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We’ve partnered with Mammoth so you can save time, stay compliant, and grow your business with HR resources and 1:1 guidance.

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Access tools and templates

Customize job descriptions, onboarding checklists, and employee handbooks, and boost your employees’ performance.

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Stay legally compliant

Get up-to-date info on state and federal wage and overtime laws (at no extra cost) and learn the ins and outs of hiring, termination, and everything in between.

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Talk to an expert

Consult a Mammoth HR advisor by phone or online for guidance on critical HR issues. We’ll also create custom handbooks and policies just for you.

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Frequently asked questions

Human resources for your small business

By Cathie Ericson January 15, 2020

When you’re a solopreneur, being in charge of human resources is easy. As a party of one, you can confidently take a vacation to Fort Lauderdale when you feel like it, choose your own employee benefits, and only worry about yourself.

Everything changes when you hire 1 or 2 full-time employees. As your business grows, you’ll likely realize you may need a full-time HR manager or department. It’s crucial to understand how to handle HR functions if your company is still small. If you’ve grown to the point that you need an HR director, you still need to know the ins and outs of HR management because you’ll be overseeing the department. Consider this your crash course in HR management for small and medium-sized businesses.

What does HR do?

If you’ve only worked for a large company, you might think HR folks just sign paychecks and enforce rules. What you may not know is that HR is in charge of every aspect of employee relations, including:

  • Talent management
  • Managing performance and career development
  • Determining salaries and benefits (and comparing them to market norms)
  • Developing and nurturing a safe and positive work environment
  • Staying compliant with the law(s)
  

Here’s a breakdown of all HR functions:

Talent management

This broad category of HR covers hiring to firing, and everything in between. When it’s time to add a new employee, you need to write an appealing job description designed to attract top candidates and start collecting resumes. You might choose to work with a recruiter who can handle many of the initial tasks for you, including background checks, credential checks (like verifying a bachelor’s degree) and reference checks.

Once you (or the HR manager) choose an employee, you’ll also need to complete the corresponding paperwork to make the relationship legal (see below for tips on finding out what you need to be compliant). This is also the time to clarify their job title and responsibilities so everyone’s on the same page.

The first few days and weeks are crucial—you’ll need to get them up to speed on the company’s goals and explain their place within your organization. If several new hires start at once, you might consider a formal new employee orientation—a more casual onboarding session will work, too. Make sure you never overlook the importance of having them feel part of the team right away.

Managing performance and career development

Once employees are up and running, you or your HR team should create an enriching work environment that continues to keep them motivated and challenged. Think about their career development and performance management—HR specialists should study their industry and related fields so they’re up-to-date on the skills that today’s workers want to hone. They also need to connect them with professional development opportunities.

Finally, you’ll need to track employee(s) performance and make sure you have a papertrail of any infractions and disciplinary procedures. This is important because if an employee needs to be terminated, you’ll have the correct back-up that proves just cause to avoid a lawsuit.

Determining salaries and benefits

In today’s tight labor environment, it’s important to offer a compelling salary and benefits package. To retain top talent you’ll want to start with salaries that are commensurate with what’s typical in both your field and the regional market. You’ll also want to consider offering top-tier benefits that include:

  • Medical
  • Dental
  • Vision
  • Long and short-term disability
  • 401(k) savings or other retirement savings
  • Life insurance
  • Paid time off (vacation, sick leave, holidays, or a combo)
  

A number of other perks and benefits are often offered today. Some increasingly popular ones include:

  • Bus or parking passes for commuters
  • Pet insurance
  • Student loan repayment
  • Wellness options
  • Free snacks and/or meals
  

The list of potential perks is endless. However, it’s easy to get carried away. Start small and make additions as more new hires come on board. As your company grows, survey them and see what benefits are most valued. This way you’re putting your investment where it matters most.

Develop and nurture a safe and positive work environment

Today’s employees value a positive work environment. Other than strong professional development opportunities and competitive benefits and salary, a positive work environment means you need to have a happy work culture.

People crave work/life balance, so see if you can offer flexible work options when possible. Most also appreciate transparency. Create an open-door policy where employees can interact with management and a robust employee communications policy where you freely share the company’s mission and progress. Also provide accessibility to management at all levels.

