Welcome to episode 246 of The Food Blogger Pro Podcast! This week on the podcast, Bjork interviews Moses Balian about contractors, employees, and building a team.
Last week on the podcast, Bjork read an email we recently received and offered advice on how to overcome the feelings of feeling stuck. To go back and listen to that episode, click here.
As you’re growing your business, there may come a time when you’re ready to hire some help.
But should you hire them as a contractor or as an employee? That’s what Moses is here to talk about today!
He’ll talk you through those initial decisions, using a PEO (that’s a Professional Employer Organization), producing important tax and employee documents, and how employee benefits work.
It’s a really interesting conversation, and if you’re at the point where you could use another set of hands to work on your business, we think this episode will help you navigate your next steps.
In this episode, you’ll learn:
- How Justworks works and what a PEO is
- The difference between a contractor and an employee
- If you can start someone as a contractor and move them to an employee
- How you can start building a team
- How 1099s work
- If and when you should create an employee handbook
- How employee benefits work
- If you should have insurance when you’re building a team
Listen to the Food Blogger Pro Podcast below or check it out on Apple Podcasts, Google Play Music, or Spotify:
If you have any comments, questions, or suggestions for interviews, be sure to email them to [email protected].
Transcript (click to expand):
Alexa Peduzzi: Hey, hey, wonderful listener. You are listening to the Food Blogger Pro Podcast. Thanks for making the show a part of your day today. Before we get into the episode, we just want to acknowledge this interesting, uncertain time that we’re living in at the moment. It’s really tough navigating the news, the restrictions, and all of the unknowns. As for what you can expect from us during this time, it’s going to be business as usual. We’re lucky in that we’re used to working remotely. Our team actually spans three different time zones and two different countries. So not much is going to have to change, but we acknowledge that times are tough right now and we’re here to support your blogging and work goals however we can.
Alexa Peduzzi: One of those ways we hope is with this podcast. And today’s episode is perfect for those who are ready to take an important step with their business, hiring. When you’re ready to hire some help, you’re bound to have some questions. Should you hire them as a contractor or as an employee? Do you need an employee handbook? What about benefits? Well, that’s what Moses is here to talk about today. He’ll talk you through those initial decisions using a PEO, that’s a professional employer organization producing important tax and employee documents and how employee benefits work. It’s a really interesting conversation and if you’re at the point where you could use another set of hands to work on your business, we think this episode will help you navigate your next steps. So without any further ado, Bjork, take it away.
Bjork Ostrom: Moses, welcome to the podcast.
Moses Balian: Hi Bjork. Thanks so much for having me.
Bjork Ostrom: Yeah, I’m really excited to talk to you about a specific area that we’ve mentioned a few different times on the podcast. We hear a lot of people bring this up and there’s a lot of confusion around what’s involved with the hiring process. And the great news is you deal with that a lot because you work for and you’re kind of an evangelist for a company called Justworks. Can you explain what Justworks is and the basic concept of a PEO?
Moses Balian: Happy to. So Justworks is, as you said, a PEO, which means a professional employer organization. So you can think of it like a payroll provider, but oh so much more. Because a PEO will also provide companies with access to health insurance benefits, really assist with the compliance aspects of that and running payroll and even more robust PEOs like Justworks will have an HR consultancy arm where you can talk to a certified HR expert, get help on issues like an employee’s decline in performance and you need to put them on a plan or even talk about termination or you’re building a parental leave policy, something like this.
Moses Balian: So it’s really like an all-in-one employment solution to manage your tax and compliance and HR obligations and processes. And so I’m a big fan of the model objectively. I came from an in-house HR background as do most of the HR consultants that we have. And so I had never been co-employed by a PEO before, but you or a lot of the listeners have probably heard of ADP. We’re a very, very similar model of that. They also have a PEO product. And so we like to talk about ourselves as sort of the ADP for startups if you will.
Bjork Ostrom: Got it. Yeah, love that. And that’s actually how I heard about Justworks. There were some startups that I was tracking along with and they were talking about some of the systems they use and processes and tools and they mentioned Justworks. And it was at a perfect time because it was right when we were starting to build a team and I was like, “Oh, I can do this, I can do paperwork. It doesn’t matter if we have two or three people in different states.” And then suddenly it was like, oh my gosh, the amount of stuff that I had to read through and process and set up. And it was all so much and also different, especially for us as a remote team.
Moses Balian: Oh my gosh. Totally.
Bjork Ostrom: Every state was different. And so it took me two weeks until I was like, nope, I definitely cannot do this. I need to find a solution. That’s how we came across Justworks. One of the things you said was interesting and was something that I had to learn about. It was this idea of co-hiring. What does that mean and why is that-
Moses Balian: Co-employment.
Bjork Ostrom: Co-employment. What does that mean and why is that important for people to understand in regards to what a PEO does?
Moses Balian: Totally. So one thing that’s funky about a PEO and we have to explain to the employees of new customers a lot is if you are a customer of Justworks, you work for Food Blogger Pro, who is a customer of Justworks, your paycheck, your employee’s paycheck is actually going to come from Justworks. It’s going to say Justworks Employment Group LLC. And so we are a co-employer and that means different things in a lot of scenarios. For payroll, it means we’re the ones running your payroll but completely in line with the decisions and business practices and compensation protocol that you, our customer has established. So we execute on your behalf in a lot of ways and running payroll is one of those things.
