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  • It’s difficult to run a small business without much support, which is why more employers are turning to human resource outsourcing. According to market research company Global Industry Analysts, Inc., the HR outsourcing market is projected to grow to nearly $54 billion by 2020 as business owners turn to other organizations for help managing important HR functions.

    So why have so many businesses turned to HR outsourcing? Here are four big reasons:

    • Time savings
    • Improved compliance
    • Better recruitment and training capabilities
    • Cost savings

    The benefits speak for themselves, so now it’s a matter of finding out exactly what business responsibilities you can outsource and which ones make the most sense for your business.

    Image of a woman selecting human resource outsourcing options for his business.

    What Falls Under Human Resource Outsourcing?

    Human resource outsourcing can involve more than just the hiring, training, and potential firing of employees. While those are important tasks, human resource management covers a wide range of other crucial administrative functions. 

    However, not every outsourcing company can handle every aspect of human resources. Some specialize in specific focus areas, leaving you out of luck if you need help with some tasks or forcing you to find another vendor if you have multiple functions where you could use assistance. 

    A Professional Employer Organization (PEO) allows you to turn to a single, trusted partner for all your human resources needs. A PEO provides comprehensive HR services for business of all sizes, including all the following functions.

    Traditional HR Responsibilities

    Your employees are a critical part of the success of your business. That’s why 78 percent of business leaders name retention as an important or urgent area of focus for their company. The right HR outsourcing partner can offer the HR support you need to improve retention rates. 

    Outsourcing traditional HR responsibilities to a PEO can help your business find the right employees for your business and prepare them for their roles through employee recruiting and training services. From there, a PEO can also provide performance management services to keep track of performance, develop rewards programs, and assist with promotions and terminations. 

    Payroll Outsourcing

    Payroll management is a time-consuming task that can consume your work schedule, with nearly 30 percent of small business owners spending more than six hours each week on payroll tax administration alone, according to the National Small Business Association. Failing to pay taxes on time or other related mistakes can also lead to financial penalties.

    A PEO can help you save time and money through payroll administration. This allows true payroll experts to manage your payroll taxes so you can reduce your tax liabilities and responsibilities and make sure that you’re compliant with any payroll rules and regulations. A PEO can also give you access to online payroll services, allowing you to keep track of payroll information, offer access to paystubs, and track time in one web-based location.

    Risk Management Outsourcing

    Another advantage of outsourcing HR is that it can help you can safeguard risk management practices associated with both workers’ compensation and unemployment claims. When it comes to workers’ compensation, you should worry about not only limiting injuries in the workplace, but also the ongoing costs of workers’ compensation insurance. 

    Whether you run a construction company or a quiet office, there is always the risk of a workplace injury. According to Occupational Safety and Health Administration, “it has been estimated that employers pay almost $1 billion per week for direct workers’ compensation costs alone.” A PEO can help you limit workplace injuries and rising costs through a combination of cost containment and loss prevention strategies. These include workplace safety measures, such as safety training programs, developing a safety manual, and creating guidelines that reduce injury risks. By minimizing exposure and keeping good records, you can receive rate discounts, as well as making your business a safer place.

    Another issue is the impact of unemployment taxes on your bottom line. While unavoidable, these taxes can be managed, you can still take measures to reduce them so that you limit the financial damage to your business. A PEO can create or improve employee handbooks and detailed job descriptions that make work expectations clear. PEO’s can also keep records of any written warnings, examples of poor performance, and other documentation that can help protect you against unemployment claims that will lead to higher rates.

    Benefits Outsourcing

    A good benefits package plays a key part in attracting and retaining key talent. Just consider the following information from a 2017 Harvard Business Review article on employee benefits:

    • Nearly three in five people name benefits and perks as a top consideration before accepting a job
    • 80 percent of employees would choose additional benefits over a pay raise
    • 88 percent of people said better health, dental, and vision insurance would receive either some or heavy consideration when choosing a job

    Employees appreciate great benefits, and outsourcing benefits administration to a PEO can provide you with more buying power to offer a better group health insurance coverage to your workers. Not only will this please your employees, it will as save you from spending time administering the plan yourself. A PEO can also offer assistance with other attractive benefits, such as:

    • 401(k) plans and profit sharing
    • Supplemental insurance plans
    • Workplace wellness programs
    • Telemedicine

    A Single Human Resource Outsourcing Partner

    Once you decide to outsource HR functions, you need to figure out who you’re going to turn to for help. With a PEO, you can work with a single company for all your HR outsourcing needs.

    As you can tell, there are several HR functions that require regular attention. Partnering with a PEO gives you access to HR specialists who specialize in all areas of human resources, allowing your business to take advantage of any or all the services we provide. Contact GMS today to talk to one of our experts about HR outsourcing and what we can do to strengthen your business and take the burden off your shoulders.

  • As a business owner, you get used to making tough decisions every day. One critical question is whether you should handle every human resource function internally or if it’s in your business’ best interest to consider outsourcing.

    To insource or to outsource may not be as difficult of a question as you may think. Here are four reasons why it may make sense for your business to consider human resource outsourcing.

    Image of a human resource outsourcing company helping a small business owner.

    Time

    Your time is crucial. The problem is that you only have so much time to spread around, even if you’re working extra hours each week.

    A survey by business advising organization The Alternative Board found that the average small business owner worked around 50 hours per week, but that only 32 percent of that time was spent working on the business itself. According to a survey by the National Small Business Association, roughly 30 percent of small business owners spend more than six hours each week on payroll tax administration, and that’s just one of many HR functions that you have to deal with.

    You can’t slow down time, but you can outsource key HR functions. Not only will this free up critical time for you to spend on core business needs, your HR functions be handled by people who are experts in their respective fields.

    Compliance

    Let’s face it; you likely didn’t train to be a HR specialist. You may be able to handle many HR functions, but you might not have the time or know-how to keep up with labor and tax laws, compliance regulations, and avoid mistakes that could lead to everything from financial penalties to litigation.

    Regardless of if you run a small five-person organization or a business with 50 employees, there are specific HR processes that you need to follow. Over the past five years, compliance rules and regulations have increased, adding even more concerns for your business. These compliance laws cover everything from proper employee classification, safety requirements, and more. A PEO can help you track everything you need to know and help you stay compliant so that you avoid future penalties.

    Recruitment and Training

    A good company needs good employees. Outsourcing certain HR functions can help your business attract top talent and retain the workers you already have.

