BUSINESS BASICS:

Finding Employees

Oklahoma Small Business Development

Center
Northwestern Oklahoma State University
in coordination with the

Service

Corps Of Retired
Executives

and in a partnership program with the

U. S. Small Business Administration

This material is based upon work supported by the U.S.

Small Business Administration (SBA) under Cooperative Agreement # 7-7770-0038-20. Any opinions, findings, and conclusions
or recommendations expressed in this publication are those of the
author(s) and do not necessarily reflect the views of the U.S.
Small Business Administration.

Copyright, 1996
Revised, 2/2005

developed by

OSBDC at NWOSU

The Northwest Oklahoma SBDC, located in Alva at NWOSU - - with

offices at the Enid NWOSU campus and Guyman, Oklahoma - - covers a
large portion of Northwest Oklahoma.
OSBDC Regional Office
Northwestern Oklahoma State University
Alva, Oklahoma 73717
(580) 327-8608
Bill Gregory, Regional Director
Jeanne Cole, Business Development Specialist

OSBDC/SCORE Satellite Office

Northwestern Oklahoma State University
2929 E. Randolph,
Enid, Oklahoma 73701
(580) 213-3197
Melissa Cole, Business Development Specialist
Bob Wilcox, SCORE Chairman

Guyman Satellite
118 NW 4th St.
Guyman, Oklahoma 73942
(580) 338-4357
Mark Aubrey, Business Development Specialist

What If I Need Employees?

Many small businesses begin without giving a lot of

thought to hiring employees. They assume they will do all the
work themselves, get assistance from friends or family, or
simply contract out special jobs on an "as needed" basis. For
some small business ventures, this scenario might work. However, for successful small businesses, who grow at an average
rate or faster, the scenario quickly breaks down. At some point
the hiring of additional personnel becomes a necessity. After all,
80 percent of all jobs expected to be created in the United
States between now and the year 2010 are projected to come
from small business.
A common misconception among small business
owners is that "If I only hire one or two employees, I won't
have to deal with personnel problems." Wrong! It makes no
difference if you hire one, five, ten, twenty, or one hundred
employees, your responsibilities as an employer remain basically the same. These responsibilities will include paying and
filing tax returns for federal and state unemployment taxes,
social security taxes, as well as income tax withholding for
wages. In addition, you will be required to comply with workers' compensation laws, employee health and safety laws,
antidiscrimination laws, U.S. immigration laws, and a variety
of other state and federal regulations.
The important thing to remember with regard to employees is
the strict and absolute adherence to federal and, in many instances,
state labor regulations. Personnel policies and procedures are
constantly being upgraded and changed to meet new situations,
responding to emerging problems, and dealing with existing issues.

Whether you are an extremely small business, with only

one employee, or a slightly larger one, with five or more
employees, you must comply with labor laws.
Often, the first issue is "How do you define an employee?"
Ultimately, when an employer-employee relationship exists, it
doesn't matter what it is called. The employee may be referred to
as a partner, an agent, or even a contractor. It also doesnt matter
how payments are measured or paid or what they are called - wages, salaries, etc., - - or whether the employee works full or
part time; nor is there any employee class differentiation. An employee
can be a manager, a supervisor, a technician, a common laborer,
or any other of dozens of titles. The real problem comes into play
in determining the difference between an independent contractor
and an employee. The IRS poses 20 questions in order to determine if an employee or independent contractor relationship exists:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.

Are instructions given?

Is training provided?
Are services integrated into business?
Are services rendered personally?
Are assistants hired by business?
Is there a continuing relationship?
Who sets the hours of work?
Is full-time work required?
Is the work done on the premises?
Who sets the order or sequence?
Are reports required?
How are payments made?
How are expenses covered?
Who provides materials/equipment?
Does the person have an investment in the business?
Does the person work for more than one person or firm?
Is there a potential for loss?
Are services offered to the general public?
Can the person be fired?
Does the person have the right to quit?

A good general rule of thumb to define an employee versus an

independent contractor is this: If the employer has the legal right
to control the method and result of the service provided, the
individual he is controlling is considered to be an employee.

