• U.S. Immigration and Customs Enforcement (ICE) recently announced an extension of the flexibility in rules related to Form I-9 compliance that was initially granted last year. With the ongoing pandemic, the Department of Homeland Security (DHS) has extended this policy until April 30th, 2022.

    Under said policy, employers may inspect the I-9 documents of certain remote employees by way of camera or fax. This extension will lend a hand in ensuring the guidance for employees hired on or after April 1, 2021, that work exclusively in remote settings due to COVID-19-related precautions, will remain in place until they undertake non-remote employment on a regular, consistent, or predictable basis, or until the extension is terminated. Upon commencing non-remote employment, the employer must verify the employee’s documents in person, within three business days.

    While some questions were raised in determining what to do if a remote employee leaves the job before the employer has a chance to inspect their I-9 documents in person, ICE provided the following information: “Employers may be unable to timely inspect and verify, in-person, the Form I-9 supporting documents of employee(s) hired since March 20, 2020, . . .in case-by-case situations (such as cases in which affected employees are no longer employed by the employer). In such cases, employers may memorialize the reason(s) for this inability in a memorandum retained with each affected employee’s Form I-9. Any such reason(s) will be evaluated, on a case-by-case basis, by DHS ICE in the event of a Form I-9 audit.” Still, little clarity is provided when a “case by case” policy is referenced. That said, GMS’ Vice President of Client Services Stacey Larotonda recommends employers do what they can in obtaining Form I-9 documentation physically to avoid any complications down the road.

    ICE is anticipated to significantly expand its I-9 inspection efforts when the pandemic nears its end – at which point, the federal government will be looking for errors made under the relaxed rules, as well as other commonly made mistakes – such as not entering the initial date of employment or incorrectly submitting a section. Knowing that the minimum fine per individual for paperwork or technical violations in 2020 was $234, and could run upwards of thousands of dollars, it’s recommended that an employer first self-audits, then partners with a PEO like GMS to assist in the efforts.

    Our HR experts will continue to monitor for updates in this matter. To learn more about GMS and how our services could be your best defense against I-9 errors, contact us today.

  • Hiring the right person is a crucial step toward building a successful team. However, hiring the wrong candidate, what we call a “bad hire,” can be costly, both financially and culturally. A poor hiring decision can impact morale, productivity, and even your company’s bottom line.

    Let’s explore the real cost of a bad hire and what effective strategies you can utilize to minimize the risk.

    What Does A Bad Hire Cost?

    The financial impact of a bad hire is more significant than you might think. Research shows that the average cost of a bad hire is about 30% of the employee’s first-year earnings, a figure that can rise depending on the role’s seniority and the onboarding resources involved. CareerBuilder’s data found that a single bad hire can cost a business around $17,000, while higher-level hires can cost even more.

    Hidden Costs Of A Bad Hire

    A bad hire can create additional costs beyond direct financial impact. These hidden costs include:

    • Decreased team morale: Working with a disengaged or underperforming colleague can reduce team morale and lead to dissatisfaction among other employees.
    • Lost productivity: Time and resources spent on correcting mistakes or managing performance issues can pull focus away from core business objectives.
    • Reputational damage: Customer-facing errors or delays due to a poor hire can damage the company’s reputation, impacting customer retention.

    How To Avoid The Cost Of A Bad Hire

    Understanding the high stakes, companies need a clear strategy to mitigate hiring risks. Here are several best practices to improve hiring success rates:

    1. Clearly define role requirements

    Clearly defining job expectations and qualifications is essential. Vague job descriptions often lead to a mismatch between candidate skills and role requirements. A well-defined job description should differentiate between “prerequisite” skills (those the candidate must have) and “trainable” skills (those that can be developed on the job).

    1. Implement objective assessment tools

    Reducing subjectivity in hiring decisions can help avoid costly mistakes. Objective assessment tools, including AI and machine learning, allow companies to evaluate candidates based on data-driven insights rather than gut feelings. This approach not only increases accuracy but also helps eliminate unconscious bias from the hiring process.

    1. Conduct thorough reference checks

    Reference checks are essential to verify the candidate’s work history, skills, and cultural fit. Speaking with past employers provides valuable insights that may not come up in interviews, helping to avoid last-minute surprises.

