Small employers often don’t worry about strict regulations and too many rules. With a small group, your employees may be more like family, and if everyone is getting along, it’s a good thing. But what if two or more employees are getting along a little too well, and start seeing each other outside of work? No big deal? But what if one of them is in a supervisory role? Now it gets complicated.

While relationships between coworkers don’t present a threat to employers, those that involve a person in power are a different story. A consensual romance that goes sour could lead to charges that it was, indeed, non-consensual. Favoritism is another potential hot issue, like when a manager promotes her boyfriend. No exactly fair to the other staff, is it? As an employer, you must protect the company from charges of sexual harassment. An inappropriate relationship between a supervisor and subordinate could leave the organization vulnerable to a lawsuit.

That’s why every organization with employees needs a basic, written dating policy. What should it include?

• First, make it clear that while dating is not prohibited, romantic relationships between supervisors and employees are not allowed. Train supervisors to avoid workplace romances with subordinates.
• Some firms avoid issues with nepotism and claims of unfair treatment with a policy that no couples or relatives will be hired.
• Other companies require employees who intend to pursue a romantic relationship to report such to management. Why? For a written record that it is indeed consensual. Make sure to ask for notification when the relationship ends, too.
• Clearly state that sexual harassment will not be tolerated in any form. This includes inappropriate language, behavior, or unwanted attention. Remind employees that “no” means “no.”

How to Deal with the Office Rumor Mill
When one employee spills the beans on another’s extracurricular activities, encourage him or her to pay attention to their own worries, not to mention their job. It’s best not to tolerate employees reporting on each other.

If Jack and Jill’s relationship is creating a negative work environment, deal with it before morale and productivity plummet. Obviously, your employees are being paid to perform their job duties and nothing else, so any damaging behavior should not be tolerated.

As it generally has in the past, the United States Supreme Court has unanimously ruled on the side of employers in a recent case concerning employees’ use of employer-provided technological equipment.

Sexting Police Officers
In the case, two Ontario, CA police officers sued the Police Department after one officer’s department-supplied work pager useage exceeded the allowed limit month after month. A supervisor requested transcripts of text messages sent and received by the employees. The search on Sgt. Jeff Quon’s pager turned up over 400 personal text messages received and sent in one month alone—including sexually explicit messages. The officers claimed the search violated the Fourth Amendment.

Do Employees Have a Reasonable Expectation of Privacy?
The Supreme Court’s decision was based on whether or not the officers had a “reasonable expectation of privacy” concerning their text messages. The department’s formal policy which that employee communications would be monitored—and Quon signed a statement agreeing to the policy. However, Quon’s supervisors informed him that they would not audit texts as long as employees paid any over-limit fees imposed by the wireless service provider.

The 9th U.S. Circuit Court of Appeals ruled that this informal policy was enough to give the officers a reasonable expectation of privacy. But the Supreme Court reversed that ruling, saying that even if Quon had a reasonable expectation of privacy, the ruling itself was indeed reasonable.

How Does the Ruling Affect Employers and Employees?
This ruling indicates the law is on the employer’s side concerning employees’ use of employer-provided equipment. Legitimate company interests trump employees’ privacy interests.

Finding a balance between allowing reasonable personal use of company-issued laptops, cellphones, iPads, and computers and protecting a company’s reputation, business practices and trade secrets is tricky. There is a reason employers provide such equipment—it makes employees more available, and allows work to be done anywhere. Employers are advised to provide employees with detailed policies governing use of such equipment.

Office Manager Pilfers $645,000 from Car Dealership

Finance Manager’s Theft Causes Interactive Business to Shut Down

Furniture Store Suffers $250,000 Loss through Bookkeeper

These headlines are real. Every single day, real employees steal loads of money from their employers. In the United States alone, the amount of property and cash stolen by employees adds up to nearly $1 trillion each year. Whether it’s done by taking property or cash out the door, or falsifying balance sheets, deposits, and checks, embezzlement is a huge problem for businesses.

