19. Navigating the Legal Potholes of Small Business with Attorney Maritza “Shay” Nelson
Also available on YouTube!
Recently, I had the pleasure of sitting down for a conversation with Maritza Shay Nelson, an employment law attorney who specializes in supporting small businesses and non-profit organizations.
You might be thinking, “Sheesh! HR *and* Legal? Are you trying to bore me to death?” But I promise you’re going to love this conversation, because Shay and I had SO much fun and shared loads of laughs, along with valuable insights and advice.
We discussed the complexities of employment laws, where Shay emphasized the importance of having legal support to help you protect your business from potential lawsuits and reputation damage.
We dove into an important conversation about the differences you need to know between hiring 1099 Independent Contractors and W-2 Employees, understanding Exempt vs. Non-Exempt compensation structures, as well as the legal challenges of hiring workers in multiple states.
Shay highlighted the significance of being proactive in your business to avoid costly legal issues *and* creating a positive work environment where employees feel valued and respected.
This episode is a must-listen for small business owners who want to navigate legal and HR issues proactively. It’s chock full of valuable insights and advice to help you protect yourself and your employees, while minimizing risks and avoiding legal pot holes along the way.
In this episode, you’ll learn:
The differences between 1099 Independent Contractors and W-2 Employees.
Understanding Exempt vs. Non-Exempt compensation structures.
How to proactively avoid costly legal issues, lawsuits, and reputation damage.
Unique challenges of navigating employment laws across multiple states.
Potential costs (financial and otherwise) of dealing with lawsuits for small business owners.
Mentioned in This Episode:
MSN Law Office - https://www.msnlawoffice.com
Book with Shay - https://www.msnlawoffice.com/prospective-client-scheduling.html
Shay’s Linked In - https://www.linkedin.com/in/maritzasnelson/
Shay’s Blog Post: Disclosing Salary Information, Nice to Do or Must Do? - https://www.msnlawoffice.com/blog/disclosing-salary-information
TIR Episode 18: Legal Myths You Need to Know if You Have Employees with Alexis Tahinci - https://www.sprouthr.co/18
Transcription for Episode 19 - Navigating the Legal Potholes of Small Business with Attorney Maritza “Shay” Nelson
Ashley Cox 0:05
Welcome to The Impact Ripple podcast the go to source for hiring and leadership made simple, doable and fun for visionary female business owners. I'm your host, Ashley Cox, author, certified HR expert and founder of Sprout HR. And I believe that you don't have to change who you are to be a great leader because you already are one. Join me as we kiss uncertainty and overwhelm goodbye and say hello to the tools and support you need to grow a profitable, sustainable, impactful team with more confidence and ease.
Ashley Cox 0:43
On today's episode, I'm joined by Maritza Shay Nelson. Prior to venturing out on their own Shay spent seven years at two of the nation's largest law firms as an associate in their respective litigation departments. Shay then decided that practicing law could be about more than how many hours could be billed, and now works almost exclusively on a flat fee basis. Their clients range from startups to growing businesses and nonprofits with nearly 100 employees across a wide variety of industries. And this episode, Shay and I completely nerd out over all of the legal and HR things that you need to know as a small business owner. We talk about the important differences between 1099 independent contractors and W-2 employees. Why hiring workers in multiple states isn't as clear cut as you might think it is. Why every employee shouldn't be hired as an exempt salary employee just to avoid paying overtime, and how to be proactive in your business to save yourself the financial, emotional, mental and physical costs that come with legal issues that could have been avoided. This episode is absolutely chock full of the essential information you need to know. Along with a whole lot of laughs Shay and I had so much fun recording this conversation for you. And we hope that it makes legal and HR feel a little bit more approachable and fun. Now, here's my conversation with Shay Nelson.
Ashley Cox 2:21
Hey there and welcome to The Impact Ripple Shay, I'm so excited to have you joining me for this conversation today.
Maritza Shay Nelson 2:28
Hey, so excited to be here. Glad you had me.
Ashley Cox 2:30
Yeah, thank you. So, Shay and I recently met through our mutual friend, Bethany George, shout out Bethany, who thought that we needed to know each other and boy was Bethany right, because Shay and I hit it off right away and have had such great conversation. And we have a lot of commonality in our work together. Since Shay is in the legal profession. I'm an HR, there's a lot of overlap there, as well as with the clients that we support. So obviously, Shay, you had to be on the show, right?
Maritza Shay Nelson 3:01
Hey, Bethany seems like one of those really, like just you knows networking people that are just great connectors. I love meeting people like that, because they always introduce you to some of the most interesting people you'll ever meet. And I know a lot of people probably hear you know, HR and legal, possibly be a worse way to spend a day. But I promise this will be a really fun conversation.
Ashley Cox 3:22
Oh my gosh, we laughed and laughed so much on our first meeting that we were like, we're going to be best friends forever. So this is not going to be your normal, sad, boring, legal HR conversation. We're going to have some fun, we're going to talk about some really important stuff today. Things that you need to know to protect your business. But you're gonna have fun learning. And if you're not laughing with us by the end of this conversation, maybe I don't know, maybe your earbuds were off. I don't know.