Moses Balian: The reason that’s so beneficial is we have a ton of eggs in the basket or what, some… or rats in the race or whatever it is.
Bjork Ostrom: Rats in the race carrying eggs in a basket.
Moses Balian: … as far as making sure everything goes smoothly and is reported correctly and is compliant. And so we really talk about ourselves as collaborators with our customers to make sure everything’s on the up and up and we’re following the rules and making your employees happy and delivering a payroll experience that they either have no problem with or ideally are even a little delighted by sometimes.
Bjork Ostrom: Yes, totally. One of the things that I love about a company or a solution like Justworks is it solves a problem in a way that I love to solve problems, which is finding people or solutions or groups that really specialize in an area. And that’s kind of all that they do. And in our world, there’s examples of people who do that in advertising and they really understand advertising. They live and breathe advertising and we want to work with them because they’re going to be able to come in and see ways to more effectively have ads on a website or an email expert. And for Justworks, it’s hiring and it’s HR. It’s people who live and breathe this all day long. So when I have a notice from the state of Minnesota about our whatever tax rate being adjusted, I can scan it in and say, “Justworks team, do you need to know this? What do we need to do with this?” And it’s a familiar thing. So it’s been a great tool for us. It’s super helpful. And it’s also great to have you on the podcast because you’re able to speak to a lot of the questions that I know listeners and members of Food Blogger Pro have around building a team.
Bjork Ostrom: Because eventually people get to the point where they realize we can’t do it all. And we all have this startup phase where we start as solopreneurs and then we want to start to bring on help. So let’s talk about that early stage when you’re first thinking about hiring an employee, and maybe that word should be a little bit different because there’s employee or there’s contractor. Can you talk about the difference between those two things?
Moses Balian: You bet. You bet, Bjork. It’s a huge question and it’s a common question and there’s rarely a simple answer. Disclaimer upfront, this is probably the most compliance heavy I’m going to get throughout the course of this interview. But the distinctions-
Bjork Ostrom: Okay. We’re ready.
Moses Balian: … are really important and awesome and usually more than people want to think about but also crucial that you do. So the fundamental difference between an employee and a contractor is a shortcut is kind of like an employee derives out of a common sense notion of what an employee is. That’s like what the employment law background of it is. Actually the FLSA, the Fair Labor Standards Act that establishes minimum wage on the federal level and overtime and things like that defines an employee as someone who is employed by an employer. And we all learned in elementary school that it’s not such good practice to use the word in the definition of the word.
Bjork Ostrom: Yes.
Moses Balian: And so there’s been a lot of like castellan precedents to extract exactly what that means as opposed to a contractor. Now a shortcut to thinking about it is a contractor is going to look and act and feel more like a vendor. So the word contractor is thrown around a lot and it can mean different things depending on what angle you’re coming at it. But basically like say I need the paper products for my copy machine, I’m going to go to Dunder Mifflin and ask them to source my paper. Now Dunder Mifflin is a contractor for my company, even though it’s a totally established company, they have dozens, hundreds of employees, they’re in the business of paper products. They’re one of my contractors.
Moses Balian: That’s why the same context when you talk about someone’s a federal contractor, has a federal contract. They are contracted by the federal government. They are a contractor for the federal government. So sometimes though businesses like Justworks are smaller businesses or huge businesses like the PWC or KPMG will engage contractors that are individuals. That just so happened to be individuals and that’s where you have to be really careful as far as making the designation. And when you do that, it’s fundamentally going to come down to degree of control. Right? Because when I talk to Dunder Mifflin, they have all their own business practices. They source their materials, they have their standards for making the paper products or packaging them for shipping them.
Moses Balian: They do all that. I’m just paying for the end result. And a contractor who’s an individual is sort of the same thing. So in that way, a contractor is usually going to provide services that are more ancillary to your business. Their output is going to look a little bit more like a final product or a tangible output as opposed to someone who you expect to be sitting at their desk from 9:00 to 5:00 and working on whatever you assign them. So here’s an example. Justworks has this beautiful mural in our office of the New York skyline and employees being happy and all that. And so we hired a contractor to paint that mural. We paid him, let’s say 800 bucks. I’m sure it was way more than that. But he billed us 800 for materials and labor and we wrote him that check.
Moses Balian: Now obviously he’s not an employee, but if Justworks were in the business of painting murals and we had mural painters on staff, now all of a sudden we have to think about, is this an employee or is this a contractor? So this vendor versus somebody who is permanently engaged with you is a good way to start thinking about it.
Bjork Ostrom: Yeah, that’s interesting. An example for the work that we do, we have a designer who we work with that we consider to be a contractor and there’ll be sprints where we’ll work with him quite a bit. We’ll have a project that we’re doing and there’s a deliverable, but then we’ll have this gap of four months and there might be one or two things that we ask him to take a look at and to help out with. And then there’s another sprint of projects that we’re doing. His name is John, lives in a renovated Airstream and travels around with his family and has his own equipment-
Moses Balian: Cool.
