Countering Gas Prices

“I’d like to provide a bonus for employees to counter the rising gas prices. How do I set it up?”

Your HR Survival Tip

You don’t want to provide a bonus just because gasoline prices are high. Increasing the employee’s pay by either providing a bonus or raising their wage can cause a ripple effect you really don’t want.

An increase in pay means your payroll costs go up, your workers’ compensation insurance costs go up, and the “regular” rate for the employee increases, potentially affecting overtime, sick pay, meal premiums, etc. Plus, it’s very hard to pull back that increase when/if gas prices return to the previous rates. Providing a bonus to employees has similar effects because it is just another type of pay. Once you repeat this bonus, you have a non-discretionary plan that also has ripples.

Keep in mind you are not required to pay anything toward an employee’s commute. However, if you are in an industry where the job site changes periodically, your employees may have to travel further for certain job sites. The company receives a benefit if the employee is willing to drive their own vehicle to that distant job site rather than providing the employee with a vehicle or finding employees nearer to that location. A partial reimbursement might be considered but it may still end up as taxable income.

You need to be specific about any reimbursement. Perhaps a flat amount as a car allowance for employees who must travel beyond your offices to do their job. Perhaps a reimbursement based on the distance of the job site from your offices. You don’t want to get into the administrative nightmare of reimbursing based on their home address or the type of vehicle they drive… these were personal choices they made. Think in terms of your office location and/or job sites.

As you know, the Internal Revenue Service (IRS) updates its per-mile rate at least annually, based on the cost of living changes. This is a reimbursement rate when the employee must use their vehicle for business and is not intended to be a commute rate since commutes are not paid. If you want to help out employees, speak with your accountant or the IRS first to ensure you do it properly. It won’t matter what you call it if the money appears to be extra pay and needs to be considered taxable earnings. The financial experts should determine the legalities of what you can do, then HR can write up the policy and implement it.

Creating a Bonus Plan

“I’d like to provide my employees with a bonus but I’m not sure how it should work.”

Your HR Survival Tip

Bonus programs can be a great incentive for employees. A good program recognizes the need to give employees a target to achieve… an incentive. Your first step is determining what you want to achieve with the bonus plan. Perhaps you want increased productivity, quality, and/or efficiency. Or perhaps you want to share a portion of profits as they improve.

Decide what the employees can do to help you achieve these things. Set specific goals for each employee to encourage them to be more productive, produce higher quality work, or work faster or more creatively. The goals should be a bit of a stretch for everyone but you want them to be achievable or your bonus plan will end up having a negative effect.

Also, consider eligibility for participation. How long must an employee be working for you before they are eligible? What happens to their bonus if their employment ends? Does anything change if the employee is written up or on probation? Does the employee need to be actively employed on the day the bonuses are paid out? Does the company need to have a certain level of revenue to have any bonus at all that year?

Bonuses are a reward for helping the company succeed. An employee shouldn’t be earning a bonus if they haven’t met their goals or aren’t doing a good job. Remember a bonus will appear as a big gold star in the employee’s file and will work against you if you want to terminate them for poor performance a month or two later.

When you develop a repeating bonus plan, it will be considered a non-discretionary bonus because it will be expected. When the bonus is non-discretionary, the bonus amount is included in your calculations for the “regular” rate of pay. This regular rate is used for various types of pay, such as sick time.

We prefer a six-month plan because it’s less likely outside forces will affect the plan as much as with an annual plan. Once you’ve made all the decisions, put all the details of the plan in writing and present it to your employees. Implement the plan and let your employees feel they have a valuable role in helping the company succeed.

Pay Attention or Pay Up

“My employees prefer to skip an “official” rest period but do take short breaks to use the restroom or grab a drink. Since the time is paid, I don’t see a problem.”

Your HR Survival Tip

Just because you can’t find the problem doesn’t mean it’s not there. California’s wage and hour laws dictate the type, the length, and when an employee must receive meal and rest breaks. The rules are stringent and require you to pay more attention to what your employees are doing about these. First, the rules:

  • Meal breaks — The break is unpaid, must last at least 30 minutes, and start within 4 hours 59 minutes from when the employee clocked in. The law states “within” 5 hours so don’t think that extra minute won’t count against you. You will be required to pay a one-hour premium pay to the employee if they begin their meal break late, skip it entirely, or don’t take the full 30 minutes. If the employee will be clocking out “within” 6 hours, no meal break or waiver is required.

