At-will employment gives small business owners flexibility, but misunderstandings around documentation, retaliation, and protected classes can quickly turn a termination into a lawsuit.

Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of The How of Business podcast show – dedicated to helping you start, run, grow and exit your small business.

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Resources:

Books mentioned in this episode:
[We receive commissions for purchases made through these links (more info)].

• The Happiness Advantage: How a Positive Brain Fuels Success in Work and Life by Shawn Achor

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Episode 549: Claudia St. John – Human Resources

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Sponsor:

This episode of The How of Business podcast is sponsored by BoxHero.

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Henry Lopez invites you to try BoxHero free for 30 days – with no credit card required – and see for yourself why BoxHero is the simplest solution for small businesses to track, manage, and organize inventory. Just visit boxhero.io and sign up for a free account.

You can also download the BoxHero app from the App Store or Google Play to manage your inventory on the go.

We have received compensation from this sponsor partner. We only accept sponsorships from companies who we believe provide products and services that are valuable for small business owners.

Transcript:

The following is a full transcript of this episode. This transcript was produced by an automated system and may contain some typos.

Henry Lopez (00:15):

Welcome to this episode of The How of Business. This is Henry Lopez, and my return guest is Claudia St. John. Claudia, welcome back to the show.

Claudia St. John (00:23):

Thank you so much. I’m delighted to be back.

Henry Lopez (00:25):

Absolutely. Most small business owners, including myself, I want to talk about the specific topic of at wheel employment, and it means typically that you can hire and fire anyone at any time, but there’s lots of misunderstandings and it’s one of, as I’ve observed, and Claudia will share her experiences as well, one of potentially the fastest way we can end up in a costly dispute or maybe even a lawsuit. Claudia joins me today and she’s the founder of The Workplace Advisors. I’ll tell you a little bit more about her and her background, but before we get started, you can find everything about how a business, including the resources, links that we mentioned today. And to find out more about my one-on-one and group coaching programs, just visit the how a business.com. Also to invite you to consider supporting this podcast and joining the How a business community on Patreon and subscribe wherever you might be listening so you don’t miss any new episodes.

Henry Lopez (01:17):

Lemme tell you a little bit more about Claudia. Claudia St. John is a keynote speaker, bestselling author, and the founder and CEO of the Workplace Advisors, which is a leading HR consulting, recruiting, and training firm specializing in equipping businesses with the consulting and support and people skills that we all need to grow. She’s a senior professional in hr. She has that certification. She also is a senior certified professional and a certified professional behavior analyst. All that means is a lot of credentials, a lot of experience, a lot of years of doing this. And so she uses all of that to empower organizations with, as she calls it, evidence-based based insights. I like that. Very practical. That’s what we’re about here at the how a business so that you can navigate the ever evolving landscape of talent acquisition engagement. We were just chatting before we started recording how important retention is, and today we’ll focus on specifically this one area of compliance, this broad topic of HR compliance of what is at Will employment and how do I make sure that I do it the right way. So she’s known as the workplace advisor, and so she helps organizations zoom out, shift their mindset, and build businesses that lead their industry. She lives outside of Syracuse, New York in a small town, what is it called? Jamesville.

Henry Lopez (02:34):

Jamesville. How did you end up there? I’m always curious.

Claudia St. John (02:38):

My husband, ex-husband now went to Syracuse University and we lived abroad, and when we were coming back, we were just looking for a great place to raise a family and I had a lot of criteria in that search, but I did not have weather as one of my

Henry Lopez (02:51):

Criteria, obviously.

Claudia St. John (02:53):

So as we speak, it’s very cold, so yes.

Henry Lopez (02:57):

Yeah, a beautiful, beautiful

Claudia St. John (02:59):

Part of the world. Absolutely.

Henry Lopez (03:00):

Alright, so with all of that, Claudia St. John, welcome back to the show. I say welcome back because she was previously on our show back last year on episode 5 49 where we had a broad discussion about HR as well as her background. So if you’re interested in more of that and learning more about hr, listen to episode 5 49. I also want to mention, and we’ll touch on it later, Claudia and I, I’ve known Claudia for quite some time because you were involved with us when we had the car wash business. David Gin and I,

Claudia St. John (03:28):

You

Henry Lopez (03:28):

Do a lot of work with wash operators. That’s not the only industry you serve, but a lot of work there. And you are now one of my trusted service partners for HR compliance services, and we’ll talk more about that as specifically the program you offer, which is the HR support plan, which many of my clients have signed up for. So that’s who Claudia is. Let’s get into it at Will employment. Let’s start. First of all, I want to start with the legal disclaimer. Sure. First, neither Claudia and I are attorneys. I don’t think you’re an attorney.

