Heed Minimum Wage Rules or Else

December 18th, 2014

http://www.dreamstime.com/royalty-free-stock-image-know-rules-illustration-design-over-white-background-image37405376That was the message from Labor Secretary Perez in a December 4 speech at the Center for American Progress in Washington, D.C. The U.S. Department of Labor (DOL) has increased its staff for enforcing minimum wage and overtime rules under the Fair Labor Standards Act (FLSA), indicating that DOL is very serious about enforcement.

A study from the Eastern Research Group found that 3.5% to 6.8% of workers are victims of minimum wage/overtime violations, so there are many businesses that fail to comply with the FLSA.

Small business owners I know want to do the right thing. Unfortunately, there are some traps that can snag owners in pay policies. Here are some that I found:

  • Giving comp time. Overtime pay cannot be avoided by private-sector employers by giving a non-exempt employee (an employee subject to minimum wage rules) comp time (time off at a later date in lieu of overtime pay). (There are only very limited exceptions in specific situations.)
  • Paying a salary. Figuring compensation on a yearly basis and calling someone a salaried employee does not make the person a non-exempt employee; minimum wage and overtime rules continue to apply if an employee’s wages and job classification make him/her a non-exempt employee.
  • Giving wage advances. Repayments to an employer of wage advances in many states are factored in for minimum wage purposes and can cause wages for the repayment period to fall below FLSA minimums.
  • Failing to factor in minimum wage increases for exempt workers. What? When California raised its minimum wage on July 1, 2014, it included a provision that effectively changed the definition of an exempt employee (one who is not subject to minimum wage rules). The definition says such an employee earns a monthly salary equivalent of no less than two times the state minimum wage for full-time employment (2080 hours per year). In other words, to keep an exempt worker exempt when the minimum wage increased, a worker’s salary also had to be increased to keep him/her above the 2.5 times threshold.

Check state law
The minimum wage rates and rules vary from state to state, and rates are set to increase on January 1, 2015, in nearly two dozen states. If your state’s minimum rate and other rules are stricter than the federal FLSA, then the state rules apply.

Conclusion
The federal minimum wage is still $7.25 per hour and applies in states that do not have a higher rate. However, the rate for payments by federal contractors rises on January 1, 2015, to $10.10 per hour. If you have questions about minimum wage and overtime rules, talk with an employment law attorney.

Social Media in Hiring Decisions

December 11th, 2014


http://www.dreamstime.com/royalty-free-stock-photos-hands-holding-social-media-icons-image40796058You may be able to discover the “real” person applying for a job with you by viewing the person’s postings on social media sites such as Facebook, LinkedIn, Instagram, and Twitter. But there are questions about whether you should, or even can, do this.

What you can and cannot do with public postings
It’s not difficult to track down a person who has tweeted or made other postings open for anyone to read. The dilemma is how to use the information you learn from social media—wisely and legally.

It’s a fact that today hiring managers and recruiters are using social media information. Go-Gulf, a web solutions company, posted some interesting statistics on how the information is being used.

When you explore a job applicant’s social media presence, here are some issues to consider:

  • Is it a good idea to make initial determinations based on what you see online? For example, if postings are foul-mouthed, do you even want to interview this person? Is it better to wait until you’ve met the job candidate before searching online? Continuing the example, the person may use appropriate language in the workplace; if you’d never interviewed the person you wouldn’t know this.
  • What’s legal? Federal and state laws prohibiting discrimination do not stop at social media gateways. You cannot use online information in a discriminatory manner. For example, if you find out a person’s religion in a posting, you cannot use this information to discriminate against the applicant.

Private postings
Can you ask a job applicant for his/her username and password on social media sites to read private postings? It depends where you’re located. Six states (Louisiana, New Hampshire, Oklahoma, Rhode Island, Tennessee, and Wisconsin) have barred this action (and Maine has authorized a study on it). As of mid-November, similar legislation is pending in more than two dozen states.

Final thoughts
In my view, it’s probably wise to use information gleaned from social media to supplement rather than supplant a resume and personal interview. The added information may display passion for a particular type of work, good moral character, or other factors that may be a tipping point in making a job offer.

Be sure to keep records of any postings you use in the hiring process. And ask an employment law attorney to review your hiring practices so you know you’re operating within the law.

The Sharing Economy — What It Means to Your Business

December 4th, 2014


Technology has enabled people to share homes (Airbnb), rides (e.g., Lyft, Sidecar, cars (e.g., RelayRides, Getaround), bicycles (e.g., CycleHop), home wifi networks (e.g., Fon), and more, easily and inexpensively.  Technology has enabled people to share their money with worthy causes through crowdfunding (e.g., LendingClub). And businesses are getting into the sharing economy, also referred to as collaborative consumption. The purpose: Only pay for what you need.

