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How a Business Email Address Can Hurt or Help Your Financing Efforts

By Marco Carbajo, Guest Blogger
Published: July 17, 2012

We can all agree that email is another tool used for exchanging information. But when it comes to business, it plays a much greater role then many people seem to realize.

Unfortunately, one of the most common mistakes business owners make is obtaining a business email account from one of the many free email services available on the Internet. While a free email services does serve a purpose, it can give a bad impression to a potential customer or even hurt your chances for obtaining credit because some creditors require a dedicated business email account.

You can help your business by obtaining a business email account that clearly shows that your company has a personalized domain name. The email address you set up should have @yourbusinessname.com. Not only does this look professional, but it also shows that you are a “real” company with a dedicated communications system.

The first thing you will need to do is register a domain name for your business with an approved domain registrar.

Once you visit the site, you will need to conduct a domain search to see if a .COM for your company name is available. I strongly suggest that you obtain a .COM because it adds another layer of credibility and professionalism to your business as opposed to a .Biz or .Net name.

If your company name is not available as a .COM, then consider searching for a .COM with the extension of your structure title as well. For example, ABC Company.com may not be available, but try ABC CompanyLLC.com as an alternative.

Be prepared to supply the following information when setting up your business email account:

  1. Name, company name, address and phone number
  2. Administrative contact information
  3. Technical contact information
  4. Domain Name System (DNS) server details

The DNS server is usually provided by the web hosting company that you use to host your website. If you don’t have a website, you can have your domain name parked on your registrar’s servers until you set one up. This can be done afterwards and you can always contact their tech support for additional help.

Once you register a domain name, you will be able to set up a business email account associated with your new domain name. When you select an email address, keep it simple because you will be supplying this information on all your company documents, applications, registrations and so on.

If you decide to establish multiple email addresses like ceo@abccompany.com, support@abccompany.com and sales@abccompany.com, make sure you use only one of these email addresses on all things related to the business credit building process.

It’s essential that you understand how lenders and credit providers assess the creditworthiness of a business. Even though it may seem like a minor detail, having a dedicated business email account does play a role in the decision making process. Small details like this that get overlooked can cause problems for you later on.

About the author

Marco Carbajo is CEO of the Business Credit Insiders Circle (http://www.businesscreditblogger.com), a step-by-step business credit building system providing credit recovery, lines of credit, business credit cards, trade credit, and funding sources.

About the Author:

Marco Carbajo
Marco Carbajo

Guest Blogger

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in 'Fox Small Business','American Express Small Business', 'Business Week', 'The Washington Post', 'The New York Times', 'The San Francisco Tribune',‘Alltop’, and ‘Entrepreneur Connect’.

The Power of Face-to-Face Networking

By Rieva Lesonsky, Guest Blogger
Published: July 12, 2012

 

Every day, like many of you (or hopefully most of you) I network—from the comfort of my home or my office. I spend a good part of my day participating in social media, posting on Facebook, LinkedIn and mostly Twitter. One of my business partners also posts our content on other social media platforms.

Networking online has served me well. I’ve met lots of interesting entrepreneurs, cemented existing relationships, marketed my work and even found a few clients. But a recent trip to Delhi, India for a conference for women entrepreneurs, DWEN (Dell Women’s Entrepreneur Network) sponsored by Dell reminded me that, though it might sound quaint, there’s still a lot to be said about-and gained from- face-to-face networking.

Are you one of those people who think networking is a waste of time? It’s not. Essentially, all else being equal, people do business with people they know, like and trust. Networking enables you to meet people you otherwise would not come in contact with, and establish a foundation for a lasting relationship.

To be clear, I am not suggesting you give up your social networking efforts. But, similar to incorporating social media into your overall marketing plan, you’ll be better off if you have just one cohesive networking strategy.

If just thinking about walking into a room full of strangers makes you break out in a cold sweat, here are some tips to make networking easier, more effective and maybe even fun.

