5 Most Common HR Mistakes Made by Start Ups

Copyright © August 2012 – The HR Matrix, llc – All Rights Reserved

by Brenda Gilchrist, CoFounder/Partner, The HR Matrix, llc

1) Giving away equity. The lure of giving away equity in exchange for services may not be the best solution for your start up –be greedy with your equity. One example is a local start up that had an outsourced CFO (a friend of the founder). The CFO offered to help prepare financial statements and provide future finance/business consulting in exchange for 10% equity in the business. Hmmmm….sounds tempting, yet, in this case, it was better in the long run to pay a finance expert a consulting fee in exchange for the services needed at the time. If the founder had given away the 10% equity, he would have been obligated to pay the CFO 10% of the future sale value of the company or buy that stock back at a much higher price. Based on the company’s projections, the 10% equity could have been valued in multi-millions of dollars, which is significantly more than the value the founder would have received in actual services. In addition, if the founder ever became dissatisfied with the CFO’s services, he would surely regret having granted the 10% equity. Be greedy and smart with your equity!

CEO and Investor, Rick Shepherd, says, “There are circumstances when giving away equity in a start-up makes strategic sense. The founders need to be cognizant, however, that they are using their equity as a currency when it is typically at its lowest value. If possible, the equity should only be given to partners that are creating long-term value and, if at all possible, not for low value-added functions or shorter-term projects and tasks.”

2) Bringing on a Partner. Before bringing on partners, think about the fact that you will be wedded to them (yes, it is like a marriage) until the partnership ends. Many partnerships go sour, resulting in one partner having to pay the other one off. I’m sure there are horror stories that you have heard about. It is often better to contract the person for their skills (as above), or hire the person through a temporary agency or as an employee versus bringing them on as partner. If there is a strategic and tactical reason to partner with someone, take your time defining what it would mean to be partners, before you become partners. Talk through the D’s first; what happens if a partner dies, ditches, divorces, or becomes disabled. How will the partners be paid? Will you be an “eat what you kill” partnership, meaning you don’t share revenue for business you bring into the company or products you sell? What types of expenses will you share? How much ownership does each partner have? 50/50? Will you each contribute the same amount to the expenses? It might be better to subcontract or employ the person before you decide to be partners.

Mr. Shepherd states, “With all the excitement of forming a new partnership, frequently some of the tough questions are not addressed. What happens when one partner wants to leave or is asked to leave the partnership? This process needs to be detailed in the partnership agreement at the beginning.”

3) Hiring your friends. Before hiring a friend, make sure your friend is actually the ideal candidate to bring into your start up. Before hiring anyone, think about the short-term and long-term talent and skills you will need to hit your goals. If you start to hire, be extremely diligent – employees can make or break your reputation, your brand and/or delay your start up from being successful. Conduct interviews to ensure your friends or anyone else you are thinking about hiring, actually have the skills you need and, even more importantly, they fit with your ideal culture and values.

“When hiring friends, the tendency is to hire fast and fire slow. This may result in the best candidate not being hired, potentially a difficult termination and the end of a friendship. In most cases, it is best to avoid hiring friends!” says Mr. Shepherd.

4) Weak hiring practices. Here are the most common hiring mistakes:
• Hiring out of desperation (the “warm body” syndrome) with little or no screening
• Not using a behavioral style interview
• Not taking the time to scrutinize the employment application
• Not checking references or, when needed, failing to run a background check

Past performance is the best predictor of future performance. [Click here to read “5 Keys to Successful Talent Acquisition"].

5) Trying to do HR yourself. Well-intentioned start-ups can get themselves into trouble if they don’t know what they’re doing. Don’t assume the state and federal government will let you plead innocence if you tell them you just didn’t know the employment laws that applied to your start up. Prior to hiring employees or bringing on independent contractors (1099’s), get the facts and do it right from the beginning.

