your one-stop resource for everything related to starting a small business in colorado.

Personnel Policies, Finding and Hiring Employees, Employee Regulations

Once you have determined that you will need employees in your business, you must invest the proper time and resources into establishing your personnel policies and finding the right people. You must also be aware of the federal and state regulations for employees.

Personnel Policies

While establishing written personnel policies may be time consuming, it can prevent significant aggravations and problems later. Your policy manual should address all the various issues you expect and don’t expect to arise in the normal operations of your business — the good and the bad. However, written policies establish rights and responsibilities for your employees AND yourself. If you establish written policies, it is important that you also follow them (e.g. written warnings, review procedures, etc.). Issues that may be addressed by personnel policies include:

  • Hours: How many hours are to be worked per day, per week? Discuss evening, weekends, holidays, peak periods, etc. Remember all employees except salaried supervisors are entitled to receive overtime. Determine how you will allow employees time off for personal needs. Establish clear procedures for paid and unpaid time off for emergencies, family illnesses, jury duty, etc. The Family and Medical Leave Act requires all employers with 50 employees or more to provide up to 12 weeks of unpaid leave for births, adoptions and health care of immediate family members in a 12 month period.
  • Compensation: Make your salaries are competitive with similar local businesses. Wages are a significant cost in operating your business. However, low wages can result in higher turnover and lower productivity. Establish clear vacation policies, including length and timing of vacation. Clearly define procedures for when two or more employees wish to go on vacation at the same time. Will you provide paid or unpaid vacations? Paid vacations are an expected basic benefit by many employees.
  • Fringe Benefits: Consider offering your employees discounts, health insurance, pension plans, profit sharing and/or educational assistance. Fringe benefits can increase worker job satisfaction and productivity. If you provide benefits, determine which employees will receive them (e.g. all employees, only full-time employees, only management, etc.). You must have clear, written, non-discriminatory policies for all fringe benefits. See the Liabilities and Insurance chapter of this guide for more information about health insurance. If your business requires skilled, professional employees and/ or you desire to establish a long-term employment relationship, a pension plan and/ or health insurance may be a requirement to achieve employee loyalty and commitment. If you offer a pension plan, it must meet the requirements of ERISA (Employee Retirement Income Security Act). General information on ERISA can be obtained from the U.S. Department of Labor,Pension and Welfare Benefits Administration,2300 Main Street, Suite 1100, Kansas City,MO 64108.
  • Grievances & Terminations: Expect and plan for conflicts with your employees. Plan and establish grievance procedures. Outline your policy for probationary employment, period review, promotions and raises. Clearly document the steps to be used to resolve conflicts and then follow them and document your actions in writing. Establish clear policies for such matters as layoffs, seniority rights, severance pay, etc.
  • Non-Competition Agreements: Is your business involved in a very competitive environment or does it work on confidential research? Should key employees be required to sign legally enforceable non-competition agreements? Do you have all employee and independent contractors sign non-disclosure agreements relating to confidential information? Do you clearly state that any ideas and inventions developed by employees and independent contractors working for your company are the property of your company? Your written personnel policies should be reviewed by an attorney to determine enforceability, compliance with state and federal employment laws and to ensure that they do not unduly increase your own liability. Each employee should receive a copy of your personnel policies upon hiring. Explain verbally any critical parts of your employment policies. Verify that each employee fully understands the document.