Thriving in a
Down Economy

The global financial crisis continues to unveil new and emerging sets of challenges for eyecare professionals. One area we find most often the subject of conversations with ECPs is introducing cost improvement actions like headcount reductions or reduction in or elimination of educational opportunities.

Before taking steps to reduce the “game making” part of your practice, that is your customer satisfaction value proposition, do take into consideration myths that may affect your practice:

Remember, the profession is about people delivering value to people. The talent you obtain and retain in your practice is essential to your patients’ satisfaction and the success of your practice.

Hedley Lawson brings over 25 years of optical industry experience to Jobson Medical LLC. For over 10 years, he has been a contributing editor to VM, most recently as writer of the monthly column "Business Essentials." He is the Contributing Editor of VM's E-Newsletter Business Essentials. Contact Business Essentials with questions or comments.

How to Solve
Tardiness

Q: The owner of our eyecare practice is very particular about punctuality. We do have some people who arrive late (usually not more than 10 minutes each day). As employees, we are always sandwiched between opposing forces: employees who feel that “We are just a few minutes late, and more important, it's the results that count.”

On the other hand, the owner, who is an optometrist, always asks me as the office manager to remind people about being punctual. Now I have been charged with documenting employee tardiness. What items should I write to them about specifically?

A: Asking employees to report to work consistently at an assigned time is neither onerous nor unusual. Even so, your employees regularly show up when it suits them, managers allow it to happen, and the owner-optometrist thinks the best way to solve the problem is to have you document each tardy offense. Employee tardiness appears to be only a minor symptom, not the most pressing concern that needs to be addressed.

Address the real problem effectively and the symptom will disappear. Fight the urge to put yet another quick fix in place. Memos won’t help. You need to discover why your organizational culture allows this symptom to exist.

First, step back and take a good look at your practice’s results. It is generally easy to spot other symptoms of the bigger problem, often accepted as inevitable. They include less-than-stellar employee morale, high turnover, staff infighting and poor quality and patient service. Take note of these trends and prepare a basic report that contains relevant facts to share with your ECP owner.

Second, work with the owner to address the root causes of these symptoms. Hard questions need to be asked and honestly answered. Find out specifically about the beliefs, practices and policies that lead employees to be tardy and why the owner believes that memos on attendance are the necessary substitute for effective dialogue between employees and management.

Third, develop a thoughtful, practical plan to fix the underlying problems. You and the practice owner need to share a common understanding and commitment to the basic tenets of your business approach. You will probably need to take action in other areas, like improving interpersonal communications, training on how to effectively provide excellent patient care, fostering continuing employee development, providing employees with an understanding of why coming to work on time is important, improving employee orientation, and related items.

This will take a lot of effort to accomplish. If possible, bring in an outside consultant experienced with these issues to facilitate the process. Although you can do this yourself, an experienced hand may produce faster and better results with less contentiousness.

Employment Documentation Expiration

Q: My employee’s employment authorization document is expiring, but she has applied for her new card so can I use the receipt for the I-9 update and get an automatic 90-day extension?

A: A receipt indicating that an individual has applied for initial work authorization or for an extension of expiring work authorization is not acceptable proof of employment eligibility. In most instances, only the new EAD will suffice. However, a receipt for a replacement work authorization document resulting from, for example, a lost U.S. birth certificate, U.S. passport, or alien card can be recorded on an I-9 and provide for 90 days of work authorization pending receipt of the replacement document.

Note: Even though work authorization has expired, the immigration regulations provide an automatic 240 days of continued work authorization while employer-sponsored applications (e.g. H-1B, L-1, TN) for extensions of work permits are pending.

If you have a question or issue for one of our experts, contact Business Essentials.

—Hedley Lawson, Jr.

Business Tips for Preventing Identity Theft

Since 2004, identity theft has been the country’s number one consumer fraud issue, and recently the Federal Trade Commission issued new rules governing employer disposal of applicant and employee records (FACTA) derived from consumer reports under the Fair Credit Reporting Act.

As business owners and managers know, employers maintain records that are of great value to those who would engage in this illegal activity. Given the continuing seriousness of this issue, ECPs should audit their processes that protect confidentiality of employee information. If processes are found to be deficient, new safeguards should be implemented.

Security audits should be undertaken periodically to evaluate the safeguarding of employee data. As part of this audit process, ECPs should include a review of what employee information is maintained, how it is shared with others, both internally and externally, and whether or not there are other non-personal identifiers that could be used as alternatives.

Concurrently, the audit should look at whether such employee information is really necessary for the business or is merely “nice to have.” In the latter case, ECPs should take every opportunity to eliminate information that is found to be redundant to the operating effectiveness of the practice. As a final piece of the audit process, it is recommended that management communicate the processes that govern such information to employees within the office.

