Need a Peep?
Recruit • Hire • Interview • Train •
Manage
Independent Contractor vs.
Employee
Bryan Donohue, CFO

Buffalo News Sales Team

Differences between
independent contractor &
employee

Local laws & where to verify
them
Buffalo News Sales Team

Commission only
 Generalist
 Sell all products
 Provide client relationship management
 Provide benefits
 Earn the right for time off based on years of service

Salary plus commission
 Specialists
 Have an expertise in a certain product area
 Provide support to generalist to close a sale
 May bring in new clients and manage that relationship
Independent Contractor vs. Employer
Federal and State Laws may differ
Check both before
classifying a person
Laws are all Different

Google “employee vs independent contractor”
 IRS website yields federal employment tax law
 State of Ohio Department of Labor has new rules
 State of New Hampshire has new rules for 2012
 State of New York rules are contradictory
 For tax purposes a person can be classified as an independent contractor.
 For worker’s compensation purposes that same person can be classified as an
employee.
 Seek legal advise about your specific circumstance
 IRS web site
 State Department of Labor web sites
Federal Tax Law – From IRS.GOV
IRS Summertime Tax Tip 2010-20
As a small business owner you may hire people as independent contractors or as employees. There
are rules that will help you determine how to classify the people you hire.
This will affect how much you pay in taxes, whether you need to withhold from your workers
paychecks and what tax documents you need to file.
Here are seven things every business owner should know about hiring people as independent
contractors versus hiring them as employees.
The IRS uses three characteristics to determine the relationship between businesses and workers:
1) If you have the right to control or direct not only what is to be done, but also how it is to be done,
then your workers are most likely employees.
2) If you can direct or control only the result of the work done -- and not the means and methods of
accomplishing the result – then your workers are probably independent contractors.
3) Employers who misclassify workers as independent contractors can end up with substantial tax
bills.
Additionally, they can face penalties for failing to pay employment taxes and for failing to file
required tax forms.
Federal tax law from IRS.gov
Workers can avoid higher tax bills and lost benefits if they know their proper status.
Both employers and workers can ask the IRS to make a determination on whether a specific individual is
an independent contractor or an employee by filing a Form SS-8, Determination of Worker Status for
Purposes of Federal Employment Taxes and Income Tax Withholding, with the IRS.
You can learn more about the critical determination of a worker’s status as an Independent Contractor or
Employee at IRS.gov by selecting the Small Business link.
Additional resources include IRS Publication 15-A, Employer's Supplemental Tax Guide, Publication
1779, Independent Contractor or Employee, and Publication 1976,
Do You Qualify for Relief under Section 530? These publications and Form SS-8 are available on the
IRS website or by calling the IRS at 800-829-3676 (800-TAX-FORM).
Links:
Publication 15-A, Employer's Supplemental Tax Guide ( PDF )
Publication 1779, Independent Contractor or Employee ( PDF )
Publication 1976, Do You Qualify for Relief under Section 530? ( PDF )
Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax
Withholding ( PDF )
Compensation

Compensation plans should benefit your
employee and your company.

They affect:


Your company culture

Whether or not you stay in business
Whether you can attract and retain
employees (from competitors)
Creative Compensation at
Google

On-site massage therapist

Travel insurance

Free lunch & snacks

Legal aid

On some campuses, on-site dry
cleaning, childcare & dentist

Gameroom

Free shuttlebus with wireless
to/from work at some locations.

…..& more….

Baby bonus & extra time off

Dollars for education/learning
Creative Compensation at
Magic City Post

On-site car wash – 1X per month

Shop local budget ($250 annually)

Group lunch – every Friday


3 free logo shirts & 10 logo water
bottles
Favorite snacks in the office fridge
– always

Summer hours

Healthcare stipend

Learning stipend

Game & Fitness in our facility


$50 grocery gift certificate each
month
1X per month – individual activity
with each employee

1X per quarter – group retreat

At least 20% of time dedicated to
learning
Performance-based Compensation
at Magic City Post

1 month sabbatical after 1 yr. of
service (must perform at level 3
or above)

Profit sharing (annual bonus)

Reps – go-ahead bonuses

Present on your desk when you
do something amazing/or
recommend process
improvement outside your job
scope
Find out what your
Competition offers…
Robert Fuqua
CEO
Recruiting “High-Caliber” Employees
(from an entrepreneur’s perspective)
Atlas RFID Solutions, LLC
May 16, 2012
Birmingham, Alabama
Presentation Purpose &
Agenda
One (1) entrepreneur’s experience in recruiting and retaining a “high-caliber” team.
Key Tenets:
-Define what “high-caliber” means to you.
-Establish your culture that will attract your definition of “high-caliber” professionals.
-Reinforce your culture.
-Celebrate culture successes.
-Make the tough decisions.
-Recruit “high-caliber” talent that will be a cultural fit.
-(vs. skill sets and experience level).
-Try to scare the recruit away.
Presenter’s Qualifications
Total Hires for Atlas:
Current Employees:
47
22

