“Employees have been asking for a retirement plan but I’m not sure I can afford it. What are my options?”
Your HR Survival Tip
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.
“I have issues with employees who call in sick the day before a holiday or want to work on a holiday so they can take another day off. What are the rules?”
Your HR Survival Tip
Holidays are always of interest to employees because it often means a day off. However, there are a lot of little issues that arise, particularly at this time of year.
No law requires you to pay employees for a holiday, even if you close for that holiday. If an employee works on a holiday, they are only legally entitled to their usual hourly rate for time worked.
Given the language of all the various paid sick leave policies, you can no longer require an employee to work the day before and day after a paid holiday. This would be viewed as punishment for taking a sick day and it’s prohibited. What you can have is a policy stating they must work the day before/after a holiday unless they have a pre-approved or excused absence.
Another request we often see is an exchange of one of your holidays for a different religious holiday of the employee’s choice. You do want to allow employees to celebrate their own religious holidays… but you are not obligated to pay for those days off.
Most employees can’t be very productive when nearly every other business is closed. Stick to the days you’ve chosen to close your business. If an employee would like another day off, ask them to request an unpaid day off for the religious day(s) of their choice. Then try to accommodate them if at all possible.
Another part of the policy you might want to review is the qualification for a paid holiday. It’s okay to have distinct groups with different eligibility, such as office staff gets paid holidays vs. field employees getting an unpaid day off, etc. But, with Thanksgiving here and more holidays coming up, look at what your policy says about timing. Do you have a 90-day eligibility period before an employee can have a paid holiday? If you don’t address it, they may think there are several paid holidays coming their way.
Like so many other topics, what happens on holidays needs to be in writing so everyone is clear. Keep the holidays in your Employee Handbook generic (listed but without the actual dates) and the policy easy to understand. Send a memo out now providing the actual dates of holidays you are observing next year. Use both the policy and memo to remind everyone of eligibility. This is a great time of year so make it even better with a well-written policy.
“Do I continue to accrue vacation time for employees on leaves of absence?”
Your HR Survival Tip
The simple answer is no. Hopefully you have all your accruals set up through your payroll system. That makes it much easier to manage those leaves in a couple of ways.
First, when an employee goes on any leave of absence, change their status in payroll from “active” to “LOA” or whatever you have set up for leaves. If you don’t have that option, talk with your payroll provider and ask them to add it.
Second, make sure the payroll system stops accruing sick, vacation, and/or PTO whenever an employee’s status is LOA. Once they return to work, you change them back to active so they can get paid and start accruing again.
Third, talk with your payroll provider about a hire date versus benefit date (or anniversary date). The hire date is easy and self-explanatory. The other date might be called different things in different payroll systems. What you want is a secondary date that aligns with the employee’s anniversary date but recognizes when someone is active versus on a leave.
When you have these dates and the status working properly in your payroll system, the employee’s anniversary date changes if they take a leave of absence. Where 7/1 might be the old anniversary, it would now show 10/1 if they had been gone for 3 months on a leave. That anniversary date represents 12 months of work so it doesn’t include the time on leave. This would likely delay their eligibility for the next level of vacation or even their next raise.
If you have any benefits tied to the length of employment or even just a full year of work, you’ll want to account for those leaves. Someone working 9 months out of the year usually shouldn’t be receiving the same benefit as those working all 12 months. Employees like to be treated fairly so don’t give them a reason to believe otherwise.
“I have a manager who is out sick a lot and I’m trying to figure out if unpaid time is an option with exempt employees.”
Your HR Survival Tip
All California companies must have a Paid Sick Leave plan in place but the sick leave may also be provided through your PTO (Paid Time Off) plan that combines sick and vacation time. Exempt employees are those paid a salary for doing their job, irregardless of the number of hours worked. Use and payment of sick time with exempt employees is often confusing so you’re not alone.
You can be conservative and pay the exempt employee a full week’s pay even when they are absent. However, years ago, California’s Labor Commissioner provided guidance on exempt absences to help us navigate this tricky situation.
If the exempt employee calls in sick for the whole day:
- and they have sick time available — you record the sick time used against their balance and they will receive full sick pay for that day.
- and they have some sick time but not enough for the full day — you record the sick time used (up to their balance) but still pay for the whole day.
- and they have no sick time left — they can be unpaid that day.
If the exempt employee works part of the day and is sick part of the day:
- and they have sick time available — you record the sick time against their balance and they will be fully paid that day between the sick pay and regular pay.
- and they have some sick time but not enough — you record the sick time available (using up their balance) but still pay for the whole day.
- and they have no sick time left – they are still paid for that whole day
As you can see, if the exempt employee shows up at all and is sick, they must be paid for the whole day. If you have separate sick and vacation plans, you may allow them to use vacation time once they are out of sick time but you can’t force it. Please keep in mind this is for sick leave only; personal/vacation time off has slightly different rules.
“I’m allowing employees to wear costumes at work on Halloween. Should I be worried?”
