Managing Employees and Keeping Good Records

Managing Employees and Keeping Good Records

Many small businesses thrive with a staff of one while others need dozens or even hundreds of employees to run smoothly. Regardless of how many people you employ, and whether or not you have a human resources department (which is likely you), it is important to follow labor and employment regulations and keep the same records for each employee. A Denver-based small business attorney will ensure you start off and stay compliant with all of the complex aspects of employment law from agreements and contracts to liability and workers’ compensation. This post will highlight what your employee files should and should not contain, so you are organized and protected in the face of an audit or lawsuit.

Hiring Employees and Obeying Employment Law

As a small business owner, your checklists never end. Hiring a new employee means yet another checklist: get an Employer ID Number (EIN), register for an unemployment account, sign up for workers’ compensation coverage, submit employment verification, classify workers properly, implement an employee handbook, display workplace posters, and so on. The various state and federal regulations can be dizzying, but once you have completed your new hire checklist, the next step is to maintain organized employee files.

Without certain documents on file, you are not only subject to costly audits and fines, but you are actually at risk of being shut down.

What Colorado Small Business Employee Files Should Contain

  • employment contracts, agreements, or acknowledgments between the employee and you
  • documentation related to employee performance, including commendations as well as disciplinary actions taken (this is particularly helpful when you are asked to give a reference for a former employee)
  • job description
  • application and resume
  • offer of employment
  • W-4 form
  • Colorado employee withholding allowance certificate
  • employee signature upon receipt of employee handbook
  • position/rate change forms
  • requests for time off
  • emergency contact and next of kin information
  • documents of any training programs completed by employee
  • warnings of poor attendance or frequent tardiness
  • documents relating to an employee leaving the company (exit interview or clear documentation of why an employee was terminated)

Maintaining certain records separate from employee files allows for appropriate access by managers, employees, and outside auditors while preventing people from having inappropriate access to other employee information.

What Employee Files Should Not Contain

  • documents or entries that do not relate to the employee’s job performance or qualifications (e.g. political views, private life, or criticisms involving race, gender, or religion)
  • medical records (if you employ someone with a disability, you are required by law to keep that employee’s medical records in a separate file with limited access)
  • Employment Eligibility Verification (Form I-9)
  • Equal Employment Opportunity (EEO) records
  • interview notes and employment test results
  • reference or background checks
  • drug test results
  • child support or garnishments
  • litigation documents
  • workers’ compensation claims
  • requests for employment or payroll verification

As a small business owner (and HR officer), it is your responsibility to provide your employees with a safe and healthy workplace, to comply with state and federal employment laws, and to maintain good records. Just as you keep track of your inventory or financial transactions, you should have complete records of all of your work with your employees. Your small business attorney will see to it that you are prepared and protected regardless of whether you are faced with an audit or lawsuit. Good records mean good business and peace of mind.

If you need help with employment law, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Employee References – How to Tell the Truth and Avoid a Lawsuit

Employee References – How to Tell the Truth and Avoid a Lawsuit

As a small business owner, you are likely the boss and human resources (HR) department all in one. This means the unfortunate task of firing an employee is yours. Once the dreadful termination is done, you are relieved and ready to move forward. Then, a month later, you get a call from a prospective employer asking for a reference for the employee you fired. Before you panic, decline, or say too much, know your rights.

Employee Job Performance, Skills, and Abilities

In Colorado, employers cannot be sued for providing information about former employees unless the information given is false. In many cases, you are protected from liability for certain types of information you give out, like the employee’s job performance, including work-related skills, abilities, habits, suitability for reemployment, and reasons for separation. However, you should not give any of this information out without talking to a small business lawyer about your specific situation as you could be liable for even giving out this information. There are enough bad cases and an endless number of potential circumstances that can leave you feeling vulnerable. A small business attorney will help ensure you stay compliant with Colorado state employment laws, from hiring your first employee to increasing your workforce to deciding to let someone go.

A Fortune article compares employment references to a legal hornet’s nest. Most business owners are well aware that they can be sued for defamation for badmouthing someone in a reference, but not many realize that you can be sued for giving a raving reference that does not match up to the employee’s performance in their new position. It is no wonder some employers shut down any requests for references.

Until you speak with a small business attorney, you should only answering the “who, what, and when” (i.e. job title, salary, and dates) of a former employee’s history. If you feel you need to answer more, for example because there are details that may be critical for a potential employer, speak with an attorney. What if you fired the person for frequent absence, poor performance, or grave misconduct? If you are reluctant to disclose such details, you can use a general comment like “I would really prefer not to say”.

