Who Signs?

“As the owner of my company, I’m the only person who can sign checks. Am I required to have a second signer?”

Your HR Survival Tip

Many small companies have only one person authorized to sign company checks. This may not be a problem most of the time and it’s not legally required but you need to consider alternatives.

Some situations where a check must be signed are:

  • An employee turns in their resignation or is fired while you’re on vacation and their final paycheck must be delivered on their last day of work.
  • An employee walks out. Legally, you have only 72 hours to deliver their final paycheck.
  • Repairs or supplies are needed by your business and payment is needed.
  • Something happens to delay your return to work.

If you have a trustworthy employee, relative, or friend who could hold a blank signed check in your absence, you’d at least have a way to ensure your business has money when or if needed. Some business owners keep a few blank signed checks in the company’s safe or with their accountant.

Decide what your “what if’s” might be and what the consequences would be if money weren’t readily available because you’re on vacation or otherwise indisposed. Also, decide on either who else might sign that check or who could hold one for you. As your company grows, you’ll realize you can’t make everything wait on you so prepare now.

Are You Being SMART?

“I give employees goals but, when I ask about how they’re doing on their goals, I hear excuses about how they’ve been too busy or they are waiting on someone else before they can move forward, etc. How can I have them take their goals more seriously?”

Your HR Survival Tip

The first step in having employees take your goals seriously is to make sure you’re taking them seriously. While it’s fine for you to create the goals, you’ll find more cooperation if the employee has a say in what those goals might be.

There are three steps that will help you. You need buy-in from the employee regarding the goals to get them excited and in agreement with you; you need to structure each goal so they know what needs to be done and when; and you need a carrot.

Start with the initial buy-in by giving the employee a brief outline of what you are thinking. Then ask the employee to come up with some ideas about this. Set a time to finalize detailed goals. The structure of goals can make or break this project. Details will help both of you determine whether each goal was successfully accomplished.

  • Specific — Rather than saying you want significant, more, better, etc., say what you really want. Example 1: You must produce at least 25 widgets consistently each week. The work must be of high quality, with no returns. Example 2: You must increase sales next quarter by 5% and maintain that level going forward.
  • Measurable — Quantify anything possible. It creates a target for both of you, plus everyone knows what is being measured. Without something specific to measure, how does your employee know they have achieved the goal?
  • Achievable — Can this goal realistically be achieved or did you put the bar so high they don’t even try? It’s one thing to make the employee stretch a bit but it’s a problem if they need a ladder to reach the goal.
  • Relevant — Does the goal make sense to the employee and the employee’s job? Make sure the goal helps the employee move forward in gaining more knowledge, better skills, a higher level of productivity, or something else of value.
  • Timelines — I’ve seen goals written on annual reviews and, a year later, they wonder why the employee didn’t accomplish the goal after being given a whole year to do it. When you give employees too much time, they are more likely to procrastinate until too late. If the goal has value, it needs a deadline. Otherwise, you’re just making a suggestion. Don’t make due dates so tight the employee is completely stressed or has to work extra hours just to meet that date.

You and the employee should sit down and discuss any goal. Everything can be broken down into steps that will get you to the end result you want. Help the employee see this and work out smaller steps and deadlines to ensure the goal is reached by the final deadline. If an employee is new to goals, it’s also helpful to have weekly meetings to discuss any progress and problems that have come up.

Goals usually help your business grow. You want employees to have a successful experience in reaching their goals so the company meets its goals. However, most people need a carrot. What is the “carrot” for your employees to motivate them to achieve the goals? And what happens when they aren’t successful? Are you building the goals into your compensation or bonus programs? Give employees their “why” for achieving the goal and watch their faces… are they excited or are they trying hard not to roll their eyes and sigh? That look will usually tell you if you’ve created a good goal program for your employees.

10-20-30 Minute Rest Breaks

“I thought rest breaks were 10 minutes but my employees are saying they should get 15 minutes. Who is right?”

Your HR Survival Tip

You are right; the paid rest breaks are 10 minutes. However, legal decisions have been made requiring you to review your rest break policy.

