1. Q. Can we give an extra week of vacation to cover any overtime?
A. Providing vacation rather than overtime is not legal under the Fair Labor Standards Act (FLSA).

2. Q. Do general standards exist for exempt employees who do work beyond the normal workweek? For example, if they travel during the weekend for work, is it expected that they would get a day off later in compensation?
A. It is not expected that an exempt employee receive a day off after working on a weekend. Exempt employees are expected to work when duty calls.

3. Q. Can an employer deduct paid benefit leave, such as sick leave or personal leave, in half-day increments from an exempt employee if it is a written company policy?
A. You can deduct less than a day’s time from an exempt employee’s allotted sick time, vacation time, or personal time. You cannot deduct from an exempt employee’s paycheck for less than a day’s absence for sickness, disability, or personal leave.

4. Q. If an exempt employee calls in sick for a whole day and doesn’t have any accrued sick time on the books, can we dock his or her pay for the day?
A. Yes, as long as the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary caused by this type of sickness or disability. Remember, though, that you cannot deduct for less than 1 day’s absence.

5. Q. If an employee is exempt, can you still choose to classify him or her as nonexempt and pay him or her hourly with overtime?
Yes. You can classify any employee as hourly and pay the employee overtime, even employees who could otherwise pass the exemption tests.

6. Q. How do you distribute overtime among employees?
A. Distribution of overtime is a constant source of controversy in industry, both union and nonunion. Whether overtime is considered desirable because of the premium pay or undesirable because of the loss of free time, employees of similar skill should have equal opportunity or equal burden for overtime assignments.

A practical method is for the department supervisor to maintain a roster recording each employee’s overtime work. A properly kept roster will prevent unfair distribution of overtime and will help settle disputes. Ordinarily, in maintaining a roster, an employee who declines overtime is charged with a “time at bat,” and his or her name goes to the bottom of the roster.

7. Q. Our workweek is 35 hours, plus we pay lunch breaks of 1 hour each day, totaling 40 hours paid. If our employees work 36 hours and are paid for 41, is that extra hour considered overtime, or can we pay them straight time?
A. You can pay them straight time. The FLSA requires that overtime be paid for each hour worked in excess of 40 hours in a week. Since the lunch breaks are not “hours worked,” they don’t have to be counted toward overtime. Therefore, each employee’s total hours worked in that week would be only 36.

8. Q. All of our employees participate in a day of volunteering. Do we have to pay them on this day?
Charitable work performed at the employer’s request as part of the job or during work hours is considered hours worked. Charitable work will not be considered hours worked if:

1. It is completely voluntary (even if the program is sponsored by the employer).
2. It is performed outside of work hours.

If employees get the impression that their jobs would be in jeopardy or that they would receive fewer perks for failing to contribute to charity work, a court could say that the hours were not voluntary, but were coerced. This time could then be considered hours worked. In addition, employees cannot perform volunteer work for an organization that employs them if the work is similar to that for which they are paid.

(Source: The HR Daily Advisor, www.blr.com)

Disclaimer

In upcoming posts we will review some of the key elements of a solid documentation practice. But to begin, we thought we should review some of the big DON’Ts of Employee Documentation.

Firstly, realize that there are common errors that do occur, often due to our busy schedule and our need to rush. Most mistakes are avoidable – documentation should never be rushed!

Common documentation errors include:

• Unsigned or undated documents
• Illegible handwriting
• Overdue or late
• Inaccurate information
• Biased or unsupported opinions
• Vague information
• Inconsistency
• Lies

These are common errors that can easily be eliminated.

Sign and date all statements that you write and make sure the individual signs as well if it is appropriate.  If an employee refuses to sign, either have a witness come in and sign that they witnessed the refusal or ask the employee to sign a line that states “they refused to sign the document”.

If it can’t be read it will only frustrate the situation, so remember: penmanship counts.

Don’t delay writing up recent events, as soon after they occur as possible. Delaying will only cloud your memory and weaken the validity of the account. Along those same lines, documentation that was written up days or weeks later than the event carry much less credibility and don’t shed a favorable light on the company or you.

Avoid all opinions and attitudes.  Along those same lines, be specific and don’t be vague.  If an employee needs to improve performance, specifically state how and why; don’t just say “they need to get better.”

