What we offer
Benefits
Human Resources
Risk Management
Payroll
Benefits Administration
HSA & FSA Stores
Who we serve
About us
Resources
Request a call Login

  • A healthy and efficient workforce is an important part of any successful business. In environments where workplace injuries are more common, it’s absolutely essential.

    According to the Bureau of Labor Statistics’ most recent occupational injuries and illnesses survey, the manufacturing industry accounted for “15% percent of all private industry nonfatal injuries and illnesses.” Manufacturing safety meetings are a great opportunity to educate your employees on key safety guidelines and practices. With the right information, your company can help protect people from injuries, stay compliant, and reduce workers’ compensation costs.

    8 Essential Safety Topics for Manufacturing Companies

    When it comes to safety topics for the manufacturing industry, there are a variety of subjects that you should discuss with your employees. Here are eight key topics that your company should highlight at the next manufacturing safety meeting.

    Slips, trips, and falls

    The potential for slips, trips, and falls is arguably the biggest threat for manufacturing employees. OSHA estimates that these falls account for more than a third of fatal workplace injuries, making it a major priority for any manufacturing company. There are a variety of reasons for slips, trips, and falls in the workplace, including:

    • Wet or uneven surfaces
    • Ladders that are defective or set up improperly
    • Dangerous weather conditions
    • Crowded workspaces
    • Poor lighting
    • Human error

    While you can’t prevent every slip, trip, and fall, you can use safety meetings to educate employees about proper safety precautions. Train every employee on how to identify potential hazards and use protective equipment and fall protection systems. That education will not only help employees stay aware, but also know what to do to protect themselves and your business.

    Fire hazards

    A single fire can put both lives and property at risk. Your next safety meeting should highlight how fires start and what employees can do to prevent them. Start by breaking down relevant OSHA codes designed to protect against fire hazards. Employees should also learn about how they can adhere to any state or local fire safety laws to stay compliant and limit the chances of a fire.

     

    You should also educate workers about what to do in case a fire ever breaks out at your facility. Have an evacuation plan for your employees so that they know how to get to safety. Make sure that your employees know the following details:

    • The locations for any fire extinguishers and other prevention equipment and instructions on how to use fire protection devices.
    • The locations of all exits at your facility.
    • Available evacuation routes.

    Hazardous materials

    The presence of hazardous materials can create a number of safety issues. Safety meetings are a tremendous opportunity to educate employees about the dangers of hazardous materials and proper procedures when dealing with these substances.

    To start, share guidelines on how employees should label, handle, and store hazardous materials. Let employees know where they can access safety data sheets for any onsite chemicals. You should also give employees a thorough rundown on proper waste management. This discussion should include details on the following subjects:

    • Relevant hazardous waste regulations
    • Waste determination
    • Accumulation limits
    • Waste pickup procedure

    Finally, employees need to know next steps in case a spill, leak, or other form of exposure occurs. Discuss what can happen in these events and how to act quickly in these emergencies. If you really want to give employees some experience, you can perform a simulated emergency to help workers practice how to respond to potential spills and leaks.

     

    Safety equipment and Personal Protective Equipment 

    Personal protective equipment (PPE) won’t help if your employees don’t know how to use it – and that’s if they use it at all. The first step of this process is to ensure that your employees and acknowledge that using or wearing safety equipment and PPE is mandatory. As long as you make this equipment available to employees at no cost of their own, they must use safety masks, reflective vests, and any other safety gear.

     

    Of course, having that equipment and knowing how to properly use it are two different issues. Use your safety meeting as an opportunity to educate employees about how to properly wear, use, and store equipment. Employees should also know how to identify and report any equipment issues issues and next steps for disposal and replacement.

     

    Machine guarding

    According to OSHA, unguarded and inadequately guarded machinery leads to “18,000 amputations, lacerations, crushing injuries, abrasions, and over 800 deaths per year.” It’s essential to put the proper safeguards in place and educate employees about the dangers that industrial equipment can pose. Make sure that employees are aware of the risks associated with improper machine guarding and take the following steps to limit the potential for user error:

    • Train employees on how to correctly use any industrial equipment and follow proper procedures.
    • Review the machine guarding controls in place at your facility, which can include barriers, two-hand trips, and other safety measures.
    • Conduct a full walkthrough of your facility or facilities to highlight controls and potential risks.

     

    Lockout/tagout procedures

    Certain industrial equipment can release hazardous energy sources whether they’re in use or not. Educating employees about proper lockout and tagout procedures will help ensure that workers know how to safely depower machinery and limit the potential for workplace injuries.

     

    Use your manufacturing safety meeting to stress just how important it is to control hazardous energy and follow proper maintenance and service protocol at all times. If you don’t already, make sure you have written lockout/tagout procedures for every machine and present them during the meeting. While the exact procedures can vary, the following steps represent a typical process for lockout/tagout:

    1. Notify any employees who are affected by lockout/tagout.
    2. Shut down equipment in accordance to proper procedure.
    3. Isolate the energy source.
    4. Attach the appropriate lockout device.
    5. Release or restrain any energy stored in the machine.
    6. Verify the lockout with the proper personnel.

     

    Electrical safety

    Anytime equipment generates electricity, there’s a chance that someone can get electrocuted. Electrical accidents can range from minor shocks to major fires and fatalities. Regardless of the danger level, you’ll want to talk with your employees about these hazards.

     

    It’s important that employees don’t underestimate potential electrical safety threats. While electrical machinery is a more obvious hazards, exposed wires or improperly used power strips are also an issue. The following topics can help ensure that employees know how to behave around electrical equipment and why safety is so important.

    • Electrical safety requirements and procedures in the workplace.
    • Why electrical safety-related work practices are critical.
    • How to identify potential hazards.
    • The different types of electrical injuries.

     

    Ergonomic work areas

    It’s easy to overlook the importance of workplace ergonomics, but this topic plays a direct role in limiting injuries and stress. Both laborers and office team members can directly benefit from adapting processes, environments, and instruments around their physical needs. There are a variety of ways that you can educate employees about safe workplace ergonomics, including the following subjects.

    • Correct lifting techniques and best practices to handle repetitive motion.
    • Stretches and exercises that can help minimize physical risks when bending, lifting, or twisting.
    • Ways to adjust computer monitors, equipment, and other items to improve posture and avoid neck and back pain.
    • Proper posture to prevent long-term issues.

     

    Protect Your Business Through Manufacturing Safety Meetings

    Proper safety training can go a long way toward making your workplace safer and more efficient. However, it’s not always easy for small business owners to conduct these meetings and stay ahead of safety and compliance risks alone.

     

    Group Management Services partners with businesses to reduce risk and create a safer, more efficient work environment. Our experts can assist you with onsite consulting, jobsite inspections, accident and injury investigations, training, and safety education. Along with learning how to run a manufacturing safety meeting, you can also sign up for one of our workplace safety courses. Contact GMS today to talk to our experts about how we can make your business simpler, safer, and stronger with manufacturing safety training.

  • You don’t need to run a big business to be a target for litigation. Small businesses across the country are targets for potential lawsuits, especially when it comes to wage and overtime compliance.

    Wage and hour litigation has grown into a major hazard for employers. Employees can pursue litigation if they feel that they weren’t paid for their work. These types of claims can stem from a variety of factors – an employee worked overtime that wasn’t approved, someone clocked in early when they weren’t supposed to, etc. These claims can wreak havoc on your business, so it’s essential to protect your business from these disputes.