Other aspects that contribute to a positive work environment include:

  • Team-building events and activities
  • Wellness initiatives
  • Employee recognition programs
  • Performance feedback
  • Town halls, surveys, and other tools to solicit suggestions
  • Ongoing 2-way communication
  

You’ll also want to make sure your workplace stays safe and positive. To do so you must resolve disputes or issues immediately. Many employees actively seek a small or medium-sized because they want to feel a sense of belonging. It’s why fostering a positive work environment is crucial.

Stay compliant with the law(s)

Staying compliant is more than just planning activities and keeping employees engaged. As the acting HR specialist, you need to be familiar with a wide variety of laws. These include:

  

Create an employee handbook

Whether you have one employee or just hired team member No. 1,000, creating a comprehensive employee handbook is an excellent tool that can not only clarify expectations for new hires, but also help protect you if something goes wrong.Your handbook should include job descriptions and summaries of policies for areas that include expected work hours and absences, vacation policy, salary and commission structure, benefits, dress code, information technology, and repercussions for employee infractions.

A handbook serves as a backup HR department. By asking your employees to read the handbook and sign a statement, you are protecting yourself against the potential for a new hire to say they didn’t know something. It also can be used to clarify policies so employees aren’t always asking or making up their own.

Formalize your HR function

Your HR department is liable to evolve along with your company. When talent management becomes too much for an owner to handle, it’s time to add an HR assistant. It’s critical that employees’ needs are being met and all laws are being followed. Whether you hire an HR specialist who handles the function in-house or you outsource it to a reputable company, a robust HR function is essential for your company as it expands.

HR starter kit

By Eric Carter January 15, 2020

HR and benefits can be an intimidating topic for a small business owner. You have to navigate federal and local employment laws, avoid cumbersome fees and fines, ensure your policies are both compliant and beneficial to your company, all while providing enough benefits to your employees to keep them happy.

Some creativity in your HR and benefits packages can help you attract high-performing employees and incentivize them to grow your business. This starter kit will help you turn your HR and benefits compliance challenges into your business’ strategic advantage. It addresses 5 key areas:

  1. Hiring
  2. Wages
  3. Policies and procedures
  4. Benefits
  5. Performance management
  

Hiring employees

  

Discrimination is the No. 1 legal risk through the hiring process. This includes unintentional discrimination. Here’s a small sample of protected classes in which the laws prohibit discrimination in the hiring process:

 

To make sure you aren’t breaking laws (intentionally or unintentionally) you need to review and implement the Equal Employment Opportunity Best Practices for Employers and Human Resources/EEO Professionals. The EEOC’s Best Practices include:

  • Diversifying your pool of candidates
  • Conducting self-analyses to determine whether current practices disadvantage certain people
  • Ensuring your selection criteria does not exclude certain groups of people
  • Opening jobs to all eligible employees
  • Clearly stating the criteria for promotion
  • Making sure outside agencies don’t search for candidates based on race or color
 

Studies show that diverse workforces are more productive and achieve more than just legal compliance. Build your team with a focus on different backgrounds that can lead to a competitive advantage. Because a diverse workforce is the most productive, you can avoid discrimination and improve your company’s output by proactively fostering inclusivity in your hiring process.

Employee wages

Wage compliance includes 2 elements:

  1. Classification
  2. Payment
  

Classification divides your workforce into 3 categories:

  1. Independent contractors
  2. Non-exempt employees
  3. Exempt employees
  

Independent contractors

Don’t confuse independent contractors with employees. You owe independent contractors only what you contractually agree to. Independent contractors are attractive because business owners have no obligation to withhold taxes, pay benefits, track hours, pay minimum wage, nor any other obligations that an employer owes its employees.

However, in recent years, state governments and the federal government have heavily scrutinized independent contractor classifications. Many independent contractors have been granted employee status, leaving employers with large penalties.Depending on the state, courts have issued different tests to determine whether a worker is an independent contractor or an employee. California, for example, has specifically stated that independent contractors who rely on a company as their primary source of income, must re-classify those contractors as W-2 employees.Most of the tests use the concept of control as the deciding factor. No single factor automatically creates employee status.

