Hiring a new employee

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TADPORTER

TADPORTER

MGF, Master Grumble Framer
Founding Member
Joined
Jan 8, 1999
Posts
518
Loc
Memphis, TN
Hello
Its an exciting time here as I am about to hire my first employee. I am quite excited about this prospect.
Any suggestions on pitfalls or other such hidden concerns. Spoke with my insurance guy this morning and will meet with the accountant tomorrow.

---Mike

"It's wonderful to be here in Latin America, I only wish I had taken Latin in College." -Dan Quayle
 
My recomendation is to be clear to yourself what activities you are hiring this person to do. If you start teaching them the things you prefer to do such as framing and sales you will still have to do the chores you don't like doing. Be sure to hire a person to support you by doing the chores you don't like doing so you can spend more time on the important stuff. I have seen so many owners still cleaning the bathrooms.
 
One thing I would do (if I was in your shoes) would be to set up a date, say 90 days off, when you will sit down with the employee and discuss 'things'.

This is your opportunity to tell them what you really appreciate about them, what you'd like to see improved; they can voice concerns they have about the business so far and just share.

I wish I had done this.

Good luck.

Remember, money is good but praise (honest praise) is more important.

OregonJay
 
We have had many employees over the years. The best thing about employees is that you leverage time with them. You pay one rate and charge a higher rate so you make money every hour they work. Ask alot of questions during the interview and have a list of policies to read to them to let potential employees know what you expect of them. We also have a ruler test to see if they can read a ruler. Any test you do you must give to every employee, Remember employees in most states are hired at will and you can fire them at any time if they don't work out so long as you are not firing for a reason that would be considered discrimintation. My biggest problem is that I am not strict enough on some matters and it drives me nuts. My problem is it is hard to clamp down on the whole group when someone new comes in. So my advice to be strict about rules and work habits but don't be nasty about it. Be good about scheduling work so when the employee comes in they know exactly what to do and keep a back log of work for them so it you get busy on something they have work to do. Good luck with the growth.
 
Mike - Where in Minnesota? It's 20 below as I write this - don't you miss the winter? Okay, back to the topic: congrats on expanding to the point of hiring some help. The first thing I tell new people is WEAR COMFORTABLE SHOES. If they have no experience in framing, they may not realize that there are no sit-down parts to the job. You can't be pleasant to the customers if your feet hurt and you can't run around a frame shop bare foot. Best wishes. Kit

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Time flies like an arrow; fruit flies like a banana
 
Check into using a Co-Employment Service (Not a Temp agency). They become the employer of record for all tax reporting, withholding, workers comp, etc. The Co-employer knows all the rules and deadlines for tax reporting and other issues. In most cases, you will be able to offer benefits (and have access to them for yourself). It will take away a lot of headache.

In our case (My wife & I), we are both employees of ePEO link (a group of 3000 employees). In IDAHO, our Tax burden is 9.95% and workers comp is 1.6%. Our overhead was about 6% if we took care of all payroll ourselves. ePEO charges 4.52% of the net payroll, almost 1.5% reduction in Admin cost. Because of Section 125 pretax rules, $1 in benefits cost us $.91. $1 in net salary would cost us $1.16 due to taxes and admin. Health insurance with the "Blue guys" was $450/month. By using ePEO, our major medical is $294/month with better PPO co-pays using the same PPO and same deductible.

We are also provided HR department service and guidance to prevent unlawful termination. OSHA safety manuals. Lots of other just generally good to have information.
http://www.epeolink.com for more information

Rick
The Frugal Framer
Coeur d'Alene, ID

[This message has been edited by Frugal Framer (edited January 25, 2001).]
 
