Small Employer

Under 50 employees

I Don’t Have a Drinking Problem

Another update from the Jungle….

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Leo and Ted are managers at their company. They were hired at the same time and became friends. They often ate lunch together and spent most afternoons at happy hour at their favorite sports bar.

Leo was promoted first. His division expanded rapidly and when he needed another manager, he asked for Ted. Ted managed the fastest growing product line in Leo’s division. Naturally, Ted began thinking that his team should have a bigger budget. Leo said no. Ted went to happy hour alone to sulk.

In the next manager’s meeting, Ted interrupted Leo repeatedly until Leo ordered him to shut up. After the meeting, Ted stomped into Leo’s office to complain. Leo ordered Ted to leave and Ted refused. In the ensuing shoving match, two chairs were broken, Ted got a fat lip and Leo had a bloody nose. After that, they went to separate bars for happy hour.

Ted decided to ask Leo’s boss to make his team a separate division on the grounds that his unnamed-8 team managed a product line worth more than all the rest of the products managed by Leo’s division. Luckily for Ted, he appealed to Oscar.

Oscar is a fan of Star Trek and he runs a modified Klingon Empire, where you advance over the body of your former boss. He is happy to watch Leo and Ted scrap because if they are fighting each other they aren’t challenging Oscar for his job. Oscar grants Ted’s request.

unnamed-3 Now Leo and Ted are trying to screw each other’s careers by sucking up to Oscar. They suck up by inviting Oscar to happy hour. Oscar appreciates having Leo or Ted cover his bar tab. But all these soggy nights mean that productivity is suffering as Leo and Ted slide into alcoholism.

Nan, the HR manager, is watching from the sidelines. She knows she should talk to the unnamed-9 senior management team about Leo’s and Ted’s potential disability due to alcoholism.

What options are available to Nan?

She can recommend that Leo and Ted be shipped off to rehab to dry out in hopes of saving their careers.
She can gather information about their poor performances to build a case for firing them.
She can wait to take action until a senior manager notices the problem.

In the actual case, each manager was encouraged to seek professional help for their alcoholism. Neither sought treatment. One manager eventually quit rather than be fired, while the other manager continued in his same role without any hope of a promotion. unnamed-7

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

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Looking for Love!

Another update from the Jungle….

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a woman named Trish was searching for true love. Like so many others, she found it at the office. Her Prince Charming was John, Vin another division of the company. John was also looking for true love having just wrapped up a nasty divorce with his former true love

unnamed-2 Trish met John at the office Christmas Party and thought he was a jerk. She changed her mind at the summer picnic when she saw him playing with his kids and lobbing water balloons at other managers. John looked like an Olympic athlete compared to some of the other managers.

So when John’s division needed a little extra help with a special project, Trish volunteered. By diligent effort, Trish made herself a star on John’s team and managed to catch his eye. A shared interest in the project led to a little flirting which led to long dinners and then to other extracurricular activities.

Alas, as with every fairy tale a curse fell upon the lovers. John’s schedule kept him busy with out of town business trips and Trish began to feel neglected. John tired of her whining over the dinner wine about how his career meant more to him than she did, giving John nasty flashbacks to his ex-wife’s complaints.

As in a fairytale, when a workplace romance fizzles people behave badly. John stopped responding to her emails and text messages. He also told Trish’s boss that Trish could never work in his division again because she was a lousy worker. Meanwhile, Trish’s performance nosedived as she realized her fairy tale was fizzling.

The final fizzle arrives when Trish hears through the grapevine that John is blacklisting her. She’s convinced its retaliation for their affair. When her boss counsels her about her cratering performance, Trish remembers that he is John’s friend. Trish storms into Sue’s office to complain about sexual harassment and retaliation.

What options are available to Sue?

She can slap the taste buds out of John’s mouth for being stupid since managers are expected to use their brains to make decisions at the office.
She can recommend settling Trish’s claims to limit the damage caused by John’s violations of company policy.
She can disguise the details and include them in her next popular bodice-ripper novel, which she hopes will earn her enough money to retire early.

In the actual situation, the manager was counseled for violating HR policies and wrecked his chances at a promotion. The woman accepted a settlement of her claims and left the company still looking for true love.

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No One Tells Me What to Do!

Another update from the Jungle….

Angie’s tearing her hair out trying to help the company owner, Tom. She’s the HR manager and some days it feels like a pretty thankless task. Tom runs several businesses, including a janitorial service and a moving company.

Tom’s a good guy most of the time and truly wants to help his employees. He loans money to employees who need a little help between payroll checks. He kept one employee on the health plan for six months while he recuperated from a cancer scare.

He hires people who have interesting back stories. His moving company crews include former gang members who are expert at moving other people’s property quickly and efficiently. Steve, an employee of the janitorial company thinks Jim Beam is a sports beverage. Tom periodically sends Steve to rehab to dry out and ensures that Steve is closely supervised while on the job.

