Category: Down to Business

Although many states are fire-at-will states, there may be circumstances that allow legal action to proceed against employers. For example, a firm that appears to adhere to a plan of progressive discipline actions prior to terminating staff members and then terminates an employee while failing to following that plan can be putting themselves in legal danger. In one example of this, the California Appellate Court ruled that the employees claim could proceed even though the company was a fire-at-will company.

Proceedings in other states have had similar outcomes so it is worthwhile exploring what happened in this situation.

The case in question occurred with Barnes & Noble Booksellers and their employee Christine Oakes. Christine began working for B&N starting in 1987 as became store manager in 1989. She also managed the West Valley-Mission Community University Campus location from 2002-2010.

Several times throughout her career with Barnes & Noble, Christine acknowledge she had received and reviewed the B&N code of conduct. She also signed an acknowledgement that she understood she was an at-will employee.

The company’s employee manual also had a disclaimer that it was not a contract and was for reference purposes only. The manual made it clear that they were a fire-at-will company meaning they could let go of employees without prior notice and without cause.

The manual also contained a specific policy of employee discipline, specifying that managers use certain training tools and procedures to progressively discipline their employees. The discipline begins with a verbal warning and progresses through a written warning. The handbook also stated that if a significant offense was taken, the initial disciplinary steps could be skipped. Also, if the infraction was significant, the person could be terminated without any prior disciplinary steps.

Oakes’ received good annual performance reviews until 2009. While she was rated as satisfactory or exceeded criteria in many measurements, she was found to not meet standards in the area of liability, client focus, and interaction.

Barnes & Noble terminated Oakes on June 1, 2010 without prior warning. Likewise B&N failed to leverage the discipline process it outlined in its employee guide.

In April 2012 Oakes sued the company for wrongful termination. This was based on the concept that B&N was in breach of contract.

The company requested a summary judgment in 2013, asking for the claims to be dismissed before trial. They said that she was a fire-at-will employee let go for legitimate reasons. The court approved the motion but Oakes appealed.

In a deposition taken prior to the dismissal of the lawsuit, Oakes said that she had been told by B&N’s HR department to use the progressive discipline process outlined in the employee manual prior to letting go of employees. She also noted that if she terminated someone without taking these steps, she was reprimanded by the company.

To support her testimony, two other managers affirmed Oake’s testimony. They said that they were not aware of any other cases where employees had been let go without the handbook’s recommendations being followed.

Does employment agreement match actual practice?

Although California is a fire-at-will state, the appeals court noted that events in an employee partnership can alter that status.

Barnes & Noble had stated that they were a fire-at-will company in their handbook but there was indeed evidence that this policy was not their intent. The court noticed that the company was correct in their ability to be a fire-at-will employer. However they acknowledged the existence of a separate unwritten policy. The court found their actual plan was using progressive discipline before terminating an employer. The appellate court used this information to change the trial courts dismissal of the case and stated that a trial was needed to figure out exactly the terms of the employer’s policies and if Barnes & Noble had breached those terms.

Protecting your business from lawsuits…

An expert guideline in this case is that it is essential to understand that actions do speak louder than words. Although a business may state certain policies and procedures, their day-to-day running of the company may not be followed consistently. Not following policies consistently puts businesses at high risk for lawsuits.

If you have a business with employees, we highly recommend that you take a close look at EPLI or employment practices liability insurance. It helps protect you from claims of things like wrongful termination, discrimination, sexual harassment, and retaliation. Because while you may believe you are operating within the law, a court may disagree. Be sure to talk with us about affordable EPLI options for your business.

Philip Maltin, who was discussing the ways of spotting liars at the Society for Human Resource Management’s Skill Monitoring Conference & Exposition, began by explaining how we can misread some signs when trying to spot liars in the workplace.

According to Maltin, if someone folds her arms, fails to look you in the eye, and keeps massaging the back of their neck depicting nervousness and stress, it’s not mandatory that they are lying. Maltin feels that body movement of a person is just one of many cues that help us to understand whether that individual is a liar. According to him, an individual might appear worried even when he is looking to tell the truth; that’s because he might believe that people would start judging him after knowing the truth.