Ashley Cox 3:49
So, if you've been listening to the show, then you know that last week, episode 18, we had attorney Alexis Tahinci on the show who represents employees in employment law matters. So she's on the employee side of things. And she shared about common issues and complaints that she's seeing in her practice right now from employees, and how we can avoid those in our business. So today, I'm excited to continue the legal conversation with Shay who works on the employer side. And really the big theme of of Shay's practice is proactively protecting your business when growing and leading your team. And I'm so excited. I think this is going to be the perfect kind of book into the conversation with Alexis last week. And you're going to learn even more ways to protect what you've worked so hard to build. Because that's our goal at the end of the day is we want to make sure that you protect what you've built, and that our teams can really work in an environment where they feel seen, valued, respected, and that that is flowing all different directions in the business. So enough of hearing from me you get to hear me on all the solo episodes. Let's talk to Shay can you go ahead and share a little bit about your journey? Because you came from some bigger law practices in the past and how you came to support small businesses?
Maritza Shay Nelson 5:08
Yeah, so I started out in big law firms doing corporate litigation, which I promise you is just as dull and boring as it sounds. But, you know, like, so many of my clients, I was ready to kind of get out of the corporate rat race, office politics, you know, all the reasons that you know, your clients, and my clients come to us and tell us, they decided to start a business. But I realized when I was doing that, you know, I didn't want to do kind of what people think of as traditional solo small, firm attorney work, which is a personal injury or family law, right? Like, I don't know, there is.
Ashley Cox 5:41
Yeah.
Maritza Shay Nelson 5:41
But I understood business. And I looked around and realize, you know, there are very few attorneys that are focusing on truly the little guy, right, like those people out here, you know, you're pursuing your passion, you're starting a business that you're super excited about. Maybe that's your area of expertise. But the law isn't, right. Those people need just as much help as the big mega fortune 500 companies, right? Probably more so. And so I really wanted to be able to take that big, firm experience, and help real people do what it is that they're passionate about. Do it on a fair basis, right. So we do most of our work on a flat fee basis, and really working with clients to help them understand, right, I often say, you know, here's the textbook answer. Here's how that works in the real world, right? And so really helping them understand like, Yes, I could tell you that this is wrong. Or I could tell you like, how is this actually going to impact your business?
Ashley Cox 6:36
Oh, what a comforting statement, you know, because I think that so many times, we're used to hearing from legal, from HR, from accountants, you know. These are, this is kind of the trifecta of business professionals that you really need if you're serious about growing your business, right. But we often hear no, you can't do that. No, you can't do that. Nope, that's not the way that works. And I love that you're bringing this perspective of, and here's how it actually applies and works in the real world. So that way, it feels like you've got a little more flexibility, you've got a little more decision making as a business owner, is that would that be a fair assumption?
Maritza Shay Nelson 7:12
Absolutely. I mean, I come at legal from the approach of my job is not to tell, you no, right. I'm here to just be the bad guy, you know the Grinch? Like, no, you better not! Right? My job is to say, okay, given how small businesses actually work, what are the implications? Right? What's the risk? Is there a way that we can minimize that risk? And if not, are you still willing to take on this risk? That's the real question. Yeah. You know, I think we'll get into this in a little bit when we talk about, you know, independent contractors, right? What's the risk of making this person independent contractor? Do you still want to take on that risk? Now that I've explained that to you? If you do, okay, great, right, we can move forward. But knowing the full picture, if that's not what you want to do. Now, let's start thinking creatively about what will work for your business.
Ashley Cox 8:04
Yeah, perfect, perfect segue. Let's just go ahead and talk about independent contractors right now. Because I know that we've both seen a lot of confusion in the small business world around 1099, aka independent contractors versus W-2s, aka employees. So I'd love to hear what questions or common mistakes are you seeing folks make in your practice right now around these two types of workers?
Maritza Shay Nelson 8:30
You know, I think the biggest thing right now, is this sort of assumption of, well, I'm just a small business. I can't afford payroll. Right. I've heard that hiring employees is expensive. I've got to hire a payroll company. I've heard that's expensive, right? And I just can't afford to do that. Or there's this attitude of, Well, I'd make them an employee. But I mean, they're just part time, right? If you can't have part time employees, part time does not automatically equal 1099.
Ashley Cox 9:01
Yes, yes. That's I feel like that needs to be a quote graphic. Like part time does not automatically equal 1099. Yes.
Maritza Shay Nelson 9:10
Unfortunately, what the law there's more to it than that. That's often the answer. Right. Right. Yeah, I think a lot of what I'm seeing is just assumptions about well, this is what will be the cheapest, this will be the easiest, you know, there's the assumption that will right now, it's so hard to find good people, you know, like we put up a job ad nobody's responding, or we didn't get any good applications. But if I find somebody, you know, three states over well, they must be independent. Right? And, again, that's not that's not how that works.
Ashley Cox 9:41
Not how that works. Yeah. So what is it that small business owners need to know about 1099 versus W-2 and when to hire, which type of worker and does the person that they hire dictate whether they're a 1099 or a W-2?
Maritza Shay Nelson 10:00
So here's the thing that I don't think people really grasp. And I think it's a hard thing to explain to any business owner, right? Small, larger anywhere in between. The problem with the law, the reason why this is so confusing, the reason why none of us will give you a straight answer, because what you all want is the answer changes from one state to another. And the answer changes from one law in that state to another. So for example, there are situations where this person might very well be an independent contractor, say, for the purposes of employment discrimination laws, but they might be an employee for purposes of whether or not they qualify for unemployment when you fire them, right? Same person, same state, but two very different laws with two very different standards, right. And that's where some of this stuff gets so complicated. So I think the simplest way to look at it the way I tend to start with clients is, if you're thinking about hiring this person, as an independent contractor, are they truly independent? If you're telling them what to do, when to do it, where to do it, and how to do it, they're probably not an independent contractor, no matter which tests, they look up, under which law and in what state.
