Guest episode! Kiera is joined by Paul Edwards, CEO and co-founder of CEDR HR Solutions, which provides human resource support especially for dental practices. They go through a rapid fire of topics, such as coaching and accountability, worker classification, documentation and evidence (including AI!), and reporting policies.
Visit CEDRSolutions.com to learn more about Paul.
Episode resources:
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Transcript:
Kiera (00:00)
Hello, Dental A Team listeners. This is Kiera and today is a great day. I love my episodes with Paul. Paul is incredible. He is the owner and founder of CEDR. And guess what? He is somebody that I get to just pick his brain about all things HR every time he comes on the podcast. So, Paul, welcome to the show today. How are you?
His Paulness (00:19)
very good and I’m gonna take that introduction, that part where you said Paul is incredible. I’m gonna turn it into my ringtone and I’m gonna be insufferable for the rest of the year with that.
Kiera (00:25)
Yeah.
His Paulness (00:27)
So thank you for that.
Kiera (00:29)
You’re welcome. I it’s funny because every time people meet you and they know you’re an HR, they’re like, he’s actually really funny and he’s a good time. And he used to play in a band. And I’m like, yeah, he makes HR not feel as scary. But every time, every time I leave, everyone’s like, my gosh, he scared me to death, which is good. Like I think it’s a good healthy, like you’re super approachable, super nice, but also like whip us into shape of like do this, don’t do that. And I appreciate you continually like guiding us along the right path.
His Paulness (00:55)
There’s
a lot of moving parts when you’re an employer. So it all feels a little bit scary. ‘Cause soon as you get figure one thing out, then there’s the next thing. You’re like, no, I’m doing that wrong or or I could do it better or whatever. So yeah, you know, we try
Kiera (01:07)
Yeah.
His Paulness (01:08)
to break this down so it’s understandable.
Kiera (01:11)
Which and I appreciate. And if you guys are not subscribed to his newsletter, he’s got the best newsletter out there. Like I think you guys do an incredible job. So, Paul, if they’re not, how do they get connected to your guys’ newsletter? ‘Cause that’s one of my favorite things about you guys.
His Paulness (01:21)
Well, I think what you want to do is just go to the website and search for almost any form on there, but there are education forms on the website. So just go to the website and join what we kind of refer to as HR Base Camp. So if you think about base camp as a place you come back to when you’re on a big hike, well, you’re on a big hike as an employer. And so we are constantly sending out helpful stuff, you know, two or three times a month. We send out some pretty cool stuff to all of our base campers.
That’ll get you also an email that invites you to join the Facebook group, which is kinda cool ’cause you’re in there with just managers and owners. and you know, it’s about ten, I don’t know, nine thousand people in there, something like that. So, yeah, that’s the way to go there. you know, you can also subscribe to my podcast, which is what the hell just happened and we cover a lot of topics there that that are kinda fun, you know. So
Kiera (02:12)
I love it. Okay. I want to just get that right in at the beginning because you guys truly he’s got the best newsletter, got an incredible podcast, and I think this is the stuff that keeps business owners up at night. So let’s like not have that happen anymore. So, Paul, we’re gonna just like rapid fire. There’s
His Paulness (02:27)
Okay.
Kiera (02:27)
a few topics, and then I know you’ve got some case studies for us as well. So, and if you guys don’t know Paul, CEDR, they are one of the top dental HR companies out there. most of our clients use them. He is one of our
I do not bring a lot of people in to speak to our private groups. And Paul is one of the people that I have hand selected to come in and speak to all of our dentists in a very intimate that’s not on the podcast. So it’s like no recording, it doesn’t get shared. He comes in and speaks to them. So, Paul, I’m excited for today. This is stuff that we’ll talk publicly, but let’s talk about some of these items. Coaching and accountability. I’m sure we’re all doing it wrong. I’m sure I’ve been coaching and telling people to do this. So tell us what we can and can’t do when it comes to coaching and accountability.
His Paulness (03:08)
you know, the thing about coaching accountability is that it starts to feel like it starts to feel like something that’s punitive, like consequences. And and when it goes into that realm, it’s really hard to get somebody to listen. I I I don’t know about you, but when someone starts to tell me what I’m doing wrong and that’s what the focus is, I get defensive. And that’s just human nature. So when we t when we talk about coaching and accountability, especially with Dennis, and I know that you’re gonna I think you’re gonna agree with me.
I while there are exceptions to the rule, and probably many of them, overwhelmingly I find that dentists do not want to have difficult conversations with their employees. They kind of avoid it. That I mean it’s it’s about 50% of the reason they get office managers because they’re like, I want to have these conversations. I can get someone else can do it. Here’s the thing that
Kiera (03:55)
Yeah.
His Paulness (03:56)
I want to say. Yes, sometimes it ends up where you have to have a really serious conversation with someone. but the
Better way to go about this is for you or you and your manager when you hire someone is to set the expectation with the employee, I mean literally during onboarding, that they are going to receive feedback from you, both positive and sometimes it might feel a little negative, because you’re making small corrections. So if you get in the practice of making small corrections as you go forward, you don’t you you have far fewer of those big conversations with someone.
And then the the ones that are frustrating, I mean the issues that you’re facing with an employee, also become easier because when we’re looking at someone who’s late all the time, and you know, in a practice with you know, we ha always have just the right amount of employees. We never have a I don’t know about you, but I never have an excessive amount of employees around, where everybody’s important, you just start leaving no quarter for being late all the time.
you really have to say something about look when you’re even when you’re only five minutes late in the morning and you tell them what the issue is, you tell them what the impact is, you explain their role in a very positive way so that you can say, Look, when you are late, we are missing you. Not you need to be here on time because when you’re on time, bad things happen. And if you don’t start being on time, bad
Kiera (05:19)
Mm-hmm.
His Paulness (05:20)
things are gonna happen to you. If you start with trying to enroll them in the idea that they’re playing an important role.
you know, part of the reason I think for goal setting is that you get to say, how are we going to get to the goal if this behavior continues? So I just want to give everybody this reminder that coaching is coaching and it doesn’t always have to be corrective and it needs to you if you set an expectation and then you execute on it, you’re gonna get a lot better outcomes with people when you bring them on board. And and the other the other end of coaching should always be.