  • Rest breaks — The break is paid, must last at least 10 minutes, and is taken approximately in the middle of their morning and afternoon shifts. This break is required for any shift greater than 4 hours. If you refuse to let employees take the break or if you keep employees so busy they can’t or feel they can’t take a break and they are unable to take either rest break, you will be required to pay a one-hour premium to the employee. Reduce your risk by ensuring employees truly know and understand the rest breaks are available to them. Many employees don’t really understand an “official” rest break is just stretching that trip to the restroom or for a drink to one 10-minute break instead of two 5-minute trips.

  • Piece-rate pay — The courts decided years ago the piece-rate amount paid does not include the pay for rest breaks. Therefore, you must pay for the appropriate amount of rest breaks on a separate line item on the wage statement (pay stub) as proof you paid for those breaks independent of their other pay. These are paid at an average rate of their earnings for the week or pay period.

  • Meal break waivers — The waiver can’t be used just because it’s convenient. There are three primary reasons you can use a waiver: (1) welfare of others (such as children or the infirm); (2) security or safety (such as a security guard); or (3) the second meal break is being waived but the employee did take their first meal break. The waiver must be in writing, revocable, and signed by the employee. Even if you have a waiver, you must pay the premium due to the employee because of the missed meal break.

In a recent case, the CA Supreme Court decided the premiums are considered a wage and, therefore, must appear on a wage statement and be paid no later than the final paycheck when an employee leaves their employment. The good news is the Court stated the legal violation was in the failure to provide meal and rest periods, not the failure to provide the premium so waiting time penalties were eliminated. Make sure you are paying any premiums due to the employee every pay period and they show up as a separate line item on the wage statement. It is your responsibility to ensure your employees are following your policies and the law or it will be your responsibility to pay for your lack of attention.

Check Your List

Over the next month, there are several things you should have on your list to confirm everything is still right in your world. It’s easy to let time go by if you haven’t put reminders on your calendar. Are you missing any of the following on your list?

  • Hiring Interns — Schools are getting out and companies are bringing on interns. If your intern will be getting training from you and school credit for the work, it’s possible they could be unpaid but be sure to talk with their school about it to confirm. If you will be paying your intern at least minimum wage, they are treated like any other new employee and given work that benefits you more than the intern.

  • Unpaid Help — Only registered non-profits are legally able to have unpaid workers and volunteers. Otherwise, plan to pay that person at least minimum wage. This isn’t a worker’s choice, your company will be the only one financially responsible for the misclassification.

  • Minimum Wage Increases — The minimum wage in several localities changes on July 1st. These include Los Angeles County, the City of Los Angeles, Emeryville, San Francisco, and Pasadena. The state minimum wage was supposed to increase to $15.00/hour on 1/1/2023 but there are rumors it will actually be $15.50 so prepare for a bigger bump than we’ve seen.

  • CalSavers — You only have until June 30th to get registered with CalSavers if you don’t already have another approved retirement plan in your company. Check their website for details on how to upload your employees and set up the deductions in payroll.

  • COVID-19 — The third readoption of California’s COVID standards now runs through the end of 2022. We are required to provide COVID pay for up to 40 hours if someone (or someone in their family) has COVID symptoms. The employee must show a positive COVID test on Day 5 to be eligible for a second week’s pay. This year, neither the state nor the Feds are offering companies any reimbursements or tax breaks on the money paid out.

  • Wage Statements — This is a good time to take a hard look at your pay stubs (wage statements) and confirm the company information is still correct, all deduction codes are easy to understand, and accruals are correct.

Many companies are still struggling to get everything done due to the lack of available workers. This means some things slip between the cracks but the cost of ignoring your compliance can carry a heavy cost.

WEBINAR: Remote Work Policies and Considerations

Tuesday, July 12, 2022
8:30a – 9:30a
$39.00

DIY HR Store

The workplace has changed dramatically and companies need to be prepared for the ripple effect of having remote workers. You need to create policies to address a variety of issues and understand how the remote workforce changes compliance requirements for you.