    Recruitment is about more than just hiring a job candidate; it’s about hiring the right candidate. A PEO can help you set up an efficient, organized process that allows you find people who are a good fit for your company. These experts can deal with the interview process, review applications, post job ads, evaluate candidates, and other time-consuming tasks, allowing you to speak to the most qualified candidates so that you can decide who’s right for your company.

    Once you hire a new employee, a PEO can also ensure that they receive proper training. The Society for Human Resource Management cites that “66 percent of companies with onboarding programs claimed a higher rate of successful assimilation of new hires into company culture.” A PEO can set up training programs that are customized to your business. This helps your new employees be properly prepared for their jobs so that they are more likely to stay at your company and succeed.

    Money

    Of course, the decision to outsource HR functions can come down to the investment. While some business owners might think of hiring an outside company as just another expense, professional HR management can result in notable savings across several HR functions.

    Remember how we already discussed how HR outsourcing helps you save time, stay compliant, and improve recruiting and training? There are plenty of savings to be found in all those areas.

    To start, time is money. The ability to free you up to work on building your business can be a huge asset to your business. That free time can be spent focusing on strategic planning, marketing efforts, and sales tasks, all of which can help you bring in additional revenue. That’s better than spending hours staying up-to-date on the latest compliance laws.

    Speaking of compliance concerns, those penalties can really cost your business. Avoiding HR penalties keeps you out of the government’s crosshairs, protecting your business from unexpected fees, such as payroll tax fines or penalties associated with a safety violation. In addition, a PEO can also employ cost-prevention strategies to help lower unavoidable expenses, such as unemployment or workers’ compensation rates.

    There’s also all the costs associated with recruitment and training. In 2016, SHRM found that the average cost per hire is $4,129. Add that to an average cost of $1,208 for training and development and you have a pricey investment. A PEO can help your company make that investment worthwhile, finding and training the right person so that your new employee doesn’t leave in less than a year and force you to start the process all over again.

    Outsourcing your HR to a PEO can also lead to additional cost savings due to economy of scale. Since a PEO manages benefits administration and other HR functions for several companies, they can give your company greater buying power that can allow you to get more for your money. For example, your newfound buying power can give you access to a better benefits package, which can help you attract and retain that top talent you want.

    Invest in Human Resource Outsourcing

    Business owners have plenty to worry about. HR outsourcing is an investment that can help you strengthen your business and save you money in the process. Contact GMS today to talk to an expert about how a PEO can help your business through HR outsourcing.

  • As a small business owner, you’ve likely thought of ways that you can cut business expenses to save money. One of these ideas may involve whether you should invest in outsourcing HR or hiring in-house HR professionals.

    HR just isn’t that important when you don’t have many employees, right?

    Wrong. Every business needs to deal with critical HR functions, whether it’s a major corporation or a five-person business. Here’s what you need to consider the next time you think about whether your business needs HR management.

    Employees at a small business thEmployees at a small business that outsources HR management.at outsources HR management.

    HR Needs for Small Businesses

    Payroll

    If you have employees, you’re going to deal with payroll. While you can manage payroll on your own, simple mistakes can get pricey. Inc. reports that “the IRS penalizes about one out of every three business owners for payroll errors,” with penalties costing small businesses up to $4.5 billion per year according to Bloomberg.

    Compliance is likely not your only concern when it comes to payroll. More than half of small business owners spend at least three hours a month managing payroll. Investing in HR can give you the time you need to focus on other key business items instead of struggling with payroll management.

    Hiring and Firing

    While you have a smaller staff, every hiring decision is crucial. SHRM found that the average cost per hire is around $4,129, which makes every bad hire a costly mistake. 

    An HR function like employee recruiting and training can help you find the right people for your business and better prepare them for their roles, lowering the chances of a bad recruit. HR can also handle employee performance management. This involves not only keeping employee policies up to speed, but also handling everything involved with employee termination, such as legal regulations and internal procedures.

    Risk Management

    One crucial aspect of good HR is that it can help you deal with costs that you may think can’t be managed. Let’s say that you had to fire an employee. That employee could make an unemployment claim. Another worker may get injured on the job and try to argue that your workplace was unsafe. These scenarios could end up being very costly for a small business without the right compliance documents and risk management strategies.

    HR professionals can take actions to protect your business. Managing key documents like employee handbooks and keeping track of performance records can be the evidence you need to fight off future claims. A good HR partner can also help lower standard workers’ compensation rates and unemployment taxes through detailed record-keeping and management, offering you some savings in places you wouldn’t have expected to be possible.

    Benefits

    You don’t have to be a big employer to offer group health insurance and other attractive benefits. While businesses with fewer than 50 full-time employees don’t have to offer health insurance, 95 percent of HR professionals cite health care benefits as a top benefit for employees, making an intriguing benefits package a great way to attract and retain top talent.

    Of course, offering these benefits can be expensive and time-consuming without expert help. An employee benefits administration team can help you identify exactly what benefits your employees want, keeping you from wading into a pool of healthcare compliance and helping you offer an attractive package that won’t break the bank.

    Find the Right HR Option for Your Small Business

    A small business has a lot to gain from quality HR management. A good HR partner can handle everything from complicated tax compliance concerns to helping you understand which employee documents you need to keep on file, but that doesn’t mean you need to hire a whole staff in the process. The key is to find an HR solution that fits what you need and can grow along with your business. 

    A Professional Employer Organization (PEO) allows small businesses to find an HR management solution that suits them. A PEO gives you access to HR professionals who can manage your payroll, benefits, and any other key HR functions, saving you time and ensuring that your business is covered in the process. Contact GMS today to talk to one of our experts about how we can help your business.

  • A lack of motivation can really cost your business. Entrepreneur reports that disengaged, disinterested employees have led to a loss of up to $550 billion per year for U.S. businesses. Fortunately, there are ways that you can help motivate your employees so that they’re ready to give it their all every day. Here are three steps that you can take to engage your employees.

    A motivated employee. 

    Build Relationships

    Just how important is it to build a relationship with your employees? When the Society for Human Resource Management (SHRM) conducted a survey on job satisfaction and engagement, a whopping 95 percent of respondents noted that “their relationship with their immediate supervisor plays an important role in how they feel about their job.”