Often, employees who are charged with embezzlement have a fiduciary relationship with the employer—they are in a position of trust, with access to bank accounts and financial records.

How do they do it? Some embezzlers set up relatives or themselves as phony vendors in the bookkeeping system, then pay phony invoices with real company checks. Others just write checks to themselves or pay their personal bills with company checks.

Embezzlers often start out with small amounts, gradually building up to larger sums when they don’t get caught. Others tell themselves they’ll take the money “just this once,” but find they are unable or unwilling to stop—even after the credit card is paid off, their child’s medical expenses are paid, or they buy themselves a new car.

The guilt felt by an embezzler is often replaced with justification that they are undervalued or underpaid, and therefore the company owes them the money they are stealing. Others feel no guilt whatsoever, and are simply stealing for their own financial gain. For some employees, opportunity is the only “license to steal” that they need.

So how does an employer remove opportunity from the equation—and prevent employee embezzlement?

Be diligent: Managers and owners must have their hands in the business. Know where records are kept, and review them regularly. Are bills or checks outstanding? Are invoices missing? Be an authorized signer on bank accounts, and review activity and statements online. Keep tabs on petty cash, deposit slips, and profit and loss statements.

Listen: Don’t discount when customers complain about double billing—it could be a sign that checks are being detoured to an employee’s account. And if employees report suspicious behavior among their ranks, deal with it immediately. Let employees know you trust them, and care about their job satisfaction. Nip bad attitudes in the bud.

Pay Attention: Employees who regularly offer to work overtime are either great to have, or a potential problem. But what about when the workload doesn’t require it? Staying late with no supervision—especially for an employee with access to cash and financial records—is something embezzlers do.  Embezzlers also spend money they don’t earn—so watch for signs of spending above salary should allow. Driving a new car, showing off expensive jewelry or bragging about trips and pricey restaurants are potential warnings.

Screen employees: Pre-employment background screening is critical to prevent fraud. But don’t stop there—occasional screening for established employees who have access to fiduciary information is also essential.

Employers don’t need to be paranoid about employee fraud. Reasonable safeguards and common sense supervision of employees is often all that is needed to prevent embezzlement. But even the sharpest managers have been fooled by embezzlers—and it can happen to any business.

Up in the Air, the multi-Oscar-nominated 2009 film, features George Clooney as corporate “hit man” Ryan Bingham, whose purpose is to travel around the country and fire people.  Employers hire his company to do the dirty work of letting employees go.

At times, watching the film is painful. The director used real, recently-laid off people to portray Bingham’s victims—and their disappointment, sense of loss, anger, and disbelief are as palpable as Bingham’s cool detachment. He doesn’t know the people whose world he just rocked. Their responses to the news, like “I’ve given this company everything,” “What am I supposed to do now?” or “How can I go home and tell my wife I’ve been fired?” appear to have absolutely no affect on him.

Most employers occasionally have to let employees go. And most do it themselves. The full-scale layoffs depicted in Up in the Air are global corporations, shutting down entire divisions—not small businesses firing a single employee. While it might seem attractive to turn this unpleasant job over to a professional hatchet man, it’s just not possible for most employers.

Most supervisors and business owners say that firing people is one of the worst aspects of their job. So, how does an employer fire someone while treating them well and protecting the company from liability?

Here are some ideas you might consider:

1. Don’t go it alone. A witness is necessary to protect your company from possible discrimination claims.  Have them document what happens.
2. Allow enough time to gather all the necessary paperwork, such as evaluations, warnings and any company separation forms the employee will need to complete. Don’t make the employee squirm while you shuffle through a folder looking for something you need.
3. Be completely professional. This means not getting personal. Don’t say “I’m sorry,” since that can confuse the issue. Your feelings and opinions should not come into the conversation. Keep your voice even, especially if the employee becomes agitated or raises his. And no matter what, don’t argue.
4. Make it quick. Remember the advice about removing a bandage—the quicker, the better? It’s the same when telling an employee she’s laid off or fired. Just give her the bad news, stay calm, and listen to her reaction. Don’t place the blame on “the boss” or “corporate.” It’s easier to assuage your guilt by blaming others, but it’s confusing to the recipient.

