Leading a Small Business

Transcription

1 Leading a Small Business Effective People Leadership for Success Dawn Garcia, MS, RN, CMQ-OE Principal, Pursuit of Excellence LLC PAGE 1

2 PURSUIT OF EXCELLENCE LLC Leading a Small Business Effective People Leadership for Success Purpose Most small businesses are established with an owner, and maybe some part-time help from trusted associates, who believe in the business concept, and have the skills to get it established. Even at this stage, a new business owner must have a foundation knowledge of human resource laws and workforce leadership to avoid business liability. Unfortunately, many business owners do not have this knowledge, and only identify this gap after an issue occurs. The purpose of this white paper is to provide an overview to the human resource structure that a successful small business needs, to manage the workforce for business growth and success. The scope of this paper is focused upon a business that has less than 15 employees, as additional laws come into effect as a business grows beyond that point. This foundation is an imperative as the business grows, and is one of key differentiators between a business that thrives, and one that struggles to survive. The Basics There are several key elements to effective people leadership of a small business, essentially falling into the following categories: 1) selection and onboarding new employees; 2) employee engagement and retention; 3) rewards and compensation; and 4) employee development. These PAGE 2

3 categories remain the same as the business grows, however the complexity of the actions require more planning and intervention as the employee volume grows. Of course, the scope of this paper is not able to cover all of these elements, which would take several books, however foundation principles will be covered to guide further actions based on specific business needs. To address these needs, every small business should have an employee handbook, that captures the key policies and guidelines for these items. This handbook may come in a variety of forms, electronic, paper, or on a shared intranet site. The important part is that it must be provided to an employee on hire, must reflect current policies in force, and must be accessible to employees as needed for reference. Since policy changes may happen frequently as a business grows, and based on state or federal law changes, it is recommended that an electronic handbook be developed that can be readily updated and disseminated to employees. Throughout this reference will be some key documents to retain in your employee files or records, noted with a. The first of these is related to providing the employee with a copy of the employee handbook, through an acknowledgement form. This evidences that you ve provided the employee with access to the policies and guidelines that protect both of you during the employment relationship. The second imperative is to adopt some general practices that will serve to build trust and a healthy culture within the workforce. These can be summarized by a few key actions: Create trust by demonstrating that your words and actions are in harmony. Communicate interests, capabilities, and concerns. Never sweep mistakes under the rug. Acknowledge and address them quickly. Ask for feedback, and never assume that the other party sees things the same as you. Work to uncover problems. The other party will respect you for it. The third imperative is to have a workforce plan. As part of the strategic planning process for a business, the workforce plan ensures that the right type and number of workers are present to fulfill the organization s strategy into the near future. While this may be easier at the beginning with few people resources, most businesses that are moving from Stage 1 (Start-up) to Stage 2 (Growth) realize a rapid need for additional employees. The time to build an effective workforce plan is prior to the high demand period, so that the additional members can be best selected for organizational success, fit with the culture, and be readily on-boarded to meet the needs. While the workforce plan initially focuses on employees, as the business grows toward Stage 2, leadership roles are also needed to manage the daily operations, workforce and processes, so that the leader can focus on strategic business growth. Typically this occurs at employees. PAGE 3