Claudia St. John (03:54):

I am not an attorney. No. Amongst

Henry Lopez (03:56):

All those designations,

Claudia St. John (03:57):

Not that one.

Henry Lopez (03:58):

But even if we were, we’re not your attorney, so be sure that you understand that what we’re sharing here are general guidance and that you should always consult with your HR professional or attorney on anything that’s a legal matter. Especially what we’re going to talk about here with terminating employees and all of those kind of things. This whole topic of at will employment is a legal concern as well. So I want to make sure everybody’s clear on that. We’re not trying to provide legal advice for anyone here.

Speaker 1 (04:22):

Absolutely.

Henry Lopez (04:23):

Yeah. So let’s start with defining it. What is at will? Employment

Claudia St. John (04:28):

At will employment is one of those common laws that date back from ages and ages ago. It’s not actually a law, it’s not written in law anywhere. It’s actually been developed through Kate’s case law over the years. But essentially what it states is that an employee may quit for any reason and an employer may terminate employment for an individual for any reason. It’s a very broad sort of doctrine, but what I think a lot of businesses don’t understand is that there are many, many ways that they cannot fire somebody for any reason. So I think a lot of employers think they can do whatever they want when firing or terminating an employee, and unfortunately that usually catches them up because wrongful terminations can definitely lead to very expensive law suits, as you know. And one of the challenges that a lot of our clients will all businesses face is that you can be correct in your hiring and firing decisions and still face a lawsuit and still win and spend a lot of money in the process. So avoiding any of the gray areas is always time well spent.

Henry Lopez (05:37):

Absolutely, absolutely. And not to mention that it’s best practice, right? It’s the way you would want to run your business. I think according to my research, there’s just one state, Montana that is not a quote at will employment state. Is that correct?

Claudia St. John (05:50):

It is correct. However, they do have their own statutes and laws on the books that act in very similar ways. So it’s not as though you cannot hire a fire at will. They just have a very different definition of it. That’s important if you’re operating in that state to be very familiar with that

Henry Lopez (06:07):

At this level in discussion and defining it, the way that I look at it as well is we’ll get into where you still run into trouble or the things you have to look at. In other words, we can say you can fire anybody for any reason. I’m looking at it now from the employer perspective obviously, so we’ll get to the qualifications there, but it is the opposite of if I have any kind of an employment contract with an employee, in other words, at will generally means there’s no obligation beyond what the employment I’m providing you today, if you will, up until the point in time that I decide to dismiss you or you decide to quit. There’s no other guarantees of employment, there’s no other agreements to compensation beyond what I’ve been paying you through that day or anything else that might be maybe in a comp plan or something like that, right?

Claudia St. John (06:53):

Yeah. So typically, unless you’re part of a collective bargaining agreement or you have an employment and explicit employment contract, the presumption is that you can terminate an employee for any reason. That said, there are a lot of reasons why you cannot terminate an employee. For example, you cannot terminate them for a protected class, so for their sex or their religion or their gender or their pregnancy status or their veteran status. So you cannot fire people for a discriminatory reason. You also cannot fire somebody for doing something legal. So for example, if you were asking an employee to do something illegal and they declined that request and you fired them, or if they took time off to perform a legally required service like jury duty and you fire them, that would be an inappropriate termination. So while the covenant is very broad, there are a lot of things that restrict when an employer can terminate an employee. And I’ll say this going a little bit off tangent already, the vast, I mean, I don’t think we’ve ever had a client terminate an employee for discriminatory reason,

Claudia St. John (08:04):

But if they don’t document sufficiently or if the employee suspects that they were terminated for a discriminatory reason, it is incumbent upon the employer to prove that it wasn’t a discriminatory reason, that it was a workplace related reason, that there was a purpose behind the termination. So businesses can’t just willing nilly make these decisions because it really is whether the employee agrees with that, whether the employee feels that they were terminated for a discriminatory reason or the number one reason why of the Department of Labor lawsuits is retaliation. So if you retaliate against an employee for having done something that is considered illegal, and that’s where you get into some of these very difficult lawsuits and challenges.

Henry Lopez (08:52):

And that retaliation could be depending on the size of the organization, be that me as the owner, the boss, they refuse to just do something illegal or they reported me or something like that. And so I’m retaliating. It could be that if I’ve got multiple layers, a manager who has then employee has, let’s see, circumvented them and come to management and say, I have a problem. And now that manager fires him for having done that. That’s the type of retaliation as well, right?

