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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Common Employment Law Mistakes and How to Avoid Them

Common Employment Law Mistakes and How to Avoid Them

Your small business may only employ a few people, but you are still subject to most of the same laws and regulations as corporations that employ thousands. Compliance with employment law will save your business from stressful audits or legal fines. A small business attorney will help you with every aspect of employment law from contract review to hiring to working with employees. Here are five of the most common areas where employers make mistakes when it comes to employment law compliance.

  1. Regulatory Agencies and Laws
  2. Americans with Disabilities Act (ADA)
  3. Employee Classification
  4. Occupational Safety and Health Administration (OSHA)
  5. I-9 Forms

1. Failing to Stay Current with Regulatory Agencies and Laws
Practically everything associated with employment law falls under here, and the number of regulatory agencies with their corresponding laws continues to grow rapidly. Some of the areas governed by regulatory agencies include: workplace safety and health laws (see #4 on OSHA), payroll and overtime payment laws (see #3 on employee classification), recordkeeping requirements (see #5 on I-9 forms), anti-discrimination (see #2 on ADA compliance) and anti-harassment laws, local, state and federal leave laws, and employee privacy laws. Creating a checklist before you begin hiring new employees and working with an attorney will ensure you start off and stay compliant with state and federal employment laws.

2. Not Following the Americans with Disabilities Act (ADA) Guidelines
The ADA prohibits discrimination and ensures equal opportunity for persons with disabilities in employment, state and local government services, public accommodations, commercial facilities, and transportation. This applies to all employment-related activities, including recruitment, training, tenure, layoff, leave, and fringe benefits among others. The law protects individuals who have a disability, which means they have a physical or mental impairment that substantially limits one or more major life activities, they have a record of such impairment, or they are regarded as having such impairment. The U.S. Equal Employment Opportunity Commission’s website has ADA and other discrimination-related information for small businesses.

3. Mis-Classifying Employees
By classifying your employees accurately, you ensure they get the appropriate wages, benefits, and protections to which they are entitled. An exempt employee, according to the U.S. Small Business Association, is someone who is paid a specified amount of money regardless of the number of hours worked a week. These employees may be exempt from overtime payments and meal or rest breaks. Assuming it is easier to pay everyone a salary, however, can lead to problems. Be sure to classify your employees properly in order to avoid noncompliance issues with the Colorado Department of Labor and Employment and the U.S. Department of Labor. Your business attorney will help you with hiring employees, choosing the right employment contracts and agreements, keeping good records, and providing advice and representation in the event of an audit or lawsuit.

4. Ignoring Occupational Safety and Health Administration (OSHA) Regulations
OSHA’s detailed safety regulations include a General Duty Clause, for small and large businesses alike, which requires every employer to provide every employee with a work environment that is free from recognized hazards. It is your responsibility to communicate these rules to your employees via written safety and health rules in the form of visible signs and/or posters. In the unfortunate event of an accident at your business, you will need to take corrective action immediately. With a host of other federal acts, intended to protect employees, such as the Fair Labor Standards Act, the ADA, the Age Discrimination in Employment Act, and the Family Medical Leave Act, it is paramount that you understand and remain compliant with all aspects of employment law.

5. Keeping Invalid or Incomplete I-9 Forms on File
The I-9 form, also known as Employment Eligibility Verification, is completed by employees and employers in verifying the identity and employment authorization of every employee hired. Simple as it sounds, omitting or not completing I-9 forms can result in fines and legal trouble. Before filing it away, be sure the whole form is filled out, including dates and signatures – within three days of the employee’s hire date. Too often, employers miss the deadline or employees fail to provide the correct supporting documentation. You can provide a list of acceptable documents and allow the employees to make their own selection.

These are just a few of the many employment law mistakes and potential pitfalls for small business owners.

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.