“I have 3 exempt managers who work a lot of hours. I’d like to give them time off to compensate for those extra hours. How do I do this?”
Your HR Survival Tip
You don’t… at least not in California. California does not allow “comp” time for non-exempt (hourly) or exempt (salaried) employees.
If an employee is non-exempt, you must absolutely pay that employee for all time worked. We have both daily and weekly overtime, rather than just the 40 hours per week most states follow. You can’t allow a non-exempt employee to swap an hour off today for working an hour longer tomorrow. You definitely must pay overtime for that extra hour the next day.
Exempt employees have different rules. They agreed to certain responsibilities and tasks in exchange for a specific amount of pay. In concept, you should not care whether that employee can complete all their work in 30 hours or 60 hours each week. You look only at the performance and decide whether or not they are performing as expected and handling all their responsibilities.
Generally, exempt employees do not track their time but it’s not illegal to require a timecard. Comp time, however, isn’t the purpose of exempts using timecards. Exempt time tracking is most often seen in companies that have their accounting set up for job costing… they want to know how much of their payroll (and other costs) went toward each project.
If you start tracking an exempt employee’s hours and providing comp time for the extra hours they work, you could easily be viewed as turning that employee into a non-exempt employee. You never want to compensate them with time off for each extra hour worked. It’s a legal disaster waiting to be discovered.
That’s not to say you can never provide an extra day off to an exempt employee; just be careful how and when you do it. You don’t want to be discriminatory nor do you want employees to expect it. Therefore, think of the time off as a special bonus for an effort “over and above” during a particularly busy time or for completing a special project that required unusually long hours. Make them wow you before considering it. Even then, you can’t reward them hour for hour.
Tell them you really appreciate their extra effort and to take Friday off. Don’t use this for someone who is consistently putting in a lot of hours even when there’s nothing special going on… this could just be a slow worker or a sign you need to adjust the amount of work they have if they can never keep up. This is not a replacement for a higher salary or a substitute for overworking your employees.
Rewarding someone who has put in a special effort is always appreciated by employees. However, think through your plan (or discuss it with us) to make sure it won’t come back to bite you.
“I heard a new I-9 form is available. Do I need everyone to complete the new form?”
Your HR Survival Tip
Over the years, we’ve seen several versions of the I-9 form. One of the constants has been the rule that you begin using a new I-9 form when it becomes available. However, you do not replace your employees’ older versions just because a new one has been issued.
The new I-9 Form can be used immediately, but you must be using it by 1/22/2017. I don’t know a good reason to wait so please begin using this new version.
- Which form to use — You must use the current form available at the time of hire. That form will usually remain valid for the length of that employee’s employment.
- When to use the form — You must receive the employee’s identification to be used on the form within the first 3 days of employment. If the employee delays in getting you the proper ID, have them stop working until they provide the ID.
- Employee’s requirements — The employee completes Section 1 and provides you with proper identification.
- What ID can be used — The page after the form itself has a chart showing what identification is allowed. The employee must either provide 1 item from List A… OR 1 item from List B plus 1 item from List C (yes, that’s 2 forms of ID when using Lists B and C). Please pay attention to List A because some items, if expired, are not valid.
- Your requirements — You have 3 days from date of hire to complete your Section 2 of the form, which includes the certification just below the area you enter the employee’s ID. Do NOT leave any blanks and add your full business address.
- Using e-Verify — Do not use the online e-Verify system unless you are a federal contractor and required to do so.
They have expanded this version so now the form itself is 3 pages, but page 3 is just the recertification section. You typically only have to use this section when idenfication from List A has been updated. The 4th page of the form is the list of acceptable ID. Instructions are now a separate document but you must still make sure the employee has access to these instructions.
In summary, stop using your old I-9 form and begin using the new one. You don’t have to replace the old ones. Complete all the questions/blanks… you can be fined for missing information even when it’s something as simple as your zip code. We’re available if you have questions!
This will be the shortest newsletter you’ll probably ever get from me but… hot off the presses… the new $47,476 salary minimum has been POSTPONED! That law has been blocked for now so you will not have to meet that minimum on December 1st!
“I know the bill passed to legalize recreational use of marijuana in California. Does this mean I’m going to have employees stoned while working?”
Your HR Survival Tip
Even with recreational use of marijuana legalized in California, this doesn’t mean you’ll have to manage stoned employees.