Claudia St. John (09:17):

Absolutely. So I mean, I think a very common one is if there’s an occupational safety and health visit or a compensation, if an employee whistle blows, for example, and then they get terminated, that is absolutely the most obvious un going to unlawful termination.

Henry Lopez (09:36):

Yeah. For example, an employee, I’ve had a client who in the past for not on purpose, they just missed some issues in California on overtime pay, they corrected it. But if an employee had reached out to the California Workforce Commission, I don’t think that’s what they’re called, but whatever they’re called and reported it, and then I terminated that employee for saying, well, why did you rat us out? That’s a wrongful termination

Claudia St. John (10:00):

Example. Absolutely. Absolutely.

Henry Lopez (10:01):

That’s retaliatory.

Claudia St. John (10:02):

That’s retaliatory. And it doesn’t even have to be that. It doesn’t even have to be that that specific, if somebody feels that, let’s say a supervisor or a manager had an untoward advance, so did something a little provocative, or maybe it came on like a sexual harassment or discriminatory claim and then that individual was fired, that’s not adjudicating. Whether or not that person’s advance was truly sexual harassment or not, but the retaliatory firing, that’s what’s going to get you in trouble.

Henry Lopez (10:31):

I see. I wanted to clarify. We do have listeners in Canada we’re talking about here, US law, that’s what we’re familiar with.

Speaker 1 (10:37):

That’s

Henry Lopez (10:38):

What Claudia is an expert in. So just to clarify, very different in Canada, have a couple of coaching clients in Canada, it’s very different laws there. So let’s just clarify that.

Claudia St. John (10:47):

Yes,

Henry Lopez (12:04):

Alright, so again, you’re starting to touch on these issues that do get us in trouble. Retaliation for all of these kind of different examples for maybe alleged or reported harassment of any sort protected classes. Let’s just go through these again, if you would

Claudia St. John (12:23):

That

Henry Lopez (12:23):

Apply in most states or if not all states?

Claudia St. John (12:25):

Well, federal law prohibits terminating somebody because of certain conditions or certain characteristics. So we term those protected classes that basically being in one of these groups protects you from being terminated for that reason. So you cannot fire somebody because of their religion, because of their race, because of their gender in some states, because of their sexual orientation, because of their military status, because of their pregnancy or their disability or their health status. Those are all conditions that you cannot fire somebody because of those things. And what I will say is that that’s federal law. Many states go much farther than that. So in certain states, California is probably the most quote notorious, but they’re much higher levels of protection. So somebody who is in collective bargaining or somebody who’s trying to bring in a union and they’re terminated, that would be considered wrongful termination. So those protections are basically specifying if you’re part of this group and this group is protected under federal law, you cannot terminate them because they are a part of that group.

Henry Lopez (13:40):

So as you stated, I’ve found as well that I think that everybody that I’ve known, everybody I’ve coached and most of us as employers, it’s not that we’re looking to do that purposely. Oh, I found out you Claudia are in one of these groups. I don’t like that I’m going to fire you. That’s not usually what happens, right?

Claudia St. John (13:57):

Not

Henry Lopez (13:58):

Usually. No. I see two scenarios, one that’s not as common, which is the group or it’s been rumored that you are in one of these categories, people don’t like it, I’m going to fire you. That would not work, right? Correct. That’s retaliatory. That’s a problem. That’s obvious.

Claudia St. John (14:12):

Correct.

Henry Lopez (14:13):

More common. It is, Claudia, your performance has been bad. I’m firing you for that. Reason happens. You’re in one of these categories. You might argue it was because of that.

Claudia St. John (14:24):

Exactly. So what I find with our clients, by and large, they end up terminating somebody because of a workplace related issue or they’re just not getting along with the team. They’re not performing up to expectations. There’s some dissatisfaction with their performance at work and that’s causing the termination, but the person who’s in that protected class may think it’s because of their protected class status. This gets to the obligation that employers have to really be very clear about making their terminations about a very specific workplace performance, and that’s where documentation comes in. What we find is that many of our clients have somebody that they just cannot. They’ve got a Sam and they cannot deal with Sam. Sam has been a problem forever and they want to get rid of Sam and then Sam does something and they’re finally done with Sam

Claudia St. John (15:19):

And they want to fire Sam. But all of the conversations that they certainly had, and our clients do have those challenging conversations about time and attendance and performance and interpersonal skills, they typically don’t document them. And so when they make that termination and when they get hit with a lawsuit, they go back and there’s nothing in their files that speaks to these ongoing challenges that they’ve had with these problem employees. And so that practice of documentation is critical because it can give you the defense necessary to say, look, it’s not because Sam is a protected class, is a person of color and pregnant and whatever. It’s because Sam failed to perform the duties of the job and we’ve had these conversations. So that’s the critical thing about documentation. It’s just our clients are doing the hard work. Your clients are doing the hard work, they’re having the conversations, they’re managing the performance on an ongoing basis, but when they don’t document it, it’s as if it didn’t happen. And that’s the challenge. That’s one of those things. If I can wave a magic wand, the one thing I would wave is to have employers just make a note of when they have these challenging conversations so that they can have that reference when and if need to be, they have to call on it.