Maltin, who is currently a partner with the LA firm Raines Feldman LLP, protects organizations in cases involving employment insurance claims. His other endeavors include helping civil legal delegates in honing deposition skills and teaching district attorneys effective trial strategies. Maltin said that he has met many detectives, police officers, and prosecutors who have the habit of doubting supposed lawbreakers assuming that they have committed a crime. HR experts, who are expected to follow employee management best practices, are also often found to possess a similar tendency.

Maltin played an audio, in which a policeman was heard interrogating ex US Senator Larry Craig hurriedly after the latter was arrested in 2007 for performing vulgar acts at an airport restroom meant for men. Instead of examining Craig carefully and calmly while adhering to the facts, the law enforcement officer maintained an argumentative, accusatory, and confrontational behavior. This, according to Maltin, allowed the policeman to gather little information from the ex senator.

Maltin affirms that people won’t reveal themselves to you just because you are the boss or the head of HR. You will get desired results only upon asking flexible questions, hearing all answers carefully, and staying on track.

Here are a few tips to suss out the truth…

Study well before questioning

Before you question someone suspected of inappropriate behavior or wrongdoing, you must investigate thoroughly. The investigation process might require you to go through the person’s emails, computer history, account details etc. Video monitoring may also be needed. Maltin believes that it’s important to know your witnesses, suspect, and the questioning techniques you will be using beforehand.

Examine your suspect, but always play nice

You must know that accusatory and aggressive interrogation might make your suspect uncommunicative. This might even cause false admissions, which should never be the way to go. You should be irresistible when interrogating. The only way you can gather information is by making the accused individual talk with you. For that, you will have to get along well with the person. Allow the person narrate his story. This will provide you with the weirdest facts. Instead of asking directly about the misdeed you feel the person has committed, you should shoot an open-ended question towards him. For instance, you should begin by asking a simple question like, “How’s life treating you?” and then move your investigation forward based the responses you get.

Evaluate the suspect’s responses

Once your suspect finishes telling his tale, you should assess it. According to Maltin, phonies tend to share tales that are mostly illogical. The details provided by them are filled with uncertainty and discrepancies. He added that liars often use simple constructions for sounding incoherent. They also have a tendency of evading straight enquiries by altering the topic. Sincere individuals, on the other hand, tend to give lots of understandable details in a coherent order. Their narrations are always significantly more meaningful and interactive in nature.

You should question yourself

It’s true that it’s extremely important that you suspect one or more individuals based on the investigation carried out by you and in-depth evaluation of the responses you receive from your suspect or suspects. However, while suspecting someone else, you must also move a step back for locating loop holes in your own thoughts.

Maltin stated that anxiety might also be an indicator of sincerity. He added that feelings would never be able to tell you what factors are responsible for causing them. It’s impossible to know what has made a person mad or nervous or worried. As a result, an individual who primarily counts on his or her intuitions would not be a good lie detector.

Protect yourself from mistakes

We are constantly on the lookout for great information about employee management best practices and how to manage your business risks. Dealing with employees can be tricky. There are a number of EPLI concerns that can impact insurance risk.

The best strategy is to be sure you have an EPLI policy in place if you have employees. If you are curious about EPLI or If you want to review your current EPLI risk, be sure to reach out to us.

A clothing store recently restricted three employees from speaking Spanish in the workplace. In turn, they sued stating that it was a violation of their civil liberties as well as discriminatory behavior.

The complaint says that the company’s human resources department was detached and dismissive to the worker’s concerns. They ignored phone calls, voicemails. They failed to take any action on behalf of the employees.

To make matters worse, the employees in question were told they would lose their jobs if they continued speaking in Spanish. They also faced other disciplinary actions.

The store’s parent company denies having an English-only requirement. Sadly, their store’s actions tell a different story.

So what does the law say?

At the Federal level the Equal Employment Opportunity Commission takes a dim view of “Speak English Only Rules.”

