Most U.S. states have an at-will employment policy.  This means that you as a business owner or employer may fire someone for a good reason, a bad reason or no reason at all — as long as your reason isn’t illegal. While this does provide more freedom for employers, it is not a free pass to fire someone without regard for how it is handled.

What’s the issue here?

If you as an employer discipline or terminate an employee and do you it badly, you create risk for yourself. A former employee could potentially sue you for discrimination, wrongful termination or a similar claim.

In at-will states, you can terminate someone’s employment for almost any reason as long as it isn’t illegal. If you can’t prove just cause, the employee can file for and get unemployment compensation. More concerning, the person can claim you released them from their job because of their protected class status. Those characteristics could include being over the age of 40, being a certain race or sex, or having a disability.

Generally, as HR professionals, we want to be able to prove that an employee has earned the right to be terminated. There should be some level of just cause when they broke company rules, were insubordinate, etc. We use that information to defend an unemployment compensation claim or discrimination claim.

What are my risks?

While no recent legislative changes have modified how unemployment compensation is handled, the U.S. Equal Employment Opportunity Commission (EEOC) under the current administration has become more proactive in addressing such issues. Employers should be even more mindful of these kinds of HR issues than they perhaps were in the past.

Most frequently, we see the biggest problems arise when an employer discharges someone who is in a protected class (e.g. they are disabled or practice a certain religion) and chooses to fire them at will. In such cases, the employee can come back and successfully say there was not just cause so they have a right to unemployment compensation. They can use that judgment to file a claim with the EEOC. From there, the EEOC hears those claims and if the employee is successful, the employer could be obligated to settle with the individual (in the form of money and/or the offer of getting their job back), or the EEOC gives the employee a “right to sue” notice so the person can potentially find an attorney and take the issue to federal court.

How can I limit my risks?

There are ways to protect yourself from risk or potential losses before an actual termination takes place or becomes necessary. A process of progressive discipline is a prudent, widely used method to follow. With progressive discipline, you follow steps to help document and show evidence of the employee’s bad behavior or failure to follow policy.

For example, if someone does something wrong, you first talk to them about the issue, giving them a verbal warning. If the problem persists, you may follow with a written warning. If this warning is not heeded, termination might be justified and necessary. Normally, the state wants you to walk through a progressive process so employees are warned and understand that if they continue down this road, they could lose their job.

If you can show just cause for terminating an employee, you as an employer are improving your chances that a terminated employee is unable to collect unemployment compensation and sue you.

What’s the bottom line?

Firing an employee comes with risk, and while a state employment at-will doctrine may lead an employer to believe they can fire someone for no reason, there are potential consequences if progressive discipline is ignored. Considering a progressive discipline process based on a just-cause standard is a recommended part of a company’s HR policies. When a policy is developed, it must be part of the company handbook, where you document just-cause offenses. HR professionals, such as those at a PEO, can walk you through the ins and outs of this policy development.

If you have any questions about this issue, contact me, Mike Yoder, at 317-585-1688. 

Outsourcing human resources isn’t the right choice for everyone, but it is an option that all business owners should carefully consider as part of their overall growth strategy. If you’ve ever asked, “Should I outsource my HR?” following are six of the Twelve Identifiers we at Servant HR use to help prospective clients figure out whether they are a good fit for our PEO services. These indicators would be useful for any business owner considering working with a PEO. (To get the complete “Are You a Good Fit: Servant HR’s Twelve Identifiers” digital workbook, download it now for free.)

Human resources can be tricky. If you don’t make it a priority for your business, serious legal and financial repercussions can result. When an employee termination is bungled, a tax change isn’t heeded or payroll is mismanaged, that’s an HR issue. When you add a new employee, revise benefits or are faced with worker’s compensation issues, that’s HR too.

Not everyone needs to outsource their human resource services. If you own a small company that isn’t going to grow, and you don’t mind managing the paperwork and compliance issues that come with having employees, then you’re probably okay. If you don’t fit into that mold, read on to see if you identify with one or more of the following Twelve Identifiers.

Ask yourself these questions and — here’s the important part — answer each one honestly. If your answers show that you do relate to one or more of these scenarios, contact us. We would be happy to discuss your situation and see how we can help.