Henry Lopez (16:35):

This is such a, I really want to explore this because this is at the heart of it. I think Claudius, we’re business owners get themselves in trouble. I would say that nine times out of 10 when I’m working with clients and there is an employee performance issue, and I ask, well, have you written them up? Have you documented that? No, we just had a conversation. And I cannot emphasize enough how important it is to have a process to documenting performance issues.

Claudia St. John (16:59):

Absolutely. And that’s one of the things that Paige always asks when we need to help firing this person. Well, what do you have in their file? How have you documented it over time? And invariably they haven’t. I think most of our clients are optimists. They had the conversation and they want to hope that that was it. And now they don’t have to have that conversation.

Henry Lopez (17:19):

It’s also a conflict. So it’s like something I, oh gosh, I have to deal with this now. Let me just deal with it. And then I think also people think they got to write a novel and it’s not the case. We can just document times, points that were made, issues that were addressed, some kind of a timeline even is always great if there was a series of issues. I think what I do see sometimes that exacerbates things is that person has been terminated shows. Look at my last review and how glowing it was. There was no mention of this one. Yeah,

Claudia St. John (17:46):

Exactly. There’s no mention in the performance evaluation. They got a standard 3% raise along with everybody else. There’s nothing from a document standpoint that shows any problem. So all of the standard things, let’s look at your performance evaluations and let’s look at your merit increases. It may all look on paper like everything’s fine. And it belies the fact that they might’ve been having real challenges with this employee over time and they just didn’t write it down.

Henry Lopez (18:10):

And I find that the reason that that happens, companies that do that is they didn’t want to have the confrontation. It was just easier to overlook it or the manager hasn’t been trained on how to properly do an evaluation if they do ’em at all. And so I think it stems from that. And also, as you said, we have the tendency to want to save people, right? Or be positive and encourage them, but you’re just undermining then your position when you do need to do something about that person’s performance.

Claudia St. John (18:40):

Absolutely, and I think there’s two different documentations that we’re talking about here. One of them is a documentation that may be part of a progressive disciplinary system. So if your handbook says we’re going to go through, we’re going to have a four step disciplinary system, and there is a requirement that you document or have a written writeup of the situation, that’s one form of documentation. But the other is just having a manager keep in their files or keep in their notes somewhere every time that they’ve had this conversation with that employee. So just keeping note of it. It doesn’t require that the employee sign off on it, it doesn’t require that the employee even knows that it’s being written down, but it’s there for your record so that you can call on it and say, we had a conversation on January 14th, we had a conversation on September 11th. All of these so that you have the track record in your notes to be able to draw on if necessary.

Henry Lopez (19:32):

And again, if it is a formal document or form, fantastic. It could be an email that I’ve sent you on this topic that documents, here’s the performance issue, here’s what we want you to do to improve it. Here’s by when or just even the documents and addresses. Keep that in file as well.

Claudia St. John (19:48):

Absolutely.

Henry Lopez (19:49):

Especially because it’s got a date and timestamp as to when we had that conversation. Right?

Claudia St. John (19:53):

Yeah. And I think for your clients when they’re developing some new supervisors and new managers getting in the habit, a lot of these are just good housekeeping practices as a supervisor or manager to do that just so that it doesn’t become burdensome. It doesn’t become like a big deal. It’s just we had this conversation and here’s what the conversation was about.

Henry Lopez (20:12):

I’m going to have a couple of downloads on the show notes page for this episode. One is a performance review form that all of you listening can download and take and modify as well as a performance issue form that you can use. And it’s a quick little for one page form that’ll help you with documenting this because I think that is, that’s great key. So go to the how business.com show notes page for this episode and you’ll find those two free downloads. Let’s continue walking through this because we’ve talked about that ongoing not only as part of a regular performance review. And again, I find that most employers don’t do them. And so if you don’t start doing that, even if it’s once a year, I like twice a year. But what are your thoughts there on formal performance reviews?