The California Supreme Court made it clear that employers cannot control what an employee does on their rest breaks or where they go. The employer must relinquish all control over the employee during the rest break. This means absolutely no work whatsoever is allowed during the rest break and you say nothing about how they choose to use their break time. Old policies stated employees needed to stay on-site during their rest breaks because, really, where can you go and return within 10 minutes? This Court decision is not focused on where they go, it’s all about you not telling the employee what they can do during that time.

What you can, and should, control is the length of the rest break. Make it clear to employees that they should be ready and in place to begin working again as soon as their 10 minutes are up. We hear about employees making off-site coffee runs frequently during rest breaks and they don’t return for 20-30 minutes. That’s time lost, which equals money and productivity lost because these are paid rest breaks.

California’s Labor Commissioner has updated their language regarding timing. They state the employee should have a “net” 10 minutes for a rest break. Basically, this means if it takes the normal employee 6 minutes to get to the break room, that 6 minutes doesn’t count toward their rest break time… the rest break clock starts when they get there. Most of you don’t have employees walking great distances to take a break but keep this in mind.

Set your policy and ensure your employees follow it by coming back on time. You might also pay attention to the location you’ve provided for employees to take their breaks. Perhaps something a bit closer to their work area or with better coffee machines might be in order.

Paying Late is a Red Flag

“I sometimes forget about the deadline to process payroll so paychecks may end up a few days late. Someone told me that’s a problem. Why?”

Your HR Survival Tip

Not only do employees really dislike late paychecks (no matter what they tell you) but California has a law against that practice. In addition, the law specifies exactly when employees must receive their money… and you can be fined if you’re not complying.

You are legally obligated to post a notice specifying the details of your regular paydays. When a holiday or weekend interferes with a regular payday, you can legally choose to pay employees either on the business day before the holiday or weekend or the first business day after. Whichever you choose, you must be consistent with that schedule and include that on the posted notice.

Compare your pay practices with the following:

  • Employees paid on a weekly basis must be paid within 7 days from the end of that work period. For example, if the company’s workweek is Monday through Sunday, time worked during that week must be paid no later than the next Sunday (7 days later).
  • Employees paid on a semi-monthly (twice monthly) basis are usually working the 1st through the 15th and the 16th through the end of the month. You must pay employees by the 26th (for 1st-15th) and by the 10th of the following month (for 16th-last day). There are different due dates for semi-monthly payrolls using different dates so confirm your deadlines if you aren’t using the normal semi-monthly dates.
  • Hourly employees must be paid at least twice per month.
  • Exempt, salaried employees must be paid at least monthly and paid within 7 days of the end of the month.
  • If an hourly employee fails to submit a timecard, you are still legally obligated to pay the employee on time. You base their pay on the employee’s regular schedule and then reconcile it and pay any overtime the next pay period.

If money is tight and you may not have sufficient funds in the bank for payroll, plan ahead and stop employees from working so you can still pay them in full. Lack of funds is not considered a good reason to issue late paychecks. When a paycheck is late, you will be liable for another day’s wages every day after that until the employee receives their pay. That’s an extra day on top of what they might be earning that day while still working for you.

In summary, you can’t move a payday for your convenience and you can’t delay paying employees because you didn’t budget properly. Both are illegal and can result in fines. Post your payday notice and stick with it. You expect employees to show up for work on time; they expect to be paid for that work on time.

Day of Rest

“Can my employees work 10 days in a row when we’re really busy? Do I have to pay overtime or double time when they do?”

Your HR Survival Tip

Terminology reigns when answering your question. Before you can look at an employee’s time, you must determine your company’s official 7-day week… this is legally called a “workweek.” Among other things, your workweek determines when you owe overtime for employees working more than the standard 5-day week. Your workweek doesn’t move around; you make a decision and stick with it.

The courts and California law have stated employees must have off at least one day out of every 7-day workweek… that’s their day of rest. Whenever an employee works ALL 7 days of your workweek, the 7th day will automatically be overtime.

