Hiring 101: Evaluating the Candidate

Your business is growing and you’re ready to bring someone aboard to join your team. But the hiring process can be complicated and intimidating. Check out these important things to keep in mind as you attempt to find the perfect candidate.

Good employees can be the most crucial ingredient in a successful business. But finding and hiring good employees can be among the most challenging aspects of running a small or growing company. There are some important things to keep in mind as you set out to add the best-of-the-best to your team.

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    Know the laws


    Numerous federal and state laws govern the various processes of soliciting employees, including advertising, interviewing and hiring. If you don’t follow the rules, you may find yourself as the defendant in a lawsuit over your hiring (or non-hiring) practices.  Or, you may end up being stuck with a very costly and unproductive employee who you have trouble firing.

    Employers are subject to many laws requiring equal employment opportunity and prohibiting discrimination in employment, which can include:

    • Title VII of the Civil Rights Act of 1964;
    • Equal Pay Act;
    • Age Discrimination in Employment Act;
    • Civil Rights Act of 1966;
    • Immigration Reform and Control Act;
    • American with Disabilities Act; and
    • numerous other federal and state laws.

    Don’t even Go there

    You probably have many questions that you would like to ask a prospective employee. But certain questions can only get you in trouble (yes, you can trip over many laws in an interview). The following seven questions are examples of questions you should NOT ask:

    No.1: How old are you?

    No. 2: Do you have any disabilities?

    No. 3: Are you pregnant?

    No. 4: Are you married with kids?

    No. 5: Have you ever been arrested?

    No. 6: What is your religious affiliation?

    No. 7: What is your sexual orientation?

    Focus on questions relating to the skill and experience of the candidates and the qualifications needed to perform the job.

    Do your homework

    Once you find the “perfect” candidate for the job, you should perform a background and reference check before extending an offer. Ideally the prospective employee will sign your “background check permission form,” which allows you to get reference information from prior employers and even do a credit-check. Before formally requesting information in writing from a prior employer, make sure the prospective employee gives you permission to do so. However, you may find that previous employers are reluctant to give much information, often confirming only the employment, position and maybe salary. (And yes, your company should have a similar policy with respect to your departing employees.)

    From a fact-checking perspective, think about checking out school experience (some people embellish their degrees or where they went to school); talk to the candidate’s former supervisor(s), if possible, who may provide more meaningful information than the company’s HR department; for sensitive jobs, check for felony convictions; and verify past employment (ensure the candidate actually worked at each of the companies listed, in the position listed, and check dates of employment).

    Stacy is a founding member of BauerGriffith, a business law firm providing high quality legal and business counsel to a wide array of clients, with an emphasis on non-profit organizations, small business and individual planning clients. She serves as outsourced corporate counsel for diverse clients, partnering with executive management to design, plan and implement stated and defined business objectives within legal parameters.
    Next up: Hiring 102: 5 Must-Have Items for Your Staffing Toolkit
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  • Hiring 102: 5 Must-Have Items for Your Staffing Toolkit

    There’s a lot to consider, and a lot of information to gather, when your business is seeking new candidates. To make it an easier, more streamlined process, we’re outlining five items you should have in your hiring toolkit.

    In Hiring 101: Evaluating the Candidate, we discussed the hiring laws to be aware of, appropriate questions for interviewing and background information you should seek. Now we’re delving into five specific items you should have on hand and included in your hiring toolkit. 

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    Hiring Toolkit Item No. 1: Employment applications

    Think about requiring all prospective employees to complete an employment application. The application solicits a lot of information that will help you decide whether or not to hire the person. However, be careful regarding what is included in the application; remember some questions are illegal to ask. A good employment application asks for the following information:

    • Prior work experience
    • Special skills
    • Educational background
    • Legal right to work in the U.S.
    • Consent for the company to check references

    Attach the prospective employee’s resume to the application and keep these on file. This can be helpful later if, for example, you decide to fire an employee after discovering he/she lied about the information on the employment application form.

    Hiring Toolkit Item No. 2: Offer letters and mistakes to avoid

     When you find the applicant who seems to meet your needs, you are ready to make an offer. Although you can do this over the phone, it is better practice to put it in writing to avoid miscommunication or misunderstanding. Include the following items:

    • Position and duties
    • Start date
    • Compensation
    • Employment-at-will status
    • Various other legal provisions to protect you and your company

    Be careful not to mislead the applicant or promise something you can’t deliver. For example, avoid statements that give the applicant a false sense of security, or what might be construed as a long-term promise of employment. Stay away from phrases such as “We expect you will have a long and prosperous career here,” “You can expect your salary to increase by X% each year,” and “After a probationary period, you will enjoy the benefits the company provides to its long-term employees.” Also avoid offering different benefits to an applicant than those available to other employees. Your current employees may see this as discriminatory and take action accordingly.

    If you intend to offer stock or stock options, make sure it vests, or is earned, after some significant period of continued employment. If you plan to offer a commission, bonus or profit-sharing arrangement, make sure the percentage or amount is reasonable and does not make the employee unprofitable for your business.

