Tag: human resources

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Human Resource

Five Things Every Entrepreneur Should Know About Employment Law

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Are you getting ready to take your startup idea to the next stage of development? It’s probably been a whirlwind of work putting together a business plan, lining up investors, adjusting that business plan, and then sealing the deal for capitol. At this point, your business is looking pretty good on paper. Now, you’ve got to step up and implement your plan. That means understanding the sometimes complicated, but also necessary, aspects of employment law.

Even though you might have what’s considered a small staff, you still need to follow the many federal, state, and local regulations with regard to their employment. Here are the five things that every entrepreneur should know about employment law:

  1. Employee vs. Independent Contractor

As the owner of a startup, you’ll be keeping a constant eye on the bottom line, but the work still needs to get done. Hiring independent contractors is often an effective way to accomplish your business goals while keeping overhead costs at a minimum. The big plus with hiring an independent contractor is that you don’t have to carry them on your company’s medical insurance plan or worker’s comp insurance. Upon hearing that, many employers wonder, “Why not just make everyone an independent contractor?” The government is way ahead of you on that one.

From a regulatory standpoint, an independent contractor is someone who performs a task that is not directly related to your company. For instance, if you are an exterminator, you might hire an independent contractor as a content writer to promote your website. The independent contractor uses their own “equipment.” In the case of a content writer, that person will be working at home on their own computer. These are specialized workers who are usually hired to take on a specific task. When the job is done, they move on.

With employees, you will provide direct supervision for a wide variety of tasks that they will perform on an ongoing basis. They will be using your “office equipment” and working at your “office space,” even if that space is your home. An employee is also someone who earns their money based on time, whether you measure it in hours, days, or weeks. As the employer, you also have the right to terminate your employee.

Understanding the distinction between employees and independent contractors should help you make an informed decision about your staff hires.

  1. State Guidelines Governing Overtime, Sick Leave, Maternity Leave, and Vacation

Depending on the circumstances, some of your employees could be exempt from things like overtime pay or maternity leave. Those exemptions vary from state to state. For instance, here’s one of the recently enacted amendments to New York City Earned Sick Time Act:

“Effective April 1, 2014, employers with 5 or more employees must provide 5 paid sick days to all of its employees; for employers with fewer than 5 employees, the sick leave can be unpaid. Initially, employers of 15-20 employees were not required to offer paid sick time under the Act until October 2015 and employers with less than 15 employees were not required to provide paid sick time at all under the Act.”

There’s yet another set of guidelines if you’re hiring for a federal contract. This is a clear indication of why consulting with an experienced employment law attorney is advantageous.

  1. Put Your Workplace Policies in Writing

As with all things in business, your workplace employee polices need to be put forth in writing. This is something that every employee should have a copy of, and it should be posted in the office. These written policies will go a long way towards protecting your interests. There can’t be a squabble if the point of contention is clearly spelled out in the policies.

Not only should these policies cover things like overtime and vacation but also workplace procedures. If you want your employees restricted from using social media on office computers, then spell that out in your policies.

  1. Protect Your Trade Secrets

If you’re opening a fast food franchise, you might not have a lot of trade secrets to protect. However, you would probably be signing a confidentiality agreement provided by the parent company that protects their trade secrets. This agreement is a good thing to have in any type of business startup. It can cover things like client lists and non-compete clauses. That can prevent an employee from learning everything from you and then going off to start their own version of your business.

It will be your responsibility to deem something a trade secret for your company. Once an item has been given that distinction, you have to make the effort to keep that information secure. That can be on a password-protected computer or even as a hard copy file.

  1. Health Insurance Regulations

The Affordable Care Act has changed the way health insurance and healthcare are handled in this country. As an employer, you are on the front line when it comes to implementing a lot of those changes. Whether you are required to provide health insurance for your employees depends on the size of the staff and how long they work. Diving into the ACA can be extremely intimidating. Fortunately, there many agencies standing by to help you navigate through the regulations.

You shouldn’t be discouraged by the amount of potential “red tape” you might have to wade through in order to be in compliance with your employees. Once you understand the basics, you can turn your attention to growing your business and watching it flourish.

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Human Resource

7 Perks That Make Employees Happier Than a Higher Salary

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Offering a hefty paycheck is an excellent strategy for companies looking to lure in talent. Unfortunately, entrepreneurs and small business owners don’t always have the funds to pay high enough salaries to attract the employees they’re looking for. So they have to get creative.

