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Growing your team is an exciting time for the business. You’re adding talent, striving for bigger goals, and building even greater camaraderie.

But it can also be a stressful time if you don’t have the right tools in place to welcome a new employee. In order to commence a stellar onboarding process, it’s important that you kick things off on the right (and a high) note. Start with a simple welcome email.

A welcome email not only provides the new hire information they’ll need to get started fast, it also gets them excited for that first day of work. This article offers tips for each component of your employee welcome email: the subject line, the first day instructions and the first day agenda. Taken together, makes an excellent template. Feel free to use liberally and be sure to apply your company’s tone and personality so that it feels authentic to your employer brand. 

Craft an exciting subject line

Never underestimate the power of a great subject line – after all, this is your gateway to grabbing attention!  You can use the subject line of your welcome email to get that new hire pumped up. Freel free to have fun with the copy. Nab any the sample subject lines below or use them for inspiration.

Sample email subject lines:

  • Welcome to [Company]! We. Are. So. Excited.
  • Can you hear us cheering from here?! See you on [new hire start date]!
  • Is it [new hire start date here] yet?!

Pro tip: Use emojis! An email for such an exciting occasion deserves it. 

Provide first day instructions

We all know the feeling of getting psyched up for that first day, and then arriving only to feel lost. Your welcome email should offer point-by-point details for how to navigate their way to and around the office. Below are examples you can use in your email, but be sure to tailor based on your company specifications and perks.

Hi {insert new hire first name},

On behalf of the whole team at [company name], we cannot wait to officially welcome you to our team! We know that this is the start of something beautiful, and we’re really looking forward to working together.

Before you join us on [start date] we wanted to queue you in to a few things that might be helpful for navigating your first day.

  • Where to go: Input your office address here. Describe any specifics if they interviewed remotely or haven’t been on site.
  • Parking details: Take this opportunity to detail any helpful parking, public transport and building entry details here.
  • When to arrive: Insert preferred arrival time and a reminder about your office dress code.
  • How to check in: Let your new hire know how to get situated upon arriving. If the first thing to do is ask for their manager, let them know. If they’re joining an orientation session, this is also the perfect place to give those details.
  • Food: Give the 411 on meals at your company. Is it a tradition to go out to lunch on a new hire’s first day? Do you have in office snacks? Are there neighborhood recommendations that your team enjoys that she/he can check out? Jot a few ideas here.
  • Equipment: Deliver details about what sort of equipment your new hire may need to bring or can expect to be provisioned with. If your company provides computers to your employees, be sure they are notified ahead of time so that they’re prepared for your new teammates’ arrival. 
Attach a first-day agenda

New employees don’t just need their parking validated and directions to the bathroom. Onboarding means giving them an agenda for that first day or even week. Use the end of your email to leave a brief agenda, things your new teammate might want to bring to the office, and any pre-reading that you’d like her/him to complete before arriving. This way, you’ll both be on the same page and off to a productive start.

Pro Tip: What do you wish you had known on your first day? Crowdsource your team to collect helpful advice and documentation here.

As you prepare to send this email to your new hire, be sure that you’ve covered all of your bases by checking out 10 Ways to Prepare for an Employee’s First Day. Starting a new job is a big step for every employee; by maximizing your employees’ engagement from day one, you’ll be sure to lay the foundation for a successful journey on your team. Good luck!

The post What Goes In a New Hire Welcome Email [Template] appeared first on Zenefits Blog.

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Nothing about small business is small. The work is constant, the goals can be daunting, and the administrative tasks are endless. Employer payroll taxes are no exception.

This can feel particularly true when it comes to understanding employer payroll taxes. Like just about anything in life, there is virtually no compensation without taxation. For small businesses and other leaders, payroll is no exception. Taxes will always be on the to-do list.

Consider this a 101 on Federal employment taxes. As a small business CEO, you may or may not manage payroll and taxes on your own. Sometimes, you’ll need to work with an accountant or an advisor through your small business payroll service provider. But it’s good to know the basic categories of payroll taxes, and how they are divided up.

First, What Are Employer Payroll Taxes?

The best place to begin is with a clear definition. Employer payroll taxes come from the money you withhold from your employee’s wages, which are then given to the federal, state, and local governments.

Now let’s get into calculating payroll taxes.

Understanding Federal Taxes

On the federal level, you’ll withhold income taxes, social security, and Medicare taxes, as well as some additional Medicare taxes. Have you ever wondered what FICA taxes are? Well, FICA taxes are just another way to refer to these social security and Medicare taxes.

The IRS’s website has a helpful and simple list of all of the different types of taxes. It’s important to note that while employee taxes for social security and Medicare are relatively simple, income taxes tend to be more complicated. As The Balance explains, employers pay 6.2% for Social Security tax, 1.45% for Medicare tax, and 0.9% for additional Medicare, but income taxes are derived from withholding tables.

The next step is preparing the W2’s and a Wage and Tax Statements, which report all payments to each of your employees throughout the past year. This is to ensure your employees are being taxed appropriately— you are not required to pay anything at this step, it’s purely documentation.