• A rule requiring employees to speak English at all time including breaks and lunches will rarely be justified
• English-only rules must be limited to ensure safety or operational efficiency.
• The ability to take disciplinary action against employees violating English-only rules is limited.

States have their own rules as well.

For example, California state law allows employers to limit language used while employees are on duty. This is only permissible as long as such a requirement is warranted by necessity.

In other words, the company must have the ability to clearly demonstrate that a language restriction has “an overriding reasonable business purpose”. Such purposes are limited in scope. One purpose could be to ensure safety. Another purpose could be to ensure proper corporate procedures are followed.

Companies seeking to implement an English only language plan must be able to clearly defend it. They have to demonstrate that it comes from more than a simple choice for English in the workplace.

For example, a hospital could make the case that having a common single language is required for a couple of reasons:

• To ensure the safety of all team members as well as patients.
• To ensure hospital procedures are reliably executed.

If a business is thinking about embracing English-only policies, it needs to be able to demonstrate necessity of the policy. It also must have a solid implementation plan that is well vetted to ensure it doesn’t cross the line into discrimination. Talking with legal counsel that specializes in this area of law is necessary.

According to Tyler Paetkau of the law firm Harnett, Smith, &Paetkau of Redwood City, CA, his comment was simple. “Typically, the suggestion is proceed with caution.”

If a company is determined to embrace an English-only policy, it must ensure that there is accompanying worker training and that workers clearly understand what disciplinary actions they may face if violating the rule.

And be mindful that a more flexible policy may be appropriate. For example, a company may require retail staff members to speak in English on the sales floor. But if a patron requests help in Spanish and the sales rep speaks Spanish, the employee would be allowed to conduct business in Spanish for the purpose of that specific transaction.

Where English-only rules tend to run into issues is when they are overreaching. For example, insisting that workers speak in English while on breaks or when making personal calls. This is a clear violation of Federal statute.

The issue here is liability and making sure the company isn’t exposed to claims of discrimination.

Having a well-constructed policy built with the help of legal council is clearly critical. But we also recommend you consider EPL insurance. (Also called EPLI or Employment Practices Liability Insurance. It offers critical coverage to employers. It’s designed to protect the company against claims made by employees alleging things like discrimination (based on sex, race, age, or disability), harassment, wrongful termination, and other employer-employee related issues.

For further thoughts on managing all forms of your corporate risk and adequately protecting your company, be sure to reach out to us.

Opening up shop? Wondering what kind of insurance coverage you might need? Chances are you’ll likely need to protect yourself. You have to watch out for things like liability claims, injuries, accidents, damage to equipment, and burglary as well. It’s enough to give a person an ulcer.

So how do you know if you have the right business insurance for your needs? And how can you be sure you are getting a great deal on your coverage?

We’re certainly here to help you with that!

Talking with an independent insurance agent will help you figure out which kinds of commercial coverage are most appropriate for your company. And being independent means we can work with multiple carriers… that means you have a choice!

Getting help for your business insurance is a smart choice. You likely save time. You’ll also get the benefit of working with someone who knows the right questions to ask to help really understand your risk profile. (Getting a full assessment of your needs is critical to be sure you aren’t over-insured or under-insured.)

So what are the kinds of business insurance you may need to consider? It all depends on the business you are in but your insurance needs will include one or more of the following:

• General Liability Insurance
• Workers Compensation
• Commercial Vehicle
• Information Breach Protection

Sometimes these insurances will be sold separately. However, they are often packaged together into a BOP (business owner’s policy.) A BOP may include discounts vs. buying the coverage separately.

Working with a seasoned professional will help you make informed decisions. They’ll ask tough questions to make sure you’ll balance your potential risk exposure with cost savings options. (Many business owners we work with are surprised to learn how they might be exposed and how costly a potential loss could be.

Making sure you have the right coverage to protect your business investment is critical! After all, you want to be certain your company can be around to serve your clients should a disaster strike. Having this sort of peace of mind allows you to concentrate your energy on what you love & do best… building your business and helping your clients.

So skip the ulcer. If you’re thinking about starting a small business or if you already have one, be sure you chat with us about your insurance options.