Until your company is large enough to hire a professional, be prepared and be kind—but be professional—when laying off or firing your employees. Done correctly, it can have little effect on the organization. Done badly, it can be devastating to both employee and employer!

Employers must be ever-vigilant in providing a safe workplace for all employees. That responsibility includes a workplace harassment policy. Harassment is unlawful and can get an employer in trouble if it goes unmonitored or unpunished.

What is Workplace Harassment?

• It’s an unlawful form of discrimination, based on the Civil Rights Act of 1964.
• It’s defined as unwelcome verbal or physical conduct based on race, color, religion, sex, national origin, age, disability, sexual orientation or retaliation that results in a hostile work environment or a change in an employee’s status or benefits.
• It can affect anyone.
• Is not limited to male on female sexual harassment.

Harassment can range from offensive language or remarks to comments about a fellow employee’s body, skin color, or religion, to inappropriate touching, jokes, gestures, or even emails.

Increase in Sexual Harassment Claims by Men
A growing number of sexual harassment complaints have come from men since the start of the recession, according to the Equal Employment Opportunity Commission (the EEOC). Litigation, including harassment cases, tends to increase during economic downturn, when jobs are harder to find. In the past, men might have responded to sexual harassment by leaving a hostile workplace for another job—but now, when they’re not easily finding other employment, a harassment suit is more likely to be filed.

Harder-hit states for unemployment, like Michigan and California, saw bigger increases in the percentage of sexual harassment claims by men: Michigan’s cases rose 10% from 2007 to 2009, and California’s cases rose 5%.

While the stigma around claiming sexual harassment is huge for both genders, it is even more so for men, say the experts. Men can be seen as weak or unmanly when claiming sexual harassment, so the numbers of reported incidents are most likely lower than what actually occurs.

Employers are often in the dark about harassment; often employees are laid off for economic reasons, and file claims months or years later. Developing and enforcing a strict no-harassment policy is vital. And remember to broaden your definitions to include same-sex harassment. Many employees are more sensitive to what they say around the opposite gender, but might think that sexual jokes and banter among their own gender is okay—but it’s not.

As unemployment continues to hover around 10%, employers could face rising harassment claims—so now is the best time to review your company’s policy and tighten it up as needed. Communicate to and train employees on the policy. Strict workplace harassment policy enforcement is the best way to mitigate risk to your business.

Supervisors everywhere know the frustration of strolling past an employee’s work station, only to find them texting furiously instead of doing what they’re being paid to do. Increasingly, employers are taking steps to cut down on employees’ extracurricular digital communication—whether its instant messaging (IMing), web surfing, texting or making personal phone calls on company time.

Some consider it an invasion of privacy, but the law is solidly on the employer’s side. Employers are allowed to monitor employee communications, and most communication equipment is the property of the business—so its use is dictated by business needs, not staff’s need to keep up with their friends’ latest activities.

Three forces are at work in employee monitoring: first, employers are ever-vigilant about squeezing every ounce of productivity out of workers. If an employee is not giving 100% to his or her employer, there are probably others who will be happy to take over that position. Second, risk-averse employers know that keeping workplaces completely litigation free is an elusive goal—but one that can come closer to happening with the right monitoring practices. Keeping all staff safe from harassment is easier if you know what types of emails and IMs are flying around the company. Third, it’s more important than ever to keep company information and trade secrets confidential. Too many firms have been taken down by loyalty-lacking employees. It’s way too easy to forward a company-only email to the press or a blogger who will quickly spread the information throughout the industry.

Monitoring software is easily found online or at electronics retailers. Depending on the package features, keystroke monitoring, website tracking, and even webcams capture employees’ activities.