Finally, NEVER make personal notes on any documents.  This includes resumes, applications, warnings, performance appraisals, you name it.  Employee documents and files can be subpoenaed in court, and while you many think the employee will never see it, it is altogether possible that a judge will.  And once written, don’t erase your comments – altering documents is against the law, including side-notes and handwritten comments.

These are just a few of the most common and easily avoidable documentation errors. Our next posts will look at Documentation Best Practices.

DISCLAIMER

1. Interviewing
2. Record Keeping
3. Temporary Workers
4. Layoffs and Rehiring

Interviewing. It is important to ensure that managers conducting interviews be trained in what they can and can’t say legally during the interview.  We recommend that at least two managers, or a manager and HR person, be present at all interviews. If an applicant calls later with a complaint, you have a witness for what was said. A set of interview questions that are used consistently for all applicants will help ensure that all applicants were treated fairly, and will assist you in determining the most qualified applicant.

Record Keeping. All of your hiring records should be kept for at least two years according to Title VII and Americans with Disabilities Act. This would include all applications of those not hired, advertisements, and interview notes. The Lilly Ledbetter Fair Pay Act has injected uncertainty into the duration of an employer’s record keeping requirements with respect to pay decisions. This guidance is based upon the noted statutory law. In this period of uncertainty, before destroying any documents related to decisions about an employee’s pay, we recommend you conduct an audit of your pay practices, and seek legal council.

Temporary Workers. Many companies, when they are unsure of their long term hiring needs, hire temporary workers. As the business needs are clearer, employers can shift to full-time hiring, or hire the temporary worker. Temporary or part-time workers can be a good option because the company is able to observe the employee’s job skills. However, hiring temporary workers can be costly because many temporary placement firms charge a substantial fee if the employer permanently hires the temporary worker.

Lay-offs and Rehiring. If you have been through a reduction in force, and are considering rehiring, there are a few considerations. In some layoffs, employees are terminated with an expected return date. For instance, many businesses layoff for the winter, and employees are rehired in the spring. This is usually the case when an employer operates under a collective bargaining agreement, or employs trade related employees. However, in our current economy, when the reduction in force is due to business slowdown, layoffs are generally considered final terminations. Unless you made a promise to recall an employee, you are not obligated to do so. You are free to go through the selection process, and choose the most qualified applicant. Be cautious to ensure there are no discriminatory reasons for not returning a former employee, or promises to the contrary, in which case, you would need to restore the prior employees.

Don’t go at it alone.

While the laws governing employment regulations, hiring and terminations are complex, you should realize there are valuable resources available to assist you along your employment travels. Consider engaging the support of a Human Resources Consulting firm, or a Professional Employer Organization. These firms are experts in employment law and can significantly help reduce your risk of making a bad employment decision.

(Source: EPLI Pro, March, 2010 Newsletter)

Disclaimer

HR Solutions

Upon entering the HR Outsourcing relationship with the practice, a CPEhr Human Resources Specialist immediately began to review their policies and employee documentation. Many gaps in employment protocol were identified. An array of new employment forms were created, compliant procedures were implemented and new guidelines were put into practice. The Director and Office Manager received training on proper employee review and termination procedures, and their designated HR Specialist was invited to attend exit interviews and assist in the termination process.

“I have run the office for more than a decade,” says the Director, “But knowing CPEhr is here to guide me through all employee matter offers tremendous peace of mind. Now, instead of being distracted by minor personnel issues, I can focus on the practice. CPEhr has truly become our partner.”

The most critical assistance occurred when the practice decided to outsource their billing function and to layoff the entire department. CPEhr assigned several HR staff to assist in the layoffs, with proper termination procedures, protocol and severance packages that were in the best interest of both the practice and the employees. The Director sums up the incident succinctly: “We could never have done this on our own.”

Real Results

Since joining CPEhr, he feels that the day-to-day protection he experiences in the area of employment exposures is immeasurable. “I now have tremendous peace of mind. CPEhr has become our ‘go-to resource.’ Without this type of relationship we end up making our own decisions, without proper knowledge of the law, and will ultimately make a mistake. You think you can use common sense, but common sense and the law rarely match!”

