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Small businesses with lean management structures often struggle with the cost containment, administration, and time management of business practices.  Daily obstacles include managing insurance and liability policies, unemployment claims, payroll processing, tax filings, and general human resources processes such as staffing and performance management.

Take for instance the situation of Elite Cleaning Service (ECS) of Philadelphia, PA. ECS started out of Joe’s basement with his wife, three sister in-law’s and brother.  Within 6 months, he grew out of the basement and started renting office space.   After some additional business and staff growth, he secured a significant contract with a major bank requiring he hire 10 more people, fast.

Reality set in that he needed help.  In addition to assistance with hiring, he needed job descriptions, workplace rules, leadership training, formalized payroll processing and direct deposit options, some affordable but competitive benefits, wage and hour training, and his worker’s compensation claims and policy renewals were coming to a head.

He did not have the resources to employ dedicated administrative staff to handle the logistics of personnel and business administration; he needed to free up his own time to focus on strategic matters and sales; and, ECS was growing large enough for Joe to feel the increased pressure of his businesses’ liability and risks.

Joe’s headaches are common for growing small businesses, but he found the solution in an increasingly popular relationship: He elected to partner with Professional Employer Organization.

Professional Employment Organizations (PEOs) provide a one stop solution for outsourcing resources and increased purchasing power.  They may have started with simple payroll processing, but PEOs now provide a wider scope of services for some 180,000 small and mid-size companies across the U.S.

How The PEO Relationship Works

The PEO relationship is that of co-employment, with the PEO taking on the role of “employer of record”.  The small business is still an employer, however, and maintains a span of control over its staff, able to make day to day decisions on new hires, promotions, compensation programs, internal procedures, job duties, disciplinary actions, terminations. etc.

The PEO Advantage

Increasingly, franchises seeking brand uniformity for business and policy administration sans their own co-employment conflicts, are discovering and partnering with PEOs.  A PEO offers HR Business Consultants who can work with various franchisees in multiple states to provide an “instant HR infrastructure”, able to craft polices and culture behind the scenes that can be delivered independently by franchise owners to their staff.   This avoids the inconsistencies that evolve when individual franchisees attempt to start from scratch, allocating personnel or HR responsibilities to in-house staff with varying degrees of skill and knowledge and without the benefit of interacting with other franchise locations to build a consistent image.

That same “Instant HR” concept is especially appealing to businesses that are just getting started.  Before the organization has even started staffed the first employee, resources such as handbooks, time and attendance policies, pay policies, and internal employment practices can be ironed out, or are very quickly available, as new needs or questions present themselves during the business’s growth. An added feature, usually only affordable for larger businesses, is access to senior HR professionals equipped to expertly coach leadership on topics ranging from organizational development; performance management; handling difficult conversations; or guidance while facing internal complaints and associated investigations.

Mindy Flanigan, CIO and Owner of HR consulting firm Inspiring HR, assesses the monetary value for the time spent on basic HR Consulting services inclusive in her company’s PEO partnership to be $1,500 to $2,000 out of the gate to a new client needing a handbook and basic forms.  The return in investment grows exponentially if the client leverages the HR Consultants for wage and hour compliance coaching, performance management, and employer relations problem solving to mitigate legal entanglements.

An important area of operational alignment: Small business owners value simplicity and its impact on time management.  PEO payroll administration delivers on this concept as it allows one simple payment by the business per payroll cycle so that payroll is accurate, on-time, and covers all liability.

According to Daniel Mormino, senior vice president, at PEO INFINITI HR, “we shield each owner from employer related liability, ensuring the employer does not focus additional time or resources on non-revenue generating work”.  This is accomplished by providing teams dedicated to loss-control services such as business insurance, often taking on the lion’s share of the deductible and liability for claims or charges.  Additional support may include claims management of Unemployment and Safety cases, and managing work place incident reporting – all designed to minimize cost.  As part of risk management, the business can also look to the PEO to provide guidance on safety policies and the creation of safety manuals.

Through the shared pool of employees across its client base, PEOs have greater negotiation power, which allow small businesses greater access to benefits at a lower cost.  The complexity of benefits administration is reduced by access to one point of contact versus multiple providers when there are questions. Small businesses see the return on investment yet again, by having a competitive and affordable benefits package to attract new hires and retain current workers.

Looking Ahead

The bundled PEO resources are very appealing for any small business wanting to avoid the hassle of multiple vendors with inconsistent messages, and the efficiency can translate into improved business survival.

