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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.

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.

NON-COMPETE AGREEMENTS IN ARIZONA

Over this past year I have had several clients who left a job and came to me because they had signed a non-compete agreement with their former employer.  These individuals were concerned that the noncompete agreements they had signed would prevent them from getting new jobs.  This concern was valid as non-compete agreements may be enforceable in Arizona depending on the facts of each case.

Courts analyze the enforceability of non-competes by looking mostly at the reasonableness of three main features of the provision: its duration; its geographic scope; and the activity it restricts.  For instance, a non-compete might say that an employee cannot compete with her former employer for six months which is more likely to be enforced by a court than a five year limitation.  Next, a non-compete might say that an employee cannot compete with the former employer within five miles of the former employer’s office which is more likely to be enforced by a court than if the non-compete says that the employee cannot work anywhere in the United States (and therefore the employee needs to move to another country to find work! ).  Finally, a non-compete that says for example that a pulmonologist cannot practice pulmonology for a certain time limit and in an certain area is more likely to be enforced than a non-compete that says the person cannot practice medicine in Arizona for the next year (and therefore that doctor has to enter a whole new field if he wants to stay in Arizona).

To know when the courts will or won’t enforce a non-compete agreement is not easy.  Many clients think that a form used in one business will work for another – but that’s not the case.  Because so much depends on the facts of each situation, if you are ever presented with a non-compete agreement or are an employer thinking about having an employee sign a non-compete agreement, you should strongly consider having an experienced employment lawyer review the agreement with you to determine the agreement’s strength and enforceability.  Otherwise, you could end up in an unwanted lawsuit.  At Hymson Goldstein & Pantiliat, PLLC, we have several lawyers that are well-versed and experienced in employment law and non-compete agreements who have argued appeals on this issue that can help you understand and avoid the pitfalls of such an agreement.

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