    1. Focus on objective interview techniques

    Rather than relying on open-ended questions that may yield little insight, tailor your interview questions to require candidates to demonstrate essential skills. For instance, “What experience do you have with [specific skill]?” is more effective than broad questions about handling workplace challenges. Keeping interviews skill-focused helps identify candidates who meet the role’s technical requirements.

    1. Prioritize cultural fit in a measurable way

    While cultural fit is essential, it’s equally important to define what that means within your organization. Break down qualities like “team player” or “cultural fit” into specific, measurable traits. This clarity helps prevent misunderstandings about what you’re seeking in a candidate and allows you to evaluate them objectively.

    1. Don’t rush the hiring process

    While urgent hiring needs can make it tempting to fill a role quickly, a rushed process often leads to mistakes. By taking the time to vet candidates properly, you can avoid repeating the process when a hasty hire doesn’t work out. Remember, a poor hire is costly, so it’s worth investing in a thoughtful and deliberate selection process.

    1. Utilize professional employer organizations (PEOs) for hiring support

    A trusted PEO can help you streamline the hiring process by managing essential functions like job postings, candidate screenings, and background checks. This support allows your team to focus on core responsibilities while the PEO’s expertise ensures you’re connected with high-quality candidates.

    Handling A Bad Hire

    Despite best efforts, sometimes a bad hire still happens. In such cases, it’s essential to act quickly and strategically. First, identify the issue, whether it’s performance, attitude, or cultural fit, and address it directly with the employee. Implement a performance improvement plan, if applicable, or adjust the employee’s role to better align with their strengths. For more insights, explore our comprehensive guide to simplifying performance management.

    If the employee still isn’t improving, it may be necessary to terminate the employment. Make sure to follow legal guidelines to avoid wrongful termination claims. Many companies implement a probationary period to evaluate an employee’s fit before committing to long-term employment. This period allows you to ensure new hires align with your organization’s goals and standards.

    Partner With GMS To Reduce Hiring Risks

    Hiring is both an art and a science, and the consequences of a bad hire are too costly to ignore. At Group Management Services (GMS), we specialize in helping businesses strengthen their hiring practices to attract and retain the right talent. From writing accurate job descriptions to conducting comprehensive screenings, our services allow you to avoid the pitfalls of bad hiring decisions.

    Contact GMS today to learn how our experts can support your business in recruiting effectively and efficiently.

     

  • Employee classification is the backbone of workforce management, impacting everything from payroll to compliance and employee satisfaction. For human resources (HR) professionals and business owners, keeping up with evolving laws and regulations is crucial to protecting your business and supporting your workforce. This blog will equip you with the knowledge you need to confidently navigate employee classification and avoid common pitfalls. 

    What Is Employee Classification And Why Does It Matter? 

    Employee classification defines the legal relationship between a business and its workers, determining their eligibility for benefits, wage protections, and tax obligations. The two most common distinctions are: 

    Employees: Employees have a formal employment relationship with the company, usually documented through an employment contract. They are entitled to various protections, including minimum wage, overtime pay, unemployment insurance, and workers’ compensation. The company withholds taxes from employees’ paychecks and can contribute to their retirement accounts. Employees typically work for one employer, either full-time or part-time, and can be classified as exempt or non-exempt. Their tenure lasts until they resign, are terminated, or the role ends. 

    Independent Contractors: Independent contractors are self-employed individuals who provide services to a company but do not receive the same protections as employees. They typically have greater control over how they complete their work, including setting their own schedules and using their own tools and methods. Unlike employees, contractors are responsible for paying their own taxes, including self-employment taxes, as companies do not withhold taxes from their payments. Additionally, businesses must complete Form 1099-NEC to report payments made to contractors during tax season. 

    Proper classification ensures: 

    • Compliance: Reduces legal exposure to penalties or lawsuits.  
    • Fair compensation: Supports worker rights and builds trust. 
    • Business stability: Avoids audits and fines that disrupt operations. 

    The Key Types Of Employee Classification 

    Employees Vs. Independent Contractors 

    Businesses must correctly classify workers as employees or independent contractors. The U.S. Department of Labor’s updated rule, effective March 11, 2024, helps clarify this process. The rule focuses on several factors, such as how much control a business has over a worker and whether the work is a permanent part of the business. These changes aim to reduce misclassification, ensure workers get the wages and protections they deserve, and provide clear guidelines for businesses. 

