Meet this computer, it's your new HR person

I often think about all of these new HR platforms and software programs being rolled out to small businesses.  These programs tout many amazing things like the fact that employers will be able to handle administration with a click of a button, or that insurance/payroll/hr can be automated to the point where you won't need someone in those roles.  I'm actually surprised that these systems don't say that they'll generate top-line revenue for your company (maybe some day they will).

Aside from administration being a total pain in the ass, I do believe that it serves a useful purpose.  Young folks entering into the HR field these days will gain valuable experience filling out forms and documents.  It's not the act of filling out documents, but understanding other crucial elements of "document completion" which includes:

1.  Why the documents are being filled out;
2.  Who requires the documents to be filled out:
2.  Where can I take shortcuts and where can I definitely not take shortcuts;
3.  What happens if the documents aren't filled out the right way;
4.  What are the consequences of an incorrectly filled out form;
5.  What happens in those weird, one-off instances where the system doesn't know what to do;
6.  When an employee signs something and I sign something, what does that really mean?

Here's an example. I used to handle HR administration back in the days of Third Eye Blind and Crystal Pepsi, and one of the things that I did was complete an I9 and go over it with employees.  I knew I9's inside and out, so well in fact that I went to a training session put on by an HR executive and an immigration attorney and left feeling like I could teach class to other HR folks.  It was incredibly informative, but it was put on by a lawyer, and we all know how I feel about lawyers.  I learned a lot of great information at that session. I learned potential pitfalls, what to do in strange circumstances, and even the intricacies of collecting identification documents. I know. I was a nerd.

Fast forward to today, where many companies are using HRIS platforms, benefit systems, and online document completion.  I was talking to friend of mine who owns a small engineering firm about how they complete I9's and he just replied with "The system does it."  The hair on the back of my neck stood up a little, but I didn't bristle.  I then asked how the system handled remote employees.  The response again was "I just click a box and the system handles the rest."   At this point I didn't argue (although I thought about sending him in the direction of the closest Immigration Attorney) but told him to be careful in case he ever has an I9 audit.

I'm not saying that companies need to hire a person just to handle I9's. And I'm also not saying that they shouldn't use I9 software or automation. What I am saying is that anyone signing an I9 should be aware of the proper way to complete the document. They should also be aware of the consequences for not completing an I9 correctly.  Most of the individuals signing I9's don't even realize that they're signing them under the penalty of perjury.  And if things go badly, and a Notice of Inspection hits your mailbox, you better be sure that "The system handles my I9's" is not going to be looked at with any sympathy.

HR needs to figure out business before boldness

The other day I stumbled onto a post on LinkedIn that seems to be making it's way around various HR circles.  After reading the article I figured I'd weigh in on its main argument that HR needs to be more bold.  It's not that I disagree with being bold or that I think being bold is a bad idea, it's just that being bold is a small piece of what HR practitioners really need to be. Sure, HR needs to be risk takers, gutsy, and all of those other exciting words that make your heart pump faster. But at the end of the day, what HR really needs to be is better businessmen and businesswomen.

HR has relied on scare tactics, fear, and "compliance" to push their agenda for too long.  Yes the DOL, EEOC, and all of those other spooky government agencies are huge pains in the ass, but they're a necessary evil. And to be honest, many business leaders look at HR as a necessary evil too.  So stop approaching the HR function in a vacuum; HR is an important component of a business but at the end of the day it exists for the same two reasons that every job in a company exists:  Increase revenue and decrease expenses. Forget that and you should just pack your shit up, leave the office, and go home for the rest of the month (or year).

My advice for those of you who are currently in HR or who plan on going into HR is to sear the following ideas into your brain:

1.  Embrace Bold Finance:   You have to do this in our current business environment.  The minute that we start caring more about being loud and gutsy than about earnings and revenue is the minute that we'll change this heading to Embrace Bold HR. But don't hold your breath. Instead, get a firm grasp of income and expenses. know how to interpret and unpack financial statements, and understand the critical impact that revenue has on a business.  Use your problem-solving brain to learn a little more about A/P, A/R, forecasting, budgeting, and taxes.  Hell, payroll tax should be near and dear to your heart if you plan on being in HR for the long haul.

2. Salespeople are Weirdos:  Weird like a fox.  You may think of salespeople as being flashy, arrogant, fake, or phony.  It's the department that spends money like water, dresses way too nice, and will waterboard their own mother for an opportunity to bump their commission check up by $50. The bottom line is that these folks bring in the dollars that pay everyone's salary, including yours.  Sales isn't easy, and while these employees have greater earning potential than other non-sales employees, they can also be around one day and gone the next.  HR needs to learn how to embrace the sales culture and figure out how to use it to their company's advantage.

