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SIXTH TIP: EMPLOYEE BENEFITS

The next tip for those who own, or want to own, a small business: make sure you are promoting your employee benefits to your company’s advantage.  

There are many types of benefits that employers can offer to employees.  Insurance is usually the first one that comes to mind, such as medical, dental, vision, life, short-term disability, and long-term disability.  There are other benefits as well, which include:  paid sick; vacation and/or personal days; paid holidays; 401(k) matching programs; etc.  A small business owner’s main concern when deciding on what benefits to offer to employees is:  “How much is it going to cost me?”  This is a valid concern that has to be considered in conjunction with obtaining and retaining employees.  For instance, if you offer no benefits at all, will you continually have turnover with your employees because they are taking jobs elsewhere with better benefits?

I think small business owners sometimes forget to consider the importance of “employee relations” or the “spin” that can be put on what they have to offer their employees.   I am a mother of three young children and have learned the importance of the “spin.”  If I tell my kids they can have a “little bit” of ice cream for dessert, they cry and scream.  But, if I tell my kids I am giving them “a lot” of ice cream (especially if I put the ice cream in a small bowl), even though it’s the same amount I would have given them in the first scenario, they happily eat their ice cream.  The same rule applies in the workplace.  It may sound simple, but if you have staff lunches and the company picks up the tab for everyone’s lunch, promote that event as a “company sponsored” or a “company paid for” event.  Or, if you offer health insurance to your employees, consider letting the employees know how much you are paying to offer that benefit to them. 

And, don’t forget the benefits you can offer that do not cost you anything!  For instance, some employers offer their employees short or long-term disability insurance or identity theft protection.  These “benefits” are fully paid for by the employee, but the employee gets the benefit at a cheaper rate through a group plan offered via the employer.  The employer’s obligation only comes in deducting the premiums from the employee’s paycheck and transferring that money to the vendor.

At Hymson Goldstein & Pantiliat, PLLC, we have experienced employment law attorneys who can help you review your benefit policies to ensure they meet the needs of your company and your staff.

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown or Hymson Goldstein & Pantiliat.

FIFTH TIP: EMPLOYMENT POLICIES

The next tip for those who own, or want to own, a small business: set written employment policies.

All companies, large and small, need a written employment handbook that describes the policies that must be followed.  When I talk to an employer or an employee about a legal issue, one of the first questions I ask is: is there an established policy that governs this issue?  This is the same question that the court is going to ask if a legal dispute turns into a lawsuit.  The answer should be found in the written handbook.

Also, employers tend to rely on their “policy” when a problem arises.  For instance, when an employee asks a small business owner for something the owner is not willing to give, the typical (and easy) response to the employee is: that’s not our policy.  The problem is that many times the “policy” is not in writing.  Another problem is that there tends to be more inconsistency in how employees are treated when a policy is not in writing.  Inconsistency leads to the appearance of discrimination which can lead to a lawsuit.

Many policies can be included in a company’s handbook.  Typical handbooks include descriptions of the policies governing: attendance, vacation, sick, pay, confidentiality, trade secrets, discrimination/harassment, discipline, etc.  One of the most important parts of the handbook is the at-will employment disclaimer which informs employees that the handbook does not create a contract of employment.  Another very important part of the handbook is the “acknowledgement of receipt” of the handbook.  Employees should be required to sign the acknowledgment and return the acknowledgment to the company.  The employer will be hard pressed to prove to a judge later that the employee was aware of the company’s policies if the employer never had the employee sign an acknowledgment of receipt of the handbook.

And, last, but not certainly not least, once the employment handbook is created, all supervisors must be trained on how to implement the company’s policies.  There is no protection for the company if supervisors do not know and consistently enforce the policy.

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown or Hymson Goldstein & Pantiliat.

FOURTH TIP; KNOW THE EMPLOYMENT LAWS THAT AFFECT YOUR BUSINESS

The next tip for those who own, or want to own, a small business: know the employment laws that affect your business. 

If you are in business, your purpose is to make money.  To make money, most companies need workers to run the business.  Last month we discussed the difference between an employee and an independent contractor.  If you decide that you are going to hire “employees”, then you need to know and comply with the various federal and state employment laws in effect. 

For instance, there are various federal laws that prohibit discrimination in employment. Those laws include: (1) Title VII which prohibits employment discrimination based on race, color, religion, sex, or national origin, (2) the Equal Pay Act which prohibits sex-based wage discrimination, (3) the Age Discrimination in Employment Act (ADEA) which protects individuals who are 40 years of age or older, (4) the Americans with Disabilities Act (ADA) which prohibits employment discrimination against qualified individuals with disabilities, etc.  There are also similar state laws in Arizona that protect employees against discrimination.  You also need to comply with federal and state laws that establish minimum wage, requirements for payment of overtime work, recordkeeping and child-labor standards.  And then there are medical leave laws such as the Family and Medical Leave Act (FMLA) and worker’s compensation standards as well.

Not all of these laws affect every business because some of them only apply to businesses with a minimum number of employees.  For example, FMLA only applies to employers with 50 or more employees.  Every responsible small business owner should become aware of and comply with the employment laws that affect his/her business.  You certainly do not want to first become aware of a law that affects your business when you get hit with a government agency complaint or lawsuit.     

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown or Hymson Goldstein & Pantiliat.

THIRD TIP: EMPLOYEE V. INDEPENDENT CONTRACTOR

The next tip for those who own, or want to own, a small business: do not misclassify employees as independent contractors.  The reason that many small business owners want their workers to be independent contractors is because independent contractors are not covered by employment, labor, and related tax laws.  Therefore, a new business owner might be tempted to misclassify employees as independent contractors in order to avoid paying payroll taxes, benefits, and other liability.  Before you make this determination, you should do a careful analysis of many factors including:

  • the type of work the  worker is performing
  • whether the worker is supervising your employees
  • whether the worker has his/her own tools and equipment to perform the work
  • how much control you have over the worker (such as who sets the work hours and the pay rate)
  • whether the worker has his/her own insurance
  • whether the worker works for other companies or just for yours
  • whether the worker advertises his /her services separately

The above is not an exhaustive list, but demonstrates that this issue is not a simple one.  For instance, typically, independent contractors sign an independent contractor agreement which details the terms of the relationship between the company and the independent contractor.  But, do not fall into the trap of thinking that if you have a worker sign an independent contractor agreement, than that automatically makes the worker an independent contractor.  If you are being investigated by a government agency, the independent contractor agreement might be one factor that is considered, but it will be unlikely to cut short the investigation and end the inquiry altogether.

Also, consider this: if an employer fails to pay wages owed to an “employee”, that employer could liable under Arizona law for three times the unpaid wages.  If a court or government agency found that your business had misclassified an employee as an independent contractor and failed to pay wages properly, you could face other penalties as well including penalties related to the employment taxes you should have been paying all along.  There are other issues to consider as well such as immigration and worker’s compensation coverage.

My grandma used to say: “begin as you mean to go on”.  She was a wise lady because that is not only good life advice, but good business advice.  Whether you own an existing business or are starting a new one, it is wise to make sure you classify your workers properly.  And, if you already have an ongoing business and think you might have misclassified your workers, you are better off making efforts to correct your mistake now rather than letting the problem linger which could lead to bigger problems down the road.  At Hymson Goldstein & Pantiliat, PLLC we have experienced employment law attorneys who can assist you and guide you to avoid these legal pitfalls.

The information contained herein is general information not legal advice, and does NOT establish an attorney-client relationship with Lori Brown.

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