Human Resources

Attorney Gene’s Top Tips for Hiring Employees

One of the hallmarks of a truly successful business is the need to hire additional employees. If your business is ready to hire employees, here’s how to go about it.

Tip #1. Use a modern, legally-compliant job application form.

Colorado has a new “ban the box” statute that prohibits use of job application forms asking whether the applicant has ever been convicted of a felony. “What???,” you say! True. And that is for some reasons the current political powers that be deem very worthwhile. For now, the Colorado law applies to private employers with 11 or more workers. But on September 1, 2021—which will be here before we know it—it will apply even if you have only one worker. So, start getting used to the term “justice involved person.” It is like calling someone a “firefighter” instead of a “fireman.” Someday, we’ll all be doing it second-nature.

Tip #2. Comply with the immigration laws.

When you hire a worker, you must comply with federal and Colorado immigration laws to ensure that the worker you hire is permitted to work in the U.S. Federal form I-9 requires specific, original forms of identification and, for some types of identification, more than one type of ID. Employers must certify that they have examined the original documents. For audit purposes, employers should permanently retain copies of the documents they examined. People have gone to jail for I-9 falsification, so give careful thought to how bad you really want to hire that worker with an obviously-fake ID. Just because your competitors are hiring illegal workers doesn’t mean you can get away with it too.

Tip #3. Report your new hires.

As mandated by federal law, in order to facilitate collection of court-ordered child support, Colorado employers must report new hires within 20 calendar days after the date of hire or by the first regularly scheduled payroll following the date of hire, if such payroll is after the expiration of the 20-day period. Good news! This law uses the same definition of “employee” as for federal income tax purposes, so you don’t have to learn yet another definition of “employee.”

Tip #4. Don’t illegally discriminate in hiring.

Today, if you can think of a class of disadvantaged persons, chances are pretty good they’re protected against discrimination in the hiring process. Accordingly, in Colorado do not discriminate in hiring based upon age (40 and above), ancestry, color, disability, gender identification, immigration status, marriage to a coworker, military service, national origin, pregnancy, race, religion, sex, or sexual orientation. By the way, non-discrimination in the hiring of disabled persons may include a host of reasonable accommodations, so don’t be too quick to tell someone they can’t apply if they can’t walk up the stairs of the building, or anything else medical/physical/mental that impacts their ability to fill out an application just like anyone else. Also, discrimination based upon race may be established by refusing to hire persons with “natural hair,” and discrimination based upon religion may be established by refusing to hire persons with beards. So, be careful when factoring in an applicant’s grooming.

Tip #5. Post required notices of employee rights. ‘Nuff said.

Tip #6. Use hiring letters.

When hiring, send your new hire a letter including most or all of the following: the job title, the exempt/nonexempt status for overtime purposes, your established “workweek” for wage/hour purposes, the initial work schedule, the pay (salary, hourly, commission, piece-rate, non-discretionary bonus), the pay dates, current benefits, vacation policy (cover earning paid leave if it is offered), sick leave, start date, probationary period, confidentiality or non-compete requirements, protection of trade secrets and customer information, and at-will status (assuming want at-will status, which you almost certainly do). Have them sign it and return it.

Tip #7. Complete federal tax form W-4. Of course.

Tip #8. Provide a decent onboarding.

New hire orientation can include providing: a written agenda for the first week, a written job description, a copy of your performance evaluation form, copies of policies/procedures/handbooks (get a receipt). Inform the employee of meal and rest periods (which are required by law). Show them your posters on employee statutory rights. Show them their workspace, and make sure it is clean, neat, and safe before they arrive. Introduce them to their co-workers, giving an organizational chart (preferably with photos). Communicate your mission and values using examples. Communicate how their job helps fulfill your mission. Cover the training they will get, addressing safety concerns in detail, and have them sign-off on safety training they have received. Assign them a mentor/buddy. Do a Q&A, and check back with them every few days. You’ll be amazed at how a proper onboarding can improve productivity and employee relations.

© Copyright 2019, Gene R. Thornton, Attorney-At-Law, all rights reserved.

Attorney Gene’s Top Tips for Hiring Independent Contractors

The ability to avoid payroll taxes and other regulatory aspects of hiring employees causes many small businesses to turn instead to hiring independent contractors. However, do not make the mistake of thinking that independent contractors and employees are interchangeable based merely upon what you choose to call them.

Don’t misclassify workers as “independent contractors” when, legally, they’re “employees.”