Sharing space
Businesses can use well-outfitted commercial space when they need it at a modest cost. For example, with WeWork, an office, as well as a community of other small businesses, are available for $250 a month. The number of co-working spaces in the U.S. increased in the past year by 83%.

Sharing equipment
Businesses may need certain equipment all of the time and could use it on an as-needed basis. For example, Shared-Use Farm Equipment (SUFE) Pool and Maine Farmland Trust lends out large farm equipment. TechShop in nearly a dozen locations nationwide provides manufacturing space and equipment for a monthly fee.

Cautions
Not all cities and towns are embracing the sharing economy when it intrudes on their ability to impose permits and collect taxes. Cases in point:

  • Airbnb has been hassling for a couple of years with NYC over tenancy laws.
  • FlightCar, a service that lets a car owner allow a traveler into San Francisco Airport to use the vehicle (which, by arrangement, has a $1 million liability policy) — the airport isn’t happy because no fees are being paid as compared with rental car companies. And the town where the company is based isn’t happy, pulling a conditional permit because of noncompliance issues. The company and airport are now in court.

Conclusion
It’s clear that the sharing economy is here to stay, although to date, many opportunities are limited to certain urban areas. The only question for business owners is whether it makes sense to become a part of it and how to do this successfully.

Being Grateful: A Business Perspective

November 27th, 2014


http://www.dreamstime.com/stock-image-label-be-grateful-autumnal-background-image43661331On this Thanksgiving Day, there are many things to be grateful for. Family, friends, good health, and freedom top my list. Thinking about my business brings several other things to mind that I’m grateful for.

1.    Business associates
I’ve been at this for a long time, and I’m pleased to say that I continue to work with a number of the same folks for many, many years (e.g., almost 38 years with one person; over 30 years with another). It’s a blessing to have these long associations, and to be able to count on these people.

2.    Stimulating subject matter
I’ve repeated it often: I’ve never been bored a day in my life. That’s due in part to focusing on small business matters, and taxes in particular. Things change every day. There are new developments and lots to pay attention to. While not every piece of news is fascinating, there are enough “wows” on a regular basis to keep things very interesting.

3.    Flexibility
Having my own business has given me flexibility to run my life on my terms. While I work many hours more than 9 to 5, I can (usually) arrange them for my convenience. This was especially helpful when I was raising my children; it’s great now, too, because I can enjoy the sun (I’m in Florida) and more.

4.    Financial rewards
Being in business has given me the financial success that I probably couldn’t have achieved in a more corporate position. This has enabled me to provide an education for my children, live comfortably, and give to charity. While I’m not a one-percenter, I’m grateful for what I have.

5.    Learning opportunities
One thing that contributes to staying young (at least in heart and mind) is learning new things. Technologies and business practices are always changing, and I enjoy keeping up.

Conclusion
In the words of Thornton Wilder:

“We can only be said to be alive in those moments when our hearts are conscious of our treasures.”

Net Neutrality: For It or Agin’ It?

November 20th, 2014


http://www.dreamstime.com/stock-image-internet-neutrality-golden-compass-needle-white-background-image42200651There’s been a lot of media attention lately to the issue of net neutrality. Essentially, net neutrality means that Internet service providers of broadband would be regulated like a public utility. It would be up to the government to dictate what actions these providers could and could not take with respect to certain customers or content providers.

Toward this end, the FCC is working on regulations to reflect net neutrality. One idea put forward recently by FCC Chairman Tom Wheeler would be to impose strict guidelines for certain businesses (e.g., content providers) (essentially employing 1930s public utilities rules) while using less stringent rules for consumers.

Unintended consequences
What regulation would do to the Internet is unclear. While those in favor of net neutrality assure the naysayers that it would merely protect the public and provide a level playing field for all users, those opposed to net neutrality argue that it could:

  • Limit innovation
  • Cut jobs
  • Increase costs (ISPs’ higher costs of compliance would be passed on to their users)
  • Harm investment in broadband deployment and infrastructure, which would mean inferior broadband service for consumers and small businesses and/or that those consumers who currently lack broadband access may never get it

Where the parties stand
President Obama is in favor of net neutrality, which was part of his campaign platform in 2008. His concern is that content providers such as Netflix could make deals with ISPs and receive better access (so-called “fast lanes”) than you and me by paying for this usage. The CEOs of Tumblr and Meetup, as well as many others, support net neutrality.

But there is opposition by many organizations, including Broadband for America. In addition, many small business groups are opposed as well. The SBE Council is opposed to it (find its position here). The Council recognizes that the Internet as it is now has provided small businesses tremendous opportunity (my business depends entirely on the Internet). As part of a delegation from the Counsel we met in late October with all five SEC commissioners or members of their staff to discuss the concerns of small business owners.