You will need to understand and comply with the Fair Labor Standards Act (FLSA) rules (e.g., overtime) related to Exempt vs. Non-Exempt classification of employees. In many cases, as a result of failing to comply with FLSA rules, start-ups often are out of compliance with Meal and Rest period rules, which can lead to costly back pay and penalties. [For more information, read Exempt vs. Non-Exempt article]

Be careful when bringing on independent contractors (1099’s). The government wants its payroll taxes! So, unless and until your 1099’s meet the complicated IRS 20 factors test, they are technically considered employees.

States Mr. Shepherd, “Ignorance is not an excuse. Employment rules are complex and always changing. Work with a qualified HR consultant to ensure your compliance. A good HR consultant can address your needs and is typically more cost effective than paying your outside counsel.”

About the author: Brenda Gilchrist is the Principal/CoFounder of the HR Matrix, llc. Brenda has started three companies, one of which she recently sold. Brenda has been awarded the North Bay Business Journal’s Women in Business “Entrepreneur” award and also their Forty under 40 award. She is co-chair of the Mentor program at the Sonoma Mountain Business Cluster a North Bay iHub incubator located in Rohnert Park, CA. The HR Matrix, provides start-ups with expert advice and consultation to hire right, to find talent that fits with their culture and help companies to understand and comply with complicated state and federal employment laws.


Talent Shortage or Shortage of Creative Talent Strategies?

Talent Shortage or Shortage of Creative Talent Strategies?
By Brenda Gilchrist

A lot of people are blaming the lack of talent on the “shortage of critical skills in the U.S.” I think most of the perceived shortage is based on a shortage of creative talent strategies. In an era of high unemployment, many, employers expect immediate plug-and-play candidates, new employees who come prepared with the skills and training to be productive immediately upon entering the workplace. Some employers blame the school systems for not educating students with the critical skills employers need.

The employers that blame the lack of resources on the “talent shortage” might look in the mirror and ask, “What have I done lately to create a strategic talent pool for my organization?

Employers need to utilize creative talent strategies to grow their own talent pools. It is up to employers to build a creative talent pipeline.

Ways to create strategic talent strategies:

- Redesign jobs and job descriptions; be open to bringing in talent from different industries and be willing to train the candidates on the skills they don’t have.

- Internal Training programs; Develop in-house training programs to train candidates to your specifications. Outcome: loyal, committed, trained employees.

- Internships; develop partnerships with schools and programs. Collaborate with schools to develop curriculum and experiences for students that will inspire and teach students about the jobs you want to fill in the future. Invite students into your company and/or send your employees into the classroom to teach or speak.

- Recruit Creatively; if you are only running craigslist ads to find talent, then you are only reaching less than 1% of your overall talent market. Get creative with your recruitment marketing strategies.

- Build a brand; become an employer of choice. Market internally and externally the benefits of working at your company. Create a branding campaign to market your company. Building a brand needs to start internally to ensure you are creating a work environment that your employees will rave about – you can’t be an employer of choice if you don’t have an engaged workforce.

- Support the Community; people want to work for companies that support a good cause and give back to the community. Plus it is good press.

About the author: Brenda Gilchrist is the cofounder of The HR Matrix, a full spectrum Human Resources, Organization Development and Search firm. Brenda has extensive Talent Acquisition experience in start-up to mature companies. Contact Brenda Gilchrist at 707-526-0877 x11 to help you assess your talent acquisition strategy.


2012 – Employment Laws; things to know and what to do

It is that time of year again – new employment laws for 2012 are here. Here is a highlight of the new laws and things that employers should start doing to comply. If you have questions regarding compliance, we are here to help. Contact Brenda Gilchrist at 707-526-0877 x11 if you have any questions regarding compliance with the new laws.

1. Give Employees Required EITC Notice with W2; verify that your payroll company is handling this properly for you.

2. Credit Checks; if you are running credit checks on applicants/new hires, be careful when and how you use credit checks. Don’t run credit checks on applicants and/or candidates unless you meet the legal requirements and it is applicable to the job requirements.

3. Group Health Coverage in place for up to 4 months of Pregnancy Disability Leave (PDL applies to employers with 5 or more employees); SB 299 requires all employers with five or more employees to continue to maintain and pay for health coverage under a group health plan for an eligible female employee who takes Pregnancy Disability Leave (PDL) up to a maximum of four months in a 12-month period. The benefits are at the same level and under the same conditions as if the employee had continued working during the leave period.

