Recruiting and Selecting Employees

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Recruiting and Selecting Employees

• For the Small Business

2
Self- Employment has Advantages and Disadvantages

• A disadvantage of being self-employed is you may
  not have anyone to help out.
• You ARE 1 in your business.
• The problem is you might be the
• only one.
• If you ARE the business, you undoubtedly have a
  lot of responsibilities, and very little time to
  take a break, let alone a vacation!

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Self-Employment Limited Capacity

• How does a self-employed person spend their
  time?
• 25 hours per week producing the product or
  billable hours.
• 10 hours marketing.
• 5 hours on administrative- management
  activities.
• At 50 per billable hour, that is
• 1250 per week, 5416 per month, or 65,000 per
  year, before expenses AND before a vacation!

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Limited Capacity and Life (of a sole proprietor)

• The business is reliant on you.
• Without you, there isnt any revenue coming in.
• If you get sick, you dont have aback-up.
• If you go on vacationits un-paid.
• After 10, 15, or 20 years, when you want to
  retire, what do you have to sell?
• Does the business retire with you?

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Advantages to Hiring Employees

• They can be trained to run the business in your
  absence.
• You are setting up an infrastructure that perhaps
  you can pass on or sell to someone.
• You can delegate the admin jobs (or the stuff you
  dont enjoy).
• You can expand your business past the
  single-person capacity!

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Making the Decision to Expand or Not!?

• Like starting a business, the decision to expand
  and take on employees, should not be taken
  lightly!
• Ask Yourself these questions
• Are you ready to expand?
• Can you afford it? (Do a Pro-forma Projection)
• Are you ready to take on more management
  responsibilities?
• Are you ready to give up control?
• Can you take on more risk?

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Alternatives to Hiring an Employee

• Source out work to other small businesses. This
  works well for certain admin jobs like
• - payroll, bookkeeping, security, cleaning
• Use a Staffing Agency. This works well for
  part-time or seasonal help, or when you dont
  want to deal with the paperwork.
• Take on Independent Contractors.

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Independent Contractor vs. Employee
The use of an Independent Contractor or IC has
been a critical issue in the last 2 decades. The
IRS and the EDD enforce a social policy that
states people should be employees (whenever
possible). The policy is to protect employees
(not to punish small businesses). BE AWARE of the
differences between an IC and an Employee. The
IRS has developed Twenty Common Law Factors
TEST to determine the status
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IC Checklist

• No instructions
• No Training
• Services do not have to be rendered personally
• Work NOT essential to firm
• IC sets hours
• No on-going relationship

• ICs have other work
• ICs determine job location
• ICs pay business expenses
• ICs have own tools
• ICs can make profit or loss
• ICs cannot be fired at will

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Independent Contractor vs. Employeethe risk

• If the Independent Contractor works and acts more
  like an employeethe government is going to say
  they are an employee.
• The RISK often comes after the IC leaves and
  tries to collect unemployment compensation.
• You would pay ALL back payroll taxes other
  penalties.
• The lesson here is to make sure you have the
  necessary documentation that shows they are a
  true Independent Contractor

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IC Documentation Files

• Copy of their own business license.
• Hold harmless (and possibly ) conflict of
  interest agreement.
• Form with Twenty Factor Checklist that they have
  signed
• Current and past contacts

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Using a Staffing Agency

• The person who they send to you is technically an
  employee of the Staffing Agency.
• The Staffing Agency deals with payroll, checks,
  tax forms.
• You pay a hire amount to the Staffing Agency and
  they pay the employee.

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Pros and Cons of Hiring Staffing Agency
Employees

• Pros
• Often quicker than recruiting yourself
• Staffer is screen through Staff Agency
• No employment paperwork (payroll, taxes, etc.)
• Use for a limited period without hiring.

• Cons
• Hourly rate is significantly higher than higher
  yourself.
• Less control on who they send to you.
• Many temporary firms will not have the employee
  that has technical experience you may need.

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What about under-the-table?

• Its true, many small business owners will pay
  people under-the-table for services rendered.
• Funny thing is the government doesnt have
  statistics.
• Remember. it's your business, so it is your risk!

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Bartering Services Products

• A Renewed-Old-Method of trading services is
  reemerging in the small business arena.
• Business Bartering for trades or services is
  predicted to grow over 400 in the next few
  years.
• The Barter Group has set up a program on-line
  with over 500 small business members.
• The Barter Group takes a 12 cut from trade (1/2
  cash ½ trade).
• At the end of the year members receive a
  itemized list of all trades and a 1099B tax form.