    Whether you work directly with your employees or have a management staff that supervises everyone, it’s important to build a welcoming culture that places an emphasis on communication. Employees want to feel like their voices are heard, and the occasional email or chat message isn’t going to be enough to motivate them. Some ways to improve workplace communication include:

    • Establishing regular face-to-face communication with employees
    • Set regular meetings where employees can share input, such as weekly townhall meetings or monthly retrospectives
    • Offer an anonymous feedback system
    • Invest in online communication tools, such as Slack or HipChat

    Instituting some of these practices can give employees an avenue to share their thoughts and feelings. However, communication can be about more than just the workplace. Showing an interest in employees’ lives outside of the office can show your employees that they’re more than just a dollar sign, which can inspire them to become more invested in your business and motivated to do great work.

    Let Them Grow

    Future opportunities can play a big role in an employee’s motivation. SHRM’s job satisfaction and engagement survey found that roughly half of respondents noted that “career advancement opportunities within their organization were very important to their job satisfaction.” Fortunately, there are many ways that you can help your employees develop as a part of your business.

    Hiring internally can be a powerful tool that can allow your workers to make the next logical step in their career. Internal candidates already know your company intimately, and you have the advantage of knowing what their skills are before you offer them the job. For your employees, it gives them a big forward step without having to leave for a new company. In return, you get to retain key talent and help your workers grow. Also, internal hires can be up to 20 percent cheaper to hire than external candidates, which adds some cost savings to your team development efforts.

    If you don’t have any open positions, you can still help your employees develop. Offering employee training or allowing workers to attend educational conferences and trade shows can give them the ability to learn new skills that they can use at your business. It also shows that you care about their career development, which can serve as a great motivational tool.

    Give Your Employees Benefits That They Want

    Money is a big motivator, but it isn’t always the biggest factor for employees. According to the Harvard Business Review, “80 percent of employees would choose additional benefits over a pay raise.” Catering your benefits package to the wants and desires of your employees can act as a good source of motivation.

    Of course, employees may value certain benefits more than others depending on their needs at home. Across generations, employees’ preferences have changed, which can impact which types of benefits you may consider adding to help motivate your workers. Glassdoor offers some insight into what benefits each generation tends to value:

    • Baby Boomers value salary level, health insurance, and a retirement plan
    • Gen Xers value salary level, a 401K plan with matching benefits, job security, advancement within the company, and opportunities for work-life balance
    • Millennials value benefits choices, paid time off, ability to work remotely, control over their schedules, and a great deal of flexibility

    Each business is different, so you may find that giving your employees some work-from-home privileges to be beneficial while another business owner may see more value in employee training. It can also be beneficial to listen to what your employees have to say on the matter, whether it’s in person or during a regular meeting that you set up to improve communication. 

    By listening to their wants and needs and amending your benefits package in a way that makes sense for both your business and your employees, you can show your workers that your company is one that values them. In turn, this can inspire them to keep up the hard work and become more invested in your business.

    Get Some Help to Motivate Your Employees

    While implementing employee management initiatives to motivate employees can be very valuable, it can also be a lot of work to take on by yourself. Partnering with a Professional Employer Organization allows you to turn to HR experts to set up employee training programs, get the most bang for your buck on benefit plans, and manage other critical HR functions that can keep your workforce motivated. 

    Contact GMS today to talk to one of our experts about how we can help you with employee management.

  • Employees are at the heart of every business. From managers to entry-level staff, they are the key to long-term success, so ensuring you have a satisfied, dedicated, and productive team is critical. For small businesses, everyone on your team is integral to the workflow, and the failure of a single employee can have a more significant impact than larger organizations. Because of this, it may be tempting to fire employees who are underperforming and start fresh, but that’s not always the best solution. Taking the time to implement employee management strategies can be the answer to turning a situation around.

    Employee management is not just about reacting to underperformance or issues. It is a proactive approach that shapes the performance and potential of your workforce. It’s more than just ensuring that people are doing their jobs; it’s a range of procedures and strategies that enable you to measure, monitor, and engage with your team, all of which are crucial to your company’s success.

    How Does Employee Management Work?

    Employee management involves a strategic approach to overseeing your organization’s workforce to ensure effective and efficient functioning. It should play a role in every part of the employee lifecycle, starting with employee recruiting and training to guarantee that suitable candidates are properly vetted and onboarded. This involves adopting a few crucial tactics to allow your employees to realize their full potential.

    Support open communication

    Teams that can effectively communicate are 25% more productive than those that cannot. Communication significantly impacts team morale, retention, and recruitment. When communication breaks down, it can exacerbate other issues, leading to more significant problems over time.

    Of course, good communication is more than just talk. It’s essential to set up processes that give employees a voice and allow you better means to listen to their thoughts, suggestions, and complaints. These include:

    • Being visible: Ensure your employees see you around the workplace and know you’re available to talk with them if they need anything. If your team is virtual or hybrid, it’s worth establishing a set time when your team knows you’re free to chat. In addition, you might take the extra step of regularly checking in with your team without them initiating the conversation.
    • Being transparent: Share company information with your employees. Sharing overall objectives, status of projects, and other relevant information will help your team feel included.
    • Being open to criticism: Ensure a proper grievance policy is in place so employees know how and with whom to share any issues they face. This feedback mechanism can help identify potential problems that may negatively impact employees. In addition, addressing these issues whenever possible is crucial. Acting on employee feedback can increase trust in the workplace by 75%, which in turn helps with morale.

    Fostering a culture that values open communication and establishes clear policies and channels for staff communication can mitigate many long-term issues. Beyond these practices, there are more strategies you can implement to help boost engagement and productivity, including:

    Employee development

    Training and development are critical components of effective employee management. Orientation programs help new employees understand the company culture, policies, and roles, ensuring smooth integration into your team.

    Additionally, career development opportunities provide pathways for professional growth and advancement, motivating employees to perform better and remain committed to your organization. Investing in training and development can build a skilled, knowledgeable, and motivated workforce that drives long-term success.

    Build trust

    Individuals in low-trust companies are, on average, 74% more stressed than their peers in high-trust companies. High-stress environments can damage morale and productivity, increase absenteeism, and lead to employee disengagement. Once the downward spiral begins, this harm to your company culture can be challenging to recover from.

    One way to help build trust with your employees is by avoiding micromanagement. Give them enough space to work independently and step in when they need help or to check in on progress. By giving them a level of independence within reason, you can build confidence that can help motivate your employees.

    How Much Does Employee Management Matter?

