You can't hack HR, Finance, and Law

On a pretty regular basis we meet business leaders who are what we would call "business hackers."  This isn't a good thing or a bad thing, but more of a mentality we see in people.  We call them business hackers because they try to hack certain functions of their business.  We think that hacking these functions makes complete sense - up to a point.  When businesses start to grow and the complexities begin to mount, it's time to replace those hacks with legitimate services...or better hacks.  This is where we see most business hackers stumble.

Here's a situation that we see all the time.  A couple entrepreneurs start a business.  They use a common online platform to set up their business.   They have some success and make some money, and then they use a full-service online finance/accounting platform to manage their books. Hey, we've got financial statements. We're a real business!  Success continues and the company then uses an online HR platform to manage their HR function.  The company has duped themselves into thinking that they have Legal, Finance, and HR.  These platforms are getting paid monthly and are never going to be the ones to say to their clients "you've outgrown us, time to find someone new."

But what happens when the business really starts to grow.  What happens if they want to raise money, or convert their entity, or create an investor deck, or terminate an executive, or enhance their culture?  This is when things start to get a little messy.  The 800 number that you usually dial, and the PoliSci grad-turned-business advisor that you usually talk to probably won't be able to answer to your questions.  This is where the breakdown starts.  This is where we advise you to Get Suitless.   Or please just get someone, because you can't hack HR, Finance, and Law.  

As on of our partners puts it so eloquently:  "I can hack law because I practice it daily, I have the law degree, I have the masters in law, and I have the years of experience.  You can't. And that guy on the other end of the 800 number DEFINITELY can't."

New ways to get into hot water in California in 2016

It's a new year, and that means that there are new employment laws on the books everywhere. More specifically, companies operating in California continue be subject to all sorts of employee-friendly laws.  Hey, the state has to make money somehow!  And remember...ignorance is not a defense.  Rather than list out all of the new laws in California, we're going to give you a few ways that you can get into hot water in California in 2016.

1.  You run an e-commerce firm in San Jose and you've hired three fulfillment reps - Tim, David, and Jennifer - to manage order processing.  All three employees have the same job descriptions and are doing work that is "substantially similar."  You pay Tim and David $40k per year, and you pay Jennifer $35k per year.  This pay disparity is problematic due to California's Fair Pay Act.  Temperature of water:  Hot 

2. You own a blog and media startup Bakersfield, but you open up a small office in San Francisco.  In order to afford your rent in SF, you pay your part-time employees $10 per hour for every hour worked.   While you're meeting Federal minimum wage requirements, you're not paying them in accordance with San Francisco's local minimum wage of $15.25. You also fail to realize that due to AB970 the California Labor Commissioner can now enforce local minimum wage laws, in addition to the less-feared OLSE.  Temperature of water: Warm

3. You are the CEO of a professional services firm in Los Angeles.  Your company has been using E-Verify since 2014.  You have an HR Manager on staff and they use E-Verify as part of the hiring process. You are talking to a new candidate and you really like her.  You "want to know a little more" about the candidate and you have your HR Manager run the candidate's info that was included on their application through e-verify.  You didn't realize that this is now illegal. There is an electronic record of what has been done.  Be prepared to shell out up to $10,000 in penalties.  Temperature of water: Scalding. 

If you have a company or employees in California, try to avoid being like any of the companies above.  And if any of you feel inclined to take on "the law", I'd encourage you to listen to what The Clash has to say about fighting the law (along with who won).

I'm a U.S. Company and I want to hire a Canadian. Help, eh?

We see it all the time.  We're working with a U.S. based company and a request comes in from someone there letting us know that they want to make a new hire.  But this isn't just any new hire, it's a special new hire.  It's an international new hire.  And the worker that this company wants to hire lives in Canada.  "Where do we start" they ask....

We've put together a bit of a checklist/reality check that you can use to get the ball rolling on bringing on board your new Canuck.  Note that this is just a starting place, and not an exhaustive list, when it comes to what you should or shouldn't be doing in order to employ your new Neighbor to the North.

Here's where to start:

• Gather Information - This might be the most important step in the process.  Find out as much as you can about this new worker.  What province do they live in? What province will they be working in? What exactly will they be doing? Where will they be doing it? Are they a Canadian citizen or just living in Canada? Do they have employment authorization?

• Determine Employee Vs. Independent Contractor - This can be a confusing step.  Much like U.S. workers, you'll need to determine if the work this person is doing qualifies them as an employee or an independent contractor.  Canada's version of the IRS (the CRA) can be helpful in figuring this out.  There are also different rules for those in Quebec.

• Employee -  If they're an employee, you'll need to figure out how to employ them in Canada.  Have you set up an entity in Canada? That's one option.  Can you employ them through a payrolling company in Canada? That's another option.  Can you register for a business number and and set up a payroll deductions account? There's a third option. Regardless of what you do, you're going to need to withhold Income Tax, Canadian Pension Plan (CPP) withholdings, and employment Insurance (EI) for your employee (and pay on behalf of the company as well).  You'll also need to have the employee fill out some forms and you'll need to register with the WISB.   

• While employment law in Canada is primarily provincial/territorial, Canada does have an Employment Standards Act - the ESA - that covers most employees (and most provinces/territories like to follow it). U.S. folks can think of this as bits of the FLSA, OSHA, and NLRA wrapped up in a neat box with a red maple leaf stamped on it. 

• Contractor - If your worker is an independent contractor you'll need to have them sign a W-8BEN or a W-8BEN-E and keep it on file.  Remember, no W9 because they're not going to be issued a 1099.  Banking info is needed, and remember, because your worker will be using a Canadian bank you'll need their SWIFT number and account number (sorry Yankee, no Account and Routing number in these colder parts of the world). 

• Paperwork - Next we need to figure out how we are going to "paper" this person.   Do you have an agreement in place with this person? You should.  Has it been localized to where they live? Does it need to be in English and French?  If they're an employee we should probably put an offer letter in place and include things like: their rate, when they're paid, what they'll be doing, when they start, time off, benefits, etc.  

• End of Year - You'll need to figure out what sort of end of year documentation your employee or contractor will need.  Do we need to issue a T4 or T4A? 

• Termination - Need to terminate your employee? Make sure you provide them with a Record of Employment!

There are also different and unique rules depending on what province you're in and sometimes what City your person is in.  And remember, special attention should be always be paid to Quebec. 

Keep in mind that just like the IRS, the CRA doesn't look kindly upon any companies, international or domestic, that misclassify employees as contractors.  

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.

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!

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.