No. 1

You aren’t spending as much time generating revenue as you should be. As a business owner, your energy is best spent carrying out revenue-generating tasks. Getting bigger and better requires focus and time. If you need to put more energy into capturing market share, increasing sales or flexing your marketing muscle, you may need Servant HR. Would product or service improvements make you bigger

and better? Would your people be more efficient and happier if you had time to dedicate to their development? If you know that you could be more effective and work more in depth with clients if you only had more hours in your workday, outsourcing your HR might be a good option for you.

You pay your employees an hourly wage or salary. You know that number. They know that number. It’s the one they use to pay bills, put food on the table, fill their gas tanks and clothe their families. You remind your employees of that number on a regular basis by way of a paystub or check. But that number is just part of the investment you make in your employees.

Showing your employees a more complete picture of how and how much you are spending on them can help you hire and retain top employees, and assist in compensation analyses to inform your salary and wage decisions.

This complete picture is often called a “hidden paycheck.”

Employers invest so much more in their employees than just a base salary. One of things that human resources professionals can do is explain to a controller or accountant how much the business spends on the employee beyond base wage or hourly rate. Those things can include overtime pay, FICA tax, Social Security payments, unemployment compensation fund payments made to the state, workers’ compensation, and benefits such as health, dental, vision, life, disability and retirement. All those tangible dollars or benefits that are paid on behalf of the employees are part of the hidden paycheck.  A Human Resources Information System (HRIS) can tally up the numbers and uncover the hidden “pay” employees receive.

But a hidden paycheck isn’t for every business. Here are some pros and cons for employers to consider before proactively divulging their numbers.

PRO: They can bring to light your best assets.

For companies with robust retirement plans or benefits plans — paying for substantially more than 50 percent of employee benefits — a hidden paycheck can accentuate the positive. Other programs like tuition reimbursement, bonuses and commissions can be quantified and should be part of a hidden paycheck.

CON: They can uncover your shortcomings.

If you don’t have a strong benefits plan, you probably don’t want to draw attention to that fact.

PRO: They help make you competitive.

When an employer can quantify just how much an employee costs, you can use that information to execute a compensation analysis to see how competitive your company is in the marketplace. As a result, you might want to make wage, salary or benefits adjustments to help keep you well staffed and on a growth track.

CON: Employee response is unpredictable.

One risk of providing a hidden paycheck is that you never know how employees will react. You don’t want to come across as self-serving, as though you’re saying, “Hey, you’re lucky to have all these perks,” which would certainly bring a negative response. Instead, the hidden paycheck should be provided as a demonstration of the employer’s transparency and as a way of saying, “Yes, we value you. And here are the numbers that show how much we appreciate,” so the response will be more like, “Wow. I didn’t know you were covering all those costs on my behalf. Thanks.”

PRO: They can help you keep good people.

If you have spent time developing your employees to be valuable assets to your company, you don’t want them going anywhere. If they are only familiar with their annual salary total, they might be tempted to find a bigger number elsewhere. A hidden paycheck can help them understand that they are getting much more than what they see on a paystub, putting you in a better position to have loyal employees.

CON: They can encourage employees to look elsewhere.

If an employee sees his or her hidden paycheck and decides the numbers don’t add up in his or her favor, a job vacancy might be in your future. If you are taking steps to retain employees with a solid benefits plan, this should not be a problem. But if other parts of your HR machine aren’t in place such as employee engagement strategies, fair policies and a healthy company culture, an unimpressive hidden paycheck could be the straw that breaks the camel’s back.

PRO: They divulge administrative costs.

Besides the legal obligations and benefits you pay for each employee, there are administrative dollars spent. Equipment, office/building space, vacation time, holiday breaks — all of these things cost money, and it’s useful for employers to know how much they are spending or saving with their current choices and HR policies.

Generally, a hidden paycheck is a well-received, effective way to communicate the value an employer places on its employees. If you are interested in more information on producing a hidden paycheck, contact me, Mike Yoder, at 317-585-1688.