    Why is Wage and Hour Litigation a Growing Trend?

    While wage and hour lawsuits have been around for decades, they’ve become more prominent in the past few decades. Fair Labor Standards Act (FLSA) lawsuits increased by a staggering 417% between 1997 and 2017, and the stakes have grown even higher in recent years due to complicated labor regulations and the impact of COVID-19.

    The Department of Labor’s Wage and Hour Division (WHD) has dedicated more time in recent years to achieve compliance with labor standards. The WHD conducted more outreach events in 2020 than any other year in history, capping off a three-year stretch of increased efforts. More employees also reached out to the WHD, as evidenced by the following numbers.

    • The WHD received more than 9,000 phone calls per day, an 350% increase from their previous average.
    • The WHD website received more than 45 million views since the passage of the Families First Coronavirus Response Act (FFCRA).
    • The WHD collected an average of $706,000 in back wages for workers per day in 2020.
    • WHD investigations in 2020 found that employees were owed an average of $1,120 in back wages.

    COVID-19 also created some new challenges for wage and hour compliance. More businesses were forced to have employees work from home, making it difficult for some employers to diligently track hours and account for overtime as they would have before.

    How to Protect Your Business from Wage and Hour Litigation

    Simply put, employers need to be increasingly careful about wage and hour violations. Even a small timekeeping error or miscommunication can turn into a lengthy, costly dispute. 

    Here are some ways that you can protect your business against these lawsuits.

    Keep accurate employee payroll records

    Clean, accurate payroll documentation is a critical aspect of running a compliant business. The (FLSA) requires businesses to keep accurate payroll records for non-exempt employees, many of which can help you make your case if you ever face a wage and hour lawsuit. Some of those records include:

    • Time and day of week when employee’s workweek begins
    • Hours worked each day
    • Total hours worked each workweek
    • Basis on which employee’s wages are paid (e.g., “$9 per hour,” “$440 a week,” “piecework”)
    • Regular hourly pay rate
    • Total daily or weekly straight-time earnings
    • Total overtime earnings for the workweek

    It’s also important to maintain these records for extended periods of time. Payroll data should generally be stored for at least three years in case of future litigation or if the Department of Labor (DOL) ever wants to review your business.

    Audit your timekeeping practices and adjust policies as necessary

    One of the simplest ways to protect your business is to review your timekeeping practices. Maintaining outdated or poorly defined practices can lead to unpleasant surprises when it comes to wage and hour law. As such, you’ll want to audit your practices and make the necessary changes to help your business avoid any issues.

    A good place to start is to review the Society for Human Resource Management’s (SHRM) checklist for various timekeeping practices. This checklist highlights a few different issues that can clean up your practices and establish more definitive methods for timekeeping. Of course, there are some notable risk areas that you’ll need to address as well.

    Establish a timekeeping policy and communicate it to employees

    It’s essential to set some ground rules to makes sure everyone is on the same page about your timekeeping policy. Employees should have a clear understanding of how your timekeeping policy works and what they should do when it comes to recording time. For example, you may want to highlight the following policies.

    • Require employees to record and verify all time worked.
    • Break down what counts as hours worked (such as training and travel time).
    • Put controls in place to prevent employees from clocking in early without prior approval.
    • Prohibit off-the-clock work.
    • Clearly state that overtime must be pre-approved by a supervisor.

    You’ll also want to have your employees review and sign documentation that they acknowledge your practices. This measure will not only educate employees on your policies, but also serve as a key compliance document to defend your business against some off-the-clock claims.

    Avoid rounding for timekeeping if possible

    It’s not uncommon for employers to round hours during payroll, but that doesn’t mean it’s the safest approach. According to the DOL, “employee time from 1 to 7 minutes may be rounded down, and thus not counted as hours worked.” The problem with this approach is that it can still open your business up to legal grey areas. SHRM found that “courts have ruled in favor of employees where the employer’s rounding policy worked only to the employer’s advantage or failed to average out over time.” Some states also have their own rules for rounding time, adding an extra dimension of complexity to the issue. 

    This grey area is why pay to the punch is the gold standard for timekeeping. This approach will not only help your company identify exactly how long your employees worked, but also avoid these potential complications that can lead to wage and hour lawsuits.

    Invest in payroll technology

    These days, a manual timekeeping system is just going to hold you and your company back. Whether you use paper records or some other form of offline time tracking, these methods are inconsistent and time consuming. That combination is only going to make matters worse if your company is ever hit with a dispute.

    Payroll technology is designed to simplify timekeeping and keep your business compliant with wage and hour regulations. Cloud-based timekeeping tools like GMS Connect offer a variety of key advantages for small business owners. 

    For example, timekeeping software makes it easier to track exactly when employees clock in and out for work and avoid issues with rounding. Technology also helps you streamline payroll management, giving you real-time calculations of employees’ pay and allowing both you and your employees to access schedules, hours, and other details from anywhere with a secure connection.

    Work with payroll experts

    It’s not easy to manage payroll for a small business. A simple timekeeping mistake can lead to a serious compliance issue that turns into a lawsuit. That need for payroll expertise is exactly why small businesses shouldn’t face these threats alone.

    GMS partners with small businesses to help them take control of their payroll administration. We can provide your company with a comprehensive web-based payroll solution to not only keep your business compliant, but also save you both time and money. You’ll also have access to a dedicated GMS payroll processor and other experts who can answer your questions and help you stay on top of new regulations, state laws, and timekeeping trends.

    As a Professional Employer Organization, GMS is here to make your business simpler, safer, and stronger. Contact GMS today about how we can help you with payroll administration and other critical HR functions.

  • Your small business’ benefits package takes on added importance as it gets harder and harder to attract and retain top talent. While group health insurance may dominate headlines in terms of what job seekers want in a new role, it’s not the only health care benefit employees want. 

    Ancillary insurance can play a pivotal role in making your workplace more enticing for both job candidates and current employees. However, some businesses may see supplemental benefits like dental and vision insurance as less important than other offerings. Let’s break down how ancillary insurance works and why your small business should offer these benefits.

    What are Ancillary Benefits?

    By definition, ancillary insurance is a secondary health care benefit that’s typically purchased in conjunction with major medical coverage. These supplemental benefits are meant to enhance your existing health coverage and give employees more support for their overall well-being. Employers can also offer ancillary insurance in a couple of different forms.

    • Voluntary benefits – Employees pay 100% of ancillary premiums, but have access to lower premiums by being part of a group plan as opposed to purchasing a policy as an individual.
    • Employer-contributory benefits – The employer pays at least half of the premiums.

    While dental, vision, and life insurance are the most well-known ancillary benefits, they’re not the only options for small businesses and their employees. Ancillary benefits can also include any of the following options to enhance your benefits package.

    • Long-term care
    • Cancer and critical illness
    • Hospital indemnity and intensive care
    • Accidental death policy
    • Long-term and short-term disability

    Why Small Businesses Should Offer Vision Insurance and Other Ancillary Benefits

    Simply put, employees care about ancillary insurance. One survey asked 2,000 people to choose between a higher-paying job and a position with more attractive benefits. A whopping 88% of those individuals said that they would consider taking a lower-paying job that had better health, dental, and vision insurance – and that doesn’t even take into account the other ancillary benefits that would make your benefits package even more enticing. 