    Without careful attention to employee management, your team can become disengaged and disconnected, leading to significant costs over time. Poor performers, on average, cost companies 30% of their annual salary; their mistakes, absenteeism, and negative attitudes can permeate your company culture, affecting overall employee well-being. This not only diminishes overall productivity, but neglecting these aspects can result in a cascading effect, where the burden of compensating for underperformers falls on the shoulders of your top talent. This can lead to burnout or discontent, eventually affecting your recruitment and retention.

    Knowing when to terminate the employment of a poor-performing staff member can be difficult but is often necessary. To protect your business from legal issues, you can place poor performers on professional improvement plans (PIPs). These plans should detail specific steps, set clear goals, and outline how you’ll evaluate progress. If a poor performer cannot address the areas you’ve identified, you can proceed with termination, confident that you’ve done everything possible as an employer to facilitate improvement.

    While there are instances where immediate termination is required, it’s still essential to have a clear plan in place. It’s important to have a fair and transparent process for all employees, ensuring that decisions are well-documented and justified.

    Overall, empowering employees to do their best and weeding out those who don’t show any potential for improvement can make your business more effective and save you from ongoing costs caused by poor performance.

    Focus On Employee Management

    Employee management is not just a one-person job. It involves many parts requiring plenty of time and effort, such as performance reviews, a grievance policy, and more. Fortunately, you don’t have to work on employee management alone. A professional employer organization (PEO), like GMS, can take on some of the administrative burden required to improve employee performance and other essential HR functions. Contact us today to talk to one of our experts about how we can help you manage your employees.

  • Employees and independent contractors all play important parts for small businesses across the country. While they can both work for the same company, there are key differences between the two.

    Why does proper employment status matter? There are important legal differences between employees and independent contractors that affect payment, protections, and other key HR matters. In addition, improper employee classification can lead to serious penalties from the IRS. Here’s a breakdown on what differentiates independent contractors and employees and how it can impact a small business.

    A collection of employees and independent contractors for a small business.

    How to Determine the Degree of Control Through Common Law Rules

    Control is a major factor in what separates an employee and an independent contractor. While employers maintain some control over employees, independent contractors maintain a level of independence. According to the IRS, there are three different categories of control that can help you determine if someone is an employee or an independent contractor.

    Behavioral Control

    The level of control an employer has over how projects are completed is a good identifier for proper classification. The IRS names four different factors that fall under behavioral control.

    • Type of instructions given
    • Degree of instruction
    • Evaluation systems
    • Training

    Types of Instructions Given

    In terms of instructions, these are directives that employers can give to employees about when, where, and how work should be done. This can include commands on what equipment an employee uses, the order which tasks are done, and where to purchase supplies. Employees are subject to these instructions, while independent contractors have freedom to complete tasks how they see fit if it meets the conditions in their contract or scope of work (SOW).

    Degree of Instruction

    The degree of instruction also plays a factor. In general, the more detailed an employer’s instructions are, the more likely it is that a worker will be considered an employee. However, this can vary depending on the nature of the work and level of expertise for both the professionals and contractors. According to the IRS, “the key consideration is whether the business has retained the right to control the details of a worker’s performance or instead has given up that right.”

    Evaluations

    If done, evaluations also can share insight into whether an employer’s degree of control, mainly in terms of how in depth an evaluation is. Evaluations that only consider end results don’t shed much light on the matter. However, an evaluation that studies specific details of how someone completes a task can be evidence that the worker in question is an employee.

    Training

    If an employer requires training, it’s a strong indication that the person being trained is an employee. This is because training is evidence of control, as it means that the person will learn how an employer wants the job in question to be completed while independent contractors typically have some form of outside training.

    Financial Control

    Another factor of control involves the economic aspects of a job. The IRS designates five different financial control factors that help determine if someone is an employee or and independent contractor.

    • Significant investment
    • Unreimbursed expenses
    • Opportunity for profit or loss
    • Services available to the market
    • Method of payment

    Significant investment

    While included as a control factor, significant investment can be hard to determine. Both independent contractors and employees can spend notable sums to acquire equipment necessary to complete a job. Instead, significant investment plays a bigger role when combined with some of the following factors.

    Unreimbursed expenses

    If an employer reimburses someone for work expenses, that’s generally a sign that the person in question should be considered an employee. It’s not uncommon for independent contractors to incur similar expenses, but they will generally won’t be repaid. However, there are situations where employees aren’t repaid for expenses, so a lack of reimbursement isn’t necessarily a determining factor.

    Opportunity for profit or loss

    A sign that someone is an independent contractor has more opportunity for both profit and loss. If a contractor is already set up with the necessary equipment, he or she can make a greater profit. However, that contractor may also have a job where the investment outweighs the income, resulting in a loss. Employees have a much more stable income and typically don’t need to deal with the ebbs and flows of investment costs.

    Services available to the market

    An employee won’t have to market the availability of their services to you; they’ll simply do their job. However, independent contractors typically make their services available on the market and float from job to job. Note that an employer can have an employee who freelances outside of work hours. In this situation, that person is still considered an employee of the company in question, but any business this employee freelances for on the side, would classify this person as an independent contractor.

    Method of payment

    Employees have a regular payment schedule, whether it’s a base salary that’s paid out in set increments of time or an hourly arrangement. Independent contractors are usually commissioned for a set amount of work. This can be a flat fee that’s delivered at the completion of a project or an hourly agreement. For example, a freelance editor or a lawyer can set a specific hourly rate and you could pay this person for 10 hours of work.

    Type of Relationship

    An employer’s relationship with a worker is a key part of proper classification. According to the IRS, there are four different identifiers employers should consider:

    • Written contracts
    • Employee benefits
    • Permanency of the relationship
    • Services provided as key activity of the business

    Written contracts

    The existence of a contract is not a determining factor for either employees or independent contractors, even if it states that someone is either classification. Instead, the IRS reviews the nature of the employer and the person in question’s relationship to measure their actions instead of written language.

    Employee benefits

    In general, if a worker receives benefits from an employer, they are considered an employee. Independent contractors are considered self-employed and are not privy to be a part of an employer’s benefits package. However, the lack of benefits doesn’t mean that someone must be an independent contractor, as a business may not necessarily offer any benefits package to their employees.

    Permanency of the relationship

    Employers don’t hire employees with the expectation that these employees won’t work for them after a short period of time. While independent contractors are generally temporary solutions for businesses, the IRS views any work relationships are meant to be indefinite as that between an employee and employer.

