Freelancer’s Survival Guide: Employees Part Two

The Freelancer’s Survival Guide: Employees Part Two

Kristine Kathryn Rusch

Wow. Deafening silence from the last post. I guess most of you figure you’ll never hire an employee. (Dean says after reading the last post no one in their right mind would hire an employee.) Of course, you’re wrong. You’ll probably hire one or more employees over the course of your business career, because you’ll need them.

Certain businesses need actual employees as defined by the tax code. People who stand behind the counter in your retail store. The receptionist who answers your phones and makes your appointments. Those folks are actual employees, who get a paycheck and whose presence requires you to pay half of their Social Security taxes.

But what about the rest of us, those who don’t have and never will have employees? We’ll hire people too. The Internal Revenue Service just won’t call them employees.

They fall under other categories, often self defined. Agents, contractors, consultants. We hire them all the time and think nothing of it.

However, they do work for us. We hire them to perform a task—or as I said in last week’s post, we hire them to do stuff for us.

Under the dictionary definition, they’re employees as well. Remember the dictionary defines employee in a variety of ways that all boils down to this: Someone whom someone else pays to do work.

That’s it.

So, as a generic term, throughout this post, I’ll call them workers. I’ll try very hard to use whatever term applies—lawyer, bricklayer, plumber—but if I need a general overall term for someone who is not required to be at your place of business twenty, thirty, or forty hours per week to do their job, I’ll use the term worker.

Got that?

English can be such a confusing language.

Anyway…here goes.

You think you’ll never hire an employee—and maybe you won’t. If you’re really creative and understand the employment laws in your state as well as the applicable parts of the tax code, you might not have to hire an official employee. You might find ways around it.

If you do have to hire an employee, read last week’s post to make sure you have all your bases covered.

Otherwise, hire a worker.

We’ve all done it. We have a lot of people in our lives who work for us. Doctors, lawyers, tutors, Pilates instructors—all of them get hired to do stuff for us that we can’t do ourselves.

Notice that most of them fall into the professionals category. They provide a service that you pay for, just like you as a business owner provide a service to someone else. They get paid for their time or they get paid by the job, but the key part of their job is to provide a service and/or work product for you.

That doesn’t preclude them from providing a service and/or work product for someone else. In fact, they probably do because they have a business to keep up as well and unless you’re a regular customer, you don’t give them enough work to keep their own business running.

Think of all the people you’ve met who provide a service on an as-needed basis. Caterers, plumbers, dog walkers—if there’s a need, someone will fill it.

And you can hire that someone, for a set fee or by the hour or by the job. The method of payment is always different. Some require a retainer to “retain” their services, after which they bill by the hour. Some require half up front. Some require ten percent. And some ask that you pay the moment the job is finished.

The methods of payment vary as much as the service providers do.

Here’s what they all have in common, however.

You pay them in exchange for work they do for you.

Pay attention here: You pay them.

You hire them.

On this project, or for this area of your business, they work for you.

It’s a tough distinction to make and people forget it all the time. Not just business owners, but regular people. People who go to the doctor or hire a real estate agent. Those people sometimes forget who is in charge.

And it’s easy to forget. When you go to this kind of service provider, you are hiring that person for their expertise. If that person is renown in their field, then that person will be pricey and probably a bit arrogant. But you’re still the one paying the bills. You’re still the person who hired the service provider, no matter how renown, how respected, or how revered.

You must remember that.

As I said last week, a lot of people work for me. I run my own cottage industry here, and have done so for decades. I have learned I can’t do without some service providers.

For example, I have had my house cleaned since I was twenty-nine years old. I couldn’t afford the house cleaner back then, not really, but I hired her. I was working eighteen hour days. My apartment (it wasn’t even a house) was a sty. I can handle clutter, but I can’t handle dirt. So I had a choice: Sleep or clean.

I choose sleep—which meant that once per month (which was all I could handle at the time), an employee of the local house cleaning service ventured into my dusty, cluttered apartment and tried to make some kind of order out of it. She at least kept the filth at bay.

As I made more money, I moved from once per month to once per week. When the money gets tight, I scale back to twice a month (and regret it every time). But I haven’t gone without a house cleaner in more than twenty years.