    Adding ancillary insurance for your small business not only makes your benefits package more competitive, but also shows your employees that you care about them. A little peace of mind can go a long way, so giving your employees access to ancillary insurance can save them from worrying about getting contacts or scheduling their next dentist appointment. 

    That added emphasis on your employees’ well-being can also have a direct impact on the future of your business. Employees who feel valued and are happy at work are likely more willing and able to contribute to your company’s success. That increased employee engagement can lead to a plethora of benefits for your business, including:

    • Improved retention – Businesses with engaged employees reduced employee turnover by 90%, according to Gallup.
    • Increased productivity – That same Gallup report found that engaged employees were 17% more productive.
    • Reduced absenteeism – Gallup also learned that engaged employees missed work 37% percent less than unmotivated workers.
    • Greater profitability – According to Inc., a 10% increase in productivity can increase profits by $2,400 per employee per year.

    Another major advantage of offering ancillary benefits is that they can help your employees stay healthy. Vision insurance is a great example for this. Poor vision and eyestrain will not only negatively impact your employees health, they can have a direct impact on job performance as well. 

    According to the American Optometric Association, dry eye disease can reduce employee productivity by 20 to 25%. Offering vision insurance and other ancillary benefits can go a long way toward keeping your employees happy, healthy, and productive.

    Work with a PEO to Offer Competitive, Cost-Effective Ancillary Insurance

    Running a small business is no easy task. There are countless administrative burdens that rest on your shoulders, and managing your benefits offerings is one notable example. Fortunately, you don’t have to deal with employee benefits administration alone.

    Group Management Services works with small business owners to help them offer and manage quality benefits packages and save valuable time. As a Professional Employer Organization (PEO), our greater buying power allows you to offer competitively-priced group health plans and ancillary options on a mass level, even for at-risk employers or small groups.

    Partnering with GMS also means that you have a dedicated resource that’s here to help. We’re always looking for ways to improve your offerings, which is why we recently switched our vision provider to VSP to ensure that you and your employees have the perfect ancillary benefits for your business. In addition to our new vision provider, we continue to offer additional benefits to our clients, including Metlife Auto & Home coverage. We also have a team of experts on hand to answer your questions and guide your through any HR hurdles you may face in the future.

    Ready to make your business more competitive? Contact GMS today about how we can support you and your employees with ancillary insurance and other HR services. Already a GMS client? Contact your account manager to learn more about VSP and our vision plans.

  • As a small business owner, you’re in charge of making many critical decisions that impact your employees. Determining which benefits and employee perks you offer is one choice that plays a direct role in attracting top talent and retaining key members of your company.

    These days, health insurance is a major sticking point for new and current workers. The Society for Human Resource Management (SHRM) found that nearly half of employees ‘said health insurance was either the deciding factor or a positive influence in choosing their current job.’ That willingness to choose jobs based on health insurance makes a competitive benefits package even more important for a growing business.

    Of course, offering health insurance is also a notable expense for a small business trying to grow. Fortunately, the small business health care tax credit allows qualifying organizations to offset some of those costs and provide quality health insurance for their employees. Here’s what you need to know about this tax credit and whether it can help your business.

    Which Small Businesses Qualify for the Health Care Tax Credit

    While any business that offers health coverage would love to save money, the IRS does set some stipulations for which organizations will benefit from the tax credit. Your business will need to meet the following criteria to be eligible for the small business health care tax credit. 

    Your business must have fewer than 25 full-time equivalent employees

    Full-time equivalent (FTE) employees are typically counted as those who meet “an average of 30 hours of service per week for a calendar month or at least 130 hours of service in a month.” Any employee that performs services for your business would normally be counted, but the IRS requires employers to alter this calculation for the tax credit.

    Instead of counting 30 hours per week as one FTE employee, the health care tax reviews hours from an annual perspective. One FTE employee for the tax credits equals approximately 2,080 hours per year. Any part-time employees who combine to equal more than 2,080 hours would count as one FTE employee in these calculations.

    The IRS asks employers to not include the wages and hours worked by certain types of employees toward their 25 FTE employee limit. These individuals include:

    • The owner of a sole proprietorship
    • Any partner in a partnership
    • Shareholders of S Corporation owning more than 2%
    • Owners of more than 5% of the business or other businesses
    • Family members of the above
    • Seasonal employees who work 120 or fewer days per year

    Your business’s average wages must be lower than $56,000 per full-time equivalent

    In addition to meeting FTE requirements, your business must also meet certain wage thresholds. The IRS set the average annual wages at $50,000 back in 2014 and have adjusted the amount each year for inflation. As of the 2020 tax year, businesses must pay average wages of less than $56,000 to FTE employees to qualify for the tax credit. 

    Your business must offer a qualified health plan

    Any organization that wants to be eligible for the small business health care tax credit is required to offer a qualified health plan through a Small Business Health Options Program (SHOP) marketplace. There are also certain areas where a qualified health plan may not be available through SHOP. In those cases, an eligible business may still be able to claim the credit.

    Your business must pay health insurance premiums through a “qualified arrangement”

    According to the IRS, a qualified arrangement means that employers pay at least 50% of any premium costs for enrolled employee’s health insurance coverage. This arrangement only extends to costs incurred by those employees, meaning that any costs incurred by family or dependents do not affect the 50% threshold.

    How Much Can Organizations Receive from the Small Business Health Care Tax Credit?

    The exact amount of credit your organization receives depends on two main factors:

    • Whether your organization is tax-exempt or not
    • The size of your organization

    Eligible smaller businesses can receive a tax credit that covers up to 50% of the premiums paid for by the employers. Meanwhile, eligible employers who are tax-exempt can max out a 35% tax credit. This credit is available to both types of employers for two consecutive taxable years. Small business employers are able to carry that credit either forward or back as well.

    Of course, those numbers represent the maximum tax credit for your business. The exact amount your business can receive is based on a sliding scale where smaller employers will receive larger credits. According to the IRS, your maximum allowed credit will be reduced if you employ more than 10 FTE employees or have average wages of more than $25,000 (subject to change due to inflation).

    How to Claim the Tax Credit

    If your small business is eligible for the tax credit, you should fill out Form 8941 to calculate that credit. The IRS provides a detailed PDF with instructions on how to list your employees, their total hours, and how much you paid them. Meanwhile, tax-exempt organizations can file Form 990-T for their credits.

    How to Invest in the Right Benefits Package for Your Small Business

    Whether you qualify for a tax credit or not, it’s difficult to balance rising premiums and providing quality health care coverage that helps you attract and retain top talent. Fortunately, Professional Employer Organizations (PEO) like GMS make it possible for you to provide top-tier coverage at affordable prices.

    As a PEO, GMS is a natural fit for health insurance administration. We represent hundreds of businesses and can leverage our greater buying power to keep premiums down and give you access to quality plans at cost-effective prices. GMS also gives you and your employees access to experts who can help you stay on top of regulatory changes and educate group members about how to best use your plans.

    Let’s face it, benefits administration is confusing and time consuming. GMS helps you invest in quality, cost-effective coverage and allows you to reclaim your valuable time. Contact GMS today about group health insurance and ancillary benefits that makes sense for your small business.

  • Employee layoffs are never easy, but factoring in the unemployment claims process can add even more stress and confusion to the situation. Unemployment benefits are designed to protect employees from unexpectedly losing a source of income. As an employer, you have certain responsibilities regarding unemployment, from maintaining accurate employee records to paying unemployment taxes. 