    Services provided as key activity of the business

    The services that independent subcontractors provide are typically important, but not critical, for a business’ success. However, if an employer hires someone to provide a service that’s the IRS considers a “key activity of the business,” it may view the relationship as that between an employee and an employer. In this definition, a key activity is part of the main services a business provides, such as if an electrical company hired an electrician for regular side work. In this instance, the IRS would view this as a part-time employee instead of as an independent contractor.

    How Employee Classification Impacts HR Management

    Once someone is determined to be an employee or and independent contractor, an employer can use this information to make sure they stay in compliance with any government regulations. The classification status of a worker impacts several HR functions ranging from financial considerations to employee protections.

    Payroll Tax Management

    The classification of a worker has a direct impact on how their taxes are handled. If someone is considered an employee, an employer is responsible for withholding and depositing their payroll taxes. Employers are required to have employees provide their social security number and complete Form I-9 for employment eligibility and Form W-4 for employee’s withholding. The employer will then report what an employee earned during the year on Form W-2 and send copies to both the employee and the IRS by Jan. 31.

    Independent contractors need to complete Form W-9. This will allow employers to confirm the potential contractor’s name and receive his or her Taxpayer Identification Number. After a contractor works for an employer, that employer provides both the contractor and the IRS with a completed Form 1099-MISC by Jan. 31. While employers are not responsible for payroll taxes with contractors, they must report the payments made to the contractor for their own tax purposes. However, if a contractor was paid less than $600 during the year, no Form 1099-MISC is required.

    How and When They’re Paid

    The payment process for employees is fairly straightforward; employees are paid either hourly rates or with a base salary. Their wages are then paid out on set dates that range anywhere from one week to one month apart.

    Payment for independent contractors largely depends on the stipulations provided in a contract or SOW. Both parties can agree to varying payment structures and fees, whether it’s an allotment of hours for work or a flat fee. In terms of when contractors get paid, that’s another matter that should be stated in writing. Some contractors will split fees up, such as requiring half the fee up front and half upon completion of the project. Others will set payment due dates at certain milestones, such as within 60 days of completion.

    Employment Laws and Protections

    If a worker is considered an employee, they are protected by the various national and state employment laws that exist. However, that arrangement doesn’t extend to independent contractors. Since they’re not an official employee of a business, independent contractors are not eligible for many of the same benefits and regulations that cover regular employees. These include unemployment compensation, worker’s compensation, workplace safety laws, and other similar protections.

    Protect Your Company Through Expert HR Management

    As an Employer, you have the final call on who to hire, whether someone will be an employee or an independent contractor. You’re also on the hook to make sure that everything your business does is up to legal standards. Between payroll management, benefits administration, and other HR functions, that’s a lot of work and responsibility, with little time left for core business functions.

    A Professional Employer Organization allows small business owners to share the burden and strengthen their business at the same time. PEOs give small business access to a team of HR experts that can efficiently and effectively manage key HR functions, including proper employee classification. Contact GMS today to talk to one of our experts about how a PEO can help you save time and protect your business.

  • A good background check is a protective measure that allows employers to make a fully-informed decision on a job candidate. Whether your business is hiring for an entry-level position or for a position of trust, these checks will help you identify potential issues up front as opposed to leaving unpleasant surprises in the future.

    There are several components to a good background check. Each of these parts provide different bits of information to help employers gain a better understanding of who an applicant is and if there are any issues. However, you also need to make sure that you’re following legal guidelines while you investigate candidates’ backgrounds as well. Keep reading for a breakdown on background checks for small businesses.

    How To Maintain Background Check Compliance

    In general, background checks are regulated by the Fair Credit Reporting Act (FCRA) and the Equal Employment Opportunity Commission (EEOC). One FCRA requirement is that you notify job candidates that you will perform a background check and have them sign off on this before you can turn to a Consumer Reporting Agency (CRA) to begin any checks or searches.

    The FCRA also requires employers to take certain steps if they decide not to hire, promote, or retain a job candidate, also known as adverse actions, due to information uncovered in a background report. First, an employer must notify the subject of the background check. This can be done orally, in writing, or electronically. Second, an employer must provide this person with an adverse action notice. According to the Federal Trade Commission, this notice includes:

    • The name, address, and phone number of the consumer reporting company that supplied the report
    • A statement that the company that supplied the report did not make the decision to take the unfavorable action and can’t give specific reasons for it
    • A notice of the person’s right to dispute the accuracy or completeness of any information the consumer reporting company furnished, and to get an additional free report from the company if the person asks for it within 60 days

    Another important detail to note is that some history may be too old to be picked up during a background check. The FCRA notes that “in most cases, a consumer reporting agency may not report negative information that is more than seven years old.”

    A small business background check for a new job applicant.

    What You Should Include In Background Checks

    A comprehensive background check should account for a variety of red flags. Small businesses should consider including the following types of checks whenever they investigate a potential employee’s background.

    Social security validation

    Tracing a social security number is a good place to start a background check. This process allows employers to complete a couple of key tasks:

    • Verify that a candidate’s social security number is legitimate
    • Uncover any additional aliases or name variations used by the candidate in the past, along with dates of birth and addresses associated with the number

    These details can help uncover any criminal records or other unsavory information that wouldn’t normally fall under the name given by the candidate. Traces can be performed through the Social Security Number Verification Service.

    Criminal records check

    If an employee has a criminal history, you’ll want to know. There are three variations of criminal records checks that will provide insight on whether an applicant has been in trouble with the law.

    • National Criminal Record Database (NCRD) search – The NCRD houses millions of searchable criminal records and sex offender registries, which can quickly point out any red flags. While an NCRD background check is a good starting point, these screenings may not include every jurisdiction or not offer enough detail for your needs.
    • Statewide criminal records check – These checks narrow down your search to a specific state, which can offer more detailed information about any potential felonies or misdemeanors.
    • County criminal records check – While county criminal background checks cover the smallest geographic area, they can offer the greatest amount of detail, including the places that an applicant with a criminal record has lived or worked.

    Employment history

    According to CNBC, 78% of candidates either misrepresented themselves on their application or would consider lying on their resume. An employment history check can help you verify job titles, dates of employment, the reason someone left a job, and rehire eligibility. Employer verification can be done through a CRA and calling a candidate’s references.