Academic Performers
3 West Point graduates
1 Princeton graduate
3 Georgia Tech graduates
1 Vanderbilt graduate
1 Berkeley graduate
2 Duke MBAs
2 Emory MBAs
Relocations to
Birmingham

From San Francisco

From Washington D.C.

From Charlotte, NC

From Memphis

From Atlanta (x3)
Corporate Transfers








Arthur Anderson
The Shaw Group
Novak & Biddle
Regions Bank (x2)
First Commercial Bank
AT&T (x2)
Southern Company
Blue Cross Blue Shields
“Seek first to understand; then to be understood”
-Stephen Covey
Define “High-Caliber”
Define What “High-Caliber” Means to You.
Atlas Case Study
-
How do you size people up?
-
How do you measure effectiveness?
-
Who impresses you?
-
Why do they impress you?
-
Where do these people live, work, go to
school?
-
DOCUMENT YOUR DEFINITION. KEEP
IT ON YOUR DESKTOP.
RF Definition of “High-Caliber”:
-
Top 1% Intelligence
Articulate; good communicator
Very Strong work ethic
Pattern of achievement under difficult
circumstances
Scrappy problem solvers
Extremely competitive
“Team Player”
Hungry for success
Establish Your Culture
“Seek first to understand; then to be understood”
-Stephen Covey
Establish your culture that will attract your definition of “high-caliber”
professionals.
Atlas Case Study
-
-
What is important to you in life? Why are you doing this? What
is your greater purposes?
How do you relate to “high-caliber” professionals? When are
“high-caliber” professionals impressed by you?
-
Figure these things out… Capture in in a document. Save it on
your desktop. Post it in your office.
-
Commit to these values for the long-term. Learn how to
communicate them effectively. Practice communicating these
tenets to others.
-
A CLEAR UNDERSTANDING OF YOUR VALUES WILL BE THE
BASIS OF YOUR CULTURE AND WILL BE THE PRIMARY
POINT OF ATTRACTRION TO PROFESSIONAL RECRUITS.
- Culture based upon exceptional
global-level achievement.
- Defined Mission and Values in static
document called “The Core”.
- Developed analogies that help me to
effectively communicate Atlas’ culture
and values:
- Special Ops Philosophy
- 100% Effort on the Basketball
Court
Reinforce Your Culture
“Seek first to understand; then to be understood”
-Stephen Covey
-
Establish rules and policies that reinforce
the merits of your culture.
-
Routinely communicate the tenets of
your culture.
Atlas Case Study
-
Celebrate successes that come as a
result of your culture.
-
Make the tough decisions to eliminate
threats to your culture.
A higher standard
- No detail too small.
- “The Tie Guys”
Work ethic
- We don’t track time in/out.
- We don’t track vacation days.
- Huge awareness to customer
comments regarding this.
Tough Decisions:
Recruit “High-Caliber” Talent
“Seek first to understand; then to be understood”
-Stephen Covey
Recruit “high-caliber” talent that will be a
cultural fit.
Atlas Case Study
-
Order of Significance when Hiring:
- “High-Caliber” Match?
- Cultural Fit?
- Experience Level.
- Skill Set.
Talent Before Skill Set
-
Project Manger  Sales Guy
Retail Manager  Project Manager
Financier  Product Manager
Accountant  Goodbye
Creative Compensation Models
-
Try to scare candidates away from your
company.
-
Never let compensation be the
showstopper when you know you have a
strong fit!
-
Identify the specific hurdle.
Creatively resolve the hurdle with a timeline.
-
Relocation
House sell
Equity
Guaranteed commission
Professional training
No travel
Work from home
Summary
“Seek first to understand; then to be understood”
-Stephen Covey
TENETS:
-
Define what “high-caliber” means to you.
-
Establish your culture that will attract your definition of “high-caliber” professionals.
-
Reinforce your culture.
-
Recruit “high-caliber” talent that will be a cultural fit.
KEY POINTS:
-
DOCUMENT YOUR VALUES AND DEFINITIONS. KEEP IT ON YOUR DESKTOP.
-
A CLEAR UNDERSTANDING OF YOUR VALUES WILL BE THE BASIS OF YOUR CULTURE AND WILL BE
THE PRIMARY POINT OF ATTRACTRION TO PROFESSIONAL RECRUITS.
-
REINFORCE YOUR CULTURE DAILY, MAKE THE TOUGH DECISIONS, OR LOSE YOUR TALENTED
PROFESSIONALS.
-
ALWAYS BE RECRUITING. IT’S YOUR MOST IMPORTANT TASK AS AN ENTREPRENEUR.
Questions?
Recruit

Write job description, and figure out exactly
what/who you are looking for. Tell them
what’s in it for them.