Lastly, there are two more sets of federal taxes that you’ll have to pay as an employer: federal unemployment tax and a self-employment tax. The important thing to know about federal unemployment taxes is that they are paid from your business’ funds and never withheld from your employee’s pay. Self-employment taxes will, by nature, not be applied to your employees. However, they may very well apply to business owners themselves. The IRS describes them as “similar to the social security and Medicare taxes withheld from the pay of most employees.”

The last thing to know about employer payroll taxes is that it’s the employer’s job to deposit the withheld money in a timely manner. The IRS’s Publication 15 document is where you’ll find everything you need to know about the timelines associated with depositing, which vary depending on how much money is withheld.

Want more help on various tax forms? Check out this blog for further guidance!

The post What Small Business CEO’s Need to Know About Employer Payroll Taxes appeared first on Zenefits Blog.

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Whether you’re entering a new day, new week, new month, year or business quarter, there’s nothing quite as refreshing as having a “tabula rasa”. The opportunity to move forward with a blank canvas and reflect on both your business achievements and areas if opportunity only comes as often as you’d like it to, so why not get in a regular habit of reflecting? As technology continues to permeate almost every corner of our lives, it’s increasingly important to remember to put your people first. At the root of any great company are the folks that come in and roll up their sleeves alongside you, so we urge you to retain these folks and develop their careers. One way to do this is through building programming that celebrates wins, acknowledges growth, and shares development. Nurturing employee engagement efforts will help you succeed in myriad ways – discover a few tips to get started. Employee engagement benefits not only the day to

Why employee engagement is critical to business success

When you’re passionate about what you’re doing and the people you’re surrounded by, you’ll be even more motivated to do great work. However, when an employer doesn’t invest enough time in employee satisfaction, the financial implications can be staggering. According to Gallup, only 30% (1:3) of employees are engaged in their workplace. Each year, this results in $550B lost for businesses in the U.S., or $3,400 for every $10,000 of an employee’s annual salary. On the upside of this? Kenexa reports that engaged companies outperform disengaged companies by 5X and outrank poorly engaged companies in the stock market by 22%.

How recognition and rewards improve employee engagement:

Just 1 in 3 workers in the U.S. agree that they receive recognition or praise in a given week – that means that 66% are getting nothing. Nothing! Not even a pat on the back or a 2-line thank you email from their manager.  And, if this continues, Gallup shares that employees who do not feel adequately recognized are 2X as likely to quit in the next year.  And all of those empty seats can cost you some serious cash (SHRM reports up to 6-9 months of the employee’s salary).

Gallup goes on to share that recognition is “one of the most easily executed strategies,” and also one of the “greatest missed opportunities for leaders and managers”, positioning recognition as the best place to start when looking to improve employee engagement at your office.

Guidelines for building a recognition program

When implementing an employee recognition program for your team, the following criteria will help you design the most valuable experience:

  • Authenticity: Recognition and rewards must reflect your company’s mission, vision, values, and personality
  • Memorable: Recognition and rewards that allow employees to associate fond memories with your company, even after they walk out your door
  • Personal: Recognition and rewards that are personalized to your employees’ hobbies, passions and interests – rewards that feel genuine and authentic
  • Shareable: Recognition and rewards that are comfortable being socialized, allowing employees to bond and that help to improve overall company morale
  • Measurable: A program that allows the administrator to evaluate the impact on key engagement metrics that you collect in your employee engagement survey
Where to get started

As you evaluate pre-existing programming for your team, take a closer look at your onboarding processes. A new hire’s first several days at the company have much to do with their future engagement, so this is a great moment to set the tone for a supportive workplace.

By introducing them to your program early on, your new teammates will understand that leadership places value on positive company culture and retention (Blueboard, 2016 data). For tenured employees, take the opportunity of an all company meeting or all hands to present the initiative with senior leadership to demonstrate support of the program.

Keep it alive

As with any new initiative, creating a lasting, sustainable employee recognition program that works will take nurturing. Host office hours, create info tables and bulletin boards in common areas (your break room, on the refrigerator etc) to answer your employees’ questions.

The post How to Drive Employee Engagement appeared first on Zenefits Blog.

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While there is is no federal definition of what constitutes an independent contractor, each state has different regulations surrounding the term. Recently, California has established a new law, which narrows its definition of an independent contractor, helping to cut a clearer line between that and a full-time employee. Here’s what you need to know about California’s new “ABC” contractor law.

Employee or Independent Contractor– What’s the Difference?