    Hiring Toolkit Item No. 3: Employment agreements

     Employment agreements are not necessary for most employees, though you may want some high-level employees to sign one. A well drafted employment agreement will cover the following items:

    • Job position and whether the employer has the right to change the position
    • Length of the agreement
    • Salary, bonus and benefits
    • Whether the employee gets stock or stock options
    • When the employer can terminate the employee for good cause, along with a definition of what good cause means
    • When the employer can terminate the employee without good cause and what severance payments the employer will provide
    • Job responsibilities
    • Confidentiality obligations
    • Where and how disputes will be handled

    Hiring Toolkit Item No. 4: Confidentiality and invention assignment agreements

     Your employees, especially in high-tech businesses, have access to a lot of the company’s confidential information. In addition, you expect your employees to come up with ideas, work product and inventions that are useful to your business. To ensure your employees keep the company’s proprietary information confidential, you should require them to sign a confidentiality agreement. Either as part of the confidentiality agreement or as its own agreement, your employees should also acknowledge and agree that the ideas, work product and inventions they come up with belong to the company, not them. The following key provisions should be included:

    • The employee cannot use any of the company’s confidential information for his/her own benefit or use.
    • The employee will promptly disclose to the company any inventions, ideas, discoveries and work product related to the company’s business made during the period of employment, and that the company is the owner of such inventions, ideas, discoveries and work product.
    • His/her employment with the company does not breach any agreement or duty he/she has with anyone else, nor can he/she disclose to the company or use on its behalf any confidential information belonging to others.
    • The confidentiality provisions will continue after his/her termination of employment.
    • The agreement does not represent any guarantee of continued employment.

    Hiring Toolkit Item No. 5: New employee paperwork

     When a new employee joins the company, make sure to have all the appropriate paperwork ready for him or her to sign, preferably on day one, including the following:

    • Company employee handbook
    • IRS forms
    • Benefit elections
    • Confidentiality and invention assignment agreement
    • Form I-9
    • Emergency notification

    Hiring new employees can be an often arduous and sometimes unexpected process. Knowing that you have these items accessible and ready to go will help the situation seem less intimidating and will ensure that your company is operating at full capacity as soon as possible.

    Stacy is a founding member of BauerGriffith, a business law firm providing high quality legal and business counsel to a wide array of clients, with an emphasis on non-profit organizations, small business and individual planning clients. She serves as outsourced corporate counsel for diverse clients, partnering with executive management to design, plan and implement stated and defined business objectives within legal parameters.

    Next up: COSE WebEd Series:Hiring and Attracting Talent
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    Next up: How to Avoid a Giant Bill by Misclassifying Employees as Independent Contractors
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  • How to Avoid a Giant Bill by Misclassifying Employees as Independent Contractors

    Follow these helpful tips to help your business avoid all of the extra taxes and penalties that go with misclassifying employees.

    If a worker is misclassified, your company could be liable for an enormous bill for back employment taxes plus penalties, interest and legal costs. In assessing whether a worker is an employee or an independent contractor, the IRS has concluded that such a determination revolves around control.

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    First, if your company is exercising behavioral control over a worker by dictating when and where to do work, the sequence in which to perform the work, and providing training regarding required procedures and methods, that worker should most likely be classified as an employee. Second, if you are in financial control of a worker by directing the financial and business aspects of a worker’s job, they are also more likely to be an employee.

    Below are 10 helpful tips that will help ensure that you’re not treating your independent contractors like employees.

    1. Don’t closely supervise the independent contractor or their assistants.
    2. Don’t let the independent contractor work at your office, unless the nature of the service they’re providing requires it.
    3. Don’t give the independent contractor employee handbooks or company policy manuals.
    4. Don’t establish the working hours.
    5. Don’t provide ongoing instructions or training.
    6. Don’t provide equipment or materials unless it’s necessary.
    7. Don’t pay for travel or other business expenses directly.
    8. Require independent contractors to sign documentation stating that they are not entitled to, and will not seek, unemployment benefits, and don’t provide any other form of benefits to them.
    9. Don’t provide business cards or stationary with your company’s logo for the contractor to use or distribute.
    10. Require that they submit invoices for their time and expenses and pay them like a vendor, as opposed to weekly or biweekly.

    Ending the relationship

    There is not a single rule or test for determining whether an individual is an independent contractor or an employee, but these tips highlight factors which have been considered by the courts in worker classification cases. In addition to these 10 tips, it’s also important to note that how the relationship can be ended might determine status. The ability of a worker to terminate the relationship with your company at any time he or she wishes without incurring liability indicates employee status. To avoid this, you should consider documenting an exit protocol to the contrary (for example, requiring 30 days’ written notice of termination between your company and any independent contractor).

    If you find yourself in a situation where you are unsure of how to classify a worker, you can request an IRS determination by filing Form SS-8, “Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax Withholding.” However, be cautious to the fact that the IRS usually classifies workers as employees whenever it’s not clear-cut what their status is. Further, employers that request such a determination lose protections against liability for misclassification. Filing Form SS-8 without talking to an attorney is not recommended.

    It’s important to not only be aware of the distinctions that exist between employees and independent contractors, but also to be conscious of them always. If you’re not careful in how your treat independent contractors, you’ll likely find yourself handing over a wad of cash to Uncle Sam instead of to your next big project!

    For more information on this topic, contact Alex Gertsburg at 440-571-7775 or ag@gertsburglaw.com.

    Get more legal tips for your business on The Gertsburg Law Firm blog, with new articles every week. 

    Next up: CareerBoard Tips On Crafting the Perfect Job Ad
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    Next up: How to Create and Best Utilize Your Internship Program
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  • How to Create and Best Utilize Your Internship Program

    We sat down recently with several of the experts who will be in the spotlight during the Third Annual Cleveland Internship Summit and asked them to describe what attendees will take away from their respective sessions. Listed below are some of the topics that will be addressed. Click here to learn more about this year’s Internship Summit and to secure your registration.

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