Becoming an employer
As you think about hiring your first employee, review the state and federal labor laws, which include non-discrimination and minimum wage rules. You will be required to display posters in your workplace related to unemployment, workers’ compensation, protective legislation (pay periods), whistleblower’s protection, wage, polygraph protection, OSHA, Equal Employment Opportunity (EOC) if you do federal contacting/subcontracting) and the federal Family and Medical Leave Act (FMLA) (if you have 50 or more employees). You also must maintain complete payroll records and good personnel records, carefully documenting all performance reviews and any disciplinary actions.
Employee benefits can be one of a business’s most significant expenses, sometimes costing as much as 30 to 50 percent of wages. However, offering some kind of benefits package has become standard. Full-time employees have come to expect it. The question is not whether to offer benefits; rather, it is “what package can the company afford?” The following are some things to keep in mind when updating or adding employee benefits:
- If your employees are likely to leave your company for another in the same industry, learn as much as you can about what benefits are standard in your industry. If you have trouble retaining employees, think about offering more or better benefits than your competitors. If your company is in a rural area where employees are likely to switch industries, consider the benefit packages offered by other companies near you.
- Begin with a modest benefit package and build up as the company grows and stabilizes. Giving too many benefits at first can backfire if you need to cut back later. For many employees, a reduction in benefits is equivalent to a cut in pay.
- Develop an employee handbook and have it reviewed by a lawyer who is well-versed in employment law.
- Have your employees review your draft handbook with an eye to uncovering unwritten rules that you’ve allowed to develop in the workplace. While you have the ultimate decision-making power, it’s helpful to include employees in developing workplace procedures and benefit structures, especially if you plan to make changes. Handing down decisions by fiat is a morale killer, especially if they are perceived as unfavorable.
An employee handbook can make managing employees easier. Relying on verbal communication can give rise to confusion, conflict, and charges of discrimination or unfair treatment. A good handbook provides consistency and accuracy in dealing with employees by spelling out company expectations, employee benefits, rules, policies, and procedures. Developing a handbook doesn’t have to be costly. One suggestion is to draft it yourself and pass it by your lawyer for review. It is important to ensure that the handbook is worded correctly and that it protects you legally. Many lawsuits occur because companies can’t document the consistent use of policies.