Ashley Cox 11:14
Yes. And, you know, I wish there was a simple, you know, checklists that would magically tell you, if they meet these exact criteria, then they're a contractor, or if they meet these exact criteria, they're an employee. But what I find a lot too with our clients is it also depends on how you're using that person in your business and what your business does. You know, it's it can vary because a graphic designer might be a contractor in one person, small business, but they might need to be an employee and someone else's small business as well. So that use of that worker in your business, like you're talking about the who the what the when the where the why the how is so important for understanding how each individual worker is is classified in your specific business and state?
Maritza Shay Nelson 12:03
Absolutely. I mean, we're seeing a lot of states kind of impose this standard of, well, if this work that they're doing is key to your business. If this is a central part of what you do, then they can't be an independent contractor. So if you're a graphic design firm, there are some states that will say, okay, yeah, your graphic design workers? I mean, that's the core of what you do. Right? They have to be employees. Other states don't necessarily look at it that way. It's so it's a bit more of an open question, right. And there are some industries where, regardless of what the law says, people will come in and say, well, the practice of my industry is that these types of people are independent contractors. And some states and jurisdictions will abide by that. And others will say, Yeah, we don't really care.
Ashley Cox 12:46
Which doesn't help us as small business owners know what the heck is going on?
Maritza Shay Nelson 12:50
It doesn't. And it also doesn't help that you know, for every entrepreneur that you talk to, they'll probably tell you about 10 of their close friends or competitors or industry buddies that got away with it. Yeah, problem is that but what happens when you're the one that doesn't?
Ashley Cox 13:07
That's it that's the thing, I think that it really breaks my heart is that when we follow someone else, whether they're a celebrity entrepreneur, they're our best friend, there's somebody that's just really big in the online space that is very visible, and we start to carbon copy our businesses, our teams, our business practices against theirs, maybe maybe they're never going to be held accountable for the things that aren't maybe being done legally correctly. But then what if you are and what are those repercussions? What what could someone face as a small business owner for misclassifying their employees for making some of these mistakes that that we've been talking about?
Maritza Shay Nelson 13:48
Yeah. So what I usually tell people is, you know, again, as a practical matter, right? Happy workers don't complain. Disgruntled workers, especially disgruntled former workers, raise all kinds of hell.
Ashley Cox 14:01
Yeah.
Maritza Shay Nelson 14:02
And so it could be this person, you know, for whatever reason, they didn't work out, they got fired, they'll go and file for unemployment. And then the unemployment office starts digging, well, why did you classify them as a 1099 instead of an employee? Or we think they should have been an employee. So now we're going to charge you the back taxes and penalties to make up for what you should have been paying into the unemployment system. And then whatever that alphabet agency is in your state, they'll go and then share that information with all the other agencies. Right. And so now you've got unemployment. Looking at it, you've got the State Department of Labor, looking at it, you've got the IRS looking at it, right. And so these things start to trigger or if you're in one of the more I hate to say dangerous, but I think we see workers comp injuries and more dangerous industries, which you know, you're in a situation where the worker gets injured. Right, now they want workers comp to step in, you're like, well, we didn't put you on our workers compensation policy because you weren't an employee, right. And so now, you've got that office investigating in the state. And then if you've got, you know, a very disgruntled worker that's injured and facing, you know, a mountain of medical bills. Now they're talking to an attorney about Well, should I sue my employer for not having this for not covering it, maybe I don't try to hold them responsible for my medical bills. And so a lot of the penalties come down to dollars and cents. But it's, it's not just what you should have been paying. But it's often penalties and interest on top of that.
Ashley Cox 14:02
Yeah. And not to mention your reputation, right? Because now you're going to be out there in the news, you're going to be on social media, probably. People talk, disgruntled people really talk and they tell everybody. So you know, it's also reputation protecting, it's protecting your brand, it's protecting, you know, the fact that you try to be in integrity and be an honest business and you make a mistake, well, that one mistake can destroy so much of the work that you've put into it. So this is not one area to skimp on in your business. If anything, if you're hiring employees, you've got to have legal backing. So that way you can avoid these which is it's something I know you're really passionate about in in your practice. Shay, you talk a lot about, you know, being proactive in your business. And from a legal standpoint, I'd love for you to share. What does that mean to you? And what does that look like when you're working with clients?
Maritza Shay Nelson 16:21
Yeah, so for me, it started with this, you know, like I said, my background was in corporate litigation. And when I switched over to really focusing on small businesses, the thing that I just honestly came to realize is that litigation is not worth it in the vast majority of instances for a small business. I mean, if you're talking about a dispute that's less than 50 60 70, grand, you're probably going to spend more on attorneys fees, fighting it than what the case is even worth.
Ashley Cox 16:50
And I don't know how many small businesses have an extra 50 60 70 100 grand laying around to dispute cases, do you?