When higher pay isn’t an option, companies can offer certain perks that cost little and still make employees happy. Here are some of the most attractive benefits employers can offer in the working sphere.

Pets Allowed at Work

Inviting Fido to work does more than save you money on pet care. Turns out, bringing pets to work reduces employees’ stress levels and boosts job satisfaction. Companies like Amazon and Ben & Jerry’s have implemented pet welcoming policies, reaping the many benefits.

A weeklong study was conducted at Replacements Ltd, a dog-friendly company consisting of about 550 employees. According to head researcher Randolph T. Barker, dogs can be helpful in the workplace: “The differences in perceived stress between days the dog was present and absent were significant. The employees as a whole had higher job satisfaction than industry norms.”

While there are numerous positives of inviting dogs into the office, there are certain setbacks as well. For example, some people fear dogs, others have allergies and you might have to deal with dog waste. Consider your workplace environment before moving forward with a pet policy for your office.

Flexible Hours

A rigid 8 a.m. start time, while somewhat standard in the working world, can seem a bit rigid in today’s landscape. Offering employees a flexible start time, but demanding a full eight hours, leaves individuals feeling more relaxed. According to a discussion paper published by IZA Press, studies show that flexibility in one’s schedule correlated with greater positivity and higher job satisfaction.

A more relaxed approach to scheduling allows employees to feel more in charge of their work time, as if it’s more personalized. The individuals who aren’t fond of mornings will also benefit because they have more time for their brains to warm up for the day ahead.

Finally, offering flexibility allows employees to more easily balance their personal lives with their work. According to an employee at Qualcomm, a company offering flexible hours, “My work hours are flexible, which allows me to work remotely when I get good ideas at odd times of the day.”

Opportunity to Work from Home

Working from home, just like having a lenient start time, allows employees to feel in control; it personalizes the work experience. The same analysis conducted by IZA Press demonstrating the benefits of work flexibility also shows that working from home increases job satisfaction. A survey conducted by Brown University says the same thing: people are happier when they have the option to work from home. Not only are they more content with their jobs, but workers are more productive from home, too.

Companies like Greenrope and Pixelkeet are two of many companies now offering remote working options. According to their employees, working from home limits distractions and allows for necessary midday breaks.

Fun Work Events

Holiday parties, organized 5k races, volunteering sessions – events that allow employees to interact in a setting beyond the conference room increase camaraderie and office morale in general.

Friendships form and co-workers begin to really foster the feeling of being a team, or family, and can increase loyalty to the company. Consider such teambuilding exercises in order to boost job satisfaction within your company.

Fitness Opportunities

A free gym membership, organized in-office exercises or an on-site gym allow employees to better balance physical fitness with their full-time employment. An on-site locker room – equipped with a shower – is another great feature as it gives individuals the chance to exercise during lunch or run or bike to work.

Many companies have added to their comprehensive benefits packages, adding sponsored yoga or Pilates classes during work hours – on the company’s dime. Ryan Pirkle of Gravity Payments takes part in an organized weekly running club; employers can leave work for an hour to run around together. ”We find this helps clear people’s minds, provides a mental break, and increases camaraderie among employees,” Pirkle says.

Free Food

This trick has been used to lure people to parties, lectures and otherwise unappealing gatherings for years. As it turns out, using food as bait can actually lead people into your company, too (or at least make them happier once they are there).

According to a survey conducted by WorkSphere, feeding employees or having free edibles in the office made 30% of respondents happier at work. Google, Twitter and Facebook are among the many companies keeping employees happy with free snacks.

Comfortable Work Space

When employees are forced to work in the office, it better be cozy. Everything from the office temperature to the desk layouts can impact job satisfaction. A study from Princeton University Neuroscience Institute found that clutter negatively impacts work flow, and that physical space is important when it comes to productivity. Individuals should have greater control over the work environment because it also boosts job satisfaction.

Another thing for managers and business owners to remember: when it comes to the office setting, the little things matter. Functioning machines, enough light, even good-smelling hand soap in the bathroom – these seemingly tiny factors can make or break an employee’s experience. 

You don’t need to be the richest company on the block to attract the best employees; you simply have to understand what people want. Sometimes, the best things in a worker’s life really are free.