    Motor vehicle report

    This report allows employers to verify a candidate’s driver’s license verification and review driving records. According to the DMV, this information can include:

    • Past and current driver’s license statuses including suspensions, revocations, and cancellations
    • Driver’s license class
    • Special driver’s license endorsements
    • Any restrictions on your license
    • Traffic violations, such as:
      • Traffic citations
      • Vehicular crimes
      • Accident reports
      • Driving record points
      • DUI convictions

    This information is crucial for employers hiring a driver, although it can be insightful for any other job candidates as well. Motor vehicle screening services can be completed by a consumer reporting agency or through your state’s driver’s license agency, which can be found via the DMV.

    U.S. terror watch list check

    In addition to criminal records, background screenings can also include a review of the U.S. terror watch list. Third-party checks can compare candidates to various government watch lists, which can be important for any jobs where security is involved.

    Drug testing

    While drug testing is not technically a part of a background check, it’s commonly done in conjunction with pre-employment screening. In addition, past drug-related offenses can also surface during criminal record checks.

    There isn’t a single, comprehensive law that covers drug testing, so you’ll need to review your state’s specific drug testing regulations for specifics on what is and isn’t restricted. The American Civil Liberties Union keeps a list of each state’s regulations online.

    How To Run A Background Check

    Running a background check is a multi-part process that requires some initial planning and consistent application. The following five steps will help your company lay the groundwork for pre-employment background checks.

    1. Have a background check policy in place

    A written background check policy makes it easier for companies to lay out guidelines for a fair, consistent process. This policy should include the following details:

    • Which background checks your company will conduct
    • How and when the company will conduct these screenings
    • How the results of these check will be used in employment decisions
    • The responsibilities of the hiring managers and HR team when it comes to the screening process

    2. Choose a background check partner

    There are several professional background check companies that provide screening services, but not all of them are right for your business. Narrow your search to FCRA-compliant partners who can scale with your business and offer a range of screenings that will help you make the most informed hiring decision.

    3. Notify candidates of the background check

    As mentioned above, it’s essential to notify candidates of any background checks. Employers must also give candidates the aforementioned adverse action notice and have them sign a release form for any screenings before they begin.

    4. Allow for explanation

    If a candidate’s background check uncovers some information that would impact your offer of employment, give them a chance to clear any mistakes or explain the situation. Employers are required to allow candidates to review their background check results and file a dispute with the screening service if they choose to go that route.

    In addition, there are candidates who simply want to be honest and open about their past. For example, an applicant with a past misdemeanor could have learned from their mistake and be a great fit. That decision comes down to the employer, but it’s important to give employees the ability to exercise their FCRA rights before you make a call either way.

    5. Make a decision

    Once you have all the necessary information, it’s time to make the best call for your company. If the candidate is the right fit, then you’re all set to make an employment offer and prepare for the onboarding process.

    How Long Does A Background Check Take?

    On average, a typical background check is completed in three to seven days. There are times when checks are delayed due to incomplete or inaccurate check request forms or release forms. However, the majority of checks should be complete within a week. One exception is that any FBI checks can take around 30 days, but most jobs won’t require that type of timeframe.

    Can A Background Check Be Done Before A Job Offer?

    While background checks are traditionally done after an employer selects a final candidate, there is no federal law that prevents employers from running checks before an employment offer is made. There are certain state laws that dictate when you can run background checks during the hiring process, along with which types of checks are allowed. Make sure to check your local laws before if you want to test early background checks.

    Protect Your Business with Proper Background Checks

    While we highlighted several areas that should be included in a background check, there are several other areas that may be important depending on the nature of a business. Financial institutions may want to run a credit report. Other companies may want to verify an applicant’s educational degrees and school history. The answers to these inquiries are crucial, as a bad hire can lower morale, hurt company productivity, and cost as much as three times the salary of the person being replaced.

    Regardless of how much an employer decides to include, a thorough background check is a complicated process that can pull business owners away from other important tasks. As a Professional Employer Organization, GMS has the human resources experts to manage the background check process and many other critical HR functions. Contact GMS today to talk to one of our experts about human resource outsourcing and how it can save you time and money.

  • You don’t need to be in school to learn a few tricks. Employees play a huge part in the success of your business. Retaining and developing a good group of employees can set your business up for bigger things in the future, especially when you consider that replacing an employee can cost up to 50 percent of that employee’s salary.

    Employee training and performance management are key HR functions that can help you shape your employees into an even more successful group. Here are some back-to-school tips to help you make sure that your business is on the right path when it comes to training and performance management.

    A small business owner going through a performance management review with a happy employee.

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    Employee Training Tips

    Plan Ahead

    Whether you just hired a new employee or are preparing to conduct ongoing employee training, it’s good to make a list of everything that employees should learn. This can serve as a checklist to guide you and your employees through the training process. 

    Start your list off with simple items or information. For example, a training list for a new employee could kick off with introductory information like where to park, a tour of the workplace, and an introduction to their workspace. As your employees progress through training, the list items can gradually cover more complex information and education. You can also modify this list as you progress through training to account for any knowledge or skill gaps you discover.

    Have Employees Get Involved

    More than one person can assist with training. In fact, it can be good to have various members of your business train employees on other facets of the business if they’re an expert in a certain area. Not only does this help spread the responsibility of training employees, it can also empower your employees to take a more active role in improving your company.

    Another way to have existing employees train newer or younger people at your company is to start a mentoring program. Experienced mentors can help teach other employees things that they normally wouldn’t pick up in manuals, training videos, or other traditional methods. Also, these relationships can help inspire employees to stay with a company, especially for millennials. According to Forbes, “millennials planning to stay with their employer for more than five years are twice as likely to have a mentor (68 percent) than not (32 percent).”

    Train Employees Regularly

    A single day isn’t nearly enough to truly prepare an employee for a job. Training is an ongoing process that shouldn’t be contained to the beginning of an employee’s tenure at a company. 

    Regular training updates can help make sure that employees are on the top of their games and keep them interested and motivated. Continuous professional development can include regular training sessions, all-staff meetings, or outside events like conferences that can help employees maintain skills and knowledge long after their initial onboarding process.

