Financial Advisor Magazine: Little Known Facts

We came across a great article from 2007 in Financial Advisor Magazine about "Little Known Facts" when you are hiring staff, much of which still applies today. Some of their tips to getting off to a good start are perfectly worded--and too good not to share! Read below and please let us know your thoughts. For the full article, check out http://bit.ly/ds4Bxj at FA Magazine's website.

Getting Off To A Good Start
What follows is a discussion of the most critical issues pertaining to employees in any environment, whether it's a home, a family office or a conventional business location, and some insight into how to best hire, retain and terminate staff.
1. Pre-employment screening: If a client is planning to hire someone to work in his or her home, the integrity and reliability of the referral source is critical. They should also talk to people who know the applicant, and consider using a formal background check (see item 3 below).
2. Application form: The initial stages of an employment relationship, when handled correctly, can play a significant role in the overall success of the relationship, as well as protecting a client in the event of necessary termination. A few things should be made clear to candidates beginning with the application process: all information collected on the application form should be permissible (for example, you cannot ask about arrests which didn't result in a conviction); all application information provided by a candidate is subject to due diligence, so they should certify that everything is accurate and complete; the application form is not an offer of employment; if an offer is made it will be for "at-will" employment (see item 6 below); and new employees are expected to sign confidentiality agreements (see item 7 below).
3. Background check: The costs for these types of investigations are quite reasonable, especially when compared to the risk of insecure hiring practices. Specifically worded consents are required to legally obtain information regarding an applicant's criminal and credit histories. Improperly worded applications have led to many lawsuits, such as those filed in recent years against many major supermarkets in California.
4. Job description: While a job description is not mandatory, it's a good idea. Be as specific, and realistic, as possible regarding hours, duties, location of work and other pertinent subjects. Your clients should put this information in writing, but reserve the right to change it. This is particularly important for employees with disabilities who ask for special accommodations.
5. Physical exam: Physical exams can be requested only after a provisional job offer is made and, even then, solely to evaluate job related issues (for example, a candidate's ability to lift heavy objects). The Americans With Disabilities Act and most state laws require employers to make a "reasonable accommodation" for a disabled worker. On a related note, it is not permissible to require an "English language-only" workplace unless there's a defensible business need.
6. At-will employment agreement: The terms of at-will employment should be communicated clearly both verbally and in writing, as follows: "You may terminate your employment at any time with or without cause. Likewise your employer can do the same." Without doing so, an implied-in-fact contract can be construed. The agreement should also state that it cannot be changed by anyone unless it has been agreed upon in writing by the employer.
7. Confidentiality agreement: It is important for your wealthy clients to know that information gathered by the household staff in the course of their employment typically is not "confidential" and therefore can be given or sold to another party (say, a tabloid magazine), unless it is protected by a confidentiality agreement. There are, however, provisions that may help an employer keep an employee from disclosing information gained by stealth or through other unauthorized measures.
8. Employee handbook: Generally, it's a good idea to have a handbook of labor policies and procedures if a client has, or plans to have, more than a handful of employees. The handbook should include a sexual harassment policy, setting forth the procedures to be followed in case an employee feels aggrieved; a description of time-keeping requirements (more below); and, if appropriate, a computer and e-mail policy, setting forth how the equipment and services should be used, who owns the equipment, and whether or not information on the computer is considered private. If a client is hiring household staff, it is important to emphasize that the law considers the place of employment "a small business run inside a residence" rather than "a home," and it should be treated as such by all parties. For further protection, your clients should consider establishing a separate legal entity as the "employer."
9. Performance review: Reviews are not required but are an excellent idea, both to provide the employment relationship with the formality it deserves and to give the employee a clear idea of how he or she is doing. Reviews should be done at least yearly.
The following section outlines other considerations for high-net-worth employers, such as time-keeping issues, establishing contractor eligibility and knowledge of labor laws. The examples and advice provided in this article are for illustrative purposes only and are specific to employers in the state of California, although other states may have similar requirements. Before taking action in any state, regulations should be fully researched with counsel.