If your workweek is the standard Monday – Sunday, this doesn’t mean every Sunday is automatically overtime pay. This means the employee must work at least a little every single day of the workweek for Sunday to be the 7th day worked in that workweek. If they had any of those days off, they’ve had a day of rest so there isn’t a 7th day worked in that workweek. For example, working one hour Monday through Sunday would mean Sunday’s hour is overtime because it’s the 7th day of that workweek. However, if they worked one hour Tuesday through Sunday, there is no 7th day overtime because they had Monday off.

This gets more interesting when looking at a 2-week period. Your workweek doesn’t change but an employee may work more days in a row without bumping into the 7-day overtime rule. For example, if the employee worked Tuesday through Sunday the first week, they had Monday off so there is no 7th day in that workweek. Then if they continue working Monday through Saturday of the 2nd week, they have Sunday off and no 7th day worked during that workweek. This means they worked a total of 12 days in a row without hitting the 7th-day rule.

You pay overtime if the employee works more than 8 hours in any day, as usual in California. You would also pay overtime if the employee’s regular hours (the first 8 hours in any day) total more than 40 hours for that workweek, which usually means a full-time employee worked 6+ days. But the clock and calendar both start over every Monday if you are using the Monday-Sunday workweek.

Generally, it’s not a good idea to have employees work more than 6 days in a row for two reasons: overtime and hazards. The overtime messes with your profit margin. In addition, you are likely to burn out that employee, and, when employees are tired, productivity drops, and safety becomes an issue. It’s fine if it’s just a short-term need but make sure there aren’t other alternatives if you need the extra help for a longer period of time.

Poor Management Style

“I have a temper and tend to yell at employees when someone doesn’t do their work correctly. My yelling seems to get results. However, Mary, one of my employees, claims we have a hostile work environment. Does she have a case?”

Your HR Survival Tip

The definition of a hostile work environment is a form of harassment and is frequently misunderstood by employees. They often assume being yelled at is a basis for claiming the office is a hostile work environment. While you may not be providing a great working environment, your yelling may not legally qualify as a hostile work environment.

There are many protected classes, such as gender, marital status, religion, and race, to name just a few. The number of protected classes has grown so now almost everyone belongs to one class or another. Legally, a hostile work environment means you are mistreating specific employees because of their protected class. However, the harassment must also be sufficiently severe or pervasive enough to make the work environment hostile or abusive. The courts consider:

  • The frequency and severity of the conduct;
  • Whether the conduct was physically threatening or humiliating or merely an offensive utterance; and,
  • Whether the conduct unreasonably interferes with the employee’s work performance.

If you yelled at Mary because of her protected class, it could be considered a hostile work environment, unlawful discrimination, and/or harassment. If your yelling is spread evenly amongst all your employees and you yell at everyone when you’re upset, it is unlikely this is a violation of California or federal law. However, your yelling may get results in the short term, but good employees will leave the bad atmosphere and you’ll spend time and money finding new employees.

Even if Mary’s complaint doesn’t fit the legal requirements of harassment, the company must still investigate. She’s made the claim, so the company must respond. Since the complaint is directed toward you, the business owner, you’ll need to bring in someone to do the investigation so you can put the matter to rest.

Avoid this in the future by exploring other, better ways to manage. I’ve never heard an employee say they liked being yelled at, regardless of the reason. Developing a better management style is less likely to create legal issues for you and will result in a better working environment for everyone.

Compensatory (“Comp”) Time Off”

“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, including overtime. We have both daily and weekly overtime, rather than just the 40 hours per week most states follow.

Exempt employees have different rules. They agreed to certain responsibilities and tasks in exchange for a specific amount of pay. In theory, you don’t 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 managing all their responsibilities. However, the job should be structured so the work can usually be completed if working 40 hours each week. You are paying for their skills, not for one person doing the work of two.

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 typically used by 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. Any other reason needs a valid legal justification.

If you start tracking an exempt employee’s hours and providing comp time for the extra hours they work, California is likely to believe you have converted 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 sure the cause was special before considering the time off. 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.

When Money is Tight

“I am expecting money from my receivables and an investor. However, right now I’m strapped for cash for payroll. What are my options?”

Your HR Survival Tip

Whenever money is tight, you need to understand your legal obligations and work to satisfy those before going further. Payroll is one of those obligations.