In September of 2016 a report by McBassi & Company and The National Association of Professional Employer Organizations examining a 2014 comparison between businesses using PEOs compared to national data available from the Bureau of Labor Statistics stated, “the employee turnover rate for PEO clients was 10 to 14 percentage points lower per year than it was for comparable companies in the U.S. overall: 28 to 32 percent annual employee turnover for companies that used PEOs for at least four quarters, compared to approximately 42 percent for all companies.”  In addition, they found that “businesses that used PEOs for at least four quarters are approximately 50 percent less likely to permanently go out of business from one year to the next when compared to the overall rate for similar private businesses in the United States.”

A realization this uncovers in the HR realm is that there has been a parallel maturing of the HR Profession and the PEO industry for over 20+ years.  PEOs once believed that outsourcing HR largely meant asking the Payroll Specialist some wage and hour questions while HR was regarded as the “personnel” paperwork pushers.  Neither sit in those spaces any longer.  HR’s reputation of adding value to any size business continues to improve; thus more businesses are interested in HR support.  As PEO’s compete for clients, the overall HR Consulting experience that can be delivered directly affects their sales and client retention efforts.  Thriving PEOs now understand that a comprehensive and quality client service experience must include dedicated access to experienced HR Consultants who can personalize service & support per client.

Click the link to view the recent INFINITI HR blog: Responsible Alcohol Use Policies at Work or check back for more on human resources, payroll, insurance and benefits.

When business as usual involves reporting to the same location every day, employee travel isn’t a subject that may come up very often.  When it does, whether it is a short trip a mile away or overnight travel, it raises questions.

What exactly is an employer required to pay for? What about travel time for hourly employees?

Sending your employees anywhere offsite, no matter the distance or time spent, will incur expenses. In terms of tangible items purchased, or paid services, if you do not provide a corporate credit card, these will be out-of-pocket for your employees who travel. While some of these expenses may be tax-deductible for employees if their employers do not reimburse them, there are many limitations to what they can actually deduct at tax time. Keep in mind that some states, like California, require that companies reimburse all out-of-pocket expenses incurred while doing business (with reasonable limits) offsite. If employees are traveling on behalf of your company, a best practice is to simply reimburse them for what they have spent while doing so.

Some examples of common travel expenses are:

• Airline and train tickets (including change fees if company plans prompt a change to travel plans), baggage fees, and tips up to a certain percentage
• Car rental fees (if your company requires your employees to purchase the rental insurance, this is also a reimbursable expense) and gas
• Taxi or bus/shuttle fares
• Parking fees
• Hotel accommodations and wi-fi charges
• Dry cleaning expenses for trips of a certain length
• Meals
• Mileage (if employee’s personal car is used)
• It is recommended that mileage be reimbursed at the standard IRS rate (54.5 cents a mile for 2018) or, if a company desires to do so, at actual cost

An accountable travel expense policy where employees submit actual expenses for reimbursement versus a flat “travel stipend” amount is recommended to avoid your employees having additional income added to their W2s.

What if employees spend money during their off time? Are there any expenses I am not required to reimburse?

There are limits. There is no law that requires you to pay for spa treatments, concert tickets, extravagant meals or other expenditures that occur during downtime on a business trip. A comprehensive Business Travel Policy will assist your employees’ understanding about what is and is not reimbursable. Non-reimbursable expenses may include:

• Upgrades to flight seating or charges for in-flight entertainment systems
• Travel change fees if not due to business reasons
• Parking tickets or tickets for moving violations
• Meal costs over a reasonable limit
  • Employers should consider geographic location cost differences when determining what a reasonable limit may be. Dinner out in large cities, for example, will likely be more expensive as a rule than it would be in other parts of the country.
• Charges for alcohol
• General sightseeing and shopping expenses
  • If an airline loses an employee’s luggage, you may want to consider reimbursing for reasonable replacement of clothing and toiletries purchased for purposes of completing the business trip
• Room upgrades, in-room movie rentals and honor bar charges
• Room service if not one of the standard daily meals. (The cost of ordering a pizza via room service three hours after dinner may not be reimbursable unless required work projects dictate a later night)
• Charges for treatments in hotel spas or fitness classes
  • If the hotel where the employee is staying has required “resort fees” that are automatically added to the bill, these should, as a rule, be part of what is reimbursed

Business travel policies should not only outline what is, and is not, reimbursable and how to submit expenses. If the company has a preferred hotel group, airline or travel agency that should be used, this information should also be included in a travel policy, as well as any documentation/explanation required for going outside of the preferred vendors. If there are different tiers of travel expenses allowed based on title and/or job level (i.e. executives may fly first class for long trips) these details should be listed in the policy as well and applied consistently.

