This is Part 2 of a series. Read Part 1 here by Quinton Johnson on the building blocks of starting your business.
Get the Right People in Place for Success
At the heart of every company are its people. Identifying and hiring the right people is critical for company success, and here are a few guiding principles to take the right steps in building your team.
- Don’t call your employees “contractors.”
Whether a worker is a “contractor” or an “employee” is not a matter of simple agreement between the worker and the company – it’s a matter of law and misclassification can be costly and disruptive. Most workers, as it turns out, should be classified as employees, not contractors, so don’t fall into this very common trap. - Be honest about your values and culture in your job descriptions.
When recruiting, describe your culture as it is, not just how you think it is or how you hope it will be. If it’s a hard-charging, intense environment in which you expect long hours and commitment, say so. If it’s work-hard/play-hard, say so. If it’s employee-first and family-friendly, say so. Stanton Law includes in all our postings that successful candidates “will understand and thrive under sarcasm.” Telling prospects who will fit in helps make sure your culture stays consistent with your mission. - Check references.
Asking for and checking references is the easiest way to keep from hiring the next person you have to fire. If you run a “background check,” you’ll have to comply with the Fair Credit Reporting Act, but simply asking your prospective employee’s former employer if they’re eligible for rehire often tells you all you need to know. In our experience, 5% of employees cause about 95% of the HR problems, so learn to look for the red flags of that 5%. - Pay your folks properly, not just well.
Nothing keeps our employment lawyers busier than pay mistakes. And, most mistakes are the result of easily avoidable violations of the Fair Labor Standards Act (the FLSA). Pay your interns. A “salary” or “commission” does not mean you don’t have to pay overtime. You can’t have “comp time.” You have to pay for unauthorized overtime. Bonus tip: Don’t compensate employees with equity unless it is absolutely necessary. - Put Personnel Policies in place sooner rather than later.
Yeah, they’re boring and no one really likes being subjected to unnecessary rules and red tape. However, if you’re successful and keep adding people, you’ll want to have some guidelines onto which to fall back. Our maxim is it’s easier to apply new employees to existing policies than it is to apply new policies to existing employees. - Protect your business with reasonable restrictive covenants.
Urban legends abound about “non-competes.” Talk to an experienced employment lawyer about how they can be effectively engaged to make sure your legitimate business interests are protected without unnecessary hamstringing, upsetting your employees or chasing off qualified candidates.
Hiring the right people, understanding intellectual property and documenting your new company correctly will lay the foundation for success at your new venture. If you have additional questions or want to take action to plan for and protect your business, please schedule a consultation with us for timely and sound business advice.