Categories
Legal

Questions Concerning Severance & Separation Agreements

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General discussion concerning severance and separation agreements from a business owner’s perspective.
One topic I get a lot of questions about is severance and separation agreements.
Generally, severance refers to giving an exiting employee a monetary bonus or settlement above and beyond their regular compensation. A separation agreement usually refers to an agreement wherein the exiting employee promises not to sue, file a regulatory agency complaint, take business or information with them, or compete with their former employer. In return, the employer gives the employee something of value (usually money).
So, a business could give an exiting employee severance without a severance or separation agreement, but usually doesn’t use a separation agreement without awarding some form of severance (i.e., consideration). If this is confusing, the below will hopefully clarify my point.
Recently, a client asked me about a separation agreement for an employee over the age of 40.
Relative to dealing with an employee who’s 40 or older, if the employer is seeking a release of all claims pursuant to the Age Discrimination in Employment Act (ADEA), there’s a 21/7 rule that applies. Under the rule, which is actually contained in Section 201 of the Older Workers Benefit Protection Act, a release of claims under the ADEA is only valid if the employee’s release is “knowing and voluntary.” More specifically, in order to be “knowing and voluntary,” the exiting employee has 21 days to review the agreement, with or without legal counsel, and has an additional seven days in which to revoke their signature (beyond the initial 21 day review period). Other requirements may apply given certain considerations. In short, depending on the nature of the separation agreement, the 40 and older employee might have rights not afforded to younger employees.
Regardless of the exiting employee’s age, a separation or severance agreement that’s intended to release the employer from all known or unknown claims is essentially the employer’s purchase of the employee’s agreement not to sue or file a complaint with a government agency, not to take business or information to a competitor, or sometimes, to not even work for a competitor.
When I’m initially contacted about this type of employment agreement, I ask the client why they think they need such an agreement. More specifically, what are your goals/purposes: to reward an exiting employee for tenure and/or quality of service, to prevent a lawsuit or complaint from being filed, to protect the confidentiality of company secrets and information, to prevent an employee from competing with them, or a combination of the aforementioned?
Businesses often ask:
* Should we offer severance to an exiting employee?
* When should we offer it?
* How much should we offer?
* Are the terms negotiable?
* Should we ask an exiting employee to sign a separation agreement that includes noncompete and confidentiality clauses?
* What about protected class considerations (e.g., race, sex, age, disability, etc.)?
* What will my other employees or competitors think if they find out that an employee signed such an agreement or received severance?
In order to help the employer focus on what issues they need to resolve, a business should analyze whether the exiting employee has been contentious or dropped hints of a lawsuit or complaint, or commented about the competition or competing with the employer. In order to help focus the employer on what issues they need to resolve, a business should analyze whether the exiting employee has been contentious or dropped hints of a lawsuit or complaint, or commented about the competition or competing with the employer. If an employer believes that an employee will sue or complain to a regulatory agency, then a separation or separation agreement should be strongly considered. If a lawsuit, complaint or any other factors of the employee’s exit isn’t a concern, then a severance or even no action might be appropriate.
Keep in mind, that unless there’s a contract or agreement to the contrary, or obligations under the Worker Adjustment Retraining & Notification Act (WARN), severance isn’t necessarily required, and in many instances an employee can just leave.
Clients typically ask whether by offering an employee a severance, separation, or some hybrid agreement, they’re setting a legal precedent within their company or creating a feeling or belief of entitlement to such a benefit among employees. In short it’s not likely that the company will be legally obligated to offer the same to other employees. However, if other employees learn about such agreements, there’s a greater degree of possibility that a sense of entitlement will result. So, when deciding whether to use a separation or severance agreement, a business should consider the impact on employee morale, and to at least some extent consider the legal ramifications of using such an agreement.
One way of reaching a bottom line for these agreements is that an employer should not enter into an agreement with an employee, and have to engage an attorney, unless the employer is reasonably sure that they’ll obtain a benefit from the transaction that they wouldn’t get in the normal course of business. Ultimately, as with most business decisions, whether to utilize an agreement or not is a cost versus benefit analysis.
Consistent with the disclaimer on found on my website, the above is a general discussion–i.e., every specific issue or case leads to its own specific resolution and should be handled accordingly.
CharlesKrugelPhoto.jpgAs a labor and employment attorney and businessperson, Charles Krugel has represented management in hundreds of negotiations, in-house and 3rd party proceedings. Charles has over 13 years of experience in the field and he has run his own successful management side practice for the past 7 years.