Sometimes this line is blurred, and with the rise of the gig economy, this is a hard question. For instance, Uber and Lyft drivers perform work for those respective companies, but they do it on their own time with their own vehicles– so how are they categorized? Let’s look at some of the key differences between employees and contractors:

Description Employee Contractor
Employment laws Covered by a number of federal and state employment and labor laws Mostly not covered by employment or labor laws
Tax Documents Provides name, address, Social Security number, tax filing status, and number of exemptions on a W-4 Provides the name, address, Taxpayer Identification Number, and certification about backup withholding visit disclaimer page on a W-9
Payment Remains the same unless formally changed. Can be paid before the arranged date of payment, but never after. Contractor typically is paid after the job is complete and he or she sends an invoice.  Contractors are not paid by payroll staff in most businesses.
Reporting to other agencies Employer Reports for state and federal Unemployment Insurance Contractor is liable for reporting.
Payer’s Tax Reporting Requirements Reports all money employee received during that tax year on a W-2. Reports on payments $600 or more in a calendar year on a form 1099

Find the full graph here.

As you can see, contractors are different from employees in that they are not considered members of their hiring organization. Rather they are separate entities, hired to do one specific job, which is typically outside of the realm of the hiring organization. One of the defining characteristics of being a contractor has been that the individual must have control over his or her work as opposed to being under the direct leadership of the hiring organization.

However, it is tempting for companies to categorize certain types of employees as independent contractors. When this happens, the company may save money and the individuals are not covered by labor laws, they are not included in health insurance benefits, nor are they on payroll.

To keep companies from exploiting workers by mislabelling them, many states have developed their own definitions of independent contractors. Before the “ABC” contractor law, the State of California used what’s known as the “Borello” test.

A contractor takes on “The Man” 

Since 1989, California has used the Borello test, which was established after an agricultural laborer (a cucumber harvester) sued the organization he worked for–  S. G. Borello & Sons, Inc. The worker had been categorized as an independent contractor but claimed his role was much more similar to that of an employee’s and he should, therefore, be treated accordingly– think benefits and labor laws. Though it was a tumultuous court case, the judge ultimately ruled in favor of the agricultural worker’s.

This helped to establish the Borello test, a set of 9 factors to help determine if a worker should be classified as an employee or contractor. The main aspect is whether or not the workers truly have control over their own work— i.e. do they control their own hours? Is the work done entirely under the company’s direction or the individual’s? Some of the other factors included whether the worker or company supplied the equipment, how long the services were being performed, the payment method, etc.

Definition of the new “ABC” contractor law. 

Even with that test put in place in 1989, the California Supreme Court continued looking for a more definitive system. In early May 2018, California adopted a new contractor law modeled after Massachusettes’ regulations, which has been considered the strictest in the country. This new law is referred to as the “ABC” contractor law“ because of the three requirements: A, B, and C. Workers will only be legally categorized as contractors if they meet the following:

A) That the worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact;

B) That the worker performs work that is outside the usual course of the hiring entity’s business; and

C) That the worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed.

With this three-pronged approach, the Supreme Court is attempting to make the regulations around contractors more stringent. You’ve heard of “innocent until proven guilty,” and this is similar ideology– “employee until proven contractor.”

What’s Changed?

The main difference between Borello and the “ABC” contractor law is apparent in prong B. According to the Borello test, an independent contractor could either:

  1. perform work that is outside the usual course of the hiring entity’s business OR
  2. perform work outside all the places of business of the hiring entity.

The “ABC” contractor law eliminated that second option, performing work outside regular places, so the only way to satisfy the B prong is by truly doing work that is outside the usual course of business.

Keep these three points in mind when reviewing your list of contractors; it may just be time to make some changes.

Need some help? These are complex issues, and you don’t have to go it alone! Click here to schedule a demo and speak with an HR specialist.

The post What Employers Need to Know About the New ABC Contractor Law appeared first on Zenefits Blog.

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Nebulous. Impossible to measure. Hard to influence. These are a few ways some employers think about managing employee engagement. But it shouldn’t be this way. An engaged workforce is consistently linked to profit, customer satisfaction and employee retention rates. In fact, Gallup reports that subtle differences in employee engagement can result in 21% greater profitability. Understanding and benchmarking engagement gives you the ability to improve performance, and that starts with asking the best questions in an employee engagement survey.

This isn’t as hard you might think. In this article, we’ll give tips on how to conduct your survey, sample employee engagement survey questions to ask, and how to follow up. With the information from your survey, you will know what’s going well, what could use attention, and any red flags to head on (we suggest calling these opportunities).

How to Build Your Employee Engagement Survey Have clear goals in mind

Like any initiative, lacking clear, coherent goals can kill your survey before it’s even deployed. Before crafting questions for employees, it’s worth asking yourself: what do we really want to know about our engagement status?

Many businesses want to capture how their team feels about compensation, productivity, or whether that workplace wellness program is having an impact. Your goals will guide which questions to ask.

Let employees select from a range of responses

Instead of positioning these as yes or no questions, we recommend giving employees a bar to measure their responses from “strongly agree” to “strongly disagree” with variables in between. This lets you get a better understanding of gaps between what the employer and the employee perceive about the workplace.

For instance, the Society for Human Resource Management has consistently found that “respectful treatment of all employees at all levels” was the most highly rated factor for job satisfaction. But only 38% of employees were very satisfied when it comes to this factor.

It’s difficult to capture discrepancies like this with just yes-or-no answer options.

