In Part 1 of this post, we talked about how it’s possible a business could have employees without realizing it. When you think you’re hiring an outside contractor, but the terms and conditions of the work don’t fully take into account the criteria for independent contractor status, you could end up with “surprise employees.” Unfortunately, this can be an expensive mistake!
The correct documentation could save your cookies. Let’s talk about documentation you should have on hand when you set out to hire workers.
Avoiding the “accidental employee”
As I covered in Part 1, there’s no “bright line” as to when a worker stops being an independent contractor (IC) an slides over into being an employee. To minimize the chances of worker misclassification, having a well-written contract is key. This contract should spell out the expected deliverables, any required performance standards, and the terms and conditions of the job to be done — including specifying that the worker has been retained as an independent contractor.
In fact, a contract is almost mandatory if you want to be sure a worker will be classified as an IC.
But if you’ll recall from the previous post, simply stating that a worker is an IC is not enough. Unless the terms and conditions of the work meet the criteria for IC classification, the worker is presumed to be a regular employee. Interpreting the criteria is often tricky and extremely fact-specific, and the applicable rules and regulations are subject to change at any time. This is why having an experienced employment law attorney review this contract is vital. Seriously — this is no time to try to “roll your own.”
But what if I actually want to hire employees on purpose?
Before you hire your first “real” employee, here are three important documents you should have on hand. It’s a good idea to have an experienced employment law attorney look these over before you use them “in real life” to make sure they cover all the bases.
- Job Descriptions: You need an accurate and detailed job description for each position you seek to fill. Why? Job descriptions set standards for performance. They help you document equal pay for equal work. If an employee requests accommodation under the Americans with Disabilities Act (ADA) or Family Medical Leave Act (FMLA), a good job description is vital to document the essential requirements of the job. And, of course, all your job descriptions should be kept up-to-date, revising them any time the requirements or conditions of the job change.
- Employment offer letter: The letter should confirm the details you worked out during the interview process, such as the new hire’s expected start date, their starting salary, and their job title. If you agreed to any special work provisions or benefits — such as additional vacation time, a sooner-than-normal salary review, a contractual minimum employment period or an agreement you will not terminate the employee unless they fail to meet agreed-upon performance standards — these should also be spelled out. And (assuming there is no negotiated agreement otherwise) the letter should contain a provision reiterating that employment is at will and can be terminated at any time, with or without cause.
- Employee Handbook: This should contain your harassment, discrimination and retaliation policies (Pro Tip: none of these should be tolerated) plus information on how employees can report incidents, information about benefits and time-off policies, as well as other employment provisions. These could include policies about personal use of company equipment, social media policies, and the like. If your employees are not covered by a contract stating otherwise, the handbook should contain a statement confirming their “employment at-will” status. Just be super-duper-careful none of your policies discourage or prohibit employees from engaging in “concerted activity” covered by the National Labor Relations Act. Even if your workplace is NOT unionized, some activities are still legally protected. (This is where it can get really tricky, and really important to have a lawyer review the document before you start using it!) And finally, the handbook should include a sign-off sheet indicating the employee has received and read the entire document.
Keep your employment law attorney on speed-dial
Whether you’re new to the whole “being an employer” thing, or you’ve been running your own business and managing employees for years, it pays to keep an experienced employment law attorney close at hand.
Of course, workforce management solutions such as the AcroTime suite can help ensure your time tracking, payroll processing and personnel documentation are accurate, complete and consistent. Since it’s based in the cloud, the software is automatically updated, helping keep you up-to-date with the latest developments. But what with all the various federal and state agencies with jurisdiction, and the constantly changing nature of the applicable laws and regulations, it’s tough for employers to keep up with all the nuances. Professional quality software like AcroTime can make the job way easier, but no software can substitute for a detailed review by an experienced attorney.
Violations of employment law can be expensive and time-consuming to defend against. Spending a little bit of time with your employment law attorney up front can save you big bucks down the road.
What about you? What do you consider “must haves” or “must do’s” when you’re getting ready to hire a new worker?