4. Willful Misclassification of Independent Contractors; Do you have any 1099′s/Indepedent Contractors? If so, the state has increased the penalties for employers that willfully misclassify an employee as a 1099. It is important employers understand their risk if they engage 1099′s. SB 459 provides new penalties between $5,000 to $25,000 for the “willful misclassification” of independent contractors. Willful misclassification is defined as: “avoiding employee status for an individual by voluntarily and knowingly misclassifying that individual as an independent contractor.”

5. Notice of Pay Details; if you hire employees, make sure you document their terms of employment in an offer letter. The state now requires that certain terms of employment are provided to employees in writing. If you haven’t been providing employees with offer letters, you can create “terms of employment” for existing employees and “offer letters” for new hires. If there is any change to the terms, employers must notify the employee, in writing, within seven calendar days of the changes, unless such changes are elsewhere reflected on a timely wage statement, such as a payroll stub. Although the new law only applies to nonexempt employees, we suggest you document offer letters for all new hires.

AB 469 requires employers to provide nonexempt employees, at the time of hire, a notice that specifies:
• The rate of pay and the basis, whether hourly, salary, piece commission or otherwise, including any overtime rate
• Allowances, if any, claimed as part of the minimum wage, including meal and lodging allowances
• The regular pay day designated by the employer as required under the Labor Code
• The name of the employer, including any “doing business as” names
• The physical address of the employer’s main office or principal place of business and any mailing address, if different
• The telephone number of the employer
• The name, address and telephone number of the employer’s workers’ compensation carrier

6. Written Commission Agreement; AB 1396 requires employers who have commission pay arrangements to put those agreements into a signed written contract. The written contract must set forth the method by which the commissions will be computed and paid. If the contract expires but the parties keep working under the expired contract, the contract terms are presumed to remain in effect unless superseded by a new contract or the employment relationship is terminated. The bill is effective January 1, 2013. Employers have the entirety of 2012 to bring their commission agreements into compliance.

7. Organ and Bone Marrow Donor Leave; SB 272 clarifies the implementation of California’s organ and bone marrow donor leave law (Labor Code sections 1508-1512). Existing law provides up to 30 days of leave in a one-year period for organ donation and up to five days of leave in a one-year period for bone marrow donation.

The new legislation clarifies that the days of leave are business days, not calendar days, and that the one-year period is measured from the date the employee’s leave begins. Existing law states that employers can require use of sick and vacation leave. The new legislation clarifies that employers can require the use of a specified number of earned but unused days for paid time off (PTO).

8. Genetic Information; SB 559 amends the Fair Employment and Housing Act (FEHA) to state that employers are prohibited from discriminating against employees on the basis of genetic information.

9. Gender Expression; AB 887 amends the Fair Employment and Housing Act to further define “gender” to include both gender identity and “gender expression” and to make clear that discrimination on either basis is prohibited. Current law only uses the term gender identity. AB 887 also amends Government Code section 12949 relating to dress codes to include that an employee must be allowed to dress consistently with both the employee’s gender identity and gender expression.

10. NLRB Notice; As of April 30, 2012, most employers are required to post the Notification of Employee Rights. This posting describes employees’ rights to organize a union (in detail). However, note that an employer will not be fined for failing to post the notice.

Short List of Things to do:

- Call your payroll company regarding the required EITC notices
- Don’t run credit checks on applicants/candidates, unless you are in compliance with the rules.
- If you have 5 or more employee, make sure you maintain health insurance for up to 4 months for the disability portion of the leave covered under Pregnancy Disability Leaves (PDL). If you have over 50 employees, you will have to comply with FMLA/CFRA and coordinate the leave laws.
- Conduct a 1099/Independent Contractor Audit to ensure you are properly classifying employees
- Offer Letters and Commission Agreements; make sure you provide new hires with offer letters and provide written commission agreements to employees that are paid commissions.
- Just be aware of 7, 8 and 9 above and educate managers and staff of overall discrimination laws and company policy.
- Chose whether or not you want to post the NLRB poster. Remember – there are no penalties if you don’t post it.