 

The notion of a 40-hour workweek is disappearing for many. 50+ hour work-weeks have become common. Many individuals go so far as to sleep with their iPhones turned on so they can respond instantly, 24/7, as needed.

The biggest problem with this is that it leads to workers being tired and disengaged. Worse, workers suffer greater tension and make more judgment errors.

The core question: are humans capable of working constantly without rest?

The answer, of course, is no.

As a business, it is important to be mindful of how employees are treated as they are a company’s greatest asset. Happy, engaged employees lead to greater client satisfaction and retention.

So how can one economically create this “ideal” workforce?

Begin with health…

• The average worker spends more than 9 hours a day being sedentary. To combat this it is recommended that you create more frequent break opportunities that allow for bursts of activity. Movement is key. These small 5 to 10 minute breaks should allow the worker to “break out” and go for walks, take in fresh air, etc.
• Tip: New Balance – an athletic wear company found that by allowing people time to move around each day those workers were more energized and more purposeful in their work.

Find ways to make work manageable…

• Help team members find possibilities rather than concentrating on problems.
• Empower workers to help others on their team.
• Encourage opportunities to learn from co-workers.
• Make sure that the pursuit of goals involves each employee.
• Maintain an honest, open, and encouraging flow of communication.

Help workers connect with purpose…

• First, understand that earning a paycheck is the beginning of why people join a company, but they often want more.
• People are energized when they are having fun and when they are involved in meaningful work.
• Make sure team members understand the big picture driving the company and how their work matters to accomplishing those larger goals.

Offer creative benefits…

• Talk with a benefits specialist about ways you can create affordable and engaging benefits for your employees… possibilities include:
  • Travel opportunities.
  • Create opportunities to earn prizes.
  • Offer employees access to free financial advice.
  • Give people their birthday as an extra paid holiday.
  • Open up to flexible work schedules.
  • Find creative ways to recognize team members.

Allowing for remote workers has advantages. It gives you versatility, helps to reduce expenses, and allows you to draw from a larger pool of potential job candidates.

There can be drawbacks as well. Top complaints:

• A sense that there’s less communication.
• Management’s struggle with knowing whether employees are staying on task.

So how can you maximize benefits while limiting the drawbacks?

Hybrid Approach

Some companies allow employees a certain amount of flexibility to work from home. However they still require that employees be “in office” for a certain number of days per week or month. Yahoo had a famously liberal policy on remote workers and shifted to a stricter hybrid approach. Many of Yahoo’s top engineers left the company because of the perceived lack of flexibility.

This isn’t to say that a hybrid approach is doomed to failure. But it is important to understand how a team may respond to such changes. If your company is moving away from a strict “in office” policy in favor of something more flexible, a hybrid approach can be a great way to test the waters.

Going 100% Remote Worker.

A surprising number of service companies have begun moving toward being 100% virtual. By eliminating a physical workplace, a number of expenses can be eliminated. Additionally, being allowed to work from home 100% of the time gives employees a greater sense of work-life balance. This also makes attracting high quality employees easier. Millenials are especially attracted to flexible work situations.

But being 100% virtual means a business must be more deliberate in encouraging collaboration and community. These efforts can include conferences and parties. They can also include leveraging technologies such as video conferencing and instant messaging.

“Going Remote” Requires Better Hiring Processes

The reality is that only some individuals work well on their own. Many others prefer the socialization offered by an office setting.

Others lack the discipline to keep on task through the day. Grocery shopping, running kids to soccer games, and getting to the gym can become distractions. In these situations, workers fail to create strong boundaries between “personal time” and “work time”.

A well-designed hiring process begins with attracting the right candidates to the role. They have the characteristics and experience to work well in work-from-home settings.

Once someone is hired, it is critical to have a well defined onboarding process. Such a process gives workers the tools they need to succeed while allowing managers to hold workers accountable for outcomes.