There are a few ways you can reduce your current payroll cost, which is often one of your largest operating costs. However, you cannot legally withhold or delay paychecks. An employee must have their paycheck within 7 or 10 calendar days after the period worked. The difference between 7 versus 10 is based on which payroll cycle you have (i.e., semi-monthly, weekly, etc.). No matter what your employees might say or agree to; you must pay on time.

You also can’t move the pay date. Even if the new date is within the required time frame, another rule is that you need to keep to the promised schedule. If you’ve said the pay date is the 5th and the 20th, then you must stick with that.

Consider just being honest with employees that the company is going through financial issues and you need to make some immediate changes. Options you could implement are below. When considering these options, either have the choice affect everyone or choose the individuals carefully so the chosen few won’t be viewed as discriminatory.

  • Cut back on schedules — Reduce employees’ working hours temporarily.
  • Cut back on wages — Reduce the amount each employee is paid temporarily. For example, a 10-50% pay cut until you have sufficient funds for payroll. If and when you receive the expected monies, you can opt to catch them up. However, you could keep the pay cut but you need to recognize employees may leave rather than continue to work at reduced wages.
  • Reduce your headcount — A layoff is appropriate if you plan to hire the individuals back. Otherwise, consider a more permanent reduction in force (RIF)… this is better known as downsizing.

The bottom line is, if employees are putting in hours, they must be paid in full and on time. You can’t play with that. The only thing you can do is reduce your payroll to a level that is affordable right now. Don’t wait until you’re facing a payroll with no money. Not only is that bad for morale, but you could end up with fines and penalties that could worsen your financial situation.

Working After Clocking Out

“My employee, Sue, occasionally responds to my emails in the evening. I don’t expect her to respond from home but she does. Now she’s asking to be paid for that time. Do I have to pay her?”

Your HR Survival Tip

Yes, you do owe her if she’s an hourly employee. You may even owe her overtime if checking her email caused her to work over 8 hours that day. Now that everyone seems to have a smartphone capable of receiving work emails and voice mails, you need to consider your options.

  • Make sure all your supervisors know not to send emails or voice mails to non-exempt (hourly) employees outside of the employee’s scheduled hours. This is often ignored because exempt employees are able to work varied hours and they don’t want to hamper their workflow.
  • End the ability for certain employees to access emails and voicemails from personal devices. If your employees must use their personal devices during their workday, this won’t be an option for you.
  • Create a policy stating that non-exempt employees are not expected nor allowed to read or respond to emails or voicemails outside of normal work hours. While it won’t be difficult to create the policy, you need to be prepared to uphold your policy by disciplining employees who break it.

Don’t ignore any after-hours work your non-exempt employees might perform. The California Supreme Court has said every minute worked in California is considered paid time, regardless of the employee’s schedule. If employees are doing anything work related, you’ll need to pay them for that time.

When Per Diem is Not “Per Day”

“I’ve been paying a few of my employees per diem pay but now one of them is asking for overtime pay, too. I’ve told them the per diem rate pays for all time worked that day. Am I wrong?”

Your HR Survival Tip

A daily pay rate is called a per diem rate and is popular in a few industries. Normally, you would be correct that the per diem rate pays for all the time an employee worked that day. But not in California.

You have to remember that California has something that most other states don’t… a daily overtime calculation. This means when an hourly (non-exempt) employee works more than 8 hours on any day, you will owe them overtime for time worked over 8 hours. Legally, a per diem employee is just an hourly employee and eligible for overtime so your per diem rate can only cover the first 8 hours of work.

Federal law and most other states have only a weekly overtime calculation for time worked over 40 hours. However, California has daily overtime plus weekly overtime. You first calculate any time worked over the “regular” 8 hours in a day, then you look at any additional time worked past the 40 “regular” hours in a week.

Even if you know per diem pay is the standard for your industry, you are still subject to California’s overtime laws. In California, the only person to benefit from per diem pay is the employee because they get the full daily rate even when they don’t work 8 hours, plus they get overtime if they work over 8 hours.

Unless you’re stuck with using per diem pay, we prefer using an hourly wage because it is less work, less costly, and easier to ensure compliance.