It’s time to turn my attention toward executing the business plan I’ve been working on for the past 12 months.

Hey everybody, welcome to the FINAL episode of SmallBiz Brainiac! Yes… I’m ending this podcast. That’s hard for me to say, actually. This has been a labor of love for me and I’ve learned so much from doing this. It was a bit scary starting off. If you go back to the first 100 episodes… I pretty much sucked. I think the content is solid but as a podcaster, I stink… still do.

So, I’ve been thinking about ending the show for several weeks now, and I’ve finally decided that it’s time to turn my attention toward executing the business plan I’ve been working on for the past 12 months.

When I started this show 17 months ago, I didn’t have a clear picture of how I would incorporate it into my business. In fact, I started it before I had my current business.

At the time, I was in a role transition. I almost said career transition, and that’s kind of true except I’m still in the same industry, just a different role. In 2015 I decided to resign from my position as the Chief Operating Officer of a large and growing Professional Employer Organization called Vensure Employer Services. But after almost 23 years of being in the operations side of the business, I needed a change.

There are a lot of reasons why I made the difficult decision, but I didn’t realize how much the job was a part of my identity until I was no longer the COO. Walking away from it was a mixture of emotions. After all, I co-founded the company with my Uncle back in 2004 and I was the CEO until July of 2012, when the new majority shareholder came in and took over that role, and I stepped into the COO role.

Since then, the company has gone through a lot of changes, it has grown significantly, and is now a major league player in the PEO industry. I’m really proud to have been a part of the company’s success, and to have helped create something that is doing so well today. Even though I resigned from Vensure, I’m still working with Vensure.

I now own an insurance agency. But this isn’t your traditional insurance agency, it’s more like a business advisory firm. I’m on a mission to use my two and a half decades of business operations, accounting, insurance, HR, payroll, and risk management expertise; and my newly acquired marketing skills, which includes my ClickFunnels Certified Partner status, to make small business owners’ insurance premiums go further, to get more services… and better service, without spending any more than they already do. And Vensure is a big part of how I do that.

But let me get back to the point… which is when I started this podcast, my next step wasn’t clear. The origins of it actually go back to 2014. Fortunatly, I now have a clear vision of my path, and this podcast, SmallBiz Brainiac, isn’t the right fit. And so, it will be replaced with a new show later this year. One that will be perfectly aligned with where I’m going.

If you want to get an email announcing the launch of the new show, go to smallbizbrainiac.com and sign up for the brainwave newsletter, and you’ll be the first to hear about it.

So, thank you, thank you, thank you, for listening. I hope you’ve learned a few things from this podcast. The one lesson I’d like you to take away is that you should hire a PEO to help you not just survive as an employer, but to thrive as one. You shouldn’t go at it alone. It’s too dangerous out there. Everyone wants a piece of you…the regulators, politicians, competitors, lawyers and leeches. A PEO is like your suit of armor. It will help protect you as you head into battle.

Empower your Managers to make their own hiring and firing decisions. 

Who in your organization should be responsible for recruiting, interviewing and hiring candidates? Who should be responsible for carrying out the unenviable task of letting employees go, regardless of whether it is for performance, behavior, or just downsizing? I’m a firm believer in tasking your managers with the responsibilities of hiring and firing their own staff.

That being said, it’s important your managers are well trained in this area so you’re not putting the company at risk. When I say have your managers hiring and firing their own staff, that does not mean they shouldn’t keep the HR department informed, or consult with them before making decisions. HR should still be part of any staffing process.

Hiring Responsibilities:

Hiring an employee can be a time consuming process. Your managers may not have a lot of extra time to devote to going through all that’s involved. If this is the case, you may want to lean on your HR department for some assistance. If you don’t have an in-house HR team, your managers can do this on their own, it may just take time away from their everyday responsibilities. You could also outsource specific HR tasks to a third party.

If you do have an HR department, have your HR team handle the recruitment process for your managers. Nobody knows what a departments needs are better than the manager in charge of that department. At least it should be that way. Have the manager sit down with HR to complete the job description, listing all of the necessary requirements that they are looking for. HR can then take this information, create the job listing and then start the recruitment process. HR should post the available position on any of their preferred job sites, or even post the job internally to give an opportunity for advancement from within the company.

They may even want to engage a third party recruiter to start filling the interview pipeline. When a candidate responds to the listing, HR can do a “pre-interview” screening, usually over the phone to filter out any candidates that may not actually meet all of the requirements. Job seekers tend to respond to any opening whether they meet the posted requirements or not, so this phone screening is a good way to filter out the pretenders from the contenders so as to not waste anybody’s time with in person interviews of unqualified candidates.

Candidates who pass the phone screening can then be scheduled for an in person interview with the manager. If your manager is well seasoned in the interview process then they could perform the interview on their own. If not, it may be a good idea to have an HR representative attend the interview with the manager to help steer the interview and provide additional support to the manager. After concluding the series of interviews, the manager and HR should discuss each of the candidates and make a decision.

You want your managers to be hiring the candidates with the most attractive skill set to perform the job, not the most attractive physical appearance. Hiring decisions should be based on the candidates ability to perform the work. You want to empower them to do what’s best for their department to succeed. Allowing them to make their own staffing decisions shows you have confidence in their abilities. But don’t turn a blind eye. If a department is under performing, then maybe your manager isn’t making the right staffing decisions. Or perhaps you don’t have the right manager.

Termination Responsibilities:

Along the same lines, when it comes time to terminate an employee the manager needs to be able to make these decisions and be involved in this process, but not without consulting HR. You don’t want to create a monster by allowing your manager to become a tyrant. Having a process in place for your managers to discuss their decision to want to terminate an employee is a great practice. This can help your company avoid possible legal troubles down the road.

Once a manager has decided that they want to terminate an employee, have them set an appointment to discuss the matter with HR. HR can then identify any possible situations where there may be cause for concern. HR can work with the manager to outline necessary steps to follow in order to complete the termination appropriately so as to minimize any negative repercussions that could arise. HR can also coach the manager on what to say during the termination before hand.