But Angie knows there’s a dark side to Tom. If Tom decides you’ve screwed up, you’re out; never mind the progressive discipline policy. Angie’s explained countless times that knee jerk reactions can lead to trouble. But Tom says no one is going to tell him how to run his businesses.

This morning, a man shows up in the lobby. He’s Mr. Beatty, an auditor from the Department of Labor’s Wage and Hour Division. He asks for the time and attendance records, job descriptions, and payroll records to verify that everyone is paid the appropriate hourly rate.

Tom starts rumbling like an over-pressurized steam engine as he glares at Mr. Beatty. Angie tries to head off disaster by inviting Mr. Beatty to wait in the conference room while she gathers the requested information. She offers coffee to Mr. Beatty but Tom nixes the offer. Tom takes a deep breath, preparatory to blasting Mr. Beatty out of the universe.

What options are available to Angie?

She can tell the Department of Labor auditor to look away while she kicks Tom in the shins for antagonizing the man who can shut down the company.
She can flirt with the DOL guy in hopes of distracting him.
She can excuse herself from the meeting and go call a recruiting company to begin shopping her resume to a new employer.

The above scenario is a composite of several actual incidents. The DOL is increasing the number of compliance audits of employers. HR representatives do their best to keep their employers “legal” but they can’t save employers who think the rules don’t apply to them.

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It Says So Right Here!

Another update from the Jungle….

Jane started her business after being downsized by her corporate employer. She knew she wanted her business to be different from the bureaucracy of her Big Biz employer and vowed to avoid the burden of written policies.

But as she adds employees it becomes clear that a lack of written policies is bad for the bottom line. No written policies allow Evan to claim that he doesn’t know he is supposed to start work at 8:30 am. He thinks showing up by 10 am is okay as long as he gets his work done.

Jane decides she needs something in writing. She digs out an old copy of Big Biz’s employee handbook. She customizes it by changing the employer’s name, correcting a few typos, and changing the font. Then she gives a copy to each employee and receives a signed acknowledgement from each employee.

None of the employees actually read the employee handbook, of course, until they need to. Evan reads the section on progressive discipline after Jane gives him a final written warning about his attendance.

Meanwhile, Audrey discovers she’s pregnant. She hauls out her copy of the handbook, which is propping up a corner of her desk, and unfolds it to read the section on the Family Medical Leave Act (FMLA). She tells Jane she wants to take FMLA leave to have her baby and asks for the leave request form.

Jane doesn’t have any FMLA forms. Her internet search eventually leads her to the U.S. Department of Labor (DOL) website where she learns the horrible truth about the FMLA. It applies to companies with more than 50 employees. Her Little Biz shop has 20 employees. The news is so disturbing that she drinks half a bottle of wine while she thinks about her options.

What should Jane do next?

She can collect every copy of the handbook and burn them in the parking lot knowing that most of her employees never read it.
She can tell Audrey that the FMLA section of the handbook is a mistake because that law doesn’t apply to Jane’s business.
She can grant FMLA leave to Audrey in accordance with the handbook policy. Then she can immediately revise the handbook to delete information about employment laws that don’t apply to her company.

The above scenario is a common problem for small business owners who lack familiarity with employment laws. The lack of familiarity can fix one problem while creating many more problems.

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Low Hanging Fruit

Another update from the Jungle….

Jack owns a small business which provides him with a good living. He owns a big house with a giant mortgage and he drives an Escalade. When he goes to the store, he parks in a handicap parking spot near the door so that everyone can see his ride.

Jack once worked for a major corporation where the HR director constantly nagged him about petty rules that he’d supposedly broken. After a few years of her nagging, Jack decided to be successful on his own.

Jack thinks his company runs smoother with fewer written rules so he doesn’t have any written HR policies. He also pays everyone a “salary” so he doesn’t have to track time and attendance. But he docks the pay of employees who show up late or miss work. His CPA, Susie, wants him to create job descriptions to distinguish between non-exempt and exempt employees. Jack tells her not to worry about it; he will tell her how much to pay each employee each pay period.

Last week, Susie attended a continuing education seminar which struck her with the force of a hurricane wind. She learned details of the new overtime rules. A presenter also said the Department of Labor (DOL) had stepped up enforcement actions against small employers. He used the phrase “low hanging fruit” so often that Susie temporarily gives up fresh fruit and vegetables.

Susie rushes home to prepare a summary of the new overtime rules and hand delivers it to Jack. Jack thanks her and privately thinks that Susie’s becoming a nag like the old HR director and it may be time to fire her.

This morning Jack arrives at his office to find a polite young man waiting to talk to him. The stranger says he’s a DOL examiner and he wants to see time sheets, payroll records and job descriptions for Jack’s employees.