The Director says the benefits of CPEhr were immediately realized, as the new systems and processes were implemented and functioning within 30-60 days. “I recognize the reality that as the practice grows. So too would the need to hire an HR Manager. However, by outsourcing to CPEhr , we don’t need to spend the money on another hire and can use those funds to invest back into patient care and clinical research.”

Company Background

This medical practice was founded in 1980 with the mission to provide the highest quality health care combined with clinical research and education. It is currently one of the few cardiovascular practices in the country that balances private practice with academic medicine, and runs one of the world’s largest cardiac transplant programs. They currently employ over 30 employees, but are opening two more locations and are expecting to significantly grow their employee base in the coming months.

It was obvious to the Executive Director of this prestigous medical practice that his time would be best spent on providing superior patient care and conducting scientific research. Managing employee issues should have been the last thing on his mind. Unfortunately, it wasn’t.

Business Challenges

As the practice grew in size and prestige, the Director recognized the critical role Human Resources played in his practice. “We do not have a dedicated HR staff,” he explains, “But I understand that human resources can’t be put on the back burner. HR is still a critical part of our practice.” With the lack of sufficient internal HR resources they struggled to standardize employee practices and stay abreast of changing employment regulations. While the Director and his Office Manager continued to personally handle the employee relations, an incident pushed them to consider outsourcing their human resources to a professional firm.

An argument ensued between two front office staff, and the altercation ended with one employee threatening to physically harm the other. The event was witnessed and the employee was let go. A short time later she sued the practice for race discrimination. Even though, at the time, the Director was sure he was doing the right thing, he ended up in an 8 month lawsuit with the EEOC that cost him hundreds of hours of time and distracted him considerably from running the practice. While he ultimately won the case, he realized it was time to work with human resource professionals. He needed a firm who would help him structure an HR system to prevent this from recurring, and to take over the administration of a lawsuit if one ever occurred again in the future.

“As our firm continues to grow and we open new offices, managing the staff in multiple worksites is only going to become more complicated,” he says. He invited CPEhr to present their outsourcing HR solution, and quickly engaged their services.

Our next post will review the HR solutions implemented by CPEhr.

According to Fulbright’s 6th Annual Litigation Trends Survey Report, companies are seeing a litigation wave that is expected to continue to swell in 2010.  That expectation is based on experiences during 2009, when 83% of respondents reported that new litigation has been commenced against their organizations, up from 79% in 2008.  Stephen C. Dillard, head of Fulbright’s global litigation practice, states:

Generally, litigation rises in an economic downturn as regulators tend to step up enforcement, laid-off workers head to court, and companies need to file more suits in order to collect money owed.

Employment litigation is expected to increase in 2010.

The poor economic conditions and increased layoffs, coupled with new laws and expansion of existing laws, are likely to lead to an increase in claims filed.  According to Rich Meneghello, the managing partner in the Portland, Oregon office of Fisher & Phillips, “all signs point to the trend [of increased litigation] continuing into 2010, especially as job growth remains stagnant and out-of-work individuals seek rewards through litigation”.

Increased enforcement by the Department of Labor.

Experts are also anticipating an increase in enforcement by the Department of Labor.  Secretary Solis said in a release, “In early 2010, the department will launch a national public awareness campaign titled ‘We Can Help’ to inform workers about their rights…  We will not rest until the law is followed by every employer, and each worker is treated and compensated fairly.”  The Department of Labor is scheduled to receive $13.3 billion in funding for 2010, an increase of $121 million from the previous year.  According to a DOL press release, “with these increases, [DOL’s] worker protection agencies will be able to vigorously protect wages and working conditions of the 135 million workers in more than 7.3 million workplaces.”

Additionally, the EEOC is slated to receive $367 million in funding for 2010.  This represents an increase of $23 million from the previous year.  The increase in funding may lead to more lawsuits alleging discrimination based on age, gender, race, color, national origin, religion, or disability.  The EEOC’s proposed regulation to implement the ADA Amendment Act of 2008 would make several significant changes to the definition of ‘disability’, greatly expanding who is covered by the statute’s provisions.

Be proactive to reduce the risk of lawsuits.

While no one can be certain what 2010 will bring, employers should prepare for litigation and for increased enforcement actions.  Experts are recommending a proactive approach.