ECP managers should also remain current on developments in both the federal and state legislative arenas that impact their employee data responsibilities. At the state level, many states have passed laws restricting the use of Social Security numbers, strengthened laws on protection of employee data and increased penalties for crimes involving identity theft. At the federal level, HR 2971, The Privacy and Identity Theft Protection Act, which restricts the use of Social Security numbers, continues moving through Congress.

Back to Top

Ineffective and Costly Hiring Mistakes

Hiring the wrong employee can often lead to added expenses for businesses and ECPs are not immune to these recruiting pitfalls. According to the Recruiting Times, it costs $7,000 to replace a salaried employee, $10,000 to replace a mid-level employee and $40,000 to replace a senior executive.

According to the Workplace Violence Institute, negligent hiring costs U.S. businesses in excess of $18 billion annually. Nearly 10 percent of job applicants have a criminal record. Nearly 40 percent of HR professionals report that over the past three years they increased the amount of time spent on reference checking for potential employees, according to the 2005 Reference Checking Survey released by the Society of Human Resources Management (SHRM). According to an article on MSNBC.com, national databases have a 41 percent error rate. Surprisingly, some 34 percent of all applications contain outright lies about experience, education and ability to perform essential functions on the job, according to The Wall Street Journal.

Other statistics are equally disturbing:

• Nearly 33 percent of job applicants list inaccurate dates of employment by more than three months.

• Some 9 percent of job applicants falsely claimed they had a college degree, listed false employers, or identified jobs that didn't exist according to Resume Inflation: Two Wrongs May Mean No Rights.

• As many as 30 percent of job seekers exaggerate their accomplishments, and about 10 percent seriously misrepresent their background, according to The Complete Reference Checking Book.

• Finally, on-the-job violence costs employers $36 billion each year according to Workplace Violence Research Institute. The average award in a workplace violence lawsuit exceeds $1 million per case, according to Workplace Violence Research Institute.

In conclusion, it pays to do careful background and reference checks on potential employees before sending out that official offer letter for employment.

Source: Private Eyes, Inc., Walnut Creek, Calif.

Back to Top

IRS Redefines 'Disregarded Entity' for Employment Tax Purposes

Single member limited liability companies and qualified subchapter S subsidiaries (“Q-Subs”) are generally treated as “disregarded entities” for federal tax purposes. Effective on and after Jan. 1, 2009, an owner of a disregarded entity is required to obtain an Employer Identification Number (EIN) for the entity and pay and report Federal employment taxes and wage payments under the entity's name and EIN.

Prior to Jan. 1, 2009, disregarded entities were permitted to pay and report employment taxes and wage payments using either the entity’s name and EIN or the owner’s name and EIN. This means that if you currently operate through a disregarded entity which does not have its own EIN, you must apply for one and report Federal employment taxes and wage payments under the entity’s name and EIN.

Even though employment taxes must now be reported by the entity, the entity’s owner continues to be responsible for properly withholding and paying Federal employee side employment taxes and also for correctly classifying workers as employees or independent contractors. A failure to correctly withhold, pay, or classify workers may result in liability for the entity, and personal liability for the owner and certain other officers and employees of the entity.

The Treasury Inspector General for Tax Administration (TIGTA) recently issued an audit report that estimated a tax gap well exceeding $1.6 billion resulting from the misclassification of workers as independent contractors versus employees. TIGTA’s audit report has brought renewed attention to the issue of worker classification and the IRS plans to coordinate a study in fiscal year 2009 on worker classification and other employment tax issues.

As a result, you should expect increased audit activity in the future relating to worker classification. A disregarded entity continues to be disregarded for other Federal tax purposes. Additionally, the individual owner of a disregarded entity treated as a sole proprietorship continues to be treated as self-employed for purposes of Self-Employment Contributions Act (SECA) taxes, and not as an employee of the disregarded entity for employment tax purposes. An EIN can be obtained online by clicking here.

If you need assistance in applying for an EIN or have additional inquiries regarding your withholding and worker classification obligations, it is recommended you consult with a legal professional.

Proposed Budget Initiatives and What It Means for Your Practice

The most notable ideas proposed by President Barack Obama in his $3.5 trillion budget is a big-ticket health reform plan and a proposal to require employers to automatically enroll employees in retirement accounts.

Though details are not fully defined, here is a look at some of the ways you and your practice might be affected:

Retirement
Addressing low savings rates among U.S. workers, the proposed budget states that employers that “do not currently offer a retirement plan will be required to enroll their employees in a direct-deposit IRA account that is compatible with existing direct-deposit payroll systems.” Employees could opt out but would automatically be enrolled in a retirement account if they did nothing.

