Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent

MTG - EP #112 Mary Simmons
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Mike: [00:00:00] Okay, the 2024 HR Benchmark Report is in, and we're a little over halfway through our series. We are, uh, I invite you to follow along, hop on the website, Asuresoftware. com. Go to ebooks and resources, download the ebook and follow along if you would. Um, uh, we asked 1, 065 people who responded to our survey.

We asked them five questions in each of eight areas, uh, from pre employment through post employment. Here's the, here's the sections, recruiting and hiring, benefits, onboarding, development, compliance, retention, performance, and post employment. So we're a little over halfway. Uh, we're going to focus on.

Compliance. And we're going to unpack the five questions we asked in compliance. Now, five questions times those eight sections, that's 40 questions. We ask one final question at the end of the survey. What best describes you last year? Was it a fast growth year? Was it a growth year? Or was it a zero growth year?

Were you down or were you flat year over year? And then we correlate the results of how they say [00:01:00] yes or no to these HR best practices and how does that correlate to revenue growth? Here's the thing on compliance. So, so some of these topics, I think it's intuitive. Like, uh, if you are better at finding talented people, if you're better at developing talented people, uh, if you're better at retaining talented people, uh, in building a culture of success, it seems obvious how that could correlate to revenue growth.

I think it's not intuitive how. Following the laws, aka compliance, correlates to revenue growth. Uh, but spoiler alert, it's a big correlation. Uh, it's a correlation for our entire sample size, all 1065 respondents. But when I, when I slice the data to the smaller firms, under 25 employees, It really gets big.

And it's, it's clear that the small firms, uh, they, they don't have the bandwidth and the resources, so [00:02:00] they struggle. And, and I, in my opinion, I think they don't know what they don't know. They're so busy just trying to run their business every day. They probably don't know what they don't know around compliance.

Uh, uh, but interestingly, when I look at the bigger companies versus the smaller companies. The fast growth firms don't drop a whole lot. The zero growth firms drop by a whole bunch, meaning even the smallest firms, they get the importance of compliance, not just for following the law, but for building a culture of trust and respect in relationship with their employees to get them aligned around their mission, in their purpose, and it shows up in revenue growth.

So, uh, glad you're with us today. Really looking forward to unpacking compliance.

Intro: Welcome to Mission to Grow, the small business guide to cash, compliance, and the war for talent. I'm your host, Mike Vannoy. Each week, we'll bring you experts in accounting, finance, human resources, benefits, employment law, and more. [00:03:00] You'll learn ways to access capital through creative financing and tax strategies, tactical information you need to stay compliant with ever changing employment laws, and people strategies you need to win the war for talent.

Mission to Grow is sponsored by Asure. Asure helps more than 100, 000 businesses get access to capital. Stay compliant, and develop the talent they need to grow. Enjoy the show!

Mike: All right. So today we're talking about compliance. Uh, five questions in the SMB HR Benchmark Report. Uh, uh, I'm going to rattle them off. I'm going to talk maybe some high level summary, uh, and then we're going to get into question by question. Uh, do you train managers about HR laws like equal pay, overtime, ADA, uh, Americans with Disabilities Act?

Uh, do you keep 9 for each person you hire for one year or more? Uh, do you have a documented process for handling HR investigations and inquiries? Do you conduct sexual harassment training? Are you certain you're compliant with wage and hour requirements to FLSA? It's a [00:04:00] significant spread, 15 percent spread between fast growth companies and zero growth firms.

But when you, when I look at the under 25 employee firms, a smaller group, it's big. It's 25 percentage points. So this is yet another area where the fast growth firms. Either they just get it or they're, or maybe shrinking firms get it also, but they just, they're not making it a priority. They don't have the resources.

Something's going on that is a clear differentiator for the fast growth firms that they're doing a much, much better job in the area of HR compliance. Uh, you guys all know my guest, uh, the perfect, the perfect guest for HR compliance. Mary Simmons. Welcome back, Mary.

Mary: Thanks, Mike.

Mike: All right. Um, I'm curious before we jump in question by question.

What's your take when you saw the results, I'd say in aggregate, fast growth firms versus zero growth firms when it just comes to compliance in general?

Mary: [00:05:00] So, I think that compliance is an area where a lot of business owners are like, Yeah, I know I need to be compliant. That's going to cost me too much money or take too much time. I'm going to roll the dice, so I'm fine. So, again, I think sometimes the smaller business owner says, A, I don't have the bandwidth.