Your HR Survival Tip
Given the news lately about a Halloween costume that backfired and resulted in a termination, you are smart to be a bit worried. People enjoy wearing unusual costumes and don’t always think about how they look in the workplace.
Ideally, you have employees who understand how sensitive others can be. Many companies have been adding T-shirts with sayings or pictures to their list of what not to wear to work. That’s because someone could take offense and companies are trying to avoid claims.
If you didn’t previously send out a notice to employees to be cautious about what they wear, take a walk around and look at what your employees decided to wear. If you believe it could be offensive, ask them to remove the costume or at least remove what they can. In more serious cases, you may have to send them home to change. And, no, you don’t have to pay for the time they are off work to change.
Other employees may realize the mistake they made with their costume choice on their own. These are the people who got carried away and have now found it’s really hard to work in that costume. While the costume may not be offensive, it may not be very practical. However, unless it’s creating a safety or productivity concern, the costume is just uncomfortable and they’ll probably select a different look next year.
If your walk-around results in any concerns this year, make a note now (while you remember) about the rules for next year so you’ll be prepared. It’s great when companies allow employees to have fun on Halloween but the “trick” is to make sure you’re not “treated” to a claim.
We know you’ve been anxiously awaiting news of which bills have been signed into law this year. Wait no longer, the following list provides the highlights:
Your HR Survival Tip
- SB1343 expands sexual harassment training requirements. By 1/1/20, all companies with 5 or more employees will have to provide all employees with training. Supervisory employees must attend a 2-hour training and non-supervisory employees must attend a 1-hour training. We are expecting the Department of Fair Employment and Housing to provide videos and written materials for this training.
- SB1252 clarifies a current law that provides current and former employees with the right to inspect or copy pay records. The difference is you must provide the copy rather than requiring the employee to make a copy. You can still charge a per page copying fee.
- SB1412 updates the “ban the box” law regarding criminal history inquiries when interviewing and on applications. The change defines more clearly, and limits, what exceptions are allowed. Don’t jump up and down in excitement… this clarification only relates to positions that legally require a background check.
- SB1123 adds to the Paid Family Leave by, in 2021, allowing the pay benefits to also be used for time off to participate in a qualifying exigency related to military service.
- AB1976 provides a very limited hardship exception to the requirement that a lactation location must be somewhere other than a bathroom. Since proving the hardship won’t be easy, let us know if you need help figuring out what else can qualify as a lactation location.
- SB970 requires, by 1/1/20, that hotel and motel operators provide 20 minutes of human trafficking awareness training to employees who may interact with potential victims.
- SB1300 makes changes to settlement and non-disclosure agreement language. However, you really need your attorney creating those agreements anyhow to ensure they will protect you in court.
- SB826 requires a minimum quota of female board members in public companies. Although gender quotas on boards may conflict with federal corporate law, California will expect public-traded companies with principal executive offices here to comply.
Since the October 31st deadline is coming up, don’t forget to confirm your janitorial or cleaning company has registered with the state. This is important because, if they haven’t, you may be subject to a fine for using them. Protect your company by getting and keeping a copy of their annual registration certification.
“I hired a guy who showed up on his start date but didn’t return the next day and isn’t responding to my calls. I don’t yet have any of his paperwork completed to add him to payroll. What do I do?”
Your HR Survival Tip
While this isn’t an everyday occurrence, it does happen. This is a good reason to get all your new hire paperwork done as soon as the employee first reports to work.
As the employer, you may feel you don’t need to pay this person since you don’t have enough information to put them into your payroll system. Or perhaps you think you can just write them a check as an independent contractor. Both are wrong. This is treated basically the same as a longer-term employee who walks off the job. You have 72 hours to produce a final paycheck and wage statement (pay stub).
If no paperwork has yet been completed you probably don’t have the social security number, which is necessary to add the employee to payroll. However, you can still create a “manual check” through your payroll system… you just won’t save it because you can’t associate it with an employee in the system.
This manual check process allows you to enter the pay rate, hours worked, and taxes. When you don’t have a W4 providing you with the employee’s requested exemptions, both IRS and California say you should default to single with zero exemptions. Once you have the numbers, create your own version of a pay stub because you can’t save this in the system without a social security number. You create a check by actually writing a check for the net amount, using the same bank account normally is used for payroll.
Once you have a check and wage statement ready, contact the employee by whatever means possible to let them know you have their check ready. You are not obligated to mail it unless requested by the employee. If the employee doesn’t respond, put the check and wage statement in their file. When the employee eventually shows up for the money, get the W4 completed so you can now actually process the manual check through your payroll system.
If you don’t know how to obtain a manual check through your payroll service, ask them to train you. It’s important you know how to create a final paycheck, even for regular terminations. It’s not hard and there are times when you just can’t wait for your payroll company to call you back.