    Because these benefits can impact your business’ tax rates, it’s essential to understand these responsibilities and how small business unemployment claims impact your business. Let’s break down how unemployment insurance works and what you can do to manage future unemployment claims.

    How Does Small Business Unemployment Insurance Work?

    Unemployment insurance, also known as unemployment benefits, is a short-term, state-provided benefit that provides money to eligible employees who have lost their job. The specific eligibility requirements for employees can vary by state or due to COVID-19 unemployment insurance relief measures. However, eligible employees typically need to meet the following requirements.

    • They must have been an employee.
    • They lost their job through no fault of their own (e.g. if an employee was fired because of poor performance, they would not be eligible).
    • They should be completely or partially unemployed (an employee is considered partially unemployed if they worked less than a full week at the time they lost their job).
    • They’ve worked enough hours and earned enough wages in their base period, which is the first four of the last five quarters. For example, employees in Ohio are eligible for unemployment benefits if they’ve worked for at least 20 weeks and earned an average weekly wage of $247 during the base period. However, these specific requirements can vary by state.

    When an employee is laid off, they can file a claim to receive unemployment benefits. If the claim is approved, the employee will receive weekly payouts. The amount they receive is based on the state’s budget and how much they earned at their previous employer. 

    What are Small Business Owners’ Responsibilities Regarding Unemployment?

    The best way to be fully prepared for an unemployment claim is to understand your responsibilities as an employer. There are three key responsibilities that you’ll have as an employer.

    • Paying Federal Unemployment Tax Act (FUTA) and State Unemployment Tax Act (SUTA) taxes
    • Properly classifying employees
    • Keeping accurate and detailed employee records.

    Unemployment taxes

    Although small business unemployment insurance is a benefit provided by the state, employers fund this benefit with their taxes – even when they don’t have any unemployment claims against them. As a small business owner, it is your responsibility to pay a variety of taxes, including FUTA and SUTA taxes. 

    Federal Unemployment Tax Act (FUTA)

    The FUTA tax rate is 6%, which is applied to the first $7,000 in each employee’s wages – up to $420 per employee. However, filing your Form 940, the form used to report your annual FUTA tax, may allow you to receive a credit of up to 5.4%. This credit could make your payment as low as $42 per employee.

    Employers are responsible for paying FUTA taxes quarterly based on how much they owe. If a business owes less than $500 in a quarter, it can carry this balance forward until its liability is more than $500. Once a business hits the $500 threshold, the employer can pay FUTA taxes via the Electronic Federal Tax Payment System. These payments are due by the last day of the month after the end of the quarter.

    Although employers might be required to pay their FUTA taxes throughout the year, they still need to file their Form 940 annually by Jan. 31. For employers who paid all FUTA taxes when they were due, the filing date is extended to Feb. 10.

    State Unemployment Tax Act (SUTA)

    Whereas all employers pay a flat rate for FUTA taxes, SUTA taxes – its state-based counterpart – vary based on several factors.

    • Your state’s SUTA tax rate range
    • How long your business has been around
    • Your industry

    To find their SUTA tax rate, employers must register the business with their state. After registering, the state will assign them a new employer rate. This rate can be updated as often as every year based on the employer’s “experience rating,” which looks at how much the employer has paid in taxes and how much they’ve been charged in benefits. If an employer has employees who work in a different state than the business, they are responsible for paying SUTA taxes in those respective states as well.

    These taxes are also typically due quarterly. Employers must report wages and employee information to their state to determine their tax liability.

    One important factor to keep in mind is that when employees make a successful unemployment insurance claim against an employer, that employer’s SUTA taxes can increase significantly for up to three years. This rate increase is part of why accurate employee classification and records are essential responsibilities for a small business.

    Proper employee classification

    Employees are classified into different groups based on several different factors, including the number of hours they’re expected to work and if their role is permanent. Misclassifying employees can have serious penalties, such as paying fines to multiple government offices, FICA taxes, interest on unpaid taxes, and possibly wage claims as far back as three years. As such, it’s important to accurately classify each team member. The types of employee classifications include:

    • Full time
    • Part time
    • Special classes, which include interns, freelancers, and independent contractors

    A common concern regarding classification is knowing the difference between an employee and an independent contractor. While an employer may classify someone as an independent contractor, the IRS may not agree and penalize your business for noncompliance. The IRS looks at the degree of control an employer has over the worker and the type of relationship they have. For example, the IRS uses the following criteria to identify proper employee classification.

    • Employers can give specific, detailed instructions to employees regarding their work, as well as provide training and evaluations for how the employee completed their task. Independent contractors generally have more freedom to complete their tasks. 
    • Employees are usually reimbursed for work expenses, have a regular payment schedule, and don’t need to personally invest in work-related equipment. Independent contractors are commissioned as needed and responsible for their own equipment, which can give them a higher profit or loss risk.
    • Employees generally receive benefits, are hired for a long-term permanent role, and provide work that is considered key to the business. Independent contractors may be hired for short-term projects and provide services that aren’t considered critical to the business.

    These classifications determine the types of benefits the employee can receive as well as the expenses the employer is responsible for paying. For example, an independent contractor is not eligible to receive unemployment benefits, which also means that the employer isn’t required to pay FUTA or SUTA taxes for that employee. Not every type of employee is eligible for unemployment benefits, so properly classifying each employee will help determine their eligibility if they make a claim.

    Accurate employee and HR records

    Maintaining accurate and up-to-date HR records could also factor into the claims process. For example, a former employee files for unemployment benefits, which inherently implies they lost their job through no fault of their own. However, their supervisor had several documented discussions with the employee about poor performance and misconduct, and HR records indicate this person was fired. 

    Having these records on hand will be helpful should the employer choose to contest the claim. Additional records that could be relevant in the unemployment claims process include:

    • Personnel records, such as I-9 forms, performance reviews, etc. These records should be kept for one year if the employee is terminated, according to the Equal Employment Opportunity Commission.
    • Payroll records, which should be kept for at least three years according to the Department of Labor (DOL).
    • Timecard records, which should be kept for at least two years according to the DOL.

    Although there are federal guidelines for how long to keep certain records, check with your state for additional recommendations. For example, the Ohio Department of Job and Family Services require that employers keep their employee records, including hours worked and wages paid, for at least five years.

    Reporting new hires to the state can also help prevent fraudulent unemployment claims. Each state has an online portal where employers can submit new hire information, which includes the employee’s name, home address, social security number, and hire date. The state compares this information against unemployment benefit claims to determine if any claims are illegal.

    How Does the Unemployment Claims Process Work for Employers?

    After an employee files for unemployment benefits, the employer is notified by your state’s unemployment office. This office could be known as the Department of Labor, Department of Jobs, and Family Services depending on your location. Once notified, you’ll be asked to verify details about the employee and the claim, including:

    • The employee’s classification
    • The reason for the employee leaving

    After reviewing the details of the claim, it’s up to the employer to accept the claim or contest it.

    Not contesting an unemployment benefits claim

    The simplest response is not to contest an employee’s unemployment claim. Even though there are tax consequences to unemployment benefits, an employee is entitled to unemployment if they have a legitimate claim. Be sure to review all the information on the claim to make sure it’s accurate and correct against your records. If so, it’s best to comply since fighting against a legitimate claim will only cost you more time and money.