3.  IT is Crucial:  I'm not talking about the IT guy down the hall that sets up your computer and spills coffee on your keyboard while he's deleting Spotify from your machine.  I'm talking about Data and Information professionals who can read, write, and understand code.  Valuable IT employees grasp the notion of how software and hardware interact with one another, and you should too. Data is a critical component of business these days. Gathering data, creating data, storing data, securing data, and disseminating data is the lifeblood of business.  As more IT efforts head to the cloud and SaaS platforms, the people who manage these programs and areas will become essential to business (I'm looking in the direction of DevOps and TechOps).  Once you're able to talk intelligibly with these employees you'll be that much better of an HR professional, and you'll be respected a heck of a lot more.

4.  Lawyers are Assholes:  For the most part this is true. I know this because I work with a lawyer almost everyday.  He also gave me permission to write this sub-topic, but he remembered to remind me that his permission wasn't technically legal advice.   Rather than going too far down this rabbit hole let's just all agree that the good Doctors of "Jurisprudence" protect you and your company, and in turn that protects everyones paychecks.  Also, it's very important to recognize that you, as an HR professional are not a lawyer.  There are positives and negatives to this, but never confuse providing FMLA information to an employee as giving legal advice.

5.  Understand Your Business: I don't care if you work for a startup, a public company, a non-profit, or a government contractor.  You absolutely must know and understand how your company makes money, how they spend money, and what goes on in between these two points.  You can't be a good HR professional, a good co-worker, or a good employee if you don't understand how and what real success and failure looks like.  Real success and failure is defined by leadership, and more often than not it comes in the forms of numbers.  So as they say in rap songs, if you don't know you better ask somebody.

When you want to know how your HR job affects the big picture, here's an idea: go ask your boss about what you can personally do to have an impact on the top line and the bottom line.  Then GO DO IT.  If your boss doesn't have an answer for you, then go ask his or her boss.  Ambition goes a long way in this world. And the next time you're feeling bold, take a deep breath, open your web browser, and download a good book from Amazon.

Surprise: It's an insurance bill!

Today I'm writing about a New York state law that was passed earlier this year which is going into effect next year on April 1, 2015.  The law is known as the Emergency Services and Surprise Bills law and it's intended to protect New York consumers from out-of-network medical services and surprise insurance bills.  As someone who has dealt with many other folks' insurance claims over the years I think that this law is going to be great for individuals initially.

You read about this stuff all the time. People who have health insurance go to the ER and then get hit with massive bills due to the hospital allowing out-of-network doctors to operate out of their facilities.  You might even go to an in-network hospital, see your in-network doctor, and then get services from an out-of-network specialist.  Sometimes you hear of folks going to a doctor they found on their insurance company's website, only to discover at a later date that the doctor was in-network  years ago, and was never removed from the insurance company's list of providers.  And once in a while, you'll hear of folks who need care from doctors so specialized that there aren't any of those specialists in their insurance network.  Whenever someone asks me for advice on how to handle these issues, I always tell them the following:  Before any provider ever touches you, make to confirm that they are in your network. Kind of crazy, asking a doc whether he participates in the MagnaPPO Plus ChoiceCare plan right before he puts on an your anesthesia mask, but hey, consumers need to be vigilant these days.

This new law is intended to protect the insured from those scenarios.  Instead of the onus being on the insured to cut some sort of deal with the doctors and hospitals, it now becomes the responsibility of the insurance companies to work with the medical providers.  This sounds great on the surface, but I wonder what the long term cost implications of this law will be. It probably means that the insurers are going to end up paying for claims that they didn't intend to pay to begin with and/or have to spend extra time arguing and mediating claims with doctors and hospitals who aren't in their network.

All of this amounts to more cost for the insurers, and guess who they pass those costs on to?  Yep, you guessed right.  Their plan participants who this law was designed to protect!

I'm also very interested to see how this law is handled for international health insurance claims.  Oh the amount of money I'd pay to see a claims resolutions specialist in the Midwest argue with a billing rep in Taiwan about negotiating a New Yorker's hospital bill. 

Recruiting like it's 1999

I recently met a great guy who happens to be the CEO of a well-funded startup based in Washington D.C.  This guy was giving me the scoop on his company (a SaaS product that I would guess many in the DC startup scene would know of) and about how innovative they are.  Usually when someone tells me how innovative their company is my eyes glaze over and I slip into a nice daydream.  But as our discussion continued, I started to agree (in my mind) that his product actually is pretty unique.