Maritza Shay Nelson 16:58
Exactly. Yeah, most of them don't. And when they get that first Oh, you know, on day one, it's, I'm gonna fight this, this the principle or the matter, right? Okay, put down your four or $5,000 retainer, whatever your attorney is asking for. And when they run through all that money in a few weeks, and they go, hey, it's time to replenish your retainer. And you're going, Wait, we got to do this every month. In this case, is going to last for how long? A year, a year and a half. Oh, my...
Ashley Cox 17:24
Yeah.
Maritza Shay Nelson 17:25
So for me helping clients minimize risk is how do we obviously we can't always avoid it, right? Because sometimes you're just frivolous lawsuits. Right?
Ashley Cox 17:34
Yeah. And hope that 100% People will be people, right?
Maritza Shay Nelson 17:37
People will be people writing frivolous lawsuits are expensive. They don't go away any faster, just because they're frivolous, unfortunately. So what can we do to minimize the chances of that happening? Right? If you're in a breach of contract case, for instance, of somebody, you know, your customer owes you 30 grand, right? Yes, that's a lot of money to a small business. But is there something in your contract that should have been addressed? So that you didn't end up in this situation? Is there a business practice at issue here where you allowed this to happen? Because you kept working for a customer? Who was six months behind on payment? Right? Same thing with some of this employment stuff? Right. You know, what are your employee handbooks look like? What are those policies and procedures look like? What are you actually telling people? How are you conducting those job interviews? What are those job postings look like? Um, how many people do you have as independent contractors? Where did they all decide to go work during the pandemic? Right? Are they currently working at now, right in the start working through some of these things, and you can say, Okay, if you continue doing it this way, and one of these workers gets upset, here are the things that can happen. Or we can start to make some changes to minimize the chance of that type of a lawsuit or that type of a claim happening. Absolutely a whole heck of a lot cheaper, then that guy suing me for what?
Ashley Cox 19:00
Yes, yes. And I think to a lot of times, we don't consider the other expenses or the other costs that come along with that, you know, it's the headache of it. A lot of the a lot of the business owners we work with, have their hands full, they have families, they have these busy practices, or, you know, businesses they're running, they have employees, they have, you know, big projects they're working on, some of them have nonprofits that err on the side of that or other, you know, volunteer or philanthropic things they're doing. And so let's add a big ol fat stinky lawsuit right in the middle of all this that you have going on and now we have the headache of that the frustration, the sleepless nights, the constant worry, you know, the toll that it takes on your mental physical well being, as well as your financial, you know, health of your business is is innumerable.
Maritza Shay Nelson 19:51
Yeah, people drastically underestimate not just the cost of dealing with any sort of litigation or dispute, but also like you said, that physical, mental, emotional energy. That it's going to take the time that it's going to take away from your business. I mean, even if you had 60 70 grand to throw at some attorneys for whatever your particular dispute is. Would that money be better spent growing the business on your marketing plan, hiring more people taking that family vacation that once in a lifetime trip? I mean, when it comes to business litigation, I often say nobody truly wins, except the attorneys. And whether it's a small case, or a big case, when I was working in big law firms, my experience was that this dispute will settle when everyone gets tired of paying their attorneys.
Ashley Cox 20:42
And that's from an attorney folks.
Maritza Shay Nelson 20:46
99.9%of all cases settle. We hardly ever try cases anymore. This case will settle eventually, and it's when you all get tired of paying the attorneys.
Ashley Cox 20:54
Yeah, yeah. And you know what, we don't share this to scare the pants off of you, but maybe kind of a little.
Maritza Shay Nelson 21:02
Again, that's why I say like, let's get back to... Okay, so what can we do to minimize the chance? Yes, happening, right, as opposed to, I'm gonna bury my head in the sand and say, "Oh, it'll never happen to me." Like if I had $1 for every time somebody said that. I'd be filming this from a beach in the southern Caribbean somewhere right now.
Ashley Cox 21:19
I mean, you might just be retired. Let's be honest.
Maritza Shay Nelson 21:22
I do a little bit of this for fun, but you know, yeah, yeah, here with my fruity drink with the umbrella filming, you know, podcast for you. Yeah, I can do one of them.
Ashley Cox 21:30
You know, I might, I might just fly out there and join you. But it is it's serious business. And if you are growing your business, and it's something that you're looking at as more than a hobby, it's it's a legacy that you're leaving behind. It's an impact that you're wanting to put out or create in this world, if you are building something that's really meaningful, and that you want for it to bring in good revenue, good income, pay people well, build that company culture that you wish that you would have had in your corporate life. These are the things that we have to talk about in order to protect all of that work and that legacy.
Maritza Shay Nelson 22:09
Absolutely. I mean, that's why I start so many conversations with people. Tell me what it is you're passionate about. Yeah, get involved in this type of business, or this industry or this idea? Right? Okay, great. That's what lets me know, you'll be a good client, and then we get into, okay, so now what are you worrying about? Those are the things that I probably need to start addressing.
Ashley Cox 22:29
Yeah, yeah. And there's always a prioritization, right. I'm sure when you sit down with with new clients, you're asking, Okay, put it all out on the table. What do you have going on? Let's figure out how to reduce liability, the quickest. So that way we can then start being proactive in other areas. That's how I work. I assume that's how you work to from our conversations.
Maritza Shay Nelson 22:48
Absolutely. Right. I mean, we could very well be having a conversation. We're like, well, I've got 10 folks, they're all independent contractors are spread out all over the place. Okay, we might need to fix that. Oh, by the way, I don't have a single written contract in my business. Okay. Okay. Let's shift this conversation and start there. First, we'll come back to this 1099 problem, right? Are those folks all happy? Okay, great. We can deal with them later.
