From Entrepreneur to Employer

The move from Entrepreneur to Employer is a significant milestone in growing a business. In most successful business ventures, there comes a point when the owner realizes he can’t do everything on his own.

Many companies have found that the idea of working with an independent contractor, rather than hiring an employee sounds promising.  After all, businesses don’t withhold Federal, State, or Social Security taxes, or pay unemployment or workers’ compensation insurance for independent contractors.  They also don’t need to offer benefits like vacation or health insurance.

Caution is recommended, though.  Even if both parties agree that the arrangement is an employer/independent contractor one, several state and federal agencies may disagree, and a business owner may end up paying all required employment taxes, wages owed, unemployment tax and benefits, or workman’s compensation, PLUS the possibility of penalties, interest, attorney fees and even potential criminal sanctions.  Each agency has it’s own reason for ensuring that workers are classified correctly – the IRS want to make sure that taxes are being paid correctly, the Department of Labor wants to make sure that workers are being compensated correctly, state Unemployment and Worker’s Compensation agencies want to ensure that workers can receive the benefits that they are entitled to, and each agency has its own test to determine whether a worker is an employee or independent contractor. The one thing all the agencies have in common, though, is the willingness to impose penalties on companies who misclassify employees as independent contractors.

So how can you know for sure if your independent contractor is classified correctly? Although each case is determined individually based on the facts surrounding the situation, a decision can generally be made by looking at the employer / worker relationship and where the control lies. If a business dictates “how, where, and when”, the worker is most likely an employee. If the business perceives itself to be a “client” of the worker, it’s more likely to be an employer / independent contractor relationship. Again, since each case is determined on an individual basis, it’s important that an employer analyze the situation for which he is hiring the worker carefully.

How can Hippo & Fleming Law Offices help?

• Our attorneys can help you analyze the relationship between your business and independent contractors to make sure you are in compliance.
• Our attorneys can consult with you before you make your first hire to analyze your workforce needs.

Questions? Contact our office for more information.

Pregnancy Discrimination Claim Costly for Maternity Store

The EEOC recently found that Mothers Work, Inc., doing business as Motherhood Maternity, illegally disciplined and ultimately fired an employee who it believed was pregnant. The company also allegedly refused to hire qualified female applicants because they were pregnant – a violation of the Pregnancy Discrimination Act.

The three-year consent decree requires the company to pay a total of $375,000 in damages, costs, and fees. The company must also adopt and distribute an anti-discrimination policy that specifically prohibits denying women employment opportunities due to pregnancy, train all Florida employees (current and future) on the new policy and federal employment discrimination laws, post a notice of resolution of the lawsuit, and report to EEOC twice annually regarding pregnancy discrimination complaints.

source: eeoc

How can you prevent this type of claim in your business?

• Take time to read and understand the Pregnancy Discrimination Act.

• Provide training for every manager or supervisor who takes part in the hiring process to ensure that no unintentional discrimination is taking place.

 

Hippo & Fleming Law Offices can help:

• We provide customizable training and workshops for business owners and managers. Contact our office for more information.

• Whether you need an existing policy reviewed, or are just starting to think about writing an employee handbook, our attorneys can give you the legal guidance you need. Please contact us with any questions.
  

Heading Off Employee Issues

Owners of new business have a lot of “upfront” work to do before they can open their doors for business. Business plans, deciding on the type of business organization, insurance, and tax issues all have to be ironed out before operations begin. Once out of the gate, though, many employers are all too willing to forego the upfront work of preparing for employee issues, and become reactive, rather than proactive when dealing with employee issues. Below are three tips on how to stay one step ahead of potential problems and costly employee lawsuits.

Take the time to create WRITTEN policies and procedures.

As a business owner, you know how you want and expect your business to be run. Your employees may not. Written policies and procedures will ensure that everyone is on the same page. Aside from company values and mission, there are always operational questions as well: How often are employees paid? What is the vacation policy? Is there a probationary period? What actions will lead to disciplinary action? Don’t wait until there are employee issues (and there WILL be employee issues) before you start to think about what the policies and procedures should be.

Don’t underestimate the importance of job descriptions.

Job descriptions must be one of the most under-valued tools that business owners have. Job descriptions should be created for every position in your business, reviewed and updated regularly, and used for everything from hiring, to evaluating, to maximizing the performance of your employees. Along with documentation, accurate job descriptions can be the best tool in the event of an employee lawsuit.

