Sick and Exempt

“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 TipHR Jungle

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.

Halloween Tricks

“I’m allowing employees to wear costumes at work on Halloween. Should I be worried?”

Your HR Survival TipHR Jungle

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.

Signed Into Law

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.HR Jungle
  • 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.

New Employee, No Paperwork

“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 TipHR Jungle

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.

Planning Ahead

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 HR Junglelawsuits. 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!

Are You Progressive?

“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?”

HR Jungle

Your HR Survival Tip

There are disciplinary options legally available and they typically fall into two categories: progressive or discretionary.

Progressive Discipline

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.

Discretionary Discipline

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.

Long Lunches

“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 TipHR Jungle

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!

Growing Pains

“My company is growing and I am curious if I will be subject to more laws.”

Your HR Survival TipHR Jungle

Whether or not you’ll be subject to more laws depends on your current size. Employment laws are often connected to the number of employees you have, have had, or will have.

Some laws count all employees, others may also add consultants and temps. You should also count anyone who is actively working in the business even if they don’t receive a paycheck (like a spouse). The following list includes only the basic and most used laws so please make sure you find out what other laws may affect you.

0+ Employees = Wage Theft Prevention Act; Wage and Hour Laws (e.g., minimum wage, overtime, meal and rest breaks)

5+ Employees = The above plus Discrimination; Pregnancy Disability

15+ Employees = All the above plus American Disability Act; Organ and Bone Marrow Donor Paid Leave of Absence

20+ Employees = All the above plus New Parent Leave Act

25+ Employees = All the above plus Alcohol/Drug Rehabilitation; Domestic Violence Leave; Illiteracy Accommodation; Military Spouse Leave; School Activities Leave

50+ Employees = All the above plus Family and Medical Leaves (FMLA/CFRA); Mandatory Supervisory Sexual Harassment Training

100+ Employees = All the above plus EEO1 Reporting; Affirmative Action Plan

Growth is often a good thing but you need to look at more than just the added revenues. Knowing what you need to do to remain compliant as you grow isn’t that hard and can be very costly if you ignore the laws. Ignorance of the laws is not a defense that works.

Enough Sick Leave

“I’m trying to understand the amount of sick time each employee gets. Is there a simple method?”

Your HR Survival Tip

You’re in California so it will never be simple. However, it’s also not that difficult to determine if the right amount of sick leave is being provided.HR Jungle

First, determine which sick leave law fits your company. There is the basic state law of 24/48 (24 usable hours each plan year, 48 accrued hours). Then make sure you know which local sick leave laws apply to your employees… there are 29 localities with their own version and that number continues to grow. If an employee spends more than 2 hours in a locale with a different sick leave law, you need to use the most generous one.

Next, check your payroll system to determine how the sick leave is set up for you. Too many times, we find part-time employees accruing at a weekly rate. Nearly all payroll systems are capable of using an hourly accrual and that’s the easiest method because they only earn sick time based on actual hours worked. You can set up different plans for salaried, hourly full-time, hourly part-time, and based on locale.

You can also pull from your payroll system a report showing total hours worked by each employee for the year(s). Once you have all of the above information, it’s just math:

Total hours X accrual rate = total accrued – hours used = current balance

The current balance is subject to your policy’s (or the law’s) maximum accrual number. The most important number is how much sick leave is currently still available to the employee this plan year. Compare these numbers with what each employee has in the payroll system.

The laws change and technology has glitches. At least once each year you should review your sick leave policy and reconcile your sick leave time in the payroll system. Although employees do not receive a payout upon termination, you do want to be know you are paying sick leave when you should.

Criminal Background Checks

“I like to have criminal background checks run on applicants. Things have changed lately and now I’m not sure how to do it legally.”

Your HR Survival Tip

California made it more time-consuming to run background checks with the “ban the box” law that went into effect 1/1/2018. The actual process of requesting the background check is the same but everything surrounding it has changed. Below is a simplified version of the rules when including criminal history in the request:HR Jungle

  • First, you must provide a written offer letter before conducting the background check. The letter needs to state the offer is contingent upon the results of the report.
  • The candidate must sign an authorization form giving you permission to run the check.
  • You must provide the candidate a copy of the report unless they have specifically waived that right in writing. The waiver is often a checkbox on the authorization form. However, if the report has information that makes you want to renege on the offer (aka adverse action), you must provide the report even if they waived.
  • You cannot just blindly renege on your offer… what is on the report must relate to the position for which they were being hired, how much time has passed, and the nature and gravity of the offense or conduct. Also keep in mind that only convictions can count, not arrests.
  • You must provide a written notice to the candidate intended to give them a fair chance because there can be mistakes on reports. The candidate must be given at least 5 days to respond to your notice. If the candidate disputes the report within those 5 days, you must give them another 5 days to respond.
  • After the candidate has responded, you must go over all the information and then provide a written notice of your final decision. It’s best to put all factors resulting in your decision in writing for the file in case you need to provide the justification at a later date.

As mentioned, this is a very simple explanation of the process but there are many details not given here. If you conduct background checks that include criminal history, ensure your process and notices are compliant and ready to use.