WEBINAR: Successful Separations

Tuesday, August 30, 2022
8:30a – 9:45a

DIY HR Store

Employees eventually separate from companies, in one way or another. Whether that separation is voluntary or involuntary, you need to understand how to handle the legalities. Plus, in today’s lawsuit-crazy times, you want to avoid common mistakes. You will also receive the paperwork we use for separations. Participation in this webinar will help you:

  • Understand employment relationships.
  • Identify relevant employment laws.
  • Recognize legitimate termination reasons.
  • Differentiate between voluntary vs involuntary terminations.
  • Prepare for the termination meeting.
  • You will receive an email by August 29th 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

The Order of Things Digitally

“I am scanning and saving all the employee paperwork but the folder is becoming a bit of a mess.”

Your HR Survival Tip

Most employee documents may be scanned and the paper shredded. However, there are a few documents that may need a “wet” signature… meaning the real, original signature. The I-9 Form is the primary one needing a real signature for Federal compliance, even though you can scan it after getting their signature. Your attorney may want certain agreements to have a wet signature or may allow specific digital signatures through a company that has met court standards.

The digital folders will typically be the same as those used for paper documents: legal, medical, payroll, and the main folder with sub-folders for employee, employment, performance, and miscellaneous documents (see our 7/20/2022 article for details about what goes into each folder). Since the primary folder for each employee (holding all the employee’s other folders) will have the name of the employee, we don’t add it to each document or sub-folder.

You can’t manually place the most recent document on top so the file name for each document takes on a special organizational role in the folder. You need to be able to find them later so make it easy on yourself by thinking through the appropriate file names for these docs. The naming protocol we prefer for documents looks like this because it seems the most logical:

EDD claim 2021-0515

EDD claim 2021-05-15a

Perf review 2022-07-27

Perf review 2021-06-28

Wage increase 2022-02-12

Wage theft notice 2022-02-12

Writeup – attendance 2022-05-03

Keep the name of the document simple so fewer characters are used but you need enough of a name so it’s still very easy to understand what each document is. Format the date exactly the same way each time because using dots instead of dashes or not using a zero may change the order of your documents. Create a master list of the naming protocol you will use for every form you currently have in the files and add to it as new forms appear. Once you have your master list and know documents are easy to find using your chosen protocols, you are now ready to start creating employee digital folders and renaming your digital files. And, lastly, don’t forget to limit access to your confidential digital files!

Travel Pay

“I have field employees but am confused about what I can or should be paying them for their travel.”

Your HR Survival Tip

A lot of companies are confused about what travel pay includes so you’re not alone. Since California has been litigating wage details more often, it is important to calculate an employee’s pay properly. Travel pay is directly related to non-exempt, hourly employees but paying for mileage affects all employees.

There are some exceptions to the following guidelines so discuss your policy with someone knowledgeable to ensure compliance:

Commuting from home to the company’s location — When an employee travels from their home to the company’s location, they are not legally eligible to be paid for their time or transportation costs. This is assuming the work location is the same every day.

Commuting from home to different work sites — When the employee’s job site moves around, such as to various customer sites, you should calculate the extra distance the employee needs to go beyond their normal commute to the company office. That extra distance is considered work time so the employee’s time and mileage should be paid.

Leaving the office to go elsewhere for work — If the employee is at work and must leave that location to go run a work-related errand or go to another job site, both their time and mileage should be paid.

Long-distance travel — Employees who need to travel a long distance for work must be compensated from the time they leave their home until they reach either the work site or lodging, whichever is first. The same concept applies when returning home.

Paying for time — When an employee is considered to be on the clock, they are paid. If the employee’s normal job isn’t as a driver, California allows you to pay minimum wage for travel time because the employee isn’t doing the work they were hired to do. You need to provide advance notice of a different pay rate for travel time and properly calculate overtime pay based on different rates throughout the workday.

Minimum wages during travel — Local minimum wage laws state you must pay the local minimum wage if your employee will be working at least 2 hours that week in that jurisdiction. That could make for some interesting calculations when it takes an employee longer than 2 hours to travel through a jurisdiction. However, since the employee won’t be performing any work while driving through and stopping for gas or breaks don’t count, you only use the minimum wage for your company office location for travel pay to and from the job site. Once your employee arrives to work at the job site, the job site’s minimum wage would apply only for time worked at the job site.

Paying for mileage — If the employee is using their personal vehicle, the company receives a benefit by not having to provide transportation and should pay for that benefit. When paying for mileage, the Internal Revenue Service (IRS) provides a standard mileage reimbursement rate that is intended to cover all the costs involved for the employee’s personal vehicle… and raises no questions.

Travel pay based on vehicle or home location — Which vehicle an employee chooses to purchase or where they decide to buy or rent a home isn’t the company’s responsibility and isn’t typically part of this discussion. However, rising gas and home prices can play a role in whether the employee is willing to make longer commutes. Companies might consider an employee’s location when hiring if you know frequent non-commute travel is part of the job.

The reason companies must pay for travel time is based on the legal definition of time worked. This is time during which the employee is subject to the control of an employer and includes all the time the employee is “suffered or permitted to work, whether or not required to do so.” Basically, if you want, expect, or even just allow your employee to work, it’s paid time.

The Order of Things on Paper

“I have a manila folder for each employee but is there a standard way to maintain a personnel file?”

Your HR Survival Tip

While there is no rule or required way to set up personnel files, there are some common methods. Technically, employee paperwork may be in several different files: a legal file, medical file, payroll file, I-9 Form file, and the main personnel file.