Bjork Ostrom: … has all his own software. And so in that way he’s helping us, he’s working for us, but disconnected from what we’re doing in terms of the day-to-day team dynamic versus we have somebody on staff that we just brought on as a team member, an employee, and she’s helping out with some writing. She’s coming into the office once a week or twice a week, has these real specific deliverables. There isn’t necessarily an end to that. And so she’s an employee. So if people are wondering how do I… they’re thinking about making that first hire, or maybe they have a team and they want to make sure that they’re doing it right, how do you do that?
Bjork Ostrom: Is there some type of questionnaire or a test or would you say reach out to an HR professional and talk to them about it? Any advice for that?
Moses Balian: I would talk to someone who’s done these sort of classifications before for sure. Don’t hesitate to reach out. Also, don’t hesitate to make people employees. I know there’s the barrier to entry, which isn’t a huge barrier, but you’re writing an offer letter. You’ve got to have them fill out an I–9 and they bring in their passport or other acceptable documents to go through that. And then you think of new hires. Okay, there’s orientation, whereas a contractor relationship is much more touch and go. It’s simple. It’s more transactional. And you just have to make sure you fall on the right side of that line.
Moses Balian: So there are, and not to get too into the weeds, but there are tests under the… the Department of Labor has a test, the IRS has a test, and you should look at those. But in all fairness, they’re pretty hard to figure out for non-experts when you’re first looking at it. So one helpful thing can be exactly what you described Bjork, as far as those two individuals, the symptoms precipitating out of the relationship. So right, a contractor is much more commonly going to use their own equipment. That’s right. This is an area where the employer isn’t controlling them. They set their own hours.
Moses Balian: They might work from home, which is not a determining factor, but they have a project that they’re completing for you and they do it on their own terms and maybe they have contractors also more likely to have more customers or more people, more businesses for whom they perform work. And so they’re juggling all these things and prioritizing their workflow on their own versus an employee is at your beck and call a little bit as far as what projects you delegate to them. Maybe they’re not a hundred percent sure what they’re working on, but they’re coming in and being assigned something to work on that day. And especially at smaller companies, we’re wearing a lot of different hats. So that’s another litmus test.
Moses Balian: A contractor is going to be definitively wearing one or few hats, like a designer. I’m a designer who does design. That’s my product that I’m… my output that you’re buying from me versus an employee might flit around and do all sorts of different things. They might have specialties, but they’ll help out where they can because they’re sort of tied to you as an employee. So the penalties for this are… for getting it wrong are pretty steep. A big thing is employees should be offered health insurance benefits. Contractors are not implicated as far as health insurance. So a lot of companies are compelled to make people contractors because it usually is cheaper. But that’s not the way the cookie crumbles as far employment law and case law is concerned.
Moses Balian: Other penalties can be steep like for example, if you’ve got a contractor on site a lot, you probably don’t have worker’s comp insurance coverage for them for when they get hurt on the job. And so if they were to, and then there’s a claim made, you might be liable for the costs associated with their injury and back pay on the insurance that you should have had from the beginning. Also, contractors can’t avail themselves of nondiscrimination laws in a lot of places. In New York where I’m sitting, only recently have contractors even been protected against sexual harassment from employees.
Moses Balian: And so these distinctions are super important where basically if something goes wrong and a contractor should have been an employee and should have been entitled to certain benefits or protections and this all comes to light, that’s going to get walked back pretty far and you could find yourself in some hot water.
Bjork Ostrom: And when you say the penalties, that’s speaking to if somebody’s on your team acting as a contractor, when in actuality they should be an employee, it doesn’t really work the other way around. Right?
Moses Balian: Oh totally. So it’s always safer to make someone an employee. You’re never going to be scrutinized for that honestly. Because you saw this designer that’s… say they work with you so much and you want to offer them health insurance benefits and give them a consistent paycheck, by all means, you can bring them on and have them in the office as an employee or work from home as an employee. So it’s always safer to err on the side of making someone an employee for sure, for sure.
Bjork Ostrom: Got it. So let’s say that you’re interested in getting started out, maybe it seems a little bit intimidating to actually go through some of this stuff. Can you start with somebody as a contractor and switch to an employee status? What does that look like in terms of, let’s say somebody’s looking to make their first hire, should that be an employee if somebody’s coming on in that capacity that is an employee capacity? Or can you have somebody act as a contractor for a little bit to feel that out and see how it works?
Moses Balian: I hear you. We call that temp to hire and that’s not going to fly. If somebody’s job duties and the relationship with the business isn’t fundamentally changing after that trial or introductory period, then they should have been an employee in the first place. So no, it’s not appropriate in attempt to hire or trial period scenario. It doesn’t have to do, permanency is only one of many, many factors to consider when classifying someone as an employee versus a contractor. So, yeah, you really should engage them as a W2 from the outset.