As long as marijuana is still on the Federal illegal drugs list, your company can be drug-free. Of course, you’ll want a policy stating that so everyone understands. This is the same as allowing or disallowing medical marijuana in the workplace. ANY use of marijuana by employees is a company decision because Federal law says you can prohibit it.
The tricky part is that recreational use of marijuana over the weekend means they’d probably fail a drug test on Monday. Unlike alcohol, drugs stay in your system longer than the time period the person is feeling the affects of the drug. Therefore, you’ll probably hear arguments that they are no longer stoned on Monday even though a drug test would say differently.
If you really want a drug-free work environment, your employees have to understand that (for now) this means they shouldn’t even be using on a recreational basis.
It helps to present the arguments from the company’s view of this:
- Policy — There’s a reason you decided to have a drug and alcohol-free work environment. Those reasons haven’t changed just because a law did.
- Company Liability — Bottom line is that any work-related accident or incident creates a big liability for your company. The liability increases dramatically when testing after an accident is conducted and the employee is found to have been working while under the influence.
- Employee Liability — Even though the company takes the first legal hit, employees can be individually sued by outside parties. If the employee was driving and in an accident, do you really think an attorney will ignore the fact that the employee tested positive for drug residue in their system?
- Safety — Both the employee and others are at risk if reflexes are slowed while driving or operating equipment. This is why employees on prescription drugs should notify their managers… they need to be pulled off that work while on that prescription if it makes them drowsy or clumsy.
- Productivity — You need your employees to be using their full abilities or your productivity levels and revenues could drop.
By the time the Federal government legalizes marijuana, we can hope they will have a way of testing that shows the level of drug in the system (like alcohol levels). That will make it much easier to determine who is and is not still being affected by the drug when working. However, until then, understand your risks and be very clear about your drug policy.
“I believe a couple of my employees might be involved with drugs. We don’t use a pre-employment drug test but I’d like to have everyone tested now. How do I set that up?”
Your HR Survival Tip
Testing your employees often involves advance notice of some kind. When creating a policy, you also want to decide on what you’ll do with the results. There are a few steps to take between the idea and actually being ready to conduct drug and/or alcohol testing.
If this is a new policy and you intend to have current employees tested, you’ll need to provide sufficient notice. The notice should outline your new policy, the requirement to have everyone tested, and provide at least 60-90 days’ notice before the policy and testing will take effect. Basically, you’re giving your employees the time to get any drugs out of their system before being tested.
Your notice and policy should also inform employees about your stance on medical marijuana. Regardless of state law making it legal, marijuana is still on the federal list of illegal drugs. Therefore, you are able to prohibit use (or the effects of) medical marijuana during working hours. Since using marijuana over the weekend would still result in a failed drug test on Monday, it’s very important employees understand the policy.
You’ll need to contract with an agency who handles the whole testing process for you. Also add “Drug and/or alcohol screening is conducted” on the first page of your job application. This is one of the first notices candidates get that your company does testing. You’ll need a Drug and Alcohol Policy providing employees with your guidelines and expectations. Once you’re ready, here are the usual types of testing:
- Pre-employment testing: If your plan is to have everyone tested when they are hired, timing is important. You must (1) make an offer (contingent upon the test results), (2) send them for testing, and (3) get the results before they start working. While you must make an offer before the candidate goes for testing, it’s not absolutely required you get the results before they start working. However, if the candidate doesn’t pass the testing, it can be awkward to terminate them after they’ve been working for 2-3 days because then you have other employees asking questions you can’t answer due to confidentiality. Avoid discrimination by ensuring every candidate offered any position goes through the same testing. Yes, even executives.
- Random drug testing: This is intended to allow you to test employees on an irregular schedule. However, this isn’t an option for most of you because random testing in CA is not allowed except in very specific cases, such as when operating D.O.T.-regulated (Dept. of Transportation) vehicles.
- Reasonable suspicion testing: Your policy should state you may require an employee to be tested if management has noticed behaviors attributed to drug or alcohol use. Again, be careful here and get another manager’s or HR’s opinion about the behavior. I also prefer a conversation with the employee about the behaviors so you can determine if there is another reason.
- New policy testing: You have implemented a new drug/alcohol testing policy and have given employees a lot of advance notice so they’re prepared. Everyone can be required to be tested and you then take appropriate action with anyone who fails testing or refuses to be tested.
When a candidate or employee fails a drug/alcohol test, the usual action is termination of employment. This is why you want to have everything clearly spelled out.