Companies often seem surprised when a new law goes into effect that affects them. However, governments aren’t that efficient. It takes months to review and pass a bill into law and the effective date is often several months later. It’s just a question of whether or not you were paying attention all those months to see which bills were thrown out and which were moved forward.
Timing is different when a judge has made a decision in court. A court decision will immediately change behavior and become the basis for more lawsuits. While a judge’s decision isn’t new “law,” it carries a lot of weight in future lawsuits and decisions. Generally, attorneys will immediately consider a court decision as the way things should be going forward in how we implement or maintain compliance with a law.
An example of a court decision was the California Supreme Court’s ruling on independent contractors early this year. Soon after the Court published it’s decision, new lawsuits were filed based on that ruling. As evidenced by the number of companies changing independent contractors into employees, the effect was immediate.
New laws passed have a specific effective date so we can prepare for them. A couple of examples include:
- Janitorial service registration — Effective 7/1/2018, this law requires all janitorial and cleaning companies to register with the state no later than 10/31/2018. After that date, both the company and anyone who hires them is subject to fines and penalties. There will also be special sexual harassment training required by 1/1/2019… but we’re still waiting to hear exactly what should be in the training. If you use a service, make sure you get a copy of their state registration certificate each year.
- Sexual Harassment training for small companies — Effective 1/1/2020 (yes, over a year from now), all companies with 5 or more employees must provide 2-hour sexual harassment training for supervisory staff AND 1-hour training for all non-supervisory staff. This is a huge change and a result of the me-too complaints over the past year. We’ve never had a requirement to train non-supervisory staff before. However, this isn’t a bad law because many complaints are a result of employees not understanding what harassment really is or what to do about it.
California continues to lead the charge with employment laws. It can be frustrating and an administrative burden to keep up with everything these days. Ironically, we continue to wait for court decisions to give us more direction in how to implement a law or even a prior court decision. Companies willing to accept the risks by being non-compliant need to recognize that risk increases with each new law and court decision. Let us help reduce your risks!
“I once worked at a company who followed a pattern of disciplinary actions. Now that I have my own business, I’m trying to decide if I really want to do it the same way. Are there options?”
Your HR Survival Tip
There are disciplinary options legally available and they typically fall into two categories: progressive or discretionary.
You have a progressive policy when it specifies what happens for each occurrence. For example:
- First offense = Verbal warning
- Second offense = Written warning #1
- Third offense = Written warning #2
- Fourth offense = Written warning #3
- Fifth offense = Final warning
- Sixth offense = Termination
The problem with this type of policy is that you may be legally required to follow each step, regardless of the offense. On the other hand, it does give employees sufficient warning that the behavior may lead to termination and can’t be considered discriminatory since the same six actions are used on everyone.
When you have a discretionary policy, you handle discipline in the way it suggests at the Company’s discretion. We prefer this method because there are some things an employee might do that call for immediate termination and we want that option.
Having a discretionary policy doesn’t mean you jump all over the place with your discipline. Even this method usually has a basic process you follow with verbal and written warnings. However, you also have the option of jumping over steps if the situation calls for a stronger message.
Regardless of which method you use, train your managers. The Company takes the hit for discrimination if you have managers using wildly different disciplinary behaviors. You don’t want one manager to fire someone for a no-call, no-show and have another manager simply provide a verbal warning in the same situation. You must create a Company philosophy on what you want to see used for discipline and then make sure the managers understand and use it appropriately.
“I have a couple of employees who like long lunches and sometimes take 2 hours. They still work 8 hours but do I need to let them continue this?”
Your HR Survival Tip
There are practical and legal issues to consider when looking at long lunch breaks. While California requires non-exempt (hourly) employees to take at least a 30-minute meal break, the state can frown on breaks of more than one hour.
You do not have to allow any longer than 30 minutes for meal breaks but consider allowing just slightly longer (35-40 minutes) simply because you need to make sure they take at least 30 minutes. It’s hard to take exactly 30 minutes every day unless you have a very rigid schedule.
On a practical side, even if the employees ensure they work 8 hours, do those specific 8 hours work for you? If your business hours are normally 8a-5p but these employees stay until 6p to make up for the long lunch, is that last hour as productive for the business? Probably not, if they are working with customers and there are no customers after closing.
On the legal side, if you require the employee to take more than an hour meal break because you actually need them to work that hour later, this is a split shift. California has a payroll calculation for split shifts. The cost of using split shifts is one hour of minimum wage each day it happens. However, the way it’s calculated may not cost you anything. You can apply anything over minimum wage normally paid to the employee toward that split shift pay. For example, if employees are making $13.00/hour and minimum wage is $11.00, you have a $2/hour overage you can apply to that one hour of minimum wage due. In a normal 8-hour day, the employee making $13/hour will have an overage of $16 ($2 x 8 hours) so you have covered split shift pay.
Overall, it’s best to stick with a standard meal break period and have employees request the additional time off as they need or want it. You should be allowed the opportunity to approve or deny the extra time based on the business needs that day. Remember, you’re the boss!