Micromanagers and Remote Workers Don’t Mix

Managers need to set up routine check-ins so that remote employees aren’t forgotten. It can also be beneficial to leverage time management software so that workers can concentrate on their jobs. Such systems help employees avoid productivity sappers like social networking. (Some roles, such as sales and customer service may need to be significantly more active in social networking…)

And this is an important point… remote workers need dynamic leadership. They need managers that don’t micromanage. They need clearly defined objectives backed by excellence in managerial support and guidance. This requires an intentionality that many managers simply aren’t accustomed to.

But by managing based on outcomes, it is possible to evaluate a remote workforce without the need to specifically worry about the number of hours they work on a given day. As long as employees get the work done on time and under budget, it’s a win for everyone. Specifically working 8 or 9 hours a day isn’t the goal in successful work-from-home arrangements. (Note: some roles like customer support definitely require consistent hours of availability.)

Watch Out for Regulatory Pitfalls

Individuals that work from home still fall under all state and federal employee guidelines for wages, breaks, etc.

Also, companies considering a remote workforce need to understand their responsibility for worker injury at home. For example, employers could be liable for an employee that suffers injury due to bad home-office ergonomics. A worker’s injuries while on the job at home will still result in a claim against the company’s Worker’s Comp insurance. (If you are thinking about allowing remote workers, it’s important to talk with your insurance professional. Get the facts about potential risk and risk mitigation before you leverage remote workers.)

Will it Work for YOU?

Ultimately “going remote” can be challenging but worth it depending on the business, the management team, and the workers involved.

The key to success is going into the effort “eyes wide open” and to understand potential pitfalls well in advance.

The greatest thing that’s required is a willingness to experiment and an ability to be flexible until the company finds a balance that works well for the bottom line.

Amazon gets it. So does Salesforce. So does Etrade. Tesla? Yep, they get it too. Virtually all companies that exist mostly or solely online already understand how critical successful Internet marketing is to the bottom line.

Yet for small businesses, there seems to be a massive disconnect with how to make digital marketing work in a way that’s impactful and cost effective. So let’s take a closer look at this difficulty, the best ways around it, and why local online marketing is so necessary to create lasting success.

If you’re a small business owner, you may believe that online marketing really isn’t very important… especially if your business is located in a smaller town. But do your town residents have mobile? Do they have access to the Internet? If so, you are missing out on an opportunity to outwit your competitors.

The reality is starker. According to Marketing Land, 90% of survey respondents say that positive reviews influenced a purchase decision.  Just as people leverage Google & Bing far more than the Yellow Pages to find services, they are also checking on the services they find via review sites. This trend growing nationally and is happening with as much frequency in small communities as it is in large cities. However, in small cities, bad reputations travel like wildfire. In other words, an accountant in the city with a handful of negative reviews is simply better equipped to correct those negative reviews vs. an accountant in a small town of 5,000.

And it’s important to recognize that mobile is quickly replacing all other forms of computing. Laptops and PC’s are dwindling in sales while tablets and smart phones are selling like hotcakes. If you run a local service business, it’s critical to be found in mobile-optimized search. (Yes, that’s a thing.) If your website isn’t mobile friendly, Google has said it will be dropping your website from all search results as of 2017.

If you run a small business, you must have a robust online presence. It’s that simple.

And this is where that concept of Guerilla Marketing comes into play. Remember that the notion of Guerilla Marketing is that you can have a huge marketing impact without breaking the bank and really, that’s at the core of online marketing in general. The Internet offers the potential of truly infinite reach for a relatively low cost for that potential impact. At least that’s the promise…

The truth is, this is where most business owners get lost. With search engines like Google & Bing, reputation sites like Yelp & Angie’s List, social media sites liked Facebook & LinkedIn, is it any wonder that most feel completely overwhelmed?

If you’ve talked with experts you’ll know right away that local SEO alone can cost $1,500 a month for a handful of keywords and Reputation Management can cost $500 or more each month per location.

But marketing online can be affordable, particularly if you take advantage of the right technology and learn the methods that actually work for SEO, writing content, marketing automation, etc. Sure, it takes time to do this work but if you learn how to do it properly, you’ve created new potential revenue streams that will last a long time.