Health Care
Among the bigger-ticket items is health care reform. Other than setting aside $634 billion as an initial earmark for reforming the country’s health care system, the budget proposal offers few details. It does state that the administration’s plan would give employees the option of keeping their employer-based health plan and capping the tax exclusion for employer-sponsored health insurance.

Unemployment Insurance
Under the heading “Extend, Expand and Reform Unemployment Insurance Benefits,” the budget proposal would curb benefits fraud that, according to the Office of Management and Budget, cost taxpayers $3.9 billion in 2008. It calls for increased “funding for program integrity” and legislative changes to reduce employer tax evasion.

Immigration
Having taken E-Verify off the table in the stimulus package, the system that checks new-hire information from I-9 forms against Social Security and Department of Homeland Security databases, is now back in the proposed budget with $110 million to expand the program.

Federal Wage Reporting
The budget contains a proposal to increase the frequency employers report wages to the Social Security Administration. Currently, employers report employee wages to the federal government once a year using W-2 forms. The administration said more frequent reporting would improve tax administration and make it easier to implement their proposal to institute automatic enrollment into retirement savings accounts. The administration said it will work with states so that “the overall reporting burden on employers is not increased.”

Risky Business: Keeping Sick Employees on the Job

A couple years ago, fears of an “avian flu” pandemic and SARS swept across the globe. Today, a strain of influenza, called subtype H1N1, is raising similar concerns.

Last month, President Obama advised the nation “stay home from work if you are sick.” Unfortunately, taking a precautionary day off for a minor cold or flu isn't a viable option for many workers.

If employees fail to take the President's advice and show up for work, feverish and coughing, you may wonder: “Can we send these sick people home?”

You can. Basically, there's no law that gives employees the right to work when they're sick, nor is there any law that prevents a company from sending workers home when they aren't fit to work. In fact, employers are required to provide a safe and healthy workplace, which means you're required to prevent contagious individuals from infecting your other employees. People don't have a right to work if their health is at risk, or if they risk the health of others.

Although you can't discriminate against people who have a “disability,” temporary conditions like the flu or a cold ordinarily don't qualify. Moreover, employees may be eligible for medical leave (e.g., Family Medical Leave Act) when they're suffering from a particularly bad illness. If so, employers have the right to place these employees on leave and designate the time off as FMLA leave.

It's Your Business
Thriving in a
Down Economy

From the Top
Business Tips
for Preventing
Identity Theft

Ask the Experts
How to Solve
Tardiness

Employment
Documentation
Expiration

People
Management
Ineffective and
and Costly
Hiring Mistakes

Office Space
What Candidates
Want

Health Matters
Risky Business:
Keeping Sick
Employees on the
Job

Rules and Regulations
IRS Redefines
'Disregarded Entity'
for Employment Tax
Purposes

Proposed Budget
Initiatives and
What It Means for
Your Practice

Money Matters
One in Four
Companies Has
Frozen Salaries

Resource Corner
Links to Important
Resources

Subscribe to Business Essentials
The monthly update about day-to-day management issues for optical ECPs and retailers.

Print this issue of Business Essentials.

Get the latest optical industry news!
Subscribe to our other
e-newsletters:
VMail Extra
Lab Advisor

Office Space

What Candidates
Want

Earlier this year, the Staffing Institute solicited input from over 10,000 self described job seekers. Here are the top five areas of information they cited and would like to see from employers:

Better descriptions
More on responsibilities and performance standards.

Clear compensation
What are the realistic starting ranges?

Employee perspectives “What's it like to work there?”

Timely [and accurate] feedback
Bad news and saying you don't know is better than no response, don't hold back. Be direct.

Potential career/ development opportunities including alternative entry points.
There should be no surprise that candidates would like to be treated the way we, as employers, would like to be treated.

One in Four
Companies Has
Frozen Salaries

One in four companies have instituted salary freezes for 2009, according to a new survey from Mercer Consulting. And that total may rise to one in three employers by the time 2009 budgets are finalized, the consultancy predicted.

The biggest budget decrease in the survey findings is at the executive level, where 77 percent of the more than 400 respondents plan to decrease their salary budget from their 2008 projections.

Organizations still budgeting increases for 2009 have trimmed their salary budgets to 3.2 percent overall, down almost one-half of a percentage point from mid-October projections of 3.6 percent.

For some of the most troubled companies, even freezing salaries may not be enough to sustain operations. And for many workers, the concern is now over retaining their jobs.

Easy-reference to Web resources about human resource policies and rules

Federal Trade Commission

HR 2971, The Privacy
and Identity Theft
Protection Act

Human Resources
Management (SHRM)

Mercer Consulting

Treasury Inspector
General for Tax
Administration
(TIGTA)

Workplace Violence Institute