At some point during our discussion the conversation turned to the topic of recruitment.  I asked this CEO how he was recruiting new employees and he proceeded to list the following websites: SimplyHired, Indeed, Craigslist, and Washington Post.  My jaw almost hit the floor.  In my brain I thought to myself this guy is developing an amazingly innovative piece of software, but he's using recruitment practices that were hot in 1999. These days there are so many ways to be creative and innovative when recruiting new talent.  Using niche job boards, developing referral programs, liaising with Dev programs, sponsoring/attending events, and holding contests are just a few things that come to mind.  The truth is that the best way to find employees who want to help you innovate is by searching for them with innovative recruitment methods.  Sure you can find some good candidates on regular job boards, but that's the exception not the rule.

I encourage startup executives and tacticians to think creatively and find new and exciting ways to tell their story to the right people.  Doing this will connect you with candidates you'd never find on the traditional job boards.  And if you are the individual who is described above, please don't be upset that I shared your story. I'm looking forward to helping you with your recruitment strategy very soon!

OOO Forever: Weighing in on unlimited leave policies

The more startups that we come in contact with, the more we see using an unlimited leave policy to manage employee time off.  Some do it better than others, and the spectrum usually ranges from a loosey goosey scenario where employees can come and go as they please, all the way up to structured unlimited leave policies.

Based on this very unscientific Yahoo Poll, 75% of U.S. internet users think unlimited leave is a "Good idea".  This makes sense since the U.S. has some of the most vacation-deprived workers on the planet.  The chatter surrounding unlimited leave has also been increasing recently as well due to companies like Virgin and Netflix publicly touting the benefits of making unlimited leave available to their employees.  If I were a pilot for Virgin I'd probably take my unlimited leave right when I reached someplace like Bali or Bora Bora, but I digress.  

We decided to take a look at some of the pros and cons of having an unlimited leave policy:

Pros:

• You're sending the message that you trust your employees;
• You convey that you're not like other companies (e.g. you're not stodgy and you don't play by the "corporate" rules);
• Your employees don't have to track their leave, ask for permission, request time off, or fill out any HR forms;
• Your HR person doesn't have to play "bad cop" when employees are taking too much leave;
• You don't have to pay the extra $2500 for your HRIS system's Employee Leave Tracking Module;
• Your company doesn't have to book leave accruals, make leave payouts, or pay out accrued leave balances;
• Your employees don't have to lie to you and pull a Ferris Bueller when they stay home sick.   

Cons:

• Companies may believe that having an unlimited leave policy will magically solve all of their issues related to absenteeism, tardiness, over/under working employees, and work/life balance; 
• The legal ramifications of having an unlimited leave policy is still a relatively grey area still since the notion of unlimited leave has yet to become mainstream (think required payouts in California, the interplay with state and local paid leave laws, discrimination claims, etc.);
• By not tracking leave you won't have a clear picture of who is or is not taking leave, when employees are taking leave, or why they are taking leave.;  
• If you ever want to change your unlimited leave policy, expect this:

We would like to offer a few recommendations if your company decides to implement an unlimited leave policy or if you already have one in place:  1) Make sure that your unlimited leave policy is written down somewhere;  2) Make sure that your unlimited leave policy is communicated to your employees; 3) Make sure that your policy contains processes and procedures in it relating to calendaring, tracking, requesting, and timing - and maybe even some guidelines; and 4) Make sure that you understand how your unlimited leave integrates with statutory leave such as state/local paid sick leave, FMLA, USERRA, and other types of required leave.  

Buyout oDesk, save $, and reduce risk

At first glance, oDesk saves you money. But, you pay for it somewhere. And if it all goes wrong, it might cost you everything. If you like your oDesk contractor, we suggest that you contract without oDesk.

To hire your oDesk worker directly, you have to have been working with the contractor (for the purposes of this post, let's call him "Bob") for 3 years or you have to pay oDesk a fee that is the greatest of:

• (A) 15% of the estimated future yearly salary;
• (B) 52x the average Weekly oDesk fees; or
• (C) $500.

In most situations, Option A is what you'll pay because it is probably the highest, which is the equivalent of a modest recruiting fee to oDesk. Here are 12 reasons why you should pay the fee and contract directly:

1. Simple economics.

If you pay Bob through oDesk $10/hour for 10 days/week for 50 weeks/year, you pay $5,000/year. In turn, oDesk keeps about $750 and gives Bob about $4,250/year. 