Claudia St. John (20:56):

I think formal performance reviews at a minimum twice a year because it just is a year is too long. You look back, when you look back at where we were this time last year and it seems like an eternity and performance evaluations are really an opportunity to say, and this is what an employer’s responsibility is, here’s what my expectations are of you. Do you understand those expectations? Let’s talk about how your satisfying those expectations and then adjust. And if we’re only doing that once a year, we’re missing out on the opportunity to really improve performance and really clarify that expectation. Because I do believe most employees, they want to satisfy their bosses expectations. The problem is where they’re not clear about it. The problem is when they don’t know if they are or if they aren’t and then they’re blindsided by some negative feedback or that’s when you also get into challenges because you might lose an employee for that reason and they might feel like they’re being bullied or something of that sort. So more frequently if possible, I would definitely recommend.

Henry Lopez (22:00):

So you’ve got that in place or institute that, and then when you do have a performance, I think you need to have some kind of a policy. Now if you don’t have one, it doesn’t mean that you’re in trouble, but here’s the policy and the way I’ve always applied it very generally, if it’s something that is coachable or fixable, in other words not egregious, not necessarily at the level of a fireable offense, then usually in my companies I’ve had a verbal warning nonetheless, to your point, as the manager or the owner, I make a note of that and document that internally.

Claudia St. John (22:32):

Yes.

Henry Lopez (22:34):

If it’s the second time where it continues, then usually we go to a written notice. That’s a form that we fill out that specifies what happened, what the correction needs to be and by when. And then we ask the employee to acknowledge that again, if they do or don’t, doesn’t mean it doesn’t mean it doesn’t document what we discussed.

Claudia St. John (22:50):

Correct.

Henry Lopez (22:51):

But it could be that it’s something that’s so egregious that requires a termination. In that case then what I’ve done before Claudia and let you get your thoughts is immediately I ask either my manager or myself, let’s create a timeline of events here. What happened? What are your thoughts there and feedback on that.

Claudia St. John (23:06):

I think it’s great. It’s a great business practice to have a progressive discipline process, which is what you’ve just described. It sets the expectation for the employee of what to expect. And it also sets the expectation of consistency across all of your managers. If you have a business that has layers or levels of management, I want to throw one caution out there, and that is, we talked about employment at will, but employers can by mistake get into an expectation of employment at will. If in their handbook it says, we will follow this progressive discipline system and then all of a sudden you’re not, you want to make sure that you have in there that management. Any point in time can terminate at any moment for reasons. Now, the other thing is a lot of offer letters, a lot of handbooks say that they will terminate for cause. So if your progressive discipline system says you can terminate for cause that’s not at will. You’ve actually restricted yourself by saying for cause because what is Cause Cause is actually pretty clearly defined in law, which is theft or some violence or something that’s really egregious. And it might not just be they have a terrible disposition or that they’re just not performing well

Henry Lopez (24:21):

Or they’re not a fit for the position or

Claudia St. John (24:22):

Something. They’re not a fit for the position. So I do like it when employers have a progressive discipline system because it does set that expectation. It creates some consistency and expectation, but they also should not relinquish their right to terminate somebody at will for any reason that does not violate law.

Henry Lopez (24:43):

Okay. So two things you’ve touched on that bring us back to the beginning of the cycle, which is hiring somebody. I have gotten into the habit and recommend to my clients that on those offer letters, if they do issue an offer letter, which you don’t have to, usually we do. So for more higher level positions, assistant managers and above that you specifically say that this is at will employment. So I specifically use that language. Is that what you recommend?

Claudia St. John (25:07):

Yes, absolutely. So in any offer letter, it should say employment is at will in your handbook. It should reiterate that employment is at will. It should say that nothing in this policy or nothing in this progressive discipline process or wherever it’s showing up, nothing is precluding at will employment. We retain the right for employment at will and none of these policies and none of these practices are designed to violate law. So you want to be clear that we’re not relinquishing at will and we’re not violating the law.

Henry Lopez (25:40):

Yeah, great clarification. Especially on the employee manual, right? Because the last thing we want is, okay, I created the employee manual. It was told us what we needed, and now it’s created a semblance of a contract, an employment contract. It was the last thing I wanted. I think I remember back when we did an employment manual for one of the car washes. I think we hired you to review it, if I’m not forgetting that.