Establish goals. Like any business effort, you need to set measurable goals so you can determine the best networking strategy for you. Do you want to make X number of new contacts per month? Do you want to obtain X number of qualified leads? Do you want to find a new supplier or vendor for a particular item? Having goals is also key to determining how you'll assess the success of your networking efforts.

Create a strategy. Now that you know what kind of people you want to meet, figure out what organizations and events they are likely to attend. Are there key industry trade groups whose conferences you should be attending? Would you benefit from local groups such as your Chamber of Commerce? How about niche groups such as networking organizations for women or minority entrepreneurs? There are also groups organized around specific topics, such as sales lead generating groups or finding financing.

Make the time. Figure out how much time you need to devote to networking to achieve your goals, and how much time you can realistically spend. Depending on your goals, you may want to focus on one organization or spread your efforts among several groups. Whatever you do, don't take a scattershot approach. Give each group at least two or three tries before you decide how valuable it is.

Do your homework. When you attend networking events, be prepared with plenty of business cards and your best elevator pitch,  a brief one- or two-sentence description of your business that clearly conveys what you do and is intriguing enough that people want to know more. Bring pens for jotting notes on the back of business cards.

Mingle. Of course it’s easier to attend an event with a friend or colleague, but if you do, make sure you split up. Spending all your time with people you already know defeats the purpose of networking. Networking is kind of like cold calling: The more you do it, the less scary it becomes. If you’re nervous about being rejected, try finding other newcomers; they'll be eternally grateful.

Be a good listener. Listening is the secret to making sales, and it's also the secret to successful networking. When you meet someone new, ask questions and really listen to the answers. When you listen carefully, two things happen. First, you'll spot needs that your business can fill. Second, you'll gain a reputation as a great conversationalist, which will make more people want to approach you.

Be a leader. If you decide to join an organization, don't just sit there. Join a committee or take a leadership role. By doing so, you'll learn more, meet more people, and make yourself memorable.

Follow up. You can go to 20 networking events a month, but if you don't follow up on the contacts you make, it's all for nothing. Within 48 hours after each event, follow up on your new contacts in some way, even if it's just a quick e-mail saying how nice it was to meet them. Take action on what you talked about at the event—if you discussed meeting for lunch, follow up with a specific invitation; if you suggested talking by phone, set a time for the call. Acting within 48 hours helps cement you in the other person's mind and starts building the relationship.

Integrate online and offline. Incorporate your real-world networking contacts into your social networking efforts. When you meet someone at an event, follow up with an invitation to connect on LinkedIn, Facebook or Twitter. Similarly, meeting up with your online contacts offline can be a great way to take those relationships to the next level. Try organizing a meetup of one of your most useful online networking groups.

Be persistent. The key to successful networking is persistence. It's kind of like that principle of compound interest that our math teachers explained to us all when we were kids. As you get to know more people and maintain and grow those relationships, your circle expands exponentially. As you do business with your new contacts, your business will grow exponentially, too.

This was my second trip to the DWEN conference. At last year’s event in Brazil, I met many new people, and reestablished some important relationships. I even forged a business partnership. This year the conference proved even more fruitful.

About the Author:

Rieva Lesonsky
Rieva Lesonsky

Guest Blogger

Rieva Lesonsky is CEO and President of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow Rieva at Twitter.com/Rieva and visit SmallBizDaily.com to sign up for her free TrendCast reports. She's been covering small business and entrepreneurial issues for more than 30 years, is the author of several books about entrepreneurship and was the editorial director of Entrepreneur magazine for over two decades

5 Tips to Help You Run a More Productive and Less Isolated Home Business

By Caron_Beesley, Contributor
Published: July 12, 2012 Updated: August 18, 2015

If you run a home-based business, you probably are an object of envy for your family, friends and neighbors. “You’re so lucky!” or “I wish I could work from home” are probably familiar phrases to you.

Whether your hours are 9-5, or 6-3, the home can be a low-cost haven of productivity and efficiency, giving you the opportunity to balance the demands of work and life without the pressures of a commute or the costs of a commercial lease.