Quick math: You can hire Bob directly for $4,250/year. Under the oDesk buyout policy, you'll owe oDesk at most $637.50 to poach Bob, for a grand total of $4,887.50 for the next year. You just saved $112.50 right off the bat!

It gets better: You just reduced your risk by cutting oDesk out of the picture. Keep reading why.

2. You've got a lousy independent contractor agreement through oDesk.

Your primary labor contract is with Bob and not oDesk. You agreed to this in oDesk's User Agreement, which makes clear that "a Service Contract is formed directly between such Client and Freelancer." 

That's legalese for "You are on the hook if Bob gets pissed off and wants to sue you." For lots of reasons below, we would never advise a client to use oDesk's service agreement as a contractor agreement.

3. You agree to pay for oDesk's lawsuits and legal bills.

This is huge. I mean, this could sink your business. Be honest: Did you read and understand the indemnity section in your agreement with oDesk? 

Well, you signed up to pay for "all claims, damages, liabilities, costs, and expenses" that oDesk might suffer if Bob sues oDesk. This includes, "but [is] not limited to, reasonable attorneys' fees and all related costs and expenses" like court fees, translation fees, travel, lodging, and more! 

What if Bob is in Poland and sues oDesk for violating Polish employment law, or damaging Bob's reputation, or not paying up, and Bob wins or settles? That's right, you're on the hook for the winning amounts from the lawsuit or settlement. 

And whether oDesk wins or loses, you're on the hook for all of oDesk's related attorneys fees and costs. Is that worth the extra 2% you're paying by keeping the contractor on oDesk? No fucking way!

4. Anybody can do the work you assign.

Did you notice that Bob can subcontract with third parties? It's right there in the User Agreement. All Bob has to do is set up a "legally recognized entity with the ability to hire and/or contract[.]" In other words, Bob can hand off tasks to whoever he wants.

5. Your IP might not be protected.

You should carefully consider how your IP is protected in your relationship with Bob. In particular, you should avoid any land mines that might exist in foreign law, which is what will govern your employment relationship when Bob is working from outside the United States.

With that in mind, your Service Contract in your oDesk User Agreement likely does NOT protect your IP in all jurisdictions. For example in France, which is a pretty good indicator of how this will go in any civil law country, you must jump through a bunch of legal hoops both in the particular provisions and overall agreement if you want to protect your IP rights as they apply to French contracts for labor. 

Bluntly stated, a French (or Colombian, or Spanish, or Polish) Labor Court would LOVE to throw out your California-based provisions on work product assignment. The best practice here is to have a local advisor provide your agreement under local law, which is an inexpensive move and the kind of foresight that a future investor or acquirer would love. 

6. If foreign laws require you to treat the worker as an employee, you're screwed.

So, we've surprised many well-heeled general counsels about this concept. No matter what your contract says, local employment law almost always governs the relationship you have with a worker who works in another country. The exceptions are so few and specific that you can pretty much accept this as the rule.

So, for example, how much do you know about how to classify, say, a Chinese independent contractor? Did you know that it is illegal to hire an independent contractor in China? Do you realize that you could pay 2 - 10x the Chinese contractor's wages and lose all of your IP when the relationship goes bad?

Well, you better know these kinds of details in any country because you assume "all liability for proper classification of Freelancers as independent contractors or employees based on applicable legal guidelines." I.e., foreign legal guidelines in many oDesk relationships.

In this provision and others, oDesk makes sure to cover its own ass but not your ass. Proper classification is one of the easiest things to get right from a legal perspective, but you've got to make sure you have the right  agreement in place, a basic understanding of local rules, and proper restrictions on Bob's activities. 

If not, you'll have to pay for all tax compliance, withholdings, penalties, and fines. You'll also have employment law risk in that country. And, you might even have corporate tax liability in that country based on your contractor/employee's activities. Your User Agreement with oDesk makes sure that it is your ass for any liability.

7. And if oDesk screws up, you can sue them for $2,500 and what you paid them.

Let's take a little detour away from employment, tax, and IP issues and glance at your civil litigation options if oDesk really screws you. Let's assume that something goes way wrong and you actually have a claim against oDesk. You could get some coverage there, right?

