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HR[preneur] Episode 15: Bad HR advice

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As a business owner, there's never a shortage of people ready to offer their advice on how to run your business. But not all advice is good. In this episode, we'll talk about advice on hiring, management, and other HR issues that makes us cringe.

Episode Info

Bad HR advice you should ignore (click to listen/download podcast)

Reference Shelf

• Does Your Business Need Employee Practices Liability Insurance?
• Modernizing Your HR and Talent Strategies – Tips for Getting Started
• Use the Science of Decision Making to Enhance Your Recruiting Processes

Speaker Info

Kara Murray is the Vice President of Sales Operations for ADP's Small Business Client Channel. Kara has been with ADP for 9 years and has been in various sales and sales leadership positions while she has been with ADP. One of her primary goals is to educate our clients on the ever-changing HR landscape and how ADP can help them overcome everyday workplace challenges.

Kristin LaRosa is Senior Counsel for ADP's Small Business Services division. Prior to joining ADP, Kristin worked as an employment lawyer where she represented employers in litigation and provided legal advice and counseling on day-to-day employment and HR matters.

Meryl Gutterman is Counsel for ADP's Small Business Services division. Prior to joining ADP, Meryl worked as an attorney in private practice representing small businesses in employment-related matters.

Full Transcript

Kara Murray: As a business owner, there's never a shortage of people ready to offer their advice on how to run your business, but not all advice is good. Today we'll talk about hiring, management and other HR advice that makes us cringe. I'm Kara Murray and this is HR^{preneur}, a podcast by ADP.

You work incredibly hard to support your employees and make your business a success. More than likely, this means you wear lots of hats and one of those is probably HR professional. We're here to help you get the insight you need in order to tackle day-to-day workplace issues. This week I'm joined by Kristin LaRosa and Meryl Gutterman, both work as council for ADP small business services. I also want to thank the ADP client appreciation program for sponsoring today's episode. You can earn free payroll by referring ADP, and if you want to find out more, you can talk to your local ADP sales representative.

So Kristin and Meryl, what's the worst HR advice you've heard?

Kristin LaRosa: Wow, there's so many. There's just a lot of advice out there that's not good. But one example that comes to mind is the idea that you should reclassify your employees or simply hire workers as independent contractors in order to help save money. We've seen a lot of businesses going in this direction, especially when you look at workers who are part of the gig economy.

Kara Murray: That sounds pretty enticing for any employer.

Kristin LaRosa: It is. Independent contractors are great. They save employers from having to pay certain payroll taxes, provide benefits, meet minium wage and overtime requirements but the reality is that only a small percentage of workers actually qualify for independent contractor status. And the penalties for misclassification can be quite significant.

Kara Murray: So how can an employer accurately make this assessment?

Kristin LaRosa: Yeah, this is a tricky area of law because there's no one universal set of criteria for employers to rely on. That said, generally the more control a business has over where, when and how the worker performs work, the more likely they are considered to be considered an employee and not an independent contractor. There are a number of federal and state tests that employers must consider when they're making this assessment.

So for example, businesses have to consider the IRS common law test when they're trying to determine how to classify a worker for purposes of determining whether to withhold income, Social Security and Medicare taxes. However, to determine whether someone is an employee who is subject to protections under the Fair Labor Standards Act or the FLSA, an employee may have to rely on a different test such as the economic realities test which is used to determine whether the worker is dependent on the business to which they provide services.

So it's a very grey and complex area. We usually tell clients or employers if they're not sure how to designate a worker, it's always best to err on the side of caution and classify them as an employee.

Kara Murray: Great. Thanks, Kristin. That's definitely some really good information for business owners. All right, Meryl, what about you? What's the worst advice you've heard?

Meryl Gutterman: Well, as Kristin mentioned, yeah, there's a lot of bad advice out there. I don't know if this is the worst advice I've heard but it's certainly among the most common and concerning and that is if an employee didn't get authorization to work overtime, then you don't have to pay them overtime.

Kara Murray: Wow. So what if the employer has a policy that overtime must be authorized in advanced?

Meryl Gutterman: It's a great idea to have that policy but it doesn't relieve the employer of paying for overtime worked. So the employer could discipline the employee for working unauthorized overtime but under no circumstances can the employer without overtime pay.

Kara Murray: Okay. Good to know. So Kristin, what other pieces of bad advice have you heard?

Kristin LaRosa: So recently we had an employer who asked whether they can give their non-exempt employee comp time instead of paying them overtime for the hours that they worked which is a problem because this is not a permitted practice. Employees can't relieve employers of this responsibly by electing extra time off over overtime, you know, even if they try to do that, employers will still have an obligation to pay overtime and employees can't agree to waive this right for example.

Meryl Gutterman: Right. And while we're on the topic of pay, there is another misconception floating around that I wanted to mention and that is that employers can hold a departing employee's final paycheck until that employee returns company equipment. But the fact is that regardless of whether an employee has failed to return company property, the employer still needs to meet final pay deadlines and federal law requires that final pay be paid at the next regularly scheduled payday. And then there are states who might also require final pay even sooner than that.

