Compensation Best Practices

Employers seem to consistently worry about how they are doing with compensation and benefits compared to their competitors. This has become an even more important topic when you add in the equal pay laws and the heavy competition for employees we’ve experienced over the past few years. Granted, we know the tide will eventually turn and you’ll have far more applicants than openings but that day hasn’t yet arrived.

Here are a few highlights from a recent PayScale survey, “The 2019 Compensation Best Practices Report.” I think you’ll find you aren’t that different from your competitors.

Retention — Companies often struggle with retention. This has become bigger issue as companies have have watched their employees blindly switching employers. Loyalty is harder to find. According to the survey, 66% of respondents are now worried about retention and only 59% were worried a year ago. Regardless of this concern, companies are not yet ready to throw money at the problem. The majority of respondents are sticking with a 3% or less base pay increase this year.

Market Data — Honestly, when the equal pay laws went into effect, we expected to see more resources available for salary surveys. However, we haven’t been flooded with new resources as yet so we are relying more heavily on the few resources providing data or producing surveys. Over half (56%) the respondents are doing full market surveys, 24% are looking at specific positions each year, but 18% checked market data monthly. Surprisingly, 5% checked market data daily. Bottom line, 82% of companies are using more than one resource for their market data and 14% use at least five sources.

Benefits and Perks — Since companies are reluctant to offer higher pay to employees and applicants, benefits and perks are being used more. There is an advantage to this… you can change your benefits and perks much more easily, and often at lower cost, than the full cost of increasing pay. The survey shows 44% of respondents allow remote work, 37% offer flextime, 32% provide paid family leave (rather than unpaid leaves), and 10% offer 4-day workweeks. Unlimited PTO is also gaining in popularity but we suggest you first have a well-written plan to limit the potential for abuse.

Pay Ranges — Companies are striving to become more transparent with pay. In 2019, 28% of respondents plan to share pay ranges with indiviual employees, 23% hope to have their comp plan reflect their culture, and 8% want to make pay ranges and employee pay information available to all their employees. That said, only 32% share the market data when giving an employee a raise and only 36% provide employees with the pay range for their own position. Let’s be real, being transparent with pay means you need a very well-documented comp plan, including detailed job descriptions, etc., so you can easily explain why Mary makes more than Joe.

Much of what we see in PayScale’s survey is not a surprise. Companies have always struggled with pay, finding reliable market data, and choosing benefits. However, money is never at the top of the employee’s list of wants unless an employee is unable to meet their basic needs. When reviewing your plans and policies, ask yourself if they match what type of employer you want to be and culture you want to have. Put your money where it will provide the best results for both the employee and you.

Sexual Harassment Prevention Training

As you know, every company in California with 5 or more employees must provide sexual harassment prevention training within 2019. The law mandates the usual 2-hour training for supervisory staff and adds a 1-hour training for all non-supervisory employees. You may receive your training via in-person workshops, online training, and live webinars.

We are leaving the in-person training to others because we’ve always found it hard to get everyone in one room at one time. The online training has been our usual method. However, we are excited to be presenting live webinars each month that are compliant with California’s AB1825 and SB1343. The webinars are very interactive and provide a lot of scenarios and practical applications so your employees get a better understanding of what harassment and harassment prevention look like in the workplace. In addition, employees will be able to ask questions throughout the webinar.

Please review for the dates and times we currently have scheduled. More webinars will be added each month. You may also request a webinar session specifically for your company.

If live webinars are not for you, let us know what type of training you prefer and we will refer you to our best resources.

Time to Post Your OSHA Summary

“When and where do I need to post my OSHA log? What should I include?”

Your HR Survival Tip

An OSHA log and summary are kept by every company and shows what, if any, workplace injuries and accidents you may have had in the past year. You are responsible for maintaining a safe workplace, including safety training, so these documents show everyone how you’ve done.

You don’t post the OSHA log, just the Summary Form 300A. This summary must be posted near your employment law posters from 2/1 through 4/30 every year. OSHA has been implementing and enforcing more rules for the workplace so you want to pay attention.

Your OSHA log maintains a record of all work-related injuries or illnesses. These are then summarized and the summary is what gets posted. The form must be certified (i.e., signed) by an owner, corporate officer, or the highest ranking person at the company. If you have more than one work site, a summary should be posted at each work site if that site is expected to be in operation more than one year. You may group the information together into one summary if your various work sites are in operation less than one year.