One important tip as you contemplate online marketing… don’t think for a minute that you have to come across as some giant corporation. If you serve a local market, chances are people would prefer to know they are dealing with someone who cares rather than a faceless monolith. So, let your individual personality shine. Make it your mission to become the hero in your market. Leverage your messaging both online and offline to create deep personal connections that will bring you lots of business and lots of referrals… and that can elevate your brand to a premium status… yes, you might actually be able to charge MORE in your market if done correctly.

So, is it necessary to leverage Internet marketing to help grow your small business? In today’s world, the answer is a resounding yes. In fact, it is critical for your survival. If you are curious about your local reputation, how well positioned you are in your local market, and what you can do to begin taking action on strengthening your local marketing, check out this free local website analysis (link to: https://greendaysgroup.wwwsrvr.net/local-seo-website-analysis) that offers a pretty handy report on a company’s local presence.

Then start to take your local online marketing seriously. Make “action” be your mission and strive to be at the forefront of your local market while also working to do so in a manner that keeps your return on investment front and center.

And remember that as your company grows, be sure to reach out to your local insurance agent for ways to reduce insurance costs, expand benefits for employees, and make your company more stable. They may be able to help you find savings opportunities that you can then invest in your nascent online marketing efforts!

If you find that a number of the candidates looking for open placements in your organization lack the business expertise, interpersonal abilities, or overall expertise required for getting the work done… you’re not alone.

Many employers are running into a skills gap and it is costly. According to a study conducted for careerbuilder.com, a company loses more than $14,000 for each job that’s open for 3+ months.

As employers struggle to meet the challenge of hiring great talent, several are taking a look at ways to keep existing employees that are nearing retirement. In fact, in 2014 the Human Resource Management Foundation discussed this at their Executive Roundtable on “The Aging Workforce”.

In it, they discussed the fact that many older employees retain institutional knowledge and specific skills that extends their value to the organizations at risk of losing them. The challenge for anyone in a position to handle personnel issues is to find clever ways to retain those tenured employees while also leveraging them to help train and instill the correct corporate values in younger, newer employees.

One thought is to creatively work with older employees to help them change their work-life balance while retaining them as employees…

Phased-in Retirement

One option is to work with employees at or near retirement to create a less intense position by changing work hours and by emphasizing training others in the role. This allows them to ease into retired life while helping to ensure their knowledge and understanding of operations, clients, corporate culture, etc. are passed on.

Mentoring

Somewhat akin to this is creating specific mentorship programs where more seasoned workers can become an advisor to younger, newer employees. This again helps to facilitate transference of knowledge and expertise and affords more time to make sure that information is passed in an environment that maximizes success.

Recruitment

AARP offers a special program called Life Reimagined for Work (http://workreimagined.aarp.org/) that helps companies find knowledgeable employees while also helping those professionals to connect with jobs and roles better suited to a lifestyle that is more aligned with near-retirement goals.

If you have members of your workforce that are over 50, this is the right time to begin thinking creatively about the future struggles you will likely face in recruitment and how you can extend the knowledge and value of existing older skilled employees so that they can continue being a part of your future growth as a company.

Benefits

One key area to explore is to offer benefits that are appealing to older workers. You can offer supplemental policies that cover gabs in Medicare for example. You can do the same with other benefits as well ranging from vision and dental to pet insurance. Often times these other benefit programs can be added in a way that offers affordable premiums to employees with minimal out-of-pocket expenses to the employer.

If you have a larger workforce, you may also want to consider adding a long-term care and / or long-term disability program with guaranteed issue. (This is important because guaranteed issue ensures folks can’t be turned down.) Sometimes it is difficult to pick up these benefits as an individual, so offer them as a company would make remaining as an employee extra attractive.

We highly recommend talking with your insurance professional to explore how a targeted benefits program can be included as a part of your total solution in retaining and leveraging older skilled employees.

All Parties Win

By creating a comprehensive program for eliminating a “skills gap” in younger / newer employees by capturing the knowledge and wisdom of your older employees, you address one of the single greatest problems that plagues most companies that fail to address these issues while benefitting yourself and your staff in the process.