Learn the skill of effective documentation … and use it.

Effective documentation may be the single most important skill a business owner needs to have when dealing with your employees.Whether it’s informal feedback or a formal counseling session, fair and consistent documentation can prevent the recurrence of performance issues.Documentation should also be used at evaluation time to help you remember events (both good and bad) that may have happened several months prior. Effective documentation is objective and detailed. Words and phrases such as “lazy”, “undependable”, and “bad attitude” are meaningless in employee documentation. Make sure you document the behavior, not your personal feelings about the employee.Keep in mind, also, that performance documentation will become a permanent part of the employee’s file. It is quite possible that several years down the road an unemployment referee or EEOC investigator will be reading the documentation. Make sure your documentation is detailed enough that someone who is unfamiliar with the employee and situation could understand it.The key in getting off on the right foot in dealing with employees is to be proactive rather than reactive. Take the time up front to put policies, procedures, and job descriptions in writing before you need them. Start the process of fair and consistent documentation with your very first employee – it will be routine by the time you’re ready to add more workers.
 

Hippo & Fleming Law Offices can help: Our attorneys can guide you through writing an initial employee handbook, review an existing handbook or policy, and work with you to create effective job descriptions. We offer training sessions for your or your supervisors on effective disciplinary documentation and general communication. Contact our office for more information on how we can help you be proactive in managing your employees.

 

The Cost of Not Taking Corrective Action

Recently, a 17-year old employee was awarded $180,000 in response to an EEOC sexual harassment claim against a national restaurant chain [EEOC v. Steak 'N Shake Operations, Inc. No. 4:04CV00880 SNL (E.D. Mo. June 22, 2006)]. The female employee was subjected to sexual harassment by a male coworker, who verbally and physically sexually harassed the employee for 3 months. She complained to the restaurant’s General Manager and to two other managers, but no corrective action was taken. In September 2002, after the coworker attempted to coerce the employee into sexual activity in the restaurant parking lot, she quit. 

In addition to awarding the monetary award, the 3-year consent decree also mandates that the company prepare a reference letter that lists the former employee’s job duties and employment dates and states that her performance was “well above average” and that she is eligible for rehire. The letter will be made a part of her permanent employment records, and restaurant must limit responses to prospective employers to the information contained in the letter, as applicable.

The restaurant also stated in the decree that it no longer employs the harasser.  The decree states that the restaurant’s sexual harassment policy must clearly describe the proper procedure to file an internal sexual harassment complaint and must include a 1-800 hotline number.  They must keep records of all written internal complaints of possible sexual harassment, including hotline reports, received during the term of the decree. At all of its St. Louis District restaurants, they must: (1) provide sexual harassment training for all General Managers and Human Resources personnel; (2) post for 1 year a modified “hotline poster” stating that employees may also contact defendant’s counsel with internal discrimination complaints; and (3) continue for 3 years their Youth at Work Initiative, which involves notifying new employees age 18 and under and their custodial parent(s) about (a) the youth’s right to work in an environment free of harassment and discrimination and (b) how to report discrimination. In addition, every 9 months the company must provide employees at five restaurants in the District where the harassment occurred, and any other restaurant whose General Manager was employed at the restaurant during the time the employee was harassed with a copy of the company’s sexual harassment policy and a confidential written survey to assess the effectiveness of the policy.

source: EEOC

How can you prevent this type of claim in  your business? Provide training for all managers and supervisors on Sexual Harassment, as well as on proper documentation and employee counseling techniques. Many managers aren’t natural disciplinarians and may procrastinate or altogether avoid counseling employees.  Review your Sexual Harassment Policy on a regular basis. Workplace policies shouldn’t be static. In an ever-changing business environment, it’s important to review all of your workplace policies on a regular basis to ensure that the information is relevant and within the scope of federal and state regulations.   Take time to review how the policy is communicated to all employees – both new hires and long-term employees. Periodically re-issue the policy and ask that all employees (and managers) review and sign an acknowledgment that they read the policy. Hippo & Fleming Law Offices can help: We provide customizable training and workshops for business owners and managers.  Contact our office to learn more about how we can help.  Whether you need an existing policy reviewed, or are just starting to think about writing an employee handbook, our attorneys can give you the legal guidance you need. Contact our office for more information.