Bjork Ostrom: Yep. And I think that it’s reassuring to hear in that it provides some clear guidelines like, hey, if you’re going to bring somebody on who you want to stay on as a part of your team to stick around for a while, this is an actual position. It’s not just a short term project like a redesign of a website that’s going to wrap up after a while or something that would fall clearly in that contractor role. Then you want to do it right. You want to go through the process of actually hiring somebody, which is why a PEO like Justworks is great, but there’s also some things outside of that that you need to make sure that you’re doing. There is offer letters which you mentioned, contracts, agreements.
Bjork Ostrom: If somebody wants to go through this process of starting to build a team, what are the pieces of the puzzle that they need to have in place along with a PEO like Justworks?
Moses Balian: Sure. Great question. So the employment relationship is pretty hefty but less so in the US than a lot of places in the world. And so in 49 states and Washington D.C., the outlier is Montana, employment is considered to be at will. And so what that means is that in an employment relationship, either the employee or the employer can terminate the relationship at any time with or without notice and with or without cause. So unless there’s something in your contract that your employer gave you when you got hired that says they need to establish cause and terminate you for only performance or misconduct or something like that, then they can let you go without any warning.
Moses Balian: And this is the basis for the employment relationship in the US. In order to establish that at will employment relationship, you need an offer letter or an employment agreement and it’s not always some hefty duty thing. It can be two pages where you indicate the regular payroll, of course the compensation, the title, who somebody is reporting to. And some states and localities have a few other requirements that are not too lengthy in nature. Versus a contractor for example, you might not even have a written agreement with them. They might send you an invoice and then you write them a check and generate a 1099 at the end of the year. That might be the only paperwork involved.
Moses Balian: Or you have a really well thought out and baked master service agreement. And this might be more for a business to business relationship, which again is in effect what you have with a contractor that outlines those sorts of terms. And so where Justworks helps with that is we’re keeping tabs on all the multi-state employment compliance. I mentioned some states have offer letter requirements that are more robust. Here I’m sitting in New York, that’s one of them, one of the strongest. And so we’re going to keep tabs on you and you hire your first New York employee and say, “Hey, you’re used to writing offer letters like this in Minnesota. Well, New York has these extra considerations to keep in mind.”
Moses Balian: And so I can talk about multi-state compliance all day and the benefits of a PEO with respect to that. Basically we have employees, co-employees in all these places already. And so the fact that we’re already established wherever you want to go will help you… we’ve been there, we’ve been there already and we’ll help you wrap things up in a nice little bow and follow the rules.
Bjork Ostrom: And it’s interesting even, I think of California as an example and we’re going through the process of figuring out like-
Moses Balian: Oh yeah.
Bjork Ostrom: … oh, California has some really unique employment laws and so we had a team member in California. We needed to make sure that as a for instance, that we had the correct amount of sick leave offered correlated to the amount of time that the person had worked in a year. And it wasn’t an issue for us, but we just didn’t know that that existed. So it was really helpful to know like, oh, through Justworks, they said this is something you need to be aware of.
Bjork Ostrom: One of the things that you said that was a learning experience for me early on is this idea of 1099s. And when we first started working with people in a contracting relationship, and even we had affiliates that we paid through our business where we gave them a commission of sales. Our accountant said, “We need to send 1099s to the people that you’ve paid.” And I said, “What’s a 1099?” And little did I know it’s this really important thing. Can you talk about what that is and why it’s important for people to understand when you’re operating a business that you need to send out these documents at the end of the year for both employees and contractors that you work with?
Moses Balian: Yeah. So there’s a few different types of 1099s, the ones we’re talking about with respect to contractors are called a 1099-MISC. There’s others for retirement distributions and things like this, but a 1099-MISC is what you issue, what a business issues to its contractors at the end of the tax year. This goes for individuals and businesses alike wherein you’ve paid them $600 or more throughout the course of the tax year and you send one copy to the IRS, you send another copy to the employee and then they use that to report their income when they file their 1040, their personal income tax return.
Moses Balian: And so yeah, this is a requirement and honestly, some people’s favorite feature on Justworks is being able to pay contractors and not just employees and you can schedule all those payments and as soon as you cross that $600 threshold, we’re going to honestly send out your 1099s to those people right away unless you tell us not to because that’s what’s required. People are probably even more familiar with W2s, of course that’s what you get from your employer at the end of the year. That’s something any payroll provider is going to do. But yeah, 1099-MISC is the W2 of the contractor world.
Bjork Ostrom: And it’s one of the things that we’ve really loved and our process now is anytime that we’re paying anybody, whether that be somebody who’s on our team or a contractor or vendor that we work with, we’re doing all of that through Justworks. And like you said, we don’t have to worry about that at the end of the year because we know that every payment we’ve made has gone through that system. And so all of the documents that need to go out will be delivered and we don’t have to comb through our books and say like, “Oh, who did we pay over $600 this year?” Because as the business grows, that becomes more and more people and more and more random places that we’re issuing those rates to and therefore the documents correlated to that.
Bjork Ostrom: So important concepts. And it goes to point out even further why it’s helpful to have somebody who’s taking and keeping an eye on this and managing that process for you. Another thing that’s important as you think about that team building phase that you had mentioned is this idea of handbooks and policies. For us, this is an area where we’re at the point now where for our company, we really need to think about what does it look like to have a solid handbook and how do you do that? What does that look like and at what point should you start to think about that?