When deciding whether or not to implement a drug and alcohol policy, keep in mind your reasons for it. Safety, job performance, company liability in case of an accident, and attendance or punctuality are all strong reasons. I’m an advocate of testing because, just like background checks, it shows you did your due diligence when hiring.
Correction: The city of San Diego minimum wage will be $11.50 on 1/1/2017 (not $11).
You only have this month to complete the analysis of your salaried positions. Federal law is overriding all state laws and declaring exempt (salaried) employees must be paid at least $47,476 per year ($3,956.34/month or $913/week) by December 1st, 2016. This affects companies of all sizes.
If you haven’t yet done any thinking about this, it’s not too late. However, you want to make those decisions soon so you have time to implement any needed changes.
Is the position itself worth $50K to your company? Let’s face it… some positions cap out at a certain level and if you keep increasing the pay, you’ll be paying more for that position than everyone else. This is easier if you ignore the person and just focus on the job. In the end, even a great employee won’t make it worthwhile to keep paying higher and higher salaries. Things to consider:
- You can’t pay less even if they don’t work full-time.
- The $47,476 minimum is the minimum… if you pay only the minimum, they could never have an unpaid day even if they were out of available sick and vacation time.
- This minimum will potentially go up each year so I prefer to make decisions based on paying $50K or more.
You also need to look at those duties and determine if they are “exempt” level duties. The salary minimum is only one part of the qualifications for an exempt position; the duties are harder and more subjective. Are the duties significant enough? For example:
- Does this position manage at least 2 other people or a department?
- Does this position have the ability to sign or agree to something that could cost your company a significant amount of money?
- Can this position make policy or hire and fire?
- Does this position require specific licensure or certification?
Outside Sales Reps are the exception to this law so you are not required to pay this minimum salary to them because they should be earning commissions.
What happens if you do nothing? If you have qualified exempt employees who are not paid the legal minimum, you will owe the employee all monies due plus fines for late payment of wages and both state and federal taxes. If you have exempt employees who shouldn’t be, those employees will be owed for every hour of overtime they say they worked, penalty pay for missed or late meal breaks, etc. for the last 4 years. If you don’t have proof otherwise, California will believe anything the employee says.
This new federal law is actually working to your benefit at the moment. It gives you a great reason to move exempt employees to non-exempt without having to mention they might have been misclassified previously. Use this to your advantage and clean up your employee classifications this month. It can be very costly any other time. Please let us know if we can help.
It’s not a surprise there are employment law changes each year that may affect your company or employees; rather, it’s a question of how much each will affect you. While this is a fairly long list, there are more laws we didn’t list here. Unless otherwise noted, everything is effective 1/1/2017 and relates to California employees.
Federal Minimum Salary, eff. 12/1/2016 — We’ve been hearing about this all year but now it’s time to make plans. The new minimum will be $47,476 and next week’s article will be devoted to this major change.
Minimum Wage (SB3) — We knew this was coming but it’s time to budget increases for any minimum wage CA workers to $10.50/hour. Workers within San Diego city limits will increase to $11.50/hour. Please check your local area carefully because there are numerous cities with their own minimum wage.
Minimum Wage Contested Violations (AB2899) — Employers must post a bond when contesting a Labor Commissioner ruling that minimum wage wasn’t paid. The bond is equal to the unpaid wages and is issued in favor of the employee.
Payroll (AB1847) — You are already required to provide employees with a notice stating they may be eligible for a Federal Earned Income Tax Credit (EITC) but now you’ll also need to provide notice they may be eligible for a state EITC. These must be sent out within a week of when you provide an annual wage summary, such as a W2 or 1099 to workers.
Local Wage Enforcement (SB1342) — Local government officials may now issue subpoenas and report non-compliance to local superior court judges. The intent is to encourage cities and counties to create laws combating wage theft.
Janitorial Worker Protections (AB1978), eff. 7/1/2018 — This law provides new protections for janitorial staff, including employer registration with the Labor Commissioner and harassment prevention training.
Gender-Neutral Restrooms (AB1732), eff. 3/1/2017 — Who didn’t see this coming? You can no longer have your restrooms designated as “men” or “women” unless they have multiple stalls. If you have restrooms designed for one-at-a-time use, you must change the sign on the door so either gender may use it.
Overtime for School Teachers (AB2230), eff. 7/1/2017 — This bill increases the amount of pay certain teachers must receive to be exempt from overtime pay.