B, I don't have the knowledge, right? Um, and C, well, you're going to cost me a lot of money, Mary, if I'm going to put you in charge of compliance. But I would say, again, that we can't look at, at these sorts of things like it's just an outlay of money. First of all, it's an insurance in case you were audited.

You know, everything's in order. Why would you want to look over your shoulder all the time and go, Oh, gee, I hope we don't get audited. I hope my things are in order. I hope they don't find what's not in order because I know I haven't done the right thing, but I would always also say, look, I don't, I, I don't want to leave this [00:06:00] compliance section with fear.

Like, you know, the auditors are coming, Mike, be careful. This can also tie to ROI, because when we do things correctly and give the correct benefits and work with employees correctly, and we'll go through it slowly. As you said, our employees. We're going to, are going to stay. So we're going to retain them.

We're going to attract employees because they know this is an organization that does things right. Believe it or not, word of mouth gets out there very quickly. Some of the industries we work with are very small. So the pool of candidates is very small. And you know, you, you've got sites, you know, that, that have employees talk about employers, even if it's not a small organization.

You know, geographic, uh, you know, area that you're recruiting in. So business owners need to do the right thing, not just out of fear of being audited, [00:07:00] but for the, the entirety of keeping and attracting talent.

Mike: this is this section. So of the eight sections in the, just to remind our audience, recruiting and hiring. So, so we go from pre employment to post employment, recruiting and hiring, benefits, onboarding, development, compliance, retention, performance, and post employment. Those are the areas of the survey.

So we're smack dab in the middle of the employee life cycle here. We're talking about, uh, compliance. Having been in this industry for a really long time, but also an entrepreneur in, in, in running businesses. Uh, during that time, this is one of those things that's like, I think most business owners, small business owners, especially understand that they, they're not intentionally breaking laws.

Uh, they probably have a sense that they're not compliant in areas, but they don't know where, but because they've never personally been sued yet or fined yet been audited yet. this [00:08:00] kind of feels like driving 56 miles an hour at a 55 zone. It's like, yeah, it's illegal, but. And my, what, what risk do I really have?

And so when I think of what, and we'll, and we'll talk about a whole bunch of stuff, especially in these specific questions, when I think about just the correlation, so what does it, what do you, what does an entrepreneur care about? When you care a heck of a lot about revenue, you care a heck of a lot about growing your business.

And when you have 1, 065 businesses respond to a survey, and if I look at the smaller firms, the less than 25 employees, and there's a 25 percentage point spread between Fast growth companies who said yes, 82 percent of the time, uh, to, to these five questions versus zero growth firms who said yes, 57 percent of the time, 25 percent spread.

It's just a massive correlation. So you might not think about compliance being a revenue [00:09:00] driver and maybe it's not even causal, but it's a minimum, uh, uh, a correlation that cannot be ignored because the data said it's too big, right?

Mary: absolutely. Absolutely. And you do have to look at it in the negative. There are plenty of businesses who have gone out of business by doing these things wrong and having major lawsuits.

Mike: I almost like in this, sometimes I hate, and sometimes I love this metaphor. It's like, my house has never caught on fire, but that doesn't mean I don't have. Insurance on my house in the, in, in the bank, the mortgage company wouldn't, wouldn't allow you to because the risk is just too big. Right. And I think that's how you really have to think about it, especially in a smaller business.

On one hand, the smaller businesses, the data would say they, they are less compliant. Um, they, they said yes less frequently than the broader population. They're the ones most vulnerable, you know, a, a lawsuit or a big fine. [00:10:00] It's an existential threat. The same as your house. If it burns down, you're, you don't have insurance.

Existential threat, right? What the heck are you going to do? Right? If, if you're a business with, let's say you've got 15 employees and you're doing a 2 million a year and you're working on 5 percent margins, right? So you got a hundred thousand dollars in profit coming in and you get sued for 700, 000. You're out of business, right? And so I kind of hate the scare tactic angle, but the reality is you can't ignore part of compliance is risk mitigation, right?

Mary: Right. 100%. And it doesn't have to be costly. I think, I think, It can be done fairly quickly and it doesn't have to be costly.

Mike: That's right. That's right. All right. Um, let's move on to the questions themselves. So the first question we asked in this category, do you train managers about HR laws like equal pay [00:11:00] over time? American with Americans with Disabilities Act, et cetera. Zero growth firms said yes, 56 percent of the time.

Fast growth firms said yes, 81 percent of the time. So it's a 25 percent spread that grows to 30 percent spread for your smaller firms. So not a big surprise. Thank you Smaller, not a, not, it's maybe is surprising to some people that a simple thing like, do you train your managers on HR stuff, uh, has a major correlation to revenue growth.