Well you can get something, because in your User Agreement, you agreed (in all caps!) that:

THE LIABILITY OF ODESK TO ANY USER FOR ANY CLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT SHALL NOT EXCEED THE GREATER OF: (A) U.S. $2,500; AND (B) ANY ODESK FEES RETAINED BY ODESK WITH RESPECT TO CONTRACTS ON WHICH USER WAS INVOLVED AS CLIENT OR FREELANCER DURING THE SIX (6) MONTH PERIOD PRECEDING THE DATE OF THE CLAIM[.]

Ouch! You can get $2,500 and about 15% of your Contractors' wages back. That sucks, but you signed it…

8. Oh and get this, oDesk can sue you.

You remember that last class in Contracts during your first year of law school where they talked about third party beneficiaries, right? I barely remembered it, but I looked it up and now I remember.

Basically, a third party beneficiary (the missing hyphen kills me) is a third party who is not party to the contract but can still sue either party even though it isn't a party. In Section 3.10 of your Service Contract, oDesk hereby names itself as a third party beneficiary, so it can sue you.

9. Weak-ass confidentiality provisions.

Okay, back to the employment and IP stuff. If you're like most startups, you are fiercely protective of your confidential information. After all, this is likely your most valuable asset. So, you can rest easy knowing that oDesk has robust confidentiality provisions, right?

Not so fast. While the Service Contract offers some protection, it's certainly not the confidentiality agreement we would ever use. We will limit this critique to a few of our concerns.

First, the provisions are not in a logical order. Your Service Contract incorporates the confidentiality provisions of your User Agreement by way of reference. Not fatal, but certainly not ideal when dealing with a court, whether in the United States or in another country.

Second, you could drive a truck through the provisions. For example, Bob must protect your "Confidential Information with the same degree of care he uses to protect his own confidential information, but in no event with less than due care." What is the standard for due care? Is it the average Ukrainian freelancer's standard? Google's security team? Not clear!

Third, I won't even comment the line allowing oDesk to disclose your confidential information "to any Client or Freelancer engaged in a Contract" except to say: on its face, that's crazy.

These are just our initial concerns with oDesk's confidentiality provisions.

10. No trade secrets protection.

In a related vein, we cannot help but notice that you do not have contractual trade secrets protection. Without digging too deep into the law here, let's take a simple example of a customer list. 

Let's assume that your oDesk contractor gets ahold of your customer list. You also list all of your customers on your website, which means your customer list is not confidential. However, you would be afforded trade secrets protection under California (and many other states') laws, if you properly contracted with your employee. However, oDesk's agreement does not include provisions that adequately protect your trade secrets, so you've got a much tougher fight.

11. No non-compete.

And notably, you have absolutely no non-compete provisions in your oDesk Service Contract. To the contrary, the Bob "is free at all times to provide Services to persons or businesses other than Client, including any competitor of Client." Did you read that part?

To be fair, this provision can cover your ass in many jurisdictions. And, as you may know, non-compete provisions are prohibited in many jurisdictions, most famously in California. But, shouldn't you have the choice if non-competes are allowed in your jurisdiction?

12. You're giving jurisdiction to California.

Ah, jurisdiction. The stuff we lawyers love to talk about in our lavish conference rooms that you pay for but you'll never see. But seriously, you designated California as your jurisdiction of choice for any disputes arising from your oDesk User Agreement. 

This is fine if you're in Mountain View, but what if you are in Boston, New York, or D.C.? Are you really going to pursue or defend an expensive lawsuit in the Golden State? Not likely!

Where HR and Legal Software Ends and Consulting Begins

Automation affords small businesses great power when addressing HR and legal issues. We know, because we run software for our clients that in turn makes our lives easier.

However, these useful tools have their limits when solving many out-of-the-box problems that small businesses face. We've thus dedicated this post to point out the price that many clients pay when using software solutions for HR and legal issues.

1. Software might not provide the security you need.

With many well designed software solutions, we are often shocked at the lack of security afforded to employee and company information. When walking through software with our tech clients--who are admittedly more knowledgeable on the technical aspects of data security--we often notice gaping holes.

For example, do you know that some of the links that software products create to store your employee and company information are simply not secure? In several instances, we've demonstrated software workarounds where sensitive information--financials, SSNs, salary, immigration compliance, tax filings, and employee identification--is only a click away with an open URL?

Moreover, software does not have the professional responsibilities that professionals, particularly attorneys, follow to protect their clients' confidential data? For example, a software program does not afford attorney-client privilege for compliance issues. An attorney does.

