Using Direct Deposit for a Final Paycheck

“Why can’t I use direct deposit for a final paycheck?”

Your HR Survival Tip

The simple answer is that you usually won’t be compliant with the law. Of course, there are exceptions, based on how your payroll is processed.

When you review the legal requirements, it becomes easier to understand what you need to do. The big thing to remember is, if you are late with a final paycheck, you must keep paying the employee until you can get that final check in their hands. The Labor Commissioner is happy to help the employee get the money that’s due plus the daily penalty. Here is the timing for each situation:

  • Employee is fired — You must provide a final paycheck that same day. On a side note, if you have the employee come to work just to be fired, you must make sure reporting time pay has been added to that check. Reporting time pay is half their scheduled time but no less than 2 hours and no more than 4 hours. If the employee normally works an 8-hour day, their reporting time pay must be 4 hours.

  • Employee has resigned — You must provide a final paycheck on the last day they are working if they provided more than 3 days’ notice. If you decide you’d rather they leave immediately, you have legally changed their resignation to a firing. This means you (a) owe them the final paycheck that day, and (b) have made them eligible for unemployment because they were fired.

  • Employee stormed off the job — If you weren’t given notice, you only have 72 hours to get that employee a final paycheck. That is 3 days but it’s calendar days, not business days. This is always a challenge when the employee walks off on a Friday. You need to get that check ready and sent that day for overnight delivery.

Most companies use an external payroll processor that needs 1-3 days for a direct deposit. This timing doesn’t work with the final paycheck timing so, if this is your situation, you need to plan for another way to provide that final paycheck. It’s easiest to learn how to create a manual check within your payroll system and how to print a copy of the pay stub (wage statement). Then, the next time you run payroll, the system processes it so all the income and taxes are recorded properly.

There is no reason to take a chance with direct deposit. It may seem easier to you but that will only last as long as it takes for the Labor Commissioner to notify you of a claim of late payment. Develop a process that’s simple and legal.

How to Document and Track Your CFRA Leaves

Tuesday, 1/26/2021, 9-10 a.m.
$49 for 1-Hour Live Webinar

Is This Webinar for You?

  • YES, if you will be subject to this law (5+ employees). 
  • YES, if you want to learn to manage leaves yourself (instead of paying us).

About this Webinar

This training is designed for companies with 5 or more employees anywhere… who also have employees working in California. The revisions to California’s Family Rights Act (CFRA) are now in effect so you need to be prepared to manage your first leave of absence. Join us to learn how you can manage CFRA leaves yourself.

  • Learn what is legally required to be in writing.
  • Be able to plan the deadlines for documents and return to work.
  • Learn our method for tracking a leave.
  • Notification templates and our tracking tool will be provided.

Presented by Candi Freed, Senior HR Consultant with HR Jungle LLC.

Reporting COVID

As positive COVID cases continue to rise, we want to remind everyone of your reporting requirements. This was simpler a few months ago but new laws have been layered upon old laws and now reporting is more tedious. If you have an employee testing positive (and who doesn’t just work from home), you must make several reports and notifications now and even more as of 1/1/2021.

Most importantly, only the DWC-1 form below has the positive case employee’s name on it. Every other document should only use an identifier code, not the employee’s name.

Within one business day of a positive test result:

  • Have the employee complete a DWC-1 regarding how they believe they were exposed. This stays in your files.

  • Provide written notice to all employees (and contractors and contractor’s companies) who were on that worksite within the infectious period that they may have been exposed to COVID-19. The infectious period is 2 days before the first symptom/test and approximately 10 days after.

  • Provide written notice to all employees who may have been exposed explaining COVID-related benefits they may be entitled to from you and from state/federal governments, such as paid time off to quarantine.

  • Provide written notice to all employees about your disinfection and safety plans.

The next reporting requirements are:

  • Within 48 hours, notify your County Health Department.

  • As soon as possible, report the positive case to your workers’ compensation carrier without using the employee’s name but include the date they were tested, the worksite address, and the highest number of employees who reported to that worksite over the preceding 45 days.

We are hearing about too many positive cases and exposures but this was, unfortunately, expected after Thanksgiving. Unless you want to be paying employees to quarantine, please work hard to enforce your safety protocols. Also, reinforce the need for personal safety over the holidays. It’s hard to stay home when the family tradition has been to gather and enjoy time together. However, celebrations with only the members of your household are the safest and best way to ensure everyone remains healthy for the new year.

Latest COVID Information

“I’m so confused about all the rules out there for COVID. Can you simplify it for me?”

Your HR Survival Tip

Don’t feel like you’re alone. You’re confused because the laws and regulations are piling on top of each other instead of business owners receiving one clear message. While we will try to provide a few tips and insights here, this topic has moved into OSHA’s (Occupational Safety and Health Administration) domain rather than employment law (our specialty). Therefore, we strongly recommend you talk with your Safety Manager or outsourced safety company.

