Employee or Contractor?

There has been increased attention on the issue of mis-classification of contractors as employees. Does your business have the roles classified correctly? The stakes of getting the classification wrong are pretty high.
EMPLOYEE: Generally, you must withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to an employee. Employees must also be covered under your state workers compensation insurance.
CONTRACTOR: You do not generally have to withhold or pay any taxes on payments to independent contractors.
Don’t get too excited about reclassifying all of your employees as contractors to avoid the tax & insurance requirements. Both the IRS and state governments have criteria in place for determining contractor eligibility. Here is a link to the IRS website on the subject.
Generally, you need to determine how much control and independence a person will have before claiming they are eligible for contractor status. Here is a list of some of the factors to consider, referred by the IRS as “Common Law Rules”:
Facts that provide evidence of the degree of control and independence fall into three categories:
1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
Your local state workers compensation insurance board will most likely have their own set of criteria, so be sure to check with them as well before making any final decision. When in doubt, it is always prudent to classify a person as an employee.

Jill Critchfield is a professional Human Resources Consultant. Through her business, Pacific HR, she has provided HR services to over 200 small and mid-sized businesses in Portland, Oregon since 1999. All information provided on this website is intended for general informational purposes only and should not be construed as legal advice.

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Internships – What Your Company Needs to Know

Thinking about bringing on unpaid interns to join your company?  Be careful! The Department of Labor has strict rules regarding the conditions required for an intern to qualify to work without pay.  Generally, the activities and training completed by the intern must be solely for his or her own benefit, and the company may not derive any immediate advantage from the intern’s activities.  In addition, you may not hire unpaid interns to do work that would normally have been done by another paid employee.

If you do bring on an unpaid intern, you must adhere to the following rules:

  • Training received by the intern must be for his or her benefit.
  • Training must be general, not for the immediate advantage of the business, and it may even slow normal operations.
  • Interns can’t be used to replace paid employees.
  • Interns must be closely supervised or mentored.
  • Interns can do real work as long as they are closely supervised, are learning and aren’t necessarily creating a final product.
  • Both the intern and the business must agree that the internship will be unpaid.
  • Both parties must agree that no job is promised at the end of the internship.
  • High schools, technical schools and colleges can partner with businesses to set up compliant unpaid internships in which the student receives course credit. This lends credibility to the internship’s benefit for the student.

Make sure that you have a thorough written plan outlining the activities and training the intern will receive throughout the course of the internship, as well as the expected learning goals.  Be sure to offer internships in writing, with a full outline of internship activities, goals and conditions.

It’s advisable to consult with legal counsel when developing a formal internship program to ensure that the company is not creating liability by bringing on unpaid interns.

If an intern fails to meet all of the DOL’s criteria, they should be paid at least minimum wage and any appropriate overtime as employees. When in doubt, businesses can avoid legal problems by paying interns at least minimum wage.

 Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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Reference Checks

What can I ask when conducting a reference check?  What should I say if someone calls my company looking for a reference for a past employee?  If the idea of conducting or responding to reference checks makes you nervous, you are not alone!  Here are some tips to ensure you get the information you need on prospective candidates and protect your company when answering questions about past employees.

Calling a Candidate’s References

  • Make sure you have a signed authorization from the candidate allowing you to check on past employment details.  Generally, your employment application should contain this language and signature, but you may choose to use a separate form.  Many employers will not verify any information regarding past employees without this signed authorization.
  • Request that the candidate provide you with at least 3 professional references.  Tell the candidate that these references should be able to speak freely about their interaction with the candidate in the workplace.  While references may be supervisors, peers, subordinates, vendors or clients tell the candidate that you need at least one of the professional references to be a past or present direct supervisor.
  • Create a standard reference check form that includes all of the questions you intend to ask the references.  These questions should include, dates of employment, title, salary (if applicable), and additional questions regarding attendance, dependability, teamwork and work performance.  All questions must be work related. Do not ask any questions regarding a candidate’s personal life or questions that will reveal a candidate’s protected class status.
  • Make sure you are complying with state rules regarding criminal background investigations and credit checks, and that you review the Fair Credit Reporting Act (FCRA) prior to conducting any of these activities.
  • Remember that quality candidates should be able to easily provide you with three professional references that can speak to their abilities in the workplace.  If a candidate can’t provide such references, or if the references reveal troubling information, you should seriously reconsider the person as a final candidate.

Responding to a Reference Request

  • Make it your company’s policy to only verify dates of employment and position title.  Only verify salary information if you receive a signed authorization from the employee allowing you to do so.  Ensure your Employee Handbook requires all staff to adhere to this policy.  Refer to your attorney prior to responding to a reference request if the employee in question committed workplace violence, or was terminated for any particularly unusual circumstances.