This is not a time where the manager can just wash their hands of the situation by deciding they want someone terminated, telling HR about it, then expecting HR to do their dirty work. One of the most difficult tasks of being a manager is having to fire people. I’ve done it many times over. It’s never easy, but if your managers want the good of being a manager, they have to take the bad of being a manager as well.

That being said, when terminating someone, it’s always a good idea to have the manager do it with an HR representative present. The HR representative can serve as a witness in the event a terminated employee decides to file a wrongful termination claim. The HR representative can also assist the manager by answering questions that may arise during the termination.

A lot of this depends on your companies structure. As I briefly eluded to earlier, you may be a small operation that doesn’t have a formal HR department. If your a small enough business it may just be you that is the CEO, HR and manager all in one. If that’s the case I definitely recommend seeking outside advice from an HR firm when necessary.

There are many HR firms out there that can provide a-la-carte consulting services. They can help with your recruiting efforts as well as offer advice on how to appropriately handle a termination. – Robert Attridge, Co-Host of SmallBiz Brainiac podcast.

It doesn’t matter if you are guilty or not, an employment discrimination claim is going to cost you.

EPLI stands for Employment Practices Liability Insurance.

The free report available on our website, smallbizbrainiac.com, called “8 Steps to Lowering Your Employer Liability”, is all about buying EPLI insurance. The very process of preparing the complete the application will put you in a great position.

So go get a copy of that report.

What is EPLI?

EPLI protects you, your company, its directors, officers and both current and former employees from claims and lawsuits filed by….well, your current and former employees as well as employment candidates. Some policies will also cover claims made by third-parties, like customers, clients and vendors.

It covers the cost of defending you against claims or lawsuits related to your employment practices. It will also pay any judgment entered against you. At least up to the limits of the policy. It’s important to understand that the defense costs apply to the limit. So, if the policy limit is $500,000 and the legal costs are $200,000 that leaves $300,000 to pay settlements and judgments.

EPLI covers you against employment discrimination claims, sexual harassment claims, wrongful termination claims and violations of the Family Medical Leave Act and other mandatory leave violations. It usually does not cover you against wage and hour claims or violations of the National Labor Relations Act.

For example, if your terminate someone after they complain about sexual harassment, and they sue for retaliatory discharge, your EPLI insurance will pay the defense costs and any settlement or judgment amounts.

On the other hand, let’s say you misclassify an employee as salary exempt and you don’t pay them overtime. Your EPLI policy will not cover a claim for backpay.

It won’t pay for bodily injury or property damage or intentional or dishonest acts either.

Not all policies are the same so it’s important to understand what you’re getting.

Notice of Right to Sue:

If an employee wants to sue you for discrimination on the basis of race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age, disability, genetic information, or retaliation, they have to file a complaint with the Equal Employment Opportunity Commission, or EEOC, first.

After the EEOC has investigated the complaint, they may issue a Notice of Right to Sue. After that, your employee has 90 days to file a lawsuit.

If your employee wants to file a lawsuit before the EEOC has completed their investigation, they may ask for a Notice of Right-to-Sue. If more than 180 days have passed from the filing, then the EEOC is required to give them the notice. If it’s been less than 180 days, they won’t issue the notice unless they’ll be unable to finish their investigation within 180 days.

Employees don’t need a Notice of Right to Sue if they’re suing for age discrimination, but they still have to file a complaint with the EEOC, and must wait 60 days before suing. If they want to file a claim under the Equal Pay Act, they don’t have file a complaint with the EEOC. Instead, they can head straight to court, but they must file with 2 years. If the discrimination was willful, then they have 3 years to file.

There were 91,503 discrimination charges processed by the EEOC in fiscal year 2016. They resolved 97,443 charges and collected over $482 million. So, they were able to gain some ground on their case backlog. Almost 46% of charges included retaliation claims. After that, the most popular are race, disability and sex discrimination. The two charges with the least number of complaints, making up 1.3% combined, were Equal Pay Act and Genetic Information Non-Discrimination Act violations.

Discrimination Claim Examples:

Not sure what a discrimination claim looks like? Here are some examples from Great American Insurance Group.

SEXUAL HARASSMENT – A former employee for a landscaper in Massachusetts with 18 employees was discharged due to poor performance and later filed a complaint with the EEOC alleging sexual harassment by the owner.  The EEOC dismissed the charge finding no cause. The employee appealed the decision and the EEOC upheld its earlier decision. $15,000 in defense costs were spent defending the matter.

DISABILITY DISCRIMINATION/RETALIATION – A former employee at a restaurant in Missouri with 30 employees filed a complaint with the EEOC on the basis of disability discrimination and retaliation. The employee was demoted for excessive absenteeism and subsequently resigned. The employee claims she was absent due to a medical condition and not given reasonable accommodation. The employer claims it was not notified of the medical condition. The matter settled for $6,000 with another $5,000 in defense costs.

PREGNANCY DISCRIMINATION – A former employee at a private school in Florida with 52 employees alleged pregnancy discrimination after she was terminated upon returning from maternity leave. When she returned to work, she was advised that she now needed a master’s degree for her position. She did not hold a master’s degree and was offered a demotion. She filed a discrimination charge with the state agency. The matter settled for $23,500 with another $10,000 in defense costs.

AGE DISCRIMINATION – A former employee at a construction company in Ohio with 93 employees filed suit alleging age discrimination. He alleged that he was terminated and replaced by a younger employee after working for over 10 years for the Company. He also alleges no younger employees were terminated at the time of his termination. The employer claims his position was eliminated and he was not replaced. The matter settled for $18,000 with another $40,000 in defense costs.