  • Understand the effect the pandemic has had on the workplace.
  • Learn the differences between the myths and reality of remote workers.
  • Review the various policy details you need to consider.
  • Discover the HR compliance issues with remote workers.
  • You will receive an email by July 11th with a link to join the webinar.


Presenter: C.J. Westrick, SPHR, HR Consultant and Founder of HR Jungle LLC
C.J. has been involved in human resources management and consulting since 1990 and founded HR Jungle LLC in 2006. She has a bachelor’s degree in business management and has maintained her SPHR (Senior Professional in Human Resources) national certification since 2002.

DIY HR Store

Employee Blackmail

“I have an employee asking for more pay but her role and performance do not justify it. However, she is the only person who knows how to do what she does so I feel like I have to give in. Is there another choice?”

Your HR Survival Tip

Too many companies have that one employee who seems to have all the company history or all the knowledge about a needed process or something else that is vital to the company. When this happens, it means you allowed that employee to have a certain amount of power over your company.

When an employee has this power and chooses to use it as an ultimatum, it’s a form of blackmail. You either do what they “ask” or they’ll leave with all that information in their brain. Granted, it’s not really legal blackmail but it certainly feels like it if you’re the one who is dealing with this problem. There are really only a few ways to deal with this:

  • Give in to the employee’s demands but realize this is a short-term solution. What you’re really doing is buying time. Immediately start thinking about how you can start backing up the information they have. As a rule, companies never keep this employee around for more than a year after the ultimatum was issued.

  • Create a cross-training program throughout the company on all processes. Develop a program where at least one more employee will learn each of these processes but consider switching the pairs around periodically. Be specific on how often they will train together and what types of training they should focus on each time. Make sure the backup person uses that knowledge at least monthly so they don’t forget what they learned.

  • Document your processes. We have seen founders and managers do a “brain dump” that records their thought processes on a variety of subjects. Consider video recordings when the process is on the computer. Use whatever you can to ensure the company is the ultimate holder of all information considered vital.

The best way is to never let yourself get into this position. Review your personnel and processes and decide where you are lacking information the company should have. The value of your company increases when you can show no one employee is vital to the company’s future success.

If you find yourself being blackmailed, remove the emotion and think through the problem logically. What can you do to bridge the gap? What outside resources might be available to you to help if this person suddenly leaves? How can you avoid this problem in the future? If this is vital information for your company, you should spend as much time protecting it as you do any other proprietary information.

WEBINAR:
Classifying Employees as Exempt vs. Non-Exempt

Tuesday, June 7, 2022
8:30a – 9:30a
$39.00

DIY HR Store

Many companies struggle with understanding who can and can’t be a salaried, exempt employee. Classifying positions is a company decision, not an employee choice. This webinar is designed to help you better understand the classification differences, the categories as defined by the Federal Department of Labor, and the risks of misclassifying your employees.

Join us to:

  • Understand the terminology of salaried versus exempt.
  • Learn the differences between exempt and non-exempt.
  • Discover details about the exempt categories.
  • Recognize the risks you have when misclassifying.
  • You will receive an email by June 6th with a link to join the webinar.


Presenter: C.J. Westrick, SPHR, HR Consultant and Founder of HR Jungle LLC
C.J. has been involved in human resources management and consulting since 1990 and founded HR Jungle LLC in 2006. She has a bachelor’s degree in business management and has maintained her SPHR (Senior Professional in Human Resources) national certification since 2002.

DIY HR Store

Retirement Plan Deadline

“I keep hearing about a state retirement plan but don’t know if I want to use that or start a 401(k) for my employees. Am I being forced to do something?”

Your HR Survival Tip

California’s state plan for retirement savings is called CalSavers. If you have five or more employees (counting owners), you are required to register with the state by 6/30/2022 to either let them know you already have a retirement plan or are signing up for CalSavers. The CalSavers rollout started two years ago for larger companies. This is the final deadline and affects companies with 5-50 employees.