• Employers should have a thorough understanding of what laws and regulations apply, and review their policies and procedures to ensure they are in compliance.
• Internal audits should be conducted to identify any potential problem areas, and corrective action should be taken where appropriate.
• Revisiting documentation and document retention practices is vital; having appropriate documentation can, in some circumstances, prevent litigation, and will be critical should the employer be faced with litigation.

For more information on protecting your company, contact CPEhr, a Human Resources Outsourcing and Professional Employer Organization.

Guest post by Stephanie R. Thomas, Ph.D.

Dr. Thomas heads the Equal Employment Advisory and Litigation Support Division of Minimax Consulting. The Division provides consulting services, dispute resolution support, and expert testimony to Fortune 500 companies, major law firms, and local, state, and federal governments and agencies.  The Division specializes in labor and employment issues in both advisory and litigation contexts.

Website: Minimax Consulting

Disclaimer

Despite the uncertainty, businesses should take stock of what is required to succeed and use this time to prepare them for the bumpy road ahead as the economy slowly recovers. When considering the future, small businesses should focus on three key employment strategies in 2010: stabilizing operating costs, reducing employment risks, and enhancing overall employee performance.

Stabilizing operating expenses.

Following dismal sales in 2009, employers will be looking to reduce unnecessary expenditures and maintain a lower operating budget until revenues increase. While there are hundreds of areas to be considered, employment costs typically account for the single highest percentage of overall operating expenses in a business. These expenses include both hard and soft costs. Beyond payroll and tax overhead, hard costs are related to health insurance premiums, workers’ compensation, recruiting fees, payroll processing and legal fees. Soft costs include employment administration, management time, employee reviews and compliance. Reducing these employment costs can significantly impact an employer’s bottom line.

Reducing employment risks.

There is a direct correlation between an increase in employment related lawsuits and difficult economic periods. Employers should beware that a downturn in the economy is often accompanied by an uptick in employment litigation.  As such, employers should prepare themselves by reviewing and training managers on termination policies, updating their forms and policies, and ensuring compliance with payroll-related labor laws and regulations. As the economy strengthens, employers may begin to rehire lost personnel. They should review proper interviewing techniques, update their employee handbooks, and have new-hire packets and offer letters reviewed for compliance.

Enhancing employee performance.

Even as companies begin hiring again, it will take some time before the workforce is back to pre-recession levels. What this means for the average business is that managers are trying to maximize productivity with a smaller workforce. The inevitable result is a more stressful work environment as both employees and management struggle to find a healthy balance of productivity despite the decreased manpower. Employers will be required to find new ways of incentivizing, motivating and training their workforce to maintain a positive attitude while managing increased workloads.

Employers that proactively pursue these three employment priorities will be a strong position to weather the uncertain economic times that lie ahead.

California Assembly Bill (AB 1825)

Over two and a half years ago, commencing January 1, 2005, a California Assembly Bill (AB 1825), was signed into law requiring all California employers with 50 or more employees to provide two hours of sexual harassment training for supervisors, managers and lead employees every 24 months. Employers also have a responsibility under California law to provide workplace harassment prevention training to non-supervisory employees as well. However, that very same year, the EEOC received close to 13,000 charges of sexual harassment, with the average costs recovered in monetary benefits increasing dramatically. In 2006, total monetary compensation paid out in sexual harassment related cases exceeded $48.8 million, which was 31% higher than the $37.1 million paid out in 2004.

While common wisdom, and the law, would dictate employers would begin training their staff on proper behavior in the workplace, the reality doesn’t match up. According to a recent study by TrainRight Solutions, 41 percent of U.S. employers still don’t provide preventive training for sexual harassment, with cost the leading factor for ignoring education in this area.

Employer Responsibility

The Supreme Court deems training “essential” and the EEOC guidelines state that it is the responsibility of all employers to train all employees. Respect in the workplace, when properly demonstrated, can not only boost employee moral and productivity, but can greatly reduce the potential liabilities of an employer. Legal experts agree that the more pro-active an organization, the more likely they will reduce their employment liabilities.

Many HR consulting and outsourcing firms provide answers and assures employers that taking preventive measures is the right approach. Helping companies establish appropriate policies and deal with complex sexual harassment issues is key to minimizing employer risk.

