Q The union in my manufacturing company has made it incredibly hard to terminate workers. Do I have any options?
Michael French, Comco Plastics, Woodhaven, N.Y.
Unions may be on the ropes in terms of membership, but they can still pack a powerful wallop. If you have security-camera footage of an employee swigging Jack Daniel's at the wheel of a forklift you may quickly prevail. Short of that, expect labor to put up a fight.
The problem is that there's rarely a smoking gun for subjective infractions like laziness or a bad attitude. That makes it tough to win over labor arbitrators--the folks who resolve disputes between unions and management. Your challenge is to marshal evidence that the employee consistently fails to meet clearly communicated expectations. Ipso facto, you should start by communicating expectations clearly. Passive communication--a "no profane T-shirts in the workplace" dictum in the employee handbook--is necessary but not sufficient, says Mark Broth, a labor attorney at Devine Millimet in Manchester, N.H. Active communication is better: An employee can't argue he wasn't aware of production targets and other performance goals if you present them in regular meetings. You can even have everyone sign an attendance sheet to avoid those must-have-been-at-the-dentist-that-day excuses.
The arbitrator will also probably demand a shot at redemption for the offending employee, and if you don't provide it the arbitrator will. That has been the experience of Bruce Woolpert, CEO and president of Graniterock, a 750-employee building-materials company in Watsonville, Calif., that is 60% unionized. Woolpert serves underperformers a balanced salad of carrots and sticks that includes a statement of what they must achieve by when (normally within 30 days) and the offer of training and moral support. He lays it all out in a letter with the added grace note (suggested by an arbitrator) of a shape-up-or-ship-out warning in large boldface type. "I thought it looked mean at first, but my employees understood that I really meant it," Woolpert says.
The good news: Redemption does work. Woolpert hands out warning letters to about five employees a year. On average three of those employees manage to save their jobs. A few even become stars. A worker that Woolpert reprimanded for flying off the handle a few years ago, for example, is now among his best managers. "He knows how to handle hot-headed employees because he was one of them," Woolpert says.
Q What legal obligations does my company have if an employee gets into an accident while driving a rental car on the job?
Dee Vandeventer, ME&V Cedar Falls, Iowa
Commercial auto policies on company cars often extend to rentals; but some don't, and, of course, not everyone has a company car to cover. In that case you can buy "hired and non-owned auto" liability coverage, which protects your company if an employee has an accident while driving a rental or his own vehicle on a business trip, or even when meeting a client for lunch. (Commuting generally isn't covered, although pervasive use of cell phones and BlackBerrys makes that whole area a little squidgey.) A $1 million policy costs about $100 to $200 a year.
But liability insurance covers only damage to the other car, not damage to the rental. If your employees charge their cars to a corporate credit card there may be some built-in collision coverage, but probably not very much. Of course, the rental car company will be happy to sell you coverage for a price just north of exorbitant. A "hired car physical damage" policy is probably more economical, suggests Gerrie Bischoff, president of the Insurance Advisory Center, a consulting firm in Columbia, Md. Plan to pony up $50 to $100 a year for a $25,000 policy.
To minimize accidents, establish rules for appropriate driving behavior. Most important, avoid DUIE (driving under the influence of electronics) by banning the use of cell phones--or at least require hands-free headsets. Several state and local governments prohibit the use of hand-held phones while driving. If your employee gets into a serious accident in one of those jurisdictions, you could be slapped with a civil lawsuit.
Q I'm thinking of entering into a formal arrangement with my partner. (We're now working as general partners.) My credit is good and his is poor. Am I putting myself at risk?
James Deyo, Boucher Concrete Westminster, Mass.
We should judge people not by the quality of their credit but by the content of their character. That said, if your partner is the kind of character who spends every weekend in Atlantic City you should get out while the getting is good. If, however, his woes are the result of medical bills, student loans, or a history of serial entrepreneurship, he deserves a chance.
You fret about future risks, but you may already be in clear and present danger. Your current status has the potential to "get really messy," according to Todd Lenson, a partner at Stroock & Stroock & Lavan in New York City. General partnerships draw no legal distinction between the business entity and the individual, leaving you with unlimited liability. If your partner is sued, your assets may be on the hook.
You can avoid that unpleasantness by forming a business entity that will protect your interests. A limited liability company, or LLC, will prevent creditors from seizing your personal assets if your partner, or your company, runs into financial problems. (The state of Massachusetts charges $500 for the privilege.) LLCs also establish procedures for a variety of situations, such as buying out your current partner if he decides to cash in his chips and pay off his debt. The bottom line: Knock on your lawyer's door before creditors come knocking on yours.