FLORIDA SMALL BUSINESS DEVELOPMENT CENTER AT IRSC
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needed and train supervisors on performance
management.
MISTAKE NO. 3: UNDERESTIMATING
THE IMPORTANCE OF WHAT’S
REQUIRED BY EMPLOYMENT LAW.
Many small business owners and startup
founders are bright and talented, but don’t
necessarily have great business acumen.
So they don’t know what they don’t know
about employment law regarding their responsibilities
as employers and the rights
of employees, Del Rio explained.
“This is why they make mistakes like
not classifying positions correctly, failing
to pay overtime, not having an employee
handbook, not documenting progressive
discipline and employee evaluations, and
mishandling a termination,” she said. “All of
these are in one way or another related to
ignorance re: employment law. This is why
it’s a good idea after reaching 5 or 10 employees
to either outsource HR or work with
an HR professional consultant or a (more
expensive) employment law attorney.”
MISTAKE NO. 4: TREATING INDEPENDENT
CONTRACTORS LIKE
EMPLOYEES AND PUTTING THE
WRONG EMPLOYEES ON SALARY.
Up to 30% of businesses misclassify
workers, whether intentional or not,
said Milian.
So when should an independent contractor
probably be an employee? Here are
a few instances that should be red flags,
according to Milian:
• If he or she is working fulltime for the
company and has no other clients.
• If the worker is given a specific schedule
or office hours.
• The worker is given training and provided
business equipment.
• The job or task is open-ended or indefinite
instead of a specific project.
• The worker is paid by the hour rather
than by project or deliverable.
Milian recommends using an Independent
Contractor Agreement. Define the
scope of the job and deliverables up front.
Set up the contractor as a vendor and
require invoices, which should always be
paid out of Accounts Payable.
Similarly, small businesses need to be
careful about which workers they put on
salary.
While having workers on salary controls
the wage expenses (no OT), some jobs must
be paid hourly by law depending on the
nature of the job and pay rate. Be careful. It
is more common than you think for workers
to sue for and win back overtime pay.
Milian recommends writing a job
description for every role, reclassifying
employees if needed, and implement procedures
to control the overtime expense.
“If in doubt, pay hourly,” she said. In her
experience, 70% to 90% of companies get
it wrong.
AND THE TIP: EMPLOYEES VALUE
REGULAR FEEDBACK — YES, REALLY.
A “big company” process that should
be adapted by small businesses is employee
performance management. But it
shouldn’t be just a yearly thing.
According to a recent PricewaterhouseCoopers
survey, 60% of workers say they
prefer performance feedback on a daily or
weekly basis, with 75% of participants saying
they believe it’s valuable. However, less
than 30% of workers say they receive constructive
feedback/performance reviews
from peers, clients, or customers.
Workers perform at their best when they
are given regular feedback, and managers
and business owners are seeing the value
of investing in processes that enable their
employees to thrive in the workplace.
Contact the Florida SBDC at Indian River
State College for more information on
“Turbo Charging Your TEAM” programs.
floridasbdc.org/services/turbo-chargeany
team/ v
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