Everyone else on my workers’ list is expendable. I can—and have—done without if I absolutely have to.

Because here’s the truth about employees and workers: With only one exception that I can think of right off the top of my head, they’re all expendable. I can do the work myself if I have to. I can learn the job. I can figure it out. I’ll botch it up (particularly if it’s plumbing), but I’ll learn it.

The exception? Doctors and medical specialists. I can’t learn that job. I don’t want to learn that job. But I do as much as I can by being an informed consumer of their services.

I also believe in second opinions. And third opinions. And fourth opinions. Because the era of the Doctor As God has gone by the wayside. Doctors are human. They come in competent varieties and incompetent varieties. You don’t want to find out they’re incompetent after the surgery is completed. You want to know up front.

So…let’s remove doctors from our list for the time being. (I know: you’re still reeling—doctors? In the worker category? But…but…. Remember. You’re hiring them to do work for you. That work might be surgery to alleviate your back pain, but you’re still hiring them—and you have the right to hire someone else if you don’t like the doctor or you notice that he never washes his hands. Okay?)

Let’s go back to my original point, made before I mentioned doctors:

You can do the work yourself if you have to.

You can build your own house, lay your own pipes, install your own electrical systems. Yep, you might have to take classes. You might have to read some books and you might need some certification, but you can do it.

Just like you can represent yourself in a court of law. Anyone can, for any reason. It’s just better to hire a lawyer for his areas of expertise. But you don’t have to.

Just like you don’t have to have a real estate agent to sell your house. Or to buy one. Dean and I have done our own real estate transactions. We’ve also hired realtors. Sometimes it was easier to do the transaction ourselves. Sometimes it was better to have an expert run us through the system.

And this brings us to book agents. You don’t need one to sell a book. I know, I know, all the publishing houses tell you they won’t look at books that aren’t represented by agents. Yet every day in this country, writers sell books without an agent. How? By writing a really good book and mailing it.

In fact, the main job of a book agent is not book sales. It is all the other stuff—the stuff that really does require an expertise, like contract negotiation. I can and have sold books myself. I’ve negotiated the contract myself. I’ve sold books overseas myself. (It’s easier now than ever, thanks to the internet.) But I still have an agent. Why? Because I like relying on his expertise.

I’m still in charge, however.

I know the writers who are reading this are reeling, just like you doctor disbelievers did earlier. Writers who are having trouble with the concept of agent as worker (and not as a savior, a god, or a miracle worker who will rescue you from anonymity and make you famous) need to read my husband’s blog titled “Life After Agents.” You’ll find Part One here and Part Two here.

All of these people and more, from the movers we hired last week (because Dean wanted to save both time and his back) to the pesticide guy who’ll come next week to get rid of a hornet’s nest on the front lawn, are workers. They are people you hire—and if you hire them, then you are in charge of them on this project. And you should know what they’re doing and why.

Let me give you an extreme example. You’re on trial for a murder you did not commit. The very famous (and expensive) defense attorney you hired says that, based on his experience, you shouldn’t fight the charges in court because juries are notoriously fickle. You’d be better off pleading to a lesser charge and only going to jail for a few years.

Are you going to listen to that? Are you going to jail for a crime you didn’t commit? Of course not. You’ll fire that attorney and hire one who’ll work for you to the best of her ability, one who’ll do everything she can to make sure the charges get dropped.

Too often, I see people in important situations bow to the expertise of the worker they hired without questioning that worker, without researching anything, and without understanding what they’ve just agreed to. It might not be something as dramatic as a murder trial, but it might be just as important, like the treatment for a certain kind of illness or a way of handling finances for their business.

I hate to tell you this, but the reason so many people got scammed by Bernard Madoff and other Ponzi schemers of his ilk is because those people did not do their due diligence. They didn’t monitor his activities, or question his results, or (in many cases) even look at their statements beyond looking for the percentage profit. And that’s just an invitation to some con man like Madoff to steal everything the client owns.

So, how do you hire a worker of any kind?