Data from 2007 shows that 2/3 of employers check up on employees’ Internet use. From tracking time spent and websites visited, to keystroke monitoring to capture search terms, employers can get a full picture of which employees are using company equipment for work use and for personal use. And a 2009 survey shows that nearly 90% of employees used office networks to send jokes, rumor, or gossip to outside recipients. 14% have sent confidential company emails to third parties.

So far, the courts have ruled that employees have no expectation for privacy when using employer-provided computer systems, cell phones, and pagers. Even employees who send personal emails through a private account are using company servers—and so have no right to expect those emails will not be monitored.

Employers’ best practices are communicating the need for monitoring, and to put a clear policy in place, so workers know exactly what is and what is not allowed—and the consequences for breaking the rules.

Oregon’s Legislature is considering a bill that would prohibit pre-employment credit screening unless it is relevant to the job. Hawaii and Washington have enacted similar limits.

The proposed bill allows banks, credit unions, and public safety agencies to continue screening applicants’ credit histories; for the rest of the state’s employers, credit checks could be a thing of the past. Other pre-employment background checks, like criminal records, education verification, and reference checks would still be allowed.

Those speaking in favor of the bill’s passage cite the floundering US economy, saying it’s unfair to conduct credit screening during a recession. Proponents also claim no connection between bad credit and unethical workers.

While the recession has certainly increased the numbers of applicants with questionable credit histories, the Oregon bill seems to assume that employers do not consider anything but credit checks when deciding whether or not to hire an applicant. The employers we hear from use credit screening for cash-handling positions, to protect sensitive confidential data, and as an indicator of judgment and responsibility.

Smart employers take into consideration every aspect of an applicant’s skill, education, and character. In many cases, the credit check is the last step before hiring. Many employers use it as a guide and communication tool for applicants that have already passed several steps in the hiring process. A few blips on a credit report due to medical expenses and job loss would be excused by many employers—and a bad economy doesn’t mean the information should not be available to employers who need it.

Employers need all the tools available to them to make good hiring decisions. Credit checks help many thousands of employers protect their companies, their existing staff and the customers they serve by ensuring only properly screened employees handle cash and sensitive data. Banning credit checks will not lead to higher employment.

Firing employees is not easy. For most employers, it’s not something done lightly, either—termination can have many consequences, from a decline in morale to litigation. While the tips presented here should not be considered legal advice, general knowledge and awareness is important, too. For dealing with a specific situation, a human resources professional or employment attorney can always be consulted for expert advice.

If you’re an employer faced with the unpleasant task of terminating a worker, consider the following ideas and tips to make the process a little easier on everyone:

1. Don’t do it alone: have a witness in the room. Whether it’s the HR director, the employee’s supervisor, or a non-management staff member—a corroborating witness will be handy if the employee decides to sue. A witness also discourages any allegations of misconduct, and can help keep anger in check.

2. Don’t fire anyone on their birthday: chances are slim that it would be, but it happens—and nothing makes an employer look more impersonal. During your due diligence and preparation phase prior to terminating, check the employee’s file and avoid the week around their birthday, if at all possible.

3. Compile the paperwork ahead of time: Pull together any agreements or waivers the person will need to sign. Have their final paycheck, or severance pay ready—or a document showing when it will be direct deposited to the employee’s account. Any written warnings or job performance evaluations should be handy, as well—in case you need to refer to them for specific reasons the termination is happening.

4. Be ready to give specific reasons for the termination, listing work performance issues—not personality or personal problems. And, be sure the employee knows for certain that they are being terminated. Then, listen patiently and answer questions. Don’t let the conversation go on for long, or over-explain or debate the issue. Let the employee know that the decision is final. Repeat the reasons you have prepared, if necessary.

5. Have an exit strategy: Disbelief and anger are natural. Some employees are embarrassed, and some become emotional. Allow the employee to vent or cry—and then give them time to pull themselves together. If the employee’s anger becomes unmanageable, have someone ready to step in and remove him or her from the room.