About the author: Brenda Gilchrist is the Principal/CoFounder of the HR Matrix, llc. Brenda and her team provide outsourced HR support, including onsite and virtual support, including HR audits, advice and consultation, handbooks, policies, employment programs, compensation design, performance management, payroll/HR systems, training and development and recruitment. Contact Brenda Gilchrist to discuss your HR needs at 707-526-0877 x11


What to Expect from your Health Insurance Broker

What to Expect from your Health Insurance Broker
By Brenda Gilchrist, Principal of The HR Matrix, llc

Top 10 things to expect from your company health insurance broker. Yes, it is important to have a broker of record if you offer group health insurance to your employees. A great broker understands all the plan options and various ways to design a plan that fits your needs. Plus, you can refer your employees directly to the broker – you don’t want to get involved (or even know) about the claims due to privacy regulations and the Health Insurance Portability and Accountability Act (HIPAA) of 1996. Also, the broker can be an advocate for your employees when the insurance companies fail to pay claims or refuse to pay claims. Here are my TOP 10 things to expect from a great broker:

1. In Depth understanding of Benefit Solutions; anyone can sell insurance – you need to select a broker that can do more than just get insurance quotes! An exceptional broker has an in-depth understanding of the various products available and can have a strategic-level discussion to understand how to align benefit plan options with your operational, philosophical and financial needs. If you only get quotes for insurance products and your broker doesn’t discuss “out of the box, creative solutions,” then you need to find a new broker. Your broker should be able to discuss options such as, self-funded plans, HSA’s, HRA’s, direct reimbursement plans, reimbursement plans for individuals, executive benefit options (carved out plans for key employees), voluntary supplemental options, FSA, etc. Your broker should also seek to understand your unique needs and craft a plan design to make sure your healthcare coverage meets your needs (i.e. an HSA may not be the best option for everyone).
2. Availability; you should see and hear from your broker throughout the year. If you only hear from them one (1) month before open enrollment, you should be looking for a new broker. Exceptional brokers will meet with you mid-plan year to discuss your business needs, usage, evaluate your current plan design to determine possible changes for the new plan year (including, designing a good communication plan to tell employees about potential changes well in advance, such as cost-sharing changes, rate increases, etc.)
3. Direct Access to an assigned benefits representative for employees; your broker should provide your employees with a direct contact person (name/phone#/email) at their office to call or email for claims questions, benefit coverage levels, claim problems, etc. I expect the brokers to create and pass out a wallet size card (or at least a flyer) with their contact information, along with names and numbers of each carrier. If you have an online benefits portal, this can be posted online on the “contacts page”. The assigned representative should be responsive and return calls within the same day or no later than the next day. Note: due to the new HIPAA and privacy laws, you want to make sure your employees are only revealing their medical conditions, claims, etc. to the broker – you don’t want to know (nor are you suppose to ask) about an employee medical diagnosis or condition. In some cases, the broker may need to get a release signed by the employee to help them with HIPAA related matters (in some cases, the insurance carriers may require employees to call them directly).
4. Side by Side Comparison; prior to and during open enrollment, the broker should prepare a side by side comparison table for you to easily view each insurance option against each other. For example, for medical insurance, your broker should prepare a table, listing each insurance benefit next to the other, so you can easily compare the benefit plan design to the other. If you don’t get this, you should be looking for a new broker. If you only have one medical plan option, you don’t need this.
5. Education and Communication Materials for Employees; your broker should be preparing professional marketing materials to communicate your overall health and wellness package to employees. Brokers should plan and coordinate your annual open enrollment benefit meetings, design the open enrollment kits and enrollment forms, benefits summary and plan documents, and personally present the new plan design during employee meetings. For mid-to-large size companies, this includes the broker making arrangements for representatives from each insurance carrier to be present at the meetings.
6. Health Fairs; for mid to large companies, your broker should be coordinating your annual health fair for employees to attend. The broker should invite representatives from each carrier, help you develop a theme to encourage health and wellness and to help you market the value of the program and show that your company cares about health and wellness. At health fairs, brokers should help companies coordinate a fun event, such as, including healthy food, massage therapist, giveaways, games to test their knowledge of health, etc. This should be a fun and memorable event for employees. At one healthfair, I had the President of the company dress up as an apple and pass out invitations to the upcoming health fair – it was a big hit with staff, plus it showed that the President really cared about his staff (MBWA).
7. Administration; exceptional brokers provide outsourced benefits administration, including processing your new hires, terminations, Cobra, HSA and FSA, and bill reconciliation. Plus, your broker should be offering you online enrollment and employee self-service options. If your employees are still going to a person in your office to get their enrollment forms or to get their plan coverage options, then you need a new broker. The exceptional broker will offer you (sometimes, at their cost) online systems like Benetrac, Wage works, Cobra serve, and others that will streamline and automate your benefit program. (note: for small groups, insurance companies still require, in most cases, that employees fill out a paper enrollment form, in addition to your online enrollment process). Small groups can request their broker to vet vendors and costs for them.
8. Annual Benefit Statement; exceptional brokers will help you to educate your employees on the value of their “total cash compensation” by creating and providing your employees with a printed (or online version) of their individual benefit statement. These are usually rolled out to all employees during performance review or merit increase time to show employees the total value of their compensation and benefits package. The statements are usually professionally designed by your broker. You provide the data and the broker develops each statement. The statements usually have a pie chart depicting the value of each benefits; base salary, retirement, taxes, insurance premiums, bonuses, etc.
9. Legal; your benefits broker understands and ensures your plans are in compliance with the federal and state laws. For example, if you allow employee to take “pre-tax deductions” for their insurance premiums or you have an FSA, you need to have a section 125 plan document. Your broker should provide you with a customized section125 document. Your broker should understand all the new laws, including the ins/outs of cobra, benefit compliance, etc. If your broker refers you to an attorney – you need to shop for a new broker!
10. Benefit Surveys (internal and external); exceptional brokers understand that benefits (medical, dental, vision, life, disability, FSA’s, key man insurance, etc.) are a tool to Attract and Retain employees; a great broker understands the value of conducting a market scan to evaluate your company against the market to determine if your plan design is competitive (or not). If not, your broker can help you evaluate solutions to compete in the market place and ensure your plan design is competitive, valued and affordable. In addition to external market surveys, your broker can help you conduct an internal employee survey (ask your employee’s their opinion regarding the perceived value of existing plans and what they would like added to the plan). Exceptional brokers will provide you with a survey template and (in some cases) collect and analyze the data for you!