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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Cell Phones in the Workplace

Are your employees using personal cell phones in the workplace?   Many employers are frustrated with employees taking time during the workday to answer personal calls or texts.  The constant din of ringtones can diminish a professional atmosphere and is often disruptive to co-workers, clients and business partners.  Make sure your Employee Handbook includes a comprehensive personal cell phone policy.  Here are some of the items to consider in developing a workplace cell phone policy:

  • Be clear as to where personal cell phones are NOT allowed (i.e. manufacturing floor, front of store, etc.).
  • If you do allow employees to carry personal cell phones at work, be sure to clarify if phones are to be turned off or “silenced” during work hours.
  • State that employees may use personal cell phones during break or meal periods, but that such use should not interrupt customers or business operations.
  • You may choose to allow employees to “limited and reasonable” personal use of cell phones in the workplace.  If this is the case, request that employees excuse themselves to a private area so as not to disturb co-workers or business operations.  Be sure to add that determination of “limited and reasonable” is at management’s discretion.
  • Many states now have restrictions on use of cell phones in vehicles.  If your employees drive during work hours, be sure to include policies adhering to state rules regarding cell phone use in vehicles.  You may choose to go above and beyond state regulations and ban all forms of cell phone use while driving on company business.  Consider purchasing “hands free” devices for employees who may need to make business calls while traveling in vehicles.
  • If you provide company cell phones to employees, be sure to state whether or not you will allow personal use of such items.  If you do allow “limited and reasonable” personal use of company phones, be clear that ALL cell phone communications (business or personal) must adhere to other company communications standards and not be harassing, inappropriate or illegal.

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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Workplace Romance – What’s a Business To Do?

With the recent public scandals of ESPN analyst Steve Phillips and David Letterman, work place relationships are becoming an increasing concern for business owners.  Forget the idea of banning dating in the office, a survey by Vault.com cites close to half of us have had a romantic relationship with a co-worker, and that many of these end up with a long term commitment or marriage.  A strict “no romance” policy will most likely result in employees pursuing or continuing relationships behind your back.  Instead, develop clear policies on appropriate workplace relationships and how your company will handle actual or perceived conflicts such as:

  • Favoritism
  • Perceptions of favoritism
  • Conflicts of interest
  • Hostile work environment
  • Sexual harassment

To avoid or minimize such concerns, consider adding a Workplace Relationships policy in your Employee Handbook. Make sure the policy includes the following details:

  • A clear statement that you require all employees to behave in a professional manner in the workplace at all times.
  • State that employees are to avoid public displays of affection that may be perceived as unprofessional, such as hugging, kissing, handholding, etc.  Such displays may make co-workers uncomfortable and detract from the professional image of the workplace.
  • Notify employees that they are to notify you if they are involved in a romantic workplace relationship that could result in real or perceived favoritism by others.
  • State that a relationship that results in perceived or real favoritism may require you to transfer or terminate one of the involved employees.

 

Be sure to use discretion and handle each workplace romance evaluation with sensitivity.  With care and concern you should be able to develop an arrangement that allows the relationship while maintaining a professional image and workplace environment for your employees.

 

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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Telecommuting Tips

Telecommuting continues to gain interest and attention in the small business world.  There are many benefits to having an employee telecommute to work, either full time, or just a day or two a week.  Here are just some of the benefits of incorporating a telecommuting plan in your business:

Conserves Energy – Telecommuting conserves the energy and resources associated with a daily commute such as vehicle & road maintenance. Also reduces the materials and energy used in the office.

Maximizes the Employees Free Time – By eliminating the commute, employees have more time to devote to family and personal endeavors.

Improves Productivity/Reduces Stress – Studies suggest that people who work from home are more productive with their time, and are less stressed than those who work in a traditional environment.  Here is some of the research results:  http://psychcentral.com.

 

Decreased Turnover – Employees consider telecommuting a valuable benefit, and are reluctant to leave an employer who supports such flexibility.

Before you start having an employee work from home, be sure to address the following items:

Develop a Telecommuting Plan: Develop a thorough plan that addresses work hours, expectations and deliverables.  Make sure the plan is in writing and signed by the employee.    Also make sure to retain the right to terminate the telecommuting aspect of the position if things are not working according to plan.

 

Make Sure the Employee Is Prepared: Ensure that the employee has been provided all of the tools required to work effectively from home.  A computer, high speed connection and dedicated phone line are just some of the items to be considered.

 

Timekeeping: Consider installing timekeeping and supervisory software on the telecommuter’s computer.  This will eliminate any arguments as to how the employee is spending their day. 

Security: Make sure the employee has a secure computer and office environment that will allow you to keep your company and client information confidential. Article: Telecommuting Security Mistakes.

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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Minimize the Flu in Your Small Business

With the influenza season upon us, and elevated concerns over the H1N1 virus (also referred to as “Swine Flu”), businesses should be prepared to promote a healthy work environment for their employees.  Small businesses are especially susceptible to a flu outbreak, as they operate with a small staff.  The Secretary of Homeland Security has provided some tips and guidelines for Small Business to assist them through the flu season.  Here are some highlights:

  • Develop policies that allow employees to stay home sick without fear of reprisal.
  • Develop flexible policies to allow workers to telework (if feasible) and create other leave policies to allow workers to stay home to care for sick family members or care for children if schools close.
  • Provide workers with up-to-date information on influenza risk factors, protective behaviors, and instruction on proper behaviors (for example, cough etiquette; avoid touching eyes, nose and mouth; and hand hygiene). See www.cdc.gov/h1n1flu/business.
  • Provide resources and a work environment that promotes personal hygiene. For example, provide tissues, no-touch trash cans, hand soap, hand sanitizer, disinfectants and disposable towels for workers to clean their work surfaces.
  • Promote a culture of health in the workplace, encouraging employees to access available health benefits & flu shots.

Other resources may be found at www.flu.gov, as well as a letter to small businesses from Janet Napolitano, Secretary of Homeland Security

Jill Critchfield is a professional Human Resources Consultant.  Through her business, Pacific HR, she has provided HR services to over 150 small and mid-sized businesses in Portland, Oregon since 1999.

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