Former Employees and Written Records

Some states have enacted service letter laws that require employers to provide former employees with basic written information about their employment – however, Colorado law does not affirmatively require it. Visit the Colorado Department of Labor and Employment for information on state labor laws that outline what employers can disclose about their former employees.

Hopefully, if you have had to fire an employee, you maintained documentation of the employee’s history with your business, particularly the details leading up to their termination. Despite your best efforts, they may blame you for their inability to obtain a new job, claiming slander or libel from your reference (or lack thereof). By speaking to a business lawyer before speaking to a potential employer, you can avoid or protect yourself from a lawsuit. Here are some precautions you can take.

Make a company reference policy. Be sure all of your employees are aware of the policy. If there are other staff members who are responsible for HR, make sure they know the policy well.
Keep it short. Do not volunteer extra or unsolicited information. It is best to keep your references short and to the point.
Provide only the facts. Keep your references as factual as possible. The truth is your best defense against defamation claims.
Designate who can give references. Select the most discrete and trustworthy employee, other than yourself, to give references. The more experience the person has with giving references, the less likely they are to say something wrong.
Create a reference request form. Include a statement about the possible disadvantages that are inherent to the reference process. This will provide you with another level of protection from liability. Requiring employees to review and fill out the form will supply you with detailed documentation as well as the right to decline a reference request if the employee did not fill out the form.

Employment Law is Complex

Employee references are just one small part of the large area of employment law. With its complex regulations and compliance requirements, employment law covers vast topics, such as contracts, hiring, and working with employees. The U.S. Department of Labor publishes an employment law guide for small businesses to develop employer policies on wages, benefits, safety and health, nondiscrimination and disclosure. For more on Colorado employment law essentials, see 7 New Business Essentials in Colorado Employment Law.

If you need help with employee references or employment law in general, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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Colorado Employment Law and Non-compliant Employees

Perhaps the only thing we dread more than being fired is having to fire someone. When we are dealing with a non-compliant employee, it is understandable that we would want to get to the bottom of the issue rather than jump directly to firing. This post will offer recommendations for getting to the bottom of what’s going on with a non-compliant employee, as well as some advice if a demand for compliance or termination is in order.

Non-compliant Employees Have Issues

I’m not just being tongue in cheek here – you may or may not agree with the issues that are causing an employee to be non-compliant, but you do need to know what the issues are and you need to hear it directly from the employee. It may feel like you can avoid conflict by asking the employee’s supervisor or peers what the problem is, but this will work against you in two ways. First, there is a good chance you will not get the story straight, and second, the employee may feel he or she has still not had an opportunity to express important concerns to someone who may have the will and ability to resolve them. You can assume that non-compliant employees have issues by their behavior – but don’t assume to understand what the issues are until you’ve listened carefully to the employee.

Positive and Negative Motivators

If you disagree with the employee’s reasons for refusing to comply, and you value the contributions the employee is making in other areas, consider applying a little motivation. Your approach will work best if you know how the employee thinks; some folks don’t respond to positive motivation at all, and others crumble at anything that can be interpreted as a threat. Once you decide what type of motivation you want to put in play, there are dozens of ways to do so.

Demanding Employee Compliance

Once you feel you have listened well and the employee acknowledges he or she has been heard and understood, you may wish to skip attempts to motivate the desired behavior and simply demand compliance. If so, consider the advice of Alison Green, who addresses workplace and management issues for readers of the Denver Business Journal. Green advises you set an expectation and explain that non-compliance “will jeopardize [the employees] job.” This should bring clarity to the request. Is it legal to fire an employee for non-compliance on any issue in Colorado? Colorado is an employment-at-will State :

Colorado follows the legal doctrine of “employment-at-will” which provides that in the absence of a contract to the contrary, neither an employer nor an employee is required to give notice or advance notice of termination or resignation.

As long as your reason for firing is not illegal (ex: sexual orientation, gender bias, etc.), you are permitted to fire as you see fit. Even if you are firing an employee for sound reasons, it is a good idea to document the problems leading up to the firing, just in case the employee sees it differently and decides to bring a wrongful termination suit against you. Ask your Colorado business attorney for advice about documenting employment performance issues, just to make sure you have covered your bases. Also, if this is your first time firing an employee, you may want to conduct a quick legal review of the process with your attorney.