Can you do that? And do you need anything else from me? Like is is is the issue here me? Do we need to give you more training? What can we do to help you get there? So don’t forget where that’s appropriate, you’ll always want to insert that in.
Kiera (06:08)
I think Paul on that just like piggyback, what do you do when you’ve had that conversation like four times? Like, Perry, we’ve had this, we’ve had this, we’ve had this, like, I miss you at Morning Huddle. We need to be at what
His Paulness (06:20)
I missed you.
Kiera (06:21)
point, at what point is it not like cute? It’s like the I feel like it’s the child that keeps throwing the rock and mom’s like, Okay, let’s not throw the rock, like it’s gonna break a window. When
His Paulness (06:28)
Yep. Stop it. Stop it. Stop it. Yeah.
Kiera (06:31)
do I actually like do something about it?
His Paulness (06:34)
As my mom would say, when do we get to snatch a knot in him? That’s what I I was just with my mom. She’s eighty eight years
Kiera (06:37)
Ha ha ha.
His Paulness (06:39)
old right now. I she actually said, Son, don’t make me snatch a knot in you. ‘Cause I like to take her out in public, embarrass her now, and pick on her. but anyway,
Kiera (06:46)
Mm-hmm, mm-hmm.
His Paulness (06:51)
look first things first, great question. I I would do wanna say that after you’ve had the same repetitive convert conversation with someone
After the second or third time, especially if it’s in close proximity in time, you know, you’ve already talked to them two weeks ago about something and they’re doing it again or not doing it. you also want to make sure that you’re making little notes in their file. That’s very important. and what I found is is that if you don’t hold someone to the standard, right? The standard that you’re looking for, I I you’re they’re never going to improve.
And if they’re not improving, then maybe they’re not the right fit for your company. And the sooner that you figure that out for them and for you, the better. And so if I’m in my third or fourth time within a month about the same thing, I’m sitting down and having a much more serious conversation with them. And in my mind, I’m I’m thinking, and sometimes I might say this to them, look, I’m not telling you that you’ve got to do the thing, whatever it is that we’re talking about. What I’m telling you is I cannot work with someone who
does or doesn’t do what it is that they’re that they’re up to. Like, you know, I just need you to know that I, you know, I can’t continue to work with you if it’s going to be this way. I understand you’re late. I understand that you have all these issues. I get all that. I’ve tried everything I can to adjust here, but I I may not be able to work with you. And you always have that standard. I need you to show up on time. There’s no more there’s no more getting around this. But you really need to be adding notes to their file.
dating them, you need that, and and then we can move into written corrective coaching if we need to. And you know, that’s a little more formal.
Kiera (08:35)
Awesome.
His Paulness (08:36)
That’s them acknowledging the conversation. And look, four times in a month for the same thing, they’re gonna get something in writing. That’s just how it’s gonna happen. If if I’m if I’m on your
Kiera (08:44)
Okay.
His Paulness (08:45)
HR team, that’s what’s gonna happen.
Kiera (08:47)
Okay, great. That’s what I feel like so many people just like it needs to go on forever and ever. And I’m like, there’s gotta be an end date to it. So,
all right, that was a quick teaser on coaching and accountability. Okay,
His Paulness (08:53)
Yeah. Yeah. Yeah, yeah.
Kiera (08:58)
next one worker classification. I know that’s a a hot topic with dentists. They love they love this 1099. I don’t want to pay taxes on them, Paul. It’s a better deal for me. They’re
His Paulness (09:07)
Yeah. It
Kiera (09:09)
a dentist. I don’t need to have them as an associate on payroll.
His Paulness (09:12)
Right.
Kiera (09:13)
This person’s just coming in to help out. I can ten ninety-nine them.
His Paulness (09:14)
They’re only going to be here for a day. They want to be paid
as a as a independent contractor. so there’s a couple levels of classification. And by the way, this is one of the good reasons to go sign up for our education because we’re gonna do we’re gonna release a really good classification guide. And you know what? you know, we’re probably gonna make it exclusively available to your folks as well, just so you know. So at some point we’ll pass it over to you.
look, classification, couple things. I’m not gonna put you to sleep
Kiera (09:42)
Thank you.
His Paulness (09:45)
on it because you do you actually need to kind of go through a checklist and do some stuff on your own. And we’ll provide all of that. you gotta think of classification as a couple of things. First of all, there’s that independent contractor conversation that we that we’re always having. And for those of you who haven’t heard me, I’m just gonna say this in a very definitive way. There is no hygienist on the face of the earth who qualifies either under the Department of Labor or under the IRS rules for employees.
as a as an independent contractor. It does not exist. It
Kiera (10:14)
Nope.
His Paulness (10:14)
can exist. It just can’t. An independent contractor cannot open his or her own practice. They have to have a dentist attached. And that’s kind of the nail in the coffin, but there’s a lot more. All right. When it comes to
Kiera (10:25)
Yeah.
His Paulness (10:27)
when it comes to associate doctors, in some states that same thing is true. I’m serious. They the state has such strict rules
That for you to classify a general dentist and a general dental practice as a independent contractor is just wrong. It doesn’t meet the Department of Labor’s standards in that state. But for the most part across the country, a a a employee who’s doing the main function of your business, who’s performing the main function of your business, a a worker, I should have said a worker, they’re an employee, not an independent contractor. So that’s one part of the
Kiera (11:02)
Mm-hmm.
His Paulness (11:03)
classification.
The other part of the classification com conversation has to do with whether or not I can pay an employee a fixed salary and not worry about any overtime they work, or whether or not I have to track
Kiera (11:14)
Mm-hmm.
His Paulness (11:14)
their hours and pay them. And I’m just gonna say this. If your entire team is on salary, that’s okay, but you still have to track their hours and you have to pay them overtime. You can have a manager who who you don’t have to track their hours and you can pay them a fixed salary.
But not all managers qualify for that exemption. It’s called an exemption to the standard to pay overtime. Not all managers qualify for that. The smaller your team is, the more in danger you are of not being able to classify someone as a salaried employee. So now that you’re really confused, just
Kiera (11:51)
Mm-hmm.