2. Software can leave you high and dry when it does not give you adequate insurance

We are fully supportive of the recent advances in technology that are disrupting the outdated insurance brokerage model. However, it rarely makes sense to leave insurance decisions up to an office manager or overburdened CEO. As cheap as most insurance policies are, we almost always find instances where businesses have spared a dime on insurance when better human guidance would provide them needed protection.

3. Employee agreements are often insufficient when an employer uses boilerplate offer letters

From an attorney and HR manager perspective, we are shocked at the gaping risks that employers leave on the table when they cut and paste an employee's name or contractor's name into an existing offer letter or independent contractor agreement. Yes, you're saving a few hundred dollars on lawyer fees by not drafting a unique agreement for each hire. But, you'd be wise to have an HR manager or attorney spend 20 minutes verifying that the agreement fits the proposed role.

This is just one example of a boilerplate document or process that creates risks for employers. We'll save things like employee handbooks, noncompetes, non-disclosures, compensation policies, and non-discrimination polices for another day. Suffice it to say that there is a middle ground between automated materials and partner-level legal drafting. 

4. A missing human touch leaves employees feeling cold

As much as we all think that we can rely solely on digital contact, the human touch still has a big role in the workplace. For instance, how do you bring your employees into your business? Do you simply have them log into your payroll software, fill out some forms, and start working?

While we don't recommend arduous intake processes, we do advocate for a personal touch in some practices. We find that a human approach up front goes a long way for communicating things like workplace culture, expectations, promotion policies, and an explanation of benefits.

We are constantly evaluating our use of technology with a keen eye on what software does best and what where we need to add a human face.

Employee Boozing: Is there a right way?

Whenever I engage with new clients one of the issues I always probe them on is alcohol.  Startups, their employees, and management tend to have a love/hate relationship with alcohol.  Everyone knows that tech startups operate lean and fast with young employees working long, stressful hours.  Companies should think about the following when it comes to their Company's alcohol culture:

• Do you make alcohol available in the office?  Does you have beer in your company refrigerator?  Do you have a separate refrigerator for beer - or even a separate refrigerator for a keg? Does your company have a stocked liquor cabinet?  Are there any rules - written or unwritten - as to when alcohol can be consumed?

• Do your employees have a regular happy hour? If so, what is your Company's contribution to that happy hour? Do you pay for booze for an hour? The whole night? Do you make sure that food is provided with the alcohol?

• If you do have a regular happy hour, is it in your office, your office building, or at a nearby bar/restaurant? 

• Does your Company, employees in your company, or a subset of your employee population have "culture of alcohol".  Do they buy each other beers for a job well done in the office or do they offer to buy shots for one another when they close deals?

Answering these questions should give you a better idea of what your Company's alcohol culture looks like and how your company "uses" alcohol.  Asking your employees these questions will paint you an even better picture of how alcohol fits in to your Company's culture.  In startups (free) alcohol can be a fun part of the culture, but can put the company at risk.  Knowing where your corporate insurance ends, and your bank account begins is always good practice when it comes to company risk.

We advise Owners, Founders, and C-Suite executives to periodically check in on their company's alcohol culture so that they can understand whether it is excessive, whether it adds or detracts from the Company's culture, and what risks it presents to the Company.

Does Your Startup have FOGO?

With all the talk of FOMO these days I figured I'd post something about startpus and their "FOGO".   For those of you that aren't in the know, FOMO means Fear of Missing Out, and apparently Millenials all of the place are experiencing it.  Think of the most recent time where all your friends went to that awesome concert or restaurant, and you weren't able to make it.  That knot in your stomach is "FOMO" and it's real (but there's no pill for it...yet).

Small companies suffer from FOGO or Fear of Growing Older (or Outward) all the time.  Tech startups often operate out of one location, acquire customers in various locations, but are then afraid to expand their company footprint.  This happens to East Coast or West Coast startups who start making tons of money, but only want to hire new employees where they were founded.  So when that Front-End/Back-End/DevOps/Designer unicorn wants to work from his house in New Zealand, or when you're ready to set up shop overseas but don't because you're scared of EU law....that's FOGO! Remote employees?!? Oh no, that's too confusing and troublesome. FOGO!  Bring an Estonian coder to the US, we could never do that?!? FOGO!

I'm here to tell you that while FOGO is real, it's not insurmountable, and it's not the end of the world. The trick is to find the right people who can help you tackle your FOGO and who can help you accomplish your goals, regardless of what/where they are.

