Recruiting and Selecting Employees For the Small Business SCC Recruiting Employees Bus 207, courtesy of s Have any of you been involved in Recruiting or Selecting Employees? o What was your first Problem?  Who Job description? Personality Wages required Skills needed How Referral Walk on How to recruit SCC Recruiting Employees Bus 207, courtesy of s Is I n goo tervie w dp red ing a icto futu r of re j per form ob anc e? Self- Employment has Advantages… and Disadvantages • A disadvantage of being self-employed is you may not have • • You ARE #1 in your business anyone to help out 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! SCC Recruiting Employees Bus 207, courtesy of s 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: $1,250 per week, $5,416 per month, or $65,000 per year, before expenses AND before a vacation! SCC Recruiting Employees Bus 207, courtesy of s Is $5 r gu ea 0.0 es so 0/ bu s fo nab hr a dg r y le et ou ? r Limited Capacity and Life (of a sole proprietor) • • • • • The business is reliant on you • Does the business retire with you? Without you, there isn’t any revenue coming in If you get sick, you don’t have back-up If you go on vacation…it’s “un-paid.” After 10, 15, or 20 years, when you want to retire, what you have to sell? SCC Recruiting Employees Bus 207, courtesy of s 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 least enjoy) • You can expand your business beyond the single-person capacity! SCC Recruiting Employees Bus 207, courtesy of s 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 proforma projection!) Are you ready to take on more management responsibilities? Are you ready to give up control? Can you take on more risk? W yo ppe hat ex u d n s pa on if n d ’t ? SCC Recruiting Employees Bus 207, courtesy of s The Rising Cost of Hiring an Employee Before taking on an employee, consider the overall impact and cost to hire- • • • • • • The salary or wages The state and federal payroll taxes Mandatory insurances Increased Insurance Benefits Changing the “environment” of the business to ensure safety SCC Recruiting Employees Bus 207, courtesy of s Hiring New Employees: The Paperwork- Federal Requirements Federal Law requires you, the employer to withhold, report and pay over to the federal government certain deduction from your employees’ wagesYou must report•Employee’s federal income tax- FIT (use tables) •Employee’s contribution to Social Security-FICA 6.2% H se ire rv a ice ! •Employee’s Contribution to Medicare – Medicare 1.45% •Federal Unemployment- FUTA 1.45% An employer is required to file for a FEIN- (also called EIN) federal employee identification number Form SS-4 SCC Recruiting Employees Bus 207, courtesy of s Federal Tax EIN Form SS-4 • • • • • • Go on-line to www.irs.gov Click on business related topics- Employer ID Numbers Click on How to Apply for an EIN Fill out form and submit You will get a number on the spot Or Fill Out Form SS-4 and Mail SCC Recruiting Employees Bus 207, courtesy of s 10 EDD “Employment Development Department” Services • More than just helping you file for unemployment or fill out an EIN number • The EDD- has the largest on-line Job Bank, to post your vacancy or seek qualified candidates • The EDD can help you screen workers, and have offered OJTP programs SCC Recruiting Employees Bus 207, courtesy of s 26 Government One-Stop Shops • You can save money by going locally and utilizing the government “one stop shops” provided by the WIB- Workforce Investment Board • The WIB is a one-stop including EDD, Solano Employment Connection and other non-profit assistance organization • They provide services in recruiting, screening, training, labor market information, EEO compliance, payroll tax information, and downsizing services SCC Recruiting Employees Bus 207, courtesy of s 27 On-line Recruiting Services A growing number of job seekers are using on-line recruiting services Advantages for the employer are they are less expensive, easy to post vacancies and they have wide-range of publicity • • • • Flipdog Monster.com Careerbuilder.com Northbayhelpwanted.com SCC Recruiting Employees Bus 207, courtesy of s 28 Employment Legal Issues SCC Recruiting Employees Bus 207, courtesy of s 29 Fair Labor Standards Act • Workers must be identified as non-exempt or • Business that make less than $500,000 MAY HAVE • Non-exempt must be paid at least the minimum wage exempt EXEMPTIONS (VERIFY!) and receive over-time pay after 40 hours at 1.5 times (see state law) • Equal Pay for Equal Work! SCC Recruiting