    Contesting a claim

    While you shouldn’t take action against legitimate claims, there are several instances when it makes sense to contest a claim:

    • If an employee has submitted false information on their claim
    • If their classification doesn’t allow them to receive unemployment benefits
    • If they quit or were fired for performance or misconduct

    If any of these reasons apply, contest the claim quickly and within your state’s fact-finding timeframe – usually 10 days. The employer will need to provide accurate documents to support any information that opposes the details submitted with the claim, including the correct employee classification or proof that the employee was fired with cause. 

    After contesting the claim, all information will be reviewed and both parties will receive notification of whether the claim is allowed or denied. Keep in mind that in either case, both parties have a period of time to appeal the decision.

    Protect Your Business With Unemployment Claims Management

    Managing small business unemployment claims can be confusing and time consuming. Considering your responsibilities as an employer – such as paying FUTA and SUTA taxes, correctly classifying employees and maintaining accurate records, and monitoring and responding to unemployment claims – it’s possible that a small oversight can lead to significant consequences for your business.

    If you’re looking for an easier way to handle the unemployment insurance process, partnering with the right PEO can help you protect your business. Contact GMS today to talk to our experts about how we can take the stress out of managing unemployment claims and other critical HR functions.

  • As a small business owner, it’s essential to understand how different events affect your bottom line. Sometimes this process is as easy as checking an invoice, but other cases are not quite as clear. This is exactly the issue when it comes to employee separation costs.

    Losing an employee costs you more than just a member of your business. The departure of an employee can cost your business in a variety of ways. Let’s break down the reasons for employee separation, the true costs of employee turnover, and what you can do to prevent talented people from leaving your business.

    The Costs Associated with Employee Turnover

    When an employee leaves your company, it has a number of direct and indirect financial impacts on your business. Unfortunately, you won’t receive an itemized bill that helps you understand the cost and implications of turnover. Instead, you’ll need to recognize the different factors that will impact your business’ bottom line.

    Exact employee turnover costs vary depending on the employee and the nature of your company. However, the Society for Human Resource Management (SHRM) reports that it costs an average of half to three-quarters of an employee’s salary to replace that individual. For an employee who makes $50,000 a year, it could cost your business roughly $25,000 to $37,500 to find, hire, and train that person’s replacement.

    Those estimates can balloon even higher depending on the position. It can cost more than an entire year’s salary to replace technical or supervisor positions. Meanwhile, turnover for hourly employees can quickly add up as well, with an average turnover cost of $1,500 to replace each person.

    Of course, estimates are only one part of the employee turnover puzzle. It’s also important to understand exactly why those costs are as high as they are. Here are some of the factors that go into calculating the cost of employee turnover:

    • Recruiting and hiring costs
    • Onboarding expenses
    • Lost productivity
    • Reduced employee engagement
    • Increased risk of errors

    Recruiting and hiring costs

    Any time you must hire a new employee, it’s going to take some time and money to do so. To start, you’ll need advertise your open positions. Some jobs may even call for a recruiter to help you find the right person to fill the position. 

    Recruiting costs don’t stop with that initial search, either. Once you find some qualified candidates, your managers and supervisors will have to take time away from their jobs to interview and vet them. This is especially true for any job searches that last for months. As you may know, time is money, so any extra time spent will add to employee turnover costs.

    There are also a number of other expenses that can add up once you find the right fit for the role. For example, you could have additional fees for background checks, drug screenings, and other pre-employment assessments. These measures are important to ensure that your hire is the right person, but they do add to your overall hiring expenses.  

    Onboarding expenses

    Hiring an employee is just the first step – you will also need to spend time with onboarding and training. This process will incur a number of additional expenses to get your latest team member up to speed. 

    The exact onboarding costs can depend on your business, but employee training is a pretty common expense. The average company spends 31.5 hours training a new hire, which adds up to an average of $1,888 in training and development costs for businesses with fewer than 500 employees. You’ll also need to factor in how much it’ll take to provide that new employee with the tools to do their job, whether that means a computer, certain supplies, or other needs.

    Lost productivity

    The goal of hiring someone is to boost productivity and improve your business operations, but it will take some time to get them up to speed. The person will need to learn the processes that are unique to your business, as well as any new systems they will be required to use. 

    Someone will also need to help them get started and be available to answer their questions along the way. This will result in lost productivity for the rest of the team as well since they’ll need to take time away from their jobs to assist them. 

    Reduced employee engagement

    Anytime someone leaves your company, there can be ramifications for the employees left behind. Other individuals may start to question why that person left and what their future might look like at your firm. Depending on their outlook, they may start looking for another opportunity as well.

    A departing employee can impact your remaining workforce in other ways as well. You may see reduced engagement from any employees who end up having to cover for a temporarily vacant role. This process will not only force them to spread themselves thin, it can also leave them feeling burnt out from the extra hours and impromptu responsibilities. As a result, that transition period could spur further turnover down the road. 

    Increased risk of errors 

    When you lose an employee, you also lose important knowledge and experience.  Following, turnover can easily result in reporting errors or other costly mistakes. Even if you spend extra time to help ensure these errors don’t occur, that simply means you or someone else is spending extra time to address something that your departing employee handled regularly.

    How to Prevent Your Talented Employees from Leaving

    The best way to reduce the cost of employee turnover is to keep your talented employees from leaving in the first place. It’s important to assess the different reasons why high voluntary turnover occurs. 

    There are a variety of reasons why people leave a company. By identifying contributing factors for employee turnover, you can take appropriate measures to reduce avoidable turnover costs. Let’s evaluate a few ways that you can retain top talent, avoid wrong fits, and reduce your employee turnover costs.

    Offer a competitive benefits package

    Losing employees is an expensive process. Offering competitive pay and benefits can help limit the chances that employees try and leave for a small raise or certain work perks.

    It’s important to consider what perks employees truly find valuable in order to attract and retain top talent. It’s not uncommon for employees to value key benefits more highly than their pay, which makes an appealing benefits package a powerful retention tool. Some of the top benefits included:

    • Better health, dental, and vision insurance
    • More flexible hours
    • More vacation time
    • Work-from-home options
    • Paid parental leave

    Improve company culture

    Your company’s culture has a significant impact on employee satisfaction and can determine whether they stay or go. Creating a culture that fosters a positive work environment, encourages work-life balance, and recognizes employees will help you attract and retain top talent. 

    According to research conducted by LinkedIn, 47 percent of employees want to work for a company with a welcoming culture, while 51 percent of professionals seek employment at businesses that promote work-life balance and flexibility. Fortunately, benefits such as work-from-home options and flexible hours offer the dual perk of making your business more attractive and helping employees avoid burnout and other issues. That level of support can make your workplace a space where employees don’t want to leave.

    Recognize employees

    Establishing procedures to recognize employees is also essential to boost engagement and retention. Over 70 percent of companies report that employee recognition had the highest impact on engagement. As such, it’s important to make sure that employees know they’re appreciated.

    Consider implementing a formal recognition program that incorporates ideas like employee spotlights and peer recognition. Recognizing the individuals that work hard to contribute to the success of your business will improve morale and create additional incentives to perform well.

    Monetary prizes aren’t the only options either. Get creative with other ways to reward your employees, like an extra day off or an experience that they can enjoy. Even short conversations expressing your appreciation for an employee’s work can go a long way toward making them feel good about where they work. 

    Provide potential for growth

    One reason why employees leave is because they don’t think there’s a future with their current company. Giving employees the tools they need for career development can help them feel like they can continue to grow at your business.