About the Author: Brenda Gilchrist, Principal/Cofounder of The HR Matrix, llc, a full-spectrum Human Resources, Organization Development and Search firm. Brenda specializes in helping companies design effective HR strategies and programs. For comments or to contact the author, email Brenda at Brenda@thehrmatrix.comor call 707-526-0877 x11. www.TheHRMatrix.com


5 Most Common Mistakes Made by Employers by Brenda Gilchrist

Are you doing business in California? Based on our experience, California is one of the most complicated places to manage employees. In some cases, the laws are not only complicated, they’re just plain annoying. Many laws have taken away flexibility that the employee and the employer want. For example, employees and employers cannot easily set up a flexible work schedule, unless they follow a complicated Alternative Work Schedule (AWS) process. If employers fail to follow the AWS process in accordance with all the required steps, they may be liable for back wages.

In celebration of our 5 years in business, here is a list of the Top 5 Most Common Mistakes Made by Employers:

1)      Owners and Managers not knowing, understanding and/or complying with the Fair Labor Standards Act (FLSA) rules (e.g., overtime) related to Exempt vs. Non-Exempt classification of employees. [For more information, read my Exempt vs. Non-Exempt article]

2)      In many cases, as a result of failing to comply with #1, employers often are not in compliance with the Meal and Rest period rules. If you are not requiring your “non-exempt” employees to clock in/out for their meal periods in California, you are setting yourself up for risk. For the Meal Period law, the risk includes repayment for the 30 minutes employees say they didn’t get lunch, on top of paying a one (1) hour meal period penalty for each day the employee says he or she missed a meal period.