Cal/OSHA is California’s version of OSHA but with a few additions to the Federal rules. On 11/30/2020, Cal/OSHA approved new regulations that went into effect immediately. Some of those regulations are contrary to what the CDC (Centers for Disease Control) uses but we must follow Cal/OSHA rules until they update them. The best thing about these regs were the definitions provided:

  • A COVID-19 “case” is defined as someone who has tested positive, with or without symptoms, employee or non-employee.

  • Close contact” is defined as being within six (6) feet of someone for, or more than, 15 minutes total in a 24-hour period regardless of wearing masks.

  • The “exposure period” is the period of 48 hours prior to the onset of symptoms or the positive test (whichever was first) of the “case” and for up to 10 days after the positive test.

  • An “exposure” is defined as someone who has had “close contact” with a “case” during the “exposure period.”

  • Quarantine” is 14 days from first symptoms, a positive test, or exposure. Yes, the CDC has a shorter time but you must follow Cal/OSHA rules.

Make sure you train your employees to inform you if they either start having symptoms that could be COVID, test positive, or are exposed. Also, make sure your employees understand they must immediately quarantine and not come to work. The employee is allowed to work remotely, if possible. Once the Case or Exposure is in quarantine, you must start tracking and doing notifications.

  • If the Exposure is an employee, you can have them tested but they must stay in quarantine regardless of the results.

  • If the Case is an employee, find out where the Case has been working and whom they might have had Close Contact with during the exposure period.

  • You cannot state the name of the Case/Exposure due to CA’s privacy laws. However, you can tell those who were around the Case that someone they were around has tested positive. Determine whether they had Close Contact with the Case and are another Exposure.

  • When doing tracking and notifications, you’ll need to consider external locations where the Case might have had Close Contact with workers in other companies. You do need to notify that company if there was Close Contact possible but, in many situations, you need to let them know even if there wasn’t.

Although the documentation isn’t going to be discussed here, keep in mind that you must notify the County Health Department and your workers’ compensation carrier about a Case. The Case will also have to be reported on your OSHA Log. Have your Case/Exposure complete a DWC-1 form and write a brief summary of exactly when and how they were exposed within 24 hours. There will be required written notifications as of 1/1/2021 and a previous law has the tracking continuing through 2022 so it’s best to develop a good tracking system now.

Within 5 Hours

“I’m confused about how to calculate when employees need to start their meal break.”

Your HR Survival Tip

California is very specific about the timing of the meal and rest breaks for non-exempt (hourly) employees so it’s important you understand the law.

The 30-minute unpaid meal break must begin WITHIN the first 5 hours of an employee’s day. This means you must have them clock out on or before 4 hours and 59 minutes from clocking in that day. Once the timeclock hits 5 hours from clock in time, they are late with their meal period and owed one hour of premium pay that day. You are expected to enforce the meal break so you should seriously consider scheduling these breaks to ensure everyone starts their break within the allotted time and you have coverage for them while on break.

  • Clock in at 7:05 am requires a clock out on or before 12:04 pm.

  • Clock in at 8:30 am requires a clock out on or before 1:29 pm.

  • Clock in at 9:00 am requires a clock out on or before 1:59 pm.

A 10-minute paid rest break is available to the employee when they work “the greater of a 4-hour period.” While you can’t restrict what they do and where they go on a rest break, you can let them know they won’t be paid any extra time taken. It is only 10 minutes. An exception is if the distance to and from your own break room would make 10 minutes unreasonable. The rest break relies less on enforcement and more on making sure your employees know the breaks are available and they are allowed to take them. If employees state they aren’t allowed to take their rest breaks, you may have to pay an hour of premium pay so be sure everyone knows how to get their breaks. Again, you are allowed to schedule these.

Premium pay is paid at their regular rate of pay and should be on the wage statement (pay stub) as a separate line item so you have proof you’ve paid it. “Regular” rate of pay legally means their average hourly rate for the week if they earn different hourly rates. If your company rounds clock in/out times, remember that is only how you’re calculating their pay. Don’t use rounding when calculating whether or not they get the premium pay. The meal break is different and the law is very clear about that 5 hours. Let us know if you’d like help putting all of this in a written policy to ensure compliance.

Avoid Hefty Fines and Lawsuits

ORDER YOUR NEW LABOR LAW POSTER NOW

Just so you know, this is my favorite site for ordering employment law posters. The reason is… they offer both the poster and update service for less than most places charge just for the poster.

It’s been years since we were able to put off getting posters each year. With new laws added so frequently, you really need a new poster each and every year. Keep your business compliant and avoid hefty fines and employee lawsuits with the new All-In-One Labor Law Poster with Update Service:

  • All-In-One State and Federal Labor Law Poster is fully laminated and attorney-approved.