    Growth can come in many forms – opportunities to advance in the company, stipends for development, etc. Regardless of the form the prospects take, nearly 95 percent of employees would stay with a company longer if they had access to learning opportunities. These efforts can play a key role in limiting employee turnover, so work with your employees to create employee development plans, provide training, and put measures in place to invest in your team.

    Welcome employee feedback

    One of the best ways to understand why people leave your company is to ask for feedback. If you’ve noticed that employee turnover has increased or want to address any issues before someone leaves, talk to your employees about what they value and encourage feedback regarding what you could do better.

    Collecting feedback is not enough though – you need to listen to them and implement their ideas to make them feel valued at your company. Making changes based on thoughtful, serious feedback shows your current workforce that you’re listening. That step along can make a major difference in morale and show your employees that they’re heard.

    When someone does choose to leave, conduct an exit interview to determine why. Use this interview as an opportunity to learn from your mistakes – they will be more likely to share candidly at this point since they are on their way out anyway. This feedback can help you narrow down potential weakness, strengths, and opportunities to improve your company and reduce employee turnover.

    Cut Out Turnover Costs With Employee Retention Strategies

    Losing a talented employee costs your business in a variety of ways. Fortunately, GMS can help you attract and retain top talent and keep your business strong. 

    Our experts can manage key functions like employee training and recruiting and benefits administration to help you find the right employees and keep them on your team. Meanwhile, you can spend that time to focus on growing the business instead of constantly dealing with the hiring process. Contact GMS today about how we can support you and your employees.

  • Workplace compliance starts with more than policies and procedures. Employees need to understand expectations, receive proper training, and see those standards reinforced consistently throughout the organization.

    For small businesses, creating a culture of compliance can help reduce workplace risks, improve employee accountability, strengthen workplace safety, and minimize potential legal and HR issues.

    Key Takeaways

    • Document workplace policies in a clear, accessible employee handbook.
    • Apply policies consistently across all employees and management levels.
    • Focus on educating employees about expected behaviors, not just prohibited actions.
    • Maintain open communication to identify concerns and improve compliance efforts.

    Why Is Workplace Compliance Important?

    Every business has rules employees are expected to follow, whether they relate to workplace safety, harassment prevention, attendance, data security, or company conduct.

    However, simply having policies in place does not guarantee compliance.

    One of the most common challenges is that businesses invest time in creating policies but fail to communicate, reinforce, or consistently enforce them. As a result, employees may be unclear about expectations, increasing the likelihood of workplace incidents, employee relations issues, and compliance violations.

    Creating a culture of compliance helps ensure employees understand company expectations and their role in maintaining a safe, productive workplace.

    Document Policies and Procedures Clearly

    Employees cannot follow policies they do not understand. Every business should maintain an up-to-date employee handbook that outlines workplace expectations, company policies, employee responsibilities, and compliance requirements.

    A handbook can serve several important purposes:

    • Establish clear expectations for employees
    • Promote consistency throughout the organization
    • Support manager decision-making
    • Provide documentation when policy violations occur
    • Communicate changes to workplace requirements

    As regulations and business needs evolve, employers should regularly review and update policies. Employees should also have access to the most current version of the handbook and acknowledge receipt when significant changes are made.

    Apply Policies Consistently Across the Organization

    Consistency is a foundation of workplace compliance.

    Employees are more likely to follow workplace rules when they see those standards applied fairly to everyone, regardless of role or seniority.

    When policies are enforced inconsistently, businesses can face several challenges, including:

    • Reduced employee trust
    • Lower policy adherence
    • Increased employee relations concerns
    • Greater legal and compliance risks

    Managers should receive guidance on how to apply policies consistently and document workplace issues appropriately. Regular reviews of company policies can help reinforce expectations and maintain accountability across the workforce.

    Focus on Teaching the Right Behaviors

    Many compliance programs focus heavily on what employees should not do.

    While prohibiting unsafe or inappropriate behavior is important, employees often respond better when employers explain what they should do and why it matters.

    For example, instead of simply prohibiting unsafe work practices, businesses can explain:

    • What safety procedures employees should follow
    • Why those procedures are important
    • How they help prevent injuries
    • How they protect both employees and the business

    Providing context helps employees better understand the purpose behind workplace requirements, making them more likely to embrace compliance efforts.

    Reinforce Expectations Through Ongoing Training

    Compliance should not be addressed only during onboarding.

    As businesses grow and regulations change, ongoing training helps keep policies and procedures top of mind.

    Depending on the workplace, training may include topics such as:

    • Workplace safety procedures
    • Harassment prevention
    • Reporting workplace concerns
    • Emergency response procedures
    • Accident and injury reporting
    • Company policies and employee conduct expectations

    Regular training sessions help reduce confusion, improve awareness, and reinforce the organization’s commitment to compliance.

    Encourage Employee Feedback and Engagement

    Compliance works best when communication flows in both directions.

    Employees often have valuable insight into workplace challenges, safety concerns, and process improvements. Encouraging feedback helps businesses identify issues before they escalate into larger problems. Regular conversations with employees can help uncover safety hazards, training gaps, policy misunderstandings, workflow challenges, and opportunities to improve workplace procedures.

    Common Workplace Compliance Mistakes

    Business owners often assume that creating a handbook or distributing policies is enough. In reality, some of the most common compliance mistakes include:

    • Failing to update policies regularly
    • Inconsistent policy enforcement
    • Limited employee training
    • Poor documentation practices
    • Lack of manager accountability
    • Not addressing employee concerns promptly

    Proactively addressing these challenges can help businesses reduce risk and build a stronger workplace culture.

    How GMS Helps Businesses Strengthen Workplace Compliance

    Building a culture of compliance requires more than creating policies. It takes consistent communication, proper documentation, ongoing training, and leadership support.

    GMS helps businesses simplify compliance management through:

    • Employee handbook development and updates
    • HR compliance guidance
    • Workplace safety support
    • Employee training resources
    • Documentation and policy administration
    • Risk management services

    By providing HR expertise and administrative support, GMS helps businesses create stronger compliance programs while allowing owners and managers to focus on running their organizations.

    Ready to Improve Workplace Compliance?

    If your business is struggling to manage workplace policies, employee training, or compliance requirements, GMS can help. Contact GMS to learn how our HR and risk management solutions can help you create a safer, more compliant workplace.

    Frequently Asked Questions

    What is workplace compliance?

    Workplace compliance refers to an organization’s efforts to follow applicable laws, regulations, and internal policies that govern employee behavior, workplace safety, and business operations. Compliance can include everything from labor law requirements and anti-harassment policies to safety procedures and attendance expectations.

    How can employers encourage employees to follow company policies?

    Employers can improve policy adherence by clearly documenting expectations, providing ongoing training, consistently enforcing policies, recognizing positive behaviors, and maintaining open communication with employees. Employees are more likely to comply when they understand both the expectations and the reasoning behind them.

    How does workplace compliance affect company culture?

    A strong compliance program helps build trust, accountability, and consistency throughout an organization. When employees understand expectations and see policies applied fairly, businesses are more likely to foster a positive workplace culture and stronger employee engagement.

    How can small businesses improve workplace compliance without a dedicated HR team?

    Many small businesses improve compliance by partnering with an HR provider or PEO that can assist with policy development, employee handbooks, training programs, documentation, and compliance guidance. This support can help business owners stay proactive while reducing administrative burdens.

