Employee

Interns and Small Business Staffing

February 18, 2010

Many business owners ask about whether using an intern is cost effective.  The answer is yes, if you plan well.

Interns can provide unique knowledge for specific projects, and in return they learn how their skills can be applied in the business world.  For example, an intern with Final Cut Pro expertise can be the “tractor operator” as you sit with him to edit videos for display on flat screens at your business site or for your web site.  You can’t manage your business and also become an technical expert with video editing, so that need is met by having an intern experienced on the software work with you.  Interns should not be put in back rooms stocking shelves, or doing mundane work all day.  An intern is not “cheap labor,” rather she is person who is looking to you for mentorship.  Try to meet with the intern at least once a day to go over the project you have selected for her.  Maybe you need to prepare an outline for an upcoming meeting.  As you describe the presentation to the intern, you are formulating your outline, thereby accomplishing two things at the same time!

Interns can be paid or unpaid, but either way, my advice is to treat them the same as your regular employees.  That is, include them in staff and project meetings, give them the same perks, such as lunches on Fridays, and acknowledge their work as if they were part of your team.  Similarly, carefully interview and chose your interns just as you would if you were hiring a regular employee.  Interns should also be subject to the same job performance standards and the same disciplinary actions.  Just because you hired an intern does not mean you have to accept that they sit on Facebook all day, or conduct numerous personal phone calls.  To be clear upfront, prepare an “internship agreement” describing the project(s) and your expectations (and theirs) and have interns sign it.

For me, it is personally rewarding to work with motivated interns who are passionate about their career choice, and that’s why I feel strongly that the experience also will be rewarding for them.

Fraternizing with the Enemy: Tips From an Employee-side Attorney

January 20, 2010
Curt Surls, Employment Attorney

Curt Surls, Employment Attorney

by Curt Surls, Employment Attorney

I am an employment lawyer. I represent employees who have been discriminated against, harassed, improperly compensated or wrongfully terminated. As a small business owner, you would undoubtedly prefer to keep me and my colleagues at bay. This will be the first of a series of posts outlining common – and expensive — mistakes I have seen small employers make in my 20 plus years of practice.

Mistake Number One: Misclassifying non-exempt employees as exempt. Picture this: business is picking up again, and your hourly bookkeeper has been working 10 hours a day to keep up with the workload (paying bills, sending out invoices, etc.). You already know that unless an employee is exempt from wage and hour laws, you have to pay overtime (time and a half) after 8 hours in one day and 40 hours in one week. Your hourly bookkeeper is getting rather expensive, and – truth be told – he’s kind of slow and may just be milking it for the overtime. What if you put him on straight salary and gave him a lofty title like Supreme Executive Financial Control Officer (or “SEFCO”) with a gold-embossed business card? Problem solved, right?

Not so fast. In California, all employees are presumed to be nonexempt; that is to say, a sometimes confusing array of wage and hour laws apply, including overtime and meal break regulations. Therefore, the burden of establishing that an employee is exempt, such as your newly-exalted SEFCO, rests with you, the employer.

There are three exemptions under California law: Executive, Administrative and Professional. A salary and a really impressive title is not enough. Under both state law and the federal Fair Labor Standards Act, all employees, including the SEFCO, must meet both the “salary” and “duties” tests to be considered exempt. Under the “salary” test, to be exempt, the employee must earn a wage of at least double the minimum wage (currently $8.00 per hour in California). Under the “duties” test, your employees must spend at least 50% of their time engaged in “exempt” duties (for example, supervising employees, managing the business, performing work requiring advanced training and/or otherwise exercising “independent discretion and judgment”). So, title and salary notwithstanding, the SEFCO is still doing routine bookkeeping tasks and is entitled to overtime.

The consequences of misclassification can be serious, including back wages and penalties. Even the big dogs get this wrong. Wachovia recently settled a class action for $39,000,000 brought by a group of stockbroker trainees improperly classified as exempt. So be very careful before you decide that an employee is exempt from California’s wage and hour laws.

