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Top 10 Best Employment Practices for the New New Economy

December 2000

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.

by Paul J. Siegel, Esq.
Jackson, Lewis, 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.

1. Plan Early for Visas and Work Authorization Documents

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.

2. Use Online Recruiting and Interviewing without Violating Anti-Discrimination Laws

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.

3. Tailor Offer Letters So They Do Not Inadvertently Become Employment Contracts

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 contracts.

4. Develop Binding Agreements To Secure Intellectual Property

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.

5. Make Sure Your "Freelancers" Are Not Really "Employees"

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.

6. Don't Give Away the Store with Stock Options

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 staff.

7. Develop Telecommuting Policies that Adhere to Traditional Workplace Regulations

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.

8. Define and Enforce Policies Regarding Electronic Communications

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.

9. Encourage Appropriate Workplace Behavior

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.

10. Conduct Staff Reductions Fairly and Consistently

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 the process.


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.

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