And finally,

DISCRIMINATION/RETALIATION – A former employee at a retail store in Colorado with 400 employees was terminated following a fight that took place between two employees which resulted in the plaintiff suffering severe injuries. The plaintiff’s spouse contacted the Company to obtain details on medical benefits and the plaintiff was terminated a few days later. The Company alleged the plaintiff was terminated following an investigation into his role in the fight not due to the request for medical benefits. An EEOC charge was filed alleging discrimination and retaliation due to disability, request for medical leave and request for worker’s compensation benefits. A suit was subsequently filed in District Court alleging wrongful termination in violation of the American with Disabilities Act and Family Medical Leave Act as well as disability discrimination and retaliation. The plaintiff  and Company arbitrated the claim and the plaintiff was awarded $4,000,000.

You can see from these examples that it doesn’t matter if you are guilty or not, it’s still going to cost you. Even if the EEOC doesn’t issue a Right to Sue Notice, you’ll still incur legal expenses during their investigation.

So, should you buy EPLI? I certainly think so. It’s affordable and, as you can see that one unfounded claim could cost you a considerable amount.

Total compensation statements show employees how much you’re actually investing in them.

Today I want to talk to you about your employees total compensation. No, total compensation is not simply the employees annual salary. It is more than that.

It refers to the total cost of employing an individual.

Why is this important? I believe this to be important on two levels. It’s important for employers to have an idea of just how much it costs to employ someone. This may help you make more informed hiring and firing decisions.

It’s also important that the employee understands that their compensation is more than just what their paycheck shows every payday.

According to a study conducted by Human Resource firm PayScale, nearly 40% of all businesses prepare total compensation reports for their employees.

Total Compensation: 

Total compensation can be defined as the employee’s cash wage plus any non-cash benefits that are paid on behalf of the employee by their employer. A lot of times these non-cash benefits are never seen by the employee, therefore they have no idea that you the employer are even paying them.

Or maybe they have an idea, but it’s never discussed with them so they may not really see it as a benefit for them. Let’s go over some of the non-cash items that you are most likely to be contributing on behalf of your employees.

Health Insurance is going to be one of the largest, if not the largest non-cash value that your employees receive. There are also employer paid matching retirement contributions, and let’s not forget the employer paid portion of payroll taxes. These will be the most common items factored into a total compensation report that you may prepare.

Your organization may provide additional non-cash benefits such as Flexible Spending Accounts, life insurance, disability insurance or any other benefit you may provide that was not mentioned. Costs such as equipment or workplace amenities would not be included in a typical total compensation report.

Let’s put a quick example together.

Let’s say you hire a new employee at $50,000 per year annual salary. As previously stated, this number simply represents the gross pay, before taxes, that your employee will be paid in cash. The employees annual salary is obviously going to be the lions share of the total compensation report. Then if you factor in the FICA taxes which are 15.3%, 7.65% of which is paid by you the employer. On $50,000, that number is $3,825.

So you can see already it’s going to cost you at least $53,825 to pay your employee $50,000. Let’s say you have a medical plan where the company pays 100% for the employee only, family coverage is extra and would be paid by the employee. For the purpose of our example, the employee only coverage is just over $416 per month.

This adds up to around $5000 for the year. Lets throw in a retirement plan where the employer matches 25% on the first 4% that the employee contributes. In this example the employer matching contribution would be $500. So that’s a pretty basic benefit offering and if we add all that up we get a total compensation report that shows us that it will take $59,325 to pay this employee an annual salary of $50,000 and provide a basic benefit offering.

In reality, it will actually cost you a little bit more than this because we didn’t factor in unemployment taxes and any other employer paid taxes that may be due at a state level. These items are typically not included in a total compensation report.

You can tailor the compensation report to your needs. You can decide what to include and what not to include in the report. If you don’t think that your matching contribution to the retirement plan is not all that generous, and you don’t want to highlight that piece, you are free to leave it out. It’s completely up to you to decide what you want to include in the report, and what you would rather just keep out of the spotlight.

Share Total Compensation with Your Employees?

Should you share the total compensation report with your employee? I say yes to this, but you’ll have to decide if this is the best strategy for you and your company.

If you do decide to share the total compensation report with your employee, you do want to present it properly so as to not confuse the employee, or make a situation worse for yourself. You want this information to be beneficial to all involved.

When to Share Total Compensation:

I think it’s a good idea to provide a total compensation report up front when you hire a new employee, but make sure it is clear. Make sure there is no mistake that the annual salary is $X and that the non-cash value of associated benefits is $Y. You don’t want your new hire to misinterpret what you are showing them.

Perhaps have a manager or your HR department go over this in person with the new hire so they have an opportunity to explain the report to the employee. The Society for Human Resource Management, or SHRM, has a great report sample on their website. Take a minute and visit the show notes of this episode on our website at smallbizbrainiac.com. There will be a link to the report sample if you want to see it and perhaps create your own reports using their sample as a guide.

Another good time to share a total compensation report with your employee is at their annual review. If the annual review is resulting in a pay increase to your employee this may be a good time to go over the total compensation report with them again. You can show them the change from the previous year to the new year. However, if a pay increase is not going to happen, you may want to tread lightly here.

Some HR experts will warn you about using the total compensation report as justification for not giving an employee a pay increase. I agree with this. If an employee is not due a pay increase, for whatever reason, it may seem like a good idea to soften the blow by highlighting the non-cash benefits they receive.

However, put yourself in the employees position. Would this appease you if you felt you were due a raise in your salary, but instead were told sorry, no pay increase, but we will continue to pay all of your benefits.  It’s never easy to deliver the bad news, but don’t make it worse by trying to soften the blow with the compensation report as justification.

More often than not, your employees will not receive that message as you intended. If you are in this situation it may be best to just let them know that the company is not in a position to offer a pay increase at this time and only provide a total compensation report upon request.

The total compensation report is a great tool for communication with your employees if presented properly. It’s important to make sure your HR and management teams understand what is in the total compensation report and are trained on how to use this report to their advantage when communicating with their employees. Your employees eyes will be opened to all the benefits that you are actually contributing to their compensation package.