Ashley Cox 23:12
Cool. Well, we'll take care of them later. Yeah, yes, exactly. And it is triage, right? Because there are, you know, depending on what all you have going on the 1099 situation could be the most significant or the most impactful issue to address first. And it could be third or fourth on the punch list, depending on what else you have, or don't have. So I, you mentioned, you know, having workers dispersed across various states, and I would love for us to talk about this, because I think this is a huge misconception that I'm seeing with clients and with our audience, is that remote work has really become front and center since the pandemic. And I think that it was already pretty prevalent in the online business space before that, but it's just become even more of an option for businesses to take advantage of. So let's talk about the unique challenges that come with that dispersed workforce, especially when you're thinking about hiring team members outside of your own state. What are you seeing as far as challenges or common misconceptions that are happening in your world?
Maritza Shay Nelson 24:19
Yeah, so with remote work, I mean, especially with the pandemic, right, we all suddenly realize, like, Okay, we don't have a choice to figure out how to work remotely. And then everyone realized that a lot of people kind of like working remotely. And I think there was this assumption that you know, whether or not you're working remotely. Or whether or not to bring the employees back to work, or if everyone was quiet, quitting, well, those are just big company problems. Those can impact the rest of us. And the truth is, if you're seeing it in the news, it probably does impact the rest of us. It's just somebody hasn't taken the time to explain how. And so the big thing that we're seeing, and I think, you know, even lawyers, I think were a little bit slow to start to pick up on this was everybody scattered in a panic without thinking about the general rule is that the employment laws are based on where the employees is.
Ashley Cox 25:06
Yeah.
Maritza Shay Nelson 25:07
You know, so everybody's sort of scattered and when Oh, yeah, Ohio employment laws are pretty straightforward. We're good. No big deal, right? Without thinking, Oh, your employee moved to California to take care of dear old mom, during the pandemic, California is one of the most regulated states in the country, right? Everything is just changed. Or your 1099? Maybe Ohio didn't care that they were classified as a 1099. But then they moved to such and such a state and oh, the standards a little bit different. Now that's a problem. Right? Yeah. And so that's a lot of what I'm seeing. It's just folks kind of scattered and moved. And nobody really thought about, you know, what does that mean? And now that we're starting starting to come out of the pandemic, right. And everybody's kind of still just doing whatever they want. Now, we're having to sit down with employees and go or with with small businesses and go, hey, when was the last time someone looked at your employee handbook? Because, you know, maybe we wrote it seven years ago, and based on the law of this state, but now you're a multi state employer, which is not something we used to see small businesses, right. I mean, that was a big company problem.
Ashley Cox 26:16
Yeah.
Maritza Shay Nelson 26:17
So now what is your employee handbook look like? Is the section still applicable in all 50 states? So those are the questions that we're having to ask. And like I said, I think it's just a situation where people aren't recognizing that that's the case and how much more complicated employment law has gotten for everybody.
Ashley Cox 26:34
Everybody! And you know, if you're thinking, Oh, it can't be that complicated every single state has jurisdiction to make the laws as they see fit. Sure, we have federal laws, but they don't dictate everything. And sometimes the state law trumps the federal law and vice versa. And if you don't know, employment law, front, back left and center, that you probably need somebody on your side who does?
Maritza Shay Nelson 26:58
Well, and here's another monkey wrench we can throw in there. Not only are we seeing a lot of state laws get passed, but now we're also starting to see municipalities pass their own laws, right. Having to ask clients, okay, give me a list of your employees. I need their job title, their duties and responsibilities. How much are you paying them? How are you paying them? And where are they? And the business will go... Oh, they're in Louisiana. Okay, where in Louisiana.
Ashley Cox 27:23
What is their physical address?
Maritza Shay Nelson 27:26
Oh, there's somewhere in the Chicago area like, okay, because are they in Cook County? Right. But then outside of Cook County might be something different? Like, I need specifics people. So yeah, now we're having to go and backtrack. All of that, you know. I did a blog post not too long ago, about this trend with requiring salary disclosures. And some states, or, you know, it's got to be in the job at some place. It's got to be after the first interview, right. Like, in some places, you know, it's like, don't ask for salary histories, and varies from one state or even city to the next.
Ashley Cox 27:59
And that's the part that gets so sticky. Yeah. Yeah. And then also, if you have an employee, and then they move, we need to be aware of that also, because now the whole game has changed again.
Maritza Shay Nelson 28:10
Right? Exactly. And your payroll service provider might have been aware of it just from a tax standpoint, like, Okay, we're gonna change things on their paycheck, right? You never thought to ask, Hey, are all the rules that we've been playing by, like, have the rules of the game just completely changed on me?
Ashley Cox 28:25
Absolutely. Yeah. Because even even something that you might think of as simple like, Oh, sick leave, sick leave laws vary across state to state, they vary across city to city, they vary across counties, municipalities, all of these different things. And so what was okay for you to provide in state A, city A, location A is going to be very different, perhaps in location city state B. So it impacts not just your tax implication, but also the benefits that you are required to offer those employees as well?
