one of the first and most critical needs both start-ups and small businesses confront is -- the simple need to have people around in order to get things done.
hiring your first employee is a major milestone. upon arriving at this point, the business owner's angst is justifiably on the practical (such as wondering how to go about finding qualified candidates. or questioning what skills, traits and characteristics are really needed to make the person successful) while these considerations are critical, they can often overshadow less immediate concerns.
you'd do good to ask "what less immediate concerns?" hiring an employee also means preparing to manage quite a bit of additional overhead (both in terms of time and and in terms of expense). among these are ::
once aware of the extent of the additional overhead triggered by hiring an employee, many owners panic. they need the help, but figure it will cost more to hire somebody than what they get in return. so they throw caution to the wind and decide to hire the help they need as "independent contractors."
though businesses everywhere need to carefully consider this choice, it's especially important for business owners in massachusetts. several years ago our state enacted strict legislation that now presumes every person a business hires is an employee unless ::
if the person hired doesn't meet each one of these 3 criteria, the hiring company will be guilty of "misclassification" once it then violates one or more laws identified in the statute (which it inevitably must). these include wage and hour laws; minimum wage and overtime laws; law requiring the maintenance of accurate payroll records, failure to withholding and deposit payroll taxes, and failure to provide worker’s compensation insurance, among others.
people who own all or part of a business, and sometimes those who simply serve in a management capacity, ultimately bear personal responsibility for assuring a company's compliance with various laws. ignorance of the law or of the actions of others is no excuse.
authorities can, have and and will impose substantial civil and criminal penalties who disregard their responsibilities in this arena. moreover, in many situations the contractors / employees are also empowered to file their own lawsuits to recover treble damages, attorneys’ fees and costs.
and lest you're breathing a sigh of relief right now because your business is not in massachusetts, you're far from off the hook. in fact, this recent inc magazine article reflects just how fraught employment law can be for everyone.
the dilemma owners face when hiring their first employee is very real. it's often true that hiring an employee will actually cost more than the value they can bring to the table. there are potential solutions, however, that will serve you better in the end than simply saying "damn the torpedoes, full steam ahead!"
so if you're a ZENLegal client, here's our reminder :: engage your attorney in this process. it doesn't cost extra, and with his or her assistance you can more comfortably forge a path to getting what you need without putting yourself at undue risk.
and if you're not a ZENLegal client... well, why not?
jack speranza is an attorney, small business owner and principal of main street ventures. for 15 years he has helped his companies and his clients strike the right balance between risk and reward by weaving good business, good technology and good law into new services and operations.