  • Continued compliance throughout the year with the 1-Year E-Update Service that provides updated postings via email with every mandatory federal & state change.

  • $25,000 ‘We-Pay-The-Fine’ Guarantee protects your business against costly fines and imposed penalties.

If you haven’t already ordered your posters, do it now because the new year is here! Get the special discounted price currently available by using the code “DEAL” when ordering.

Multiple Rates

“My skilled employees are paid a high rate because they work with clients and I can bill my clients for their time. However, now I’m starting company meetings and I really don’t want to pay that high rate for them to attend my meetings since I can’t bill for that time. What are my options?”

Your HR Survival Tip

While California can be very picky about wages, we do have some options regarding pay. California has recognized the different values of different types of work for years. The state already allows us to pay employees minimum wage for time spent driving when that isn’t their normal job. This is because you didn’t hire that person to be a driver. You hired them to be a therapist, electrician, plumber, etc…a job that typically earns a higher wage. It makes sense to pay a skilled employee more but you aren’t going to be excited to pay them that amount if they aren’t doing that level of work.

Just a few examples of employees who might earn two different rates include:

  • Your employee is a licensed therapist. They could earn a higher wage when working with clients versus time spent at your company meetings.

  • Your employee is a certified consultant. When working with clients they could earn a higher wage versus time spent in your weekly online meetings.

  • Your employee is a trainer. They could earn a higher wage performing their primary training duties versus doing the cleaning for your company.

As you might have noticed in the above examples, there is a big difference in the type of work between one role versus the other. You want to be able to fully justify each rate. You already have a justification for their normal, higher rate. You just need an equally reasonable justification for paying them the lower rate. Just be sure the lower rate doesn’t include any of their skills paid at the higher rate. You want a clean division of skills or talents needed for each type of paid time.

Once you have a solid justification, you need to implement the rates properly. You want a printed document that includes details about both rates and the employee’s signature on the document. The document must name each rate (such as skilled and base rates), the amount paid for each (plus the overtime and double-time rates), and the effective date. Provide the affected employees at least a couple of weeks’ notice before you implement these rates.

Be aware not everyone will be thrilled with a lower rate for any reason because this really only benefits you. You could choose a lower rate that saves you money but doesn’t appear too low to them or you could implement the lower rate by reducing it a bit periodically over time. The messaging you use to explain this policy will make a big difference in how well it’s received.

Offer Letter Do’s and Don’ts

“I am creating an offer letter only because the candidate asked for one but I don’t know what I should put in it.”

Your HR Survival Tip

While an offer letter has not always been legally required, it has always been a good idea. Newer laws require a written offer to candidates, depending upon your hiring process. The biggest problem we see is companies trying to put too much into that letter or not using the correct language…both of which can be problematic. We prefer to keep the actual offer letter quite simple because it can be considered a legal document.

  • DO include the full details of the proposed position, such as “We are pleased to offer you the non-exempt, full-time position of Program Coordinator, reporting to __.”

  • DO include the date you want the person to start in this position. Hopefully, you already discussed the date they will be available but, if not, use something like “on or before December 1st, 2020.” While you may be anxious for them to begin, you also want to appreciate the fact that they want to give their current employer notice rather than leaving abruptly. How they leave that employer is a clue to how they would leave you.

  • DO include the rate of pay and frequency but it should be listed as either the hourly rate or salary paid each pay period, such as “You will be paid $2,500.00 per semi-monthly pay period (annualized at $60,000).” Many companies just say the pay is $60,000 without realizing an enterprising attorney could try to hold you to paying that full amount even if the employee didn’t stay a full year.

  • DO include a contingency statement if you are going to have that candidate do a drug screening or background check, such as “This offer is contingent upon the company receiving an acceptable background report and drug test.” In fact, if you are doing background checks, a written offer must be provided before requesting the report.

  • DO mention your benefits but only in a very generic way, such as “You will be eligible for any benefits normally offered to someone in your position.” If you are giving this position special perks, such as a car or gas card, do list those because they aren’t normally provided to every employee.

  • DO include your at-will statement.

  • DO include a deadline for the candidate to respond, such as 3 business days, so you aren’t left wondering whether you can move on because you haven’t heard anything.

  • DO include a place for the candidate to sign their acceptance of your offer.

  • DO NOT mention the details of your normal benefit plans because they may change and you don’t want to be stuck with extra benefits you might have mentioned in the letter.

  • DO NOT list the details of the job duties. Instead, you could mention a job description is attached. Again, if you want to change or add duties down the road, you don’t want this offer letter limiting that ability.

The offer letter should be simple but include the relevant facts of what you are offering. You can make the verbal offer first to make sure the candidate doesn’t want to negotiate but then you immediately follow up that conversation with the letter. When you only do a verbal offer, there may be misunderstandings but a written offer is harder to dispute…from either side.