  • Hiring a new employee involves more than just extending an offer and setting up a workspace. Employers must gather several forms and documents to meet legal requirements, process payroll, provide benefits information, and establish clear expectations for the new hire.

    Although the onboarding process may differ from one business to another, most employers will need to complete four main categories of paperwork: hiring documents, employment eligibility forms, tax forms, and company-specific onboarding documents. Completing these forms promptly can help employers remain compliant, minimize administrative issues, and create a smoother onboarding experience.

    Key Takeaways

    • New employee paperwork generally includes four main categories: hiring documents, employment eligibility verification forms, tax paperwork, and company onboarding materials.
    • A structured onboarding process can improve compliance, organization, and employee engagement.
    • Form I-9 and Form W-4 are among the most important documents required for new hires.

    What Documents Do New Employees Need to Complete?

    Most onboarding documents serve one of two key purposes: to meet legal requirements or to help employees transition successfully into their new roles.

    At GMS, we often observe that small business owners prioritize filling positions quickly, but they often underestimate the importance of the onboarding process. Missing paperwork, unclear expectations, or a disorganized first day can lead to frustration for both employers and employees.

    A well-structured onboarding process should include various types of documentation.

    What Hiring Documents Should Employers Collect?

    The onboarding process typically begins before an employee’s first day.

    Job Application

    Even if a candidate submits a resume, a signed job application is still an important document. Job applications provide consistent information regarding employment history, education, qualifications, and personal details. They also help employers demonstrate compliance with hiring requirements if questions arise later.

    Offer Letter or Employment Agreement

    Offer letters and employment agreements detail important aspects such as compensation, job responsibilities, employment status, and start dates. Keeping signed copies on file provides employers with a valuable reference point for any future employment-related questions.

    Drug Testing Documentation

    If your company conducts pre-employment or ongoing drug testing, employees should be informed about your testing policies and sign any required acknowledgments. Keeping documentation can help support compliance efforts and maintain internal recordkeeping.

    What Documentation Is Required?

    One of the most important onboarding requirements is verifying an employee’s authorization to work in the United States.

    Form I-9

    Form I-9 is required for almost all employees and must be filled out by both the employee and the employer. New hires complete their section on their first day of work, while employers must review the necessary documentation and complete their section within three business days.

    The required documentation may include items such as passports, driver’s licenses, or Social Security cards. It is essential to properly maintain Form I-9 records, as employers may be required to present them during a government audit or inspection.

    Form W-4

    Form W-4 enables employees to specify how much federal income tax should be withheld from their paychecks. Completing this form early allows employers to process payroll accurately starting from the employee’s first paycheck.

    Additionally, depending on the state, employees might need to fill out extra state withholding forms. Employers should keep these records for future reference and to ensure compliance with regulations.

    What Company Documents Should Be Included During Onboarding?

    Beyond required government forms, businesses should provide company-specific documents that help employees understand workplace expectations and benefits.

    Direct Deposit Authorization

    Employees choosing direct deposit must provide their banking information to ensure accurate payroll processing by employers. Collecting this information during onboarding helps prevent payment delays and administrative issues.

    Benefits Enrollment Forms

    If your organization provides benefits like health insurance, life insurance, retirement plans, disability coverage, or wellness programs, employees should receive enrollment materials during the onboarding process. It’s important to collect signed enrollment or declination forms to document each employee’s choices regarding benefits.

    Employee Handbook Acknowledgment

    An employee handbook communicates workplace expectations, policies, procedures, and guidelines. Obtaining a signed acknowledgment ensures that employees have received and reviewed this information.

    Job Description and Performance Expectations

    Providing a clear job description and performance expectations helps employees understand their responsibilities from day one. Establishing these expectations early often leads to stronger performance and fewer misunderstandings.

    Company Mission and Culture Documents

    Many organizations also share information about their mission, values, and strategic goals during onboarding. Giving employees insight into the company’s culture helps them understand how their role contributes to the organization’s success.

    Emergency Contact and Workplace Access Information

    New hires must provide emergency contact information and obtain any necessary security credentials, parking information, keys, badges, or access codes needed to perform their jobs. Organizing this information can simplify future transitions and safeguard company assets.

    Why Is an Employee Onboarding Checklist Important?

    With the volume of documents involved, important steps can easily be overlooked during the onboarding process. An onboarding checklist helps ensure that paperwork, training, benefits enrollment, and introductions to the company are completed as planned. This approach also fosters a consistent experience for employees and shows that the organization is committed to their success. At GMS, we’ve observed that businesses with structured onboarding processes often experience smoother transitions for new hires and face fewer administrative challenges for managers and HR teams.

    Simplify New Employee Onboarding With GMS

    Collecting new employee forms is an important part of onboarding, but paperwork is only one piece of creating a positive employee experience. A well-planned onboarding process helps employees understand expectations, connect with company culture, and become productive more quickly.

    GMS helps businesses streamline employee onboarding, manage HR administration, and create processes that support compliance and long-term employee success. From onboarding documentation and recordkeeping to broader HR support, our experts can help employers build a stronger foundation for new hires.

    Ready to improve your onboarding process? Contact GMS today to learn how our HR experts can help simplify employee onboarding and support your growing workforce.

    Frequently Asked Questions

    What forms are legally required for a new employee?
    Most employers will need to complete Form I-9 and Form W-4, along with any applicable state tax withholding forms. Additional requirements may vary depending on state laws and company policies.
    When should new hire paperwork be completed?
    Whenever possible, employers should have employees complete required forms before or during their first day of work to minimize delays and ensure compliance.
    Can onboarding paperwork be completed electronically?

    Yes. Many businesses use digital onboarding systems that allow employees to complete forms electronically while maintaining compliance and recordkeeping standards.

  • Long-term employees often provide valuable experience, institutional knowledge, and stability to an organization. However, having a long tenure does not automatically ensure that an employee continues to add business value. If a long-time employee is no longer meeting expectations, adapting to change, or contributing to the company’s goals, employers may need to make the difficult decision to let them go.

    While terminating a long-term employee can be emotionally challenging, especially in small businesses where employees and owners have built close relationships, it’s important to evaluate performance objectively and make decisions that support the long-term health of the organization.

    Key Takeaways

    • Long-term employees can provide significant value through experience and organizational knowledge.
    • Employers should handle the termination process professionally, consistently, and with appropriate HR support.
    • Warning signs may include outdated skills, resistance to change, declining productivity, and negative workplace behaviors.

    How Do You Know When a Long-Term Employee Is No Longer the Right Fit?

    Many employees build successful careers that last for decades with the same company. These individuals often become trusted contributors who help train new hires, support the company culture, and offer valuable historical insights.

    However, there are circumstances in which a long-term employee may start to impede growth, innovation, or operational efficiency. Identifying these signs early can help business owners address concerns before they develop into more significant performance issues.

    Their Skills Have Stopped Evolving

    As industries, technology, and workplace expectations evolve, it is essential for employees to continually develop their skills. One common challenge that employers encounter is when a long-term employee depends strictly on knowledge acquired years ago and demonstrates little interest in updating their skills. This can lead to outdated processes, inefficiencies, and missed opportunities for improvement.
    Signs may include:

    • Limited interest in professional development
    • Difficulty learning new systems or processes
    • Reliance on outdated methods
    • Lack of awareness of industry trends or best practices

    GMS often sees businesses encounter challenges when key employees have not adapted to changes that have occurred over many years. Without ongoing development, skill gaps can eventually impact productivity and growth.