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EDD Services

• The EDD does more than help you file for
  unemployment insurance or fill out an EIN.
• The EDD has the largest on-line Job Bank, where
  you can post your vacancy or look for qualified
  candidates caljobs.org.
• The EDD can help you find qualified workers and
  in the past have offered on the Job Training
  Programs (where they may pay half of the salary)

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Using Government One-Stop Shops Workforce
Investment Board

• Few Small Business are aware of or take advantage
  of the local services that are available to them
  through the Workforce Investment Board (WIB).
• The WIB is the one-stop government agency that
  includes the Employment Development Department,
  and locally the SEC- Solano Employment Connections

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More One-Stop EDD Services

• Worker Skills-Training for Small Larger
  Businesses
• Labor Market Information wage information,
  employee issues, AA and EEO compliance plans
• Payroll Tax Information
• California Tax Information
• Downsizing assistance
• Job Service Information including recruiting

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Employment Legal IssuesBefore You Recruit
Understand the Legal Guidelines
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Fair Labor Standards Act

• Workers must be identified as non-exempt or
  exempt.
• Business that make less than 500,000 MAY HAVE
  EXEMPTIONS ( BUT CHECK!!!)
• Non-exempt must be paid at least the minimum wage
  and receive over-time pay after 40hours at 1.5
  times ( see state law)
• Equal Pay for Equal Work!

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Stiff Penalties for Abusing Wage Laws

• Ignorance is not an excuse.
• Many small businesses have received stiff
  penalties and fines for violating state wage laws
  and the FSLA.
• Fines of 1,000 per employee if classification of
  exempt-non-exempt is incorrect.
• Exempt employee must be executive, administrative
  or professional employee with min salary of 250
  per week.

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MORE Employment Laws to Review

• Title VII of Civil Rights Act- companies with 15
  or more employees Prohibits discrimination.
• Equal Pay Act- Amended Title VII
• American Disabilities Act- ADA- prevents
  discrimination due to disabilities
• National Labor Relations Act- Right to Form Union
• Age Discrimination in Employment Act- companies
  with 20 or more employees

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And MORE Employment Laws

• Family Medical Leave Act- Companies with 50
  employees.
• Occupational Safety Health ACT- OSHA- ALL
  Businesses
• Workers Compensation- mandatory insurance
• Immigration Reform Control Act Immigration
  Act- All businesses

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Immigration Law Acts and How that Impacts Your
Hiring Procedures
The Immigration Acts of 1990s were enacted to
prevent illegal aliens form working in the
U.S. You are required to have new employees fill
out an I-9 or Employment Eligibility
Verification Form. The Company must retained the
form at the business location. Fines are imposed
if you do not have proper documentation.
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OSHA Occupational Safety Health Act

• Law designed to reduce workplace hazards
  improve health safety programs for workers.
• OSHA does not apply if
• - your self-employed
• - your business is a farm that employs your
  family
• - mining business (has other regulations)

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OSHA Posting Reporting

• You must post a notice called Job Safety
  Health Protection.
• Many specific industries (restaurants) have other
  notices that must be posted.
• Keep records of safety if you have ten or more
  employees, for over 10 years.

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Other Considerations Before Starting the Hiring
Process

• What do I really Need the Employee to do? Do a
  Job Analysis and then establish a Preliminary Job
  Description.
• Establish the future-employees wage rates. Are
  you competitive? Will this employee get benefits
  or be an exempt employee?
• Develop a typical work schedule.
• Revise the Organizational Chart.

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Ready Set Hire Steps to Recruitment Hiring

• Job Analysis- determine the duties and nature of
  the job to be filled the experience required by
  the applicants.
• Job Description- a written statement of duties
  responsibilities including reporting
  relationships, working conditions, methods
  techniques used and materials and equipment on
  the job.

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Steps to Hiring

• Develop a recruiting plan
• -Where will you look for your future employee?
• - Will you advertise
• 4. Plan the Interview
• 5. Conduct the Interview.
• 6. Check the references!

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Preparing a Job Description

• Preparing a job description is a JOB that many
  small businesses over-look.
• It is important to spend a good amount of time
  defining the task.
• The EDD has Job Descriptions Wage Information,
  as does the Dictionary of Occupational Titles
  published by the DOL has over 20,000 Job Titles.

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Recruitment Strategies A Few Ideas

• Improve Your Image Its got to look good and be
  fun if someone wants to work there!
• Utilize Your Current Employees- Get them to
  recruit!
• Use Newspaper Ads- Still the best way to get a
  BIG response!

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More Recruiting Strategies

• Use On-line Recruiting- Nothbayhelpwanted.com
• Ask Your Customers
• Develop Contacts Schools Institutions-
  possibly for entry level or internships (Checkout
  SCC, Zafer Sun)
• Participate in Job Fairs- local and regional
• Recruit on Campuses