Home business owners also tend to be more successful than their counterparts. Although difficult to track, according to the U.S. Census Bureau, an estimated 70 percent of home-based businesses succeed for at least a three-year period (compared to 29 percent outside the home business ventures). 

However, running a business out of your home is a skill, and it’s not for everyone. Success requires tenacity and self-discipline. With no boss to answer to or traditional workplace structure to keep you on track, it’s up to you to make it work. And it’s easier said than done.

Here are some tips to help you dust off any cobwebs and optimize your home business routine and productivity.

Run Your Office as Virtually as Possible

Home businesses can benefit enormously from merging offline and online systems. Online software apps that automate timesheets, invoicing, payroll and  administrative functions can help keep costs low and help you stay efficient. Virtual systems also help you manage remote employees or interact with independent contractors. For example, tools like FaceTime, Skype, and DropBox all make communicating easy and cost efficient – if not free! For more tips, read this guest post from SmallBizTrends.com’s Anita Campbell: 4 Ways Technology Helps You Run Your Business.

If you find yourself buried in administrative tasks, a virtual assistant (VA) might be able to help. My regular window cleaner uses a virtual assistant to manage appointments, take calls, and take care of the client-side of his business while he’s on the job. But VAs can also be handle all manner of administrative and marketing support. Rates vary from $25-$100+ per hour depending on the assistant’s experience and the type of help you need. Check out the International Virtual Assistants Association for a directory of certified VAs.

Master the Art of Time Management

Without the structure of the workplace, many individuals feel rudderless. This is something your business can’t afford.

Good prioritization skills and a formal schedule will help you keep an eye on the future needs of your business, your clients, inventory, and the inevitable variables that arise. Chart out important tasks such as client deliverables, tax deadlines, and billing cycles in blocks of time. Set aside uninterrupted time to focus on tasks that demand it. If priorities shift or urgent tasks sideline you, revisit the schedule at the end of the day and make adjustments.

It sounds simple, but carefully managing and planning your time is critical to staying on track, keeping clients happy and reducing your stress. A well-tuned schedule will turn mountains of work into chunks of time that are easier to navigate.

Have a Proper Workspace

It sounds obvious, but if you have children, pets or other family members at home, operating your business from the kitchen table isn’t the best strategy (it also won’t qualify you for the home office tax deduction). At the same time, it’s not healthy to be holed up in a basement all day long. Find a workplace that fits your routine, is intrusion-free during work hours), and ergonomic, and set boundaries with your family so you aren’t disturbed. There’s nothing more embarrassing or unprofessional than being on a business call when dogs are barking and kids are screaming!

Get Out and Network

One of the most challenging aspects of running a business, yet perhaps one of the most critical to its success, is mastering the art of stepping back. The day-to-day grind can be all-consuming, but there’s nothing like networking – whether it’s at the gym or with a local business group – to help you look at your business with fresh eyes. It also helps counteract the isolation that many home business owners feel and can help keep you motivated.

Organizations such as Small Business Development Centers and local Chambers of Commerce offer regular networking opportunities for business owners that are worth looking into. For networking tips, read 5 Tips for Tentative Networkers – How to Make Connections Online and Offline.

Social Networking and Other Distractions

There aren’t many things you can’t accomplish these days using your phone, laptop or tablet, but these tools are also loaded with distractions. It might be a good idea to remove non-related work games from work computer, clear your browser of social media bookmarks, and move them onto your tablet PC or home computer.

If you use social media as part of your profession or to market your business, take advantage of the scheduling services in many free social media tools and line up your posts at the beginning of the day. Schedule time throughout the day to check in and interact with your followers, but limit your participation to professional “social” activity during work hours, just as you would be expected to do in any workplace.

Have questions about hone-business ownership? Post them below.