Hair/Nail Salon Licensure Requirements (AB2437, AB2025), eff. 7/1/2017 — All licensed establishments must post a notice regarding workplace rights and the wage and hour laws. In addition, license applicants must be provided with basic labor law education when being schooled.
Fair Pay Act (AB1676, SB1063) — AB1676 states prior salary alone cannot be used to justify compensation differences. SB1063 extends the original act to include racial and ethnic wage disparity.
Immigration-Related Protection (SB1001) — It is currently illegal under Federal law to ask for more or different documentation than is stated on the Form I-9 or to refuse documents that appear to be genuine. State law has now added its weight to these protections.
Paid Family Leave Benefits (AB908), eff. 1/1/2018 — Employees filing for Paid Family Leave supplemental pay may now receive up to 60-70% of their earnings, depending upon their income. In addition, the current 7-day waiting period will be removed.
Driving (AB1785) — This amends the current law regarding use of devices while driving. Drivers can use their hand to activate or deactivate a device with a single tap or single swipe of a device that is mounted in the vehicle. Otherwise, hands off!
There are a lot of legal changes and updates related to pay, in particular, this time. Let us know if you need help understanding how a particular law may affect, or be implemented in, your company.
In 2008, many employees either lost their jobs or their pay was frozen. And every year since then, employees have been crossing their fingers that this will finally be the year where they will see a significant increase in pay. But it’s not.
Aon Hewitt’s U.S. Salary Increase Survey of 1,074 companies shows base wages and bonuses won’t be increasing in 2017 any more than they did in 2016. This is the 5th year companies have predicted a 3% increase but actually only provided a 2.6 – 2.8% average increase. This is viewed as a sign of the pressure companies are feeling to keep fixed costs low.
The survey also showed:
- 12.8% of payroll is going toward variable pay (bonuses and pay-for-performance)
- 10% of companies have frozen salaries (up from 6% in 2015)
- Stopping annual raises and shifting to performance-based bonuses or perks is a strong consideration for many companies
On December 1st, we expect to see a huge increase in the number of non-exempt employees due to the increased minimum salary for exempt employees. This means the potential for considerably more overtime hitting your payroll and another reason it’s doubtful we’ll see companies offering higher pay increases. You’ll need to see what your new payroll costs are compared to prior years.
Another component is the increase to minimum wage. While you may only be providing tiny raises, the state is providing 10% increases. This, too, affects your bottom line and needs to be weighed in your overall payroll costs.
While bonuses are becoming more popular as a way to reward employees without increasing fixed costs, they also have a downside. Bonus pay may qualify for an overtime premium with non-exempt employees, is often taxed higher, and white-collar positions are often offered more bonus potential than blue-collar positions.
I like bonuses instead of higher pay but you need to think through a company-wide plan. Everyone should have an opportunity to profit based on company, team, and personal performances. You want a written bonus plan that is distributed and communicated in a way that every employee knows exactly what they must do to earn their piece of the bonus.
“I’ve just promoted a great employee, John, so he’s now supervising several other employees who used to be his peers. He seems to be having trouble supervising these employees but I’m not sure how to help him. Any ideas?”
Your HR Survival Tip
Supervising former peers can be difficult because suddenly their buddy is their boss. However, there are things both you and John can do to make this easier.
When first promoting John, you should have made an announcement to the whole company. If it’s only been a month or so since the promotion, you can still do this. Highlight why you selected John for this promotion, what the new position entails, and who will now be reporting to him. This helps set the stage for John and lets the other employees know you trust John to handle this job.
There may be some of John’s former peers who don’t feel he has the right background or experience to be their supervisor. This is one reason you make the announcement… to let them know you believe John was the correct choice for this promotion. If they bring this up to you, you need to stand behind John and your decision.
John should meet individually with each of his direct reports. He needs to nicely take control but to also let them know he basically hasn’t changed. He’s still John. Follow those meetings up with a team meeting to plan how things will move. John has new responsibilities and completing them will very likely require a team effort. Whether he realizes it or not, John already knows what motivates each member of his team and he needs to use that information to help the team function smoothly.
If a team member continues to be resistant to the new leadership change, it’s time for another one-on-one. John needs to let this team member know he can’t and won’t let the situation continue. Although it can be very hard to discipline a former peer the first time, John needs to be prepared to take whatever action is necessary. However, just the intervention of another meeting may provide the desired end result.