His Paulness (11:51)
go join. You’re gonna get this is the kind of information and the guides and stuff that we send out.
So the the you know, the classification’s a big deal ’cause we run into it every day. I mean,
wh
Kiera (12:02)
Yeah.
His Paulness (12:02)
when I say run into it, we get about twelve thousand questions out of our three thousand members and every week there are four or five what we call submissions asking us about you know, they’ve read one of the one of our articles and they’re like, I think I got this wrong. And most of the time they’ve gotten it wrong. and you can’t rely well,
Kiera (12:21)
Yeah.
His Paulness (12:22)
you you it you gotta be careful because
Kiera (12:24)
It’s true.
His Paulness (12:25)
The IRS rules for your independent contractor and the Department of Labor rules don’t match up all the time. And so you have to be
Kiera (12:31)
Correct.
His Paulness (12:31)
very careful in that area.
Kiera (12:34)
Yeah, and Paul, I’m so glad you talked about it because like it is a while it is a full checklist. And I think sometimes we like to justify it. Sometimes we like to say like, but no, like they really do. And that’s not gonna go over well. And so to I’m like, cross our T’s, dot our I’s, which is why Paul, we do podcasts like this and why everybody should have that checklist. Because when I learned about this, I’m like, No, they’re a salaried employee. It’s like you gotta you gotta check off this checklist and this checklist, and they’re not like you said, they’re not the exact same checklist at all.
His Paulness (13:02)
It it’s a little complicated,
Kiera (13:02)
And you had to make sure both qualify for them to truly be
His Paulness (13:04)
but once you figure it out, you’ll have all your positions and you’ll know and and you’ll be set. It’s just that you guys and gals tend to borrow what someone else is doing.
Kiera (13:13)
Mm-hmm.
His Paulness (13:14)
Maybe it was already in the practice that you purchased, or it was in the practice that you were an associate of, so you’re c you know you’re copying, which is what we all do when we start a business, or you’re talking to your you’re talking to, you know, other other people in your industry and they’re giving you HR guidance that
Is not sound sometimes.
Kiera (13:33)
Yeah. No, I love that. And definitely sign up for that checklist. That’s a brilliant one. Okay, next one. Documentation and evidence. Let’s talk
about that.
His Paulness (13:42)
we are going to be we are going to be actually doing some podcast on this where the internet does HR is what we’re gonna call it.
Kiera (13:56)
Mm.
His Paulness (13:56)
I just want you guys to know that online HR advice is not something that you really want to participate in. well look let me let me
Kiera (14:08)
we’re talking like AI, internet searches. Let’s just talk about it.
His Paulness (14:11)
We’re talking about AI,
we’re talking about going on Reddit, we’re talking about we’re talking about going into any kind of group thing for for advice and running with that. But particularly AI is a con a concern and we’ll get into this a little bit more. I think every time you see me I talk about AI. Well we now have court we
Kiera (14:31)
You do,
His Paulness (14:32)
have court cases rocking it right now and and companies are getting themselves in trouble for creating employee handbooks through AI.
they’re getting themselves
Kiera (14:39)
Mm-hmm.
His Paulness (14:40)
in trouble for using AI to fire people. they’re finding out that your chat is discoverable. and so in one case we watched the chat was really bad. The the thought process of the person who was putting the problem into the chat became exposed in court and they were basically asking it how can I break the law? I might I’m paraphrasing, but they were basically like I they were kind of telegraphing, I know what I want to do here is wrong.
HR wise, tell me how I can get away with it. And so just be
Kiera (15:11)
no.
His Paulness (15:12)
careful about online advice and taking something from someone without knowing who those people are. it’s you know, the context here is you’re making an HR decision that is has a law that impacts it. And if you get it wrong, it can be very, very expensive. And there’s no reason for it. There’s no reason to go out that way and try and self-help.
yourself. So just be very careful. you know, same thing. Same thing about the internet. I’ll make this other point, maybe a little bit about AI. You know how if you’re a subject matter expert and you see AI give an answer to the thing that you’re an expert on, you will look
Kiera (15:55)
Mm-hmm.
His Paulness (15:56)
at it and you’ll go, you what, that’s pretty darn good and it’s getting better. But here’s these three or four little subtle places where it’s not exactly wrong, but it’s not correct.
And without context, I I would be worried about just telling someone that. Versus you’re asking it a question about something that you really don’t have a whole lot of subject matter expertise in it. And it gives you back that wonderful, confident, same kind of answer. It’s got bullet list. it’s actually, if it’s your AI, it’s designed to please you. So it’s put a little bit of stuff in there to please you. And you’ll just take that hook, line, and sinker and say, this looks so well organized
Kiera (16:30)
Yeah.
His Paulness (16:31)
and so authoritative.
And it look, it cited some things too, and you’ll run with it, and that’s what’s getting people in trouble. So we just really I don’t know what the word is for that. Maybe I need to make it up. but you just can’t you
Kiera (16:43)
Mm-hmm.
His Paulness (16:44)
if you don’t have subject matter expertise, you gotta be very careful when it involves employment law and your pocketbook. I think that’s the
Kiera (16:52)
I think that I think it’s so hard because like AI we use for so many things and like you said, it is like a little therapist over there and people
His Paulness (16:56)
Yeah. Mm-hmm.
Kiera (16:59)
enjoy it. I mean, I’m guilty of it too. I heard you talk about this six months ago and I was like, It feels annoying, Paul. Cause I’m like, I just wanna ask like what are kind of the parameters and I I
His Paulness (17:07)
And I want the answer. Yeah.
Kiera (17:09)
think of you all the time and you’re like, Kiera, it’s gonna come back on you and like they can pull these records on you and it’s like, okay, noted. I need to just go to the proper sources and channels to make sure that we’re compliant truly.
His Paulness (17:21)
Yeah,
yeah. I mean my AI is incredibly smart about HR and it still gives wrong answers occasionally when we’re writing articles and stuff. So I mean, kinda gives you some perspective. Yeah.
Kiera (17:31)
So there you have it.