Not a big surprise that the smaller firms struggle more. What, what, what's your, what's your insight there?

Mary: I like to give you examples. So let me, let me give you an example. So I was, uh, on a call with a client the other day. And I was talking to them about the new changes in the Fair Labor Standards Act, the increase in the minimum salary. They were quite surprised, and this is in a state that it significantly [00:12:00] impacts the business, right?

So the, you know, it's going from 35 and change, 35 and 5 and, and change all the way up to 58, 000 and change, uh, by January of 25, which is Kind of right around the corner, Mike. Um, and I said, well, you know, talk to me about if we switch some of your salaried people who are at that 35, uh, to non exempt, will they get overtime?

And she said, no, no, no, we, we don't have overtime. And I go, you never, and it was a manufacturer. And I was like, Wow, I've never had a manufacturer say that, you know, when you have to create, you know, extra widgets because you got a new contract, there tends to be overtime in manufacturing settings occasionally.

No, no, we never have overtime. And I said, you don't. And she said, yeah, the, the managers control it. And I said, oh, that's interesting. And I'm leading a long story [00:13:00] short. How do they control it? She said, we just don't give it. If they end up working overtime, we'll give them comp. And this is the office manager.

So the managers are doing it wrong and the office manager is doing it wrong because nobody trained them. They're experts in managing production. She's an expert in managing the office. They were never taught that you can't give comp time in this situation. There's very small exemptions. You can't give comp time instead of giving overtime.

And they've been doing it for years.

Mike: Yeah. Yeah. And this is one of those things that I, I give folks the benefit of the doubt that people are not breaking the laws on purpose and try to squeeze people. This is one of those areas that you could just have a good, just a human understanding. Oh, you know what? You worked 43 this week. We'll just keep it your normal 40 for [00:14:00] on the paycheck, just 37 next week.

We'll, we'll, we'll even it out. So and the employee might not feel infringed upon at all, right?

Mary: They might like it.

Mike: they might like it, right? But that doesn't mean it's not illegal. And here's where people get in trouble. We are in this ridiculously tight labor market, right? And so maybe you've been doing this for 20, 30 years and employee has been like, family, and now you have somebody new, and because such a tight labor market, you'll take anybody, and all of a sudden that person, that happens too, they're telling their spouse or their friend at dinner over the weekend, oh, you know what, I did this, and that, that other person says, you know, that's illegal, right?

And all of a sudden, boom, they don't go to the Department of Labor, but they do talk to an attorney who absolutely pro bono says, I'll take that case. They call, all of a sudden there's a lawsuit in the Department of Labor, and guess what they do next? You're in an audit, you're in an [00:15:00] audit that goes back years, and you're gonna pay a lot of money.

Even if you, even if none of your employees were upset by it.

Mary: if we're, and if I'm going to speak to the other side, which is, you know, retaining talent, most of your employees are going to prefer a little extra money in their paycheck than working less hours the next week and making less money the next week, right? Or getting comp time. Um, so, you know, if, if, if.

If it doesn't resonate with, with people listening to, to, you know, do the right thing so you don't get audited, do it because it's a better way to retain staff because that they deserve that over time legally. But I think also most employees are going to say, yeah, I'd rather have a bigger paycheck than have a couple extra hours off next week.

Mike: And regardless, it's illegal, you can't do it,

Right.

And there's a difference between not getting caught and being [00:16:00] legal. Uh, a, a and I, I, I, I think, I think just like the house and the insurance, you may never have the fire, but God forbid that you, you don't have the insurance if it happens, right? Because you, you, you, you might not be able to recover if it does.

So. Uh, and this is an area, it doesn't cost you a cent to stay compliant other than the time invested to actually learn what the laws are, right? Um, anything else on training of managers? Uh, so, so you, you give an example of a policy that, they were like intentionally doing it wrong without realizing it, um, Any, any other cases, maybe it's ignorance of the law.

Maybe it's they're teaching something that they think is the law and it's wrong.

Mary: Yeah. A lot of times I, we have another example where, you know, the leave laws are very hard to keep up with. There's local, state, and [00:17:00] federal leave laws. And nor should a manager be an expert in HR. You know, nobody, nobody expects that. When we do this training, we're teaching, uh, managers how to recognize when to escalate to HR, where the experts can handle it.

So there was an instance where there was, you know, turnover of a very, uh, important individual. I wouldn't say high level, but it was this key person. Uh, and again, it happened to be manufacturing on the production line. They knew the machine, nobody else knew the machine, et cetera.