1. You figure out what you need that person to do. Simple as that. You figure out the job first. You might be wrong. You might not know all that the job entails. But you need to know what the job is.

That sounds elementary, and it often is. You need someone to fix your car because it won’t start. You need someone to get rid of the hornet’s nest in your front yard. You need someone to check that gash you just got on your knee and see if you need stitches to help it heal.

Occasionally, however, the task isn’t simple. You need a divorce, which is complicated without children, but a nightmare with children. You need someone to rent out the various houses you own in another town a hundred miles away. You need a mechanic to service the five vehicles that make your catering business run.

Sometimes the work you want these people to do will extend over years instead of hours. Sometimes you’ll end up with a working relationship. Sometimes you’ll want an overseer—someone who will recommend other professionals to help you with the tasks at hand. A divorce attorney will recommend an accountant to keep your finances in order as things get rough. A U.S. book agent will partner with a French book agent to sell your work into France. A Hollywood agent might recommend a publicist to make certain you get the most promotion possible on the job you’ve just gotten, and so on.

You need to know what you want going in, so that you don’t spend a lot of money on goods and services that you don’t want. For example, if the man I hire to get rid of the hornet’s nest tells me that carpenter ants have burrowed into my house, then we’ll discuss whether or not we need to solve that problem. If a plumber tells me that the pipes in my house are all rusted and we need to replace them (and I’ve seen no evidence of rust), then I would call another plumber for a second opinion—and a second estimate of the cost of repairs.

You need to know how much you’re willing to spend, how hard you’re willing to work with your new worker, and approximately how much time the task (or tasks) will take.

You must also be flexible. Since you’re hiring someone else to do this task, you might not be the expert here. You might not know exactly what the job entails. Be willing to learn. If the person you’re considering for this task tells you different things than you’ve assumed, take the time to double-check your assumptions and his.

2. Research everything. Don’t rely on the “conventional wisdom.” Conventional wisdom is often wrong. Facts, not assumptions, rule.

The first thing to research is the task itself. Is it something you can do? If not, why not? If you prefer not to—or in the case of my house cleaner, something you’ll never do but you want done—then by all means hire someone. But make sure you have researched the job, and examined your reasons for asking someone else to do it.

The second thing you must research is the person you want to hire. Too many people hire the first person who offers to work with them. This is particularly bad in the writing business, when unpublished writers hire the first agent who says they’ll represent that writer’s work. In writing, I’ve learned, the agent you hire when you’re unpublished is often not the agent you want once you become published.

Book agents are not regulated. No one oversees the industry, which is why there are so many con artists in the business. Writers give their entire financial future over to these people without a bit of research—rather like the folks who hired Madoff. And you saw how well that worked out.

But don’t smirk. How many of you have gone to the very first specialist your doctor recommended for your latest medical problem? Just because your general practitioner recommended the person doesn’t mean that specialist is for you. Research. There are more and more organizations that track doctors, hospitals, and medical professionals.

If the worker you want to hire is in a regulated industry, like a contractor, make sure there are no outstanding complaints against that person. If they’re not in a regulated industry, check with the Better Business Bureau in the worker’s state to see what kind of complaints have been lodged.

Word of mouth is also valuable, especially in a small industry or a small town. But remember, people are people are people. Which means that they might hate someone you like and vice versa. Talk to people who are clients of your worker and talk to people who refuse to hire him. See if the complaints are valid, but make sure that the people who love his work are informed people and not people who close their eyes to any potential problem.

So many serious problems could have been avoided if only the business owner researched the worker they were hiring.

In the end, however, the choice is yours. And the responsibility lies with you. If the financial manager you hired absconds with your funds, it’s ultimately your responsibility for hiring him—and for not firing him at the first sign of trouble. (And believe me, in cases of embezzlement, there are always first signs of trouble. And second signs. And third signs.)

When you’re in business with someone, you have to trust them. But you don’t have to blindly trust them. You must protect your own interests first.

3. Agree to terms up front—and make sure those terms are in writing. You and your worker have to know what the job is, an estimate of the costs, and how long the job will last. You also need a termination clause. Thirty days notice? Two weeks? Make sure that it’s a mutually agreed-upon termination clause and valid for both sides (in other words, if he doesn’t like working for you, he can quit). You need everything in writing so that you don’t get into a he-said, she-said legal situation.