3)      Misclassifying someone as a 1099 (aka: independent contractor). The government wants its payroll taxes! So, unless and until your 1099’s meet the complicated IRS 20 factors test, then they are considered employees, in the eyes of the government.

4)      Weak hiring practices. Did you know that past performance is the best predictor of future performance? [Click here to read “5 Keys to Successful Talent Acquisition"]. Here are the most common hiring mistakes:

  1. Hiring out of desperation (the “warm body” syndrome) with little or no screening.
  2. Not using a behavioral style interview.
  3. Not taking the time to scrutinize the employment application
  4. Not checking references or, in some cases, running a background check

5)      Trying to do HR yourself. Well-intentioned managers can get themselves into trouble if they don’t know what they’re doing. Whether it’s a harassment or discrimination claim, employee discipline, terminations, policies, recruiting or any number of HR practices, it pays to have expert advice and help.

You don’t have to spend your time trying to learn how to be an HR expert. Our firm can easily assess your needs and help you put systems and policies in place that will support you in managing through complicated California and Federal employment law. Call us today for a consultation – 707-526-0877, ext 11

About the author: Brenda Gilchrist is the Principal/CoFounder of the HR Matrix, llc. Brenda and her team provide outsourced HR support, including onsite and virtual support, including HR audits, advice and consultation, handbooks, policies, employment programs, compensation design, performance management, payroll/HR systems, training and development and recruitment. Contact Brenda Gilchrist to discuss your HR needs at 707-526-0877 x11


Exempt vs. Non-Exempt…It Pays to Know the Difference! by Brenda Gilchrist

If you employ people, you need to know the difference between exempt and non-exempt jobs, or face the risk of potential hefty penalties, legal fees, and payment of unpaid overtime and missed meal periods. Most employers think of jobs as “salary” vs. “hourly”. Most non-exempt positions are paid hourly and exempt positions are paid salary. It is unwise to improperly classify an employee as exempt, just to avoid paying overtime.  Employers must decide whether their jobs (and therefore the employees) are exempt, or not, from wage & hour requirements (overtime and meal/rest periods) based on complex FLSA classifications set by State and Federal law.

Here’s a real life example of what can happen when the employer misclassifies a job: A former employee filed a complaint with their local Department of Labor stating his employer misclassified him as an exempt employee. He claimed that the company had removed so many of the exempt level job functions that he was left with non-exempt duties. Thus, he claimed that he should have been treated as a non-exempt and should have been paid overtime and meal/rest periods. The employer, did in fact, start to remove duties since they felt he was unable to perform the higher level functions (engineering) at an acceptable level. As a result, they eroded the exempt status and the company had to pay back wages (going back 3 years), which included what the employee reported to DOL as missed overtime and missed meal/rest periods. The employer also paid penalties on top of the overtime, missed meal periods, the 1 hour meal period penalty for every day he stated he missed a meal/rest break.

What makes the job become Exempt? It’s actually the job duties that classify someone as exempt or non-exempt. Job titles are irrelevant to whether a job qualifies for exemption. So, just because you create the job title, for example, VP of Administration, it doesn’t mean the person meets the FLSA exemption. State and federal governments assume a position is non-exempt unless it clearly meets both tests for exempt status: the salary test and the duties test.

Salary test

For most “exempt” categories, the employee must be salaried and earn twice the current minimum wage per month.

Labor Code Section 515.5 provides that certain computer software employees shall be exempt overtime if certain criteria are met. Effective January 2011, exempt computer software employees must earn $37.94 or annual salary of not less than $79,050 for full-time employment, and paid not less than $6,587.50 per month

Duties tests

There are five job categories for which the DOL allows exempt status:

Executive: the primary duty must be management of the enterprise or a department and include decisions such as hiring/firing, promotions or assignments. The position must regularly supervise at least two or more full-time employees.

