Making It Legal:

Yes, it sounds very Arnold Schwarzenegger-esque, but most business owners face the point when they have to look an employee squarely in the eye and say, “You’ve been terminated.” Does the prospect make you uncomfortable? Probably. Should you avoid it and mollycoddle the employee in the hopes of a turnaround? Absolutely not.

There comes a point where no amount of training, pleading or cajoling will change an underperforming employee. And you need to be careful that you don’t give more “breaks” to, say, a young white male employee than you do to a female Chinese employee who’s over 40. Problem employees generate three major headaches:

• They may actively foment discord and try to sabotage the workplace (or sit on their butts and do as little work as possible).
• They may harm your relationships with customers and suppliers.
• They may play the “waiting game”–and the longer you wait to get rid of them, the harder it is to dislodge them.

All this may sound cruel and callous . . . but it’s a hard reality of building a business and needing to rely on employees. You can protect yourself in several ways:

• Have a careful screening process so that you choose someone with the skills and temperament that fit your company and the needs of the position.
• Set clear guidelines for how performance will be measured.
• Create a process for regular performance reviews.
• Generate written reviews for the employee’s file.
• Speak to an employment attorney or HR specialist to get guidance on how to steer clear of the federal and state laws against discrimination and other prohibited employee practices.

It probably passed unnoticed by most people, but the Supreme Court handed down a decision recently that raised more than just a few eyebrows in the legal community.

In the case of CBOCS West v. Humphries, a black manager at a Cracker Barrel restaurant filed suit under the Civil Rights Act of 1866 (now codified at 42 U.S.C. Section 1981), alleging he was fired after complaining about discrimination against other black mid-level managers. Whereas some civil rights statutes explicitly prohibit retaliating against an employee who is trying to assert his or her rights, Section 1981 was silent. It prohibits discrimintation on the grounds of race in making contracts, but says nothing about retaliation as a prohibited form of discrimination. So the narrow question before the court was: “Can someone bring a race retaliation claim using Section 1981?” The court’s answer was yes (by a 7-2 margin).

The result is surprising for a couple of reasons. First, it seems to run counter to the increasingly conservative trend of court decisions. In fact, just last year in Ledbetter v. Goodyear, the court faced an employee complaint of discrimination. The plaintiff employee had 180 days to bring a claim of sex discrimination to the Equal Employment Opportunity Commission. She claimed that there was a repeated pattern of unfair evaluations and (lesser) pay raises that existed for a period of time. However, since many of them predated the 180-day period, the court held that she could no longer base a claim on them. Based on that strict reading of the statute, civil rights activists were concerned about the decision-making trend of the court. The Humphries decision takes a much more liberal approach.

The second reason it’s surprising (sort of in line with the first) is that the majority decision seemed to weigh the legislative history of the Civil Rights Act and similar statutes more heavily than case precedent. Sure, the court found cases on which to hang its collective hat. But the approach taken to arrive at the decision was not one normally associated with a conservative court, which would tend to look at the strict language of the law: “Does the language specifically allow a claim? No. If that’s the case, it’s for Congress to pass a law amending it, not for the court to imply a right of action.” Rather, the majority decision took the position that it is presumed that federal civil rights statutes prohibit retaliation whether they say so explicitly or not. See the wiki on the U.S. Supreme Court for a cogent analysis of the history of the case and the arguments before the court.

In practical terms, what does this mean for employers? Quite possibly, that they’ll see a rise in retaliation claims. An effective way to prevent them is to ensure that your company has an employee manual outlining the appropriate procedures for airing grievances and proper training for managers in dealing with these kinds of claims.

From the people you love to hate, the IRS is offering a phone forum on Wednesday, May 21. All you need is internet access and a separate phone line. For registration information, visit the IRS Site.

Here is what the forum will cover:

Learn what you need to know as a small business owner:

• Classifying workers as employees or independent contractors as determined by law, not the choice of the worker or business owner;
• Depositing federal withholding employment taxes, called trust fund taxes, according to the appropriate schedule;
• Making quarterly estimated tax payments to cover your own income tax and social security self-employment tax liability;
• Keeping good records to protect your personal and financial investment and to make tax filing easier;
• Considering a tax professional to help you with Schedule C;
• Filing and paying your taxes electronically; and
• Avoiding abusive tax avoidance schemes such as the IRS’s 2008 “Dirty Dozen.â€�

There will be a question-and-answer session after the presentation. Be sure you register and get your pin number for access. Times are listed on the link as well. Sign up now and put yourself and your business on the right path!