The city of Minneapolis has bought into the voodoo economic theory that they can regulate the labor market and bend it to their will.

Even if you don’t have employees in Minneapolis, you need to stay on top of all the local HR laws because they are a sign of things to come. Especially if you live in a city that is governed by Democrats.

The city of Minneapolis has bought into the voodoo economic theory that they can regulate the labor market and bend it to their will. They’ve jumped on the municipality minimum wage bandwagon and passed an ordinance creating a city minimum wage of $10.00 effective January 1, 2018 and increasing each year until it reaches $15.00 in 2024.

The City Council and Mayor apparently unhappy with the federal and state governments lack of action to protect the city’s citizens health, safety and general welfare, have taken matters into their own dirty little hands.

You see, the labor market, and every other segment of the economy, are far too complex for any one politician or gaggle of politicians to understand, let alone control. They can manipulate the markets, thereby making them more expensive and complex. They can even kill certain markets sending them into the black market. But the only certain outcome of their meddling is damaging unintended consequences.

Seattle’s Minimum Wage:

Seattle’s minimum wage took effect April 1, 2015. The minimum gradually increases to $15 per hour as early as this year, and as late as 2021, based on the size of the business. After reaching $15 per hour, it will increase every January 1st thereafter, based on the Consumer Price Index for the area.

So how’s it working so far for low-wage workers? The answer, not so well. According to The Seattle Minimum Wage Study Team at the University of Washington, employers have cut their payroll, postponed hiring and reduced hours or terminated employees. Overall, the study says the average low-wage worker lost $125 month because of the increase in the minimum wage. And those are the results of just the first 9 months. Long before the full-effect will be felt.

The reports says:

“… our best estimates find that the Seattle Minimum Wage Ordinance appears to have lowered employment rates of low-wage workers. This negative unintended consequence (which are predicted by some of the existing economic literature) is concerning and needs to be followed closely in future years, because the long-run effects are likely to be greater as businesses and workers have more time to adapt to the ordinance.”

But, maybe economics work differently in Minneapolis. After all, I’m sure, being the rhode scholars they aren’t, the City Council members know what they’re doing.

States Are Fighting Back:

I don’t know if they have the authority to do this or not, but other municipalities have had their actions overturned by the state and blocked from future similar ordinances. According to an article on the New York Times website titled: Blue Cities Want to Make Their Own Rules. Red States Won’t Let Them., states have banned local ordinances from passing minimum wage increases and paid sick days.

In St. Louis for example, a new State law takes effect on August 28th pre-empting the City’s minimum wage ordinance. Their $10 minimum only took effect on May 5, 2017. It was going to increase to $11 on January 1, 2018… but, no more.

And in another example, just as the city of Birmingham passed a minimum wage ordinance, the State of Alabama passed a law pre-empting the City from regulating minimum wage.

So, time will tell if Minneapolis’s ordinance survives.

Minneapolis’s Municipal Minimum Wage:

The Minneapolis Ordinance says the City has broad authority through its police powers to enact regulation to further the public health, safety, and general welfare. It says increasing the minimum wage DIRECTLY promotes the health, safety and welfare of workers in the City.

The other stated reason is a living wage. The City Council says the living wage in Minneapolis is $15.25 per hour for a single person and $19.80 for a family of three, yet they’re only increasing the minimum wage to $15.00. And it won’t reach that level until July 1, 2022 for large employers, and July 1, 2024 for small employers.

For large employers the rate starts at $10.00 on January 1, 2018 and jumps to $11.25 on July 1, 2018 and then it goes up every July 1st thereafter.

For small employers it starts at $10.25 July 1, 2018 and goes up every July 1st thereafter.

A large employer has more than 100 employees and a small employer has 100 or fewer.

To determine you business size, take the average number of employees who worked each week in the previous calendar year.

If you’re a new business, you’ll look at the average number of employees you had during the first 90 days following your first employee starting work.

You have to count all employees, including part-time, joint-employees and temporary employees. You can’t use a PEO or a temporary staffing company to escape the large employer rates. Also, if you are a franchisee and you have more than 10 locations nationally, you’re a large employer.

If you have employees outside the city limits and one of them works 2 or more hours in the city then you have to pay them the City minimum wage for those hours. Employees just passing through the city aren’t covered, as long as they do not have any business related stops except for food, gas or a personal errand.

There are of course penalties for non-compliance. If you don’t keep proper records, that’s $1,000 for each failure. If you don’t post the proper notice provided to you by the City’s Department of Civil Rights each year, that will cost you $1,000, and if you retaliate against one of your employees for exercising their rights under the Ordinance you’ll have to pay between $700 and $3,000 for each violation.

Also, you’re liable for back-pay and compensatory damages.

But the real kicker is for restaurants. Tips are not counted as wages toward the minimum wage.

The Maine House of Representatives passed a referendum in November 2016 to raise both the regular and the tipped minimum wages. Tipped servers began to complain and they succeed having the tipped minimum excluded from the increase.

Here is an excerpt from a June 27th article in the Washington Post about this:

“Their fears were twofold, said Sue Vallenza, a 55-year-old bartender at the Pilot House in Kennebunk, Maine, who immediately began lobbying state legislators to overrule the referendum. Many servers feared the higher costs to owners would lead them to raise prices or cut shifts. And at a packed, 10-hour April meeting of the Maine Legislature’s Labor, Commerce, Research and Economic Development Committee, dozens of servers also said some confused customers were already tipping less.

Vallenza said she saw her hourly tips drop by more than $2 per hour, from the $20 to $30 per hour she made before.

“I don’t need to be ‘saved,’ and I’ll be damned if small groups of uninformed people are voting on my livelihood,” Vallenza said. “You can’t cut someone off at the knees like that.”

So, we’ll see… maybe Minneapolis servers will lobby the City Council to get an exemption.