    Exempt Vs. Non-Exempt Employees 

    For employees, the Fair Labor Standards Act (FLSA) governs whether employees are entitled to overtime pay.  

    Key factors include: 

    Exempt Employees: Generally salaried workers who meet a “duties test” and are not eligible for minimum wage and overtime pay. These employees are typically salaried and hold executive, administrative, or professional roles. 

    Non-Exempt Employees: Typically hourly workers who are eligible for overtime pay for hours worked beyond 40 per week and must earn the federal minimum wage.  

    Full-Time Vs. Part-Time 

    While “full-time” and “part-time” are not strictly legal terms, they are crucial in determining eligibility for benefits such as health insurance, retirement plans, and paid time off. Employers should clearly define these terms in their handbook and any other key distinctions to ensure consistency and compliance with company policies and applicable laws. 

    Full-time employees: Typically work 35 to 40 hours a week, are eligible for benefits, and may qualify for overtime pay. 

    Part-time employees: Typically work fewer than 35 hours a week, are less likely to receive benefits, and often have more flexible schedules. 

    Seasonal Employees Vs. Temporary Workers 

    Seasonal employees: Hired for specific times of the year when demand increases, such as lifeguards in the summer or retail workers during the holidays, typically for six months or less.

    Temporary workers: Fill short-term needs, like covering for someone on leave, with contracts ranging from a few days to several months.  

    It’s important to distinguish between these types of workers because the Affordable Care Act (ACA) requires large employers to offer health insurance to full-time employees working 30 or more hours per week. Both seasonal and temporary workers may qualify as full-time if they consistently work 30 hours per week for several months, entitling them to health insurance. For more details on ACA requirements, consult legal counsel. 

    Remote Employees And Multi-State Compliance 

    With remote work normalized, businesses must navigate state-specific labor laws for employees working across the country. Some states, like California, have stricter worker classification standards, including wage theft protections and mandatory overtime laws. Employers must ensure proper tax withholding and reporting based on the worker’s state of residence. Explore our guide to managing a remote team for more information.  

    The Risks Of Misclassification 

    Misclassification can expose your business to serious risks, including: 

    • Tax liabilities: Misclassification can result in unpaid payroll taxes, which can lead to significant tax liabilities and penalties from the IRS. 
    • Back wages and benefits: Employers may be required to pay back wages, overtime, and benefits to misclassified workers, which can be substantial. 
    • Legal disputes: Employees misclassified as contractors may sue for unpaid wages, benefits, or wrongful termination. 
    • Fines and penalties: Federal and state agencies are increasingly aggressive in auditing businesses for compliance. 
    • Reputational damage: Misclassification issues can tarnish your company’s public image, deterring talent and clients. 

    How To Ensure Proper Employee Classification 

    • Conduct a classification audit: Regularly review employee and contractor relationships to ensure compliance. Focus on roles with unclear or evolving responsibilities. 
    • Reevaluate job descriptions. Clearly define each role’s scope, expectations, and reporting structure. Align job descriptions with FLSA and ABC test criteria. 
    • Understand state laws: Pay close attention to labor laws in the states where your employees work, especially those with stricter classification standards, such as California, New York, and Illinois. 
    • Train your team: Equip HR and management teams with the knowledge they need to spot and address potential classification errors. 
    • Consult experts: Partnering with a professional employer organization (PEO) like Group Management Services can provide your business with access to legal, HR, and payroll expertise to manage classification challenges. 

    How GMS Supports Proper Classification 

    Navigating employee classification is a complex process, but GMS simplifies it. We provide: 

    • Comprehensive classification audits: Identify and correct any misclassification issues. 
    • Multi-state compliance management: Ensure your workforce is compliant across all states where you operate. 
    • Payroll and benefits administration: Streamline your processes with tools and resources tailored to your needs. 

    Proper employee classification is not just about avoiding penalties; it’s about fostering a fair and compliant workplace. As 2025 brings new challenges and stricter regulations, businesses must stay proactive to protect their workforce and bottom line. Connect with GMS today to explore how we can help you manage employee classification and drive your business forward. 

  • As a small business owner, you’re likely being pulled in countless directions, including the responsibility of finding quality health insurance for your team. Health insurance is an expensive and complicated system to navigate and can be incredibly time-consuming for individuals who are unfamiliar with the process. However, it’s not something to ignore.