Network, network, network

Tell everyone you meet at business
meetings that you are hiring & the
qualities/traits you are looking for

Attend job fairs & follow-up

Always be recruiting…
Alex Papike, VP
Sample Job Posting
Magic City Media, publishers of Magic City Post & ShopBirmingham.com, is looking for a talented Sales Affiliate to join our
team. You’ll help local independent businesses learn how to market/advertise online, and you’ll help our team grow and
thrive by meeting monthly sales goals. We offer an excellent digital training program along with enhanced, ongoing
learning opportunities and a unique culture that supports collaborative decision-making. Magic City Media is a year-old
start-up company located in Innovation Depot, a world-class technology incubator in downtown Birmingham. We were
recently named ‘Best Local Website’ by readers of the Birmingham News, and our shopping sites are the ‘buy local’
platform for the communities of Homewood and Mountain Brook.
For this role, you must be a curious type – interested in learning something new everyday as you’ll dedicate at least 20% of
your time doing just that. You must also be able to perform in a team environment and support your colleagues and the
community in a positive, motivational way.
We offer:

A team-based work environment

Performance-based compensation

Monthly grocery stipend & free car washes

Healthcare & fitness stipend

Month-long sabbatical after 1 yr of service

Path to advancement
Interested candidates can connect with us on Linked In or email their resume to:
emily@magiccitypost.com.
Recruit

Pull: Place job on college job boards (usually
free)

Pull: Place job ad on your own website &
social media channels

Network: Contact local Professors of Sales
& Marketing programs & ask them for their
best candidates

Direct: Contact student media at local
colleges/universities
Interview
The #1 reason
why people
leave an
organization is
because of a
values misfit.

Pitch

Cultural fit?

Clear & precise on training program

Follow-up with all candidates
Hire

Call to offer position (don’t leave a voice mail
with the offer)

Send offer letter immediately with all details




Start-date
Compensation
90 day trial
Employee should sign/send back
Offer Letter
Dear Susan,
We are pleased to offer you a Sales Affiliate position with Magic City Media.
Your compensation is performance-based, so in addition to your base salary of $10 hourly, you will receive a 20% commission on all sales above your base-level goal each month. Your baselevel goal will be given to you prior to the start of the month by me. You will receive your base salary check each Friday and your commission will be paid on the 15th of the month for the
previous month’s collected revenue.
You will also receive some fringe benefits that we’ll cover with you in detail on your first day with us. We determine our fringe benefits based on employee feedback, so those could change on
a quarter-to-quarter basis, and we look forward to hearing from you on which benefits you find to be most valuable. Mary Neal, our Marketing Coordinator, is a big fan of the grocery
stipend right now. She can tell you all about that on your first day with us.
Your offer is contingent on a background check of your references, which will be completed by Friday. You will also be subject to a 90-day probationary period as I described during your
interview.
Your start date will be May 1, 2012 at 9:00am or a mutally agreed-upon date.
Please sign and return this document via fax (205-250-9038) or email (emily@magiccitypost.com) to indicate acceptance of the position no later than April 22, 2012 at 5:00pm.
Welcome to the team!
Best,
Emily Lowrey
________________________________________
Emily Lowrey, CEO
Magic City Media
____________________________________________
Susan Jones
1st Day

Keep the momentum going from the start.

All forms ready prior to arrival.

Training scheduled prior to arrival.

Goals prepared prior to arrival.
Manage: Snowflake exercise

Three management styles:
1. Laissez-faire
 Chaos, need for control
2. Autocratic
 Don’t do anything unless the
leader is here
3. Democratic
 Participatory decision-making
Manage: Four phases of
employee development

Manage your employees to where they’re at
currently, with the goal of getting them to the
next stage.
4 Levels of Employee
Development
1.
Full Direction: They need you to clearly direct them on
most everything they do.
2.
Half/Half: They can take on some tasks, but still need
direction on most.
3.
3/4 -1/4: They can take on most every task, but still
come to you for approval.
4.
Optimal Performance: They take initiative and own work,
making nearly all decisions in their specific area of focus.
Questions