So when, you know, I asked if, you know, we do the exit interviews a lot and the individual said, well, I have to care for my mother.

And, uh, take her to all these, you know, appointments and my manager said I couldn't have more time off. I took all my vacation and all my sick days to Well, they were an FMLA eligible employer, [00:18:00] Mike, and FMLA was never offered to the individual because the manager had no idea. They didn't even know what family medical leave was.

So, of course, they couldn't say, go talk to HR. Maybe there's something that they can do. The individual just resigned. So, at that point, of course, we said, well, would this work? We talked through FMLA. And we kept this key person. So again, I want to just point out that yes, this is insurance when you stay on top of compliance, but it also helps your HR function, uh, work the way it should, which is to attract and retain and manage your staff properly.

Mike: Yeah. Amen. Okay. Uh, we're going to get down into the weeds in the next question is much more tactical. Do you keep form I 9 for each person you hire? And for one year after their employment ends, [00:19:00] 84 percent of zero growth firms said yes. 86 percent of fast growth firms said yes. That's a 2 percent spread.

What say you?

Mary: Um, maybe a little bit of that, but I would also say, um, and I think I've said it before, uh, we do I 9 audits. I've done them in my career and in 30 years, and I, I was just talking to this employer. I had 1 employer where I wasn't like, wow, there's so many mistakes. So maybe they have, um. The I 9, maybe they answered, let's give them the benefit of the doubt.

They answered this question right. But are those I 9s completed correctly? And when they say that everybody has an I 9, did they give it within the first three days of employment? Challenge. So, so that's a huge fine. And so is doing it properly. I mean, you can't imagine that if you fill in [00:20:00] one spot wrong, Mike, it's like 1, One little area you filled in wrong, a thousand dollar fine.

Mike: You and I have done podcast episodes on this topic. I've done it with our friend Brian Schenker. Uh, Jackson Lewis, the form, if you just glance at it, it's not that complex looking. Uh, the, the, the challenges, the requirements on the employer are incredibly specific from the timing to how it gets filled out in, in the storage.

Um, it's not complex. It's just so specific. It may be just what, what recap for the folks who haven't seen that episode yet. We encourage you to go do so. Um, what, what, what are the big gotchas?

Mary: Um, I think the three day requirement, I think one of the other things is, um, when I did an audit once I was looking at the forms and I said, why did everybody give a driver's license and a social security [00:21:00] card? Like, nobody gave you a passport. Nobody had a green card. Like, I'm so surprised. I said to the employer and they said, well, yeah, This is the offer letter and we tell them that's what they have to bring.

I said, no, no, no. There's a lot of options, right? So that can look like disparate impact. Um, so.

Mike: Explain that one. That might not be self evident to everybody.

Mary: So, you know, if you really look at an I 9, it comes with, I think it's up to nine pages of instructions. I would send, when I send the I 9 to a new candidate or hand the I 9, we do it all electronically because we think it's a lot easier, we believe it's a lot easier.

But if you want to do hard copies, you can do that. You give them the instructions and say. You can, when you look at the form, it tells you, and the instructions, it tells you all the different types of [00:22:00] identification that you can bring. And I always say it's kind of like a Chinese menu, right? So it's, it's, you can bring one thing from column A, and that would be something like a passport.

Or, Uh, an item from B and an item from C, and that would be your driver's license and your social, but there's quite a few other options. So you want to be able to give all of your candidates. Options of what they can bring in. You should not be telling them the only things that they should bring in. I would say some of the other errors that I see is that there is an employee section and then an employer section.

Every single line has to be filled in. If it's not filled in, you can put NA for not applicable and the employee must fill in their space. So, if it looks like, um, You know, you signed for the employee and you signed as the, uh, [00:23:00] employer person who's completing the employer section. Um, that that would be bad too.

So don't fill it in for the employees. They should be filling it in themselves.

Mike: Yeah. that, that example about the ID, I suspect the employer didn't even say, you can only give us a driver's license. They probably just said, give us driver's license, right? That seemed perfectly reasonable, but think about the, think about the, the other end of that. Well, you know what? I had a DUI. I, and I didn't disclose that.

I, I have reliable transportation to and from work every day. I can take the train or I have a, have a ride. Uh, I, it was embarrassing. So I didn't want to disclose that. I guess I can't work here all of a sudden.

Mary: you lost a candidate.

Mike: You, you, you lost a candidate and they probably didn't report it 'cause they didn't know better that their password pa, passport or a state ID would work just fine.