Do you think there will ever come a point that AI can replace HR? Not to say I want to put you out of business. I’m just genuinely
His Paulness (17:37)
No, no, no.
Kiera (17:38)
curious of like, I think about for consulting too. Like, do you think that AI will like there will be HR AI in the future?
His Paulness (17:44)
I think at
some point it’s gonna you’re gonna have some very strong models that are mostly available to lawyers. They’re not available
Kiera (17:51)
Mm.
His Paulness (17:52)
to someone like you, you know, l someone who’s not giving out guidance, because I believe that the context of the guidance alwa almost always has one or two more questions, and AI is not great at taking a left or a right hand turn. But five
Kiera (18:09)
Sure.
His Paulness (18:09)
years from now, six years, ten years from now.
I think, yeah, in some pla in some ways it’s gonna be able to give some very good answers and prompts to get those answers. And we are as a company, we are very aware of that. We are
Kiera (18:23)
Mm-hmm.
His Paulness (18:24)
we are well, I I think the I’ve said this twenty years ago when we started CEDR. And I think this, you know, for the people listening, the business you’re in, I think this might h head home a little bit. I believe that the next I believed then that the next greatest innovation
was the opposite of what was going on in the world, which was it’s providing service and people and getting it getting systems right and being able to actually talk to someone instead of running them into these failed chat bots and these failed chats that you you know you put your question in, it’s like, let me give you your question. And then it, you know, it it answers with one third of a cup of flour. And you’re like, we were talking about my internet not working. I mean
Kiera (19:08)
Mm-hmm.
His Paulness (19:09)
So I think the greatest
in I think the I still think that that that innovation is there and available for us and we’ve been using the technology in the wrong direction. I’m using it to make us more efficient, to so that my experts can spend less time creating something from a conversation that is kind of a policy or a th or a thing, and so they can spend more time listening and and a little more time with the member.
And and worrying less about I have six other people who are waiting for me to get back to during that day. So that’s my view
Kiera (19:45)
Sure.
His Paulness (19:46)
that’s my view on AI and HR. humans are humans. As long as we’re being human, I I don’t think we’re gonna be able to take the human out of that out of that process. Yeah.
Kiera (19:55)
I agree.
I agree. Okay. Next reporting policies. Let’s talk about these.
His Paulness (20:04)
the the reporting policies that people okay a policy only works if it’s distributed and it and it is more it becomes more powerful when the policy is distributed, it’s acknowledged, and the and the employer and manager know how to use that policy. All of those things have context. So look, let’s let’s use AI as an example.
We used to say this about template handbooks. Some would say, Well, I got a template and I put it together and I said, Well ask the template how to and ask the qu ask the template any question. Templates can’t answer questions. And so if you end up with a a policy and you don’t know what you haven’t had training and what its purpose is, what its limits are, what it’s both both, you know, small and large, what it’s how you’re supposed to use it and where it’s supposed to apply, then you’re kind of missing
that. And so I just want to be clear that when you put together a set of policies and when you change them or you have an employee handbook, if it doesn’t come with a couple hours of support and training and ongoing training, then what you have is kind of a static thing sitting there in your office and it’s not really helping you when it in the ways that it can help you. and I give you guys an example.
If you don’t have a good maternity policy and it’s not complete, then when an employee s asks you a question about your maternity policy, you can’t say, go to the handbook and tell me. You go read it. You tell me how much time that we give for for maternity leave. You tell me whether or not you can use your vacation time that you’ve accrued. you tell me whether it’s paid or unpaid. You tell you know, all those things.
should be in the employee handbook. So it’s important for owners to train their managers. It’s very, very important for owners to train their managers. make sure
Kiera (22:03)
I love that.
His Paulness (22:04)
they understand and make sure you understand the policy.
Kiera (22:08)
Yeah. And I think Paul, you’re right. Like, as companies evolve, like where you started at the beginning versus where you might be today. Like we didn’t have people that were getting pregnant when I first started now. It’s like we do. And so definitely I’m big on like make sure that they’re updated, make sure that they’re current, make sure that everybody has them. That the new ones that have changed and morphed through the business, like we’ve been in business for 10 years. Like what we started with versus where we are today are very different. And I like that.
call out that you really do need to know that. So
His Paulness (22:40)
Yeah, I I
I mean I could give you a really good example. Arizona changed about I don’t know, about seven, eight years ago. We went to mandatory sick time. And all employees were entitled to it under a specific set of rules. Before then it was like it was in much of the other states, not all the states, ’cause many states have mandatory sick time now. it it was you just could give it, you could make it paid, you could make it unpaid, you could not offer it at all, you could do whatever you want to.
Once that changed, a new a complete new set of rules came around. and I just give you an example, and I think managers in Arizona need to know that this exists. In Arizona, if you fire an employee within I think it’s sixty days of them having used it’s sixty, yeah, within sixty days of them having used one of those sick days, it is presumed to be retaliation against them for using one of those sick days.
And so you’ve got to be thinking, well, h what? Wait, what? Does that mean you can’t fire anybody because they can use sick days? No, the answer to w what you know, what you do about w what I just described is that you have to have documentation showing the reason why you terminated a person or took that adverse action against them. So basically we went from being in an at will state to sort of being an at will state because we’ve got this sick lead policy.
Kiera (24:00)
Mm-hmm.
His Paulness (24:01)
So I I again I was kind of a roundabout way.
but but it kinda shows you you need to understand the policy and the limitations that come the laws that affect that policy.
Kiera (24:12)
How often do you recommend looking at your policies like and updating? Because those rules come into effect. Paul, you read this. Like to me, this is your algorithm. You’re seeing this all the time.
His Paulness (24:22)
Yeah, yeah.
Kiera (24:22)
for us, it’s like a one and done, check it off the list. We think we’re compliant. How often do you recommend updating your policies, double checking your state laws, having your handbook updated? What are what are your recommendations
for that?