Keep the survey responses confidential

In order to collect true, honest feedback, it’s critical to ensure employee confidentiality. Without this guarantee, employees may fear that their responses could work against them, which defeats the purpose of the employee engagement survey. Confidentiality is more important than anonymity in this case as you want to be able to zero in on certain demographic and team trends. Read more about the difference between confidentiality and anonymity here.

Sample Employee Engagement Questions and Categories

Once you’ve assembled your goals for the survey, you can start drafting the questions. In this section, we unpack specific engagement categories and sample questions to include. Use these for guidance but customize them based on your company’s needs, size, industry, and other factors that make your employee base unique.  

Questions to gauge engagement within the company

Consider starting your engagement survey with questions that assess an employee’s overall impressions about the company. While these are high-level queries, they’ll ensure you have a benchmark for how the team feels about the company’s direction and general satisfaction. It’s important to keep these simple and allow responses to range from “strongly agree” to “strongly disagree.”

        Sample Questions:

  • I would recommend this company as a great place to work.
  • This company motivates me to go beyond what I would in a similar role elsewhere.
  • I see myself working here in two years time.
Questions on company leadership

Your company’s leadership is one of the most critical factors in business success, employee engagement, and driving performance. Again, these questions tend to be high level, but important in measuring whether the leadership team is adequately communicating the vision and goals for the company.

      Sample Questions:

  • The broader leadership team (directors and above) demonstrate that
  • people are important to the company’s success.
  • I have confidence in the senior leaders [company CEO] and her/his direct reports.
  • The senior leaders have communicated a vision that motivates me.
Questions on the employee’s manager

It’s rare to find a successful company that relies solely on a senior leadership team. Individual managers are more likely to have a day-to-day impact on an employee’s job satisfaction and engagement. In fact, a survey by the American Psychological Association found that nearly 80% of employees who felt supported by their supervisor also trusted their employer, while 56% of employees who didn’t feel supported by their supervisor reported a lack of trust in their employer.

Clearly, a good relationship between managers and their direct reports have a huge impact on overall engagement.

       Sample Questions:

  • My manager gives me useful feedback on how well I am performing.
  • My manager has shown genuine interest in my career aspirations.
  • My direct manager motivates me to do my best work.
Questions about individual roles

If you don’t understand, enjoy, or have the resources to do a job well, it’s unlikely one will stay engaged with work. You should gauge how well your staff comprehends what their roles entail, how to access tools and resources, and how their roles fit into your business’s larger strategy.

In some cases, you might find gaps among certain teams or functions. Other times, you might find an organizational challenge, or too much overlap between roles. The key is asking the employee to think about his or her specific responsibilities in order to see how the company is engaging overall.

         Sample Questions:

  • The information I need to do my job effectively is readily available.
  • I have access to the things I need to do my job well.
  • I have enough autonomy to perform my job effectively.
Questions about the company’s culture

Maybe you’ve heard this adage before: culture eats strategy for breakfast. In other words, you can have the best strategy in the world, but if your culture doesn’t encourage honesty, fairness, innovation, and recognition, success will be hard to achieve.

To determine culture, questions tend to address whether employees feel supported as a whole, rather than in their specific role or by their direct manager.

       Sample Questions:

  • Generally, I believe my workload is reasonable for my role.
  • We act on promising new or innovative ideas.
  • Day-to-day decisions here demonstrate that quality and improvement are top priorities.
Growth and development questions

An organization is a living organism. So it’s important that your employees don’t feel stuck or that they’re driving down a dead end street. The questions addressing personal growth and development should provide insight into their satisfaction, whether they are learning and adopting new skills, and if they believe performance is fairly evaluated.

       Sample Questions:

  • I receive appropriate recognition for good work.
  • I have access to the learning and development I need to do my job well.
  • I am given opportunities to develop skills relevant to my interests.
Ask some open-ended survey questions

When you give employees an outlet to voice their concerns, they feel heard. And feeling heard is an undervalued but incredibly crucial aspect of employee satisfaction and retention. One of the best ways to do this is by offering a free response portion to your employee engagement survey. However, do note that free responses are better used to collect input on specific subjects, rather than on quantifiable topics.

For example, by leaving a free-form response for a question that asks about work-life balance, you will get long-form answers that run the gamut about something that could be distilled more easily with a scale. However, if you pose a question such as “what can we do better?” or, “what type of learning and development initiatives would you like access to?” you guide your employees to leave a more directed response.

        Sample Questions:

  • What process needs improvement?
  • If you could wave a magic wand, what change would you make to the company?
  • What is the highlight of your work this month?

Remember, conducting an employee engagement survey is a first step, not a final destination. The next phase of the process is ensuring you follow up on concerns and deliver actionable changes that leadership will take to address employee feedback.

How to Turn Survey Results Into Action

Know your goals? Check. Create survey questions? Check. Now it’s time to get your survey in front of employees, ensure they actually engage in the survey, and take action based on the results you collect.