This happened to me back in the sixties.
I was working for another company at the time.
I was hiring my second employee, we had ran an ad in the paper that came out the night before.
As I drove up to work that morning there was a line of people going down the whole block. There was well over two hundred people applying for a minimum wage job, I could not believe it. I was 24 years old at the time and I was totally freaked, I mean how was I supposed to pick one person from all those people.
I had a young fellow working for me at the time, his name was Joe Carter. I was looking out the window at all these people waiting for us to open ( I came in the back door) and Joe could tell I had a major problem.
Joe wadded up a piece of paper and tossed it out onto the floor about five or six feet from where the line would be. I asked him what he was doing, he replied, " Whoever picks up the paper, that's who you should hire. After about two hours of handing out applications and watching the paper. A fellow stepped out of the line, went over and picked up the paper. I hired him and never regretted it once. He turned out to be a fantastic worker, He went on to manage several stores for our company. Of course Joe did the same.
Just thought I would share that one with you.
John.
 
The Goddess always makes it clear to new hirees that the first 30 days are a "probationary" period. I just tell them that sometimes it happens that different work styles just do not mesh and, truly, I can tell within a week but give them the benefit of the doubt. And if they have experience, this is a good time to be able to assess just how much experience and ability they do have (and use.) I also start them at a lower rate of pay for these 30 days and then I raise it after that time to a rate more appropriate for their skill level. More later...
-FG
P.S. It is easier to "adjust" the hours of part-timers than full-timers.
 
That picking up the paper idea is a good one.
I've just been reading Jay Goltz's book, The Street Smart Entrepreneur. It has a lot of good pointers on this subject.
 
Congratulations, Tadporter! That's our dream - hire employees - helps us and the community. We are lucky to have a customer couple that has become our friends and they have been running a company a long time. They have told us many good tips and pitfalls to look out for. Get a good lawyer and a good accountant for a start. I like Rick's, The Frugal Framer, idea of outsourcing the HR stuff.

PS - originally from Chattanooga, TN

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Jim Price
Western Winds Frame and Gallery
 
You might want to consider an hour bank. My employees all love it once they understand how it works. I got this idea from my daughter since hour banks are common in accounting firms where they have busy and slow seasons as we do. If your Susie normally works 25 hours per week then that would be her bank. Her pay remains the same every week. If next week she works 27 she has two hours she accunmulates in the bank. If she works 24 she owes you one. Susie benefits because her pay remains stable. You benefit because your payroll remains stable, you pay no overtime, and accounting costs are dramatically reduced. If Susie ever accumulates 25 hours in the bank you owe her an extra weeks pay (This has never happened in 8 years to me...they always owe me hours) If Susie owes 25 hours then that is a week she doesn't get a paycheck. (This has also never happened). Its easy to start with a new employee. Any questions you can email me. I also use the hour bank as an incentive program. When someone completes a particularily difficult and long job I can add hours to their bank...as a thank you.
 
As far as my understanding goes, the idea of a hour bank, in Connecticut, is illegal here. Here, the pay periods are determined at the time of employment. If you choose to pay people on Fridays or once ever two weeks then that is what you must do. You may also choose to hold bank a weeks paycheck at first. A problem with holding back paychecks is that after they leave you owe them. Depending on when you put in payroll, say you do it on Wed, but do not have the checks till Friday, then you will have to estimate how many hours the employee will work for the remaining two days. This is why a lot of employeers are fans of a set work schedule and no overtime at all. Because if they do end up working more time then the paycheck alloated by the end of Friday you MUST, by CT law that is, write them a company check or pay them out of petty cash. Wage workers get paid for overtime, no excepetions!!
A good purchase would be a time clock. The old write down on time cards things doesnt fly for very long very well. You would be well off to have a time clock in place and have them punch in and out.
 
Hiring employees changes the face of your business forever. That is good, because it means you are growing and contributing to the prosperity of your community. And that is bad, because it requires you to accept more responsibility. When something goes wrong, you have to deal with it. You become an administrator, not just a framer.

Management can become the owner's main task, which is OK if your interests run that way. If you're a hands-on kind of shop owner who wants to build frames and minimize the hassles of running a business, then you'll have some adjusting to do.

