Month: August 2014

How Soon Can I Fire Her?

Another update from the HR jungle….

Gretchen and Sam started their business on a shoestring budget and built the company up to a point where they now have a dozen employees. The employees work well together and cover for each other during lunches, vacations, or sickness; whatever it takes to keep the clients happy. It’s a real team effort and it’s paid off financially for everyone.

That is…until Liza was hired as the receptionist. Liza was told at her date of hire that she would be trained on other office procedures so that she could help cover for other employees when they are absent from office. But it turns out that everyone is covering for Liza.

Liza has a malady a week, mysterious illnesses that mean she misses a lot of work. The other employees are beginning to openly complain about the extra work caused by Liza’s absences and inattention when she is at work.

Gretchen just completed a review of the past quarter’s attendance records and is shocked by what she sees. She wants to fire Liza immediately based on poor attendance. Then she realizes there is no record in Liza’s employee file showing that Liza has been warned of the consequences of poor attendance.

What should Gretchen do next?

1. She could fire Liza immediately and hope that Liza won’t hire an attorney to argue about allegedly wrongful termination.
2. She could offer Liza a severance package in exchange for leaving immediately and waiving any later claims related to the termination.
3. She could set up a meeting with Liza to review attendance policies, give a “final” warning and wait to see if Liza improves (or not).

Does this situation sound familiar? If your company has faced this issue, you know that each option has pros and cons. Corporate Compliance Risk Advisor can help your company consider the options to resolve the immediate problem and limit similar problems in the future.

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Are My Guys 1099’s or W-2’s?

Another update from the HR Jungle….

Otis runs a lawn care business and has a small staff of permanent employees. During the summer months he hires extra workers as his work load increases. Many of these extra workers take other jobs because Otis doesn’t offer full-time employment.

Otis always treated these extra workers as independent contractors and issued a 1099 to them. As 1099’s, these workers are self-employed and responsible for all employment taxes. Many of these workers don’t want to be considered employees of Otis’ company because they like the bigger paychecks they get now.

Last week one of the temporary summer workers told Otis he talked to a friend who knows someone who says he (the summer worker) should be a W-2 employee.

What should Otis do next?

1. He should review the factors used by the IRS and the U.S. Dept. of Labor to determine if a worker is an independent contractor or an employee. Basically, the more control over how and when the job is done, the more likely the worker is a W-2 employee.
2. If an initial review indicates the summer workers should be re-classified as W-2 employees, Otis should immediately work with his payroll service to reclassify the workers as employees.
3. If Otis isn’t sure how to classify the summer workers based on his initial review, he should seek legal advice on how to classify the workers.
4. He should seek legal advice on the tax consequences of misclassifying W-2’s and 1099’s.

There is no bright line test dividing 1099 and W-2 workers; it depends on the total circumstances. Corporate Compliance Risk Advisor can help Otis do the initial review of the factors and gather the information needed by the attorney who will give a legal opinion to Otis.

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We Need Employees….But We Have No Employee Policies

Another update from the HR Jungle…

Abigail and Bob started their business five years ago after being downsized from corporate jobs. Until recently they were the only employees, working long hours and outsourcing specific tasks to free-lancers (a/k/a independent contractors).

Now they want to add employees to prepare for several new customers. They believe replacing the free-lancers with employees will allow them to streamline processes, speed up response times and become more profitable.

As refugees from corporate America they want to avoid bogging down in bureaucracy but they also know they need some administrative structure. Hiring employees involves creating human resources policies to ensure that all employees are treated the same.

What should Abigail and Bob do next?

1. They should identify all the tasks to be performed by the newly hired employees so that accurate job descriptions can be created.
2. They must decide the details of everything from a dress code to what benefits should be offered.

Abigail and Bob are smart, educated individuals who can research HR issues and create an HR department from scratch. Or they can delegate this activity in order to free up their time to focus on growing their business. Corporate Compliance Risk Advisor can help them create their HR department and then serve as a resource for the HR manager.

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How Can My Business Grow With All These Distractions?

Another update from the HR Jungle….

Sondra’s business grew rapidly in the past 18 months as she expanded product lines. She added three new employees last quarter when she opened a second store. With two retail locations and a constantly expanding line of products, Sondra can’t keep up with the details.

She is constantly bombarded with employee requests for time off from work. Yesterday several employees came to work with ripped jeans and t-shirts which is not the image Sondra wants to present to her customers. The employees say they thought the dress code was casual. This morning she spent an hour sorting out a dispute between two employees.

One of the new employees at the new store is not working out and should probably be fired. Sondra needs time to read the store manager’s notes to verify the grounds for terminating employment. Then she needs to hire a replacement. But first she needs to revise the job description to ensure the next employee has the qualifications she needs.

What are some of the tasks on Sondra’s “to do” list?

1. An employee handbook that explains dress codes, time and attendance, and leave policies (among many other things) would answer many employee questions, saving time for her and her employees.
2. A procedure for resolving workplace disputes could ensure that future employee disputes don’t escalate like the situation this morning.
3. Job descriptions may need to be revised to better match the evolving duties of each employee.

Sondra’s been delaying taking action because she hates these administrative tasks. But she also knows her business is getting stuck because she’s stuck making up the rules as she goes. Sondra can outsource these tasks to an HR consultant leaving her free to continue building her business.

Corporate Compliance Risk Advisor can help Sondra and other business owners in similar situations.

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