Administrative: the primary duties must be office (non-manual) work directly related to management or general business operations, and the employee must exercise independent judgment about matters of significance. This exemption is often misapplied to clerks, secretaries and customer service employees who do not meet the duties test. The administrative exemption is meant to apply to high-level employees whose primary job is to “keep the business running.”

Professional: generally requires a 4-year college degree or a State license in a specific science or discipline. The most common jobs under the professional exemption are in the areas of law, medicine, dentistry, optometry, architecture, engineering, teaching or accounting. Professionally exempt work is primarily intellectual, requires the specialized education mentioned above, and involves the exercise of discretion and judgment. Certain creative jobs may qualify for a ‘creative professional’ exemption, such as actors, composers and musicians.

Computer Professional: reserved for high level computer professionals such as systems analysts, programmers and software engineers, who exercise independent judgment. Specifically, the exemption applies to employees who apply systems analysis techniques and procedures to determine hardware, software, or system functional specifications, or who design, develop, test or modify computer systems or programs based on user or design specifications.

Outside Sales: this exemption does not have to meet the salary test. The primary duty is to make sales or obtain orders for the company, while regularly working away from the place of business (not at home and not in the office – inside sales typically don’t qualify as an exempt position).

Preserving the exemption

Once a position is considered exempt, you will want to avoid eroding that status. Says the DOL, “The employer will lose the exemption if it has an actual practice of making improper deductions from salary.” You should not dock pay for quality/quantity of work, discipline or availability of work. Requiring or requesting an “exempt” employee to clock in and out and/or to complete a timesheet, reflecting hours worked, may also erode your argument that their position is exempt.

Exempt employees must be paid the week’s salary for any week in which they perform work. There are exceptions to this rule, the most common of which are docking for absences from work for one or more full days for either personal reasons or sickness or disability (as long as deductions are made under a bona fide plan). Partial day absences should not be docked unless you have a partial day docking policy in place.

There have been a few landmark cases involving misclassification and substantial penalties:

Wachovia Securities Wage & Hour Litigation, $39 million. Employees claimed they were denied overtime pay and other wages.

Veliz v. Cintas Corp., $22.75 million. Delivery drivers claimed that Cintas misclassified route drivers as exempt employees in order to avoid paying overtime.

Conley v. Pacific Gas & Electric, $17.25 million. Employees alleged they were improperly classified as exempt employees and were denied overtime compensation and paid a salary rather than on an hourly basis.

If you would like help with properly classifying your jobs and employees or with administration of policies for exempt employees, please contact Brenda Gilchrist at Brenda@thehrmatrix.com or 707-526-0877 x11.

For additional reading, see the following government sites:




5 Recommended Reading Suggestions

1. Built to Last: Successful Habits of Visionary Companies, by Jim Collins and Jerry Porras.  Their blueprint for sustainable organizations includes stable core values and purpose, while strategies and practices must continually adapt to an ever-changing world. 

 2. The Answer to How is Yes: Acting on What Matters, by Peter Block.  This insightful and philosophical book challenges us to take accountability for our experience, our choices, and the meaning we create from our lives.

3.   Catalytic Coaching: The End of the Performance Review  by Garold L. Markle. A great book to reconsider how you approach the traditional performance review process. 

4. Bel Canto by Ann Patchett. One of the best novels I’ve read in the last decade (Gary). A beautiful tale of friendship, romance, and human spirit in the context of terror and hostage-taking.

5.    Brenda’s favorite interactive business website: BNET

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5 Elements of Successful Meetings by Gary Hochman

As a consultant to managers and executives in a variety of organizations, I’ve participated in every sort of meeting imaginable. Upon reflection, there are just a few factors that seem to separate the great meetings from the average ones.

1. The Right Participants

Begin here by carefully considering who needs to be in the meeting. Too often, participants are invited so they don’t feel excluded or offended, or because they report to the meeting leader on the org chart. To engage in an energetic and purposeful meeting, participants must have a reason for attending; a point of view, a need to know, the authority to make a decision, or useful information, that will shape the topic and drive closure.