There is no one-size-fits-all model. Each company has its own culture, communication styles and channels, and means of implementing changes. But the following three steps are perhaps the most crucial for success:

1. Assemble engagement survey champions to drive participation

Sending one or two emails may feel effective at first, but it’s common for employees to forget an opt-in effort like a survey. Designate “Survey Champions”, or a representative from each department at your company who you can work with to ensure they’re constantly encouraging their teams to participate. Send updates to the entire company with status check-ins on which departments have completed the survey to 100%. You can even gamify the experience by offering a prize to the team who completes it fastest!

2. Address results as a team

If you conduct an employee engagement survey and don’t address the outcomes, then you will only reinforce the idea that employee opinions are not valued. Address the outcomes with leadership first, then require that managers to address the company-wide results with their smaller teams. Guaranteeing complete anonymity as it relates to responses is important to ensure honest and candid answers.

3. Hold post-survey check-ins

Create action items for your team to focus on. Have routine status updates on how implementing change is going, and keep everyone honest. Improvement is a group effort, and it starts with genuine transparency. If your team uses a collaboration tool for different projects or sprints, create a new one that focuses solely on survey feedback and assign owners to each facet. For instance, does your onboarding need improvement? Work with a member of your team to decipher what can be changed, and then encourage them to own that enhancement. When you get together for your team meetings, be sure that survey feedback is a topic on the agenda on a regular basis to demonstrate the importance of delivering change.

There’s no “set it and forget it” approach for employee engagement. Similarly, your employee engagement survey questions might need to be adapted as you dig into initial results and find gaps to fill.

Be sure to keep a regular cadence for deploying the survey, communicating the results, and using the data to make improvements. And don’t stop there– want more helpful tools and tricks for improving your company culture and employee engagement? Download our Employee Handbook guide! In it, you’ll find 20 customizable templates to help you build your culture and onboard new hires faster.

The post The Employee Engagement Survey | How to Ask the Right Questions appeared first on Zenefits Blog.

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One thing that every business with employees (aka practically all businesses) will have to contend with is crafting a paid time off, or PTO, policy. In recent years, flexible paid time off policies—aka policies that allow employees to take time off when they need it for increasingly varied reasons—have stormed onto the scene. But if you’re confused by the different PTO policies, you’re not alone.

It’s important to understand the facts behind different policies. We explore the reasoning behind flexible paid time off, and what you should know before rolling it out to employees.

What Is Flexible Paid Time Off and How Does It Work?

The defining characteristic of flexible paid time off policies is that, as APS Human Capital Management explains, they “bundle PTO by combining sick leave and vacation time.” This means that employees have a greater level of flexibility to choose the type of time off they need.

Flexible PTO policies work particularly well for companies whose work takes place outside of the traditional 9-5 workday. However, trust is a key factor—management has to trust that employees are handling their PTO appropriately and not abusing it. 

One of the major benefits of flexible PTO policies is that they accommodate the increasingly diverse workforce. Not everyone celebrates the same religious holidays, and for some, birthdays matter more than national holidays. Flexible PTO policies also make room for alternative types of days off like mental health or wellness days.

Remote working days are another element of many flexible paid time off policies. Though they’re not technically time off as employees are still working, it’s part of the flexible work environment.

How Is Flexible PTO Different Than Unlimited PTO?

While flexible and unlimited paid time off policies are often used interchangeably, there’s an important difference between the two. As the name suggests, unlimited PTO policies are truly unlimited—employees can take as much or as little time off as they desire. But while certain flexible PTO policies can be unlimited, they aren’t inherently. Flexible PTO policies can be flexible as to the kind of time employees take off but can still pose rigid caps on the amount of time off if employers choose.

One CEO ran an unlimited PTO experiment at his company a few years back and wrote about his experience for Fast Company. In the article, the CEO noted that “over the course of the [experiment] year, employees took roughly the same number of vacation days under our unlimited policy as they did the year before, when we accrued paid time off (PTO) in a more traditional system.”

If you’re worried that an overly flexible or unlimited policy might lead to chaos, evidence actually suggests the opposite. As an Inc.com article puts it, “just because PTO is unlimited doesn’t mean it isn’t planned… Employees still request the time off with their manager and the team works to ensure no balls are dropped.”

The bottom line is that flexible PTO policies can be as flexible or as structured as you need them to be.

Considerations When Crafting a Flexible PTO Policy

For those ready to take the next step and craft a flexible PTO policy of their own, here some of the elements you will need to consider as you decide on your policy’s parameters according to Business Benefits Group:

  • Personal Days. Time off for reasons that don’t fall into traditional sick or vacation days.
  • Holidays. Flexible PTO should outline how national holidays are going to be handled, especially if your business doesn’t close on holidays. Be sure to consider floating holidays as well and outline a process for selecting those days off as well.
  • Grieving. This type of time off is traditionally given to employees when they experience a death in their immediate family. Note that a flexible PTO policy provides an opportunity for an expanded view on bereavement in a world in which the definition of “family” is rapidly evolving.
  • Leaves of Absence. If you offer extended time off, your flex policy will want to cover the circumstances under which it is granted and how it would be carried out.