Claudia St. John (26:00):

Yes, and I think I go back and forth with my team on this. There is an argument that having no employee handbook can be better than having the wrong

Henry Lopez (26:10):

Employee

Claudia St. John (26:11):

Handbook. You can. I had a client who had their handbook specified that they would offer FMLA leave, so unpaid leave for 12 weeks, but they were such a small company, they didn’t need to offer FMLA. They weren’t required to, but they had it in their handbook and so they had to comply with it. So you want to make sure that they handbook is tailored to your size. There are laws that kick in when you have more employees. You want it tailored to your geographic area. If you have a handbook that’s made in California and you live in South Dakota, that probably is unnecessary. You’re obligating yourself to things that you shouldn’t do, and you want to make sure that it doesn’t inadvertently, if you download it off the internet, you want to make sure that it doesn’t inadvertently catch you on things like this. There’s an implicit violation of employment at will in this policy. So making sure that you have the right handbook tailored for you is critical.

Henry Lopez (27:02):

Yeah, I mean if you’re in New York City, you have city laws that

Claudia St. John (27:05):

Come into place.

Henry Lopez (27:06):

So

Claudia St. John (27:06):

Many. Yeah, absolutely.

Henry Lopez (27:08):

We’ve walked through it from the things you got to think about as it relates to will employment in hiring from the offer letter to then the manuals that ideally you have the acknowledge that received, like the employee manual ongoing performance evaluations and being honest in those so that you don’t end up then having to defend why you said everything was great just a month ago, and now you’ve terminated them and documenting as best as possible those performance issues and what led up to the termination.

Claudia St. John (27:39):

Yeah. The other thing I’ll add is that oftentimes our clients, because they don’t want to be confrontational, say, we’re letting you to go because we’re shifting in a different direction. We’re letting you go because we are taking a different approach. They’re not explicit about why they’re terminating the employee. And when they’re not honest about that or when they want to avoid any conflict, so they just give them a wishy-washy answer. It’s in that space that employees can start telling themselves stories about why they were fired and they were fired illegally because the answer that they gave was not specific. And so being honest about why you’re terminating, because chances are you’re not terminating for an illegal reason, you’re terminating for a legitimate business reason. Being honest about that is so important.

Henry Lopez (28:26):

Okay, this is worth exploring here because I have taken the approach of when I terminate someone and I usually put it in writing, I try to keep it short and to the point, but I do specify that it is for performance issues. And I think that’s what you’re speaking to.

Claudia St. John (28:41):

That’s what I’m speaking

Henry Lopez (28:42):

To. You’re not saying I’ve got to get into the whole detail. We’ve discussed that I’m terminating you. This isn’t the discussion, but I should not say we just no longer have a position available.

Claudia St. John (28:52):

Correct.

Henry Lopez (28:53):

If that’s not true.

Claudia St. John (28:54):

If that’s not true, because chances are, if you’re terminating that employee and then you turn around and hire somebody, let’s say somebody who’s young, or let’s say somebody who’s a different

Henry Lopez (29:03):

Protected class background. What a protected class.

Claudia St. John (29:05):

Yeah, exactly. They’re going to be able to say, look, it wasn’t because they were eliminating the position. This position’s still there and now Steve’s in it. So that undermines as well. And again, I think most businesses short and sweet. Absolutely. My son just had to fire his very first employee two weeks ago, and that was really, he did such a great job, but the employee kept fighting back and No, I didn’t say that. And then they got into this because he wanted to prove that he was right, and that was a mistake. I said, you don’t need to explain yourself if you’re firing them because of their time and attendance, leave it at that. That’s the reason. Right?

Henry Lopez (29:44):

That’s it. That’s it. And at that point, once you’ve made that decision, it isn’t a discussion. You’re just sharing the facts with them as to why you are terminating them.

Claudia St. John (29:51):

Yes. Don’t let them try to litigate it. That’s not going to get you anywhere. Exactly.

Henry Lopez (29:55):

Alright, let’s talk about that and then we’ll start to wrap it up. If it does get to that point where somebody files a complaint or a lawsuit or whatever, what’s the first thing I should do as a business owner?

Claudia St. John (30:05):

The minute you get a lawsuit or a complaint of that sort? I think you should contact either your HR consultants or your legal advice. You want to make sure that the attorneys that you’re contacting our labor attorneys, because I find that a lot of businesses use corporate lawyers or business attorneys. That is not the same discipline. So you really want to make sure that you have somebody because that’s where your opportunity is to avoid a lawsuit. We do recommend that businesses have employee employment liability insurance, EPLI insurance. If you don’t have it, please get it. It protects you for lawsuits like this. And oftentimes that’s your first place to go to is

Henry Lopez (30:46):

Your E pli. I think most people would assume, oh, I’ve got that in my general liability policy, but that’s not the case.

