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While re-inventing myself the other morning (we all do that from time to time, right?) I met TJ Carter for coffee and she got me thinking about certain human resource issues and how they are impacting small businesses. The government is taking a keen interest in how employers are treating employees these days, and you may want to look at how HR is being handled in your business.
TJ is an HR adviser to franchise companies, such as Gold’s Gym International and ACE Cash Express, and we talked about the Top Ten HR Issues That Trip Up Small Businesses (good title for an eBook, I said!).
Issue: Calculating Compensation
I asked TJ, “What’s the number one issue?”
She said, “Compensation calculations.”
The Federal government has already decided how you are to pay your employees–you don’t get to decide that. “The government’s default is to say that everyone is non-exempt,” TJ explained, “and you, the business owner, have to prove they are exempt if that’s how you’ve classified them.”
When franchise companies employ sales people, whether they are selling franchises or selling products/services to franchisees, or they work for franchisees selling products/services to consumers, that’s where a business owner is likely to get in trouble. “Whether or not a sales person is exempt is a function of several things related to what the person does and how they are paid,” said TJ. “Inside and outside sales are treated differently. Sometimes the classification varies from one pay period to the next!”
Error out of Stupidity?
This isn’t an easy issue to resolve on your own–and it’s only one of the Top Ten issues!–and if you error and get caught, the penalties are severe. “If you error out of stupidity,” TJ said, “the government will go back for two years to recalculate compensation for all of your employees, including terminated employees that may be entitled to additional pay. Error willfully and they’ll go back three years.” Either way, penalties are not light, so pay attention.
“The pain and suffering of going through the audit ordeal is worse than the fine and the payback,” TJ commented. “It’s just not worth taking the risk.”
Still, many business owners simply aren’t aware of the rules, or with so much going on in an average day at work, too many business owners overlook human resource issues thinking “I’ll get to them later.” But later is just about the time a former employee complains–and now you’ve got a serious problem.
Take care of your human resource issues . . . and if you need assistance, visit with TJ Carter and Associates.
TJ also told me about the WOTC program which makes free money available to business owners. If you don’t know about it, ask and find out!
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