Maritza Shay Nelson 29:01
Yeah, I usually use this analogy in contracts. But I think it fits here as well. You know, I used to tell people, you know, contracts are basically like the rule to the rules of the game, right? The problem is that if you pick out any of your favorite childhood games, I usually like to pick on the game of UNO. Everybody's got their house rules that are a little bit different, depending on where you're from, and where you grew up, and who you're playing with. Right? It's the same thing here with these employment laws, right? The house rules are going to change anytime that worker moves to a different jurisdiction. And like it or not, you're responsible for knowing that right? I didn't know I'm just a small business is not a defense to anything.
Ashley Cox 29:38
That does not fly and nobody cares.
Maritza Shay Nelson 29:41
No one cares. No one.
Ashley Cox 29:43
The only one that cares might be you. But it's true. And that's the thing is, they don't make it easy to find all the information you need in one spot. I always complain about state websites. If you've ever worked with me, you know that that is like my biggest gripe. Why can't they just make it easy for busy This is to know what they're responsible for. But this is why we hire attorneys, this is why we need this type of support on our side. Because you cannot realistically know and be watching every single thing that may have a legal implication in your business while you're also managing a team, doing your marketing efforts serving your clients, the other, you know, 50 tasks that you have on your plate every day.
Maritza Shay Nelson 30:25
Absolutely. I mean, I'll give you one quick example. So I'm working for a client right now. They've got contractors and maybe 10 different states. And so being an attorney, right, I don't just have to Google it or, you know, go to, you know, the state website, try to find these answers on, you know, should all these people actually be contractors, like, we've got paid subscription services that we can get this information from? And so I go, and I pull a report, you know, tell me about the independent contractor laws in these 10 states, the report is 132 pages. Now, as an attorney, I can nerd out and geek out on this stuff for the next however many hours, it's going to take me to sort through this and give the client an answer. Understand, running their business with you, business owner, don't have the time, the energy, the inclination to do that, right. Especially with everything else on your plate.
Ashley Cox 31:12
Yes, yes, you're for. And that's what I always tell people. I'm like, I love to do the stuff that you hate to do in your business. So let me just let you know, make your life easy, right?
Maritza Shay Nelson 31:24
Yes, let me do what I'm passionate about. So you can go spend your time doing what you're passionate about?
Ashley Cox 31:28
Yes, yes. Oh, my goodness. Well, this also brings up another kind of similarly related area of confusion, if you will, you know, we've got the W-2 versus the 1099. We've got the multi-state employer challenges and the laws that come along with that. What about salaries? What about pay? Let's talk about that. Now. I already loved that. You're like smiling, like, Yes, I know.
Maritza Shay Nelson 31:53
Oh, boy, I'm smiling because I cannot tell you the number of times in any given week where somebody comes into my office or virtually, you know, here on Zoom. And I'll ask them about their employees. And they'll tell me. Oh, well, we don't worry about overtime. Everyone salaried.
Ashley Cox 32:10
No. Tune in to the next part of this conversation. If that is something you have thought or said recently.
Maritza Shay Nelson 32:21
Yeah, salary does not automatically equal over like exemption from overtime. It's not just enough to say, well, I pay them a salary. Therefore, I don't have to track hours. I don't have to worry about overtime.
Ashley Cox 32:35
Which seems reasonable, right? Like, it's, it seems like I could get there in my head from point A to point B. Okay, that seems reasonable. So if you've thought this, also don't don't think that there's anything wrong with you, because this is not necessarily another easy part of the law?
Maritza Shay Nelson 32:49
Not at all, we're not picking on you, right? Joe Smith on the street, right? If they get paid salary, that's what they expect to get. They don't really worry about overtime. If they hate their job, they might not want to work more than 40 hours, but they don't think twice about it. And same thing, if they get paid hourly, the assumption is, well, I'm gonna get overtime at the boss calls be in for a few extra hours after my 40. Right. And that's how I think your average person thinks of it.
Ashley Cox 33:12
Absolutely.
Maritza Shay Nelson 33:13
But again, the law is more complicated than so when we're looking at it. From a legal standpoint, we're not just looking at is this person paid on a salary basis? And there are a lot of ways you can mess that up by trying to take deductions from that salary based on whether or not you thought the person worked enough last week. But also, how much of that, how much is their salary? Right? Is it high enough to make them exempt from overtime? But the real caveat, the real one that I think most people miss is that for a person to be exempt from overtime, their job duties, not their title, their duties and responsibilities have to fit within a certain set of categories, right? It's those categories that then say, okay, yes, this person is exempt from overtime. So very easy example, you know, people will tell me, Well, my executive administrative assistants, you know, she is exempt from overtime. She's absolutely amazing. You know, I pay her you know, $40,000 a year and salary. It's great, right? It's like, yes, technically, that salaries high enough. And, you know, yes, technically, you're paying her on a salary basis. Right. You're not worried about her taking a couple hours off to take the kids to soccer. Okay, great. But as an administrative assistant, like her duties don't fit the categories like she's not going to be exempt from overtime. It's just not gonna happen, right? Yeah. And what did we say earlier? Happy workers don't complain when disgruntled workers, especially disgruntled former workers will come back and demand their overtime and you won't have the records. Again, really speaking right? Again, lot of gray area in the law. Generally speaking, if you Mr or Ms. Employer don't have the records you lose.
Ashley Cox 34:54
If you cannot prove what you've done, to be on the up and up you don't win.
Maritza Shay Nelson 35:00
Especially with wages.