4 The Compliant Foundation A small business (generally defined with annual income less than 1M) faces several areas of potential risk related to people management; businesses with less than 15 employees are protected from some of the risks faced by larger businesses. This section will recommend some basic practices to mitigate these risks, and to establish a compliant small business human resource foundation. While it is always recommended to seek the advice of legal counsel for specific questions and concerns related to a specific business, this paper provides a reasonable starting point for most small businesses. At Will Employment: Twenty-seven states, including Wisconsin, do not have a right-to-work law. This means that employment is at will, or terminable by either the employer or employee for any reason whatsoever. The employment-at-will doctrine avows that when an employee does not have a written employee contract and the term of employment is of indefinite duration, the employer can terminate the employee for good cause, bad cause, or no cause at all. At the same time, employees are free to leave the employer at any time, with or without cause or notice. There are some exceptions to this standard: Public Policy exception - Prohibits termination or other adverse action for reasons such as reporting an unsafe working condition, responding to a military or jury duty obligation, whistleblowing, or other discriminatory employer behavior. An implied consent contract - Statements implying job security, including those found in policies and handbooks have been used to reflect an employment contract. Covenant of good faith and fair dealing - Knowingly terminating someone near retirement where the action results in the denial of retirement benefits is prohibited. 1) Ensure that all policies in the employee handbook do not imply an employment contract. 2) Use non-discriminatory human resource practices. 3) Develop a culture that recognizes employee value to the ongoing nature of the business. Discrimination: Laws protect employee s rights within the life cycle of the employee relationship, from sourcing and recruiting, to selection and hiring, to performance management, compensation, benefits, training, termination, and all other terms and conditions of employment. While some discrimination laws do not apply to businesses with less than 15 employees, it is recommended that all businesses establish general practices that do not provide differential treatment to employees based upon race, color, sex, religion, national origin, age, disability, or a wage differential between men and women while performing substantially equal work. The PAGE 4

5 Equal Employment Opportunity Commission (EEOC) enforces discrimination actions, including the American Disabilities Act (ADA), and the Americans with Disabilities Act Amendments Act (ADAAA). Potential discrimination risk situations frequently involve retaliation, which can occur when an employer, employment agency, or labor company takes an adverse action against a covered individual because he or she engaged in a protected activity. 1) Establish a policy that prohibits discrimination with relation to race, color, sex, religion, national origin, age, disability, or a gender wage differential for performance of substantially equal work. 2) Conduct training on hire for employees to ensure understanding of discrimination policy, and how to report potential concerns. USERRA - Uniformed Services Employment and Reemployment Rights Act: prohibits discrimination against applicants and employees who serve in the armed services; requires employers to reinstate employees who take up to five years off to serve in the armed services and restore their benefits; prohibits employers from firing reinstated employees, except for cause, for up to one year after they return. Harassment: Section Section 1981 of the Civil Rights Act of 1866: prohibits race discrimination in the making of enforcement of contracts, which includes every aspect of the employment relationship. 1) Same as for discrimination above; Section 1981 action can be for race or ethnicity only. 2) Employee making claim must show unwelcome racial comments or offensive conduct that was severe or pervasive through employment. Health and Safety: OSH Act - Occupational Safety and Health Act: requires all employers to comply with workplace safety and health standards. [Wisconsin does not have a state plan] Four Main Provisions: 1) Compliance - Employers must comply with standards issued by the Occupational Safety and Health Administration (OSHA) or, if they are in a state plan state, by the state agency. 2) Safety - Employers must keep their workplaces free of recognized hazards. 3) Inspection - Employers must submit to inspections from OSHA-approved State inspectors or, if they are in a state plan, from OSHA-approved State inspectors. PAGE 5

6 4) Employee rights - The OSH Act gives employees the right to request information about workplace hazards, refuse to work in hazardous environments, and otherwise get involved in workplace safety issues without employer retaliation. 1) Employers must maintain accurate records of all work-related accidents and diseases and inform employees of their protection and duties under the law. 2) Employers must determine which standards apply to their industry, and then strictly comply with those standards. 3) Employers must train and supervise their employees appropriately and adequately. 4) Employers must provide safe tools and equipment, as well as proper safety equipment for all of their workers. 5) Employers must provide their employees with work and a workplace free of recognized hazards that could cause death or serious physical injury. 6) Employers can demand that an OSHA inspector have or obtain a warrant before conducting an inspection. Once the investigator provides a warrant, an employer must allow the inspection. 7) Employees have a right to get information about hazards in their workplaces. 8) Employees may refuse to work when they face an imminent danger in the workplace that the employer refuses to correct, if the condition is so dangerous that it could harm the employee before OSHA can respond to the employee s request for an investigation. Posting Requirements: 1) An OSHA poster informing employees of their rights and obligations under the OSH Act. 2) A log and summary of occupational illnesses and injuries (unless waived by industry) 3) Current citations that OSHA inspectors have issued to the employer. 4) Any petitions that the employer has filed for modifications or abatement. Other Federal Acts applicable to Small businesses (less than 15 employees): IRCA - Immigration Reform and Control Act: prohibits discrimination on the basis of citizenship and national origin in every aspect of employment; requires employers to verify that employees are authorized to work in the United States and keep records to the effect. 1) Employers may not knowingly hire, recruit, or refer unauthorized aliens for employment in the United States, and may not continue to employ someone after discovering that he or she is an unauthorized alien. 2) To verify the employee s work authorization, employers must examine certain documents within three days of hiring an employee or by the end of the first day of work, if the employee will work for fewer than three days. If the employee s authorization to work in this PAGE 6