Not Good For Low-Wage Workers:

These social engineers see nothing immoral about making it illegal for you to contract with another individual for their labor at a price both parties are willing to accept. The only thing minimum wage laws do is cause the less skilled workers to be unemployed.

And why does the government, at any level, have the right to mandate every employee be paid an arbitrarily derived living wage? Dispensing coffee or flipping burgers was never meant to support you, let alone a family of four. What fool ever thought that was the case? Is everyone entitled to living wage based on their own circumstance?

This rapidly expanding fight for a living minimum wage is hurting low-skill workers. The higher you push the cost of labor, the more affordable replacing technology becomes. Remember, a $10 restaurant wage translates to a cost of about 11.20 per hour due to employer taxes and workers’ compensation insurance. That’s not including any benefits like health insurance.

McDonals’ kiosks cost $60,000. That’s a one-time cost. The kiosk will work 24/7 and won’t sue you.

A Big challenge with remote employees is communication. Some managers fall victim to the “out of sight, out of mind” syndrome.

Having remote employees away from your main or corporate office is nothing new. With today’s technology however, it has become increasingly more prevalent.

Businesses are no longer forced to look in their local market for potential employees. As with most things in life, this can be both a blessing and a curse.

You can really expand your pool of qualified candidates if you’re willing to look beyond your local market, but hiring employees out of state brings additional challenges for HR, as well as the remote employee’s direct supervisor or manager.

Let’s take a look at some of the challenges you’ll face from hiring remote employees.

HR Challenges:

Conducting an interview for a remote employee may be a bit more challenging than a standard in-person interview. A telephone interview may be sufficient, however it’s difficult to get an accurate read on a potential candidate with out being able to see them. A video interview using a service such as Skype, may be a better solution if an in-person interview just isn’t possible.

After the interviews are conducted and the decision is made to hire a remote employee, the on-boarding process comes into play. Some companies may opt to have a newly hired employee come into the office for the first few days of employment for on-boarding and training purposes, even though they will ultimately be working remotely.

This is a great way to go if you can afford it. It’s an opportunity to properly introduce the new hire to their co-workers, as well as go through a proper on-boarding, where the employee learns about the company’s expectations and culture.

You may also find in-person training to be more effective than remote training.

If bringing out a new hire to your corporate location is cost prohibitive, then remote on-boarding is possible. Perhaps the most challenging aspect of remotely on-boarding a new hire is the completion of the Form I-9.

The U.S. Citizenship and Immigration Services (USCIS) requires the employment authorization documents to be physically examined. Because of this, you will need to utilize an authorized representative in the area of the remote employee to complete this process.

The USCIS states: “You may designate an authorized representative to fill out Forms I-9 on behalf of your company, including personnel officers, foremen, agents or notary public. When completing Form I-9, you or authorized representative must physically examine each document presented to determine if it reasonably appears to be genuine and relates to the employee presenting it.  Reviewing or examining documents via webcam is not permissible.”

One additional note to be aware of: “If an authorized representative fills out Form I-9 on your behalf, you are still liable for any violations in connection with the form or the verification process.” Your other on-boarding processes can be completed remotely such as benefits enrollment, delivery and explanation of employee handbook, explanation of company policies, etc.

Supervisor/Manager Challenges:

Managers are tasked with many day to day responsibilities. The most important task is managing their employees. It’s a difficult aspect of the job to begin with. Managing all the different personalities that make up their team. Making sure that you have a cohesive team that works well together and is productive is not always as easy as some may think.

Adding remote employees to the mix does not always make things easier. You may be able to avoid some of the day to day clashes between co-workers that maybe are not a great personality fit, but a new set of challenges may arise.

One of the biggest challenges when it comes to remote employees is the communication. Some managers fall victim to the “out of sight, out of mind” syndrome. This has happened to me. Not that I forgot that I had employees out of state, but that I would sometimes forget to communicate the same message to the remote employees that I just communicated to the team in the office.

Setting up a process for communication is a key element to managing a remote employee. Consider scheduling a weekly meeting where the remote employees join via phone, or a web video call to discuss important topics or projects. This will help the remote employees feel more like part of the team and also remind the office employees that they have team members away from the office.

Another challenge for managers is to make sure that the remote employees are being as productive as the office employees. Again, don’t let out of site, out of mind creep in. Are your remote employees getting all of the expected tasks done? If they are working from home, that could be a recipe for a lot of distraction that could effect their productivity.

I’ve had great remote employees and some not so great. Some of the great ones were actually more productive than some of my in-office employees.

Make sure you conduct periodic performance reviews and documenting those reviews. They will come in very handy if you find yourself needing to someday terminate a remote employee.

Terminating a remote employee can get tricky. You’ll want to make sure that your supervisor or manager is working closely with your HR team so it’s handled properly. Create a checklist ahead of time so you know exactly what actions need to take place and what equipment if any needs to be returned.

Ideally you will want to handle any termination in person. This will allow for easier retrieval of company property.

Again, if an in-person meeting is not possible, then you may conduct a termination via phone. You should refrain from ever terminating an employee via text. It’s very impersonal and unprofessional.

For a termination performed remotely where you also need to recoup company property, be careful to not withhold the employees final pay while you wait for company property to be returned.

It’s illegal, and in some states entitles your employee to three times the amount in damages.  Instead, pay the employee their final paycheck as required, and perhaps structure a separate severance payout based upon the successful return of company property.

Payroll Challenges:

Hiring remote employees also poses challenges for your payroll team.

If an employee is hired in a new state, then the payroll team will need to make sure that you have all of the proper tax accounts opened in that new state. This would be state income tax (if applicable), state unemployment tax, and in a few states you may have a state disability tax, and/or a local tax.

This adds additional tax payments and reporting every quarter. In addition, the payroll team will need to make sure they understand all of the local regulations for that particular state such as minimum wage, mandatory paid leave, etc.