Um, but yeah, it, it, it, it's, it's crazy how nitty gritty. [00:24:00] Um, anything else you wanna say on I nines? I feel like this is a black and white issue.

Mary: it is agreed.

Mike: think maybe the question in itself and how it correlates to the 'cause. 'cause the first question we explored, do you train managers about HR laws like equal pay overtime, a DA, et cetera?

A little more generic, uh, general. This one was super specific. I think we're not trying to trip anybody up here, but when I look at, when I look at this, you know, 84 percent of the zero growth firms said yes. 86 percent of fast growth firms said yes. We just know from experience here, you know, you give one example in 30 years of somebody that that was actually true.

People just don't know what they don't know. And that's what gets you around compliance. All right, our next question. Do you have a documented process for handling HR investigations and inquiries? Pretty big spread here. Zero growth firms, 62 percent said yes. Fast growth firms, 84%. It gets to be a big spread when I look at smaller firms under 25 [00:25:00] employees.

41 percent of zero growth, 76 percent of fast growth firms. What's interesting to me here as I look at this is, It. It dropped for both. Fast growth said, uh, the bigger population went from 84 to the smaller population, 76, so dropped by eight percentage points across the whole audience. It was from 62 to 41.

So 21% is points. How I read into that is fast growth firms, smaller firms struggle with all this stuff, right? 'cause they're strapped for resources.

Mary: Right,

Mike: But the fast growth firms only dropped by 8 versus zero growth by 21. So, the fast growth firms, even in smaller companies, are still doing something right here around how they think about employees.

Because, do you have a documented process for handling HR investigations and inquiries? There actually is some legislation around this in California. We just did a show on this [00:26:00] recently. Uh, but I'd say federally, there's not like some law you must have a process, but it's a good HR best practice that indicates how you, how serious you take.

employee complaints, how serious you take employer relations, how serious you feel about your employees feeling safe and feeling heard, right? Um, what, what, what, what, what's, what's your explanation for why such a big gap on just the fact whether they do or don't have a documented process for handling investigations?

Mary: Well, and again, absolutely, of course. I'm an HR nerd. I believe all of those things. Your employees need to feel fully heard. But here's what I want to say to the business owners who are listening. If they don't have a process to follow somebody to go to internally, and it can't be 1 person, it should be 2 or 3 people, your manager, your manager's manager, or [00:27:00] the outsourced HR or the internal HR, right?

Because 1 of the, if you only give 1 person, that person could be the abuser, or you might be embarrassed to go to, you know, a male or a female to talk about these things. Um, so. If you don't have a policy like that, and they don't know who to go to, they're going to an attorney, or they're going to the Department of Labor, or they're going to the EEOC.

And you ought to listen, all of those entities are, yes, maybe you want to do the right thing, but they want to monetize. That that situation, so if you don't have an internal process where you can do an investigation and the employee knows who to go to, they're going externally and. It's, it's going to cost you money, whether or not that investigation finds that there was any fault.

You're, it's probably going to [00:28:00] cost you money.

Mike: The agreement employee, they're going to go somewhere. Probably going to start in their own household and talk to their partner or their spouse or significant other or their friends. Uh, and their friends are probably going to have a voice in what they do.

And if there is no, if they don't perceive there to be an outlet at work, Okay, here's how, here's what I do when something like this comes up. They're going to seek remedies somewhere, right? that's,

Mary: A hundred percent. And I, and I would say, and you know, this is not, not truly self fulfilling, but I do want to say that having an external person do the investigation and having outsourced HR is powerful because we used to call it, you know, and of course I was internal HR for 30 years, the walk of shame, right?

Oh man, when you come out of the HR office, everybody's going, why'd you go to HR? Why'd you go? Did you get fired? What's going on? Right? [00:29:00] So, you know, it can be embarrassing, right? So, when you have a outsourced HR, they can go into an office, they can call from home, um, and the investigation is done. And the appearance of the investigation is going to obviously feel to the employee, like, it's impartial.

Right? So, if I have a complaint against you and your best friends with Mary, the HR director, then. I'm not going to feel really confident that Mary is going to listen to me because I'm complaining about her BFF. Right? So, there's a lot to unpack there. This process has to be here to protect the organization as well as protecting the employee.

It helps your culture and I would say it ties back to productivity because if they have no place to go that everybody is talking about it and the more they're standing at the water cooler or the more they're [00:30:00] getting, you know, if you have a remote, the more time they're spending, you know, on a team's chat talking about, oh, did you hear

the less productive your staff is.

