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Small Business HR Issues and Concerns - March 2008

By Rick Hughes

If you?re like most people, you went into business for yourself because you had a passion and a talent for your chosen profession. However, if you plan to be anything more than a one person operation, then you?ll have employees and this will create a whole new set of human resource issues. And, unless you?re expertise is in the human resources field, then you might need to get some help from your attorney or other professional advisers in such areas as?

Staffing & Recruiting
This is simply finding and hiring the best people and placing them in the right position and giving them a competitive benefits and compensation package in order to ATTRACT, RETAIN and MOTIVATE them to continue working for your company.

Payroll & Tax Filing
While QuickBooks and/or Peachtree are both good small business accounting packages, you should seriously consider outsourcing your payroll to a third party payroll provider who is much more familiar with Federal, State and Local payroll laws. Additionally, you should use their payroll tax filing services since this not only shifts the work?but also the liability?to the third party vendor for accurately paying the various taxing authorities.

Benefits & Compensation
Employees today are really quite sensitive about pay and benefits?and the Internet has given them many more tools to find and evaluate a multitude of data about pay and benefits. Therefore, you need to create a competitive benefits and compensation package that will help you to find the ?best? employees who can add value and help you grow your business.

Employee Relations
Once you have employees, you?ve now inherited employee relations issues. The best way to overcome most employee relations issues is with a well-drafted Employee Handbook that spells out the company?s expectations and provides a detailed set of policies, procedures and regulatory requirements. From a risk management perspective, the most important part of the Employee Handbook is the Acknowledgement & Receipt page which each employee should be required to sign indicating that they?ve read, understand and agree to abide by the terms and conditions outlined in the Employee Handbook.

Legal & Regulatory Compliance
There are numerous Federal and State regulations that affect small business but we only have the opportunity to cover the most common (and often misunderstood) regulations?FLSA, COBRA, and FMLA. The Fair Labor Standards Act (FLSA) governs the payment of overtime to employees and allows for various ?exemptions? where overtime pay is not required. Basically, the law says that ALL EMPLOYEES must be paid overtime anytime they work more than 40 hours in a workweek unless they qualify under one of the exemptions (thus the terms ?non-exempt? and ?exempt?). If you?re a small business in Ohio with fewer than 20 employees, then your employees are NOT covered by the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. However, Ohio (and most other states) have a ?mini-COBRA? provision (Ohio Revised Code 3923.38) for terminated employees. Finally, the Family Medical Leave Act (FMLA) is for companies with 50 or more employees within a 75-mile radius which allows for up to a 12-week unpaid leave of absence for various personal and/or family circumstances.

Performance Management
Not only is a periodic performance review important to employees, it?s also critical for the company who will ultimately have to terminate an employee for performance reasons at some point in time. Here, it?s critical to have a well-documented paper trail detailing the performance issue and demonstrating the steps you?ve taken to address and correct the problem. Remember, you may be standing in front of a ?jury of your peers? someday and you?d better have a well-documented paper trail showing that the termination was due to poor performance and not based on any discriminatory action.

If you have an effective performance management process, then terminations should go smoothly. However, today?s society is very litigious and many employees are encouraged by various law firms to sue their former employer. For this reason, it?s typically recommended to try to obtain a signed Waiver & Release Agreement from the employee that gives them some form of consideration (pay and/or benefits) in exchange for agreeing not to sue the company. In most large corporations, this is risk management tool that?s widely used in nearly all terminations since it reduces the company?s overall liability due to the fact that it?s very expensive to be sued?whether you win or lose.

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