Sexual Harassment Training is a Must

A comprehensive Sexual Harassment training course should cover the following topics:

* The laws that prohibit unlawful harassment in the workplace
* Specific forms of harassment
* How to prevent harassment and hostile environments
* Identify retaliation and why it is illegal
* The rights and responsibilities of all staff members
* Consequences of harassment suits
* What to do in the even of a harassment charge
* How to conduct an investigation

While at first glace it may appear that implementing sexual harassment guidelines may be costly, employers should recognize the higher expenses related to fines or penalties for an ill-educated workforce. And aside from protecting the business for lawsuits, training the staff on preventing unlawful harassment is just the right thing to do.

• federal and state tax,
• workers compensation insurance,
• unemployment insurance,
• employee benefits,
• overtime, vacation and sick pay.

However, now more than ever, employers must be aware that federal and state lawmakers are beginning to crack down on employers who hire ICs that do not meet the strict IRS requirements.

What are the guidelines to be an Independent Contractor?

The following are excerpts from the IRS website, Section 762 – Independent Contractor vs. Employee:

• Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done through instructions, training, or other means.
• Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:

1. The extent to which the worker has unreimbursed business expenses
2. The extent of the worker’s investment in the facilities used in performing services
3. The extent to which the worker makes his or her services available to the relevant market
4. How the business pays the worker, and
5. The extent to which the worker can realize a profit or incur a loss

• Type of Relationship covers facts that show how the parties perceive their relationship. This includes:
• Written contracts describing the relationship the parties intended to create
• The extent to which the worker is available to perform services for other, similar businesses
• Whether the business provides the worker with employee–type benefits, such as insurance, a pension plan, vacation pay, or sick pay
• The permanency of the relationship, and
• The extent to which services performed by the worker are a key aspect of the regular business of the company

Government crack-down

As the government is looking for ways to bring in revenue in a down-economy, they are paying serious attention to the losses incurred by the usage of ICs. Reports estimate the misuse of ICs lowers income tax revenues by about $4.7 billion annually. In Illinois, for example, the  University of Missouri–Kansas City Department of Economics estimates that from 2001 through 2005, the state lost $124.7 million PER YEAR year in income taxes as a result of IC misclassification by employers.

In August, Congress began reviewing several bills that tighten restrictions on the use of ICs and exact tougher penalties on employers who bend the rules. The IRS also announced plans to randomly audit six thousand businesses nationwide to curb abuse.

Don’t take shortcuts

If your company engages the use of ICs, don’t let the lure of bypassing a few tax and insurance dollars distract you from the real-life risks at hand. You should take the time to seriously review your IC relationships and determine if they do, in fact, match the IRS guidelines. If you are uncertain where to begin, there are professional human resource outsourcing and consulting firms that specialize in these employment relationships and can guide you to make the right decision for your company.

“ICE is focused on finding and penalizing employers who believe they can unfairly get ahead by cultivating illegal workplaces,” said Assistant Secretary Morton. “We are increasing criminal and civil enforcement of immigration-related employment laws and imposing smart, tough employer sanctions to even the playing field for employers who play by the rules.”

What is a I9 Audit?

Audits involve a comprehensive review of Form I-9s, which employers are required to complete and retain for each individual hired in the United States. I-9 forms require employers to review and record each individual’s identity and work eligibility document(s) and determine whether the document(s) reasonably appear to be genuine and related to that specific individual.

Why does ICE Conduct These Audits?

From the desk of ICE:

Protecting employment opportunities for the nation’s lawful workforce and targeting employers who knowingly employ an illegal workforce are major ICE priorities, for which ICE employs all available civil and administrative tools, including audits. Audits may result in civil penalties and lay the groundwork for criminal prosecution of employers who knowingly violate the law.

In April, DHS issued updated worksite enforcement guidance emphasizing ICE’s major enforcement priorities-specifically focusing on dangerous criminal aliens and employers who cultivate illegal workplaces by breaking the country’s laws and knowingly hiring illegal workers. In this strategy, ICE identified form I-9 audits as the most important administrative tool in building criminal cases and bringing employers into compliance with the law.

Don’t Get Caught!

If you are uncertain whether or not your employees have accurate I9 information, it is critical to conduct an independent I9 audit. If you are uncertain how to conduct such an audit, please contact us to assist you. With ICE knocking on employers’ doors, you don’t want to put this off any further.