6. Don’t allow the employee to disrupt other workers: let him or her know they have a set amount of time to collect personal items, return company property, and leave. Keep an eye out for any trouble, but don’t feel that you must escort them from the building. It’s fine to end the termination on a pleasant note, if possible, by wishing the employee luck.

7. Inform remaining staff: While it is important to maintain the terminated employee’s privacy, his or her fellow workers need to be told about the situation. Just keep the details to a minimum; if the termination affects any remaining staff, let them know how; and if there is a replacement plan, share it. Don’t allow personal questions regarding the employee or the circumstances surrounding the termination.

No one likes to terminate employees. When it is necessary to do so, make it a little less painful by following these steps—and check with an HR professional for legal advice.

The US Department of Labor announced last month the hiring of 250 investigators, tasked with looking into wage and hour violations by employers. The influx of investigators is partially based on a recent report compiled out of a 2008 survey of over 4,000 low-wage workers in three major U.S. cities: Chicago, Los Angeles, and New York City. Researchers focused on more vulnerable workers, such as immigrants and cash employees, who often slip through the cracks of data gathering.

The goal of the survey was to produce accurate estimates of workplace violations, like minimum wage abuse and unpaid overtime.

According to the report, 26% of workers were paid less than the legal minimum wage; and 60% of them were underpaid by more than $1 per hour.

Of the 25% of survey respondents who worked more than 40 hours in the previous week, 76% were not paid the legal overtime rate. Employees averaged 11 hours of overtime that were underpaid or not paid at all.

Additional violations revealed were workers performing work off the clock, and not being paid for it (25%/70% respectively); workers who received no meal breaks or were required to work during their meal breaks (69%); and workers who received no documentation, such as a pay stub, of their earnings and deductions (57%).

The report goes on to describe employers who stole their workers’ tips, who forced workers to pay for damages to tools, and who retaliated against employees when they complained about working conditions. These are not the types of employers anyone would want to work for!

The report’s first recommendation for a solution is to “Strengthen Government Enforcement of Existing Employment and Labor Laws.” Thus, the hiring of 250 new DOL investigators.

Employers must be fully aware of labor and wage laws; if there is a question regarding a specific situation, researching the answer is pretty simple: the Internet, the IRS and the DOL have loads of information for employers. You can also check with a labor attorney. There is no excuse for breaking labor and wage laws; and violations will result in stiff fines and penalties.

Can employers hire staff if they are in the middle of layoffs? While there is nothing inherently wrong about it, hiring new employees after (or while) letting other staff go can open the door to big problems. Your ex-employees will surely find out—and will look for any holes in your procedures and the reasons they were let go.

Even though it is risky, there is no reason not to hire new staff in spite of layoffs. Proper planning and care in procedures makes a big difference. Microsoft announced big layoffs this year: a decrease of 5,000 jobs over 18 months. But the net loss in jobs was reported to be only 2,000 to 3,000. Why? Because Microsoft planned on hiring for new, key positions at the same time they were eliminating the old ones.

At Dell, recently laid off employees filed a $500 million class-action lawsuit, claiming that older and female staff were targeted in a round of layoffs that affected 8,900 workers. The employees claim performance evaluations were manipulated and that they were told that no other positions were available when job openings existed. Employers must be clear about reasons for reductions and must ensure that no group is singled out—or even appears to be.

But keep in mind, too, that although it is illegal to target older workers for layoffs, it is within an employer’s rights to base reductions on salary—which often means the older, tenured staff members are more likely to be let go.

For most employers, decisions around hiring and laying off employees are necessary to stay viable—and sometimes must be made at the same time. It doesn’t make sense to ignore areas of your business that are currently strong, and need additional staff, just because you must reduce in other areas. If certain sectors of your business have the potential to become profit centers, you should reinforce them as needed.

A reasonable approach might be to eliminate positions, then re-categorize or modify job descriptions, establish the new positions, and hire for them. And as always, the safest way to ensure you are within the law is to consult an HR attorney before taking any action.