I went over a few challenges to look out for and it makes it seem like I’m trying to talk you out of hiring remote employees. That not my goal here. If you can find a rock star employee that you must have on your team then it may well be worth fighting through these challenges. I have had some great employees that worked remotely and it was well worth working through any challenges that arose.

Nine million people lost their jobs in the Great Recession, and over 150,000 businesses shutdown.  Create a plan for dealing with it before it happens again.

I’ve spent 3 episodes teaching you what a recession is and what economic indicators you should be watching to signal danger. I’ve tried convincing you that we’re on the verge of another one, and that it’ll be worse than the previous “Great Recession”.

You should certainly care about recessions because they have a very real impact on your business. You might have forgotten the pain caused by the last one. You might not have been in business back then, or maybe you weren’t even in the labor market. You might have been in school and oblivious to the effects.

You might not like this subject or even believe we’re on the verge of another, more serious one.

Regardless, recessions are a reality, and another one will happen. In fact, if we are still in the post Great Recession expansion, then its the third longest expansion in our history. Only two other times have we gone this long between recessions.

About 9 million people lost their jobs in the Great Recession, and over 150,000 businesses shutdown.

So, you should have a plan for dealing with it before it happens. That way, when it does, and it will, you’ll know what to do. Whatever you do, don’t stick your head in the sand and wait for reality to punch you in the face.

New Recession Data:

Just since the last episode, an article in Schiffgold dated July 26th says:

“We have reported extensively on the stock market bubble, the student loan bubble, and the auto bubble. We even told you about a shoe bubble. But there is one bubble that is bigger and potentially more threatening than any of these.

The massive debt bubble.”

And the CEO of US Global Investors, Frank Holmes, writes in a July 25th article in Business Insider, that some people are calling it the “mother of all bubbles”.

He goes on to say that the Institute of International Finance (IIF), puts global debt at an astronomical $217 trillion as of the first quarter of 2017. That’s 327% of what the entire world produces in a year.

Global debt was “only” around $150 trillion back in 2008, and now, it’s at $217 trillion. So, in 10 years, the world has added about $120 trillion. That’s mind numbing!

Schiffgold reports that we Americans have racked up more than $1 trillion in credit card debt, and as of the end of 2016, the average credit card debt per American household was $8,377.

Consider this. If you add up the national debt, national unfunded liabilities and personal debt, that would be $446,540 per citizen! And if you took all the personal and business assets and sold them, each citizen would still be left owing over $38,000.

So… all this debt, has consequences.

HR’s Recession Plan:

Here’s how you should prepare for the next recession from an HR standpoint.

First, update your organizational chart, and keep it current. You should be reviewing and updating it monthly. You’ve gotta have a clear picture of the positions within your company, the hierarchy, and who’s working each one.

Then, update or create a detailed job description for each position. I go over how to create a job description in episode 2. Job descriptions are overlooked or neglected in most small businesses. The roles and responsibilities of positions in small businesses often change, and that’s one of the reasons why they aren’t maintained. It’s also one the reasons why they’re so important.

But don’t let that discourage you. If you review and update them monthly you’ll be surprised how helpful they are. They’ll help you know when it’s time to add new positions, change titles, and reassign the duties. At a minimum studying the job descriptions, as part of any change, will give you valuable insight.

Make sure you have recent performance evaluations and that whatever your employee review policy is, you’re following it. Check out episode 90 for the 411 on performance reviews.

Dust off your company’s operating procedures and update them. These will be worth their weight in gold when you have to reduce the workforce and redistribute the workload. You’ve got to get those processes out of everyone’s head and into one centralized location accessible to everyone.

You can use a software app like SweetProcess to create some amazing documentation, complete with videos… now that’s sweet!

Cross-train employees so important tasks can be done by more than one person. This has many other benefits, like:

• Better employee engagement and satisfaction as they’ll appreciate the opportunity, challenge and variety.
• less organizational stress from employees taking time off.
• A better understanding of your business due to fresh perspectives.

Make sure you have a system for keeping track of all the software applications being used, who has accounts and what their passwords are. You can use a program like Passpack which will give both you and your employees a centralized location which you can managed.

Develop an action plan for reducing the size of your staff. Go department by department and consider which positions will be affected the most by a loss of business. This includes a plan for how you’ll go about the actual termination. You need to pay close attention here so you’re not creating any undue discrimination liability.

Remember to focus on positions and job duties, not individuals.

Consider what you can do without, what can be outsourced for a lower cost, and what could be automated. This will help you reorganize, consolidate and eliminate positions.

And finally, my recommendation is that you be open with your employees about what’s happening. Once you know it’s time to take action and you’ve developed your plan, let everyone in the company know what’s going on. The last thing you want to do is create company-wide panic and have the rumor monger running wild.

This is part of the business cycle… part of life, and it can make your company stronger if you’re prepared. Companies large and small are affected so you’re definitely not alone. Only government can ignore reality… although, not forever!

If you don’t take HR seriously, no one else in your company will either.

I know you are serious about your business. You’re serious about the work that you do to service your clients. Are you carrying this seriousness over to your own employees? You want, and frankly need, your employees to be your biggest asset and not become your biggest liability.

Today I want to focus on a  high profile company that has not taken HR matters seriously and it has finally caught up with them and has shaken the make up of that company. If you have paid any attention to HR news lately then I’m sure you have heard about the issues going on at Uber.

Uber of course is the ever popular ride sharing company that has helped revolutionize the transportation industry with it’s easy to use mobile app that allows riders to schedule a ride and pay for it without having to exchange physical cash. The app is tied to the riders credit card in order to ensure payment.

Ubers HR Issues:

Uber has suffered massive negative effects to their public image recently due to poor HR tactics and company culture. Their issues have been well documented and are somewhat perplexing due to the length of time in which the culture that created their problems have persisted.

Details of Ubers culture, which some have dubbed a “frat-boy” culture, began to come to light for the masses in 2017 when a former employee named Susan Fowler published a blog post titled “Reflecting On One Very, Very Strange Year At Uber.”