For more information, contact the California Department of Industrial Relations’ website at www.dir.ca.gov. Next time, we’ll discuss whether you can hire that bookkeeper as an “independent contractor” and avoid paying him overtime and benefits.

Third-party services vs. full- or part-time employees

December 8, 2009

When applicable, I recommend expert third-party services versus hiring a full- or part-time employee to do the same job. There are many benefits with using services and business consultants: If you are unhappy with the consultant or service, you can cancel it and sign up for another. If you are unhappy with your employee, it’s a lot more work to make a switch. Third-party services and independent consultants are always on time, and they only bill for time spent, never taking vacations. For many small business applications, this is the only way to go. There is no reason to reinvent the wheel when it comes to standard business operations.

In today’s global world, you can outsource just about everything for your business (accounting, web design, database setup, inventory control, e-commerce, marketing). You only need to hire employees where day-to-day needs warrant it, otherwise use contractors. This is the best way to control costs as you can budget for the contractors and use them only when you need the help. Your payroll is usually the largest expense — keep it to a minimum.

With the crash of the economy in the fall of 2008, employers laid off staff and found that the productivity stayed the same as the remaining employees took over the work left by those who left. Even though the economy improved in 2009, employers are not hiring back since production is adequate even with a decrease in staff. Independent contractors fill the gaps left by this unemployment.

Do Employee Perks Work?

December 6, 2009

Employees love perks.  They are like birthday presents all year long.  They can also be non-taxable to employees and a tax deduction for small businesses.  The best perks promote team building and provide daily reminders about how great it is to work for the company.  For example, allow employees to work from home, bring in fitness trainers for free lunch-hour workshop, or offer free seminars by professional speakers on topics such as “The Dynamic Management Team”.

In this economy, cancel the holiday party and give employees practical perks; a BART card, movie and theatre tickets, or dinner reservations at a local, sustainable restaurant. Promote giving by exchanging the gift cards with a warm coat to give to the One Warm Coat project.  Or, cancel the holiday party entirely and do something socially responsible.  Each year, Nvidia funds a community project and their employees participate in the project.  Last year they built a multimedia studio and a volleyball court at an elementary school in California working directly with the students.

For managers, give them something they cannot get on their own. I once had a boss pay for a reserved parking spot for me. I was a working mother with four sons.  He knew that I would value a reserved parking spot much more than cash because I was not eligible to get one of the coveted parking spots on my own.  He was right, and every day I parked in the spot, I thought of my great boss — the perk worked.

Does a probationary period work?

July 1, 2009

Probationary periods do work. Be serious about using the probationary period to let employees know how they are doing. If you have taken the time to hire well, most employees will pass the probationary period with flying colors.

If deficiencies show up, by half way through the probationary period, sit down and tell the employee what they have to do to successfully complete the probationary period. Keep it simple and don’t list more then six things (more than six things means the employee is not the right match).

Tell the employee that it is up to her whether she can keep the job — at the end of the probationary period she needs to have adequately performed the items on the list. This is the best part for a manager — taking an employee who is weak and coaching them to succeed. Unfortunately, from my experience, if an employee is having problems, less than half will still be working for you after the probationary period. But for those who are, it is the greatest reward for a manager to watch an employee benefit and grow from mentoring.

When to Fire an Employee

May 8, 2009

Fire employees for serious misconduct — dishonesty, unethical behavior, gross insubordination or inebriation on the job — or where it is clear that the employee cannot meet the level of performance of the job. Employees who lie can’t be trusted; it is impossible to ‘train’ an employee not to lie.

For example, when an employee changes the time on an email to cover up, fire him because you will not be able to trust him in other situations. Fire employees if they steal objects or cheat about their time (stealing from your payroll). Fire employees who consume an inordinate amount of administrative time (someone who needs constant remediation to get along with co-workers). Fire those who cannot adhere to a work schedule or are always late when arriving at work is important to your business. Fire employees whose productivity is low. Fire employees with bad attitudes. Fire employees where their continued employment will decrease your income.