By Mike Yoder, CEO 

Since 2008, Fishers and Hamilton County, Indiana, have accepted dozens of accolades for being exceptional. Among the list are the following:

• #1 Top 10 Cities for Families in U.S. – The Learning Channel (TLC)
• Healthiest County in Indiana – Community Health Network
• Top 100 Best Places to Live in America (#8 Ranking) – Money Magazine
• #11 Best Place to Move in the Country – Forbes
• Best Place to Raise a Family – Hamilton County (#1 Ranking) – Forbes

Jeff Leffew, our founder and president, chose to plant Servant HR’s roots in Fishers because this is where he lives and is raising his family. He wanted his business to be a part of this booming community on the edge of Indianapolis. We see this kind of attitude a lot in Hamilton County. Employers and employees want their work lives and their personal lives to complement one another. A strong work life in which you are happy, well compensated and appreciated, for example, will have an effect on the quality of your life outside of the office.

Many of the elements that go into making a business an exceptional place to work fall under the area of human resources. It is our job at Servant HR to help employers set themselves up to be a positive part of their employees’ lives. This kind of positivity can benefit families and even entire communities. Empowering employers to be a positive force in their communities is an exciting part of our work.

Becoming an exceptional place to work

Many of our 60 clients ask how can they can be “best in class.” They want to know how they can become an “employer of choice.” First, employers must care more for the positive impact of such efforts on employees than they do about receiving a fancy accolade. Business leaders must have a desire to create a culture of not only financial success but also a place of stability based on more consistent employment, longer tenures and low turnover. An exceptional business is one that builds a culture of relationships and loyalty.

When Servant HR is evaluating a company’s culture, we evaluate a lot of areas, including policies and procedures, benefits, management and employee training and talent development. These are the types of things that would indicate if a company is stable and growing. If we find that an area is weak, we help the employer develop that area through our HR Coaching and Counseling.

Health care and benefits’ role

A reasonably robust benefits package can help a company attract and retain the right kind of people for its culture, taking one giant leap forward to becoming a great place to work.  As we can see from our federal government’s move into universal health care, the issue of benefits is a huge one, both locally and nationally. As a full-service benefits broker, Servant HR helps employers attract and retain employees, while being cognizant of how much more expensive health care has become. An approach to benefits should be holistic, using creativity to establish diverse benefits packages as well as more traditional health plans and 401k plans to support both short-term and long-term benefits.

One of the best ways to deal with the rising cost of health care is to help educate our clients on different options including consumer-driven health care offerings. Employees should understand the types of benefits they have, how to get preventive care when it is needed and how to participate in wellness programs if they are interested in them. For an increasing number of employers, health saving accounts are becoming an important part of their packages. This type of account helps employees make smart choices for their health and budgets.

Partnering with strong businesses

Fishers and the Indianapolis area is a great place to do business. One of the biggest advantages for Servant HR is that our focus is on small and medium-sized businesses that want to have the freedom to focus on revenue-generating activities and their core strengths. We can serve these businesses as their HR partners, helping them move toward becoming exceptional places to work. These types of businesses have found great success in Hamilton County.  We like being where we live and where smaller businesses thrive. It’s a great fit for who we are at Servant HR.

If you have questions about the path to becoming an exceptional employer, please contact Servant HR at 317-585-1688 or email [email protected]. 

(Photo above by Jennifer Driscoll, courtesy of Town of Fishers.)

By Mike Yoder, CEO of Servant HR

Many employers may overlook the necessity of workers’ compensation believing it does not pertain to them or their company. But consider these two rather bizarre claims:

• An employee was proving that he could carry an air compressor and strained his back.
• An employee tripped over a dog and injured herself while meeting with a customer in the customer’s home.

Yes, you may have guessed it, these claims were found in court to be compensable. At Servant HR, we receive frequent questions regarding workers’ comp, such as:

• Why am I required to have coverage?
• Why do I have to pay when no one ever gets hurt on the job?
• Why do particular employees cost so much, despite having reasonably “safe” jobs?
• Shouldn’t health insurance cover any injuries?
• Does workers’ comp really have to pay if it is clearly the fault of a negligible employee?