Kara Murray: How about deductions for the unreturned equipment? Is that allowed?

Kristin LaRosa: So I think that depends on the type of employee. So if you have non-exempt employees, the FSLA permits deductions for unreturned equipment as long as those deductions don't reduce the employees pay below the minimum wage or cut into any overtime that they might be entitled to but some states prohibit this practice. So as an employwer, you want to make sure that you're looking at your state law before you're making any kind of deduction. With exempt employees, it's fairly straight forward and you can't deduct from an exempt employees pay for any unreturned equipment.

Meryl Gutterman: Right. You should also get an employee's written consent before you go ahead and make a permissible deduction. The agreement that you put in place should specifiy the items for which deductions are going to be made. Whether it's company uniforms or equipment or if it's because of employee theft. You should also make sure you're putting in writing the amount of the deduction and how you're going to determine it. And before you go ahead and make any deduction, because this is a real difficult area, we recommend that you consult with legal counsel because the rules are tricky.

Kara Murray: Okay. What other bad advice have you heard?

Kristin LaRosa: So I recently had an employer who told me that they read online when new hires complete the I-9 form they should require a U.S. passport since it provides both identity and work authorization and it's usually harder to forge than some of the other documents. So employees have the right to choose which documents they want to present in order to confirm their eligibility to work in the U.S. provided that they're on the I-9s list of acceptable documents. So as an employer, you can't specify which documents the employee needs to show you.

Kara Murray: Got it. That's a really great example of relying on the web to get answers, but unfortunately we know that not all information available online is accurate. All right. Meryl, can you think of any other examples of bad advice that you want to share?

Meryl Gutterman: Oh sure. Well, when we're talking about new hires, I've heard a lot of employers think about putting new employees through a probationary period and that while it may seem like a good option for assessing a new hires performance, it isn't always the best idea and it can lead to a lot of confusion.

Kara Murray: That's an interesting one. So employees may think that once they successfully complete a probationary period they're no longer at risk for termination.

Meryl Gutterman: Exactly. Employees may believe that they can't be terminated due to performance after they finish up their probationary period. Or they may think that they can only be let go for good cause. This misunderstanding can lead to an increased number of wrongful termination complaints.

Kristin LaRosa: Yeah, and I would also add here that in addition to the potential exposure to legal claims, probationary periods may also provide -- they're kind of undesirable introduction to the company. And then also creates a negative connotation for some new hires who may mistakenly believe that they're immediately being placed on a disciplinary action plain or subject to some kind of harsher scrutiny at the start of their employment.

Meryl Gutterman: Right. So we recommend as a best practice that you avoid using probationary or introductory periods in your terminology and instead focus on working with all new hires to set clear performance goals and make sure that they have all of the tools and the resources that they need to meet their performance expectations.

Kara Murray: Okay. So I think we have time for one more example. Kristin, do you want to take this one?

Kristin LaRosa: I do.

Kara Murray: So recently I had an employer whose employees who were abusing their sick leave policy and they told me, the employer told me that someone told them that they could require a doctor's note for every sick day used in order to help reduce sick leave abuse.

Kristin LaRosa: Well, most leave laws allow employers to ask employees for reasonable documentation but of course there are certain laws that have restrictions. So for example, some paid sick leave laws prohibit employers from requesting documentation like a doctor's note unless the employee has taken sick leave for more than three consecutive days.

Meryl Gutterman: That's right. And even in the absence of a restriction, you should really consider what, if any documentation would be reasonable to require from your employees and then make sure that you're applying that policy consistently. So requiring employees to produce a doctors not for every sick may result in more employees coming to work sick because they don't want to go ahead and incur the cost of having to go to the doctor for a visit and get a note.

Kara Murray: Well, we definitely covered a lot of misconceptions today. Kristin and Meryl, do you guys have any final advice for our listeners?

Kristin LaRosa: Sure. I think touching on what we talked about earlier, I would say that if you're going take it upon yourself to conduct your own research on various HR rules, you want to at least make sure that you're getting information from trusted resources and that the information that you're getting is current because the laws, rules, regulations are constantly changing. Of course the preferred approach would be to try and seek guidance from experience council.

Meryl Gutterman: And once you have that guidance and know the law that applies to your business, just review your policies and your practices to make sure that they're consistent with all of the applicable laws.

Kara Murray: Great. Thank you so much, Kristin and Meryl. We also want to thank you all for listening to HR^{preneur}. I'm Kara Murray. For all the latest episodes, subscribe on Apple Podcast, Google Play or whatever you listen to podcasts.

Podcast Overview

HR^{preneur}, a podcast by ADP's Small Business Services, is designed to help you get the insight you need in order to tackle day-to-day workplace issues. In each episode, you'll hear from industry experts about the latest in HR, such as the #MeToo movement, evolving marijuana laws, and more. Each episode will be between 10 and 15 minutes long, but full of practical advice. Find us on Apple^® Podcasts or visit the HR^{preneur} podcast page on Podbean.