Claudia St. John (30:52):

It’s not. That’s a different, and EPLI insurance is going to require that you have an employee handbook because they’re going to want to make sure that your practices not only your policies and your practices coincide and are legal. And so EPLI is a great resource and oftentimes they will settle these lawsuits on behalf of their clients just to avoid litigation. Even if the employer was right all day long, they’d just write a check and be done with it, which I can tell you frustrates our clients

Henry Lopez (31:20):

Greatly. But that applies I think, just broadly to any litigation. And it’s something that took me, I still am learning it, but because that principle kicks in, well, my goodly we’re right,

Claudia St. John (31:31):

I’m right. Yeah, this is not fair.

Henry Lopez (31:32):

You got to look at how much it’s going to cost. Right. In the car wash industries damages, for example, it’s like, okay, you can go fight that all you want, but is that really where you want to be directing your energy and spending money on legal costs? Sometimes it’s okay not to be right. Yes.

Claudia St. John (31:46):

Yes, exactly. And EPLI insurance does help. It takes, it lets somebody else make that decision for you. Exactly.

Henry Lopez (31:53):

Good point.

Claudia St. John (31:54):

Yep.

Henry Lopez (31:54):

Alright, so let’s talk about, as you mentioned, the services that you do offer the workplace advisors. First of all, give us the high level information on what you guys do.

Claudia St. John (32:03):

Sure. So we’re a national HR consulting firm. We work with small to mid-size businesses. Typically our clients, whoever’s doing HR is not an HR person. They may be the owner themselves, it may be their accounting person. So we provide the HR resources they need to be compliant and to have a safe and productive workplace. One of our core programs is our HR support plan that you mentioned. This is $189 a month. And for that we essentially are your HR backstop person. So we develop policies, procedures, we do your employee handbooks, we update them, we maintain them. We also provide unlimited consulting. So I have this situation, what do I do about this employee situation just happened, or there’s a new law that just came out, how do I comply with it? Or we’ve got people arguing politics at work, how do I handle this situation?

Claudia St. John (32:52):

So unlimited support in that regard. And we also do regulatory and compliance tracking. So if you’re in one location or if you’re in a bunch of locations, you have to comply with all of the workplace requirements of each of those states. Or in some instances like New York City, those local geographies. So that’s our core sort of anchor program. We also offer full service recruiting. We have juniors, senior and executive level recruiting packages that are available. We have compensation. We do a lot of employee development. We do behavioral testing. If your clients are not testing their employees before they hire them, that is one small thing you can do to avoid a mishi and make sure that you’re hiring the right people. So that’s a good practice. All of our pricing is affordable. It’s designed to be affordable to meet small businesses where they are, but we have some very, very big businesses that also use our recruiting services and use our compensation and our employee support. And some of them just use us to help them track. They have full fully fledged HR departments, but they let us keep all that tracking and the handbook and policy work. So we

Henry Lopez (34:01):

Really meet our clients where they are. It also serve a third party compliance component, which is so critical.

Claudia St. John (34:06):

Absolutely.

Henry Lopez (34:06):

Yeah. I think at this price point, it’s a no-brainer for businesses. I was going to ask you how many employees before it makes sense, but I think one employee and it makes sense, but what do you recommend when I get to X number of employees? It’s definitely, do you have a recommendation there?

Claudia St. John (34:21):

By the time you’re at 10 employees, you have employees. I mean, anybody under 10 employees they can maybe skate by with just having things the way that they are. Those tend to be more intimate work environments. They tend to know each other very well. But by the time you have 15 employees, you have different federal laws kicking in. So the Americans with Disabilities Act kicks in at 15 employees and many states, there are a lot of laws that kick in when you have one employee. So typically we find around 10 is when employers reach out to us. But we have, I would say a good 20% of our client base is under 10 employees.

Henry Lopez (34:58):

Perfect.

Claudia St. John (34:58):

And the reason why that is is because whoever’s doing HR is not an HR person.

Henry Lopez (35:03):

Not HR profess

Claudia St. John (35:05):

They’re the owner, right? Or they’re somebody who’s intimate in the business, but HR is not their core competency.

Henry Lopez (35:12):

And what I find is a small businesses that you really got to get to quite a level before, that’s a pillar that you bring in a professional for.

Claudia St. John (35:20):

Yes. Yeah. I mean it’s expensive.

Henry Lopez (35:22):

It’s expensive. So you might have an administrator or somebody who does that and does the financials, and they also do hr, so they desperately need that support on these compliance issues in particular.

Claudia St. John (35:35):

Absolutely. Absolutely. Yep. We don’t do payroll and we don’t do benefits, but a lot of folks get HR through their payroll, but we are a much more robust offering than what the ADPs and Paychex offer.