By definition, workers’ compensation is an alternate way for employees to recover costs for work-related injuries, rather than suing their employers. Workers’ compensation includes an “exclusive remedy” component, meaning if an employee gets hurt at work, his bills and typically his lost wages, are paid. However, exclusive remedy also ensures that the employee can’t file a lawsuit against the employer, in most situations. It’s an exchange of rights and benefits for both the employee and employer. The workers’ comp system provides employees with the security of knowing they can recover for work-related injuries without the complexity and uncertainty of a lawsuit.

Workers’ comp can be thought of as an insurance policy for your company. Just like home owners and life insurance, you are required to regularly pay, even if you never have to use it. The rates are determined from the statistics and probability of an accident or hazardous situation for a particular occupation.

If a claim is made by an employee, a workers’ compensation insurer generally reviews the case and verifies any issues. As the exclusive remedy, any injury happening in the workplace is generally covered, even if an employee is negligent. However, an employer may choose to dispute a claim, for example, if he believes an injury is not related to work or is being put-on. Regardless, it is generally in the best interest of the employer to get the employee back to work even on limited duty, rather than being paid lost wages from the policy.

For answers to your workers’ compensation questions or to find out more about how Servant HR can help with all of your HR needs, please contact us today.

Mike Yoder, CEO of Servant HR, understands that great people are the key to a successful business. His favorite part of working at Servant HR is helping to develop real relationships between the employees and management of his client companies. He appreciates the opportunity to get to know each of his clients, so he was happy to sit down for a Q&A so that you can learn more about him.

How has your previous work influenced your work at Servant HR?

“My work in the legal field was in the area of labor and employment relations law. How do you develop employees? How do you grow employees? How do you discipline employees? How do you terminate employees? And it was a great experience. But I realized from that, as opposed to dealing with employee issues after somebody has sued you or raised a complaint, I preferred coaching and counseling where I could get on the front end of it. I love being able to coach managers, coach business owners to try and avoid those problems by making their company a good, fair and safe place to work.”

What is one thing that you wish everyone understood about human resources?

“It is viewing employees as your most important resource over equipment, over technology, over anything. One of the biggest things an employer can do is seek to grow and develop his employees. If I develop an employee, rather than discipline them and fire them, I am making progress, rather than this constant churning and turnover that occur.”

What career could you see yourself in, if you did not work at Servant HR?

“Probably teaching, whether a college professor in history or in human resources.”

That’s funny; you would teach human resources if you didn’t work in it?

“Well, I think there are aspects of teaching that are as rewarding as what I do now, but I would want to teach something I am good at.”

What was your favorite part of the holiday and what do you have planned for the New Year?

“Actually over Christmas, my parents celebrated their 50^th wedding anniversary. So my whole family headed off to take a vacation together to celebrate their 50 years together. My eldest son now has his driver’s license and my middle is a competitive gymnast, so we tend to follow him around the country to watch him compete. And I have a 7-year-old daughter who controls the house. So anything we can do to just spend time as a family is a blessing.”

Mike is clearly eager to assist your company with all of its HR needs. To reach him or the rest of the team at Servant HR, please call 317-585-1688.

By Mike Yoder, Chief Executive Officer

Baseball fans know that Jackie Robinson was No. 42 for the Brooklyn Dodgers. Here in Indiana, we know who No. 18 is. Forty-seven means something to Star Trek fans, and 4 8 15 16 23 42 is important to Lost viewers. Paper, literature or fire aficionados know to what 451 refers. And 3.14 means something to you if you paid attention during high school geometry class. But what do 15, 20, 50, 55.5, 3,100, 6,250, 17,000 and 110,100 mean? In the HR and benefits world, these are good things to know as we enter 2012. Take this multiple choice quiz to test your HR intellect. (Answers appear at end of quiz.)

1. The new annual 401k or 403b maximum contributions.

a. 15   b. 20   c. 50    d. 55.5  e. 3,100 and 6,250   f. 17,000   g. 110,100

2. The number of employees needed for Title VII, the Americans with Disabilities Act and many other federal laws to come into play.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

3. The number of cents that the IRS suggests as the standard business mileage reimbursement rate.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

4. The new maximum taxable earnings for Social Security in 2012.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

5. The number of employees required in a 75-mile radius for the Family Medical Leave Act to apply to an employer.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

6. The new annual Health Savings Account contribution maximums.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

7. The number of employees needed for the Age Discrimination in Employment Act and COBRA to come into play.

a. 15    b. 20    c. 50    d. 55.5    e. 3,100 and 6,250    f. 17,000    g. 110,100

These numbers change, so it is always a good idea when you are turning your calendar to make a note of the new numbers. Happy New Year and happy counting!