7 country has an expiration date, the employer must reverify the employee s work eligibility when that authorization has expired. 3) If the documents the employee presents reasonably appear genuine and reasonably appear to refer to the person who presented them, the employer may not ask the employee for additional identity and work authorization documents. 4) Employers who fail to properly verify work authorization face civil and criminal penalties and fines. 5) Employers must complete a Form I-9 for each employee they hire, including relatives. 6) Employers must keep the Form I-9 for three years, or one year after the employee s termination, whichever is later. PRWORA - Personal Responsibility and Work Opportunity Reconciliation Act: requires employers to report new hires to a state registry, which uses the information to enforce child support obligations. 1) Employer must report all new hires to a state agency called the State Directory of New Hires. 2) Employer must submit the following information on each new hire: name, address, SSN, employer s name, employer s address, employer s federal ID number. 3) IRS Form W-4 is typically used for submission of this information. 4) State agencies may request additional information, such as date of hire, birthdate, etc. FCRA - Fair Credit Reporting Act: requires employers to provide notice and get consent before getting a credit report or other types of background or investigative reports on employees or applicants; requires employers to give certain information to employees or applicants before taking negative action based on a report; establishes standards employers must follow to destroy consumer records. 1) Employers may request a consumer report or an investigative consumer report on an applicant or employee only for employment purposes. 2) Before requesting a consumer report on someone, an employer must notify that person properly, obtain his or her authorization, and then verify to the consumer reporting agency that notice was given and authorization received. 3) Before obtaining an investigative consumer report, an employer must make additional disclosures to the person about whom the report will be obtained. 4) Certain exceptions to these requirements exist for employers in the trucking industry and employers hiring third parties to investigate alleged employee misconduct. PAGE 7

8 5) Before taking adverse action based upon a report, the employer must give the employee two documents: (1) copy of the report, (2) copy of a document from the Federal Trade Commission called A Summary of Your Rights Under the Fair Credit Reporting Act. 6) After taking adverse action, the employer must give the person an adverse action notice. Businesses involved in Interstate Commerce or have $500,000 or more in annual gross sales: EPPA - Employee Polygraph Protection Act: prohibits employers from requiring or asking employees or applicants to take a polygraph test in most circumstances. EPA - Equal Pay Act: requires employers to give male and female employees equal pay for doing equal work. FLSA - Fair Labor Standards Act: establishes the minimum wage; determines what constitutes work time for purposes of calculating pay; requires overtime pay for certain employees; restricts child labor. Summary Managing the workforce is a significant component of operating a successful business. In addition to the leader s selection and onboarding of new employees, successfully managing all aspects of the employment relationship are essential for business sustainability and growth. Beyond the Federal and State regulations listed, that impact employer responsibilities and employee rights, the small business owner is required to comply with all pertinent State requirements, updated legislation, and industry-specific requirements. As a small business owner or leader, if you need further information, assistance, evaluation or support for your human resource practices, policies, or documentation, feel free to contact Pursuit of Excellence LLC at Your Business Solution References: L. Guerin, J.D. & A. DelPo, J.D. The Essential Guide to Federal Employment Laws. 4th Ed. Society for Human Resource Management; Bang Printing: April PAGE 8