Henry Lopez (35:47):

Agreed. Agreed.

Claudia St. John (35:47):

I might get a phone call from them, but that’s okay.

Henry Lopez (35:51):

I have customers that have those payroll services and it’s better than nothing, but it’s not at the level that we’re talking about here. And if you mentioned when you contact Claudia and her team, I’ll have a link to it in the show notes page, the workplace advisors, if you mentioned the how of business you get your first month free on this HR support plan.

Claudia St. John (36:09):

Absolutely.

Henry Lopez (36:11):

Take advantage of that.

Claudia St. John (36:12):

We love your clients. They’re wonderful.

Henry Lopez (36:14):

Appreciate that. Alright, we’ll start to wrap it up here. Before we get there, I’m always looking for a book recommendation. Is there a book that you’ve read recently or that you would

Claudia St. John (36:21):

Recommend? Yeah, you know what? I just read The Happiness Advantage by Sean Acker, A-C-H-O-R. And it’s a wonderful read and it’s a very clear book about how mindset can shift, how productive and successful we are, that oftentimes our limitations to thriving and succeeding are our own internal mindsets. And so it’s a lovely book about how practical ways to shift mindset in order to be successful. So it’s a lovely book and I recommend it to everybody.

Henry Lopez (36:54):

Excellent. Thanks for the recommendation. I’ll have that on the show notes page as well. Hi Claudia. Let’s wrap it up. What’s one thing you want us to take away from this conversation about at will employment? From a small business owner’s perspective?

Claudia St. John (37:06):

I think the most important thing is that clients don’t intend to make mistakes or don’t intend to discriminate and don’t even know that they are. But recognizing that these are not choices that employers get to make. An employer has to follow regulatory requirements around protected class. And if the employees being terminated and they think they’re being discriminated against, that’s when a lawsuit happens. And what I always say is, if an employee sees it coming, if an employee is surprised, they’re going to sue you. If an employee sees that they are struggling and that this is not working out well and that they see the writing on the wall, you typically have very few problems with people like that because you’ve done the work to communicate with them on

Henry Lopez (37:51):

All of them. Often I find sometimes they’ll leave on their own because they know what’s coming. They understand that they’re not a fit and they’ve been told why.

Claudia St. John (37:58):

Absolutely. Absolutely. Yep.

Henry Lopez (38:01):

Yeah, I think that’s the huge takeaway. Again, to your point, and this is why you got to get help on this, it’s just like you’re not going to go prepare your own taxes or try to identify where you might have tax opportunities. Similarly here to try to do this yourself. This is not our core competency, but it can be an area that can get us in a lot of trouble and very easily avoid it because we’re not doing it on purpose, to your point, it’s just that we’re not doing it the right way. And then that can potentially get us in trouble.

Claudia St. John (38:30):

And one of the things, Henry, that I love, a lot of our clients reach out to us just practice just to get the words, what should I say? What can I say? What shouldn’t I say? And we practice with them. And so many calls are just, I need to fire this person. How do I do it? Can you coach us on how to have this critical conversation? So I absolutely agree.

Henry Lopez (38:52):

Excellent. Tell us where to go to learn more about the Workplace Advisors.

Claudia St. John (38:55):

Come visit us at www the workplace advisors.com and you’ll see all of the services that we provide. And if you go www.theworkplaceadvisors.com/services, you can see all the information about our HR support plan and all the other services that you provide. And if you sign up for the HR support plan, there’s an indicated field where you can say, I found you through the how of business, and you’ll get that first month off.

Henry Lopez (39:25):

Get that free month,

Claudia St. John (39:25):

Please come and check us out.

Henry Lopez (39:27):

Absolutely. Well worth it. And it’s my recommendation. Again, Claudia and the Workplace Advisors are my trusted service partner for HR compliance and all the HR services that she mentioned. I’ll have a link to it as well in case you’re somewhere where you can’t write it down on the show notes page for this episode@thehowabusiness.com. Claudia, thanks again for coming back on the show. We’re going to have you on as we chatted before started recording. I want to start having you come back on these different deeper dive on compliance topics. But thanks for taking the time, sharing your information and being with me today.

Claudia St. John (39:55):

Thank you so much for having me. It was an absolute delight as always.

Henry Lopez (39:58):

Thank you. This is Henry Lopez, and thanks for joining us with this episode of The How of Business. My guest today, again, Claudia St. John, I released new episodes just about every Monday morning. You can find the show anywhere you listen to podcasts, including the YouTube channel, our YouTube channel, the How of Business YouTube channel, and of course our website, the how of business.com. Thanks again for listening.