In the blog post Susan Fowler describes an alleged event of harassment and how Uber responded to her report. The post reads “After the first couple of weeks of training, I chose to join the team that worked on my area of expertise, and this is where things started getting weird.

On my first official day rotating on the team, my new manager sent me a string of messages over company chat. He was in an open relationship, he said, and his girlfriend was having an easy time finding new partners but he wasn’t. He was trying to stay out of trouble at work, he said, but he couldn’t help getting in trouble, because he was looking for women to have sex with. It was clear that he was trying to get me to have sex with him, and it was so clearly out of line that I immediately took screenshots of these chat messages and reported him to HR.”

Susan then goes on to describe her interactions with Uber HR saying “Uber was a pretty good sized company at that time, and I had pretty standard expectations of how they would handle situation like this. I expected that I would report him to HR, they would handle the situation appropriately, and then life would go on. Unfortunately, things played out quite a bit differently.

When I reported the situation, I was told by both HR and upper management that even though this was clearly sexual harassment and he was propositioning me, it was this mans first offense, and that they wouldn’t feel comfortable giving him anything other than a warning and a stern talking to. Upper management told me that he “was a high performer” (i.e. had stellar performance reviews from his superiors) and they wouldn’t feel comfortable punishing him for what was probably just an innocent mistake on his part.

I was then told that I had to make a choice: I could either go and find another team and never have to interact with this man again, or I could stay on the team but I would have to understand that he would most likely give me a poor performance review when review time came around, and there was nothing they could do about that.”

If everything in Susan Fowlers account is accurate, then Ubers HR team did not appear to take this matter as seriously as they should have. You could argue that the HR teams response to this incident is a direct result of the culture created at Uber.

The Miami Letter:

An email that recently surfaced from a 2013 company event in Miami sheds some light on what culture had been cultivated at Uber. In the email now known as the “Miami Letter,” Uber CEO Travis Kalanik laid out the DO’s and DON’TS for the company event in 2013.

In the email, and I’ll restate that this is coming from the CEO of Uber, Kalanick suggests that attendees, in this case employees, should not “throw large kegs off of tall buildings.”  He also states that “No lives should begin or end” at the event. If you happen to imbibe a little too much “There will be a $200 puke charge for any public displays on the Shore Club premises.”

But perhaps the most curious “don’t” item in the email “Do not have sex with another employee UNLESS a) you have asked that person for that privilege and they have responded with an emphatic “YES! I will have sex with you” AND b) the two (or more) of you do not work in the same chain of command. Yes, that means that Travis will be celibate on this trip. #CEOLife #FML”.

Now, did I happen to mention that this email came from the CEO of Uber prior to a company event? Maybe it’s just me, but if you have to send an email like this before a company event, perhaps you should re-think your event. I know, I’m a lot of fun at party’s! Again, this email or letter to employees from 2013, again from the CEO goes to show you that company culture is dictated from the top.

This culture cultivated by the CEO ultimately ended up costing him his job as he was forced to resign after investors applied pressure for a change in an effort to restore the company’s image.

These two examples of poor HR management are only a small sample of the alleged issues going on at Uber. Taking a serious approach to HR is vital for your business. You want to protect your employees as they are your biggest asset. This in turn will protect your company’s image.

 

Yahoo Finance reported in 2016 that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy.

In parts 1 and 2 we learned that a recession is a significant decline in economic activity spread across the economy, lasting more than a few months. We also learned there’s NOT a consensus among economists about how to calculate if we are in one.

Besides, all the major players, using the traditional measures, missed calling the last recession… the Great Recession.

So it’s probably a good idea to look to those who did call it, and see what measurements they take. I’ve been calling these non-traditional recession indicators.

In this episode we’ll wrap up the argument… the argument being that we are very close to another recession, and that this one will be much worse than the last one, by looking at a few more “measuring sticks”.

Retail Store Closings:

A huge slowing in consumer credit is contributing to the slowdown in retail sales. Major brands are shutting down more than 4,000 stores this year. Many of these are the result of bankruptcy.

Business Insider calls it a Retail Apocalypse. In a March 23, 2017 article, Kate Taylor says “Walking through a mall in 2017 is like walking through a graveyard.”, and she provides some disturbing photographic evidence.

She also points out that visits to malls have declined by 50% from 2010 to 2013, according to the real-estate research firm Cushman & Wakefield. Fifty percent! That’s crazy!

In The Atlantic, Derek Thompson provides 3 reasons for this. A shift to online retail, too many malls were build, and a shift in spending from retail to meals and entertainment.

So is this just a shift in spending methods and preferences, or a sign of economic slowing?

It’s both. We’ve all changed the way we buy, but we’ve also borrowed a lot of money to make those purchases.

Auto Loans:

After record auto sales in 2015 and 2016, auto loan delinquencies have reached their “Great Recession” peak, but we’re not in a recession. Auto sales are down in 2017 even though interest rates are low and manufacturers are offering huge discounts.

Loan delinquencies of poor credit borrowers have reached the same level they were in 2009. But again, we’re not in a recession. So why does this matter?

Well, Casey Research looked at the S&P 500’s performance in relationship to auto sales. The S&P 500 is a measure of how the stock marker is performing. Since 2010, these two measurements have moved almost in sync with one another. So if that relationship continues, you can expect a sharp decline in the stock market to follow.

Stock Market Valuations:

Speaking about stocks. They are (in general) greatly overvalued. The stock market is in a major bubble right now.

According to Marc Faber, valuations are super high and earnings are not real. He says they’re overstated.

Yahoo Finance reported in 2016 that 93% of the entire stock market move since 2008 was caused by Federal Reserve policy. In other words, they printed a ton of money.