    They Consistently Resist Change

    A growing business must adapt to stay competitive. If an employee consistently resists new initiatives, technology, or operational improvements, they may be obstructing your company’s progress.

    Signs of resistance include frequently saying, “We’ve always done it this way,” refusing to adopt new processes, discouraging others from embracing change, and undermining new initiatives or leadership decisions. While healthy debate can be beneficial, persistent resistance that hinders improvement can pose a significant obstacle to business success.

    They Become Defensive or Protective of Information

    Employees sometimes become defensive when they feel uncertain about their role or value within the organization.

    This can lead to behaviors such as refusing feedback, excluding coworkers from important information, dismissing ideas or contributions from other employees, and becoming defensive when questioned.

    When these behaviors affect collaboration, innovation, or team morale, employers should address them quickly through coaching and documented performance discussions.

    Productivity Has Declined

    Long-term employees may sometimes see a decline in their performance compared to earlier in their careers. Common warning signs of this decline can include missed deadlines, a drop in the quality of work, difficulty managing workloads effectively, an increased reliance on coworkers to complete tasks, and resistance to adopting new productivity tools or process improvements.

    What Should Employers Do Before Terminating a Long-Term Employee?

    Before deciding to terminate an employee, employers should take several important steps.

    Review Performance Documentation

    Examine:

    • Performance reviews
    • Meeting and email records
    • Corrective action plans
    • Attendance records
    • Goal achievement history

    Documentation provides a clearer picture of the employee’s performance and may help reduce legal risks.

    Provide Honest Feedback

    One challenge that GMS often sees is inconsistent performance management.

    If an employee has only received positive reviews despite ongoing concerns, termination may come as a surprise. Instead, provide clear, honest feedback and establish expectations for improvement.

    Offer Opportunities for Improvement

    Employers may consider various approaches based on the situation, such as providing additional training, implementing a performance improvement plan, offering coaching and development opportunities, or adjusting an employee’s role to better align with their strengths and capabilities. Taking these proactive steps shows a genuine effort to support employee success and address performance concerns before deciding to proceed with separation.

    What Is the Best Way to Terminate a Long-Term Employee?

    When termination becomes necessary, employers should focus on professionalism, consistency, and respect.

    Conduct the Meeting in Person

    Whenever possible, deliver news in person. A personal conversation shows professionalism and allows employees to ask questions while receiving clear information about the next steps.

    Include HR in the Process

    Having an HR professional or another management representative present can:

    • Serve as a witness
    • Help maintain consistency
    • Ensure policies are followed
    • Reduce potential legal exposure

    For businesses without a dedicated HR department, partnering with an HR provider can help ensure termination procedures are handled appropriately.

    Communicate Carefully with Remaining Employees

    The departure of a long-time employee can create uncertainty within the team, making clear and professional communication essential. Employers should respect the former employee’s privacy and refrain from discussing confidential performance issues. However, it is important to acknowledge the transition, reinforce the organization’s goals, and clarify any changes to workload or responsibilities. Addressing employee concerns openly and proactively can help maintain trust, reduce speculation, and support overall team morale during this transition.

    Consider Severance When Appropriate

    While not required in many situations, severance pay may be appropriate for some long-term employees.

    Potential benefits include:

    • Supporting a smoother transition
    • Demonstrating appreciation for years of service
    • Protecting company reputation
    • Encouraging positive separation outcomes

    Employers should review company policies and consult HR or legal professionals before offering severance agreements.

    How GMS Can Help

    Managing employee performance and making termination decisions are among the most challenging responsibilities for business owners.

    GMS helps employers:

    • Develop performance management processes
    • Create employee documentation procedures
    • Implement disciplinary policies
    • Reduce compliance risks
    • Navigate difficult employee relations situations

    If you’re struggling with a performance issue involving a long-term employee, GMS can help you evaluate your options and build a strategy that support.

    Frequently Asked Questions

    Can terminating a long-term employee create legal risk?

    Any termination decision can carry legal risk if not handled properly. Employers should consistently document performance concerns, follow company policies, and consult HR professionals when needed.

    Should I place a long-term employee on a performance improvement plan before termination?

    In many situations, a performance improvement plan can provide employees with clear expectations and an opportunity to improve before termination is considered.

    Should employee tenure protect someone from termination?

    No. While tenure can reflect loyalty and experience, employment decisions should be based on performance, business needs, and organizational goals.

  • I receive this question very often, especially at the beginning of each year. The IRS requires any company with a 401(k) plan to conduct annual compliance testing.

    The testing is conducted after the plan’s year-end. For most plans, this is 12/31.

    Why is plan nondiscrimination testing important?

    According to Transamerica Retirement Services, “Nondiscrimination testing mandates were added to the rules governing 401(k) plans to ensure that these plans are not designed to economically benefit only highly-paid personnel, but are fair for all employees. Not meeting these mandates, or failing to correct any failed year-end compliance test, could mean substantial penalties and possibly even disqualification of the plan’s tax-exempt status.”

    Simply put, 401(k) testing is required to make sure all employees benefit from the plan equally, regardless of their income level. When plans aren’t tested or fail the test, or when plan problems aren’t corrected, the company can be penalized.

    How does 401(k) testing work?

    401(k) testing involves examining the benefits received by all employees. For the purposes of these tests, employees are grouped into three categories:

    • Key Employee – anyone with at least a 5% ownership stake in the company (either last year and/or current year) or a direct relative (spouse, parent, or child) of someone with a 5% ownership stake.
    • Highly Compensated Employee (HCE) – for 2013 testing, anyone who has made $115,000 in 2012.
    • Non-Highly Compensated Employee (NHCE) – anyone that doesn’t fall into the other two categories.

    *Please note that all Key Employees are also considered Highly-Compensated Employees, but not all Highly-Compensated are considered Key Employees.

    What do the tests entail?

    These two tests are probably the ones that effect employers the most.

      1. Average Deferral Percentage Test (ADP)

    This test takes the average deferral rate of the HCE and compares it to the average deferral rate of the NHCE. The HCE can only contribute so much more than the NHCE.

    If you are a HCE and contribute more than the maximum allowed, then you could be subject to a refund or the company might have to make contributions into the NHCE accounts.

      1. Top-Heavy Test

    This test is a little different, in that it is always conducted for the upcoming year. The numbers used are from 12/31/12 to determine if you are Top-Heavy for 2013.

    Key Employees cannot control more than 60% of the entire plan’s assets. If they do, the company will have to make up to a maximum of a 3% non-elective contribution to any eligible employee of the company—even those who aren’t participating in the plan.

    How do I make sure I’m abiding by the rules?

    You need to make sure you are getting the proper guidance from your retirement provider. You also need to take ownership of your plan. Additional Plan Data forms are extremely important, because things change from year to year. It’s important to have the most up-to-date information so that your retirement provider can correctly conduct your testing.

    GMS, as a PEO company, is able to offer clients our 401(k) plan. We assist with administering the testing. Instead of just handing you the results, we will go over them and provide advice. Every company is in a different situation.

    Are you getting the right guidance on your 401(k) plan?

    “Numbers and Finance,” © 2011 Ken Teegardin, used under a Creative Commons Attribution-Share Alike 2.0 Generic License.