Moses Balian: You should start to think about a handbook as soon as you’ve got the bandwidth to do so. So fundamentally what a handbook is for is to make sure you are administering your policies and procedures consistently and have consistent treatment of your employees. So it happens all the time that I’ll be speaking to a customer on the phone and they’ve got someone, their first employee who’s having a baby, for example, and they say, “What do we do?” And I say, “Well, what’s your handbook policy like?” Or, “What’s your handbook?” And there’s a brief silence there when I say, “It’s okay. I understand. It’s perfectly fine that you don’t have a handbook, but this is a great reason to start thinking about it. And maybe let’s get some of these things down on paper.”
Moses Balian: A parental leave policy is a brilliant and robust example of where you can’t have Jane going out and getting so much leave and so many weeks paid and then Sally goes out two months later and gets something vastly different. That’s going to get you in trouble most likely, especially if there’s a difference that’s not based on a bonafide difference in employment relationship. So again, handbooks are here to establish consistency and just the rule of law at your organization. Think about it as early as you can. Also, it’ll head off so many questions that your employees might have for you. Like, what’s our progressive discipline process or even like where are my health benefits coming from? Why does it say Justworks on my… saying my paycheck is coming from Justworks.
Moses Balian: And then even like, what’s our dress code. For an HR manager or someone, whoever’s wearing the HR hat at a small and growing business, considering these things in advance will give you something to come back with when you’re getting that question and may even preempt the question at all. So while it’s a ton of work and getting cracking on a handbook is super intimidating, it’s like writing your first paper, looking at that blank blinking cursor on Microsoft Word your freshman year of college and you’re trying to crank out the history paper.
Bjork Ostrom: Totally.
Moses Balian: That’s how it feels. And I might have some flashbacks, but that’s why if you partner with a PEO like Justworks, I can’t speak to other PEOs actually, but we have an amazing partnership with a company called ThinkHR and they provide us with a lot of tools and collateral and written resources to our employees, to our customers rather. And so through them we offer to our customers something called the Employee Handbook Builder where you go in, it’s amazing. You enter how you refer to employees, whether they’re employees or team members or whatever, name of your organization, who’s in charge, and then what states in which you have employees and the number of employees in each of those states.
Moses Balian: And you click next and it generates this beautiful handbook for you. That’s albeit huge with all of the different policies you might consider including in your handbook. And thankfully, they’re labeled as far as which ones are absolutely necessary, which is far less than half might do, which ones are a really good idea and then others as applicable to your business. And different employee count thresholds at the company as a whole or in individual states can have huge implications on what employment laws are kicked into place. For example, the Americans with Disabilities Act, something I encounter a lot dealing with accommodating disabled employees or those with a serious medical condition on the federal level doesn’t actually kick in until you have 15 employees.
Moses Balian: And so what your business needs to accommodate and sustain in different scenarios can vary drastically, whether you have seven employees versus 100, or even versus 50. So this is all to say, this feature in the handbook builder is amazing and employee count is crucial as far as determining what policies you need to have in your handbook. And at the end of the day, it’s going make your employees, it gives them some peace of mind, show that, hey, my employer really knows what they’re doing and this is something I can reference when I don’t know how a situation will be treated.
Bjork Ostrom: It’s a good reminder for us. As we were chatting about before, we pressed record here on the interview, we actually went through the process recently in 2020 where we technically used to have two different businesses, Food Blogger Pro and Pinch of Yum. We’re operating as separate businesses. And then now we’ve since rolled up into one, we need to revisit the handbook that we have and make those updates because not only is our team bigger now, but also the name of the company is different. And my guess is from when we last made that, that we’ve also had tweaks and enhancements and changes that we’ve made. An example, we have what we are calling an IRL budget, which is as a team, we set aside a budget for each team member where we can travel and spend some time with each other in the remote locations.
Bjork Ostrom: That wasn’t something that we had three years ago when we first went through that process of creating a handbook, which it was the exact scenario you described. We had a team member who was expecting their first baby and we said, “What is our policy on this? We should probably create a handbook.” And as I was thinking about it, I feel like a handbook is kind of like a playbook for a team where-
Moses Balian: Absolutely.
Bjork Ostrom: … technically you have to have one. But if you don’t, then it’s really hard for people to know what the norms are and how you operate and what the language is and so I can see it being a really helpful thing. And we went through that process just like you described using that tool and then from there combed through it and tweaked and adjusted as needed.
Moses Balian: Exactly. How much more sophisticated is a football team rather than saying, “Hey guys, we’re going to run a passing play.” We’ll say, “We’re going to do that play action thing that we did in practice,” and how much more successful is that going to be?
Bjork Ostrom: Yes. That’s great. So speaking of the idea of understanding the norms within a company, do you have any advice around some… For somebody who’s looking to wanting to build a team, what does that look like from a benefits perspective? I think that’s one of the things that is scary when you’re getting started out is this idea of benefits and in the early stages, do you need to have health insurance and a 401k? Can you add that in after? How does that work and what is your advice for people who are starting to build a team as it relates to benefits?