CalSavers is intended to be simple for both the employer and employee. Once you’ve uploaded your employee list onto the CalSavers website and set up your payroll for the deductions, you have minimal work to do to maintain it and there are no fees charged to the company. The website (CalSavers.com) is extremely helpful and includes live or recorded video training and a lot of other details to make the plan and process very easy to understand.

Employees are added as they are hired and they must complete an opt-out form if they don’t want to participate. The plan starts with a 5% after-tax contribution of your employee’s gross wages and increases it by 1% each year until it reaches 8% but the employee can choose to do something else. The plan actually creates an individual IRA for each participant so it is portable if an employee leaves your company.

If you have or will be implementing a 401(k) or similar plan before 6/30/2022, you don’t have to do anything but register that information on the CalSavers website. The most notable difference between CalSavers and 401(k) plans is the ability of a 401(k) to offer contribution matches and deduct contributions on a pre-tax basis.

While CalSavers is required for companies of 5 or more employees, smaller companies should inform their employees about the opportunity it presents. Individual employees can sign up on their own to start saving. The expectation by California is young employees earning lower wages will have saved at least 50% more toward their retirement than without this plan. It’s a good thought.

Employee Moves

“I have two employees who want to move out-of-state to live while working remotely for me. What things should I consider?”

Your HR Survival Tip

The movement of employees really became a movement during the pandemic. Employees only look at the work they do to determine whether they can be remote… and remote means anywhere to them. However, as an employer, you have to look at the bigger picture to determine which employees can be remote, if any.

Whether hiring someone from out-of-state or just having an employee move outside of your area, you have legal responsibilities.

  • You must register as an employer in that state so you are paying into their unemployment pool and so payroll taxes are being sent to the correct state. This is free but can take a few weeks, depending on the state.

  • Once you receive your state identification number for that new state, you need to set it up in your payroll system so payroll taxes are submitted correctly for you and the employee.

  • You need to make sure your workers’ compensation insurance will cover the employee in that state. Some carriers have limitations on where they provide coverage.

  • You need to confirm the state or local employment laws to ensure you are following them. Employment laws are based on the state where the employee lives/works, not where your business is located.

  • You will need to obtain the appropriate new hire and termination forms and posters for that state and locale.

  • Your group health insurance’s HMO may not be available elsewhere, which means you could be paying PPO premiums.

  • Employee Handbooks need to be adapted to include differences between state and local policies. For example, California has a generous pregnancy disability law that other states don’t have and only about 14 states offer a state disability program to help employees supplement their time off.

  • Understand U.S. banks will not send payroll money to a foreign bank so your employee must have a U.S. residence and bank.

While it can be nice to hire from all over the U.S. and not have to worry about an office, failure to set up your business to accommodate each state’s or locality’s requirements will result in extra costs and problems. Don’t hire from outside California or your local area until you have checked the requirements and timing needed to do it right.

Cringe-Worthy Proposed Laws

Every year there are bills proposed by our legislature that make employers want to cringe. Sadly, this year is no different and some of the proposed laws will also encourage a scream or two:

AB2932 will require employers to now have 32-hour workweeks, instead of 40 hours… AND force you to pay the employee the same weekly amount. So you’ll be paying higher wages, higher workers’ compensation, and overtime after 32 hours.

SB1044 allows employees to leave work or refuse to show up based on their own subjective feelings of it being unsafe or a state of emergency or an emergency condition. This bill doesn’t even have Cal/OSHA make this determination instead of the employee. Also, if the company assigns someone else to those job duties, the employee could claim they’ve been replaced and file a PAGA claim.

AB2182 returns for a second attempt at passing. This bill will add “family responsibilities” as a new protected class for any employees with children under 18 years of age or for employees who provide care to anyone in their household or any widely-defined family member (even those who don’t live with the employee). This would require an interactive process, protected leaves of absence, and possible accommodations, similar to those needed for disabilities, etc.

SB1162 will require pay data reports (from companies of 100+ employees) to be public so anyone can look up what a company is paying professional and administrative employees. We imagine pay equity lawsuits will then follow.

AB2188 promotes marijuana use as a protected class within California’s discrimination laws, prohibits pre-employment drug testing, and would prohibit urine and hair tests for marijuana. This will severely limit employers from maintaining a safe working environment when using vehicles or equipment are part of the employee’s job.