Parting Ways

“My business is slower to return than expected and I have too many employees. How do I reduce my headcount?”

Your HR Survival Tip

Your employee costs are often one of your highest line items, depending on the type of business you have. It’s important to know exactly how much you spend per employee overall so you can make good decisions about when you should increase or reduce the number of employees.

There are several types of terminations but they each have a specific use. Many companies like to use “layoff” because it feels softer to them. However, your choice could potentially result in legal obligations for you so you really do want to choose the type of termination that fits your scenario.

  • Layoff – When you use layoff as your reason, the expectation is you will rehire the employee once business picks back up or you again have need of the position. You provide a final paycheck that includes any earned, unused vacation or PTO time. The employee is eligible for unemployment.

  • Furlough – We rarely saw this used prior to the pandemic. It is almost exactly the same as a layoff except they remain an employee on your records. You still provide a final paycheck that includes any earned, unused vacation or PTO time, and the employee is eligible for unemployment. However, they are still technically an employee. There have been local laws in parts of California requiring companies to hire back furloughed employees before hiring others. In addition, the Families First Coronavirus Response Act (FFCRA) payment to employees with COVID issues is available to furloughed employees even if they aren’t actively working for you. If you truly can’t bring back a furloughed employee, you’ll still need to actually terminate them at some point.

  • Resignation – When the separation with the company is initiated by the employee, it is a resignation. It doesn’t matter whether the employee provided notice or just walked off the job. You provide a final paycheck that includes any earned, unused vacation or PTO time. The employee will not be eligible for unemployment unless there were extenuating circumstances.

  • Job Abandonment – When an employee is a no call, no show for a certain period of time, their termination is processed as a resignation. The length of time will vary from company to company based on the type of industry but the standard is 3 days. You provide a final paycheck that includes any earned, unused vacation or PTO time. The employee will not be eligible for unemployment unless there were extenuating circumstances.

  • Position Elimination – This type is something we find companies wanting to use when they shouldn’t. If you are truly eliminating that person’s role, you need to have a strong justification…particularly if you have more than one employee in that role. If you have 5 technicians but only need 4, you are eliminating one position but then you need to justify why that person is the one losing their job. Beware of the appearance of discrimination when choosing. When you use position elimination as a reason, you want to be sure you won’t need that role again for at least 6 months. That’s not a legal timeline but it’s a safe one. You provide a final paycheck that includes any earned, unused vacation or PTO time. The employee is eligible for unemployment.

  • Discharge – When the company initiates the separation, it’s a discharge (aka firing). This is usually due to poor performance, a bad hire for the job, or other reasons. But you do have a reason you can articulate for choosing to separate. You provide a final paycheck that includes any earned, unused vacation or PTO time. The employee is eligible for unemployment.

We occasionally hear about employees disliking the termination choice and want to use another one. For example, instead of discharge, they want to be laid off, etc. The easiest justification for keeping your choice is that no one except the unemployment department (EDD) will know what the reason was unless the employee tells someone. Companies no longer share reasons with other companies or even within their own company. When you have to share that an employee is gone, it’s best to just say “Sam is no longer working with us and we will be moving his duties/clients to George.” If an outside company contacts you to ask about the employee, the only safe response is to provide their title and dates of employment. Nothing more. At all.

Employee Referrals

“I’d like to implement a plan that rewards employees for recommending people they know to our company. What do I need to consider?”

Your HR Survival Tip

Employee referral plans can be a huge benefit to your company and for your employees. When a current employee recommends someone to apply, they want the reward. As a side benefit to you, they often feel responsible for the success of that person and won’t recommend people they think might make them look bad.

When planning to offer a referral bonus, there are more things to consider than you might think:

  • What is the value of receiving a recommendation from an employee? Recruiting time and money can often cost you far more than paying a referral bonus. We see plans paying $300-$1000, depending upon the position.

  • When does the current employee receive the bonus? Consider how long it takes a new hire to start doing well in the job. Or look at your turnover and determine when most of it happens. If you have a lot of turnover in the first three months, then you want to wait until after that to pay out any bonus.

  • What process needs to be in place? Make sure you have a system that captures who referred each applicant and reminds you when to pay out the bonus. Also, what happens to the bonus if the current employee is no longer working for you when the payout date arrives?

  • What will you do if the new employee isn’t really that great but is still around long enough to force you to pay the referring employee? New hires don’t learn new jobs at the same pace and you have to accept that. Either make sure your payout date allows for this or just remember you’re paying for the recommendation, not for a guarantee this will be the best employee you’ve ever had.

If you decide to implement this type of plan, make sure the details are in writing and/or added to your Employee Handbook. When money is involved, employees tend to have a very good memory of what was promised. You don’t want to undermine the benefit of offering this plan by not paying as promised.