Moses Balian: You bet. The first thing I want to say is for small employers who aren’t applicable large employers under the Affordable Care Act, I’ll get to that in a second. But if you have less than 50 employees, you for the most part do not need to offer health insurance compliance wise. Realistically, in order to attract the talent that you need in order to get your business off the ground, you’re going to want to offer health insurance benefits just to remain competitive amongst the talent pool. An EPO is going to make that so much easier for you because… okay, so one of the ways a PEO works is that I said your paychecks come from Justworks but also you’re under Justworks’s group health plan as far as benefits.
Moses Balian: So let’s say you’re a 12 person company, you go and get a health insurance quote for your organization. It’s going to be pretty expensive, especially if you have more employees of particular ages or demographics that are more prone to utilization of the health insurance. Your premium is going to be way higher, right? Versus the way it works at Justworks is you become a customer, we have one huge ginormous gundo health insurance relationship with Aetna or our other providers of which you become one of many employees and that cost and that risk is just spread out so much more thin that the health insurance premiums are that much affordable. And so you can be the hip new kid on the block, but still offer Microsoft, Google, Netflix level benefits because of really the economies of scale.
Moses Balian: And Justworks in attracting the types of customers that we want to, that we’re really excited about, we understand that it’s not just about what we call MDV, medical, dental, vision. It’s not just about that anymore. It’s about benefits that are going to get people excited that they’re going to utilize and that are really going to draw them in. So your medical insurance is affordable and robust and that’s great. I feel like I can go to the doctor. It’s like the fundamental level of your Maslow’s hierarchy of needs. Right? But we go so, so, so much further up the pyramid and we offer these ancillary benefits that you can buy into. So these are like, you can choose to offer these things or not. You can also choose to pay for them or offer them to your employees for them to pay for.
Moses Balian: And these are things like life insurance, which nobody really likes to talk about, nobody loves talking about it. And we make that as painless as possible. Short term disability, which is something you never think about until you need it and all of a sudden you’re unable to work, provides wage continuance. And then other things that we dub as modern benefits, which are like access to New York City Bike or other bike ride share programs that are popping up in cities throughout the US, sort of an employer cost sharing thing where maybe we’ll give your business the opportunity to chip in for half and you can ask employees to pay for the other half. Gym reimbursements, and then access to mental health assistance programs.
Moses Balian: We have an EAP for all of our benefits eligible employees of our customers health advocate where they can call in, talk to a counselor 24/7. Every time you call in, a licensed counselor answers the phone. You can talk to them about whatever’s going on and they are beholden to your privacy concerns. They’re not going to then go to your boss and say, “Hey, Jimmy’s really struggling.” Right? It’s like totally a safe space. And even permits three in-person therapy visits where this organization, this EAP will connect you with a therapist, they know what your health insurance is through Justworks and will find someone in network.
Moses Balian: So even speaking from personal experience, establishing a relationship with a mental health professional can be one of the biggest hurdles, especially if you find yourself in a position to feel compelled to or really want to do that. You probably have a lot of other things going on. And so this brokers that relationship and finds you someone in network that’s affordable and that you can continue seeing if you want. So I can plug the benefits of an EAP, an employee assistance program all day, but you can see these are the things, these are the benefits we allow you to buy into or to provide to your employees at great prices, at great levels of engagement so far beyond just medical, dental, and vision because people are thinking about benefits. They used to be black and white and now it’s a whole rainbow of options.
Bjork Ostrom: And what I love about this conversation is I think it offers, for listeners of the podcast, a really good lens into a different way to approach what they’re doing from a business perspective. And a lot of times we talk about this idea of the solopreneur and how can you hustle and get things done and be as productive as possible. But inevitably, if you are good at that, there’ll be a time where you have to start thinking about bringing on additional people to your team and the strategy around that then changes and you have to shift what you are good at and you have to go from being good at the hustle productivity, delivering on a certain thing as a solopreneur to what does that then look like to build a team and to create an environment that is positive and in a good place and somewhere that people want to be?
Moses Balian: Absolutely.
Bjork Ostrom: So we’re going through this series where we’re trying to broaden horizons a little bit and this fits into that perfect as we talk about leveling up your business. A couple of other questions that come up that I know people wonder about, logistical questions around building a team. How about on the insurance side of things? It feels like one of those things where there’s probably some type of insurance that needs to exist when you are building a team, is that something that you need to be aware of and include as you’re starting to hire people?
Moses Balian: Yeah, sure. The first thing that comes to mind is worker’s comp and I mentioned that before. For anyone who doesn’t know what that is, that’s insurance that specifically covers workplace injuries. So it’s going to supplement an employee’s own health insurance if they have any as far as injuries that happen on the job. So that’s something that you just have to have. That is just absolutely fundamental because imagine an employee gets hurt at your office, you have no coverage, that’s going to just be a huge financial liability for you. It’s legally required in most if not all places. So that’s really the bedrock as far as insurance that you as a business have to carry as far as when you start having employees.