Companies classified as low-hazard and which have 10 or fewer employees do not have to post. Low hazard basically means you have an office environment where paper cuts and copier toner are your biggest health hazards. Serious injuries requiring hospitalization of more than 24 hours, loss or disfigurement of a body part, and deaths are reported to OSHA within 8 hours of knowing about the incident.

Maintaining a safe workplace isn’t that hard. In California, we have Cal/OSHA and several years ago they required a written safety plan for every company. This Injury and Illness Prevention Plan (IIPP) provides information about recording incidents, training staff, and should make completion of the OSHA log and summary a breeze. If you need a good safety plan or help making yours better, let us introduce you to our experts.

Easy Peasy PAGA Lawsuits

“I have heard the word “paga” but don’t understand what it means and how it may apply to me.”

Your HR Survival Tip

PAGA is the California Private Attorneys General Act, which doesn’t really mean anything to you. However, if we said this Act allows a sole employee to initiate a wage and hour lawsuit against you, that might grab your eye. Even more importantly is the fact that a PAGA claim automatically pulls in all your other employees affected by this wage and hour issue. Kind of like a mini class action do-it-yourself lawsuit … with detailed instructions available online.

This Act focuses on wage and hour violations, which makes most companies somewhat easy targets. Here are just a few examples of how you could be subject to a PAGA claim:

  • Improper meal break procedures — late meal breaks; breaks less than 30 minutes; working 6+ hours without a meal break; poorly written instructions in your handbook.
  • Improper overtime pay — not understanding how our 8-hour day and 7-day workweek play into the overtime calculation; not paying overtime on non-exempt bonuses; using 4 10-hours workdays without setting it up legally.
  • Improper wage statements — having a pay stub that is hard to understand; missing required information about the company or employee.
  • Untimely pay checks — late paychecks; too much time between the work period and the paycheck date.
  • Miscalculating time worked — not paying for after-hours emails, texts, and calls; not paying for reporting time; badly designed on-call policy

California wage and hour laws are extensive so it’s very easy to either do something wrong or forget to be diligent about periodically confirming you are still in compliance. Don’t gamble that YOUR employees wouldn’t file a PAGA claim against you… remember, it only takes one employee to get this ball rolling.

Harassment Training Tidbits

When planning your sexual harassment training this year, you need to think beyond what you might have done in previous years. There are specific rules and other things to keep in mind.

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Which Companies — If your company has 5 or more employees, every California W2 employee must receive training before 1/1/2020. We’d recommend including your 1099 workers, too.

Which Employees — Everyone must receiving training in 2019. Yes, even if some of your employees were just trained in 2018, they must go through training again in 2019. Employees with any level of supervisory responsibilities or those with any perceived control over others must receive the 2-hour supervisory training. All others must receive the new 1-hour training.

Timing — We have already received numerous inquiries about training. Slow it down! The problem with training right now is that you are selecting January as your training month for every year going forward. Most companies are busy at this time of year and training is an added burden. Instead, look at your slower times of year and plan your training during that period. There’s no rush to get it done right now… we have a whole year. The initial training must happen within 6 months of hire or promotion to a supervisory position. After employees are trained, the training is repeated every 2 years. You may want to plan for 2 training times each year to allow everyone to participate within the timelines.

Your Trainer — The law allows 3 possible trainers. (1) Attorneys whose practice includes employment law and they have been practicing at least 2 years. You’ll find several employment law firms offer training quarterly. (2) HR professionals or harassment prevention consultants who have at least 2 years of practical experience in designing or providing this type of material. (3) Teachers with a post-graduate or California teaching credential who have 20 hours of employment law instruction under FEHA or Title VII.

Resources — Free online training will be eventually available from California but don’t expect it before July. Inexpensive online training is typically more interesting and the supervisory version is available now. We haven’t yet seen materials for the 1-hour training but it will start showing up soon. In-person training can be costly but it is easier for employees to interact (and not fall asleep).

There is a whole list of what must be covered during the training, which is why it’s important to select your trainer and/or resource carefully. At the end of any training, the employee should receive a certificate of completion (online) or have signed the attendance sheet so you have proof for the files. There is no shortcut here… even the online training is designed to prevent people from jumping ahead. If an attendee leaves a live training, it’s possible they won’t be approved for having attended for the full 1 or 2 hours. This is important but we’re not in a hurry… make a plan for your implementation rather than just trying to cross it off your list.

