Since most new businesses begin with individuals or with friends, the concern for personnel policies is relatively minor at this time. As an entrepreneur, your challenge will be to make the transition from an employee to an employer. A good deal of outside reading or attending seminars will assist you.
As your business begins or grows, you will find the need to hire the first employee. The following steps will apply:
Job descriptions. Every job should have a very specific description of the functions and responsibilities. It should also include education, experience requirements and job performance measurements.
Job applications. Office supply stores sell legally acceptable and convenient pads of application forms.
Training. Outline specifically what will be done to prepare a new employee to assume their new responsibilities.
Performance review. Establish a time and procedure for all employees to have a rank review of their activities. In addition to deserving praise, provide written deficiencies and corrective action required. This formal procedure is very important if an employee is terminated and to avoid a wrongful discharge lawsuit.
Hours. Have written hours for starting, breaks, lunch and quitting time. Provide written notice of changes.
Attendance. Have a written list of work days and holidays. Provide written notice of changes.
Compensation. Establish written base pay, overtime policy, paid time off and formulas for raises or promotions.
Vacation. Provide written policy of work experience before eligibility, rate at which days are earned, limits on whenever earned days can or cannot be used or unpaid days taken at some time.
Personal. Provide written policy as in vacation. Reasons for paid or unpaid days: illness, family, medical appointment, etc.
Termination. This deserves review with a lawyer or personnel consultant because recently many employees have filed discrimination or wrongful discharge lawsuits. Learn the practices prohibited by the Civil Rights Act of 1964 in terms of race, age, religion, sex or origin.
When the previous information is written, it should be presented to that first employee and reviewed with them. They should sign that they read and understood it and retained a copy.
This brief outline is not complete, but it is intended only to suggest the general areas you should consider as you approach the first employee. Use many other means to prepare for a full personnel policy and employees handbook.
Independent Contractor
Depending on the nature of your business, you may hire people as independent contractors not as employees. If they meet the IRS criteria, you can save on payroll taxes, workman's compensation insurance, unemployment insurance, and social security. The contractor receives a 1099 at year end instead of a W-2 and is responsible for his own taxes and social security. File an SS-8 with the IRS to determine whether the person is an employee or contractor.
General Michigan Compensation Requirements
Printed information on a variety of subjects can be obtained from the Michigan Department of Labor at 517-322-1287.