Mike: right. This is just a win win all the way around, right? So if I'm, if I'm the employee who feels aggrieved And maybe, I don't, I don't want to say feels aggrieved. I mean, maybe, maybe somebody was like literally making racially motivated jokes in the break room and it's just offensive and wrong, right?

So this doesn't have to be touchy feely, borderline gray area stuff. There's plenty of black and white, what people do sometimes are wrong. And sometimes the boss doesn't know about it. It just happened in the break room, right? If you, if you don't give that employee the opportunity to. To voice their concern and share that a, you made the case already.

They'll, they'll go outside to an attorney and guarantee that's going to be expensive or the EOC audit, or something's going to be expensive, not in a selfish way, uh, but when, when, when you create the [00:31:00] path internally, And whether it's outsourced HR, there's a whole bunch of really good reasons for that you just outlined.

Or maybe you create more of a hotline where people don't have to have that walk of shame to the HR office internally, but you create that path. You, you give an opportunity. To demonstrate how you're going to respond as a business and as a business owner. It's like, Oh my gosh, Mary, I had no idea that so and so even thought things like that, let alone said those kinds of jokes.

I want you to know, I'm going to take this super serious. I'm going to investigate this thoroughly, blah, blah, blah, blah, blah. Right. And just the empathy, the opportunity to demonstrate genuine empathy

was

Mary: Even if you think it's ridiculous, and this is part of the management training, right? You want to make sure that managers take it seriously. Escalated to HR right away, and of course, we do this training and they understand that if the employee goes, no, no, no, no, no, don't tell anybody. [00:32:00] They are obligated.

To, you know, escalate it and I'll just add 1 more thing on the compliance side, which is that the EEO has not changed their policy significantly. In over 20 years, and they just, redefined some of the areas, within the equal employment opportunity, policies that everyone should have in their handbook, and one of the areas I would say that they picked up on, which I'm thankful for is virtual harassment.

We all knew it could happen. It was always protected, but when they define it, those lawsuits will have more teeth to them. And it happens, right? So that's just something that I want to make sure our listeners understand. They need to update their [00:33:00] handbooks with that policy and probably give additional training to managers.

Mike: Yeah, that question kind of, I think, goes hand in glove with the next one. So that's having a documented process for the investigations and I almost regret a word we added here. Um, in this question is, do you conduct sexual harassment training? The question probably should have read anti harassment training because it's not a question.

It's not just harassment is harassment and it's illegal, whether it's based on gender, sexual identity, race, religion. There's lots of reasons that are illegal for harassment. Um, let's unpack the numbers. Uh, it's a 17 percent spread across the broader population. It's a 33 percent spread across smaller companies.

So once again, it's clear, of all these categories we've been talking about, uh, uh, in, in, in this series. There's always a big, almost always a bigger spread with smaller firms because they don't have the time and [00:34:00] resources to do these HR best practices. I think the gap is biggest between the broader population and the small firms around compliance.

33 percent spread, so I'm going to say just those numbers. 42 percent of zero growth firms said yes, they conduct sexual harassment training. 42%, less than half. 75 percent of fast growth firms said that they do. Um, this is one of those things. Now it's mandated in several states. I'd be curious, I'd be curious to cut the data to see, uh, how that

follows. again, what, what you, you and your team talk to clients every single day of all sizes. What's, what do you see when it comes to sexual harassment, maybe more specifically anti harassment.

Mary: Right, so sexual harassment obviously is discrimination or maybe not obvious, but it's discrimination based on sex and that falls into a lot of different categories. Right? It doesn't just mean male against female. It could be [00:35:00] female, uh, you know, to, to male. I can sexually harass you as well as you can me.

It's also, you know, harassment against, uh, Uh, it's also, you know, transgender, um, and the, um, LGBT, uh, community. So, you know, sexual harassment, you know, goes across the board, but, you know, even though it does say anti sexual harassment training in six plus states is, um, Is, you know, mandated to do that training every time we do it.

Obviously, we talk about all of the protected categories and how, uh, discrimination against protected categories for race or color religion is, is also against law, but, but I'll say this. For those, uh, states that are not mandated to do this training, yes, I, do [00:36:00] I have a difficult time, uh, having those employers get on board?