Or Forever Hold Your Peace

“I have an employee, John, who is a constant problem. Today while speaking with him, he became frustrated with the conversation and said he might as well quit. Later I found myself wishing he had. What should I have done?”

Your HR Survival Tip

As an owner or manager, you need to be alert to things going on with your employees. This situation was one of those perfect missed moments.

HR Jungle

If you have an employee who hasn’t done well, you obviously need to work with them to improve their performance. When the employee isn’t particularly motivated to want to improve, he can become frustrated with your efforts. I have heard John’s comment before. The trick is grabbing that opportunity.

When an employee says something like “well, I might as well quit,” your response could be “Okay, I’ll accept your resignation. Let’s talk about the timing.” It’s likely the employee wasn’t truly serious and was hoping you’d realize they are a valuable asset. It’s a surprise to them when you accept that off-the-cuff resignation.

The other side of this situation is when an employee misinterprets something you’ve said and now believes they have been terminated. Again, you need to react fairly quickly unless that was really what you intended to say.

If an employee knows they messed up, they could be assuming they’ll be fired. Be very clear that wasn’t your intention… unless it was. The biggest reason you need to pay attention to this is because, in California, you better have that final paycheck ready if termination is your intent or you’ll be open to fines and penalties.

Ideally, of course, you manage your employees in such a way that neither of these situations would ever occur. However, it pays to keep your ears open for unexpected reactions and your responses timely and appropriate for the situation.

New Year Checklist

“What employee-related changes do I need to think about for the new year?”

Your HR Survival Tip

As we all return to work from the holidays, business owners are faced with items taking effect with the changing of the calendar year. We’ve made it a bit easier for you with a short list for 1/1/2019:

  • As mentioned in a recent article, California has a new state minimum wage of $11/hour (25 or less employees) or $12/hour (26+ employees). However, you need to also check local laws because there are 29 (and counting) localities with higher minimum wages and many of those are increasing, too.
  • When the minimum wage increases, the minimum salary ANY exempt person receives also increases. We only look at the state minimum wage for the calculation but the new minimum will be $3,813.33/month (25 or less employees) or $4,160/month (25+ employees). This is $45,760 and $49,920/year, respectively.
  • The Internal Revenue Service (IRS) has increased their per mile rate to $0.58 (up from 2018’s $0.545). If you pay this rate, both CA and IRS will consider your employees have been fairly compensated for use of their personal vehicles.
  • Order and hang the new employment law posters that include both state and federal laws. They may not yet be ready due to last minute legal changes but at least get your order submitted. My favorite way to buy posters is through this site.
  • Issue a memo with the specific dates of the 2019 holidays you will be observing. Since a few holidays have dates that move around, the memo will let employees plan ahead based on exactly when you’ll be closed during the coming year.
  • Make sure your W2s for employees and 1099s for contractors are scheduled for delivery before January 31st. If any are returned because the person moved, just leave it unopened and put it in their file as proof it was sent on time. They will probably contact you once they start working on their taxes.
  • Review your Employee Handbook for legal and policy updates. Confirm you have the latest California and Federal employee flyers and forms.
  • The one-year clock has now begun on implementing new, mandatory sexual harassment awareness and prevention training for companies with 5+ employees. Supervisory employees must have a 2-hour training and non-supervisory employees will get the new 1-hour training. All employees must have this training by the end of 2019, then are scheduled for future training every 2 years.

There isn’t as much on this checklist as usual because many laws now have effective dates throughout the year. Let us know how we can help you!

Raise Them Up

“I know the new minimum wage goes into effect on January 1st but does it change anything else?”

Your HR Survival TipHR Jungle

California’s minimum wage sees another increase on January 1st in 2019 and 2020 and 2021, etc. However, that’s just the state minimum wage. Many of you may be subject to local laws that are higher or on a different schedule than the state law. San Diego, for example, will increase to $12.00 for anyone working within San Diego city limits.

The new minimum wage in California will be $11.00 (if you have no more than 25 employees) or $12.00 (if you have 26+ employees). Companies with no more than 25 employees will continue to be $1.00 behind larger companies until 2025 when all sizes will be paying $15.00/hour.