 

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Facebook, Credit Checks, Criminal Records? Where the Law Stands on Employee Background Checks

By Caron_Beesley, Contributor
Published: July 11, 2012 Updated: September 15, 2016

You’ve probably heard about the controversy surrounding employers asking job applicants for their Facebook user names and passwords as part of the background check process. It sounds shocking, but it happens – particularly among law enforcement entities – but even among private sector employers who feel they have a reason to go that extra step to weed out potentially undesirable employees.

Unethical as it may seem, what does the law say about this?

Led by the state of Maryland, which became the first state to ban employers from asking for social media passwords, several other state legislatures are pressing for laws that prohibit this extreme form of background check.

At the federal level there is no law prohibiting employers from soliciting social media login information. However, the Department of Justice considers it a crime to violate social media terms of service. Check out Facebook’s Terms of Service and you’ll find it stated explicitly that users consent not to share their login information, solicit login information, or access the account of another Facebook user. So employers and applicants clearly need to tread carefully.

At the end of the day, asking a job applicant for their social media login is unethical and an invasion of privacy at the very least. It also exposes employers to discrimination lawsuits if an applicant can prove that information about their religious, political or sexual views on their social media profile was used to discriminate against them.

What would you do if someone asked you for yours?

Background Checks – What are Your Options?

Background checks have their place, but what are your options as a potential employer?

You can use several different types of background checks to build a profile of an employee, but the law varies on what information you can ask for, what you can do with it and when consent is required. If you run a criminal background check on an employee, for example, different states have different rules on how you can use that information. Also, if you are seeking to hire someone who will have fiscal oversight in your business, you opt for credit score check. By law, this requires the applicant’s consent.

To read more about the types of checks you can legally conduct, refer to SBA’s Guide to Employee Background Checks. In most instances, the following checks are worth considering:

  • Credit checks (currently used by 60 percent of employers, but remember that you must get the applicants consent according to the Fair Credit Reporting Act)
  • Drug tests
  • Past employment
  • Criminal background (check with your lawyer so you are compliant with state laws)
  • Driving records (if the job demands this skill)

For many small businesses, this scope of testing is downright time-consuming. If you feel you need to go beyond what’s on an applicant’s resume or contained in their letters of reference, consider hiring a private screening firm. Not only will they do the legwork for you, they’ll also ensure any checks are done within the law.

The Bottom Line

The turnover costs of replacing an experienced worker who doesn’t work out can be 50 percent or more of that individual’s annual salary; more if you are seeking specialized skills, high qualifications, and experience. (Source: AARP).

Just because today’s job market is considered a buyer’s market doesn’t mean it isn’t worth doing your due diligence.  But do it ethically and within the law. It may save you money in the long run.

Related Resource

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Understanding the Charitable Giving Tax Deduction – What Can Your Small Business Write Off?

By Caron_Beesley, Contributor
Published: July 9, 2012 Updated: April 23, 2018

Small businesses are known for their philanthropic gestures. In fact, surveys suggest that 75 percent of small firms donate to charities each year, averaging a contribution of six percent of their profits. Women-owned businesses tend to donate an average of 10 percent of profits, and those with the highest revenues are, not surprisingly, the most generous. (Source)

Contributing to a worthwhile cause has many benefits beyond the act of goodwill itself. It gives local business owners an opportunity to embed themselves in the community and network with other donors. And, of course, there are tax deduction benefits.

But what exactly are these benefits? If you are thinking of making charitable donations in the near future, here are some FAQs to consider:

What does the IRS consider to be charitable giving?

In the eyes of the IRS, charitable donations are gifts made to qualified charitable organizations. These include, but are not limited to, churches, nonprofit organizations such as a volunteer fire company, a foundation or trust fund or any other organization “operated exclusively for charitable, religious, educational, scientific, or literary purposes, or for the prevention of cruelty to children or animals.”

Most operate as federally-approved 501(c)(3) organizations. This online search tool from the IRS lets you search for charities eligible to receive tax-deductible charitable contributions.  Donations can include cash, volunteered services, sponsorship of local charity events, or donating inventory or services. All are forms of charitable giving.

What tax benefits can charitable giving provide?