    In today’s competitive job market, health insurance is a benefit that can help you maintain a competitive edge. In some instances, such as if your business has more than 50 full-time or full-time equivalent (FTEs) employees, it’s a legal obligation.

    When searching for the best health insurance option, you don’t have to find a plan alone. Professional employer organizations (PEOs) and health insurance brokers can guide you. While both PEOs and brokers have the same general goal—to find you quality, affordable health insurance for your business—they work in different ways.

    PEO Vs. Brokers

    PEOs

    PEOs and brokers have distinct differences, particularly in their scope of services. PEOs go beyond just health insurance, providing comprehensive HR solutions. They can handle payroll, employee benefits, risk management, and other HR-related functions. By bundling these services, PEOs offer a holistic approach to managing employee-related tasks, freeing you, as a small business owner, to focus more on your core business activities.

    Beyond the scope of their work, PEOs and brokers differentiate in cost structure. PEOs can help small businesses lower their potential premiums by becoming a “co-employer” for your workers. Since PEOs partner with dozens of companies, they have greater buying power than any small group. As a small business owner, this allows you to step up to the insurance bargaining table and earn discounts as if you employ hundreds of people.

    Health insurance brokers

    On the other hand, if you’re not looking for comprehensive services, insurance brokers specialize solely in helping businesses select and manage their health insurance plans. They offer expertise in the insurance market, advising on the best plans, assisting with plan selection, and helping with claims management. However, their services are limited to insurance and do not extend to broader HR functions.

    Brokers can also help your company save money as they have a detailed knowledge of the health insurance market. Though they can offer more flexibility by helping to tailor plans to meet your team’s specific needs, you’ll have less negotiating power as a small business.

    Factors To Consider When Choosing Between A PEO And A Broker

    Choosing between a PEO and a broker for your health insurance needs requires careful consideration of several factors. The following are key aspects to keep in mind to ensure you make the best decision for your business:

    • Business size and needs: PEOs are generally more beneficial for small to mid-sized businesses that require comprehensive HR support. If your company struggles with managing multiple HR functions, a PEO can offer integrated solutions that streamline these processes. Brokers are ideal if your business has a well-established HR department but needs expertise in selecting and managing health insurance plans.
    • Future growth plans: As your business grows, the comprehensive HR services provided by a PEO can scale with you, offering continued support and helping manage the increased complexity of a larger workforce. While brokers can continue to provide valuable insurance advice, they may not offer the broader support needed to operate a larger, more complex organization.
    • Budget considerations: Brokers often earn their income through commissions paid by insurance carriers. These commissions are usually a percentage of the premiums paid for the insurance policies they help secure. PEOs charge a fixed fee per employee or a percentage of the total payroll. Understanding the costs of both options compared to the services you are receiving is crucial to making the right decision for your company.
    • Level of support needed: If your business requires assistance with various HR functions beyond insurance, relying solely on a broker may require outsourcing to multiple vendors to get the comprehensive support you need. This approach can lead to higher costs and increased complexity in the long run. On the other hand, PEOs offer bundled support across multiple HR areas, saving you time and money by providing a single, integrated solution.
    • Flexibility: Most PEOs offer a limited selection of health insurance options, which can simplify decision-making. However, if your business has unique or specific health insurance needs, these limited options may not be sufficient. In contrast, brokers can provide a broader range of insurance plans tailored to diverse requirements, although these options might come at a higher cost.

    While there are many pros and cons to both PEOs and insurance brokers, it’s crucial to weigh your specific needs, short and long-term costs, and overall business goals when making your decision. Ultimately, the goal is to provide comprehensive and competitive benefits to help retain and recruit top talent. By carefully considering these factors, you can choose the solution that best supports your business and its employees.

    Find A Health Insurance Expert To Help Your Business

    Although PEOs offer many additional services and potential savings opportunities, both PEOs and brokers can be extremely helpful when searching for the right health care plan. There are also ways that PEOs like GMS can work with brokers, helping them offer more comprehensive, customized solutions that benefit small businesses.

    Whether you’re looking for experts who can help you find the right insurance plan or are already working with a broker, GMS can help. Contact GMS today to talk to one of our experts about how we can help you find a quality, affordable health care plan for your business.