Perhaps the best thing about flexible PTO policies is that they’re exactly that: flexible—for both your employees and yourself when it comes to how you want to design your policy.

This article is for informational purposes and is not meant to provide legal, regulatory, accounting, or tax advice.

The post What You Should Know About Flexible Paid Time Off appeared first on Zenefits Blog.

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Not every employee is the same. Similarly, not every item in an employee’s payroll will be the same– particularly when it comes to the complexities of supplemental payroll.

Supplemental wages are part of an employee’s compensation that doesn’t fit into their normal wages. The types of compensation that can be categorized as supplemental payroll are crucial for small businesses should look at and know. We look at four examples here, but you should also review the IRS’s guidance on supplemental wages as well.

What is supplemental payroll?

Supplemental wages are types of compensation that are paid in addition to the employee’s regular wages. So these wages, when specified by the employer, are paid out as supplemental payroll.

Why does this matter? Basically, it comes down to taxes. If the employee is paid the supplemental wages as regular pay, then it’s taxed at the same rate. But if it’s paid out separately, or in the same check but specified as supplemental wages, it can be taxed at a separate rate or at an aggregate rate. (More on both processes can be found here.) The supplemental tax rate currently is 22%. But it can vary for state taxes. For instance, the supplemental wage tax rate in California is 10.23% for bonuses and stock options or 6.6% for other types of supplemental wages.

How you decide to pay out supplemental wages in your payroll can depend on what’s best for your company, pay periods, employees and state regulations. You should refer to your own state’s rules. (If you’re a Zenefits customer, you can also speak with a certified payroll advisor to walk through these scenarios and get advice.)

But to get a better grasp on how supplemental payroll might work, let’s take a look at a few examples.

Supplemental Payroll Examples:


1. Accumulated Sick Leave

If you allow employees to accrue their unused sick leave, paying this out at the end of their employment could fall into the supplemental wages category. How much you pay out, and whether you have to pay it out, is dependent on your company policy and the laws of the state you do business in or where the employee resides.

  2. Severance Pay

Situations that warrant severance pay are layoffs, mutual agreements to go your separate ways, and job elimination. Whether you are required to pay out a severance package is, again, based on the laws of the state where you do business and your company policy. But many employers choose severance pay to cushion a termination or avoid legal issues down the road.

Whatever the case, severance packages can be paid out as a supplemental payroll depending on how you structure it.

3. Payments for Nondeductible Moving Expenses

Sometimes work means a move. In certain cases, the employer might choose to reimburse the employee for making the move. For non-deductible moving expenses, the employer can specify the reimbursed expenses or allowances as supplemental wages.

4. Bonuses and Commissions

For many companies, paying bonuses or commissions is critical to hitting their goals. This is especially prevalent for sales professionals and employees who are paid according to quotas. Bonuses or commissions are typically paid separately from a regular paycheck and separately taxed on a percentage basis.

It’s important to note that if your employee is able to achieve more than $1 million in supplemental wages, then it’s taxed at a higher rate of 37%.

Supplemental payroll is something every small business should be aware of. When and where to use it needs to be carefully considered based on what’s best for the employee and the employer. For more information on tax consequences for employee benefits like these to stay fully informed as an employer, check out IRS Publication 15B.

This article is for informational purposes and is not meant to provide legal, regulatory, accounting, or tax advice.

The post 4 Supplemental Payroll Examples Small Businesses Should Know appeared first on Zenefits Blog.

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Welcome to Take Five, our customer Q&A series in which our Zenefits customers share their experiences through five questions!

We’re pleased to introduce you to Sori Ptalis, the operations manager at Web Marketing for Dentists (or WM4D), a company serving the dentist community for over 13 years. Sori has the broad responsibilities of HR administration, talent acquisition, account management, and is involved in all aspects of making to ensure the company’s internal operations run smoothly. Within these many roles and responsibilities, she has found gratification in improving company culture and watching her team grow.

Customer Marketing Manager Kim Saloner sits down to “take five” with Sori:

Kim Saloner: What Zenefits functionality has most changed the way you run your business?

Sori Ptalis: By far, the Time Off feature has made everything PTO-related way easier. It eliminates the guesswork with each employee and keeps things very straightforward. From our processes like management approvals to onboarding new hires, it’s easily one of the features our whole company appreciates the most.

KS: What are your company’s core values and how have these developed over time?

SP: We’ve come a long way building the team we have now, so we protect what we’ve built by becoming more meticulous about who we let in. I’ve made sure that we carefully engage with people who have the characteristics that match our values. We value integrity, self-motivation, good work ethic, and professionalism. Nurturing these values was instrumental in our growth.

KS: What was your biggest “Aha!” moment in using Zenefits?

SP: My first “aha!“ moment was actually the day I discovered Zenefits. Right after I signed up, I realized how awesome it would be to no longer manage spreadsheets. Our ”system” wasn’t practical, especially as we started to grow. I had to manage these ridiculous spreadsheets that required color coding and equations with information that didn’t carry over from one to another. Although very helpful in other types of tasks, spreadsheets were not made for this.