Employees Bus 207, courtesy of s 30 Penalties for Abusing Wage Laws • • Ignorance is not an excuse • • Fines of $1,000 per employee if classification of exempt-non-exempt is incorrect Many small businesses have received stiff penalties and fines for violating state wage laws and the FLSA Exempt employee must be executive, administrative or professional employee with salary of $250 per week SCC Recruiting Employees Bus 207, courtesy of s 31 More Employment Laws to Review Now we know why businesses limited their employees to 19! • Title VII of Civil Rights Act – companies with 15 or more employees: Prohibits discrimination • • Equal Pay Act – Amended Title VII • • National Labor Relations Act – Right to Form Unions American Disabilities Act – ADA – prevents discrimination due to disabilities Age Discrimination in Employment Act - companies with 20 or more employees SCC Recruiting Employees Bus 207, courtesy of s 32 …and more Employment Laws • Family & Medical Leave Act – Companies with • Occupational Safety & Health ACT – OSHA – • Workers Compensation – mandatory • Immigration Reform & Control Act & 50 + employees All Businesses “insurance” Immigration Act – All Businesses SCC Recruiting Employees Bus 207, courtesy of s 33 Immigration Law Acts and How that Impacts Your Hiring Procedures • The immigration Acts of 1990s were enacted to prevent illegal aliens from working in the • You are required to have new employees fill out an I-9 or Employment Eligibility Verification • • The Company must retain the form at the business location U.S Form Fines are imposed if you not have proper documentation SCC Recruiting Employees Bus 207, courtesy of s 34 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) www.osha.gov SCC Recruiting Employees Bus 207, courtesy of s 35 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 SCC Recruiting Employees Bus 207, courtesy of s 36 California Small Business Hot Topics- Impacting Employers – Worker’s Comp Reform – Nearly 80% of all voters support the cost-cutting Reform Bill – Check out www.fixworkerscompnow.org » Faster payment » Penalty provision for not paying » Voc Rehab replaced 1/1/04 – Unemployment Insurance Tax Hikes – The current system is bankrupt, proposed 74% increase on UI Tax – Mandatory Health Care Proposition 72 “Play or pay Health care Obligation”…in 2006 all businesses that have over 200 employees will have to provide health benefits 2007 all business over 20 • Employer must pay or penalty applies • Employer must collect & transfer fees – SCC Recruiting Employees Bus 207, courtesy of s 37 More California Small Business Hot Topics- Impacting Employers – Customer Harrassment AB76 • An employer can be liable for harrassment if their employee harasses a customer – “Sue Your Boss” Bill SB 796- Also referred to as the “Bounty Hunter Law” Employees can sue their bosses for varied statutory labor codes being violated, creating a multitude of lawsuits - Whistle Blower Protection (SB777) - Forbids employers from adopting policy or rule forbidding employees from reporting alleged violations Forbids employers from discharging or discriminating against employees who make a report SCC Recruiting Employees Bus 207, courtesy of s 38 Other Considerations Before Starting the Hiring Process • What I really need the employee to do? Do a job • Establish the future-employee’s “wage rates.” Are you analysis and then establish a Preliminary Job Description competitive? Will this employee get benefits or be an “exempt” employee? • • Develop a typical work schedule Revise the Organizational Chart SCC Recruiting Employees Bus 207, courtesy of s 39 Class Assignment (Optional) for next week, November 6th, 2004 What should you before you “hire” an employee for What obligations or responsibilities you have as an your business Where and how will you recruit? employer in the state of California? SCC Recruiting Employees Bus 207, courtesy of s 40 ... Art of Recruiting Employers recruit job applicants through a number of sources If an business is large enough they will have their own established recruiting division (staff), and a recruiting strategy... The WIB is a one-stop including EDD, Solano Employment Connection and other non-profit assistance organization • They provide services in recruiting, screening, training, labor market information,... compliance, payroll tax information, and downsizing services SCC Recruiting Employees Bus 207, courtesy of s 27 On-line Recruiting Services A growing number of job seekers are using on-line recruiting