However, it is important to remember that the candidate

chosen may or may not accept the position. (S)he may have
received a better offer or may wish to negotiate employment
conditions. For this reason, it is important to predetermine
which issues (e.g., duties, pay, benefits, hours, vacations, titles,
or responsibilities) you are willing to negotiate. Once all issues
have been clarified and approved by both parties, a formal job
offer can be made. Assuming the candidate accepts, then notify
other candidates that the position has been filled. If, on the
other hand, the chosen candidate declines, you must decide
whether or not to move on to the next rated candidate or begin
the entire process again. This decision will likely hinge on the
quality of the next candidate in line.
The hiring process is complex and time consuming;
both for the employer as well as the applicant. A successful
"hire" will result in a highly motivated, qualified employee who
thoroughly understands his or her role in the company and both
feels and responds like an important part of the business team.

HIRING PRACTICES
The purpose of the following information is to provide you
with as much knowledge as possible to avoid discriminatory
issues.
Placing Ads
In placing a "help wanted" ad, or in listing openings with
employment agencies, it is important to avoid anything that would seem
discriminatory in nature. This would include references such as
these:
-

Race or national origin, including reference to "native language,

Sex classifications such as "female secretary wanted. . . "
Age such as "mature woman, over 40, or "recent graduate"
Marital status such as "married man. . ."

Also, remember that ads must be placed where disabled

individuals can learn about the available position; must not discourage them from applying; and must give them access to the
business.
Job Application and Interview "Do" and "Don'ts"
Employment applications and interviews must also avoid
discriminatory questions and/or references. The following information cannot be requested:
- The applicant's Social Security number
- Whether an applicant is single, married, divorced, or
widowed; has children, is pregnant, or plans to have
children, the age of children or child care arrangements
- An applicant's maiden name, spouse's name, or if the name
has national or religious affiliation
- Any questions relating directly to race or color
- Whether the applicant is male or female; if the applicant
is gay or heterosexual
- The applicant's age, birth date, graduation date, or any

RECRUITING EMPLOYEES
Good employees make the difference between a successful business and a marginal one. It is important to know where
to find qualified employees and where those potential employees
can receive training, if needed.
One of the very first things you should do before hiring
employees, is to ask several questions:
1) How many employees do I need? In determining how
many employees to hire, it is important to determine whether those
employees will be classified as:
- Full time, part-time, or temporary
- Entry or advanced-level
- Exempt or nonexempt
2) What skills are needed in order to perform the work
I need done? In every job there are certain skills, attitudes, and personality traits that make for a better employee. What are they? Beyond that,
are there other requirements of the position that are not typically associated with the job?
3) What education or training is available for employees? In
identifying the education and/or training required of employees, it is
important to think in terms of requirements both prior to job start and
after hire. Some education and/or training may be necessary before
you can even hire an employee; some can be provided on-the-job.
4) How will the required education or training be
accomplished? Once the required on-the-job education and/or
training has been identified, then it is important to consider "how" it
will be accomplished. Will it be done:
-

In-house
By contract
Through local education agencies
By some other mechanism

5) What will the employee(s) do? Many employers do not

bother with written job descriptions. The problem then becomes that
they can't give candidates a clear picture of what is expected from

employees (in general) or from someone in the job (in particular). In

the long run, a well thought out job description can save employers
time, money, and effort; even though writing it might be a shortterm headache.
Smart business people will take the time to transfer this information into a written job description which spells out the specific duties
and tasks required. Many cases of employment discrimination can
easily arise when these requirements are not clear to individuals
who consider themselves good candidates for a job that is vaguely
identified.
6) What are the base wages or salaries I can afford to
pay? The wages (or salary), benefits, and training, added together,
account for the overall cost of an employee. It is important to know
what that bottom line cost is to the business. Is it feasible? If not,
then you have to back up and rethink the issue to determine how to
make it affordable. (e.g., making the position part-time, cutting
benefits, etc.)
7) How should I advertise for employees? Hiring a
quality employee is not an easy task. Therefore, it is important to
determine - - up front - - what resources are available to find one.
8) What "process" will I use for hiring employees? It is
also important to determine what hiring process will be used before
interviewing begins. This means making a determination as to how
many applications will be accepted (the screening process); how
many candidates will be interviewed and by what method (the interview process); and how a final decision will be made (the decision
process).