His Paulness (24:32)
I think at
at least once a year and if you’re in s California, Connecticut, New Jersey, Washington State, some of those states, you have to visit it more often. and I think that’s the problem if you don’t have a support company because how would you visit it? Like where is it that it’s certainly not get f get f you know, fed to you on TikTok or Facebook or something. So, you know, at least once a near a a year you should if you have time
You should read your policy to see if you’re following it. And I don’t mean your policy should tell you what to do. I mean you may have changed something and it conflicts within your handbook now, and you just need to change the policy. That’s it. That’s that’s that’s all there is. so yeah, once a year you should check. Most states are now updating and putting in new laws about once a year. Many states are putting in new laws and making them effective two or three times a year.
Kiera (25:26)
Awesome.
Okay. All right. Let’s go into payroll. Payroll I feel like is such a thing. Payroll, payroll review. I’ve got some questions on payroll, but what are some of like the hot things that practices deal with in the payroll realm?
His Paulness (25:39)
this has come up two or three times in the last three or four months. I don’t know why. the employer is not reviewing their their payroll ledger. meaning they run payroll, you always get a report. If you’re in gusto, you dig for it or ADP, maybe you can find it. I don’t know. maybe it y y you know, somehow you find your you you you get this report every single time, but you don’t pay attention to it.
And or you do give it a quick look and you go, yep, all their hours are right. But what you don’t do is you don’t review your payroll thoroughly. And what we’re finding is is we’ve had these three instances where an employee has been paid anywhere from five to eight dollars more an hour than they were supposed to be paid. And it’s been going on
Kiera (26:28)
Well.
His Paulness (26:29)
for years. And so tens of thousands of dollars in payment and salaries have been made.
And in all three of these instances, none of it was recoverable. In one state,
Kiera (26:43)
Mm.
His Paulness (26:43)
it was just not recoverable. You couldn’t do it. The state would not allow you to recover it. In the other two instances, the there was no way they were gonna get this money back from this employee. They were not working for them anymore. they were gonna have to sue them and and there were problems with that. It was not gonna be a a a slam dunk home run to try to get the money back out of somebody.
So I think one of the biggest one things that we’re just telling everybody right now is you need your own oversight. If you’re doing your own payroll, your payroll company’s not doing anything, they’re not watching anything. They’ll let you misclassify a hygienist. They’ll let you pay somebody a salary that they’re not supposed to be paid by salary. your payroll company is not reviewing your final ledger because how would they? They don’t know. You they they just take what you put in. That’s how they work.
And so I I just want you guys to be very careful and review your payroll every now and then. And then the other one that we’ve seen I’ve seen over the years, and it’s more than once or twice, the the reason the payroll was wrong was because the person in charge of the payroll made it wrong for themselves. And then the other reason why the payroll was wrong and in in the most egregious cases was that they were so they were using it as embezzle as an embezzlement mechanism.
and they had actually put people in their family on the payroll that didn’t work for the practice. and that ran for two years before they got caught stealing another way and then the full audit re revealed that they had put their family members on there. So I I
Kiera (28:22)
my gosh.
His Paulness (28:23)
think the the the moral of the story is check your darn payrolls. Yeah.
Kiera (28:28)
Paul, that is something ten years in I still am the final stamp off on payroll and I feel silly doing it, but I like a lot of those things happen and I catch it and like as an office manager I didn’t I didn’t I mean I just put in the hours and as a business owner I have very different keen eyes on that. So it’s the isn’t
His Paulness (28:44)
Yeah. Yeah you do.
Kiera (28:48)
I have two other questions on payroll that I didn’t prep you for. One
His Paulness (28:50)
Sure, sure.
Kiera (28:52)
is how can you change like let’s say we’ve got variable comp.
That’s bonuses. Like I’ve got an office right now, they recognize the bonus structure is very, very high. It is variable comp and they’re trying to figure out how do we like change that bonus system. Do you have to have like are there any laws? I obviously know it might be state specific. This one happens to be in Arizona. but like what can you do for that variable comp commission states, like pieces like that when you recognize we’re we’re paying more than we’re supposed to, and I need to right size that and I don’t want to fire an employee, but also I gotta deal with changing their comp.
His Paulness (29:20)
Yep. Yeah. I gotta deal with
changing the car. Okay, first of all, really difficult conversation. Good luck, y’all. but but let’s let’s talk
Kiera (29:29)
Seriously.
His Paulness (29:30)
about the rules around it. yeah, I mean this is let me sidetrack for a second. You may have to put me back on the question. This is why you when you promote someone to a manager’s position, they don’t get an immediate raise. they need to earn their way into it. Now it needs to happen quickly and it could be, you know, by steps over the next weeks and months.
But it’s really hard if someone’s unsuccessful and you’ve moved your best employee in and now you realize they’re you’ve kind of peter principled them. They’re not competent as a manager, you need to move them back down. Y the hard part would be to take the pay away from them. So so going back to your question, some states require you to provide notice in a certain amount of time before you make any pay adjustments. So you want to know if that’s true or not. Arizona does not. You cannot make it retroactive in any case. so
If you’re going to change someone’s compensation, you need to change it and you know going forward. if it’s a commission or it’s a bonus program, I want you to keep those things outside of the employee handbook, but I want you to refer to those things. So I know you didn’t ask me this. I want conditions in the handbook about how someone qualifies for the bonus program should a bonus program exist. For example, one of the things that’s in our policy of many things, which, you know, one of the reasons you work with us.
is in order for you to earn the bonus, you must be employed for the entirety of the bonus period. Meaning that if they quit or get fired in the middle of the bonus period, they’re not entitled to a portion of what’s going on or what happened. So to be more direct, I I think you’ve gotta you really gotta work this out. I think this is a good place for AI, by the way. I don’t say this very much on podcasts. I think
Kiera (31:14)
Mm-hmm.
His Paulness (31:14)
you I think you put what your bonus system is and what’s going on and what your problem is in it.
And where you need it to go, and you help it, you you know, work with your consultant and you figure out where that pay needs to adjust. And sometimes you’re adjusting the base rate of pay. and sometimes, by the way, everybody who’s on a bonus or commissions needs to have a base rate of pay. or or you’re, you know, you’re you’re moving some, you’re moving something. My way of moving something is we’re not hitting the goals that justify that commission or that bonus. And
In order to get back to it, here’s the new numbers that we have to hit. And until
then I need to adjust this back and you you make your adjustments. are you talking about massive adjustments or yeah.