And remember, we, uh, if, if individuals listen to our last podcast about development, it can be very inexpensive to do e training on these topics, right? So, there's really no excuse. Uh, not to do it. Um, so it needs to be done, whether it's mandated or not, because it's against the law to discriminate. Either sexual harassment or other in every single state, and as we talked about in the development section, when you do training, it is positive for your culture and positive for your culture.

leads back to ROI because it's going to make people

Mike: You're, you're, you're reading in my mind. That's exactly where I was going. I mean, this is one of those things like, you're right, six plus states that it is legally mandated. [00:37:00] You must do it. But man, I just feel like this is one of those things. So, again, I keep thinking, okay, this is the compliance question.

What is it about following a law that correlates to revenue growth? And I think the basis of an employer employee relationship. is trust and respect, right? And if you, if you, if you're providing anti harassment, anti sexual harassment training in a non mandated state, what is it that you're telling your employees?

You're telling your employees that you respect them. You trust them. You want to have a safe working environment for everybody, regardless of how you view the world. Right. And I'm going to help bring people along who might not see it the same way as me. And I'm going to protect those people, uh, from, from those folks who don't see it that way.

And I'm going to establish clear law, clear rules of the road for my organization so that we can all rally together [00:38:00] around the mission of the business right?

Mary: Right. And not be distracted by, you know, feeling uncomfortable, et cetera. So a hundred percent, it, it, it leads to ROI.

Mike: Yeah. No question. All right. Let's take our last one. This is an interesting one. We could, we could go, we could go deep here. Um, I'm just going to start out by saying there's just no way businesses could possibly know all the nuance to the Fair Labor Standards Act. It is so big. It is so complex. Um, we asked the question, are you certain you are compliant with wage and hour requirements according to the FLSA?

84 percent of zero growth firms said yes. 92 percent of fast growth firms said yes. So it's not just that it's a small spread of 8%. There's not a huge correlation. Everybody is very confident that they are. Um, let's say you, Mary Simmons.

Mary: [00:39:00] Well, I I'll tell you a secret and I, I'm not embarrassed to say that after 30 plus years working with people. Um, having an assurance certification, I would tell you that I don't even know every single thing there is to know about FLSA because it can be very specific. There's always something that trips you up.

What does FLSA do? Right? The word, the name kind of tells you Fair Labor Standards Act. What they were trying to do is set a standard. So what don't they do? They don't tell you that you have to take vacation, that you have to give vacation. What they, so they don't go that route. What they say is how you pay your employees.

That's why it's named wage and hour, right? Um, that's kind of the layman. Layman term for it. So how do you pay your employees? What breaks do [00:40:00] they have to have? Now, don't forget, you're going to have state and then local law layered on top of FLSA. Your employees get the best of those laws. So in our states, and listen, it's not, everybody just thinks it's New York on one coast and California on, on the other coast and every other area is, you know, fine and there's no laws.

Not true. Massachusetts, Colorado, um, Hawaii, um, their Department of Labor's and many other states, uh, Washington State will have other, uh, laws that govern how we pay our employees. The overtime, right? So a couple of states, it's not just California, um, you know, have a nuance to the overtime. Uh, travel pay, right?

And a lot of employers go, what? And I'm like, well, you know, if you have an employee [00:41:00] go to a client or travel to another one of your stores or, you know, uh, restaurants, et cetera, what happens then? What happens if they have to fly someplace? How do you pay them? There are so many nuances here that I challenge the, the affirmative.

I like, I like the energy and I like the positivity, but I will challenge because, you know, as an HR professional, this is quicksand. And you, I study this, I probably read an article, I read an article every day on HR, but wage an hour at least twice a week will, will be the topic.

Mike: Yeah.

Mary: It's a lot to it.

Mike: Is it safe to say that most small business leaders, owners, or managers, when they think They think wage and hour, they think minimum wage, they think overtime, they think, [00:42:00] uh, Maybe, maybe they think travel pay and do I have to pay breaks? It probably doesn't go a lot deeper than that.

Mary: Yeah.

Yeah,

And probably the, the biggest area where I find the confusion is you do not have a choice people. All of your employees are exempt or non exempt. There's no in between. You don't make that decision. The employee doesn't make that decision. It's a duties test and that's what drives the exemption.

Um, so, you know, I was on a call with an employer trying to help them with the changes in FLSA. And they had no idea what exempt or non exempt meant. They're like, I just pay them all salary. That's what they want. It's easier for them. I'm like, okay, do you have an hour? Cause that's what it takes

Mike: yeah,

right. through this.

There's no such thing as I'm a sal, they're a salaried [00:43:00] employee or an hourly employee. They're exempt or they're non exempt. And the law is very specific. What qualifies for both of those categories? You don't get to choose. You just have to follow the law. And I think, I mean, fair to say you walk into businesses and people get that one wrong almost every day.

