Given the rapid growth of new new economy companies, HR issues have tended
to take a backseat to other concerns. This article enumerates the most important
employment practices that these companies should adopt in order to keep on track.
J. Siegel, Esq.
Schnitzler & Krupman
From Silicon Valley to Silicon Alley, new new economy companies have turned
the traditional workplace upside down. With CEOs under the age of 30, 16–hour
workdays, and increasingly casual attire, there is a tremendous need for solid
human resource (HR) policies and practices. Given the rapid growth of new new
economy companies, HR issues have tended to take a backseat to other concerns.
This leaves loopholes for workplace dissatisfaction and disputes, as well as
a myriad of missed opportunities.
The following is a rundown of 10 of the most important employment practices
that new new economy companies should adopt in order to keep on track.
To keep pace with the demand for skilled and experienced information technology
(IT) employees, many companies are looking to recruit and hire overseas. However,
there is a statutory limit—far short of the demand—on the number of work visas
available for foreign nationals. This means companies must anticipate their
staffing needs, engage in strategic planning, and consult with legal counsel
knowledgeable about making the immigration system work in the company's favor.
The efficiency, ease, and convenience of online recruiting and interviewing
have made for an instant success among companies in all industries. A recent
survey from the Society for Human Resource Management (SHRM) reports most HR
executives prefer to receive resumes via e-mail and many are conducting computerized
applicant screening. However, the undeniable benefits to both companies and
applicants do not come without strings. "Automatic" screening may pose a problem,
and companies must understand how to use online services without violating anti-discrimination
laws and Equal Employment Opportunity Commission (EEOC) regulations protecting
the rights of job applicants.
With the prospering U.S. economy driving the demand for qualified employees
to a record high, employers are finding themselves competing for available candidates
with increasing haste. There are legal pitfalls involved in making job offers
that sound and are too good to be true. New economy companies may still be bound
by express and implied promises of employment and compensation, guarantees which
are too burdensome or costly to keep. Managers and supervisors must be trained
to know how to communicate job offers that do not transform into employment
Old dogs can learn new tricks, as the saying goes. So can noncompete clauses
and restrictive covenants—long stock-in-trade for positions with access to highly
sensitive, secret, or proprietary information—be useful in the new economy to
help companies protect their intellectual property and other intangible assets.
If properly drafted and executed, such agreements will secure these assets from
an employee's first day on the job to the last, and thereafter. But there are
restrictions on the restrictions, and new economy companies must ensure the
agreements they negotiate are binding and enforceable in a court of law.
New new economy employers may see freelancers
with specialized skills and training and ready to work on an "as-needed" basis
as the answer to a crisis or for projects of limited duration. Yet, the employment
arrangement between companies and contractors often is ambiguous, as short-term
projects turn into years of work with none of the trappings and/or benefits
of employee status. Regardless of the label, the employment relationship is
defined—and regulated—by state and federal laws. And when "independent contractors"
are really "employees," the rules and risks are significantly different. Companies
should understand the difference and make sure freelancers are not really employees.
As Congress moves toward legislation on giving stock option guarantees to
rank-and-file employees, the trend among new economy employers to sweeten the
pie takes on even greater proportions. Employers wanting to avoid giving away
the store must determine whether salary and traditional employee benefits can
be structured in such a way that attracts qualified applicants and holds valued
Providing opportunities for off-site work arrangements may be an effective
way to attract and retain job candidates. However, just because employees are
away from the workplace does not mean they are exempt from workplace laws and
regulations. Indeed, the recent flap created by the Labor Department's announcement
(subsequently withdrawn) that Occupational Safety and Health Administration
would be inspecting home work sites indicates the potential for unexpected pitfalls.
Arrangements to work at home should be tempered with all the rights and responsibilities
governing on-site staff.
The use of new workforce tools—e-mail, Internet, intranets, b2b networks—makes
possible 21st Century levels of productivity and efficiency. However, the ease
and capability of electronic communications also makes them susceptible to unauthorized
use and abuse by employees. Companies are advised to implement policies defining
how and when employees may use electronic communication tools, as well as the
penalties for violations. Equally as important is the employer's consistent
enforcement of those policies.
In a corporate environment with 16-hour workdays, casual dress, and rapid
growth, rules governing appropriate workplace behavior may become muddled. Even
though dot-com and high tech companies are not necessarily playing according
to the same corporate rules, they are still held to the same standards. Training
and prevention programs are the only way a company—new economy or old—can ensure
a safe, harassment-free work environment and protect itself from liability.
The euphoria-dampening layoff news at some dot-coms is a reminder that companies
in the new economy must be prepared to conduct staff reductions in a way that
is designed to reduce the likelihood of lawsuits and agency charges. As in the
case of individual terminations of employment, employers forced to downsize
must have legitimate—and well-documented—business reasons, must lay the foundation
for their actions, and must treat employees fairly and consistently throughout
Opinions expressed in Expert Commentary articles are those of the author and are
not necessarily held by the author's employer or IRMI. Expert Commentary articles
and other IRMI Online content do not purport to provide legal, accounting, or other
professional advice or opinion. If such advice is needed, consult with your attorney,
accountant, or other qualified adviser.
Please use the print button on the IRMI toolbar to print/preview this page.
© 2000-2015 International Risk Management Institute, Inc. (IRMI). All rights reserved.