From my view, the regulations that could come out by the end of the year are attempting to fix what isn’t broken; they are addressing a potential concern. What’s more, countries such as China are also trying to regulate their Internet usage, and who wants to be like China? Needless to say, like the SBE Council, I’m agin’ it.

5 Financial and Tax Planning Things to Do Right Now

November 13th, 2014


The clock is ticking and the year is winding down. Don’t let December 31 take you by surprise. Act now to solidify your position for the year.

1.    Meet with your CPA
Work your tax advisor to map out some year-end tax planning strategies so you’ll minimize your tax bill for 2014. This may require you to spend more money to reap tax savings, so make sure you have the cash flow to support the strategies. The sooner you schedule an appointment, the more time you’ll have to take action.

2.    Review your balance sheet
If you may need commercial financing next year, your year-end balance sheet may be a key factor in securing a loan. Review what’s on the balance sheet so you can make favorable changes. It could mean, for example, paying an outstanding loan.

3.    Finalize year-end bonuses
Decide who will get bonuses and how much. If your calendar-year business is on the accrual basis for accounting purposes, then bonuses paid to rank-and-file employees within the first 2-1/2 months of 2015 are deductible on your 2014 return. The bonuses must be reflected in the minutes of your company’s annual meeting. Bonuses to a S corporation owner are not deductible until actually paid.

4.    Face your inventory challenges
Have you been sitting on inventory that just hasn’t moved despite your best marketing efforts? In order to make adjustments to closing inventory by writing off obsolete items, you must offer them for sale at least 30 days prior to the end of the year (the date you take the write-off).

5.    Fix benefit plans for the coming year
Are you offering health care coverage? A retirement plan? Now’s the time to act. If you plan to offer employees health care coverage in 2015, you must give them 30-days notice of the coverage so they can decide what to do (e.g., opt out if a spouse’s coverage is better). Also, if you don’t yet have a qualified retirement plan, you must sign the paperwork by December 31 if you want to make 2015 contributions. So talk to an insurance broker for health coverage information and to a financial advisor for retirement plans so you can get started immediately.

Conclusion
Don’t wait until you’re thick in the midst of the holiday season to attend to your tax and financial matters. Do this now!

Let’s Talk Federal Regulations

November 6th, 2014


Red tape can be a nightmare, right? But it may be scarier to see how regulations are made.

That’s my view after taking part in the SBE Council’s first Regulatory Accountability Day and visiting federal regulators and their staff. The group was led by Karen Kerrigan, President and CEO of the SBE Council, and included Brian Moran, Victoria Braden, Todd Flemming, and me. For two days, we visited the Securities and Exchange Commission (SEC), Health and Human Services (HHS), the Federal Communications Commission (FCC), among others.

Here is what I learned:

  • There are a lot of federal employees involved in the regulatory process.
  • All of those we met with seemed highly knowledgeable and hardworking.
  • The pace of regulatory process is slow, and depends in part on political winds.
  • The input from small business is genuinely valued.
  • Showing up matters. Regulators may not understand the impact of their proposed rules, and putting a face on the potential impact is critical.
  • Small business owners need to directly engage in this “shift in power”—from Congress to the regulatory agencies.

My message to small business owners:

Stay abreast of regulatory developments that may impact your business. Note proposed regulations and the period during which you can submit comments. Submit your comments; the agencies proposing the regulations are required to read each and every one them and actually do so (there have been about 4 million comments submitted to the FCC regarding the net neutrality proposals and have read about 3 million to date). Make your comments constructive by specifying ways in which the proposed regulations can be improved, and how they directly impact your business.

One resource to keep up-to-date on regulatory matters is the SBA’s Office of Advocacy’s email communications, including its bimonthly eNewsletter. Subscribe here.

Find out more about the SBE Council’s regulatory visits here.

Preparing Your Workplace for Flu Season

October 30th, 2014


October is the start of the flu season, which generally runs through March. Steps you take now can go a long way in creating a healthy workplace and keeping your company fully-staffed.

Encourage a healthy workplace
Staying healthy is the first line of defense against the flu.

  • Sanitize work surfaces. These include telephones, keyboards, and doors of refrigerators and microwaves. Provide sanitizing wipes for this purpose.
  • Provide information on the flu to staff (e.g., importance of getting flu shots, which may be covered by your company’s medical plan).

Discourage presenteeism
According to one source, 60% of employees report for work even though they are ill. This presents two major concerns:

  • Sick employees are not as productive as those who are well.
  • Sick employees can spread disease.

One of the best ways to do this is to pay for sick days. Only California, Connecticut, Washington, the District of Columbia, and a little more than a dozen cities nationwide require employers to pay for a limited number of sick days (find specifics as of May 2013 here). But even if not required, it may be cost effective to pay for sick days to keep unwell employees from bringing infectious diseases into the workplace.