One word of advice: In addition to your insurance and accounting people, talk to a lawyer. Find out about employment law in your state. Do you have to satisfy specific requirements you don't know about? For example, do you have to make a written statement of applicable policies and procedures?

Whether required by law or not, I suggest you think about how you would resolve possible conflicts, and deelop a written policy. For example, if an employee has a problem -- absenteeism, poor quality work, dress code violation, behavior problems, customer relations problems, whatever -- what is your procedure for dealing with that employee? You should have a written disciplinary procedure.

Plan your training regimen, too. You will have to invest time and effort in training new employees, and you need to get them productive as soon as possible.

One way or another, your business life will never be the same.
 
Thanks for all the great info. Am taking many notes in preparation.
 
As a humble employee of such a shop (like framers are ever humble), I'd like to add one golden piece of advice, a problem I've noticed at my own shop--make sure you make ALL your own policies clear to the employee. If YOU don't like non-glare glass, or paper vs. acid-free mats, or deco-cuts, or whatever--make sure they know that, so your customers won't get three different ideas every time they come in.

At the shop I work at, everybody pretends it is their own shop, and I frequently speak to customers who were told something opposite of what I have just told them...it confuses the customer and makes it appear as if none of us really have any clear idea of what we're talking about.
frown.gif
(Hey, Boss, hope you're reading!
wink.gif
) I get a lot of, "But so-and-so said I didn't need spacers--didn't mention UV glass--didn't charge me before for that second mat opening..." etc.

So make all your policies crystal clear, so you're all on the same page.

And good luck. I'll be keeping my callused fingers crossed.
biggrin.gif


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I don't care what color your sofa is.
 
Consider using an agent, they will help you out on both sides of the situation and will also have knowledge of the ongoing changes to employment law in your area.
Congrats on being so good that people want more of you!!!
 
Speaking of new employees...I just found out that I've been laid off effectively immediately. SOOOOOOO, if there are any of us grumblers here in NY that need an experienced framer, let me know!

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Seth J. Bogdanove, CPF
21 years framing and still loving it
 
Tedporter,
May I bring in my experience with hiring new workers? I have two points to make:
1. When I interview prospective workers, I ask them to answer in written a few basic questions. Some BS questions like age, work experience and, why should I hire them. I let the applicant at a table with paper and .. a BROKEN tip pencil. Needless to say that what follows is very much telling of his qualities and abilities to perform. Is he looking for a pen? does he have one(I give him no other choice but to hand sharpen the existing pencil)? His ideas, hand writing, hand sharpening the pencil and the way he does it, especially what is he going to do with the shaves, all this constitutes my real hiring test.
2. Do not feel tempted to give points for how attractive that young lady (I presume that you need to hire a woman) might be or else, you will discover that long hours of working together, teaching and learning, showing and telling, talking and walking is likely going to turn into something else...

[This message has been edited by Frame Harbor (edited January 28, 2001).]
 
Setting up a simple payroll system:

Step one: Get an Employer Identification Number (EIN). You can apply for a number by filling out IRS Form SS-4.

Step two: Get state and local identification numbers if they are required in the area or areas where your business operates.

Step three: Have employee fill out and sign IRS Form W-4. The form provides two critical pieces of information: the employee's Social Security Number and the allowances the employee is claiming for income tax withholding purposes.

New workers should fill out a W-4 as soon as possible. Employees who marry or divorce, have children, gain or lose a dependent or want to change withholding amounts for any other reasons should also complete and sign a new W-4.

If you do not have an employee's W-4 on file, you are required by law to treat the employee as a single person with no exemptions for withholding purposes.

Step four: Establish a pay period. Most states require that employers pay workers on regular paydays. Most require that you pay your employees at least twice a month. Check with your state department of labor for your state´;s specific guidelines.

Step five: Establish payroll records. For federal tax purposes, you must keep the following information on file:

the name, address and Social Security Number of each employee

the total amount and date of each payment

the portion of each payment that constituted taxable wages

copies of each employee's W-4

dates and amounts of tax deposits

copies of returns you filed

copies of any undeliverable W-2 forms

Step six: Decide if you will pay workers for time spent in orientation, sick days, meals or working from home. Your state department of labor can tell you if you are required to pay for this time.