Moses Balian: I loved what you said earlier, Bjork, about transferring or the transition from a solopreneur to a manager of people and of this business. And one reality that I think is important to confront there is that as you grow, maybe your first few employees are also entrepreneurially minded or they’re people who share your enthusiasm and ethos and are just going to get it done whatever it takes. And inevitably as you grow, whether it’s once you hit 15 employees or 100, you have people who are coming to work doing the thing and then going home and probably not thinking about it until the next morning. And that is perfectly okay. We need doers to come in and show up and do the work.
Moses Balian: And so having people engaged in an employee mindset by offering them these types of benefits, by encouraging a culture of collaboration, is so important because frankly at a certain point you just can’t expect everyone to be as invested in this dream, in this idea, in this mission as you are. And so becoming part of the Justworks co-employment pool, we know what that takes. We’ve seen it literally thousands of times and have these tools at your disposal to offer to your employees and advice to give, whether it’s from an HR consultant or from your account manager as far as building a place where people want to come to work.
Bjork Ostrom: It’s actually something that we’ve tried to think about, especially as we enter into this phase of TinyBit, the name of the parent company that we have, is how do we level up in that area. And I know that some people might be at that point that listen to the podcast, some people might be aspirational in getting to that point eventually, but just from an HR perspective, and HR will use a different word to expand that out a little bit, but just like team building or maybe culture perspective, what would your advice be in ways that we can build teams, build a group of people who are working together and support those people?
Bjork Ostrom: How can we do that well and what are the things that we need to consider as we’re thinking about different offerings that we can have or strategies that we can have in that realm? Both personally asking that, but I know that other people would be interested in it as well.
Moses Balian: My first piece of advice is seem self-evident, hire well, hire smart, and give strong and due consideration to your applicants. I can speak for Justworks itself as an organization has a very rigorous hiring process. We have special types of character and behavioral interviews that we go through to make sure people are a culture fit. And to that point, in order to hire well, you want to hire against your values. What are your values? Well, give that some good, strong thought and try to establish that as early as you can. Now, it doesn’t have to be an acronym, like at Justworks we have COGIS, comradery, openness, grit, integrity and simplicity. The last ones-
Bjork Ostrom: Nice.
Moses Balian: Thanks. Hoo.
Bjork Ostrom: Because you put yourself on the spot quiz.
Moses Balian: No doubt about it, I’m sure our HR team is thrilled that I got that right on the first guess. I’m not sure how early we developed that. I was employee number 170 or so. But it was around when I got here and I know that they were hiring me against those values and that it meant something to the organization. Maybe you have 15 people and you look around and everyone’s just got something. They’ve got a spark, whether it’s a caring streak or whether it’s a strong interest in a specialized area or whether it’s a wacky hobby, maybe you have people who are really engaged with what they’re doing outside of the office. Find something when you first get going, find talented people and then look around and try to distill what the common denominators are and what you love about the people that you’re looking at and consider writing it down.
Moses Balian: And you don’t have to paste it all over the walls. And honestly, you probably shouldn’t. When you’ve got motivational posters on the wall at the office, then that’s when you should start thinking about maybe looking somewhere else. I’m not a fan. But at least develop something codified against which you can hire and to help your managers and if you have someone dedicated to recruiting, just have in mind you’re not just diving into the massive pool that is LinkedIn, but rather you are identifying particular attributes of individuals, whether that’s directly related to their skills of their job or more like soft skills or personality traits that are going to continue to build a culture that you’re happy about.
Moses Balian: And if you start to stray and start to… I mean, you can visualize it. You hire a lot of employees over here who aren’t part of this tree that’s the ethos of what you’re trying to grow, it’s going to tip over and wither and get out of your hands. And so just try to… honestly this image just came to mind of in a Charlie Brown Christmas, he’s like, he finds really sad little Christmas tree and he wraps his little blanket all around the base of it and put some ornaments on it. That should be your culture. Maybe it’s going to be a little ragged at first. It’s going to be gritty, it’s going to be ugly sometimes, but find what you love and nurture it and try to maintain that consistency.
Bjork Ostrom: That’s awesome. And one of the things that you had mentioned was what that looks like for Justworks and it’s an interesting company in that you work and focus on hiring and therefore you get a lot of exposure to other companies who are doing that and doing that well. And so you’re able to fold some of that into what you’re doing.
Moses Balian: Totally.
Bjork Ostrom: I don’t remember where it was or what specific category it was in, but it was something along the lines of best place to work and maybe it was… or approval of CEO I know was another one.
Moses Balian: Totally.
Bjork Ostrom: What are some of the things that you feel exist at Justworks that makes it a great place to work, that people who are thinking of building a team can emulate in some way?
Moses Balian: Well, first of all, we allow dogs in the office.
Bjork Ostrom: Nice.
Moses Balian: So that’s going to be a huge plus, it’s not foundational, but that’s always going to win you a bunch of brownie points. And then I’d say the first thing that comes to mind, I’ll just say it is leadership, the way that leadership communicates with employees, talking to us like adults. Like we know what we’re talking about, like we’re trustworthy as far as whether it’s some very nitty gritty and real financial growth and data about the organization, whether it’s new products, new verticals we’re looking to build out. But just a leader who talks to you like a person. And they don’t have to be your buddy, but someone who’s going to look at you and hear your questions and answer them candidly and not give you a roundabout answer.