Robert Shiller, a Nobel Prize winning economist created a CAPE ratio that measures stock values (a modified price/earnings ratio), and according to it, there’s only 2 times in history where the stock price to the company’s earnings has been higher, 1929 and 2000. Of course 1929 was the Great Depression and 2000 was the doc com blow up.

Other Voices:

Mike Maloney has an awesome video about the different bubbles that he says are flashing “big signs of the beginning of the next “Greater Recession”.

It’s even come to the point where the “financial elite” are coming out and publicly saying the stock market is skating on thin ice. You just have to know where to find their comments.

For example, Jim Rickards posted in the Daily Reckoning that Mohamed El-Erian (a former deputy director of the International Monetary Fund and president of the Harvard Management Co.) doubts the current bull market in stocks will survive if the Federal Reserve, the European Central Bank (ECB) and the Bank of England don’t print more money.

“He says stocks rose on a sea of liquidity and they may crash when that liquidity is removed.”

Rickards also wrote that the CEO of the Government of Singapore Investment Corp. (GIC)  said “valuations are stretched, and policy uncertainty is high”. He goes on to say investors are being too complacent.

Well, it’s taken 3 episodes to lay the groundwork. I hope this has helped open your eyes to the fact we’ve got a shaky economy right now, and it’s going to get a lot worse. So, it’s a good idea to prepare your company for the inevitable.

On episode 144 we’ll see what you can do to prepare from an HR standpoint.

I’ve got a lot of links to videos in the show notes, so if you’ve never looked at the show notes… make this the first time you do! I promise you, if you’re even the least bit interested in this subject, you’ll love these resources.

Even though Form I-9 revisions seem insignificant, failure to comply can result in fines.

Today we’re going to focus on some changes that have recently been made to the Employment Eligibility Verification Form I-9 by the U.S Citizenship and Immigration Services.

Overview of Form I-9:

The Form I-9 has been in use since 1986 for the purpose of verifying the identity and work authorization of individuals hired for employment in the United States. This was all made possible by the passing of the Immigration Reform & Control Act. All U.S. employers must ensure proper completion of Form I-9 for each individual they hire for employment in the United States. This includes citizens and non-citizens.

Both employees and employers must complete the form. An employee must attest to his or her employment authorization. The employee must also present their employer with acceptable documentation confirming their identity and authorization to be employed in the United States.

The employer then must review the employment eligibility and identity documents presented to them by the employee to determine whether the documents appear to be authentic. The employer should then record the document information on the Form I-9.

The list of acceptable documents is located on the last page of the form. The employee can present a single item from List A, or present one item from each of List B and List C. Employers must retain Form I-9 and make it available for inspection or audit by authorized government officials.

Revisions to the Form I-9 is nothing new. The form has been modified numerous times over the years. These most recent revisions were just published this week so this information is hot off the press! Employers may continue to use the prior version of Form I-9 showing a version date of 11/14/16 N until September 17, 2017. After this date however, employers must start using the most recent version just released showing a date of 7/17/17 N.

There’s no need to wait until the last minute in September though. The new form is available now and you can get it by going to USCIS.gov and downloading the Form I-9.

Changes to Form I-9:

So what has changed?

First, off let me just mention that here at SmallBiz Brainiac, we just love the topic of employment eligibility and the I-9. We love it so much that we have recorded numerous episodes previously regarding the Form I-9 process. Please don’t hesitate to go back and listen to episodes 31, 76, 120, 129 for more information about the I-9 process.

Now, focusing on the newest revisions to the Form I-9, what has changed? The changes to this version of the I-9 for the most part are just minor changes:

• • The new form will modify the forms instructions to remove the phrase “the end of” when describing the day on which Form I-9 completion is required. It now reads: “Employees must complete and sign Section 1 of Form I-9 no later than the first day of employment” instead of reading “no later than the end of the first day of employment.” So there you can see that “the end of” has been removed.
  
  

• • A revision to the name of The Office of Special Counsel for Immigration-Related Unfair Employment Practices. That name has been changed in the I-9 instructions to reflect the new name, Immigrant and Employee Rights Section. This change is found only in the 15 page Form I-9 instructions booklet and is not referenced in the 5 page Form I-9 itself.
  
  

• • The List of Acceptable Documents for Form I-9 has been changed as well.
  
  

• • The Consular Report of Birth Abroad, Form FS-240 has been added as a valid document under list C and is acceptable to confirm employment authorization. Employers completing Form I-9 on electronically will be able to select Form FS-240 from the drop-down menus available in List C of Section 2 and Section 3. Also, if you happen to utilize E-Verify, you will now be able to select Form FS-240 when creating a case for an employee who has presented this document as identification Form I-9.
  
  

• • The newly revised Form I-9 combines all the certifications of report of birth issued by the Department of State, Form FS-545, Form DS-1350 and Form FS-240, into List C on Form I-9.
  
  

• • All List C documents have been renumbered except for the Social Security card which is listed as number 1 on List C in the newest version, as it was in the last version. All other items still on List C will have a different number on the new version when compared to the old version.
  
  

There you have it, just a handful of minor changes. Nothing earth-shattering to this most recent revision of the I-9.

Again, just to re-iterate, although you will be able to use the previous Form I-9 through September 17, 2017 it makes sense to make the change now. Get rid of all those pre-printed old version forms and begin using the updated version today.

The form is free and can be printed from the U.S. Citizenship and Immigration Services website by going to www.uscis.gov and searching for the Form I-9 link. Instruct your hiring managers and human resources department to download the new version of the form and start using it for all new hires going forward.

Even though the changes to the Form I-9 may seem insignificant, failure to comply by the deadline in September can result in significant fines.

Immigration and Customs Enforcement announced increases in the fines for Form I-9 violations last year so try to avoid the fines at all costs.

The Federal Reserve has injected over $4.5 trillion into the economy to speed up the recovery from the Great Recession of 2008. In Part 1 we learned a recession is a significant decline in economic activity spread across the economy, lasting more than a few months. We also learned there isn’t a standard formula you can apply…