KS: How has integrating Zenefits into your role been helpful?

SP: I would recommend Zenefits to anyone who works in HR, someone who occasionally has to wear the hat of a hiring manager, or anyone who just could use help managing company time. It’s awesome because everything people-related is in one place and saves everyone time. I like it mostly because it doesn’t feel awkward, clunky, or buggy.

KS: Lastly, what’s the best business advice you’ve ever received?

SP: The best business advice I have ever received came from one of my previous directors. He was recommending a book to me called ”Who Moved My Cheese?” by Spencer Johnson. In essence, he told me about how companies have to move where the market moves and need to keep trying new things to succeed. He told me “no matter what business you’re in, keep embracing change.”

The post Five Things You Didn’t Know About Customer “Web Marketing for Dentists” appeared first on Zenefits Blog.

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To stay competitive in today’s talent market, your organization must have a culture that sets your team apart. Ideally, employees are happy, dynamic, cooperative, and display ingenuity– but these characteristics necessitate a healthy work environment, support, and a positive culture in the office.

While this may seem like common sense (and all the rage in Silicon Valley), many companies and businesses are still unsure how to attain this culture. Many will look for quick fixes– providing lunches, comfy couches, pool tables, office yoga classes– but these work perks are not what define company culture. It’s much more complicated than that.

What defines company culture?

Well, that’s hard to answer– so we asked a professional.

Marc Prine has a Ph.D. in Industrial Organizational Psychology and founded MIP Consulting, or “Management Integrating Psychology” Consulting. As an I/O psychologist, Prine specializes in the study of human behavior in organizations and the workplace. He studies the culture within organizations and how to select the right people to help foster that desired environment.

“Some leaders tend to oversimplify culture,” says Prine. “The way ‘culture’ is defined academically is a lot more behavioral-based than the way pop management has started talking about it. When I think about building culture, it’s about building a team and selection of employees based on behavioral competencies and abilities. A positive culture will be the byproduct of selecting the right individuals.”

How to hire the “right person”

Trying to fix culture by throwing free snacks and meditation classes into the mix is like treating the symptoms to an illness, not the root cause of the illness itself. In fact, according to Marc, there isn’t a lot you can do to fix the culture on the surface level. First, you have to start at the foundation.

“The trick to creating positive culture is hiring those with the right technical skills, but also those who do things in the right way. They have to have values that fit with your company and your style of work. So it’s a combination of those two factors that’s going to lead to the culture that you’re looking for.”

Finding the perfect person for the job is every hiring manager’s goal. But what’s the secret to doing so? That’s where Marc comes into play. Companies hire him to help them perform what’s called strategic job analysis, a process which adds quantitative data to candidate selection.

“So, that basically comes from everything from the job description to the recruiting process, and how you’re selecting people who will ultimately construct the culture you want,” says Prine.

Related: 10 Ways to Prepare for an Employee’s First Day

5 Hiring tips from the pro

There’s no getting around it; you won’t have positive culture without the right people. Here’s how to get there:

1. Strategic Job Analysis

Strategic Job Analysis can sound daunting, but the ideas behind it are quite accessible. To get started, have current employees fill out job analysis forms, or interview them to get a good grasp on what each job role entails. It’s also a good idea to ask managers what skills are the most useful in the roles they oversee. All of these steps will help you identify specific skill sets and traits that will make the ideal candidate. (Lifehack: you can also hire a pro like Marc to help you out.)

2. Create a standardized interview

Develop a structured interview and specific metrics to use across candidates.

“The first thing I do is identify which behavioral competencies are necessary for this job role, field, and organization. If, for example, there are six competencies you’re looking for in a candidate, then that interview will dig into those areas, and I will use those same six questions for everyone we interview.”

Not only is this a productive, strategic, and fair process, but it can also help you avoid tricky legal situations.

“If you walk into a room and you just say something like tell me about yourself, then you’re not really getting any predictive value from that interview and you’re more likely to unearth certain information that would suggest some background information or hint at their religious affiliations, sexual orientation, etc. Once that data is added into the process, then you’re more likely to have problems and potential for bias.”

3. Ensure employees are properly incentivized

It’s not what your employees accomplish, but how they accomplish it. If you prioritize making sales over the nature or fit of each sale, there can be negative consequences. Sales reps will end up selling to clients that aren’t a best fit for your product, and there will be tension and unhealthy competition within your sales team. It’s important to examine those dynamics and understand the potential implication.

Marc takes this concept way back– to old school operant conditioning. “Operant conditioning is about carrots and sticks. It’s creating the environment where people are incentivized in the right way; the process by which things are done is just as important as any output. That process builds culture.

4. Write a realistic job preview

A common mistake of trying to fix your culture on the surface-level is advertising a false work environment. Don’t promise an office culture you can’t deliver on; it will most likely have adverse effects.

“There’s a crazy finding in psychology research: if you tell people exactly what you expect of them, that’s what they do,” says Prine. “It’s important to get rid of any role ambiguity there might be.

Try to include a detail description of what to expect, even on a day-to-day basis. Include the fun things your team does together, but don’t embellish.