Once all of these questions are answered, you will have

a clearer picture of what the employee should be, what (s)he is
going to cost - - in terms of time and money - - and what
benefits will be derived from having the employee if the right
hire is made. Keep in mind, that the costs associated with
having employees are much greater than the wages paid. There
are costs required by law, as well as many optional costs
geared toward helping you keep good employees. All of these
must be taken into consideration before making any personnel
hires.

Applications and job interviews should NOT ask questions like:

- The applicant's religious preference; church or parish
names of clergy; religious holidays; or place of birth
- If the applicant is a U.S. citizen; if (s)he, his/her spouse or
parents are native or naturalized; request dates of their
naturalization or application papers; any question about
national origin, including birthplace of applicant, spouse,
parents, or grandparents or date of citizenship
- For non job-related educational requirements or the
racial, national, or religious affiliation of schools attended
- Native language or how an applicant may have learned a
foreign language
- Whether or not the applicant is disabled
- Whether or not the applicant has any health related conditions
- Physical characteristics like height or weight
- For a photograph of the applicant (or take pictures during
interview)
- If an applicant has ever filed for unemployment benefits
- Labor union affiliation
- Whether the applicant owns or rents the home or who
resides with him/her
- Mode or method of transportation to work
- Club or organizational affiliation designed to reveal applicant's
religion, race, color, or national origin
- The applicant's willingness to work religious holidays
- For specific references from anyone reflecting the
candidates color, race, religion, sex, national origin, or
ancestry
- Type of military discharge or affiliation with foreign military
branches; for service record copies
- If an applicant has ever been arrested
Many of the questions above are illegal.

Fair Labor Standards Act

Applications and job interviews should ask questions
like:
- What formal training have you had?
- What practical experience have you had?
- What are your strengths and limitations regarding the
position you are applying for?
- Why do you want to work for us?
- What do you like best and least about your present job?
- Are there any conditions or situations that make you uneasy?

FLSA establishes the minimum wage for full-time,

nonexempt employees; establishes overtime pay at not less
than one and one half times the (nonexempt) employee's
regular rate after eight hours a day or in excess of forty hours
within a standard work week; sets the definition of nonexempt
employees; covers equal pay for equal work; and covers child
labor laws. (Note: Hospital and residential care facilities may
adopt, by agreement of their employees, a fourteen-day overtime
period in lieu of the seven-day work week, if employees are paid at
least one and one half their regular rate for hours worked over
eight a day or 80 in a 14-day period.)

- What kind of people do you get along with best?

FLSA does not require:

- What kind of people do you find difficult to get along with?

- What have you done in your present job that you are
most proud of?
- What do you expect to, and not to, do in the position you
are applying for?

Vacation, holiday, severance, or sick pay

A discharge notice or reason for discharge
Holiday or vacation leave
Premium pay rates for weekend or holiday work
Pay raises or fringe benefits
A limit on work hours for employees 16 years of age or older

- Do you have any questions?

- Where do you want to be in a year? Five years? Ten years?
- Tell me about yourself.
- Tell me about a typical day in your present (or last) job.
- If you could have made improvements in your last job,
what would they have been?
- Describe the best person who ever worked for you or you
ever worked for.
- What kind of people annoy you?
- How do you think your previous experience ties in with
the job we have open?
- Describe emergencies in some of your jobs for which you
had to reschedule your time.
- In what way would you like our company to assist you if
you join us?
- What is your long-term ambition or goal in life?

These are matters for agreement between the employer and the
employee.
Child Labor
Although the wording is slightly different, the Fair
Labor Standards Act (FLSA) and Oklahoma Child Labor Laws
are similar. They differ in that FLSA states that a 14 or 15
year old can only work up to 40 hours in a non school week;
while state law sets the maximum at 48 hours. Additionally,
Oklahoma has a compulsory school attendance law that must
not be violated in order to employ a minor.
Child Labor Laws apply to minors between the ages of
14 and 17. However, there are different regulations for each
age group. Minors under 14 years of age may not be employed,
while workers who are 18 or above are considered adults and
covered by regulations pertaining to the work force in general.