Moses Balian: I mean, Isaac, I’m such a huge fan. Isaac Oates, our CEO, he’s just so matter of fact and charmingly frank, never sarcastic, but witty and it’s just such a great line to walk. I don’t know, he probably has an amazing, amazing coach-
Bjork Ostrom: Sure.
Moses Balian: … if I had to guess, but leaders should really think about that honestly. If you’re in a leadership position or you’re a co-founder and you’ve never had some sort of professional leadership and presence coaching before, I would strongly, strongly recommend it. No one is self-aware as they hope they are or think they might be. So that can just have huge benefits. But as far as what’s working for Justworks, we don’t have COGIS plastered on the walls. If you looked around the office, you wouldn’t see it written down anywhere except for in like our hiring manual. Right? But still everyone, maybe not as quickly as I did, but everyone here could tell you what it means and what it means to them and experience that they’ve had here that relates back to those values.
Moses Balian: So culture is built by common vocabulary, common responses to certain stimuli or problems or successes. It’s common repeated behaviors. You look at cultures in a certain part of the world, within an ethnic group or you look at cultures within an organization. It’s the same sort of ideas. It’s common language. What do we call things? How do we refer to things? It’s the tools and systems that you use. And that brings me to my point that Justworks wants customers that are going to be thrilled that they’re Justworks customers. And if that doesn’t quite make sense, it’s someone who looks at our product and our platform and say, “Yes, this makes sense. It’s self-evident. I can help myself. I feel empowered and all these tools are here at my disposal without being overwhelmed as far as being able to run my business with confidence.”
Moses Balian: And so Justworks really infuses its cultural values and its ethos into everything we do. I guess just don’t forget, don’t think, oh yeah, we talk about our culture when we’re having a nice dinner, sitting down at the dinner table with family dinner on Sunday. No, it’s something we live and breathe and it’s real.
Bjork Ostrom: That’s awesome. And we can feel that as customers of Justworks using the product, interacting with the people, doing a podcast interview, all the different ways that we’ve been lucky enough to have the support of Justworks along the way. So I would have lots of questions and know that we could continue to talk about this for a long time. The nice thing is those questions as always can get answered by a simple email or phone call in.
Moses Balian: Yes. Good to say. You got time this afternoon?
Bjork Ostrom: So I won’t record those follow up questions that I have.
Bjork Ostrom: But for those who are interested in starting the process of building a team or maybe they have a team and they want to simplify some of the ways that they do some of the payroll and just some of the HR stuff, what’s the best way to get connected with Justworks to kick off that conversation and see if it might be a good fit?
Moses Balian: Sure. I mean, you can go to our website. One thing you’ll probably want to think about first is how much is this going to cost me? Justworks is the only PEO on the market that has transparent pricing right on its website. You can go in and literally whip out your calculator and add it up based on the number of employees you have and the plan you’re selecting and figure out how much it’s going to cost you on a recurring basis. So go do that. I guarantee you’ll be excited by what you see and then get in touch with us. Get in touch with our sales team. We’d love to give you a demo. I’ve never been so thrilled or privileged to work with the amazing sales team that we have. They’re smart people. They have to stay on top of a lot of stuff.
Moses Balian: This is the most complicated product that I’ve ever seen sold. And you’re having to explain all these complicated concepts to non-experts. And it’s from the moment you walk in the proverbial door with our demand generation and sales team, we’re working to demystify this whole HR forest and be your spirit guides through. And maybe you’ll learn along the way. And once you begin speaking this language and learning the ins and outs and intuition of fundamental payroll and HR best practices, you don’t have to become an expert. But really quickly, it all starts to make sense. We’ve laid out the pathways for you to walk down. We’ve manicured the lawn for you or that we’ve trimmed the hedges so that you can walk through the forest of HR and you’ll like what you see and it all makes sense.
Bjork Ostrom: Yes. And having been through, walked both paths, it’s really nice to have that spirit guide because otherwise it’s really easy to get lost and be like, I entered into this forest knowing where I was going and now it’s all just trees and-
Moses Balian: Super easy. Right.
Bjork Ostrom: … to have somebody helping out with that process is really great and I know that you’ve done that in lots of ways for lots of other businesses and the others at Justworks have. So Moses, thanks so much for making the time, for talking about this super important area that I know a lot of listeners are interested in. I really appreciate it, and we’ll catch you around. Thanks for being on the podcast.
Moses Balian: Thank you so, so much, Bjork. Thrilled you’re a customer and thrilled that you had me on today. I appreciate it.
Alexa Peduzzi: And that’s a wrap my friend. We hope you enjoyed this episode with Moses about hiring. If you’re at that step where you’re thinking it might make sense to bring another member onto your team, we hope this episode has given you some thoughts and some considerations as you navigate your next steps. Thanks for tuning into the podcast this week. We’re thinking of you, our incredible, hardworking community. We’re here for you and we’ll continue showing up for you, including in a brand new podcast episode next week. See you then. Make it a great week.