2. An Agenda Provided Before the Meeting

Sounds obvious, but agendas are the blueprints for building successful meetings. They are indispensable tools that keep meetings on track, help participants to prepare and understand their roles, and clearly define the objectives. A good agenda will also identify the purpose of each topic (e.g. Is this topic for information only or do we need a decision?). Many teams use the same basic agenda, week after week, for their routine meetings. While this practice is well intended, it misses the point. These agendas may offer an outline of the meeting, but they don’t contain adequate detail to set expectations, help members prepare, and galvanize the group to accomplish its goals. Each meeting deserves a unique agenda.

3. Facilitation

Skilled facilitation makes an enormous difference in the quality of a meeting, whether it comes from the meeting leader, the members, or a designated participant in the meeting. A facilitator pays attention to process and is mindful of the following questions: Is the group staying on topic? How are decisions made? Who is doing the talking? Who is interrupting? How is conflict managed? How can we improve the quality of our meetings? A good facilitator knows how to intervene graciously to help the participants become conscious of the process and derive maximum benefit from their meeting.

4. Clear Conclusions and Next Steps

How often have you attended meetings when the follow-through you expect does not occur? The time to fix that problem is before you move to the next agenda item. At the conclusion of an agenda topic, ask, ”So, who can summarize what we just discussed? What did we decide? What are the next steps?” You might be surprised how often members are unclear exactly what was agreed upon.

5. Opportunities For Creativity and Participation

Most meetings are conducted as a sequence of topics for information sharing, either tops-down or in a go-round fashion. The communication flow is primarily one-way, with little opportunity for members to contribute perspective, energy, curiosity, and creativity. If our only purpose is to deliver information, consider using e-mail or voice mail rather than a meeting. Management time is precious and there is little reason to convene people if we expect them to be passive. On the other hand, we can utilize meetings as an invaluable opportunity to bring multiple perspectives into the room in order to collaborate, debate, decide, and perform the real work of a team.

If you or a member of your organization wants help orchestrating more effective meetings, please don’t hesitate to reach out to us. We would be delighted to help. Contact Us


5 Keys to Successful Talent Acquisition

Copyright © June 2011 – The HR Matrix, llc – All Rights Reserved

by Brenda Gilchrist, CoFounder/Managing Partner, The HR Matrix, llc

1.      Culture: Know your company culture; be able to articulate it in writing. Validate your perceptions by asking team members.

2.      Talent Gap Assessment: assess what you really need; write the job description based on what you need to add to your team to supplement skills that aren’t available now or will be needed to hit future goals.

3.      Cultivate for Fit: Define your ideal fit; list the attributes and core competencies that are must haves and nice to haves to fit in your department and company culture (be real! Don’t sugar coat it)

4.      Compelling: make your opportunity compelling to the candidates. Remember: candidates are interviewing you, just as much as you are interviewing them. Use your PR/Sales/Marketing skills – even if you don’t think they are a fit. Leave all candidates with a good impression of their interview experience. It’s good for business.

5.      Critique: Plan ahead and create behavioral style interview questions that will assess the candidates past experiences as they relate to your culture, core values and talent needs. Asking well crafted behavioral style interview questions are one of the top predictors of assessing fit. Past behaviors will predict their future performance.


2011 HR Professional of the Year Award

The HR Matrix and co-sponsors PASCO and the Santa Rosa Chamber of Commerce are now accepting nominations for the 2011 HR Professional of the Year Award. This annual award recognizes outstanding HR professionals and their innovative or strategic accomplishments.

To qualify, individuals must be senior level HR professionals and be nominated by a c-level executive. Nominations must include a specific initiative or accomplishment achieved during the past 18 months that has had a measurable impact on the organization, such as increased engagement, improved productivity, or financial savings. We encourage you to share this opportunity with your c-level executive!

Winner and nominees will be announced at PASCO’s Annual Employment Law Conference on October 20, 2011 and on the HR Matrix website. Winners will receive an engraved award, a pass to the PASCO conference, and will be recognized with an opportunity to share their accomplishment at the conference.

To nominate someone, click here: HR Professional of the Year Nomination – online

Posted in HR Matrix News/Press