Ashley Cox 35:03
Yeah, because the law always favors the employee, always they will always favor the employee over the employer and it is your burden to prove that you were doing right.
Maritza Shay Nelson 35:13
Exactly. Yeah, exactly. And again, you know, ignorance is not a defense not having paperwork, not having records not keeping track of the hours that people are working. None of that's a defense. Yeah. Can you that stuff will come back to bite you.
Ashley Cox 35:26
Yeah, for sure. Could you give us some examples of what would constitute an exempt job duties? Kind of in that role? What are what are we looking at? You're exempt from overtime, you get to be on salary? What are some of those responsibilities or duties that you could be looking for in that job position?
Maritza Shay Nelson 35:47
Yeah, so one of the big ones that we see come up a lot is you know, whether or not this is a worker that actually supervises other workers underneath them or right, whether they have a team of people underneath them, right. So that can be one. I don't see it a lot with my small business employees, or small business owners, but, you know, highly compensated employees. So somebody that gets paid more than $100,000, the law is kind of like, well, we're not worried about what they're paying that much. They don't write, you know, executives, people who are, you know, functioning in kind of that executive role of professionals, right, where you've got to have that higher education, usually some sort of an advanced degree. Okay, the law says, Okay, we're, those people can be exempt from overtime, just based on that alone, right? So again, you know, this stuff gets really complicated. And that's why we go back to employees, and we don't just hurt employers, we don't just say, Okay, you made a list of your employees and their job titles, right? What are these people actually do? What are they responsible for? What does the org chart look like?
Ashley Cox 36:49
Exactly, exactly. And when you talk about, you know, is this person supervising people? Does that only count employees? Or does that also count supervision of contractor? So if this person is in charge of coordinating all of the contractors, is that enough to be considered an exempt level position?
Maritza Shay Nelson 37:09
You know, usually we're looking at the actual employees. And I think part of the reason is that, again, when we talk about contractors, they're supposed to be independent. If you've got a manager supervising them, they're probably not all that independent. They're probably not truly independent contractors. I
Ashley Cox 37:29
I just wanted to hit that one on the head a little bit more
Maritza Shay Nelson 37:32
Now to start circling back around some of these issues, interconnected. Oh yeah, I supervise a team of 10. You know, they're all independent contractors. I'm like, wait a minute, are you supervising them or are they independent? It can't be both!
Ashley Cox 37:43
Yes. Yes. And it's just, it really is so convoluted sometimes. And that's why, you know, now you have the alphabet soup gang coming in saying, you know, the IRS is involved, the Department of Labor, the DOL is involved. Now we have, you know, the Department of Homeland Security involved DHS. We got everybody, everybody is here at the party, and it is not a party you want to be invited to.
Maritza Shay Nelson 38:05
It is absolutely not a party you want to be invited to I mean, I don't think we were planning to talk about this. But I once had a client that called up and said, Hey, I've got INS here asking for paperwork. I don't understand all my folks are independent contractors.
Ashley Cox 38:20
Oh, no. And for the people, what is INS?
Maritza Shay Nelson 38:24
Oh, so those are the good folks over immigration, who will sometimes, you know, come to employers and show up because they want to make sure that everyone you've got working for you is actually legally authorized to work in the United States.
Ashley Cox 38:37
Yes.
Maritza Shay Nelson 38:38
The problem is that you've got some small business owners that they will hire folks, you know, under the table, so to speak, right? And so don't check any of these things. And then you've got folks that will come in and say, Well, yeah, of course all my people are authorized to work in the United States. They're independent contractors, but I've got their form I-9s.
Maritza Shay Nelson 39:01
We're laughing because you get it, but you're not gonna get it.
Ashley Cox 39:04
You might not get the joke. Maybe we just think we're funny. Shay, I don't know.
Ashley Cox 39:10
And if you've not heard of form I-9, please reach out immediately to one of us for some sort of assistance because if you're hiring W-2 employees, you absolutely have to have this form. And it must be completed within the first three days that that person starts with your business. So there's a little more nuance there. Right?
Maritza Shay Nelson 39:42
Absolutely. I mean, if I you know, really took the time to go through some of my clients you know, payroll files are just there their personnel files I mean, there's all kinds of stuff we could probably find that's wrong like you know, is the I-9 filled out correctly wasn't known out on time or their hours records for when this person worked, you know, You're telling me you're having all kinds of disciplinary problems with this employee, and there's not a single document anywhere to be found about what those problems are. Or that employee got a slap on the wrist, but this employee you write up every week, right? And just all kinds of stuff that we start digging into, or the number of people that go, yeah, they've got an employment contract, none of this stuff is signed. I showed them the employee handbook. No one's acknowledged receipt of it, right? I mean, all of these things that start to come up.
Ashley Cox 40:26
Yeah. But this is why we're here.
Maritza Shay Nelson 40:28
Right? Yeah. When you get this stuff to pick on people, right, you started your business, because you're passionate about something. Yeah, that passion probably wasn't HR, unless you're actually or you have this type of HR business, right? For the rest of us. It's, well, I had a terrible boss, once I don't want to be like that person. That's my HR policy.
Ashley Cox 40:48
But that's really not a bad place to start, like, let's start there. But there's a couple other layers of HR and legal that we need to maybe kind of add to that.
Maritza Shay Nelson 40:57
You know, start with treating others the way you wish to be treated. And then let's add some legal compliance on top of that.