As my mother is fond of saying, “Watch what you wish for–you may get it.” That certainly applies to the ways in which technology has made an impact on our workplaces. On the one hand, it has opened up a wonderful world of flexibility, new business arrangements and ease of automation. On the other, it has opened up a hornet’s nest of new ways for employers to get stung in employee-related lawsuits.

Just think of the ways that computers and technology have changed the way we work: e-mail, voice mail, conference calling, videoconferencing, PDAs, smartphones, Treos, BlackBerrys, iPhones, internet, intranet, blogs, message boards, Facebook, Twitter, MySpace, networks, ASPs… and the list goes on.

So does the list of legal issues that have emerged as a result:

• Employees freely copying what they see on the internet;
• Posting of inappropriate or offensive content on company bulletin boards or blogs;
• Discrimination in hiring employees through internet job postings;
• Badmouthing a company on personal blogs;
• Using e-mail to discriminate against or to harass fellow employees;
• Employees’ expectations of privacy on their office computers or in their e-mail;
• Requirements for backing up electronic communciations in the event of litigation; and
• Electronic communications policies.

It’s as if you took a bunch of rambunctious children and gave them potentially dangerous toys to play with. If you don’t show them how to use them properly, someone (probably you or your company) will get hurt. If you have employees, speak to an attorney to get guidance on how to handle these issues.

If I could find a word to sum up the best way to deal with employees, I think the word would be consistency. It’s a lack of consistency that often gets employers in trouble with discrimination laws, even if they didn’t intend to discriminate.

Picture this: Aybeesee Company hires its first employee (Jim, a 22-year-old college graduate) and, because they’re so excited about the new hire, the owners generously give him four weeks of vacation… although they later realize how costly it is to be paying for an employee who’s not there to work. So the company decides to give less vacation time to any other incoming employees. Six months later, business picks up, and they hire Natishia (a 42-year-old African-American returning veteran). Given the lessons learned with Jim, they offer Natishia two weeks’ vacation. Jim and Natishia are shooting the breeze at the water cooler… and guess what Natishia learns? Things just get uglier from there.

Similarly, as Melissa Nicefaro’s article, “Sex in the Workplace,” points out, consistency is also key in dealing with dress code issues, gender issues and office romances. Be sure to check with counsel in your area to make sure your employee policies don’t run afoul of local laws.

With more and more people (especially Gen Yers and Millenials) posting their personal information on the internet, it seems a handy place for employers to go to scoop up background information on prospective hires. After all, by publishing this information on their blogs, Facebook pages and MySpace profiles, the potential employees can hardly claim that this information is private. I mean, if you’re too dumb to know that unless specifically encrypted, your blog is totally open to computer-connected Planet Earth, you’re too dumb to be hired, right? So whatever an employer finds is fair game, yes?

Not exactly. As with other hiring and screening processes, unless an employer utilizes them fairly–and handles the information received objectively across the board–an employer could be held liable for discriminatory hiring practices.

Let’s say that Jarhead Corp. is screening two applicants: One is a white male, who has posted a photo with fraternity buddies, holding beers; the other is a Chinese female, whose photo shows her with close friends at an LGBT (lesbian, gay, bisexual, transgender) rally, revealing pierced navel and tattoos. Can an employer honestly say that the LGBT context and race won’t come into play? Similarly, can an employer document that the same degree and level of searching on the internet is done about all candidates? Or is it only to dig up dirt about female ones to find a reason not to hire them?

If an employer does not have a set policy (or list of steps) for the ways it goes about evaluating its employee candidates, it can leave itself open to a world of hurt. That is particularly true because the nexus between social media and law is so new, and there’s not a lot of case law yet to give employers guidance as to how these kinds of issues will be received by courts and legislators. Best to consult an employment attorney when developing a hiring strategy to make sure that the tactics you use don’t run afoul of the law.

I just returned from Miami Beach, where I spoke on the subject of “Social Media for Corporate Executives” with fellow (sister?) Entrepreneur blogger Lena West. [Check out her Tech Forward blog if you haven’t already.]

Blogging is fun, blogging is new, blogging is strategic, and blogging raises hairs on the backs of the necks of attorneys, who see blogging as a cauldron of liability waiting to bubble over. There’s a way to balance the interests of free speech, on the one hand, and employee control on the other. How you handle that can depend on whether you want employees blogging on behalf of your company or whether you want to be sure you’re not tomorrow’s front-page news in connection with their personal blogs. Here’s a short video clip from attorney Cliff Ennico on SBTV on the subject.

You’ve either had them or have worked with them: the employees from hell. They tend to do very little productive work and spend their time making a nuisance of themselves. And they know just enough about the law to “play the game.” They have you boxed into a corner so that you can’t fire them for fear of a lawsuit.