My preference is for small businesses to pay for an unlimited number of sick days (some workers are ill only once every few years), with the understanding that responsible employees won’t abuse this offering (if they do, they won’t remain on the payroll).

Resources:
•    CDC’s information for businesses and employers
•    Flu.gov’s business planning
•    OSHA’s workers guidance
•    Staples Flu Center


Economy Better but Small Businesses Aren’t Hiring

October 23rd, 2014


Various economic indicators continue to show that the U.S. economy is getting stronger: GDP is up, unemployment claims are down.

How is this good news being received in the small business community? The Hartford’s 2014 Small Business Success Study found that owners are feeling better about things in general, but this isn’t translating into expanding their payrolls.

Some key findings from this study:

  • 77% feel successful (up from 70% in 2013)
  • 56% view slow economic growth as a risk to their business (down from 67% in 2012)
  • 40% think taxes are a major risk (down from 59% in 2012)
  • 39% consider health care costs as a risk to their business (down from 53% in 2012).

So if owners are feeling better in general and feeling less threat from certain major risks, why aren’t they hiring?

The Hartford study found that 67% of small businesses haven’t hired anyone in the past year. It also found that if owners had an extra $100,000, only 8% would spend it on hiring.

Some reasons given for not hiring or not hiring as much as they would have liked:

  • Their business was not growing: 36%
  • They can’t afford to hire: 34%
  • They are taking on additional responsibilities themselves: 31%

Are these the only reasons for not hiring? My anecdotal evidence shows that there isn’t a single answer; each small business owner has his or her own story. One may have target sales in mind before hiring, while another may expect technology solutions to be a substitute for a new worker.

Historically, small businesses have been the job creation engine of the U.S. economy (the SBA said that small businesses created 63% of all jobs between 1993 and mid-2013). While the engine seems to be idling at the moment, as good economic indicators continue to make small business owners feel better, things may shift into high gear soon.

Note: I work with The Hartford to help small businesses achieve success.

It’ll Never Happen to You, But What if it Does?

October 16th, 2014


Dramatic traumatic events, like the Oklahoma beheading at the Vaughn Foods front office on September 25, is not likely to happen in your company, but what if the unspeakable should happen? Maybe something less dramatic but still traumatic could happen.

Can you avert a crisis? How would you handle it if something terrible happens?

It could happen to you
The statistics on workplace violence are startling. According to the CDC, homicides in the workplace average 700 per year. “From 2003 to 2012 over half of the workplace homicides occurred within three occupation classifications: sales and related occupations (28%), protective service occupations (17%), and transportation and material moving occupations (13%).” The number of nonfatal violent crimes was 572,000 in one year (2009).

Even nonterrorist or noncriminal activity can produce trauma in the workplace. A tragic accident can affect your staff and operations.

The result to your company if something terrible should happen: incalculable losses to impacted employees (e.g., their psychological trauma), plus direct and indirect actual costs to your business (e.g., disruption in operations, added costs for remedial actions).

What are your obligations?

According to the Society for Human Resource Management (SHRM), “[n]o federal law explicitly establishes an employer’s duty to prevent or remedy workplace violence against employees. However, employers must comply with the general duty clause [Section 5(a)(1)] of the Occupational Safety and Health Act of 1970, which states that each employer must furnish a place of employment that is ‘free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.’”

But of course small business owners feel a personal connection with their staff and want to be sure their workers are safe. Being aware of the risks that can befall a company is the first step in preparedness.

Encourage workers to express their concerns to a designated person if a co-worker is acting erratically or there is a domestic violence threat that could spill over into the workplace (the designated person can be the owner or anyone else who is clearly identified for this purpose), making sure of confidentiality and a promise of any necessary follow-up or support. The FBI has a sample threat assessment questionnaire that you can use.

Planning
While there’s no way to absolutely ensure a terrible act of violence won’t occur in your company, there are some preventive measures you can take to minimize your risk:

  • Think “security.” This means limiting access if appropriate, using security cameras, and if you use security guards, making sure they are well trained.
  • Hire smartly. While there’s no guarantee, doing background checks on job applicants may help to avoid problem employees. But watch legalities about what you can and cannot check (e.g., some states bar inquiries about an applicant’s prior criminal past).
  • Do risk assessment. Periodically revisit what’s going on in your company—your staff, your security measures, your neighborhood’s activities.
  • Create an emergency action plan. When something occurs, make sure employees know what to do. This may include, for example, training employees in CPR.

Crisis management
Ok, you’ve done everything possible to prevent a workplace tragedy, but one happens nonetheless. This could be the result of a civil riot, a domestic or foreign terrorist attack, or other unexpected event. In the aftermath, what will you do? Do you know how to obtain trauma counseling for your staff?

Last thought
When taking any action, make sure that what you’re doing, or planning on doing, is legal. If you have questions, talk with an employment law attorney.