Charitable contributions can qualify as tax deductions against your business’ annual tax liability. However, the IRS tax code is complex and it’s important to note that not all contributions can be considered legitimate deductions.

Here’s what you need to know about what you can and cannot deduct:

  • Monetary contributions – Cash or other monetary contributions may be tax deductible as long as they are not set aside for use by a specific person. Contributions must also be made during the tax year to be eligible for a deduction, regardless of the accounting method you use. When you file your claim you’ll need to use Form 1040, Schedule A and itemize each deduction. Generally, you can deduct up to 50 percent of your adjusted gross income, but 20 percent and 30 percent limitations may apply (refer to Limits on Deductions from the IRS).
  • Donations of property, including business inventory – These are also considered a valid tax deduction. Donations are evaluated and deducted based on their fair market value (basically what a consumer would pay for these goods in an open market). Deductions are limited in most cases to 50 percent of your adjusted gross income. For donations of over $500 in value, you’ll need to complete Form 8283.
  • Volunteering – While you can’t deduct the value of your service, you can deduct certain expenses incurred and related to your volunteer work. For example, if you host a party or fundraiser for the organization, you can deduct the costs. Other deductibles include supplies (e.g. stationery), the costs of a uniform and telephone expenses.
  • Benefits you receive as a result of your charitable contributions – If you received something in return for your donation, you can only deduct the amount of your contribution that is over and above the value of the benefit you receive. For example, say you attended a fundraiser and placed a winning bid on a weekend in Las Vegas where the trip is valued at $2,500, but you actually bid $5,000. Your deductible contribution (i.e. the fair market value of the trip, in this instance), is the value of your total contribution ($5,000), minus the benefit you receive ($2,500), for an allowable charitable contribution deduction of $2,500. Find more information about this type of deduction and other scenarios that might qualify in the IRS guide: Contributions for which you Benefit.

Another useful reference is the IRS’ guide to monetary and property contributions that cannot be deducted.

When in doubt, consult your accountant or tax attorney.

Keep Good Records

This is an absolute must when it comes to preparing your taxes and ensuring you can back up your deduction claims should the IRS initiate an audit. The IRS offers information here on the records you need to keep for monetary, non-monetary and out-of-pocket cash expenses when donating your services.

Related Resources

 

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

4 Tips for Researching and Finding Wholesale Suppliers

By Caron_Beesley, Contributor
Published: July 5, 2012 Updated: September 28, 2016

Starting a retail or service business? Looking to form relationships with wholesale suppliers?

There are currently 300,000 companies in the U.S. wholesale distribution industry, so as you can imagine, finding and forming trusted relationships with wholesalers takes time and research.

Here are some tips for finding wholesalers, and best practices for entering into agreements with them.

1. The Wholesale Business

The wholesale industry is large and highly fragmented, with 50 of the largest distributors generating 25 percent of industry revenue. Wholesalers serve retailers and other service businesses through a variety of distribution channels and supply chains. At the top of the chain are manufacturers (including importers or exclusive distributors – who also sell to wholesalers). Next are wholesalers or regional distributors (who distribute the goods locally) and brokers/jobbers (who deliver goods to local small businesses such as independent produce stores).

2. It’s All About Volume

The wholesale business is volume-centric. The more you can buy, the lower wholesale prices become, and the higher your profits are as a result. So as a new small business, it’s unlikely that you’ll be able to negotiate relationships from a high-volume wholesaler, simply because your sales volume won’t yet support buying in any kind of bulk. Smaller wholesalers will sell and ship to small businesses, and as you move forward and your sales increase, you’ll be able to graduate up the supply chain to negotiate higher volumes and lower rates.