One of the best ways to deal with them? Don’t hire them in the first place. Fortune Small Business has seven handy tips for avoiding employee problems, such as:

1. Know the laws. There are lots of federal laws that may or may not affect you, depending on how many employees you have. An employment attorney can coach you through this, too.

2. Create an employee handbook. It helps prevent potentially fishy (and discriminatory) situations by ensuring that you treat your employees equally.

3. Avoid time-bound contracts. If you commit to keeping someone as an employee for a certain period of time, you can’t fire her sooner without penality.

4. Leave a paper trail. The more evidence you have in writing of problems with an employee, the stronger your case.

5. Move out, not around. If an employee is causing problems, moving her to another position could aggravate the situation, not alleviate it.

6. Choose wisely. Make the right choice at the outset by clearly thinking through your hiring needs.

7. Don’t stick your head in the sand. Address personnel issues immediately. Seek the advice of counsel to make sure you’re handling the situations correctly.

As you may have heard, there’s a lot of hand-wringing going on in Congress and the courts about how to deal with illegal immigration. Your responsibility, as an employer, is to make sure that you get some form of verification from your employees that they are legally allowed to work in the United States. (Note, some students come into the country legally on student visas, but those visas often do not permit them to work and earn money in the U.S.)

How do you do that? Make sure that all your employees, as a condition of being hired, fill out Employment Eligibility Verification Form I-9, available online for free, and provide the necessary identification documents. U.S. passports, driver’s licenses and Social Security cards are all valid forms. The I-9 Form provides instructions and a table of ID types, so there’s no guesswork on your part about the kind of ID you need to see.

As reported in the San Francisco Sentinel, the U.S. government will suspend its legal defense of a new rule issued in August to penalize employers who hire illegal immigrants, according to government papers filed late Friday in federal court. Court papers asked the judge to delay the case until March 24 or until a new program is ready.

Instead, the administration plans to revise the rule to try to meet concerns raised by a federal judge and issue it again by late March, hoping to pass court scrutiny on the second try. The rule would have forced employers to fire workers within 90 days if their Social Security information could not be verified.

The government’s proposal was a response to an indefinite delay to the rule ordered Oct. 10 by the judge, Charles R. Breyer of U.S. District Court in San Francisco. Judge Breyer found that the government had failed to follow proper procedures in issuing the rule and that it should have completed a survey of its impact on small business. As noted in the Seattle Times, his ruling effectively barred the government from mailing Social Security “no-match” letters to 140,000 U.S. employers, citing serious legal questions about requiring companies to resolve questions about their employees’ identities, fire them within 90 days or face potential fines and criminal prosecution.

The New York Times further pointed out that Breyer found that the Social Security database the government would use to verify workers’ status was full of errors, so the rule could lead to the dismissal of many thousands of workers who are American citizens or legal immigrants.

Food and sex have always had a close relationship. Think of the cinematic ditties No Reservations, Chocolat and Tampopo. Food can become a sensual experience that leads to … dancing (as the old joke goes).

But it’s no joke when you find yourself the recipient of a sexual harassment suit. As Glenn Haussmann of Hotel Interactive writes, there are ways that other restaurateurs have developed to keep these problems to a minimum. They include:

• Deal with any whiff of the issue immediately and seriously.
• Follow up on any conversations.
• Avoid blending work and social time with employees, especially where alcohol is involved.
• Address work performance problems directly (as employees have been known to use harassment or discrimination complaints as a way to cover over poor performance.

Whatever unpleasant associations background checks may bring up, they can form an important facet of your due diligence for your small business.  It’s not just about criminal matters, although that’s a part of it.  For example, if you intend to hire an employee to handle sensitive financial matters, you’d want to know whether they have a previous conviction for kiting checks.  If you want to enter into a strategic alliance with another company, you’ll want to know whether it has undergone a bankruptcy restructuring in recent years.  A Dun & Bradstreet report, a Better Business Bureau report – both are forms of “background checks.�

And, of course, there are laws that govern the procedures for obtaining this information.  As reported in “Legal Aspects of Background Checking,� 

So far as the financial records are concerned, the Gramm-Leach-Bliley Act (GLB) governs the procedures through which personal financial information are disclosed to a third party. Then there is the Fair Credit Reporting Act (FCRA) that protects the privacy of a person’s consumer reports. Similarly, The Drivers Privacy Protection Act protects the past driving records of individuals.

Particularly when it comes to employees, many states do not require background checks (although they do require that you have employees fill out an Employment Authorization Document Form I-9, which documents immigration status).  The Privacy Rights Clearinghouse provides an overview of what you can and cannot ask for.  But most importantly, if a satisfactory background check will be a required condition of employment, this should be conveyed to the prospective employee in advance of the check and permission obtained.