As another best practice: Submitted expenses should have a quick turnaround for approvals and processing and be reimbursed in a reasonable amount of time.

What about pay for travel time for hourly employees?

Non-exempt employee travel is tricky as the wage rules vary by state.

From a Department of Labor (Federal) standpoint, compensable hours for non-exempt employees while traveling as a passenger (in a plane, bus, train, car, boat) are generally only those that fall during regular work hours.  If the employee, on the other hand, is required to do the driving, this would be considered compensable time.

In California, however, all travel time (whether the employee is a passenger or active driver) is compensable less an employee’s regular commute time. Please note that actual in-the-air or on-the-road travel time can be paid at state or local minimum wage unless actual work is being performed during that time (i.e. an employee answers emails and/or works on a presentation while on a flight.)

Any meetings or required activities outside of work hours are generally considered compensable – state and federally – at local overtime rates.

Important to note: Even while offsite, any state or federal meal/ rest period and overtime rules still apply and non-exempt employees should carefully track their time while traveling.  If employees travel out of state, check wage and hour laws for days spent at that location. More than likely those are the laws that should be followed.

As for shorter day trips – regular commuting, errands, travel to a local conference, it comes down to employer control and state law.

• If George, an hourly employee is asked to stop and pick up supplies or refreshments on the way in to work, George may be owed for all or part of that time.
• If you require hourly employees to take a company-provided shuttle to work, that time spent in the shuttle may be considered work time.
• If Jenny reports to her regular work location in the morning and leaves for a conference at 10 a.m., finishes the conference at 2 p.m. and returns to work, the time spent traveling to and from the conference may be compensable in all states as it occurs during work hours. Alternatively, If she leaves the conference at 5 p.m. and goes straight home, if the time it takes for Jenny to get home is longer than her usual commute you may owe travel time for the difference.
  • This works similarly if employees need to travel to multiple clients or locations throughout the day.

As travel is a sometimes necessary cost of doing business and remaining competitive in the market, developing a Business Travel Policy is essential to keep control of those costs and guide employees on how best to manage their travel plans and expenditures.

A close eye on wage and hour laws will also assist in ensuring your hourly employees who travel are paid appropriately as well.  The following sites provide additional guidance:  IRS & Mileage Rates; California Travel Wage Requirements;  and Department of Labor Fact Sheet: Travel Pay.

Click the link to view the recent INFINITI HR blog: The Decline of Classroom Training or check back for more on human resources, payroll, insurance and benefits.

Don’t tell them… show them:  Job Previews and other Assessment Options

Ever walk through an office space on the way to an interview and see the glistening hallways, large modern bouquets on the reception desk and hushed, state-of-the-art conference rooms? Someone brings in croissants and fruit on glass platters, asks if you want a cappuccino.  The interviewers are in dark suits, have slick business cards and gleaming attaché cases. Everyone is amiable but professional.  Smiles and handshakes abound.

“Wow,” you think.  “I would love to work here.”

It may be a bit of a letdown on your first day to be escorted past the beautiful reception area, past the sleek conference rooms and through a side door, into the area where the employees actually do their work. White and gray walls, printers and fax machines. People are yelling directions at co-workers down the hall, phones are ringing off the hook, and a very stressed-looking person in jeans comes at you with a stack of paper to fill out before dashing into a meeting where the door is closed and blinds are drawn.

Not quite what you expected.

While giving a good impression of your company is a high priority when someone is interviewing for a job with you, an interview really doesn’t create an accurate picture of what the workday will be like. It also doesn’t give you any idea of how your interviewee will fit in to the work environment as candidates are also usually showing you their best, most accommodating side of themselves to get the job.

So, how can employers reveal what’s behind the curtain in order to try to avoid some unpleasant surprises once a candidate becomes an employee?

Beyond a recruiting process that accurately represents your brand and culture, a job preview or trial period may do the trick.  Both are ways for candidates to see what a few hours on the job is really like as well as good methods for the company to use in assessing how the candidate may do in a job situation. To ensure that this “on-the-job” sneak-peek doesn’t put you afoul of labor laws or open you up for liability, here are a few things to keep in mind:

1. Pre-hire, keep it preview-only. Whether the position the candidate is trying for is manning phones in a call center, entering data or cooking in a kitchen, it is important to note that during this “audition”, there should be no work done that benefits the company.  In other words, a candidate can’t take actual calls in a call center but can take several “fake” calls in a simulated environment to see how he or she handle different situations in real time. Data entry ability can be assessed in a test format if it’s not data that can later be used. Otherwise, you will probably owe wages for any time “worked” – before they are even hired.