Student workers between the ages of 14 and 15 are

permitted to work 3 hours on school days and 8 hours on other days,
not to exceed 18 hours per week when school is in session. They are
prohibited from working between the hours of 7:00 p.m. to 7:00
a.m. When school is not in session, these workers are permitted
to work 8 hours a day, not to exceed 40 hours per week and are
prohibited from working hours between 9:00 p.m. to 7:00 a.m.
Workers between the ages of 16 and 17 are not regulated on the
number of hours they may work per day and there are no prohibited hours for this age group whether or not school is in session.
A "Certificate of Employment" must be on file for each child
14-15 years of age. These are obtained from the school superintendent.
Proof of age is required for those under 19. A "Certificate of Employment" is an acceptable proof of age.
Prohibited Occupations - Ages 14 & 15
-

manufacturing occupation
mining operation
processing occupation
workplace where goods are manufactured, mined, or processed
public messenger service
operation of hoisting apparatus or power driven machinery
occupations found and declared to be hazardous
occupations involving transportation of persons or property
occupations involving warehousing and storage
occupations involving public utilities
construction occupations
retail, food service, or gasoline service occupations involving
- work performed in or near boilers or engine rooms
- work in connection with maintenance repair
- outside window washing that involving work from window sills
- work requiring use of ladders, scaffolds, or their substitutes
- cooking or baking (except soda fountains, lunch counters,
snack bars, or cafeteria service counters)
- operation, setup or maintenance of power slicers,
choppers, cutters, and bakery mixers
- work in freezers or meat coolers
- preparing meats (except for wrapping, sealing, and stocking)
- loading and unloading goods to and from trucks,
railroad cars, or conveyors
- occupations in warehouses except office and clerical work

With proper screening, you - - the employer - - can

weed out the majority of applications and settle on the number
of candidates to be interviewed; generally three to five. If the
screening process fails to significantly reduce the number of
candidates, another look should be taken at the "minimum
qualifications." In instances where a large number of qualified
candidates are available, you can afford to be a little more
choosy with regard to preferences.
Some employers use an applicant rating form in conjunction with the interview process. The form helps to crystallize
thoughts about each candidate by rating them on their experience, abilities, and/or aptitudes. Once all of the candidates have
interviewed, the form is an excellent reference tool to measure
candidates against one another. This can be extremely helpful in
making final selection choices.
It is important to be thoroughly prepared for the interview process before interviews are scheduled. Here are some
tips:
1) Have all the needed information at your fingertips. This
generally includes the application form, a pre-established set of
interview questions, and the salary range and benefits package
being offered.
2) Avoid typical interview pitfalls such as making unfavorable comments during the interview, failing to use a uniform process, or making selection decisions based on issues other than job
qualifications.
3) To ensure a positive interview, ask open-ended questions that require explanations and allow the applicant to respond at
his or her own pace.

Here are some things to look for in "body language" during the
job interview.
- Signs of nervousness: tilting, jumpiness, nail biting,
slouching in chair, hand movements
- Grooming. Observe shoes, fingernails, makeup, hair, tics,
clothing choice, cleanliness, neatness
- Use of pat phrases or verbal crutches like "to tell the truth,"
"frankly," "basically," and "you know"
- Lapse of memory: inability to remember dates, job
changes and important events
Background and reference checks should be performed to
follow-up on the information provided by the candidate. These checks are
helpful in weeding out unqualified candidates and narrowing the field to
one or two choices. As with all aspects of the interview, background
and reference checks must be handled carefully. To avoid stepping over
legal boundaries:
1) Collect only information that is relevant to the job the applicant is
applying for
2) Reveal the information obtained only to those making the selection
decision
3) Establish a clear set of procedures on how the information will be
collected and used
4) Avoid attempts to collect information from sources the applicants
has not authorized
5) Collect information in person or by phone; not in writing

Once applications are reviewed, interviews are conducted, and

background checks performed, an employer should have sufficient
information on which to base a hiring decision.