One thing the state law affects (and the local laws don’t) is the minimum salary you’re allowed to pay and have someone eligible as salaried exempt. Only the state law applies and it is a calculation based on the state minimum wage of [2 X state minimum wage X 2080]. No matter how few or how many hours your salaried exempt person works, they must be making at least $45,760 (if you have no more than 25 employees) or $49,920 (if you have 26+ employees). If you’re not paying that amount, they will be considered hourly employees.

Do your employees use their own hand tools on the job? You must either provide the tools needed in their trade or you must pay those employees twice the minimum wage.

Any employees with wage garnishments? Pull the documents and recalculate the amount they must pay each pay period because they are now making more money than before.

Watch your payroll calculations if your payroll period includes time in December and January to ensure you’re paying at least the new minimum wage for those January hours.

When you’re feeling a little less squeezed by this new minimum wage, stop and take a look at those employees who were making a little more. Recognize they will no longer be as happy with their wages because they just became closer to being minimum wage workers. They won’t think about the fact that state law caused that 5-8% increase. All they’ll think about is the 2-3% increase they got, if they even got that. Also pay attention to those leads and supervisors because the people reporting to them just got a little closer to those wages.

A new minimum wage has a ripple effect felt throughout the organization. Although few companies can afford to provide company-wide increases, be prepared for the fallout. Just blaming state law won’t make anyone feel better… except those minimum wage earners.

Does Your Company Benefit?

When making decisions, the courts often look at whether or not the company received any benefit from the action or activity. But what does that mean to you? Here are a few examples to consider: HR Jungle

Holiday Party or Other Activities
Although you may not pay employees for attending an event sponsored by the company, the courts have decided the company benefits by having these get-togethers. It boosts connectivity, team building, and morale. Where it may fall apart for the company is when alcohol is served. A court decision said alcohol just made the company responsible for each employee’s behavior at the party, on the road, and at home… until the employee is sober again. This particular issue falls under the legal term of “social host.”

Business Use of Personal Cell Phones
If you are requiring (which is different from allowing) employees to use their personal cell phones for business, your company benefits. The benefits include a savings from having to buy company cell phones and adding them to your telephone plan. Even when that personal cell phone is on an unlimited plan so making those business calls don’t cost the employee anything, a court decision said the company should still pay a reasonable amount toward that plan.

Employee Committee Volunteers
While this may not have hit the courts yet, it has the potential for litigation. If your employees volunteer to be part of a committee to create fun activities for employees, like the holiday party, are you paying for their time? Even if you are allowing the committee to meet while on work time, have you considered the time spent at the activity itself? Are they at the activity and greeting people at the door, handing out tickets for something, or organizing the flow of the event? You might consider paying your non-exempt (hourly) employees for that time because your company benefits from those employees volunteering. Keep in mind your more expensive option would be to hire an event planning company.

Driving Personal Vehicles
If your employees are driving their personal vehicle for work purposes throughout the workday, you do owe them mileage. The commute is not paid but any travel within the workday needs to be compensated. You benefit by not having to provide company vehicles for employees to go from place to place.

Whenever you think you’re getting something for free, think again. Ask yourself how the company benefits from that freebie and what it’s worth to you. There’s a reason for that old saying: there’s no such thing as a free lunch!

Save Yourself

“Employees have been asking for a retirement plan but I’m not sure I can afford it. What are my options?”

Your HR Survival TipHR Jungle

Adding a 401(k) retirement plan to your benefits can be done for as little as $2,000 per year in administrative fees. A 401(k) is a really good benefit to add to your benefit package. However, there is another option coming over the next few years.

California has found another way to protect employees… but this time the employees are being protected from themselves and their poor savings habits. Studies have shown people are saving less for retirement than ever before and California wants to help improve and encourage saving.

The Secure Choice Retirement Savings Program (SCRSP) was enacted in 2016 and will be implemented over the next few years as the CalSavers Retirement Savings Program. At a certain point, if your company doesn’t have a 401(k) plan in place, your employees will be automatically enrolled in CalSavers. Employees will have an automatic 5% payroll deduction put into CalSavers and they must opt out if they don’t want to participate. This is a big change because it requires opting out rather than opting in.

Registration and implementation will start in 2019 and continues until 6/2022. The program is designed to encourage employees to save. Although you’ll have to manage the payroll deductions and transferring the money to CalSavers, companies will have no other financial obligation.

You can either implement a 401(k) plan on your own or wait for CalSavers. However, one way or another employees will be pushed to start saving for retirement.