3. Researching and Finding Wholesalers

Finding wholesalers takes time, but there are a number of best practices you can use to help your research efforts:

  • Search the Internet –Search for wholesalers by product to help you pinpoint local suppliers (this will bring up nationwide suppliers), then add your zip code to the search so that your results are localized. You can also search YellowPages.com and online associations, trade directories, or wholesale directories such as Wholesale Central or Wholesale Network.
  • Trade Shows – Trade shows are great venues for finding wholesalers if you’ve got the budget and the time. Trade show directories such as TSNN and 10times can help you pinpoint events by industry and location. 
  • Trade Magazines – Check out the ads and classifieds for wholesalers in your industry.
  • Ask Around – It might not be appropriate to ask your competitors where they source their inventory from, but ask around if you are out of town attending a local business networking event (Chamber of Commerce, Small Business Development Center, etc.).
  • Talk to Brand Manufacturers - Brand manufacturers sometimes sell wholesale, but usually only in high volume. However, they might be able to refer you to wholesalers or distributors that will sell to small businesses.

4. The Wholesale Agreement

Now that you’ve found your supplier, do your due diligence. Ask about volume discounts, return policies, and order processing time. Before you sign any contract, be prepared to negotiate pricing terms, minimum order quantities, delivery schedules, etc.  Add these agreements to the terms, and consider having an attorney review it before signing.

Don’t forget to ask for references and do your own research. The Better Business Bureau is a useful resource for a quick background check for complaints.

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Payments On the Go – Turning Your Mobile Device Into a Cash Register

By Caron_Beesley, Contributor
Published: July 2, 2012 Updated: August 18, 2015

Have you considered dispensing with your cash register or offering more flexible payment options for your customers?

If you’ve ever purchased anything from an Apple store, you’ll recall that they don’t have a single cash register on the premises. Instead, all payment transactions are conducted by Apple’s employees using mobile devices.

But Apple isn’t the only one in on the act. More and more small business owners are turning to mobile payment platforms on site and on the road. And with smartphone use at an all-time high, new technology is making it much easier for small business owners to process credit card payments via smartphones and tablets.

For local businesses, particularly those that sell products on the go – at fairs, in restaurants, concession stands, and door-to-door – these payment solutions offer small businesses reliable options for accepting payments other than checks and cash.

When it comes to accepting payments via mobile devices, the following platforms are particularly geared towards small local businesses:

1. “Square”

Used in more than 20,000 retail locations nationwide and processing more than $5 billion transactions per year, the market pioneer and current leader is Square.

How it works: Square is a very simple concept. Using a free app and card reader (or dongle) that plugs into an iPhone, iPad or Android device, businesses and their employees can collect payments by swiping cards through the device. Once accepted, the customer signs the touch screen with either their finger or a stylus, and can add a tip. A receipt is sent to the customer via text or email. The cost? Square charges merchants a 2.75 percent fee per swipe for most major credit cards and funds are deposited the next day.

Note that if you accept more than $1,000 in card-not-present payments during any seven-day period, Square will defer depositing the amount in excess of $1,000 for 30 days (more here). Square also offers Square Register, which can convert any iPad into an all-in-one cash register.

2. Intuit GoPayment

Intuit GoPayment is similar in concept to Square. Merchants get a free app and card reader that can be plugged into a smartphone or tablet device. It also synchronizes with QuickBooks, making it easy to manage your sales records; you can also buy add-ons that allow you to print receipts. Intuit’s pricing model is also slightly different than Square’s, with two options: 1) A 2.7 percent fee per-swipe (3.7 percent for keyed transactions), or 2) merchants can pay a monthly fee and pay a lower per-swipe rate, maybe a better option, depending on how you use the reader.

3. PayPal Here

Launched earlier this year, PayPal Here includes a free credit card reader and app, as well as a range of add-ons. For example, merchants can use their device’s camera to scan checks and cards (useful if you don’t have your card reader on you), as well as access their own PayPal account to make purchases. PayPal Here charges slightly less per swipe than its competitors at 2.7 percent. It also purports to be more secure, thanks to card reader technology that encrypts cardholder information before it is transmitted to the device.

The Bottom Line

This is just a brief overview of some of the players. A quick search online will deliver a host of reviews that can help you make an informed decisions about which platform makes sense for your needs. It’s also a good idea to talk to other business owners to gauge their experience of these platforms. 