What should Jack do next?

He can bluster at the DOL examiner to mind his own business.
He can beg the DOL examiner to give him time to fix his many problems in hopes of lowering the penalties his company will ultimately owe.
He can sneak out the back entrance, empty the corporate bank account and escape to a foreign country that has no diplomatic relations with the U.S.

In the actual situation, the employer woke up to his peril before the DOL examiner arrived on his doorstep. He had already implemented a plan to fix his HR problems which convinced the DOL examiner to show mercy when calculating the penalties.

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Boxed in by Box 12 on the W-2

Another update from the Jungle…

unnamed Maryann handles payroll questions for her employer. She and her coworkers have been scrambling for a couple of years to ensure they comply with the Affordable Care Act (ACA). Last year was all about finding a software program that would allow the company to track the hours of its temporary employees.

This year, Maryann is looking at box 12 on the W-2. That’s the box where employers need to plug in the cost of the medical plan for the employee. Filling in this information is mandatory only for employers who filed at least 250 W-2’s in the previous tax year, meaning in 2013. Maryann’s company filed 170 W-2’s in 2013, so they aren’t required to complete box 12 for the 2014 tax year.

She knows that this January her company will issue 200 W-2’s covering the 2014 tax year. She thinks that number will rise to 250 during 2015. Maryann wants to get a head start on figuring out box 12 after some of the past fiascos in trying to comply with the ACA.

What should Maryann consider?

Maryann knows that the “cost” or “value” of health coverage refers to the premium paid for medical coverage in the health plan, known as “major medical”. She needs to verify what other costs, such as FSA contributions and dental and vision premiums, may need to be included.
Maryann can consult her company’s CPA firm for assistance on completing box 12.
Maryann can do some research in the ACA section of the IRS website during her spare time.

Update: According to the IRS website, no new guidance has been issued in the past year. As a result, reporting the cost of the employee medical plan in Box 12 is required only for employers who filed 250 W-2’s in the previous tax year. Employers who filed less than 250 W-2’s in the previous tax year may voluntarily report the medical plan cost in Box 12.

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It’s Back Again!

Another update from the Jungle….

Michelle owns a small business of 35 employees that is slowly expanding. She’s ignored the Affordable Care Act (ACA) ever since she realized that her company was too small to be subject to the employer penalty. Besides, she has other concerns, such as finding new markets for her company so that it can continue to grow.

However, her employees like having benefits, including health coverage. Last year, Michelle encouraged her employees to obtain individual health policies because she couldn’t afford a group health plan. Now the issue has arisen again as the annual open enrollment period for the Exchange approaches on November 1^st.

Michelle would like to offer a group health plan because she thinks it would be a nice perk for employees. But she’s heard other small business owners complain about increased premium costs.
She’s afraid she can’t afford a group plan this year either.

She does a quick survey of her employees. She learns that 15 of them have coverage through their spouses. One employee is an early retiree covered under a former employer’s plan. Another employee is eligible for Medicare. Part-time workers wouldn’t be eligible for coverage in an employer’s group health plan under the ACA rules.

That leaves a grand total of 12 employees who are interested in a group health plan. Of the 12 employees, several could qualify for a subsidy from the Exchange based on their income and family size.

What should Michelle do next?

She can ignore the issue completely since her company is not subject to the employer penalty.
She can ask her insurance agent to give her information on a group health plan option for the 12 employees who are interested in coverage.
She can arrange for an insurance agent to come to her work place to help employees choose individual health policies, through the Exchange or outside the Exchange.

There are no easy solutions for small employers regarding health coverage. Small employers may find that not offering a group health plan actually helps their lower income employees to qualify for a subsidy through the Exchange. On the other hand, any employer offering a group health plan may use a business tax deduction to offset part of the cost of the plan. An experienced insurance agent or producer can help small employers assess their options.

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New Job; Old Baggage

Another update from the Jungle….
Betty started a new job about six months ago but already the old patterns are starting to repeat. Betty’s last job became so unbearable that she quit. Now she seems to be headed down the same path again.

At her last job, a clique of female co-workers proved that Heathers don’t get nicer as they grow up; they just get older. They made Betty miserable. They invited her to lunch during her first week on the job for the apparent purpose of mocking her interests and lifestyle. That was the beginning of a long campaign of passive aggressive behavior aimed at undermining Betty.

When Betty complained about misplaced files or sabotaged resources, her clueless boss labeled her a complainer. Betty didn’t want to be best friends with the clique but in a small office it meant she was isolated and alone. Betty’s confidence eroded and her performance suffered. When her performance review assessed her as “not a team player”, Betty took the hint
and found her current job.

Unfortunately, the old baggage came with her. She knows some of her new co-workers think she’s a snob for declining lunch invitations and not participating in the monthly office birthday parties. But Betty’s cautious of getting to know her new co-workers because she’s afraid of meeting a new group of Heathers.