Mary: Almost every day, even HR professionals, right? If we're working with an HR professional and I've been and I've been there sometimes, you know, when you're internal, you know, it's hard to get out of the weeds and you're like, but that position's always been exempt. Right, so you just, you can't get on the balcony and kind of look at it objectively and we'll be like.

All right, let's walk through this. Do they do this? Do they do that? You know, it takes, you have to have a good job description to go with that. So that's where that HR function, you need a function, uh, to make that, you know, to, to hit all of these laws correctly.

Mike: We've been working together too long, Larry, because that's exactly where I was going to go. [00:44:00] So topic number one, uh, episode number one in this series, recruiting and hiring, question number one in that section, do you have written job descriptions for each opening? So. Here we are midway through the series and we're talking about the topic of compliance.

Are you certain you're compliant with wage and hour? It goes back to your job description. And are you writing the job descriptions? in such a way, like maybe, maybe the business, maybe because of the way your P& L works, the way you're monetize this industry or your offering, maybe you need it to be quote unquote hourly, or you need it to be salary.

Mary: Yeah,

Mike: You don't get to decide after you've hired them what you put them you need to write the job description that back that backs into The FLSA requirements, right? And so these things are circular. It's like, we, we understand and respect. Maybe you [00:45:00] need to, to, to level out, uh, your expenses to make, uh, expense forecasting easier.

So you need people on salary. Okay. But that means you've got to write the job descriptions right in the first place. You've got to hire those. You've got to manage performance accordingly. This is, this is all hyperlinked to

Mary: All related. Yeah. I love that. Hyperlinked.

Mike: I'm going to kind of, I'm going to give you the last word here.

Here's my recap. 57%, and I'm going to focus on the small businesses because I think they're, it's clear, they're the folks who struggle the most with compliance. The data is really clear on this. 57 percent of zero growth firms said yes to all five questions we just reviewed. 82 percent of fast growth firms said yes.

To all five questions for under 25 employees, 25 percentage points swing. And something that I think most businesses would not correlate to revenue growth. There's they think of, okay, there's the. [00:46:00] There's the administrative side of HR, which is following the laws and it's the boring stuff and okay, I got to do it.

But if I don't do it, am I really going to get caught? I'll, run that risk. And then there's the soft stuff of HR, which is finding talent, recruiting them, bringing on board, developing them, retaining them, and this is just crystal clear, they are completely intertwined. The companies who take compliance serious, it's part of the employee management function.

It's part of the employee relationship. It's part of trust and respect between you and your employees. And the correlation is massive, a 25 percent difference from fast growth to zero growth firms for revenue growth around compliance. Mary, you get the final word.

Mary: agreed. Um, I would say that compliance is not an option. Um, so there are areas where we have to follow compliance and I've had business owners say, okay, what's the over under? I'm like, what? They're like, okay, if I get [00:47:00] sued for this, you know, what's it going to cost me? I'll take the chance. That's not the only, that's not the only reason to follow compliance is not so that you don't get caught in an audit.

I want everybody to, see the correlation to, you know, being compliant makes for happier employees, right? It helps retain them because there could be a, you know, inexpensive, you know, option or an absolutely free option, like offering family medical leave. Does not cost an employer anything. Yes, that person is not going to be there, but it beats them resigning.

So, look at it as though when we follow compliance, that it is an employee experience to help them be more productive for your organization and to protect your organization. So, it's both.

Mike: Yeah, couldn't have said it better. Mary, [00:48:00] love talking through these topics with you. I think we have three left here. Next, uh, we're going to talk retention, performance, and then finally post employment. We'll wrap this series up. Uh, spoiler alert, our next one has the biggest impact between zero growth and fast growth firms of any other category in the survey, and that's retention.

You're going to want to stick around for that one. So until next week, thanks for joining me again, Mary.

Mary: Thanks, Mike.

Mike: And for everybody else, thanks for letting us be part of your mission to grow.

That's it for this episode of Mission to Grow. Thanks for joining us today. For show notes and more episodes, visit us at missiontogrow. com. If you found this content valuable, I invite you to share it with a friend and subscribe to the show. If you really want to help, I'd love it if you left a five star review on Apple Podcasts, YouTube, or wherever you listen.

Mission to Grow is sponsored by Asure. Asure helps more than 100, [00:49:00] 000 businesses get access to capital, stay compliant, and develop the talent they need to grow. To learn more about how Asure can help your business grow, visit AsureSoftware. com. Until next time.