    Performance Management

    Set Realistic Goals

    It’s hard to evaluate an employee’s performance if you don’t set goals for them first. However, an unattainable goal won’t do anything to help motivate employees. Sure, tripling sales numbers for a quarter would be great, but it’s not a good guideline for growth if it’s something an employee has no chance of completing. Instead, base employee goals on the SMART framework:

    • Specific – Clear and relevant to an employee’s duties
    • Measurable – Able to be tracked to determine success
    • Achievable – Reasonable, but still difficult to push employee toward growth
    • Relevant – Worthwhile for both the company and employee
    • Time-based – Has a target date for completion and review

    It’s also important to include your employees when it’s time to set goals. If you dictate goals to employees, they won’t be as likely to take them to heart. Giving them some say in what they want to achieve allows employees to own their goals and give them a milestone to work toward in the future.

    Communicate

    Setting and reviewing goals shouldn’t be the only time you check in on employees about their performance. Annual reviews provide a good opportunity to discuss overall growth or review goals, but it’s also good to regularly talk with employees about their performance.

    A great way to motivate employees is to build relationships with them. Establishing regular face-to-face communication and making yourself available can help employees open up about their thoughts, suggestions, and complaints.

    In turn, random check-ins with an employee about how he or she is performing should feel less like a pop quiz and more like a natural work conversation. The information you gather from these talks can be extremely helpful toward making meaningful changes that can help both you and your employees make strides to change your company for the better.

    Give Them Rewards They Want

    A big part of performance management is making sure that talented employees feel properly rewarded for their hard work. Rewarding employees can benefit business in two impactful ways. First, it can help you save money, as disengaged, disinterested employees led to a loss of up to $550 billion per year for U.S. businesses, according to Entrepreneur. Second, talented employees who don’t feel adequately rewarded are more likely to try and find a job somewhere that will recognize their efforts.

    The types of rewards you should use depend on your employees. Financial incentives are an obvious go-to option. However, some of the more impactful rewards are those personalized to fit an individual.

    For example, if an employee has children and has to manage dropping kids off at school or daycare, offering them the ability to work from home or shift their hours to be more flexible shows you care while giving them something they want. Other employees may desire chances to advance in the workplace, so rewarding them with the ability to attend conferences or other career development events helps them reach their personal goals. 

    These rewards also don’t have to be grand gestures. Small, affordable rewards like open recognition in the office or gift cards are small rewards that can help employees feel validated by the work they did.

    Invest in Training and Performance Management

    The ongoing development of your employees is important, but it’s also yet another responsibility that’s on your plate. Fortunately, you can still invest in the growth of your employees and business without the time commitment. 

    GMS can help take on the administrative burden of training, performance management, and other HR functions so you can spend your time building relationships with your team growing your business in other ways. Contact GMS today to talk to one of our experts about how we can help you strengthen your business today.

  • It won’t be long before millennials dominate the workforce. The Society for Human Resource Management (SHRM) reports that about a third of the current workforce is comprised of millennials. That same report indicates that millennials “are projected to make up 75 percent of all U.S. employees” by 2025. That means that you’ll probably want to take measures to attract top millennial talent when that generation dominates the pool of available job candidates.

    Of course, each generation has different priorities when it comes to finding an employer. For example, cash doesn’t rule everything around millennials. Instead, they tend to value a good company culture and special benefits more than a high dollar number. In fact, Forbes reports that “millennials would be willing to give up $7,600 in salary every year to work at a job that provided a better environment for them.”

    Millennials have different expectations than past generations. Here’s what you can do to make your business more appealing when recruiting millennials.

    Young professional happily employed by a business that recruited millennials.

    Reconsider Your Recruiting Style

    Technology has changed the way the people find jobs. The internet gives people so much access to find information about potential job openings and the companies that list them. This means that what potential applicants find online about you can be the first impression of your company.

    Fortunately, you have some control over your online presence. You can use social media platforms to showcase what your company is all about, including your values and culture. A mobile-friendly website is another way to showcase your business in a good light, especially since mobile job search is prevalent across all generations, not just millennials.

    Of course, how you communicate with millennials is a key part of recruiting them. For many millennials, it’s important to be authentic and make them feel like they would be working with you instead of for you. It’s important to make your company sound like a place where they would want to work. However, that doesn’t mean that you should hide certain aspects of your business. Some people are just not a good culture fit regardless of generation. Be honest about your company, your expectations, and the potential applicant’s role and both parties should be able to tell if a pairing just won’t work out.

    Stress Development and Career Path

    Contrary to the stereotype that millennials are job hoppers, studies show that the majority of the generation highly value a workplace that gives them a chance for a bigger and brighter future. A Gallup poll found that “93 percent of millennials left their company the last time they changed roles,” but that may have more to do with a lack of opportunities for growth within a company than simple job hopping.

    According to that same Gallup poll, 87 percent of millennials consider “professional or career growth and development opportunities” as a key value for jobs, while only 69 percent of non-millennials said the same. If a millennial finds that he or she is in a position with no viable chance for growth or promotion, that employee is more likely to find that opportunity elsewhere. By investing in employee training programs, mentorship programs, and other development tools, you can show job candidates that you care about their growth. Also, promoting a qualified, motivated employee can lead to lower hiring costs, which makes the situation a win for both parties.

    Consider Work-Life Balance and Other Key Benefits

    The ability to work remotely or have flexible hours is a major consideration for many millennials. At this point, a significant portion of millennials are getting married, having kids, and making life choices that will have major impacts on their future. Other generations have gone through the same process, but Inc. reports that millennials are “almost twice as likely to have a spouse or partner who works at least full time than boomers (78 percent versus 47 percent).” This means that instituting workplace programs or policies that allow for flexibility or telecommuting can be a major selling point for your business.

    Other benefits that are attractive to millennials aren’t all that much different than those for other generations. According to a Capital Group survey, millennials, generation Xers and boomers all share the same top-three benefits: 

    • Health insurance
    • Vacation time
    • Matching 401(k) plan

    Another way that your business can make itself more attractive to millennials is through benefits related to student loans and schooling. Forbes reports that about 80 percent of millennial employees “would like to work for a company that offers student loan repayment assistance,” although only four percent of companies did as of 2016. Because of this, you can make your business stand out in a big way by offering such a sought-after benefit. However, millennials aren’t only considering student loan benefits for themselves. The aforementioned Capital Group survey also found that 34 percent of millennials think that a 529 tax-advantage college savings plan is another important benefit to offer so that their children don’t have to go through crippling student debt in the future.