Today, an HR rep asked Betty to stop by. At their meeting, the HR rep asked Betty how she liked her office, her workload, and how she was getting along with her colleagues. Betty gave a non-committal answer. Then the HR rep asked Betty if she would like to participate in a new mentoring program which was created to help new employees integrate into the company.

What should Betty do next?

She can decide based on her past experiences that she will “fail” at this job so she should quit now and join a commune in Alaska.
She can start looking for another job hoping that things will be different next time.
She can accept the invitation to join the mentoring program, increasing her chances of having a satisfying career with her current employer.

In the actual case, the first employer had no mentoring program because the owners were not convinced that touchy-feely programs contributed to the bottom line. Consequently, they experienced a high level of employee churn and were eventually acquired by a competitor.

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She’s Not My Employee

Another update from the Jungle….
Rob has a small consulting business that does project-based work. That means Rob needs a flexible work force that can easily gear up when there are lots of clients, but can also gear down when projects are few.

Rob relies on a group of individuals that he classifies as independent contractors. For each project, Rob explains what the client wants, the deadlines that must be met, and the scope of work. The worker can accept or reject any project. Rob’s been happy with his flexible work force.

At a recent networking event, Rob heard that the U.S. Department of Labor (DOL) has decided to ditch its old “control” test for deciding if a worker is an independent contractor (1099) or an employee (W-2). Instead the DOL will use an “economic reality” test. Rob does some quick research at www.dol.gov/whd and finds the document outlining this new test. What he reads makes him reach for a bottle of Gentleman Jack.

After a couple of stiff drinks, Rob thinks he understands the main points of this new test. The
economic reality test says that a worker who is economically dependent on an employer is an employee and not an independent contractor. Rob doesn’t know if his workers are economically dependent on him. He uses them part-time and always believed that they did work for other consulting businesses.

Rob sees that the new test has several factors. The factor that most worries Rob is the one that says if the work performed is an integral part of the employer’s business, then the worker is a W-2 and not a 1099 worker. Rob knows that his consulting business depends on completing projects for his clients which requires the use of skills that his independent contractors have.

After another shot of Gentleman Jack, Rob does some worst case scenario calculations of what will happen if his workers must be converted to W-2’s. He realizes immediately that it wouldn’t be financially possible to convert all of them to employees.

What are Rob’s options?

He can choose a couple of the independent contractors that have the broadest range of skills and offer to convert them to W-2’s who work full-time for him. All the other workers would no longer be eligible to work on his company’s projects.
He can talk to his CPA about cash flow and tax strategies for dealing with the new economic reality test.
He can continue business as usual, including drinking more Gentleman Jack, while he waits to see what DOL will do.

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School Zones Made Me Late

Another update from the Jungle….
Jane is the HR manager for a company with about 200 employees. The company runs a lean operation which means that Jane is the sole HR person and handles pretty much every situation that arises. Jane likes the variety of issues that she faces because it keeps everything fresh and interesting.

A major problem for the company is time and attendance. The owner of the company is obsessive and compulsive about details and it drives him nuts to see a few employees chronically showing up late. He told Jane to fix the problem.

Jane reviewed the time and attendance policy which clearly states that chronic tardiness may subject an employee to progressive disciplinary action. The policy is included in the employee handbook. Jane checks the personnel files for each laggard employee and finds that each of them has signed the acknowledgement form. That means that each employee received a copy of the employee handbook and promptly tossed it aside without actually reading it.
This week, Jane began meeting individually with each employee who is chronically late. Jane tries not to yawn as she hears the usual excuses. One employee says she was stuck in traffic due to an accident. Another says his dog got out of the fenced-in backyard and he had to find the mutt and lock him in the garage before leaving for work.

Jane’s favorite excuse of the week is the employee who says she was late due to the school zones. The employee recently moved so that her children could attend a more highly rated school. This means the employee must now travel through three more school zones on her route to work. That caused her to be late.

What should Jane do next?

She can explain to each employee that the excuse du jour doesn’t make up for chronic lateness. She can then move to the next step in progressive discipline.
She can encourage each employee to make a greater effort to arrive on time and let them off with a verbal warning.
She can ask herself why she never thought up so many creative reasons for being late to work.

Time and attendance issues are a perennial problem. Perhaps it’s time to think about the underlying reasons for tardiness. Employees who enjoy their work tend to show up on time.

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	Mae on Halloween Horror
	Mae on Freedom from Rules
	Genie Herron on Where Is He?
	Norma Shirk on Whose Side Are You On?
	Pat Brewer Hairston on Whose Side Are You On?

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Another update from the Jungle….

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Another update from the Jungle….

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Another update from the Jungle….

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Another update from the Jungle….

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