You don’t need a contract—and many of your worker relationships won’t have contracts. (I don’t have them with my house cleaner, for instance.) You still need a dated piece of paper detailing what the job is, who does what, and when. That will be enough to get rid of a he-said, she-said problem should the matter ever go to court.

And relationships do go sour. Sometimes you will go to court. You might not initiate the proceeding. The worker might. But you need to be protected. So keep invoices, that piece of paper delineating the work, and any other information that pertains to the job the worker does. Chances are you won’t ever need that file. But the time might come when you just might.

4. Supervise. You don’t have to hover. But you need to check up on your worker on a regular basis. If you listened to the Madoff coverage this year, you would have heard from people who fired Madoff or didn’t hire him at all. Why? Because when they asked him what the details meant on his statements, his answer was a version of “Trust me, you don’t need to know.” (What I used to call the Don’t-Worry-Your-Pretty-Little-Head factor.) Any client who claimed they needed to know got released by Madoff. Any client who didn’t like Madoff’s answers fired Madoff.

But a surprising number trusted him. And got screwed.

You need to keep track of everything your worker does. You need to get solid answers to your questions. If the answers don’t come in a timely manner, push. If they don’t come at all, fire this service provider and hire someone else.

Over the course of your business’s lifetime, you will hook up with a bad worker or two. It’s inevitable. The key is to cut that person loose before they do a lot of serious damage.

5. Be Fair. If the worker does a good job, do what you can to hang onto that person. Sometimes you’ll pay a bonus. Sometimes you’ll recommend him to someone else. (Be careful on that one; you don’t want your worker to get too busy to do a good job for you.) Sometimes you’ll give him extra work when times are tough to hang onto him in the good times. Be fair to the good worker and he’ll work harder for you.

6. Remember that life happens. Good workers get chronically ill. They get in bad situations. They have all consuming clients and cases that have nothing to do with you. Sometimes your excellent worker becomes a bad worker. Or no longer has time for you. That’s okay. (And if they’re really good, they’ll tell you up front.) Then go through this process again and hire someone new for this particular job. Maybe, if your favorite worker’s life situation improves, you can hire her for the next job.

7. Question, question, question. If something doesn’t sound kosher, it probably isn’t. For example, in book publishing, publishers often tell writers to hire an agent. That would be like me telling my housekeeper that she needs a secretary before she can work for me. How she runs her company is her business, just like the way I run my writing career is my business.

If someone you want to hire tells you that you must pay in full up front before the job is even started, run from this person. A percentage (even half) is fine up front, but not in full. Not ever. You need a way to guarantee that the job gets completed.

I can think of a thousand examples like this. If you don’t know what’s reasonable and customary in the worker’s area of expertise, find out before you hire him. If something doesn’t seem right, then put the brakes on before you enter into a relationship with that person.

Remember that I told you to be flexible? That also means you need to be flexible about who you hire, what you hire them for, and when you hire them. Go on your timetable after you’re fully informed.

Hiring people, whether they’re employees or workers, is a lot of work. But it can be worthwhile. I had the same house cleaner for more than twenty years before health issues caused her to retire. My house was never cleaner. And she introduced us to her husband, a handyman who improved our property a thousandfold.

Yes, I’ve had bad experiences with workers and employees alike. But the good experiences outweigh the bad.

But before you hire anyone, remember two things:

1. You can do most anything yourself. So ask yourself why you need to pay someone else to do this task.

And…

2. No one else cares about your business as much as you do. No one else ever will. So don’t expect an employee or a worker to do as much as you do. It’s not fair to either of you.

Finally, my advice on all things—the more informed you are, the better off you’ll be. That goes for employees, workers, finances, and just about everything else covered by this Freelancer’s Guide.

Stick to that principle and you’ll do well—even when hiring others to help you keep your business afloat.

You can now order either an e-book copy of the Guide or a trade paper copy of the Guide. It’s in slightly different format and has been organized, so that related topics are in an easily accessible place.