Something critical to John’s long-term success is training. Too often an employee is promoted with no supervisory training provided and they either fail or just aren’t very successful at it. There is a wide assortment of supervisory training available and investing in John’s success can result in a great supervisor for you.
“My employee, Jane, is pregnant and asking what happens during her pregnancy and after the delivery. I don’t have a clue what to tell her. Help!”
Your HR Survival Tip
Did you remember to congratulate Jane? Often your concerns about how to operate your business without Jane can make you forget what an exciting time this is for her.
Both expectant mothers and expectant fathers want to know what they can and can’t do at this time so you need to have the answers for them. You also need information about what you, the employer, can and can’t do. One place to start is by giving Jane the Pregnancy Leave and the Paid Family Leave brochures again (these were part of the required new hire paperwork) because it gives you both a few answers. There’s also a pregnancy notice flyer you must give her as soon as you’re aware of the pregnancy.
The biggest misunderstandings are based on the differences between companies that are subject to FMLA (Family/Medical Leave Act, when you have 50+ employees) and companies that are not subject to FMLA (<50 employees). Jane will hear from friends and family about her rights and you’ve probably heard from other business owners how hard it was to manage without the employee. All those stories need to take into account the size of the company because this makes a huge difference for both you and Jane.
You are subject to the Pregnancy Disability Leave if you have 5 or more employees, which means the following probably pertains to your company. These are answers to several of the most common questions we’re asked:
- Jane cannot voluntarily stop working before her doctor is willing to provide the state proof she is medically disabled and unable to work. You, as the employer, want to receive that note from the doctor before Jane stops working or as soon as possible after that. Once you get the doctor’s note that she’s to stop working, do your calculations and give her the precise date she’s expected to return (or earlier). If she doesn’t return on that date and hasn’t made other arrangements with you, it could be considered a resignation.
- You can only put someone temporarily into Jane’s position. The laws protect her job and she should return to the same “or (very) similar” job. Yes, even if you discover Jane wasn’t doing the job as well as you thought!
- You are required to continue her insurance coverage, if any, and Jane is required to send you the co-pays you normally deducted from her checks.
- The length of leave possible has two answers. If you have under 50 employees, Jane is legally allowed only the amount of time her doctor can show she is medically disabled but this is standardized at about 8 weeks unless there are medical issues. If you have over 50 employees, Jane can take the full 12 weeks allowed by FMLA (493 hours under CA’s Pregnancy Disability Leave law). The company may offer additional unpaid leave that isn’t legally required but please consider it as more protected time off, just to be safe.
- Jane may apply and receive supplemental income (~60% of her pay) through CA’s state disability insurance for 6 weeks. She will also be eligible for Paid Family Leave’s supplemental income for up to another 6 weeks… however, this is not a leave, it’s supplemental pay for the mother or father only if they are otherwise eligible for a leave. Whether or not she receives Paid Family Leave pay will likely depend on whether you are subject to FMLA or you have allowed her to be off work longer than her medical disability leave requires.
- Baby bonding time is only legally available if you are subject to FMLA (>50 employees). Fathers have no paternity leave legally available at this time if you have <50 employees. The company may agree to a period of unpaid time off that isn’t legally required.
- Available paid sick leave can be used by Jane or by the father during her maternity leave. You can require Jane to use her sick leave (which I recommend) and you can allow, but not require, her to use any vacation or PTO.
- Time off due to the pregnancy (morning sickness, doctor visits, etc.) before delivery counts against the total FMLA and Pregnancy Disability Leave allowed. Yes, even if they use Paid Sick Leave or PTO.
- Jane must send you a doctor’s note stating she is able to return to work, when she’s ready to return. Jane must return when her doctor releases her (<50 employees) or as soon as her 12 weeks of FMLA / 493 hours of Pregnancy Disability Leave is used up. Her job protection ends at that point.
- If Jane wants to only come back part-time, you are not legally obligated to provide any change to her job. First, let her know her same job is available and that she needs to provide in writing that she doesn’t want it. Now you can discuss her options and preferences but it’s totally up to the company to agree to any changes in her previous position.
Pregnancy is a fact of life. Prepare for the inevitable by making sure some of your employees are cross-trained so absences of any kind are easier to manage. While Jane’s absence might be hard on you temporarily, I’ve never heard of a company going under simply because an employee (at any level) had a baby.