Most realistic job previews consist solely of observation, with the company’s interviewer using the opportunity to gauge the candidate’s interaction and communication style with the people they meet and assess engagement: Did the candidate keep checking their phone during the observation period? What questions did they ask? When asked, what takeaways did the candidate seize? Was the candidate able to describe key points or priorities that should have been evident in their observation or discussions with others? Here’s your chance to confirm if they are paying attention to what matters to the organization.

2. Keep the cooks out of the fully-operational kitchen… until you do your due diligence. Before doing a “trial run” or “preview” with a candidate for a kitchen or other role in a risk-filled environment (warehouse, garage, hospital), check with your Workers’ Compensation carrier and risk management team to assess any potential liability issues. Recreating the environment in a controlled way may be an option if the real thing poses too many problems.

3. Go Temp before Perm. Hiring someone on a temporary basis is a great way to see how they pan out before making a permanent offer. It is important to set expectations up front. Once they pass the interview process, for example, you can extend a temporary offer for a designated period of time (less than 90 days is recommended) at a lower (but in most cases, not less than minimum) wage while you assess performance and fit. The benefit of this method is that you can ask these employees to do actual work once they are ready to roll. Be sure to stick to agreed-upon timeframes for hiring decisions and follow all applicable federal, state, and local labor laws.

4. Let them listen in. Job-shadowing can be a great way that for candidates to experience the work environment in certain industries before signing an offer letter.  They could listen in on calls, walk the floor with employees, or attend part of a regularly-held meeting. Don’t forget that these job hopefuls may become privy to some privileged internal information in the process. Check with your legal resources to see if a non-disclosure agreement or liability release is necessary before making it a part of the pre-hire process.

And finally, be honest. Even if a job preview-type activity isn’t in the cards, it’s always important to be honest with candidates about the work environment and job they are interviewing for. Is it high energy? Low energy? What is the dress code? What are the “official” hours and what hours are expected? Is it a position that many have found challenging in the past? What about the candidate’s work history could help them be successful in the job where others have struggled?

I once interviewed for a position with the hiring manager, and while we were talking, the phone constantly rang, people popped in and out of her office every few minutes, and an intercom boomed frequent messages throughout the cavernous warehouse-style space. She described the job and shared with me, among other things, that while the hours in the office were fairly standard, frequent travel was expected with very little notice.  I appreciated both the interview location and specific details she shared as they gave me a very real taste of what the job would be like daily and while it wasn’t for me, another candidate may have found the organized chaos and spontaneous travel exhilarating.

Fit – a combination of the right experience and personalities coming together – is one of the most important factors in a long-term employment relationship. Whatever employers can do to assess this ahead of time – and help candidates assess their interest themselves – can save time and money in the long run.

Click the link to view the recent INFINITI HR blog: Rethinking Multitasking or check back for more on human resources, payroll, insurance and benefits.

Exposing misconduct is in the air. So we ask employers: what kind of environment have you been cultivating?

The recent explosion of accusations and charges of sexual misconduct has put the nation’s employers on alert. If you don’t have a policy and procedures on dealing with sexual harassment, or its bigger category, harassment, in place, you better get them – fast.

If you google “harassment policies” you’ll see the uptick of blogs and discussions on what to do. What you don’t often hear, however, is what you were doing wrong, i.e., what not to do.

What companies often do wrong in dealing with any type of harassment:

Not training your managers to spot and act on red flags proactively. While this might seem obvious on paper, I have discovered any number of managers looking the other way because they feel the absence of an active complaint means that no one is being negatively affected.  This can be the overly sexual calendar in the warehouse office, the casual shoulder rub in the break room, the locker room jokes in the executive conference room, playful flirting with direct reports, the racist joke, or tolerating inappropriate comments or language from a customer or business vendor because “they are the client”.  The assumption is that it is all in good fun and not “unwanted” by the group involved, so unless a complaint is on the table, it must be okay.

The danger here is that by not driving change to stop these behaviors, two things are happening:

1 – You’re inadvertently enabling a culture that tolerates and supports harassment in the workplace; and,

2 – The fact that your supervisors or managers are aware but not acting is putting your organization at additional risk for purposely neglecting the problem.

The magnitude of this problem might not be appreciated until an employee files a charge with the EEOC or hires an attorney and the investigator brings all these past behaviors to light. At that point, it is too late to fix, and the financial ramifications will be huge.

