Respect your employees. Create an atmosphere where they can function comfortably and work with them as a team. Never be moody; always be steady.

Do you want to do payroll, pay workers compensation insurance, and do payroll deductions for income tax, social security and other taxes? Would you prefer charging a rent as in the beauty salon industry? Would you rather they are independent contractors?

If they are to be considered an independent contractor, there are certain criteria which might be difficult to meet. An independent contractor makes their own hours, collects their own money and then pays the owner.

According to the Internal Revenue Service (IRS), if the hiring therapist has the right to direct or control the worker, the worker is an employee. Indications would include scheduling and training the worker. If the employing therapist has routines the worker is expected to follow, premises the worker is expected to work in, the right to discharge or terminate the worker, or a continuing working relationship with the worker, the worker is probably an employee. Other indications the worker is an employee are when the employing therapist furnishes materials (such as lotion and towels) for the worker to use or pays the worker by the hour, week or month. If this is the person’s only job, that leans towards employee rather than independent contractor. A wrong decision on the employee/independent contractor question could be expensive if the IRS determines the status differently in an audit. Back taxes and penalties may then be due.

Sometimes big companies make mistakes in this area. Microsoft hired independent contractors who had fewer benefits than employees and wore different colored badges. These differences did not impress the IRS when it looked into the matter. Once the IRS determined the “independent contractors” were really employees, the new employees sued Microsoft for back benefits, which the court awarded.

The IRS will determine whether a worker is an employee or independent contractor if asked. This requires the worker’s consent. The form number is SS-8 and it is available online.

Get the independent contractor’s handbook to see if that is the way you want to go. The convenience of independent contractors is all you do is give the contractor a 1099 statement at the end of the year. Another arrangement to consider is having them pay you a rent. This is a common arrangement in beauty salons known as booth rental. It cuts down on paperwork. Your hairdresser or barber might be the most qualified to tell you how that arrangement takes place. There will be certain criteria that have to be followed in order to satisfy the IRS.

If you decide to do payroll, there are computer programs that will make that easier and also services that will do it for you for a fee. You will have to figure everything in and make sure the employee is profitable in a way that meets your goals. Most importantly, check with your state. States have their own rules pertaining to the status of a worker and what is allowable.

Be sure to get a contract with your employee and include the basic rules and policies of your establishment. Go over every detail with them so they don’t get into the habit of doing something incorrectly. Otherwise, they have to train themselves out of it on top of getting use to a new place. Be certain they know the law as it pertains to them and the business. For example, a number of states specifically forbid refusal of an inspection by an agent of the massage board. If an inspector came while your employee was in session, the employee might insist they come back when you’re there or when she or he is not busy. This not only gets the employee in trouble but you as well. You could have your establishment license revoked for just two or three similarly seemingly innocuous citations, depending upon how aggressive your licensing board wants to become.

You may have to answer for carelessness or misconduct by your employee which rises to the level of tort liability. In legal terms, which are often drawn from Latin, this is called “respondeat superior.” …. loose translation, “let the superior give answer.”

This can only be applied if the employee is directly working for you when the event occurred. In other words, the employee was going about your business, doing their job and something went wrong. For example, your employee gives a treatment to an elderly client who, when the employee turns their back, falls off the table and breaks their collar bone. Let’s assume that this proves to be an act of negligence on the part of the employee for not taking ordinary measures and proper precautions. In that case, you will probably be liable for the damages. If this, however, occurs in the home of the employee, where they are conducting a side business and you’re not involved in any way, then you’re safe---if you can prove it. Now, if the injured client was also a client of your establishment, does it make a difference? Not likely…..you were not involved in the business transaction, you did not make the appointment for the client to go over there, it is obviously a separate location, you’re not on the lease there, you received no monies or other gratuities from the situation, and you never gave permission to the employee to extract clients from your business.

If your employee was, with your knowledge and permission, representing your business at a sporting event, for example, and through neglect or malice causes injury, you would probably be held responsible. The fact that it did not occur in the business establishment makes no difference under these circumstances.

Florida has a law that forbids a massage therapist from arranging a sexual tryst in a massage establishment. That portion of the law does not specifically mention it has to be with a client. In other words, the therapist can tell someone, “I’m madly in love with you. Meet me at my home where we can have consenting adult sex,” and they would be breaking this Florida law. Notice there does not need to be a financial component to the arrangement in order for it to be illegal.

