor, state agencies, Congress, state legislatures, courts, class action attorneys, and unions care about your decision? What those entities have in common is that they assume your worker is an employee and that it’s your responsibility to prove that you are using an I/C. IRS calculates it loses $3-5 billion per year because of misclassified workers and has created a new audit program in an effort recoup some of these losses.

The biggest determining factor seems to be the level of control you or the workers have regarding behavior, finances, and the relationship. Although each entity has its own testing requirements, an I/C is likely to:

• Have a financial stake by risking a profit or loss from the work;
• Furnish his own tools and/or equipment needed to complete the work;
• Be paid by the job rather than by the hour;
• Provide similar services to more than one company;
• Invest in his own business, tools/equipment, and facilities;
• Pay his own business and travel expenses;
• Hire and pay for any helpers needed to complete the work; and
• Set his own working hours and days.

Misclassifying workers is seen by the government as cheating. Statistics show 7-15% of workers are misclassified and 15% of employers have misclassified workers. Now all this sounds frightening but do you know who is the scariest and most likely to start all your legal and financial problems? That worker you classified as an I/C.

The predominant problem I see is that the workers you are hiring as I/Cs aren’t seeing themselves as businesses. A signed I/C Agreement is barely worth the paper it’s printed on if that I/C doesn’t have the business mindset. That mindset means they are truly operating like a real business, they have other clients, and take on jobs over which they have total control except for the agreed-upon outcome.

Instead, a worker agrees to be an I/C because you’ve asked them to and they follow your instructions, use your tools/equipment and facilities, and are paid for the time worked. Then, when you don’t need them any more, they file for unemployment and start the governmental nightmare for you by triggering an EDD (Employment Development Dept.) audit.

Because misclassifying an employee is a wage and hour law issue, California can collect unpaid payroll taxes and unpaid overtime hours for the previous four years… plus the associated fines and penalties. It’s not pretty and it’s very expensive.

So, just how sure are you that you have properly classified your workers? If you’re not positive that I/C is operating as an independent business, you may have a problem. Sorry, but there’s really no cheap and easy fix here. However, being proactive in correcting misclassifications is usually less costly and looks better for your company than just waiting until you’re sued or audited.

AN ALTERNATIVE TO HIRING EMPLOYEES:  Rather than making the mistake of misclassifying workers as Independent Contractors, consider hiring temporary employees through an agency. Yes, you’ll pay more per hour but you won’t have to worry about unemployment, benefits, workers’ compensation insurance, payroll taxes, or the fines and penalties of misclassifications. Plus you can swap out workers if they aren’t working out for you!