Transgender Employees in the Workplace

I've decided to write about Transgender employees and Transgenderism in the workplace because I've seen the topic come up several times over the past few months.  Does this mean that Transgenderism is on the rise or that Transgender employees are asserting their rights more in the workplace? I don't know. But I figured I'd provide some information to employers who find themselves interviewing, hiring, employing, or firing Transgender employees.

The very first thing employers should do is understand what Transgenderism is.  Transgenderism can include individuals who have transitioned to a gender other than what they are born as, individuals who are undertaking a gender transition, or individuals who identify with a gender opposite of what they were born as.   While there are many individual states that protect against LGBT discrimination, the federal government along with 29 other states currently have no laws prohibiting gender identity discrimination. In July 2014 President Obama issued (amended) Executive Order 11478 and 11246 to include gender identity - so if you're a government contractor you should be aware of this. When it comes to federal law, Democrats have been trying to pass ENDA for years now.  If it were to pass, ENDA would protect against LGBT discrimination, but it's not clear if or when this bill will ever become a law.

Whether laws exist or not, you should never discriminate against someone due to their sexual orientation or gender identity.  Doing so could harm your reputation as an employer and have a huge impact on employee morale.  Here are some ways that you can go above and beyond by fostering inclusion and making everyone in your office feel welcome:

• Include in your handbook that gender identity and expression are protected within your workplace;
• If you have a dress code make it gender neutral;
• Consider covering domestic partners under your health plan;   
• Consider publicly supporting an organization like GLAAD or the HRC;   
• Post open jobs to LGBTQ job boards and university groups;
• Document performance and make sure any actions you take can be attributed to that performance; 
• Locate a nearby individual (non-public) bathroom and inform all employees about it.  This is just good practice on so many levels. 

The key word here is Inclusion. Employers should strive to create a workplace where all of their employees can bring their similarities and differences to the company.  These similarities and differences should be celebrated, as you'll never know when they'll contribute or lead to the next breakthrough product or service.

5 tax mistakes that international startups make

Startups that are doing business across borders have special needs when it comes to tax compliance. And who isn't doing business across borders these days? Most businesses have multinational founding teams, contractors abroad, and customers in multiple countries.

We know that entrepreneurs simply do not have time to figure out their tax problems, particularly when the company has 5 - 50 employees. At this state, all profits, if any, are reinvested in the product. Accordingly, we've boiled down 5 mistakes that are easy to avoid or fix for an international startup.

#1 Using a regular accountant to set everything up.

Do you use an architect or a plumber when you want someone to design your house? The answer is obvious. But, time and time again, we clean up companies' messes when they use their local accountant to set up their cross-border tax structure. Now, we love accountants, but only after we have given them the structure they need from a legal perspective. And, when your tax attorney directs your accountants, all information is privileged.

#2 Assuming that your foreign contractor is a contractor.

This one can really hurt. In some countries, anyone that a foreign business hires in that country will be an illegal employment relationship. This can cost huge fines and painful procedures. And, you'll have little in the way of protection against the employee's employment law claims. Oh, and you can kiss you IP goodbye. In almost every country, someone who works on the ground is subject to local payroll tax withholdings that you--the employer--must address. This is much easier to set up than it is to clean up!

#3 Not filing for local taxes

This might seems obvious to the casual reader, but compliance professional and entrepreneurs understand. For tax professionals, we see screwed up and missed filings all the time. As entrepreneurs, we know that entrepreneurial plates are often too full to make room for the nitty gritty. That said, unmet local tax liabilities can snowball out of control.

#4 Keeping multiple sets of books

You know what we mean: you have one system for your big enterprise customer, multiple spreadsheets for your other customers, a napkin for other customers, and a couple in your head. At the end of the month, you (hopefully!) email your bank statements over to your accountant, who can now bill you extra. This is bad for a couple reasons. First, you're paying more for your quarterlies by dumping a ton of accounting shit on your accountant. Second, you're losing a ton of data that, when organized, can offer you a ton of in valuable information for operations and, perhaps, the ammo you need when you sit down and explain your numbers with a potential investor.

#5 Not taking advantage of deductions

Okay, so you've only got 5 - 50 employees and you're not racking up profits, so why worry about deductions? Again, a couple reasons at first glance. First, you can almost always bank those deductions and use them in the future when you are profitable, which will save you a bunch on taxes. Second, this is a great opportunity to understand the stuff you need to know when you are ready to hire in-house CFO and accountants, who won't be able to bullshit you on what they don't know. It's never too early to at least understand the power of deductions on your business's after-tax bottom line.