Kiera (32:03)
This
one is like so it’s like an office manager who came inherited to a practice and has a bonus structure in place like on collections. Well, back in the day it was great, but now payroll is at 42% of total overhead.
His Paulness (32:16)
That’s all hot.
Kiera (32:18)
is a little high. And so recognizing the base pay is great. the additional compensation does not justify, like it’s just part of their job. It’s not an above and beyond. And so needing to remove that bonus structure.
until maybe we hit a higher tier of the company and it’s to right size that payroll portion.
His Paulness (32:35)
Yep. Yeah,
I think that I would just kill the bonus system in that in that case. And if it’s across the if it’s across the board, I’d kill it. Or I would adjust it back significantly and so that they still have the feeling that they can earn a little bit more on the bonus system and I would set goals for them to get up. I think in your case, I don’t know what you would could get a manager to do to to right side a forty two percent cost labor
Kiera (33:02)
Yeah.
His Paulness (33:03)
in a dental practice.
what can I ask you what percentage you think it’s supposed to be?
Kiera (33:08)
So what we typically say, like a lot of consulting companies are twenty-five percent, I tend to err on thirty percent. So it’s twenty-five to thirty percent tends to be where I sit. I recognize California offices sometimes are a little bit higher than that.
His Paulness (33:20)
Hello, mm-hmm.
Kiera (33:22)
but that tends to be about what we’d recommend for a percentage.
His Paulness (33:23)
I’m I I’m with you. We
you know, we we’ve got several hundred close to a thousand people on payroll. So we and and and they’re using our our software for their HR systems. I you’re you’re you’re in about the the pocket right there. We see as high as thirty six percent, and as as low as twenty two percent. That twenty two percent practice is tiny and highly profit profitable.
Kiera (33:47)
Mm-hmm.
His Paulness (33:48)
That’s a very specialized dentist with about four employees.
Kiera (33:52)
Mm-hmm.
His Paulness (33:52)
So yeah,
same place. I just was curious. I just, you know, love to
Kiera (33:55)
Yeah, no.
It’s a great one. And then one other question on payroll, because I have a lot of dentists who get burned by that third payroll, right? So it comes in the month and they’re like, ugh. So some dentists, and I did this early on, so I have no idea how people can do it. I know what I did and I’m not about to share because it might not have been correct. but we move to only two payrolls in a month. So I do it on the fifth and the twentieth. And I know some dentists are thinking about that, wanting to are there any rules around how to do that? Are you allowed to do two payrolls a month? Like, because then I’m not getting hit with the cash flow hits of the third payroll.
periodically, just some thoughts of offices are wanting to do that, are the right ways to go about it.
His Paulness (34:28)
Absolutely. Absolutely.
You need to check your again, you gotta check your state rules. There’s fewer states that have these rules but you need to check your state rules. There’s this pay frequency. By the time they finish their payroll period and they close the payroll, there’s a certain number of days when they have to be given a check. In none of those
Kiera (34:47)
Mm-hmm.
His Paulness (34:48)
instances does it prevent you from going to two payrolls a month, th that that I can recall. It’s if it is, it’s it’s very
It’s one maybe one state, where you might have to add one or two payrolls to the year in order to meet the law. It’s not every month. It’s just to the year.
Kiera (35:09)
Interesting.
His Paulness (35:10)
Yeah.
Kiera (35:11)
Okay. Yeah, ’cause I know when we did it, I just I was like, We’re gonna change it and they told us to float employees if they needed it. I let them know when it was coming so they could financially prepare for it and yeah.
His Paulness (35:20)
Yep. Give everybody thirty days and you will have met your states
most states’ requirements too that say if you’re gonna change to this model, that’s what you gotta do. Yeah.
Kiera (35:30)
Awesome. Okay. Well, Paul, I’ve like we peppered you on so many questions. I know you had a couple of case studies you wanted to bring and I’m excited to like hear. I I do enjoy a good case study that freaks me out and I I feel like it’s like forensic files with you. Like bum bum bum bum. Like let’s hear the case studies now.
His Paulness (35:46)
I think I’m gonna start with a f positive one and then I’m I’ll ruin y’all’s days with the other one. here’s the here’s
Kiera (35:52)
Ha ha
His Paulness (35:52)
here’s the positive one. And we have been saying this for years and we’re the ones that started implementing it with our clients. It’s not that we invented it, it’s that not enough importance was put on it. And when we started in two thousand six, everybody was making up their own employee handbook or they were going to ADP and they were getting handbooks that didn’t have anything about HIPAA in them.
And they didn’t have anything about maternity leave. I mean, literally, payroll companies were telling employers, you don’t have to give you’re not required by law, so we don’t put it in the handbook. And and we’re like, so offices with seven women in them who
Kiera (36:23)
Yeah.
His Paulness (36:24)
are all going to get pregnant at some point in their career, you don’t have a policy for what to guide them through. Anywho, the policy that we are very big on and we use it throughout the handbook in the c in the proper places.
is a requirement to report a problem. So it’s very simple. If you re if you have a problem and it could be with payroll, it could be around harassment and and you got to define that. It could be around many other things. You have to report it to us. Here’s how to report it. If you’re not confident who manages you, here’s a way to tell somebody else about it. If you put those reporting procedures in place and someone doesn’t follow it, they get fired.
And they come back six months later to sue you over the problem that they never told you about, then the the judge is supposed to say, Hey, when did you tell them about this? When when when did this happen? And so we see it happen a lot in depositions, which never make a court case, so you don’t see it publicly, where the lawyers got someone in deposition, they’ll just say, okay, cool. so you said this was happening for the whole year, and you had four one on ones with your manager.
and when when did you report it to your manager and and and or or or an email to somebody, you know, that that kind of thing. Well, we recently saw a case come up, it was errors versus chemjet. I I don’t know what in the world chemjet does. chemjet argued,
Kiera (37:54)
Mm-hmm.