Step seven: Check your local overtime rules. According to most state laws, any work that exceeds 40 hours per week must be compensated with at least one and a half times the employee's hourly wage.

Step eight: Figure out what you need to withhold. The IRS expects you to withhold a portion of every employee's paycheck. Chances are your state and even local governments require withholding as well. The government provides tax tables that calculate the amount you must withhold once you have established the appropriate amount of taxable wages. All states except Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming impose a personal income tax. Like the federal government, most states provide tables to help you compute withholding amounts.

**HIRE a payroll service.** It's a good idea to get at least three quotes before deciding on a payroll service. Many payroll firms let you do this right on their Web sites. You should also speak with other small business owners who outsource their payroll to find out how much they pay and if they are SATISFIED with their service.
 
EMPLOYER-PAID TAXES
All businesses must pay the following taxes:

1) Medicare and Social Security tax (FICA). An employer pays half of the FICA taxes and withholds the other half from their employees' paychecks.

2) Federal unemployment tax. An employer must pay federal unemployment tax on the first $7,000 earned by each employee during a calendar year.

(Federal Unemployment Taxes-tax rate is 6.2 percent. Employers must pay this tax on the first $7,000 earned by each employee during a calendar year. Once an employee’s wages exceed this amount, you no longer have to pay federal unemployment taxes for that employee for the rest of the year.
*TIP*If you pay your federal unemployment taxes early and send in your state unemployment taxes on time, you can claim a 5.4 percent credit on your federal unemployment return. So your federal unemployment tax rate will fall to 0.8 percent. )


3) State unemployment tax. Rates are based on a business's location, size and number of employees, but since each state runs its own unemployment program, these rates can vary.
Some states also require employers to pay a disability tax every quarter to cover the costs of the states' disability program. Check with your state's guidelines to see if you must pay this tax.



[This message has been edited by KeepFraming (edited January 31, 2001).]
 
Random Items:

*Companies are required to carry workers' compensation insurance even if they only have one employee. Also familiarize yourself with the Immigration Reform and Control Act (IRCA) since you are legally required to have completed I-9 forms for all employees.

*Ask employees to sign a written acknowledgement that they are employed "AT-WILL" and that nothing provided or told to them is a contract.

*HIRING/FIRING:To protect yourself, make sure your company has clear policies about what kinds of employee conduct are subject to discipline or termination (sexual harassment, theft, drug possession, and so on). These should be clearly communicated to employees in writing. You should also have workers acknowledge receipt of these policies in writing.
If the employee hasn't done anything wrong and is simply underperforming, be clear about expectations. Make sure your employees understand the performance standards they must meet. **Regular, written reviews are the best way to do this.**
*Create a warnings policy and apply it consistently.* Make sure all warnings are written and maintained in the employee's personnel file!! Document verbal warnings with specifics about the particular issue, what was said and the potential consequences (including termination) if the employee doesn't improve or correct the problem. You may find that the employee's performance will improve. But if it doesn't, the firing won't come as a total shock and the substandard performance history is well documented.
The point of all this is to let employees clearly know what's expected of them and to put them on notice about the consequences of not meeting those expectations. It's worth repeating: Documentation is critical! With proper documentation, if you do have to fire someone, they'll be less likely to sue, and if they do you'll also have better odds of winning.
 
Employment, Nondisclosure Agreement:

The employee agrees not to disclose confidential company information to third parties or engage in business dealings with customers of the company for a designated period after termination of the employment relationship.

Personally, I wouldnt go this route...but if you were already thinking of a noncompetition agreement this agreement will serve you better and is more enforceable.
 
KeepFraming-
I appreciate all of the above info. Have printed out for reference. I should hope that my acct. and/or atty has this info. Perhaps you are interested in handling these duties for me (hehe). Thanks again.

---Mike
 
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