Laws exist to protect workers from being taken advantage of by people who hire workers as “contractors” or “1099 employees” as a way of getting around payment of minimum wage/overtime compensation and statutory benefits that are legally mandated.

Different laws have different tests for the purpose of determining whether a particular worker is an “independent contractor” or an “employee.” “Employee” is defined differently for purposes of tax withholding (federal and state) wage/hour (federal and state), unemployment, and workers compensation insurance. For wage/hour purposes under Colorado law, “employee” “means any person, including a migratory laborer, performing labor or services for the benefit of an employer.” Colo.Rev.Stat. § 8-4-101(5).

“Relevant factors in determining whether a person is an employee include the degree of control the employer may or does exercise over the person and the degree to which the person performs work that is the primary work of the employer; except that an individual primarily free from control and direction in the performance of the service, both under his or her contract for the performance of service and in fact, and who is customarily engaged in an independent trade, occupation, profession, or business related to the service performed is not an “‘employee.’” Colo.Rev.Stat. § 8-4-101(5).

Notice those words, “degree of control.” Do you see how the definition of “employee” for wage/hour purposes is dependent upon the facts of each situation? If you hire the neighbor’s kid to mow your lawn and you tell him or her to show up exactly at 10:00 a.m. on Tuesdays, to use your own mower, then use your own edger, then use your own leaf blower, you have probably just hired yourself an “employee.” And that would probably still be true if the kid mowed lawns for money for a few other neighbors as well. Contrast that with a true “independent contractor” relationship where you hire a company you found on the internet with four crews of two people each, that come on their own schedule, use their own machines, and have hundreds of customers. If you’re the one with the lawnmowing business and you intend to staff it with a bunch of teenagers who have their own lawn mowing businesses, but you’re providing machines and dictating work schedules, your probably going to be deemed to have “employees,” not true “independent contractors.”

Don’t assume that just because a worker is an “independent contractor” for one purpose, he or she is an “independent contractor” for all purposes.

The definition of “employee” is different under other statutes (taxation, unemployment, and workers compensation), so don’t believe it if anyone ever tells you there is a simple answer to the question, “is he/she an employee or independent contractor?” It is a complicated, fuzzy, fact-intensive inquiry—under each statute.

The back liabilities, penalties, legal expenses, accounting expenses, and lost sleep you WILL experience WHEN (not “if”) you are audited for misclassification of workers will make you wish you hadn’t done that. The SBDC offers materials, consulting, and webinars on proper classification of workers. Take advantage of them. Consult the IRS, U.S. Department of Labor, Colorado Department of Labor Wage/Hour Division, Unemployment Division and Workers Compensation Division for the rules for distinguishing “employees” from true “independent contractors” under the various statutes. When in doubt . . . the worker is almost certainly an employee.

Have a written Independent Contractor Agreement.

It is very important when hiring a worker that in any way could be construed to be an “employee,” you have a written independent contractor agreement. In particular, for Colorado unemployment insurance purposes, independent contractor relationships should be documented by a written agreement containing specific provisions. Some of the provisions must be written in ALL CAPS or Boldface. I suggest you hire an experienced employment law attorney to review any independent contractor agreement you come up with. Your average business attorney isn’t going to know about the Colorado unemployment guidelines for what independent contractor agreements should contain. Using qualified and experienced legal counsel can help you include in your form agreement all sorts of things you may not have thought of such as provisions for protection of trade secrets, non-competition provisions, an indemnification clause, alternate dispute resolution mechanisms, and a clause for recovery of attorney fees in the event of breach of the contract.

Check out your contractor’s licensing, insurance, and bonding situation.

Many lines of work are regulated by the Colorado Department of Regulatory Agencies also known as DORA, and people performing such work are required to be licensed. Even if you don’t need a licensed service, you may still want a service that has in place suitable liability insurance or bonding. Don’t be satisfied with just seeing a photocopy; call the supposed insurance company to make sure the policy is currently in effect.

© Copyright 2019, Gene R. Thornton, Attorney-At-Law, all rights reserved.

Attorney Gene’s Top Tips for Staffing Up

There comes a time when a small business owner may declare: “I need to hire someone to help me. I can’t do everything by myself.” Here are my top tips for businesses in need of staffing help.

Farm it out.

Many small business owners do their own payroll, accounts payable, accounts receivable, and tax returns. Bite the bullet and hire a professional so that you can spend your time making money and doing what you’re good at. Why did you want to start your own business in the first place? I bet it wasn’t the prospect of doing payroll every two weeks.