Talk to your accountant, too, so you have a clear view of how a mobile payment platform will fit into your cash flow management processes.

Related Articles

About the Author:

Caron_Beesley
Caron Beesley

Contributor

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

Email, Phone and Social Media Monitoring in the Workplace – Know Your Rights as an Employer

By Caron_Beesley, Contributor
Published: June 27, 2012 Updated: September 21, 2016

Do you know how much privacy your employees are entitled to? For example, if you feel employees are abusing their work privileges, is it legal to intercept emails or phone conversations to find out what they’re up to and confirm your suspicions? Can you ask potential job candidates for their Facebook profile log-on information?

Here are some general guidelines that can help.

Screening Job Candidate’s Social Media Profiles

There has been plenty of coverage in the media recently about companies and public sector organizations asking job candidates for their Facebook passwords as part of the employment screening process. Many of the employers who do this are in law enforcement and are on the lookout for potential illegal activity. But businesses have also been known to use this approach to get a better handle on who they are about to hire.

Although there is no federal law prohibiting this, the Department of Justice considers it a crime to violate social media terms of service and enter these sites illegally. Asking an employee or candidate for their log-on information means you and that individual are both in direct violation of Facebook’s Terms of Service which states the following: “You will not solicit login information or access an account belonging to someone else” or “You will not share your password... let anyone else access your account, or do anything else that might jeopardize the security of your account.”

Many states are also now looking to make this practice illegal.

The Bottom Line: Simply asking for access to personal passwords is a clear privacy violation and is both offensive to the candidate and unethical. Employers and managers should also be careful they’re not accessing profile information to determine an employee’s religious, sexual or political views. If it’s determined that you used this information to discriminate against an employee, you may be found in violation of equal employment opportunity and privacy rules.

Monitoring Employee Social Media Activity in the Workplace

A recent report by Gartner suggests that by 2016, up to 60 percent of employers are expected to watch workers' social media use for security breaches.  Currently, no specific laws govern the monitoring of an employee’s social media activity on a company’s computer (employers are on the lookout for unauthorized posting of company content – videos, documents, photos, etc.). However, the U.S. National Labor Relations Act does address employee rights in regard to the use of social media and acceptable social media policy. There has also been a ruling against employers who fired workers for complaining on social media sites about their workplace conditions.

The Bottom Line: Provide employees with a social media policy and be sure to include information about what you consider confidential and proprietary company information that should not be shared. For more tips on social media monitoring do’s and don’ts check out this article from Small Business CEO: Considerations for Social Media Use in the Workplace.

Intercepting Email or Phone Conversations

Increasingly sophisticated ways of storing and accessing email have made it easier than ever for employers to monitor email accounts. But is this an invasion of privacy? The law is fuzzy.

The Electronic Communications Privacy Act (ECPA) of 1986 prohibits the intentional interception of “any wire, oral or electronic communication,” but it does include a business use exemption that permits email and phone call monitoring.

This exemption often comes under close scrutiny by courts, and includes several elements. Generally, if an employee is using a company-owned computer or phone system, and an employer can show a valid business reason for monitoring that employee’s email or phone conversations, then the employer is well within his or her rights to do so. Likewise, if employees have consented to email or phone monitoring (in their contract of employment, for example), then you may monitor their calls or emails.

But here’s the rub: the ECPA draws a line between business and personal email content you can monitor – business content is ok, but personal emails are private.

Tip: If in doubt, consult your legal counsel.  Develop and share a monitoring policy with employees (for example, in your employee handbook).  If possible, get them to agree to it. Courts often look at whether employees were informed that their calls or emails might be monitored in the workplace, whether there was a valid business justification for the monitoring, and whether the employer complied with established policy.

Related Article

Useful Resource

·       U.S. Equal Opportunity Employment Commission: Prohibited Employment Policies/Practices

About the Author:

Caron_Beesley
Caron Beesley

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Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed. Follow Caron on Twitter: @caronbeesley

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