In this case, Florida has made it a point to make that illegal for the establishment as well. However, even without putting it into law, a state could still argue that the employer was equally responsible, in an attempt to pull the establishment’s license. This law could be constitutionally vulnerable under free speech, but fighting it in court would probably cost the owner much more than the business is worth. An owner has to make sure employees are keen on playing by the rules. That is why it is important the employer know the people hired by checking their references, having a trial period and being prepared to dismiss them if necessary. Otherwise, the employer might end up staying awake every night worrying about this sloppy person they hired.

Sexual harassment is another thing that has to be looked at when you have employees. This does not mean the employer has to make a blatant sexual overture towards the employee for it to be sexual harassment. There are two ways an employer could commit sexual harassment: “hostile environment” or “quid pro quo.”

The first kind of harassment refers to the behavior of others which unreasonably interferes with an employee’s work performance or negatively affects an employee’s psychological well being because the environment is intimidating, hostile or offensive. The behavior could be obscene, lewd or romantic in nature. The second type of harassment is more blatant. Here job benefits, keeping a job or other employment decisions are based on meeting sexual demands. In either case, the employer is ultimately liable for what happens on the job. The NCBTMB Standard IV(i) says “comply with all laws regarding sexual harassment.” The employer can greatly lessen liability for any problems which do occur with hostile environment by having appropriate policies in place and following them.

The federal statute applies to employers with 15 or more employees; state law may differ.

A hostile environment can occur when repeated language or writing is obscene or lewd (including whistling or leers), when continued sexual or romantic advances are unwelcome, when pornographic or sexual material is displayed, or when persistent undesired touching occurs. For example, a female pilot for Continental Airlines complained several times to management about pornography male pilots left in the cockpit. Continental failed to respond to the complaints. She sued and the jury awarded the female pilot $875,000. If it were a male pilot, he would have a case as well. Sexual harassment is not gender specific.

In a small Costa Rican village, a new teacher was instructing his class when he heard whistles and other sounds coming through the window. Across the way in another building were a number of female students standing in a window who were nosily admiring his good looks. As individuals, the women would never have behaved so. As a group, they were emboldened beyond recognizing the inappropriateness of their behavior. After a time it became too much and the headmaster wisely intervened. One can see how a teacher in this situation could go from feeling flattered and embarrassed to feeling tormented.

This atmosphere can be created by clients, co-workers and others. It is possible that an employee who was repeatedly harassed by any of these, who complained to management about it, and whose protests were ignored, could sue the employer for sexual harassment. This would indicate there should be some policy in place that addresses misbehavior and is followed through. In a case such as this, it might be wiser for the owner to personally set the offender straight or simply ban them from the premises. To do nothing or to leave it up to the employee may not be a good idea.

The U.S. Supreme Court has given employers a course of action. If the employer has a sexual harassment policy which prevents and corrects these problems and the victim-employee fails to use the channel(s) provided by that policy, the employer is protected. Every employer, therefore, should take the hint and draft a written policy.

Quid pro quo harassment (job benefits conditioned on complying with sexual demands) is generally done by someone in authority, a supervisor or manager. If the employee agrees to the act, the coerced consent may not relieve the employer of liability. In other words, compliancy does not make the employee an accomplice in the eyes of the law.

There was a young woman who nearly had a nervous breakdown because her supervisor kept touching her on the back and making flirtatious suggestions. She felt helpless to confront him and did nothing. There was also another woman with the same problem. She tape recorded her supervisor, sued and walked away with a paid retirement. Both women were under pressure; they just responded to it differently.

Harassment can be implied—a discussion of workplace issues followed by an improper request was held to be quid pro quo harassment. The harassment need not come before the request. An employee spurned a request and was later discharged for calling in sick; this was held to be harassment. No negative job consequence, such as being demoted or fired, is required for the employee to bring an action—simply the act of being asked and having refused is sufficient.

Employees who are not the direct victims of sexual harassment can still bring a sexual harassment claim when they are passed over for benefits because less qualified employees submitted to either kind of sexual harassment.