Consider alternatives to hiring traditional employees.

Hiring traditional employees involves a lot of paperwork, posting statutory notices of legal rights, paying minimum wage and overtime, tax withholding, unemployment insurance, workers compensation insurance, and exposure to anti-discrimination laws. You may be able to get by with hiring independent contractors. But BEWARE! See my blog on Hiring Independent Contractors. Hiring an independent contractor isn’t as simple as you and the worker agreeing not to withhold taxes and calling him or her a “1099 employee.”

Consider using a temporary agency or professional employer organization (PEO) to test the waters and have the paperwork done for you.

Or, if done properly, you may be able to set up a low-cost internship. See U.S. Department of Labor Fact Sheet #71: Internship Programs Under the Fair Labor Standards Act for guidance.

For the right kind or organization, you may be able to recruit volunteers. Consult U.S. Department of Labor Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA).

Put your kids to work. The experience of earning a dollar rather than having one given to them could be hugely beneficial to your youngins. Plus, it starts building their résumés. Also, there are some nifty tax benefits for hiring your own children. But don’t violate the child labor laws. The child labor laws tell you what kind of work kids of various ages can do, when they can do it, and for how long. We don’t want eight-year-olds disposing of hazardous waste for 12 hours a day when they should be in school, for example. If you’re being paid by the business, you probably have to pay your children to work in the business as well. But that doesn’t mean you have to pay your own kiddos the same rate you would have to pay to get a willing worker on the open market, so long as you pay minimum wage and overtime.

Count the costs.

Don’t staff up without knowing what it’s going to cost you. Once you realize the full costs, you may decide it isn’t worth growing your business after all. You will have to pay: minimum wage, and time-and-one-half overtime when applicable, the employer’s side of FICA, FUTA, Colorado unemployment insurance premiums, and workers compensation premiums. Depending upon the size of your company, you may be required to provide health insurance under the Affordable Care Act. In the near future, and again depending on the size of your company, you may be required to provide paid family and medical leave. You’ll have to pay a little for employees on jury duty too.

Don’t grow too fast.

Although growing your company may be have been an initial goal and make you feel like you’re a success, reconsider whether that is something you really want—at least right now. Growing too fast has been the downfall of many small businesses. The businesses end up running the owners rather than the other way around.

© Copyright 2019, Gene R. Thornton, Attorney-At-Law, all rights reserved.

Are You Ready for Big Wage Changes in 2020?

By Reanna Werner, MBA, SPHR, SHRM-SCP |  Co-Founder, HR Branches

"On January 1, 2020, we are going to wake up to two significant wage changes that will impact most Colorado small businesses."

On January 1, 2020, we are going to wake up to two significant wage changes that will impact most Colorado small businesses. Are you prepared for these changes?

What’s Changing?

 

  • Hourly Employees:  Colorado Minimum Wage- Colorado minimum wage has been on an increased schedule of $.90 per year for the past 2 years. In January 2020, you will see the third and final $.90 minimum wage increase. Effective January 1, 2020, Colorado Minimum Wage will be:
    • Colorado Minimum Wage- $12.00/ hr
    • Colorado Tipped Employees- $8.98/ hr

*Denver increased its local minimum wage to $12.85 per hour effective Jan. 1, becoming the first local government in Colorado to set its minimum higher than the statewide level per a new statute passed by the legislature in 2019.

  • Salaried Employees: Minimum Salary Rate (Federal Overtime Rule)- The minimum annual salary for exempt (salaried) employees is going to increase in 2020. Effective January 1, 2020, the Federal minimum salary rate will be:

    • $684 per week (or $35,568 per year)
    • $107,432 for highly compensated employees 

*Don’t forget that in addition to the minimum salary level, you must meet the duties requirements. 


What To Do?

  • Review all employee wages. The easiest method is to pull a basic wage report out of your payroll system (if you have one). Review how they are paid (hourly, salaried or tipped), what they are paid and determine whether any changes need to be made. 

  • Increase all minimum wage worker’s pay to Colorado’s required minimum wage, if necessary.

  • Increase salaried employees’ wages or change wages to an hourly rate that meets FLSA requirements, if necessary.

  • Communicate with your employees about any changes they may see on their paycheck and why. 

  • Update Colorado Minimum Wage employment poster.  The poster should become available on the CO DOL website on January 1, 2020: https://www.colorado.gov/pacific/cdle/posters 
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