    Invest in Employee Recruitment

    It’s important for a growing business to find the right employees, but recruiting isn’t easy. A SHRM study found that more than two-thirds of organizations have a difficult time recruiting full-time staff for job openings. This can be caused by not knowing where to look, not having enough applicants, and not having enough time to spend on recruitment efforts. Between creating job ads, background checks, and the interview process, that’s a lot of time and effort that you could spend building your business in other ways.

    As a Professional Employer Organization, GMS provides employee recruitment services that take the burden of recruitment off your shoulders and leaves the process of finding qualified applicants to HR experts. GMS also gives you the opportunity to outsource your employee benefits administration, which can help you build an attractive benefits package without spending the time it takes to manage everything yourself.

    Do you want to save time and attract top talent? Contact GMS today to talk to one of our experts about how GMS can help your business today.

  • Thanks to technological advancements in the modern workplace, remote work, or work-from-home (WFH) jobs have become increasingly more common. According to the Global Workplace Analytics’ analysis of 2018 American Community Service data, work-from-home jobs have grown 173 percent since 2005—11 percent faster than the rest of the workforce. Remote work has likely grown even more so as a result of the 2020 outbreak of COVID-19, which prompted many employers to shift to a remote work model to limit the spread of the coronavirus. 

    Telecommuting can be an attractive work option for both employees and employers. For employees,  flexible work hours and more time to spend with family can make remote work an ideal situation. For employers, hiring remote workers can save money and increase productivity if you manage your remote team effectively. 

    As more businesses implement work-from-home policies, employers will need to consider how the trend will impact HR initiatives. Here are some best practices for managing HR for remote employees.

    A small business employee working from home.

    Remote Employee Performance Management

    How do you manage an employee that you don’t see face-to-face every day? With technology and some effort, it may not be as hard as you think it is. In fact, some evidence shows that working remotely can improve performance. 

    According to the Society for Human Resource Management (SHRM), “77 percent [of employees] reported greater productivity while working offsite.” In addition, the article cites a U.S. News & World Report story that states “Telecommuters log five to seven more hours per week than non-telecommuters” With good management, remote employees can be a boon for business.

    Of course, this can all depend on making sure that proper employee performance management practices are in place to monitor performance and make sure that employees stay engaged. In terms of monitoring performance, timesheets or online time tracking can help you keep track of employee productivity.

    It’s also good to set up phone or video check-ins to see how they’re doing (but not so often that it feels like they’re being micromanaged). In addition, regular facetime can help remote employees feel like they’re a part of the company.

    While telecommuters can have flexible schedules, it’s a good idea to make sure that part of their schedules overlap with office workers and that they work together via Skype, Zoom, Slack, or other communication programs. 

     

    Payroll for Remote Employees

    Managing payroll can be a complex and time-consuming task for any business owner. However, remote employees might be subject to different payroll regulations and laws depending on where they’re located. Each state, county, and even city can have its own stipulations on how much people are paid and how it happens. This can affect multiple aspects of payroll compliance, including:

    Employers must also find a way to display federal and state labor law posters for remote employees. You can electronically share the posters via email or in an employee online workplace portal, or you can mail copies for the employee to keep.

    In addition, employers need to be aware of any state requirements for the reimbursement of business expenses that remote employees may incur, such as Internet access from a home office. Where the expense may be used for business and personal use, such as having a stable WiFi connection, consider a system to help employees monitor and record how much of the cost is related to business activities and reimbursing employees at least that amount.

    Nobody wants to be hit with costly non-compliance penalties, especially for infractions that could be easily avoided. If your employee works in a different city, make sure that you or your payroll provider checks each state’s payroll regulations to make sure that your business is compliant.

     

    Hiring Remote Employees

    While some HR functions may be impacted more by remote work locations, the hiring process can be very similar to what it would be for anyone who works on location. Aspects of the process like creating face-to-face time for an interview, assessing skills, and determining if someone is a good culture fit all apply to remote employees as well.

    While it’s not always possible to have remote applicants sit down for an in-person interview, technology gives you a way to conduct a “face-to-face” interview. Video interviews through Skype, Zoom, and other tools allow you to still get a more personal feel for how an applicant would fit through nonverbal communication and body language.

     

    Terminating Remote Employees

    As for termination, you need to take the same precautions that you would for someone located in your office. Create a checklist of matters to address when an employee is terminated, such as final pay requirements, removing IT and security access, and retrieving any company property in their possession (if the employee has anything). If the employee is out of state, make sure to review the laws in that state. For example, final payment laws can differ, impacting what’s included in a final paycheck and deadlines for when it must be provided.

    Another item to consider is how you inform your soon-to-be former employee about the termination. Even if he or she telecommutes, it’s good to let an employee hear the news face-to-face, whether it’s for an in-office meeting or through a video conferencing tool like Skype. The latter may not be as personal, but it’s much better to let someone know about a dismissal during a video conference than via email.

     

    Workplace Safety Concerns for Work-from-Home Employees

    Even though remote employees may not work in your office, they still may be subject to health and safety regulations. The level of responsibility an employer has regarding workplace safety for remote employees is hazy. 

    According to SHRM, OSHA is on record as saying that it “will not conduct at-home workplace inspections and that it will generally not hold employers liable for at-home safety issues.” However, the article also cites attorney Alec Beck stating that “OSHA continues to maintain that employers are responsible for safe working conditions regardless of location.” 

    As a result, the best plan of action is to create safety reporting systems and policies that can help protect you and your employees. SHRM suggests the following risk management strategies to help reduce the chance of claims against your business:

    • Create an at-home work policy and disseminate it to all employees.
    • Require that remote employees create and provide evidence of a dedicated work area at home that has been set up according to your specifications.
    • Periodically follow up to ensure compliance.
    • Require employees to have homeowner’s or renter’s insurance that covers any potential equipment damage or liability.
    • Review the employer’s insurance to make sure that all contingencies are covered—including business travel incidents.
    • Make it clear that computer security issues are monitored and that employees wishing to use their own computers must have safety protocols installed.

     

    Manage HR for Remote Employees with a PEO

    It takes a lot of hard work to run a business. Telecommuting adds yet another layer of complexity to HR management, a task that already requires plenty of time and know-how. This amount of work and expertise is a big reason why many businesses turn to a professional employer organization (PEO) to help manage HR.

    At GMS, our experts can help you save time and strengthen your business through payroll management,  benefits administration, and other key functions. Contact GMS today to talk to one of our experts about how we can help your company manage remote employees.