Welcome to the October edition of the HR Advisor. This month we teach you how to conduct stay interviews, remind you of recent employment law news, and examine the requirements for classifying workers as independent contractors.
In last month’s Advisor, we discussed the reasons for conducting exit interviews. When employees leave, the exit interview can help you understand why. You may not be able to convince the departing employee to stay, but you may be able to make improvements that help you retain others.
In this article, we’re going to focus on another kind of employee interview —the stay interview. Like the exit interview, the stay interview solicits employee feedback; but instead of being conducted as an employee exits, it’s conducted before employees decide to leave. As the name implies, the stay interview asks employees why they stay.
Preparing for Stay Interviews
Stay interviews ask employees to assess what they like and dislike about working for their organization. But if employees fear reprisal, they may be hesitant to speak candidly. For stay interviews to be effective, employees need to know they can trust the interviewer specifically and their employer generally. And they need to know that their employer will listen to them and strive to make improvements based on what they learn.
Some of this trust-building will take time. Employees will probably become more open and expressive after they’ve been interviewed a few times, especially if they’ve seen changes made in response to their feedback. However, when you first get started with these interviews, it’s helpful to reassure employees that the answers they give will not affect their performance reviews or result in any kind of retaliation.
Scheduling the Interviews
Thirty minutes or less should be sufficient. Make sure you first ask the questions you most want answers to, as some employees may have long answers that lead to a fruitful, but possibly tangential, conversation. How often you conduct these interviews will likely depend on how many employees you have, who you have conducting the interviews (individual managers or HR), and whether you have regular check-ins with employees.
If managers have regular one-on-one meetings with their employees, then conducting a stay interview once a year should be sufficient. In fact, a great way to start every regular one-on-one meeting is to ask how things are going for the employee. If you’re regularly chatting with employees about these matters—say once or twice a month—a separate stay interview might not be necessary. However, having HR conduct a separate stay interview can be helpful in cases where employees are not comfortable discussing these matters with their manager.
Executing the Interviews
You may wish to open the interviews with a statement such as, “Thank you for meeting with me. I wanted to have an informal discussion about how your job is going, how you enjoy working here, and what we can do to support you. We value your feedback, and we want this to be a great place to work.”
Open-ended questions are best, as they can provide more actionable information. But it’s also important to limit your questioning to matters that are within your power to change. There’s no sense in asking if an employee is happy with their rate of pay if their rate of pay cannot be increased. Asking about pay in this case might give you additional information, but it’s likely to cause frustration on the employee’s part when nothing comes of their feedback.
Here are a few questions you might consider asking:
- What do you look forward to when you come to work each day?
- What do you like most or least about working here?
- What keeps you working here?
- If you could change something about your job, what would that be?
- What would make your job more satisfying?
- What would you like to learn here?
- What motivates (or demotivates) you?
- What can I do to best support you?
- What can I do more of or less of as your manager?
- What might tempt you to leave?
Closing the Interviews
At the close of the stay interview, review the highlights of the discussion and let the employee know what to expect going forward. You might say something like, “Thank you for taking the time to meet with me and share this feedback. I am committed to doing what I can to address your concerns. You’ll receive a recap from me about our discussion, and please feel free to come and ask questions about the items we’ve discussed.”
Documenting the Interviews
To ensure that you and the employee are on the same page about what was discussed during the stay interview (or regular check-in), take notes about what was discussed and share them with the employee afterwards. Something like, “Here’s a recap of what we’ve discussed. If I missed anything or if you have any additional feedback, please let me know and I’ll be happy to add it to the list.”
If any changes are made because of the employee’s feedback, be sure to let the employee know in the recap. Also let them know if any expected or desired changes couldn’t be made, and why (if appropriate). Transparency is key, particularly as you won’t be able to fix everything or please everyone. Employees may not like the way everything is done, but if you share with them the reasons the company behaves the way it does, they’ll be more likely to trust you and share their concerns in the future.
Requirements for Classifying Workers as Independent Contractors
There are a variety of reasons that an employer might want to classify a worker as an independent contractor (IC). The most compelling are usually the tax savings and the administrative time savings of not having to put that individual on payroll. Often employers believe that if they hire a temporary employee, this option is available to them since it seems to make sense that you shouldn’t have to jump through as many hoops when only employing someone for a few days or even a few months. Other employers believe that a worker’s consent to being classified as an IC is all that is necessary.
