People's Law Guide
SMALL EMPLOYERS: “HOT” ISSUES IN HIRING & STAFFING
Although owners of smaller businesses often “wing it” when making decisions, the risks and costs are too high to do so on matters involving hiring and staffing issues. This “Hiring & Staffing Checklist” contains information on selected issues of importance for smaller employers:
It’s a good idea to purchase an application which was prepared by a publishing company or Human Resources organization familiar with federal and state employment discrimination laws. Questions appearing in applications prepared by “lay persons” not familiar with employment law practices often run afoul of anti-discrimination laws. Rather then “guess” which topics you are and are not permitted to inquire about, it’s best to purchase pre-printed employment applications that have been screened for legal compliance instead of developing an application of your own which may violate anti-discrimination laws which could subject you and your business to stiff fines, penalties or costs.
Pre-Employment Background Checks:
Customers, clients and employees can and do sue businesses which fail to adequately screen the staff members they hire. Insurance carriers and knowledgeable employers recognize “red flags” for potential claims for “negligent hiring” when learning applicants have been convicted of criminal offenses involving DUI, violent crimes, certain traffic-driving offenses, and theft crimes or were accused of discrimination or harassment at prior workplaces. Although Federal and Florida law does not require it, some employers require applicants to sign a “waiver & hold harmless agreement” indicating their consent to participate in a pre-employment screening process. Some employers perform credit checks, but doing so requires strict compliance with Fair Credit Report Act restrictions.
Florida’s minimum hourly wage increased to $6.79 on January 1, 2008, which is above the amount set by federal law. For employees receiving tips, employers needed to boost hourly pay to $3.77 on the same date. Minimum wage increases next go into effect on January 1, 2009. Federal law requires most employers to pay 150% of an hourly wage (time and a half) for all work performed in excess of 40 hours per week. Failure to pay these requirements often leads to lawsuits filed by governmental agencies or private attorney representing employees. Penalties and other expenses for non-compliance with wage and hour laws are significant. Wrongful classification of workers as “independent contractors” subjects employers to these and other substantial penalties. Non-governmental employers are prohibited to compensate workers with time-off or “comp time” in lieu of paying time and a half pay rates.
Too often, employers wrongly label workers as independent contractors, in improper efforts to reduce costs for payroll, health insurance and taxes. The Internal Revenue Service and U.S. Department of Labor each has their own set of “tests” to determine when workers qualify for independent contractor status. Here are some of the factors, though not all, which are likely to determine if workers may lawfully be considered independent contractors:
- If the employer sets the work hours or arranges the order in which assignments are to be performed;
Employee Manuals / Handbooks:
As their number of employees grow, businesses should consider “formalizing” rules and procedures. Most businesses are well served by obtaining an “off-the-shelf” employee manual/handbook from a recognized publisher of Human Resources materials. Determining “which” employee handbook/manual to select is often a decision which is easier and less significant than deciding when to start making use of these material. Utilizing “formalized” procedures while the business is still “too small” could create legal liability when none would otherwise exist. Failing to make use of employee handbooks/manuals and other formalized procedures after a staffing growth curve may expose a business to risks which could be minimized by making use of well-established practices and procedures. Also, the number of employees working for the firm triggers which staffing laws must be adhered to. It’s a good idea to confer with an experienced employment law attorney regarding the implementation of employee manuals/handbooks and also discussing which laws your firm is obligated to follow.
Paperwork for Employees to Complete:
Each employee must fill out IRS Form W-4 designating their withholding allowance. Also, all employees must complete Form I-9 for employment eligibility verification. The Department of Homeland Security requires employers adhere to a “reasonableness” standard when verifying employment eligibility requirements. Employers can be held civilly and criminally liable for failing to notice facts and circumstances which “reasonable care” should have led to knowledge of unauthorized employment of aliens. However, exercise caution because an applicant’s or employee’s foreign appearance or accent is not a relevant factor in making this assessment and consideration of national or ethnic origin and accents could lead to liability for unlawful discrimination in staffing.
A number of employment laws permit government agencies and individually filed private lawsuits to target the personal assets of owners and managers. Even if the business was to be depleted of assets or to file for bankruptcy, claims that certain laws were violated permit recovery to be sought against owners and decision makers in their individual capacities.
Unemployment Insurance & Compensation:
Many employers have erroneous beliefs about Florida’s unemployment compensation system. You should be aware of the following:
-The employer’s liability is not limited to the amount of money the worker receives for unemployment compensation. Employees do not pay any part of the unemployment tax and employers are prohibited from making payroll deductions for this purpose. Newer employers who have made fewer than eight quarterly payments pay 2.7% of the first $7,000.00 of each employee’s wages into the unemployment compensation system. For assessment purposes, wages include bonuses and the cash value of non-cash remuneration. Larger payments are assessed against longer established employers based upon the number of unemployment compensation claims charged against them. Typically, it is less expensive to retain the services of an experienced employment law attorney to provide legal representation at an unemployment compensation claims hearing than it is for the employer to pay the additional costs of being “charged” for another unemployment compensation claim. After a qualifying period, employers with a “stable employment history” receive credits in the form of a reduced tax rate.
-The firing of an employee does not automatically subject an employer to become responsible for unemployment compensation sought by the terminated worker. In Florida, employers are not held liable for unemployment compensation for employees who have demonstrated a wilful and wanton disregard of an employer’s interests. If a preliminary review by Florida’s Agency for Workforce Innovation determines that unemployment compensation should be paid to the worker, the employer has a brief period of time to file a challenge, which triggers the scheduling of an unemployment compensation hearing, which is in effect a “mini-trial”. Attorneys are permitted to provide representation at these hearings, for purposes of asking “friendly” questions to their clients, cross-examining the opposing side, making objections, and presenting a closing statement by summarizing legal precedents and case facts. Also, employment for a brief period lasting less than a duration set by the Agency for Workforce Innovation won’t cause the employer to be charged for an assessment.
-A classification as an “independent contractor” does not automatically restrict an employee from receiving unemployment compensation benefits. The Agency for Workforce Innovation will look at the overall circumstances surrounding the employment relationship to determine if there was a mis-classification of status. A determination that the work relationship was more like one of employee-employer than that of an independent contractor will cause the employer to be charged with an award determining unemployment compensation payments were due to the employee.
It’s Not Expensive to Obtain Preventative Advice:
You likely realize the importance of having a physician perform a medical check-up from time to time. Your business’ future and assets are worth safeguarding, too. An employment law attorney will likely be able to answer most or all of your questions in an hour or so and perform a “routine check-up”/assessment on critical business practices in under a few hours of time. Costs for a “problem-prevention assessment” are low, especially in comparison to expenses incurred if your business is sued by a private attorney or targeted with a governmental audit/investigation.