Answer Key

1. f. (This number is up from 16,500 in 2011.), 2. a., 3. d., 4. g. (This number is up from 106,800 in 2011.), 5. c., 6. e. (This number is up from 3,050 and 6,150 in 2011.), 7. b.

By Mike Yoder, Chief Executive Officer

With the summer’s heat still in our memory, it may be hard to think about year-end and what that means. For business leaders, it definitely means annual budgets, employee performance reviews, merit increase analyses and W2s.  Are you ready for the year-end?

Many employers do not have updated processes and forms that help with year-end compliance with state and federal expectations.  Many people who have processes and forms take for granted that the management team knows how to conduct reviews, provide feedback and make smart decisions.

To help ensure your team is on top of its year-end game, ask yourself some questions. Does your staff analyze the potential disparate impact of their decisions?  Do the annual reviews really reflect reality? You might discover that your management team needs a business owner’s active leadership and formalized training to reduce risk and improve performance.  This is the time of year to make sure you are ready.

If you aren’t ready, the repercussions can hurt. If an employer fails to have consistent and compliant year-end processes, it fails to mitigate multiple risks including fines, taxes and potential lawsuits. Servant HR provides consistent communication with its clients to help ensure proper preparation is being executed and compliance is met.

One common year-end responsibility is W2 form filing. Rest assured that Servant HR is in touch with applicable payroll personnel to be sure employers have completed forms in the hands of those who need them when they need them. Our multifaceted relationship with clients enables us to recognize who needs this type of attention.

If you have any questions about your year-end readiness, please contact us.

By Michael Yoder, Chief Executive Officer

Once a year? Once a quarter? Once a month? How often do we as employers have to do certain tasks to stay compliant with Federal and State laws? It seems like we have to do it, as The Beatles suggested, “Eight Days a Week!”

How about the time frame of every 20 days? Does that ring a bell? While there are many different compliance tasks, one that is often overlooked by employers is the requirement to report new hires electronically at a minimum of every 20 days. In 1996, Congress enacted a law called the “Personal Responsibility and Work Opportunity Reconciliation Act,” or PRWORA, as part of Welfare Reform. This legislation created the requirement for employers in all 50 states to report their new hires and re-hires to a state directory.

New-hire reporting speeds up the child-support income withholding order process, expedites collection of child support from parents who change jobs frequently, and quickly locates non-custodial parents to help in establishing paternity and child support orders. New-hire reporting helps children receive the support they deserve.

I think we can all agree this is a worthy purpose – but it exhibits the uncertainty of responsibilities and timing for corporate compliance. I just finished the latest cycle of these reports for all of my clients. Compliance is “Fun, Fun, Fun.” Oh wait – that was the Beach Boys.

By Michael Yoder, Chief Executive Officer

The first quarter of a new calendar year is always an amazing one for an employer. Just like a New Year’s Resolution, it seems like so much begins anew. By now, you have finished up your W2s and OSHA injury reports. New hire reporting is in full swing and new federal and state forms are available. The first quarter is also the restart of FUTA and SUTA charges. It’s a lot to take care of when you’re also trying to go about your “regular” business.

The first quarter is also a good time to take stock of what you have learned from last year. What have you learned from the processes you have in place related to benefits, payroll or tax filing? How can next year’s paperwork and tax filing be handled more easily? How can you refine your process to make things better? Reflecting on each quarter and really getting organized so that you’re prepared for what’s around the corner is really the best way to effectively handle all of your HR responsibilities and obligations.

For our clients, the answer to these questions of process and best practices is to let us handle it for them. Human resources can be a never-ending world of change. That is where Servant HR thrives. We do all of this “stuff” for more than 50 different employers — who then have the “freedom to focus” on getting their new sales or production year off to a great start. As one of our long-term clients says: “It’s done!” You don’t have to do it on your own. We wanna hold your hand! Please contact me directly if you have any questions.