Ashley Cox 41:03
Yeah, exactly. And it doesn't have to be, I know that this conversation may feel a little a little overwhelming. It might feel a little impossible to meet all the standards. And that's why they're experts to help you. That's why you know, I don't know how to run ads. That's why I hire an ads manager, I don't know how to set up a, you know, a project management software, it's like, I am not that person. That's why you hire someone to set up the project management software for you. You know, it's just another piece of the business where you're not expected to be the expert. But in these instances, you are expected to know and comply with those things. And it doesn't mean that you have to go out and all of a sudden get your GED, and learn how to do you know, legal research and have access to these tools and systems that che has, but it means that you have the knowledge to say this is where I need support? What do I not know that I need to know in order to protect my business?
Maritza Shay Nelson 42:02
Absolutely. Building a business is all about all about getting the right team around you. Right? I tell people this all the time. The last time I tried to do my own taxes even before I started my business. And as you know, it's just a couple W twos like this should not be that complicated. And it probably took me a good day and a half.
Ashley Cox 42:19
Yeah, no, I'm not doing taxes.
Maritza Shay Nelson 42:21
Next year, I went to my accountant, right for the first time, and I watched this man do our taxes in 30 minutes while holding a conversation with me and I went, I don't care what he charges pay him, he's earned it!
Ashley Cox 42:34
Pay him double!
Maritza Shay Nelson 42:35
Right? Your time, especially as an entrepreneur, especially as a business owner is so valuable. There's always more on our to do list that we could possibly ever get into in a lifetime, let alone all the things I think I want to get done today or this week, let experts take the things off of your plate that you're not an expert at, or you're not passionate about or both.
Ashley Cox 42:57
Absolutely, absolutely. And that's where that skill of delegation comes in handy. You know, in delegation, I always say delegation is like a muscle. It's something you have to practice and it may feel really scary to delegate to an attorney to an HR professional. I think people are a little more comfortable delegating to financial professionals, accountants CPAs, bookkeepers, because that's that's become like, that's the money part of the business, right? Like, we got to, we got to have the money, numbers that we pay somebody for that. That's right, that's right. But we're gonna help you keep your money once you've got your numbers locked down.
Ashley Cox 43:33
Oh, my goodness, this has been such a fantastic conversation, Shay, I just know that people are gonna get so much value from this. And so I want to go ahead and talk about the final segment of our show, which is called Imagine the impact where we get to envision what it could look like for folks to take action today. So Shay I would love for you to help paint the vision for the kind of impact our listeners, our business owners, could create through one key thought or takeaway or action item from our conversation today.
Maritza Shay Nelson 44:05
Yeah, you know, I know that talking about legal risk is always a little bit scary. And it's really easy to say I don't want to deal with that, that just it's too much it's too overwhelming. But I think that the takeaway here is think about what success looks like for you like in your wildest dreams, what do you want this business to look like? And if that's what you're truly working towards, like, you're not just like, oh, no, that's too scary. I'm gonna run away from that too. But if you're truly working towards that vision of your wildest success, then you've got to have a team of people standing there with you going Hey, pothole, let's watch out for that. Hey, no, no, let's miss this. Nope, bear - don't go. Right? Want to have that team of people around you to help you miss these things that can just destroy that entire vision before you can even you know, put the foot to the gas. So that's probably way too many metaphors in one sentence, but I know what I'm trying to say.
Ashley Cox 44:57
I love it. I love it. Potholes and bears and road bumps and snakes. I don't know, I added snakes in, because that's what I'm terrified of. But I really think that that does paint the vision, I think that, you know, it's an opportunity for us to imagine the impact that we truly can have. When we have the right guide, when we have the right protection, when we have somebody who has foresight or insight that we don't have. Because it takes it's going to take a team, it's going to take a group of people to help you bring that big vision forward. And your vision is so worth it. Right?
Maritza Shay Nelson 45:37
Absolutely. Absolutely.
Ashley Cox 45:39
So Shay tell us, where is the best place for folks to connect with you and learn more, because I just know everybody's gonna scurry away from this episode and be like, where is Shay? I need them in my life right now.
Maritza Shay Nelson 45:51
Well, I'm always open to having those conversations, the easiest place to get a hold of me is actually I've got scheduling right on my website. So it's MSNlawoffice.com. And you'll see scheduling right there on every page of the website, my marketing person has put it all over the place. So you can refer that out on an opportunity. And that way, you can just jump on my calendar, and we can have a conversation about you know, what are you passionate about, and what's keeping you up at night. And then we can move from there.
Ashley Cox 46:16
Wonderful. And we will make sure to put that link in our show notes. Because we want for you to go and to reach out to Shay have a conversation. Make sure that your business is protected because your business, your vision, your impact matters in this world. And we want to help you protect that. So thank you so much again, Shay for joining me on the impact rebel podcast today. This has been brilliant, fun. And so, so important for legally protecting your small business and growing your team.
Maritza Shay Nelson 46:47
Thank you so much for having me.
Ashley Cox 46:49
And thank you dear leaders for tuning in today. I hope that you enjoyed our conversation. Maybe you didn't always get what we were laughing at. But hopefully you laughed and had a good time with us. And I hope that you took away something today that will help you be more proactive and protecting your business. As always, it's an honor and a privilege to be here with and for you on your leadership journey.