LEGAL is only needed if you have letters or requests from attorneys, state agencies, etc., or have paperwork regarding an investigation that included the employee. This information is usually only available to your own attorney or by court order.

MEDICAL is used for doctor’s notes, disability claims, workers’ compensation DWC1 forms and claims, medical leaves of absence forms, or any other document that refers to the employee’s health.

PAYROLL is usually only available to your CPA or by court order and includes W4 forms, timecards, time off requests, garnishments, child support orders, etc.

I-9 FORM file or binder holds all current employees’ forms. The form is not kept in each employee’s main file because if an immigration agency audits your company, you can give them just this file/binder. If the form is in the main file, you might have to turn over whole files… which you don’t want to do.

MAIN personnel files contain most of the paperwork about employees. This is the one file a manager or employee can review. If you are using folders with inside dividers, we suggest the following categories but keep them chronological with the most current document on top in each of these:

  • Employee — All the recruitment documents are kept, including any ads or job postings, job application, letters of reference, resume, job description, etc. This category should have the employee’s current contact information on top.

  • Employment — Include the offer letter, policy sign-offs, status changes, bonus information, etc. Later you would add any termination documentation, resignation, exit interview, copy of the final check, and benefit termination or conversion forms.

  • Performance — Performance reviews, warnings, memos regarding disciplinary actions, and commendations are included here. If relevant, you could also include certificates from training courses, tuition reimbursement forms, post-hire degrees, etc.

  • Miscellaneous — Use this when the document doesn’t fit another category, such as non-medical leave of absence requests, unemployment claim records, jury duty forms, and requests to inspect the personnel file.

When there are only a few sheets in a file, order rarely matters. However, the longer an employee is with you, the more likely their file will grow. We prefer having the paperwork clamped down inside whatever folder you’re using. This will prevent paperwork from being lost or easily removed. All employee files and documents are legally considered confidential and need to be kept in a secure, locked location at all times. We often see unlocked file cabinets that are easily accessible to the curious. Be prepared to keep employee information for the company’s life, but you can scan the files of ex-employees to keep digital copies instead of paper.

Defining Eligibility

“Do I have to provide all benefits to all employees who are working at least 30 hours/week?”

Your HR Survival Tip

No, but we understand why you’re confused about the 30 hours. When the Affordable Care Act (ACA) became law, the insurance industry lobbyists were able to include that full-time for insurance purposes was an average of 30 hours per week. Since 40 hours had always been the standard, this was an unpleasant and costly surprise to companies.

That action muddled the concept of full-time hours and how the hours apply to benefits. Only when considering health insurances is full-time at 30 hours and most other benefits still consider 40 hours to be full-time. The following is a simple explanation of the most common benefits and the eligibility requirements.

  • Health Insurances — The ACA applied to health coverages so, if you offer group health insurance through your company, anyone working an average of at least 30 hours per week is eligible. Coverage must begin on or before day 91 of employment so most plans have coverage begin on the 1st of the month after 30 days of employment or the 1st of the month after 60 days of employment to ensure compliance. This is the only benefit with the 30-hour requirement.

  • Paid Sick Leave — California passed a paid sick leave law several years ago and, since then, about 30 localities have passed a similar but different version. You are subject to the local law where your employees work but default to the state law if no local law exists. At a minimum, all W2 employees are eligible for paid sick leave regardless of how many hours they work. You must start accruing (1 hour of sick time for every 30 hours worked) or front-load the sick time on the date of hire. Regardless of having sick time in their “bank,” employees are not eligible to receive any paid sick time in the first 90 days of employment. The state law requires accrual of up to 48 hours but you can limit usage to 24 hours per plan year.

  • Vacation — This is a benefit decided completely by the company. You can choose to offer paid time off or not. If you do offer it, you can choose to offer different amounts based on title, length of employment, full-time vs. part-time, etc., as long your eligibility matrix is non-discriminatory.

  • Holidays — This is a benefit decided completely by the company. You can choose to close or stay open on a holiday. If you choose to close, you can choose to pay or not pay for the holiday. You can choose who is eligible but it must be non-discriminatory. You can choose to close on a holiday and tell employees it is an unpaid day off. All you are obligated to do is pay an employee for time worked if and when they work. The sick leave laws limit your ability to state employees must work the day before and after a holiday to be eligible so make sure you understand what works and doesn’t work in that situation.

  • Floating Holidays — Typically a floating holiday is considered to be 1-2 paid days off each year where the employee picks the date and any unused time is lost at the end of the year. This concept is illegal in California. According to a court decision, this is too much like vacation time and, since vacation time is considered wages to employees, the employee can’t lose the unused time. What can work is the company picking the date and having a tighter timeline, such as the employee’s birthday off but the time must be taken within a month of either side of the birthday.

  • Workers’ Compensation Insurance — All companies are required to have workers’ comp insurance for all employees that begins on their date of hire, without any other eligibility needed. This covers any medical condition related to their work.

  • State Disability Insurance — This is provided by California to employees who have a personal medical condition not related to work. Payroll taxes pay for this coverage. Employees apply directly to the state and the state decides if they are eligible.

  • Paid Family Leave — This is supplemental pay provided by California to qualifying employees. This is not an actual leave; employees must qualify for a “real” leave from the company before becoming eligible for this pay. At this time, it is paid through employee payroll taxes. Employees apply directly to the state and the state decides if they are eligible.

Benefits can be very important to employees and a big help in recruiting and retention for you. However, poor benefit design can result in extra, unneeded costs or unhappy employees. Confirm your benefits are compliant with any applicable laws, then decide if you are offering the best benefits package within your budget.

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

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