Not taking a complaint seriously. You may be thinking, “I’d never not take it seriously!”, but, you may have not realized you were hearing a complaint.  There seems to be a poor assumption out there that for it to be a complaint, the employee must march over to HR or will start a conversation with “I would like to place a formal complaint”, but that isn’t what normally happens.  More often than not, the problem is in the beginning or middle stages, where the employee feels uncomfortable but is afraid to say anything or does not want a huge fuss, so they say it to bring it to your attention but don’t emphasize it, and back down if you don’t seem receptive.

For example, during a weekly sales update where you are asking how a new client is doing, the representative might say, “Things are going well, he likes our products, and is increasing his order next week, but the guy is kind of creepy.  He tends to be handsy with the female vendors.” If your response is, “Great job on increasing the order! Don’t let him bother you too much, he’s harmless”, you most likely just heard a complaint, blew it off, and defended the client’s behavior. Upon hearing your defense of him, this employee will be less likely to feel safe continuing the conversation to reveal something specific that may have occurred that is bothering them, or a desire to seek your help with the matter.  The better response would have been along the lines of “That is not acceptable. Do you need my help dealing with this, or is there anything else we need to know about his behavior?” or, more directly, “Do you need to place a complaint?” to drill deeper into what you are hearing.  If it is a complaint, deal with it appropriately and involve an HR rep.  If the response is “I’m fine, it’s just an observation, for now”, you should always encourage and support the employee that you are there to help, and you should give HR a heads-up.  It also does not hurt to remind your staff that “the first and best way to handle a minor annoyance before it festers is to stand up for yourself and state to the offender that a specific behavior is not okay with you and needs to stop, and if that doesn’t work or you’re not comfortable doing that, the company needs to know so that we can help”.

Not having a documented and clear communication process while handling a complaint. It is ALWAYS a good idea to produce an “acknowledgement of receipt” letter to the person placing a complaint immediately or at least within 24 hours. It should also provide verification that you will be conducting an investigation and communicating a goal for completion of said investigation, typically about 10 business days. Realistically, the faster you can wrap it up the better, but to give yourself some time to do it right is important up front.

Why does this matter? After placing a complaint, the employee is anxious. If they have been told, “We’ll get back to you” without a timeline, they might assume nothing is being done after a week of silence.  This leads to poor reactive behaviors such as telling other employees the company doesn’t care, it might impact their productivity, or generate the feeling that they need to escalate the matter to an outside party to be taken seriously. Not having a similar notice to the person who the complaint is directed at is also a miss.  They deserve the courtesy of seeing the issue and the process in writing and have the same benefits of a time line, so they know what to expect. Having a comment misunderstood or feeling wrongly accused is a painful experience, and an employee who wasn’t expecting a complaint can exhibit the same negative reactive behaviors with colleagues or outside agencies if they don’t feel you are handling the matter professionally or thoroughly. When all is said and done, if you don’t also produce letters to the involved parties on the completion of the investigation and how they are each affected, you are missing out on a chance to clearly communicate for their peace of mind and to document to minimize risk.

Not having or not enforcing a no-retaliation policy. This is a horrible mistake. It’s one thing to put out the expectation of no-harassment, it is another to ensure employees feel safe using it. If you don’t have the safe-guard of no-retaliation, employees won’t step forward until issues are unmanageable.

It’s an HR practitioner’s wish that employees would always step up when issues are so minor that no-one needs to lose their job. Instead, the issue is addressed, no one was hurt, the bad behavior stops, everybody learns something, and employees return to their respective roles.  That won’t happen if employees feel that sounding the alarm causes more problems than it solves. Whether it is because it drives change that other employees resent and they isolate or harass the complainer, or because the employee feels their career will be negatively affected by management because they went against status-quo.

The ramifications of retaliating need to have as much, or more, impact than violating any other policy. I once fired a manager not because he said something inappropriate to a pregnant employee, but rather because after he was counseled and coached on the matter he stormed over and complained to her that she complained.  She never wanted him to lose his job, but he was not professional enough to learn from the situation and stop hostile behaviors.  That is not something the company needed in its management team.  The resulting credibility that management gained from employees for a willingness to address problems and make hard decisions went a long way.  It also set an example for others who needed to improve on how they handled constructive feedback meant to better the workplace.

Looking ahead

If you look deep inside your organization, you can almost always find something that is being done wrong.  While you don’t know what you don’t know, you can put safeguards in place to prevent behaviors you don’t want. When you sit down to develop or update your harassment policies, stop and think about the loopholes discussed above and ask yourself if you can rely on your managers to respond appropriately.  If the answer isn’t a resounding “Yes,” this should be where you focus additional training and support to bring your policies to life.

Click the link to view the recent INFINITI HR blog: Offer Letters, Not Employment Contracts or check back for more on human resources, payroll, insurance and benefits.