His Paulness (37:55)
hey, we this case should not go forward. We want summary judgment, we want out, because this employee never told us about this problem. They never said a word to us. And the judge said to the and the judge granted it to him. They just said, you know,
It they’re right. You had an opportunity to report this. You’re back here. You have a multiple complaints, but you were you did sign the employee handbook, you did acknowledge it, they did distribute it to you, and you gave them no chance to cure this. Had you given them a c a chance to cure it, there’s a reasonable expectation that they could have done something about it. Without knowing about it, nothing they could do. So again, when you self-make your handbook and you miss that opportunity,
Kiera (38:31)
No, she’s not.
His Paulness (38:32)
you get, you know, you may not get the best result.
Kiera (38:36)
I think Paul, something I’ve learned and when I started a business, I was like, okay, I can be cheap on certain things. I can be cheap on gauze, I can be cheap on gloves, I can be cheap on what I pay for dinners, like staff gifts. Like I can be cheap those areas. The thing not to be cheap on is have my employee handbook and my policies like cross our T’s, dot our I’s pay there to prevent much harder future decisions.
His Paulness (39:02)
Well, you’re speaking my love language right now. There are just a few places
where you just don’t want to be cheap. You don’t want to be cheap with your CPA. You wanna you want consultants and and good consultants cost a little bit more and so that you can get more individual attention. There’s just you know, for all of us, there’s just these things where it just doesn’t make sense to kind of cheap out. the you know, but the entrepreneur in all of us, in
Kiera (39:26)
Mm-hmm.
His Paulness (39:27)
me too, and me as well. I mean, heaven help me,
AI has made it so that I can start coding my own stuff. That’s probably not a good idea. But I’m doing it, Kiera, because I’m gonna I’m
Kiera (39:38)
I know.
His Paulness (39:38)
gonna save myself some money. that’s
Kiera (39:40)
Ha ha.
His Paulness (39:41)
not what’s gonna happen. I but anyway, that’s the story, you know, that little guy in the back of your head. yeah, there’s some things
Kiera (39:48)
Seriously.
His Paulness (39:49)
not to say. Money on, and I’ll make this argument about policy. Most doctors will and will spend hours on creating their own employee handbook.
Which I mean, I don’t know a doctor that doesn’t value his or her time at five hundred dollars an hour. Many of you make a lot more than that. You have to generate that. That’s the only way you can keep your business open. you end up with a fifteen to twenty to twenty five thousand dollar handbook that was created by somebody who doesn’t understand HR law, which is you. it’s just not the best way to spend your time. And I’m just I’m just like, doctor, this is
Kiera (40:20)
Agreed.
His Paulness (40:20)
a this is a fifteen thousand dollar document and it’s got a bunch of evidence in it and it’s not the right kind of evidence. So,
Yeah, thanks for letting me talk about that.
Kiera (40:31)
I agree. Okay. Now let’s scare everybody into why they should not make their own handbooks. Like that that’ll be the one that won’t let us sleep tonight. Cause I’m sure has something
His Paulness (40:37)
That’ll be the Halloween thing, yeah.
Kiera (40:39)
that that like just don’t don’t shortchange on your HR and legal. To me, I’m like, those are worth it. Just pay. I can sleep at night better. Like and cross my T’s not my I’s. I do want to do right by my employees. So okay, what’s your other case study?
His Paulness (40:49)
And just like
I wanna add one more thing. When you’re
Kiera (40:54)
Yeah.
His Paulness (40:54)
working with someone like us, you’re also getting access to the experts who are taking the legal and the human side approach to it. So they’ve talked to thousands of practices and heard your problem probably. Every now and then somebody gets an award a an award, a monthly award for wow, we’ve never heard that before. but for the most part, you’re talking to a a a group of experts who are there who can actually help you solve the problem too.
And that’s where the real value is. You know, we were talking about AI giving the right legal answers. It’s the human answers that are are more interesting. So the last case study is the it it it has to do with the classification conversation we had. a temporary employee who the doctor hired. she was a hygienist. she came into the practice, they hired her as a
ten ninety nine employee, which doesn’t exist, hired as a ten ninety
Kiera (41:52)
Mm.
His Paulness (41:52)
nine, didn’t put her on the payroll, didn’t put her on workers’ comp, didn’t put her on anything. she ended up working for them for about three weeks. The person that she was supposed to set in for was supposed to come back, and that person was at the end of her pregnancy, and so she d was unable to return to work, so they kept that employee on for about three weeks. She was not great.
at the end of the three weeks, they she was like the the the the employee who she was replacing for for temporarily was going on maternity leave. She was expecting to stay and through that time period now. And they didn’t want her to stay, and they told her, you know, no, you’re you’re not gonna stay. And so she went and filed unemployment. and you know, you guys are thinking, well, an independent contractor can’t get unemployment. Well
Well, remember, she was misclassified, she was an employee, didn’t matter what you called her. And this triggered the state to look
Kiera (42:53)
Mm.
His Paulness (42:54)
for her withholding and to see that she was not on the record. and then it triggered them to tell the Department of Labor in that state that this because they were working together. So UI a UI claim kicked in an entire investigation from the Department of Labor in that state. And so they wanted all the time records and
I think they may even requested bank records because they were looking for other instances of misclassification and paying people as an independent contractor. So that’s the other horror story.
Kiera (43:25)
Mm-hmm.
His Paulness (43:25)
I don’t I don’t s that it doesn’t usually get that bad, but it can, but I do see it blow up a lot and and I mean quite frequently people go out and make these claims. the other thing
Kiera (43:40)
Mm-hmm.
His Paulness (43:40)
that can happen in a misclassification in the domino effect.
Is that your associate doctor gets that that independent contractor gets audited. and in the audit they learned that they were working for you, and then that
Kiera (43:54)
Yeah.
His Paulness (43:54)
triggers an audit of you, and then you have to pay all the taxes that you didn’t pay them, with with penalties.
Kiera (43:59)
Mm-hmm.
His Paulness (44:00)
That’s a really happy note to end on, right?
Kiera (44:03)
I know. I’m like, all right. And with that, everybody, have a great day.
His Paulness (44:05)
Yeah, w with that, yep. Have a great day. I think we should pause to focus our way out of this somehow.