 

If you can answer “yes” to any of the following questions, you likely have an employee, not an independent contractor:

    • Do you control working hours, conditions, and equipment?
    • Did you issue the worker a company email address?
    • Does the worker work solely for your company?
    • Is the worker subject to the same policies and procedures as your employees?
    • Does work for your company preclude the worker from obtaining work from another company?
 

In most cases, the burden of proving independent contractor status falls on the business. Keep this in mind when classifying a worker.

  

Employees

Employees are either non-exempt or exempt. Non-exempt employees are paid hourly. You must ensure that their time is tracked correctly, and overtime is paid for any time worked beyond 40 hours in any given workweek. Most employees are non-exempt. There are 6 employee categories considered exempt from minimum wage and overtime laws:

  • Executive Exemption
  • Administrative Exemption
  • Professional Exemption
  • Computer Employee Exemption
  • Highly Compensated Employee Exemption
  • Outside Sales Exemption
 

To learn more about each exemption, review the Department of Labor’s fact sheet. You are responsible for tracking time and paying employees per their classification, not the employee. Misclassification leads to lawsuits. If you treat non-exempt employees as exempt employees, you risk paying back wages, taxes, penalties, interest, and attorneys fees for your misclassification. A recent study by Seyfarth Shaw LLP showed that wage and hour settlements are the No. 7 exposure for companies in 2018.

Proper classification and wage compliance are challenging. But, if you get creative with compensation, you can rally employees around your mission and increase productivity.

Wages are traditionally limited to an hourly rate or salary. But, alternative compensation models include profit sharing, equity, and performance-based bonus programs. Unlike standard wages, you can base these alternative compensation models on the overall success of the company.

If the company is successful, employees earn more money. Structure bonus programs so employees focus on company performance. Think beyond monetary compensation. Set up social spaces, ping-pong tables,and reading rooms. Company culture is an attractive alternative to cash alone. A Glassdoor study found that a positive culture is more valuable to many employees than compensation and benefits. Keep this in mind when considering your compensation strategy.

 

Workplace policies and procedures

 

Policies and procedures are standard in any modern business. The list of such policies is long, and it continues to grow:

  • Employee handbook
  • Anti-discrimination and anti-harassment policy
  • Social media policy
  • Leave and time off
  • Code of conduct
  • Safety and health
  • Reasonable accommodation requests
  • Business travel and expenses
 

Most company policies aren’t required by law, but the actions required or prohibited by such policies are. For example, no company is required by law to maintain an Anti-Discrimination & Anti-Harassment policy. However, laws prohibit employers from discriminating against employees for protected characteristics or facilitating a hostile work environment full of harassment. As a result, many employers set expectations for the company and employees through policies.

 

While such policies aim to comply with the law, they risk unintentionally violating other laws. A policy that prohibits profane language or the display of political or religious paraphernalia, likely violates your employees’ rights under the First Amendment rights and the National Labor Relations Act. Keeping policies current with legal changes and consistently enforcing policies are difficult goals to achieve. Follow 2 best practices when it comes to company policies:

  • Draft and review policies with an expert in the policy field
  • Don’t create policies that you aren’t going to follow and enforce
 

Move beyond the tension that creating and maintaining legally-compliant policies causes, and your policies can strategically promote your company as an attractive place to work. Consider time off and vacation policies. Many employers have eliminated time off and vacation policies. As long as the work gets done, the employer doesn’t care when employees take a vacation. This aggressive approach to time off could be enough to win quality employees from other companies, even if you offer less salary.

Remote work policies are another policy-driven attraction to the modern workforce. Do you have positions that can be performed remotely? If so, your employees may appreciate working from their desired location, during the hours that best suit their lifestyle. Policies can be painful to manage. Focus on employee satisfaction and policies become an opportunity to win the trust and dedication of employees.

  

Employee benefits

The Affordable Care Act (ACA or Obamacare) has become the most popular and controversial benefit-related legal compliance issues in the past few years. Employers with 50 or more employees are required to offer their employees healthcare that provides “minimum essential coverage.”