In light of the Department of Labor’s (DOL) recent changes to overtime pay rules—issued on May 18, 2016—more business owners are concerned about controlling overtime costs. The increase in the minimum salary an employee has to earn in order to be exempt from overtime pay (from $23,660 to $47,476) is expected to increase the number of workers eligible for overtime by 4.2 million. Complying with this change will add to companies’ payroll costs and may also impact their administrative and legal expenses as well. Fortunately, there are steps you can take to minimize the effects of the new rule on your business bottom line and remain in compliance.

Review your workers’ job classifications. Exemption isn’t just based on earnings; it’s also determined by the type of work the employee does. Workers who earn more than the threshold amount ($47,476) but who do not perform primarily executive, administrative or professional duties(all relatively high-level work), cannot be classified as exempt and are eligible for overtime pay. A summary of exempt job duties can be found here. Carefully examine the job descriptions, roll requirements and hours worked for all positions within your organization. If you have workers performing those duties but earning less than the threshold, you’ll need to reclassify them.

Compare the costs of payment options. Let’s say you have a previously exempt worker who is earning a salary of $46,000 a year and whose position regularly requires him to put in more than 50 hours a week. You’ll probably save money in the long run by raising his salary to $47,500 and continuing to classify him as exempt than by keeping it where it’s at and paying him overtime every week.

On the other hand, maybe you have a previously exempt employee who earns a salary of $23,000 a year and who usually works 50 hours or more a week. Raising the employee’s salary above the new threshold may cost more than reclassifying him as non-exempt and paying overtime. You could also look at hiring a part-time employee to take on some of the work (eliminating the need for him to work overtime altogether) or otherwise redistributing duties to reduce his workload.

Monitor employee hours carefully. In the event of a lawsuit or DOL investigation, you’ll need to be able to document the number of hours your non-exempt employees worked and any overtime hours for which they were paid. Wage and hour claims account for the greatest percentage of litigation in employment law, and many of those lawsuits arise as a result of misclassification issues and wage violations. While the DOL does not require employers to use automated time-management systems, manual time tracking can increase errors and reduce the accuracy of your payroll process. Automated systems not only continuously track time worked but can also help you more closely monitor overtime and creative cost-effective work schedules.

 

A 2014 survey of business leaders found that 71 percent prefer to develop their current employees’ skills and then move them into more-senior rolls versus hiring an external candidate for the same position. There are many reasons why this is so, from performance to improving morale and reducing turnover.  However, there are also situations in which an external candidate might be a better option. The trick is determining when; you’ll need to consider the following factors to figure it out.

If you’re worried about hiring costs, you might want to look to internal candidates first. Outside recruiting fees can run as high as 25 percent of a position’s salary. And if you choose to recruit externally yourself, you’ll incur costs for posting job ads as well as promoting them. You’ll also need to spend more time screening and interviewing candidates you’ve never met versus reviewing the skills and performance of an employee who already works for you.

If you want to pay a lower salary, you might want to look to internal candidates first. According to the Society for Human Resource Management, external hires often get paid 18 to 20 percent more than internal hires do. If you have employees within your organization who are capable of the job, it may make more financial sense to promote them—and increase their compensation accordingly—than to hire an external candidate with the same skills and a much higher price tag.

If you want to reduce your onboarding and training costs, you might want to look to internal candidates first. In many cases, an external hire will require more training than an internal hire will. You’ll also have to devote time to communicating your organization’s policies, processing employment paperwork including retirement accounts and health insurance, and introducing them to the existing team.

If you’re interested in tax incentives, you might want to look to external candidates first. Federal and state governments offer many tax credits to help offset the costs of hiring and training new employees. For example, the Department of Labor Work Opportunity Tax Credit is available to organizations that hire workers from certain target groups including unemployed veterans, food stamp recipient and ex-felons.

If you’re expanding or diversifying and adding a brand new role, you might want to look to external candidates first. If you’ve created a new position that is unlike any other in your organization, you may not have any current employees who can successfully fill it without a significant investment in training and/or education. In this case, it likely makes more sense—financially and in terms of productivity—to seek an experienced candidate outside your company.