“Don’t say you’re a fun company and then cite your ping pong table as the reason why– that doesn’t mean you’re fun. If you’re going to expect the person to occasionally work 15-hour days, then let them know that. It’s going to attract the right kind of person and predictability can ultimately increase job satisfaction.”

Remember: there’s a good, bad, and ugly to every single job.

5. Be open to change

Be open to some changes, but don’t worry– you don’t have to change everything.

“Everyone is hesitant to change. What I would say is define what you like about the old process, then what you’re looking for, identify your pain points, and then take the empirical-based approach based on all of that data.”

We don’t leave other aspects of our roles to intuition or “gut feels,” so why would you leave your hiring to this instinct?

“The problem is that I typically deal with older managers who say things like, ‘I know talent when I see it,’ so I want to talk about that mindset. Have you ever made a bad hire that way? Okay, then maybe it’s time to try something new.”

Moving Forward

It turns out that the secret to hiring for “culture fit” is more analytic than the way it’s been viewed in the past.

First, identify your core values, your ethical standpoints, and the way in which you incentivize your employees. Create standardized interview questions for each role and train all your hiring managers to stick to those questions; discuss what they should look for in candidate responses and keep the conversation clear from casual conversation that will reveal personal information.

When you hire the right employees for the right reasons, a positive culture will just…happen. Plain and simple; no shortcuts. So ditch the ping pong table and go find your top talent– happy hiring!

The post Building a Positive Culture from the Ground Up | 5 Pro Hiring Tips appeared first on Zenefits Blog.

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As the People Platform, we always have customers in the front of our minds. We like to hear what they love, what they want to see more of, and what we can improve on. This week, we talked with a customer whose approach to building his business, product, services, and team starts with one unifying concept: always do the right thing for the right reasons.  

And guess what? It’s working.

Eric Edelson, the CEO of Fireclay Tile, has helped scale a 32-year-old business from 20 employees to 150 in just a few years. In the process, he’s turned the business from a tile manufacturer to a one-stop, “dirt to doorstep” creator, distributor, and vertically-integrated sales organization. He’s also gotten Fireclay certified as a B Corp, meaning that the company has met rigorous standards of social and environmental performance, accountability, and transparency.

What’s his and his team’s secret to success? It turns out that one of the keys to doing the right thing is measurement and analysis. Measuring success necessitates a tool. 

We sat down with Eric to hear what he had to say about using Zenefits, Fireclay’s system of record for benefits, payroll, HR, time & attendance, and onboarding.

Which crucial business measurements do you power with Zenefits?

Eric: We use Zenefits’ business intelligence and reporting all the time. We can pull detailed information and run analyses much faster than before. So when we want to introduce new benefits or increase contributions, we know the financial impact it will have.

This includes foundational things like health, dental, and 401k contributions, which are now much easier for us to measure and for our employees to access. We can see who is enrolled or not enrolled in benefits and help educate our employees to increase enrollment and increase satisfaction with their packages.

Related: Onboarding Musts: Explaining Health Insurance

We look at pay across teams and by gender to ensure we are paying fairly. We also compare our base pay to local fair living wages using MIT’s Fair Living Wage Calculator to ensure we are paying a living wage at a minimum. This has helped us increase wages over 50 percent on average for the Fireclay team over the past four years.

We have a continuously updating employee roster on Zenefits for fast, easy communication. This feature is truly invaluable, not only because our roster changes so frequently, but also because most of our employees don’t have Fireclay email addresses. With this feature, we can quickly pull a current roster and send a mass email to all team members, ensuring we keep everyone informed. Before this feature, communication was much more complex, largely paper-based and slow. We also do fun things like track shirt and sweatshirt sizes for swag for employees and their kids.

How were you measuring success and tracking all of this before Zenefits?

Eric: We didn’t. We tried building our own system in Salesforce, but it was too challenging to maintain and it wasn’t nearly as robust as what we have in Zenefits. The information was always wrong and out of date. Given that our headcount is 7.5 times larger than it was in 2009, we need a system that scales with us.

What practices does Fireclay have to ensure fair pay?

Eric: It’s actually quite simple. We record and review the data to ensure we are paying fairly across genders for similar roles and experience levels. We also ensure we have a strong balance of genders across all roles and levels to mirror our customers. Our client base is majority female, so 66 percent of our leadership team is female, 77 percent of our non-production team is female, and over 45 percent of our company overall is female. We still have work to do on balancing our board of directors, which is currently four men, but we’re making progress.

What does being a B Corp mean to you? To your people?

Eric: Being a B Corp is huge for us. It holds us accountable to metrics beyond profit or cash flow. It pushes us to be a better business and use business as a force for good. It allows us to measure ourselves against the best of the best, such as Ben & Jerry’s and Patagonia, and helps us improve each and every day.

For more on The Fireclay Tile Story, check out their success video, here:

Reimagining the Employee Experience with Zenefits - YouTube

The post Measuring Success with Zenefits appeared first on Zenefits Blog.

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