5 Things to Look For When Selecting a Consultant

Ever since I became a consultant I've heard the following question many times: "How Do I Select a Consultant".  I immediately reply by telling the individual to extend their arm (in my direction), extend their index finger (in my direction), and say the word "YOU" very loudly.  But in all seriousness, finding and selecting a consultant is important for businesses as often times consultants work alongside their clients as partners for long periods o f time and handle very sensitive work for them.  So here are five guiding principles on how to select a consultant:

1.  Helpfulness - this sounds like an easy one, but is your consultant helpful? Are they available to take your calls, do they answer your emails, are they excited to speak with you?  Can you come to them with any problem and feel confident that they'll either know the answer or steer you in the right direction?

2.  Trustworthiness - Finding someone who you can trust is one of the most important elements of finding a great consultant.  If you can't trust your consultant there's a chance that you'll hold important things back from him or her, and that's not good for anybody. 

3.   Question Asker - It's great to hear that your consultant has multiple degrees, certifications, licenses, and accolades.  But what does that mean for you as their potential client.  Will your consultant be able to get things done in a way that works for you?  Even more important than asking questions is 'asking the right questions' but we'll address that in a future blog post. 

4.  Problem Solver - Does the consultant have a one-size-fits-all solutions or are you and your business partners getting custom level solutions? Maybe you need a one-size-fits-all solution, maybe you don't. If your consultant can't explain why he's doing what he's doing for you - in a way that makes sense - it's time to find a new consultant. 

5. Expert Advice - Is your consultant an expert in what they are helping you on? Even more importantly, if  your consultant isn't an expert on what they're working on for you, will they tell you and help you find someone who IS an expert in that area?  Being in job for 30 years doesn't make someone an expert. Being in a job for 3 years doesn't disqualify someone from being an expert either.  

These should get you off to a good start when trying to find and select a consultant to help you with your needs.  

Legal Weed and the Workplace

With Prop 71 going from pot legalization movement to D.C. law, Cannabis could soon be coming to a DC office near you.  On November 4th voters turned out and overwhelmingly supported the initiative (68% approved) to legalize it.  Residents and non-residents will now be able to possess up to two ounces of marijuana and they will be able to grow up to 3 THC-producing Cannabis Sativa plants in their house.  But what does this mean for the workforce and businesses that hire D.C. residents?  Unlike other states where marijuana is legal (Washington State and Colorado) Washington D.C. is situated in a major metropolitan area next to two states that definitely still consider Marijuana illegal.  But not so fast, says Congress, who may end up being the ones to "pass" after others have "puff, puffed".  Additionally, without corresponding legislation and ordinances on how marijuana will  be taxed and sold, there's still a huge grey area in terms of legal weed in DC.

But there are some valid concerns from a business and employer perspective. What happens to an employee who talks about growing Cannabis at their DC home while they're at their Maryland office?  What about individuals who live in DC, and legally consume marijuana, but are given a surprise drug test by their Virginia-based employer?  Or what if you're a Virginia or Maryland employer who has an event or happy hour in DC, only to see pictures of your employees smoking joints or holding (up to two ounces of) marijuana. Also, do the drug policies in your Employee Handbook now conflict with DC law? These are issues that HR departments, legal departments, and risk management departments will have the benefit of unpacking in the very near future.

Is Washington DC Really Business Friendly?

There are plenty of reasons to do business in Washington, D.C. The growing populace, The federal government, lobbyists, the vast number of associations, and the burgeoning startup scene.  But is DC really business friendly? When it comes to laws and regulations in the District, some would argue that it is not. Or at least not as business-friendly as other states and cities.  The most recent example of a local law that will have an impact on the business landscape is the Wage Theft Prevention Amendment Act of 2014.  This law is similar to Wage Theft laws in other cities, but the administrative burden that it imposes on small businesses can be challenging.  With the law set to go into effect in Mid-December, employers will be expected to comply with the law within 90 days of its effective date.  What does compliance entail, you ask? Here's a brief overview of notice requirements:

• That a notice be provided to your employees;
• The notice be in English AND the employee's primary language;
• The notice must include Company's Name, Address, and Phone Number;
• The notice must contain the employee's rate of pay and the basis in which it is paid;
• The notice also has to include when the regular pay day is for employees;
• Anything else the Mayor deems should be provided to employees;

Sound like a herculean task? Not really, if you have the resources to: a) know about the law, and b) comply with the law administratively.  Not only that, but this notice must be provided any time you have new employees or if an employee receives a pay change. The fine for not complying? $500 per employee. So get ready to comply or be prepared to break out the checkbook.