Prohibited Occupations - Ages 16 & 17

Minors under 18 may not be employed in any hazardous nonagricultural occupation or occupation that is considered detrimental to
health and well-being. This minimum age applies even when the
minor is employed by the parent or guardian. Prohibited occupations include working in:
-

manufacturing and storing explosives

motor vehicle driving and outside help
mining
logging and saw milling
power driven woodworking machinery
exposure to radioactive substances
power driven hoisting services
power driven metal forming, punching, and shearing machines

slaughtering, meat packing, processing, or rendering

power driven bakery machinery
manufacturing brick, tile, and kindled products
power driven circular saws and guillotine shears
wrecking, demolition, and shipwrecking operations
roofing operations
excavation operations

As an employer, you must be aware of all of your

obligations under federal and state laws that prohibit employment discrimination based upon a number of issues. Equal
employment opportunity is the law! While such antidiscrimination laws apply to every aspect of the relationship between
an employer and employee like compensation, promotions,
work assignments, working conditions, and firing practices, it
is in the hiring process that most small businesses make their
major mistakes. Be sure that you, and others who might do
hiring for you, be aware of all applicable statutes:
CIVIL RIGHTS ACT
"prohibits against employment discrimination in hiring,
firing, compensation and terms, conditions, privileges of employment
on the basis of race, color, religion, sex, or national origin . . . .
prohibits any business practice that is not based on a job requirement
which has unequal consequences for persons of a different race,
color, religion, sex, or national origin."

AGE DISCRIMINATION ACT

"it is unlawful for an employer to fail to, refuse to hire, to discharge,
or otherwise discriminate against individuals 40 years of age or
older with respect to compensation, terms, conditions, or privileges
of employment because of age. . . . to forcibly retire an employee. .
.to give preference because of age to one person over another within
the protected age group."

AMERICANS WITH DISABILITIES ACT

"prohibits private employers from discriminating against individuals
with disabilities. . .prohibits retaliation against an employee for
taking any action pursuant to the act. . .requires employers to
provide reasonable accommodations to the disabled including
making existing facilities accessible. . .to provide special equipment
and training. . .to arrange part-time or modified work schedules
in order to employ the disabled."

It is also important to note that businesses that wish to

do business with the federal government are required to adopt
affirmative action programs to employee minorities; women,
people with disabilities, and Veterans. These affirmative action
programs go way beyond just the mere elimination of discrimination. Under these programs, employers must consciously make an
effort to hire more women and minority group members and to
upgrade the pay and responsibility levels of groups that have
historically been the subject of discrimination. (Note: EEOC poster
P/E-1 must be posted where employees can see it at all times. Contact the
Oklahoma Employement office for information on obtaining this poster.)

As an employer you are required to keep detailed

records regarding your reasons for hiring (or not hiring),
promoting (or not promoting), and increasing compensation (or
not increasing compensation) on all employees. This documentation is necessary in the event that your firm is ever required to
prove that it has not discriminated against certain job applicants
or employees. The best method of keeping such records is
through a formalized employee manual that clearly

documents your company's policies and procedures with regard to

personnel issues. Once established, and followed to the letter, such
documentation is difficult to dispute.
Other issues you must keep in mind as an employer include:

FAMILY AND MEDICAL LEAVE ACT

"entitles employees to take up to 12 weeks of unpaid, job-protected
leave each year for specified family and medical reasons. The leave
entitlement is for: the birth or placement of a child for adoption or
foster care; the care of an immediate family member (spouse,
child, or parent) with a serious health condition or of the employee
who is unable to work because of a serious health condition."
(Note: U.S. G.P.O. Poster 363-608 - Your Rights Under The Family and Medical
Leave Act of 1993 must be posted where all employees may see it. Contact the
Oklahoma Employment office for information on obtaining this poster.)

EMPLOYEE POLYGRAPH PROTECTION ACT

"prohibits most private employers from using lie detector tests either
for pre-employment screening or during the course of employment."

(Note: WH Publication 1462 - Employee Polygraph Protection Act must

be posted where all employees can readily see it. Contact the Oklahoma
Employment office for information on obtaining this poster.)
OCCUPATIONAL SAFETY & HEALTH PROTECTION ACT
"provides job safety and health protection for workers by promoting
safe and healthful working conditions."
(Note: GPO Poster 355-763 OL3 - Job Safety and Protection must be
posted where all employees can readily see it. Contact the Employment
office for information on obtaining this poster.)