If you have questions about Colorado employment law and dealing with non-compliant employees, , contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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DOL’s Overtime Rule Means Change for Employers in Colorado

While some employees might well be rejoicing, recent changes in overtime rules have some employers concerned. When the Department of Labor’s Overtime Rule was announced in May 2016, it introduced some important changes that will surely impact employees and employers for small businesses, non-profits and universities in Colorado. Among the many provisions within the rule, it provides for several items of note for salaried employees, including:

  • Establishes a mechanism for automatically adjusting employee income levels every three years
  • Sets standards for salary levels of the lowest-wage regions of the U.S., based on Census data
  • Allows employers to use nondiscretionary bonuses and incentive payments to satisfy up to 10% of the new salary level

The DOL has released a downloadable fact sheet that answers a great deal of the questions surrounding the new rule, but despite a plethora of information and guidance available, Colorado employers are still trying to get their heads around the many ways it will affect their businesses. While it might seem like a raise is on the horizon for some employees, it could be that only a few employees at any given company will see an increase in their own compensation, and some employers might decide their resources are spread far too thin to implement the new rule the way it’s written, so could switch some employees from salaried to hourly or other another status.

The rule is intended to update overtime thresholds (which have been updated only twice in the last 40 years) for employees who are currently exempt from overtime pay, and even though the new rule is set to take effect December 1, 2016, there are some lawmakers who have presented legislation designed to roll the rule out in phases, with full thresholds being met entirely by December 1, 2019. Representatives who introduced the Overtime Reform and Enhancement Act would like to have the threshold spread over three years. This “phasing in” period, they believe would give more time to employers, so they can adjust to the new rule in increments, both financially, and in relation to staffing needs. Their position is summarized by Congressman Kurt Schrader, who states:

“Without sufficient time to plan for the increase, cuts and demotions will become inevitable, and workers will actually end up making less than they made before,” says Schrader. “It’s long past time we strengthen overtime pay protections for American workers in a meaningful and effective way.”

The Colorado Division of Labor provides extensive details on the laws surrounding employee overtime in our state, and the new rule from the DOL provides equal details on ways for employees to be in compliance, some businesses and organizations in the state might find the new rule hard to implement, due to strained resources. Organizations in Colorado like the Colorado Association of Commerce and Industry (CACI) have voiced concerns that the rule can hurt employers, particularly smaller ones, while proponents contend the rule provides the compensation that employees deserve for the hours they put into their work.

If you need legal help, don’t hesitate to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Denver’s Housing Crunch and The Impact on Small Business

News of Denver’s housing crunch isn’t really anything new, as reports of the housing shortage have been in the spotlight for the last few years. What is new is the toll it’s taking on small businesses and the employees that work for them. Current figures estimate Colorado grew by as much as 101,000 residents during the previous 12 months, and with growth like that, jobs and the competition to get them is fierce.

Live, Work, but Where?
With such explosive population numbers, housing becomes a greater concern, as most people prefer to work close to where they live, but as people try to find a place to live, low inventory of properties both for rent and purchase, there are often more people than places to house them. Home-seekers are pushed further and further from the metro in order to locate the housing they need, and this can sometimes drive those same people to chose work that is closer to their new residence. For small businesses, this can spell trouble because the talent they need might now reside too far away to make the drive worth it. This can breed some competition for the employee, and create a type of “wage bidding war”, but not all small businesses are ready for the fight and have to stick close to their compensation budgets to maintain steady footing themselves.

Talent Gap
And speaking of talent, a recent CU-Boulder survey indicated that Colorado businesses overall are concerned about a talent shortage, meaning there appears to be a lack of skilled employees for small businesses to choose from, even though there are a great deal of people entering the state. This means companies will be challenged to do more things than usual to both acquire and keep the best hires for their needs.

The talent shortage cuts across many industries, including tech, as well as construction and medical. However, it’s not all bleak; economic forecasts point to another strong year of job growth, which will continue to help Colorado enjoy unemployment rates and decreased consumer inflation.

A Different Kind of Competition
Despite the pressing issues of housing and a talent gap, small businesses in the Denver area are also presented with a unique opportunity; they can leverage to get the people they want, while at the same time out-witting their competition. Because people aren’t always motivated by just money, employers have a chance to offer other things that could attract the ideal hire. People cite the “Work/Life Balance” as something that drives them towards certain opportunities, as well as versatile framework in which to get the work done. Employers can offer work-from-home or flextime schedules, on-site daycare, and a host of other perks that might help them secure just the perfect next hire. Small businesses that can tap into some of the intrinsic needs of their employees will inevitably be the ones that entice the right people to work for them, even if they have to live out in the suburbs.

If you need legal help, don’t hesitate to contact me at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Attorney. Phone: 720-258-6647. Email: elizabeth.lewis@eclewis.com.

Contact Us Today

Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
501 S. Cherry St., Suite 1100
Denver, CO 80264
720-258-6647
Elizabeth.Lewis@eclewis.com

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