Unfortunately, no matter how good the reason or how short of a time the worker works for you, if they don’t pass the tests established by the Department of Labor (DOL) and IRS, they must be classified as an employee. Failure to do so could result in significant penalties due to both wage and hour and tax withholding violations.
Thankfully, the DOL and IRS tests are quite similar, and a worker who looks like an IC under one test will likely look the same when the other test is applied. Here we have provided the DOL’s test.
The DOL Test: Economic Realities
The Department of Labor identifies six points of evaluation:
Whether the work is integral to the business
The more integral the work, the most likely you have an employee. For instance, a chef, server, or general manager in a restaurant does work that is unquestionably integral to the business and what it offers to its patrons. Those people will be employees. On the other hand, someone who a restaurant hires to redesign the menu is doing work that is not integral to the business, and therefore is more likely to qualify as an IC.
Whether the worker’s managerial skills affect their opportunity for profit or loss
This refers to hiring and supervision of workers, as well as resource management. If the worker’s skills in these areas directly impact their ability to make money, they are more likely to be an independent contractor. If these skills only benefit the company, the person is more likely an employee.
The relative financial investments in facilities and equipment as well as risk of loss
To be an IC, the worker must make some investment that indicates they are in business for themselves. Simply purchasing items needed for use in doing a job for a particular employer is not enough. For instance, purchasing specialty software required by an employer is not necessarily strong evidence of being an independent contractor, whereas purchasing a laptop, software suite, and other tools of the trade that can be used on multiple jobs makes a stronger argument for IC status.
Skill and initiative used elsewhere
If a worker is using their unique skills and business initiative to procure other work, this is a good indicator that they are an IC. That said, simply having another job in the same field doesn’t make IC classification a sure thing; the worker should be exercising business judgment in a way that makes them economically independent from the employer.
Permanency of the relationship
Open-ended employment relationships are more likely to indicate that a worker in an employee, since ICs are often hired for specific time-limited projects. That said, the fact that a worker has been hired on a temporary or seasonal basis is almost a non-factor if the other elements of the test are pointing toward employee status.
Nature and degree of control
Think about who sets pay amounts and work hours and who determines how the work is performed, as well as whether the worker is free to work for others and hire helpers. An IC generally works free from control by the employer (or anyone else, including the employer’s clients). Be wary, though: a worker’s control of their own work hours is not necessarily indicative of IC status, nor is the fact that a worker works from home. If the employer is still exerting significant control over how the work is done, flexible location and hours will not be relevant.
Unfortunately, this test cannot be treated like a True/False test that a worker will either pass or fail. Rather, it requires that employers balance the evidence on each side of the equation and come to their own conclusion. Additionally, no single question will be determinative in how to classify a worker; you must consider all the factors in a test.
New Form I-9 Must Be Used
As of Monday, September 18, employers are required to use the revised Form I-9 for all new employees. This new version of the form has the revision date of 7/17/17. The I-9 form can be found here or on the HR Support Center.
EEO-1 Pay Data Reporting Suspended Indefinitely
The Office of Management and Budget has put an indefinite hold on the pay data collection portion of the EEO-1 form that was revised on September 29, 2016. The version in effect prior to September 2016, which collects data on race, ethnicity, and gender by occupational category, remains in effect.
The EEO-1 form only applies to private employers with 100 or more employees and public contractors with 50 or more employees. Affected employers should plan to submit the earlier-approved EEO-1 by the previously-set filing date of March 2018.
Overtime Rule Doubling Minimum Salary for While Collar
Workers Officially Dead
On August 29th, Judge Mazzant in the Eastern District of Texas issued his ruling on the Department of Labor’s overtime rule changes. The rules, which were slated to go into effect on December 1, 2016, have been on hold since he issued an injunction last November. As anticipated, the Judge ruled in favor of the Plaintiffs, finding that the DOL had overstepped its authority by making the new minimum salary so high.
The DOL will not be appealing the decision, but labor or employees’ rights groups could theoretically take their place in the lawsuit. However, the DOL has said they would not enforce the 2016 rules, so any further action toward implementation will ultimately be ineffective.
Additional Guides on Independent Contractor Classification
The Support Center has additional content on classifying workers as independent contractors. We have an Independent Contractor Classification Guide in the Guides section, plus 2-Minute HR trainings on both the DOL Test and the IRS Test.
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