Top 5 HR Practices Every New Entrepreneur Should Know
By VICKY BROWN
You know, when clients come to me, they mostly make the same statement – I’m not an expert in HR, and I’m afraid of what I might be missing.
Well, take a deep breath because I am an expert in HR, and I’m going to tell you the top five HR things that are a must know for Entrepreneurs.
First – up your knowledge game. Employment laws aren’t just set at the federal level, there may be (and probably are) different laws for your state, and maybe even your city and county. Here’s an excellent example – I’m in California, and while the Feds have a specific minimum wage rate, so does the state of California. And let me tell you, it’s a lot higher than the Federal rate.
But wait – I’m in Los Angeles, and the city of LA also has it’s own minimum wage – and (of course) it’s even higher than the state’s.
So, all that to say, it’s super important that I know all these rates exist, and how they might apply to me and my company.
Just get settled with the fact that you’re going to have to stay on top of both the current employment laws at all those levels, and any changes that may be coming down the pike.
Yep, I already hear you saying – how in the world am I supposed to do that? Well, one way is to get on our mailing list. And I also highly recommend signing up for updates from employment law firms like Littler, Seyfarth and Latham & Watkins. It’s all free, and can be really helpful in keeping you up to date.
Oh, one other thing – they aren’t any good, if you don’t read them; so be sure to carve out some weekly quality reading time.
The next huge pitfall that so many entrepreneurs fall into is classifying employees correctly. I’m talking about figuring out if they are eligible for overtime or not.
Now lots of people have lots of opinions about who should and shouldn’t get overtime – but I’ll tell you – the fact is that the only opinion is that of the regulators. You know, the Dept of Labor, the IRS and your state or local employment department.
As far as the regulators are concerned, every job is eligible for overtime. That is, unless it meets one of the exemptions. Get it, that’s how we get the term exempt (meaning exempt from overtime) and non-exempt (meaning eligible for overtime).
The details that make a job exempt fall under specific categories, like Executive, Administrative, Professional etc. And by the way – pretty much none of those mean what you think they mean. If you want a detailed deep dive, I did an episode you might want to watch called Non Exempt vs Exempt – How To Classify Employees.
But, you know there is another classification issue – it’s the question of whether or not the person is an employee at all. That’s right – I’m talking about independent contractors. So what makes someone an employee vs. an independent contractor. Now there’s a lot of confusion around independent contractors, and what qualifies as one. Mostly because, as I mentioned earlier, there are a lot of agencies with fingers in the pie. And while your contractor might meet the guidelines of one, or two, they may not meet the guidelines of the third. And if they miss the guidelines of any one of them, then they won’t qualify as an independent contractor.
And, as with many other employment laws, there are different laws at different levels – the Feds have one and your state probably has one too.
And, unfortunately the stakes are pretty high if you get this wrong. There are penalties and back taxes involved, not to mention other nasty fines. So definitely do everything you can (and by that I mean consult with an HR professional or labor counsel) to make sure you get this right.
Next up is wage and hour regulations. You’ve probably heard this term before – it’s a catch all that covers the minimum wage required, what when and how much overtime is paid, lunch and rest breaks; and other things connected with – well, wages and hours.
Again, there’s a lot to know here, but one thing to keep top of mind is to make sure you’re paying your employees all that they are owed, on time.
Now, I’ve done quite a few episodes covering this topic, but one of the ‘must see’ episodes is Paying Overtime
“… As far as the regulators are concerned, every job is eligible for overtime. That is, unless it meets one of the exemptions. Get it, that’s how we get the term exempt (meaning exempt from overtime) and non-exempt (meaning eligible for overtime)“
OK, you’ve got them, you classified them, you pay them – but what about if they need to take a leave of absence. Well, as you might guess, yes there are laws; and yes there are laws at the Federal and most likely the state level as well. You’ll need to familiarize yourself with them to be sure nothing falls through the cracks.
Now, if you happen to be in California – we can give you an extra special leg up. I’ve created a course specifically designed to walk you through the various California leave laws, and how to navigate them. It even has a step by step with all the forms, templates and notices you’ll need to get through the process. If you want more information on Managing California Leave, just use the link.
And that all brings us to terminating an employee. What can I say, there’s a right way and the way that will get you in massive amounts of hot water.
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OK, here’s the real scoop – let them get out with their dignity. You can avoid huge amounts of (very expensive) pain, if you stay professional and respectful. When people feel slighted, that’s when they come after you.
Oh sure, there may absolutely be someone that you treated like a king, and they come after you anyway – it can absolutely happen. But, generally speaking, you take the high road, and they will too.
So that means (if at all possible), the termination isn’t a surprise. You should have spoken to the person well before you got to the place of termination, to let them know they aren’t cutting it, why, and what they can do to improve. Give them a chance to fix it, help them where you can – and if they don’t – well that’s on them, you did what you could.
By the way – I fully understand that sometimes, even when you do have those performance conversations, the person will still be quote ‘surprised’ by their termination. That’s because it’s a human self protection mechanism. “I didn’t do anything wrong, and now you’re firing me?!”
Again, that’s on them – you did what you could.
But another thing you have to watch out for is making sure you do the termination fully within the legal guidelines. Give them all the required notices, pay them all they’re due, and do it on time. Don’t try to hold up their paycheck until they return the keys, or laptop, or parking pass, or anything else. Don’t make illegal deductions from their paycheck.
And, just as a good leader, don’t badmouth them. Just because they weren’t suited for the position with your company, doesn’t mean they wouldn’t be stellar at a different company.
Again, let them go – with dignity intact. It’s better for everyone.