Kiera (44:11)
I think we should too. And I think I think the piece I take about this is I appreciate honest and real because I think so many times we were like, that’s not gonna happen to me. And I would like people to like, I remember it was crazy. I actually was talking to my financial advisor this week and I was like, okay, let’s just like run the tape. If me and my husband got divorced and
Like what would this look like? Would we both be financially taken care of? And he was like, is divorce on the table care? And I was like, no, not at all. I just want to know like what would be my worst case scenario if that ever did happen. Cause that’s going to set me up better to make smarter decisions today and like make sure we’re prepared if that ever came about. And he’s like, You’re the first client who’s ever asked me that. And I thought about it and I’m like, that is actually how I think. And I feel like it applies very much to HR is why don’t we know like what worst case scenarios are? Not so we don’t sleep at night, but so we make better decisions.
His Paulness (45:00)
So we do
sleep at night. Yeah.
Kiera (45:00)
And like this can happen. Exactly.
Cause I’m like, I’d rather know. Like they have proven that us not knowing what happens creates more anxiety than knowing. And so I’m like, I feel like this is my like when I pay for HR or when I pay for my lawyer or when I pay for I have to learn a lesson. Like we’re going through some things in our company right now. And I’m like, all right, this is just my CE and HR. So like me paying
His Paulness (45:18)
Yep. Exactly.
Kiera (45:20)
my legal fees, me paying my HR fees. Like I didn’t learn this. You paid for dental school. So this is where we learn what’s the absolute worst that could happen to us.
We pay for our CE education in this to learn from people like yourself for this. And then we do the best we possibly can. And when we learn that we were doing it wrong, we correct it, we make it better now and we keep moving forward. And that’s how I think I would like put a pretty bow on this because Paul, like, to me, as much as I get creeped out every time I talk to you, I appreciate it. It’s not a lie. Every time
His Paulness (45:48)
Okay.
Kiera (45:50)
you come and meet with our dentist and I’m like, my gosh, and my whole team’s sitting there. And I’m like,
His Paulness (45:54)
Yeah.
Kiera (45:55)
like, please like just cover your eyes and ears and don’t hear that I’m messing up. Like
His Paulness (45:56)
Just yeah, Toba said la la la. Yep, yep.
Kiera (45:59)
All the dentists get a hear and like their teams aren’t even present. My whole team sitting there taking notes rapidly. And I’m like, goodness, like great and not great. but I appreciate it because it makes me better and it makes me a better business owner. And I think that’s why we’re all listening to this. So that’s my take. You might have a happier ending, but to me, I’m like, let’s learn
His Paulness (46:16)
I do.
Kiera (46:17)
it. Let’s play our CE fees of learning HR and let’s continue to be great employees in the industry.
His Paulness (46:22)
I have a very upbeat thing here
to end this on. it’s very short. if your better half is like my better half, there’s no way in hell they listen to your podcast ’cause they’ve heard your voice enough. And so your your
Kiera (46:34)
It’s true.
His Paulness (46:34)
your spouse is never gonna hear that he’s in imminent danger right now. Maybe he should hear it. Maybe we should send him a
Kiera (46:40)
True. Maybe to
I did tell him I asked the financial advisor that yesterday. I was like, I did ask this question.
His Paulness (46:47)
Mm-hmm.
Kiera (46:47)
He’s like, Kiera, I like that about you. He’s like, that’s more probable than me dying. He’s like, how many and I was like, you’re right. And I was like, but guess what? I hope we ride off to the sunset forever. Like, that’s my ultimate plan, but I
His Paulness (46:58)
Right.
Kiera (46:58)
would like to know. So anyway, he probably will never hear this podcast, which is probably in my favor today.
His Paulness (47:03)
Yeah.
look, I appreciate you having me on the show. I it’s nice to be able to kinda talk through these things. This is like, you know, my passion, the thing I wake up thinking about every day. So it’s kind of fun to share this stuff. I do appreciate.
Kiera (47:17)
Well, I appreciate you, Paul. Paul, you’re such a resource in the industry. You’re somebody that I recommend to every practice that we work with. So, Paul, if people are interested, if they loved this, if they’re freaked out and they’re sitting there with their stomach in knots, how do they connect with you? Or if they’re like just wanting to be better. You don’t have to be nervous. You can still reach out.
His Paulness (47:26)
Yep. yep. if they Exactly.
okay, so you can go to our website, which is C E D R, the word solutions with an S on the end. So that’s CEDRSolutions.com You can go to our website, sign up for the education. if you want an employee handbook or you want to kind of figure out, you know, what it would take, you’re like, hey, I think I maybe I should take care of this.
You go in the other direction,
Kiera (47:55)
Mm-hmm.
His Paulness (47:55)
just fill out a form, you’ll talk to somebody here, it’s all low pressure. You wanna make sure that you that you’re saying, Look, I heard the podcast of Dental A Team, so we can so we know where you came from. and we’ll take good care of you. We’ll explain what’s available to you and kinda, you know, go through the process. those are really the best two ways, you know. Best those are the best two ways.
Kiera (48:17)
I love it, Paul. And Paul’s not going to be high pressure. I will be high pressure. Get your freaking handbooks updated and like legal. Then go do that. Like that to me is like give
His Paulness (48:25)
What she said.
Kiera (48:26)
yourself the gift of peace of mind at night. Go get that done. So, Paul, thank you for being on the show. Thank you for being a part the Dental A Team. Thank you for being someone I trust in the industry, someone I value. And I hope today everybody listen to what he says, make yourself better, become a little bit better today. And Paul, truly thank you for being on the show.
His Paulness (48:41)
My pleasure.
Kiera (48:43)
And for all of you listening, thanks for listening. And I’ll catch you next time.
on the Dental A Team Podcast.
Episode
Guest episode! Kiera is joined by Paul Edwards, CEO and co-founder of CEDR HR Solutions, which provides human resource support especially for dental practices. They go through a rapid fire of topics, such as coaching and accountability, worker classification, documentation and evidence (including AI!), and reporting policies. Visit CEDRSolutions.com to learn more about Paul. Episode […]
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