While the ACA continues to be the most discussed topic in benefits compliance, HR professionals must keep many benefit-related laws in mind. Others include:

  • Employee Retirement Income Security Act (ERISA): Applies to employers of any size that offer retirement or pension plans to employees
  • Consumer Credit Protection Act (CCPA): Applies to companies of any size
  • Family and Medical Leave Act (FMLA): Applies to all public employers and private employers with 50 or more employees
 

If you think you may be required to offer benefits under any law, or you offer benefit plans that might be governed by law, consult an expert to ensure compliance. The penalties associated with non-compliance far outweigh the cost of a consultation.

Healthcare and retirement benefits are strictly regulated by law. However, many benefits or perks fall outside the scope of federal and state laws. Such perks (both free and paid) help attract and retain employees.

Perks at Work offers a free platform where employers can improve company culture with over 30,000 unique discounts for their employers. At the local level, explore business partnerships with local restaurants, health clubs, apartment complexes, and other amenities. Local businesses are often willing to offer special discounts for your employees, at no cost to you, because increased business volume justifies the discount.

Consider low-cost perks for employees. Small tokens of appreciation toward your employees can build strong rapport:

  • Free stuff like concert and movie tickets, T-shirts, and snacks
  • Subsidized subscriptions such as meal plans, health club memberships, home and car maintenance services, dry cleaning
  • Rewards like presidents clubs, employee of the month, sales SPIFFs
  • Office environment—pet-friendly, catered lunches, onsite gym
 

Many companies use performance-related discounts for government-mandated benefits. Wellness plans grant employees discounts on their health insurance premiums for meeting certain health goals or participating in health-related activities, such as:

  • Joining a weight loss program
  • Joining a tobacco cessation program
  • Attending a certain number of workouts per year
  • Receiving a yearly medical exam
 

Alternative benefit plans and incentives within the required plans are popular methods to enhance your company’s benefits package.

  

Performance management

  

Similar to hiring, discrimination is the main legal concern in performance management. It typically shows up in the form of retaliation. Retaliation (whether intentional or unintentional) occurs when an employer takes action against an employee for a protected characteristic. Protected characteristics include everything listed in the hiring section plus:

  • The right to discuss wages and working conditions (FLSA)
  • The right to report discrimination or a hostile work environment (Title VII, Civil Rights Act, ADEA, ADA)
  • The right to request a reasonable accommodation based on a disability (ADA)
  • The right to take leave for qualified medical or family reasons (FMLA)
 

Retaliation is commonly claimed in the context of performance reviews. Managers who dislike giving reviews, and shy away from conflict, don’t give honest performance reviews. In these cases an underperforming employee gets satisfactory feedback until the employer is ready to part ways. The manager knows the employee’s poor historical performance, but satisfactory performance reviews are the only thing on record. In the end, an employee concludes that performance could have never played a role in their termination.

With performance off the table, what are the other options? The employee and their lawyer look to protected characteristics. The employee claims they were fired because of race, gender, disability, reporting a hostile work environment, etc. The list of legally-protected characteristics is long. And, it continues to grow. Honest, consistently-held performance reviews are the best way to avoid retaliation in performance management.

While you need to avoid retaliation in the performance management process, a quality performance management program can be an effective tool for advancing your workforce through improved productivity. A good performance management program includes 4 things:

  • Planning and expectation setting
  • Development
  • Monitoring
  • Consistent review
 

Through planning and expectation setting, you educate your employees on your expectations for their performance and growth. By clearly stating such expectations, you minimize the possibility of surprises and conflict.

A development plan is customized to the individual employee and goes beyond tangible goals and achievements that may be used for bonuses and satisfactory marks. A development plan focuses on skills development and career planning, and shows the employee that the company has a vested interest in their growth. A plan must be monitored to be effective. If you write down the plan and never look at it, it’s useless for the employee and the company.

Finally, the plan needs to be reviewed and updated on a consistent basis. Frequent review creates an objective measure to judge an employee’s performance and pushes the employee to improve.

Compliance with employment-related laws is necessary for any HR department. While attention to compliance is required, successful companies also offer things that make employees happy.

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Features

1. HR support: Provided by experts at Mammoth, Inc. See Mammoth’s privacy policy and Terms of Use. HR support center is available only to QuickBooks Online Premium and Elite subscriptions. HR Advisor support only available in QuickBooks Online Payroll Elite. HR support is not available to accountants who are calling on behalf of their clients. HR support is intended for informational purposes and does not constitute legal or tax advice.