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.

Reading Your IWC

“I’ve heard you mention an IWC but I don’t know what it is.”

Your HR Survival Tip

Nearly every time we ask a new client if they have posted their IWC Wage Orders, they usually give us a blank look and ask what it is.

As an employer, you have the responsibility to post a minimum of two things: current employment law poster(s) and your Industrial Welfare Commission (IWC) Wage Order(s). The IWC is a document providing you a great deal of information about wage and hour laws for your industry. There are different IWCs for different industries and some companies may need to use two, one for the office staff and a different one for the field.

If you want to implement an alternative workweek schedule, such as four 10-hour days, this document gives you the steps to follow. A secret ballot vote in accordance with the IWC is required to avoid paying overtime for those longer days. Different industries have different implementation timing so it’s important to be reading the correct IWC.

Do you require any of your employees to wear a uniform or any other logo wear for your company? According to the IWC, you are responsible for the maintenance of the logo wear. This might mean you have a service clean the uniforms or that you pay the employee a reasonable amount for the cleaning.

Other items of interest in the IWC include:

  • Reporting time pay when you send an employee home from work early.
  • Deductions from wages or reimbursements based on breakage, loss of equipment, or the employee’s cash drawer coming up short.
  • Regular rates of pay are explained, including how the rate affects overtime pay.
  • Rules for requiring employees to provide their own tools versus the company providing them.
  • Information on changing rooms, lockers, seats for employees, room temperature, and elevators is also included.

The print on the IWC may be small but the amount of information provided is huge. You are strongly advised to stop and read your industry’s IWC. When posting it on the wall, just staple it together and attach it to the wall in a way that still makes it readable. Don’t know where your IWC is? Get a copy online through the CA Department of Industrial Relations.

HR Needs It Signed on the Dotted Line

“I don’t like to do write-ups. Can’t a conversation with an employee work just as well?”

Your HR Survival Tips

One reason HR has so many forms and other written documentation is that good HR processes are a company’s main defense against employee lawsuits. I’ve been told by employment attorneys that any paper in an employee’s file has little value unless the employee has signed it… their signature is your proof that the employee has seen that piece of paper. A conversation isn’t a usable defense because you can’t prove what was discussed.

What does signed documentation have to do with managing employee performance? It’s your backup, your proof, your evidence that you are trying or did try to help your employee’s performance improve.

When you set up this meeting to discuss continued problems with an employee’s performance, you’ll want to have a memo already prepared. This memo will:

  • be ‘to’ the employee (full name),
  • be copied to ‘Personnel File’ and your supervisor (if any),
  • use a topic of ‘Job Performance’ or something similar,
  • include any previous discussions you have had with the employee regarding these issues (and any paperwork), and
  • include exactly what your employee must do to correct these issues and appropriate deadlines.

The memo should not be more than a page and one-half if you have stayed on top of the employee’s performance and dealt with the issues as they have arisen. Deadlines are essential but it is equally important that you give them a fair and generous amount of time, depending on what the issue is. Tasks can be immediate; behavior takes longer.

At the bottom of the memo put “Received and discussed:” and below that put a line for the employee’s signature.

You really want to obtain the employee’s signature for the memo to have the most HR value. Most people will sign it if you merely mention that their signature does not imply they agree with you. What you are trying to achieve is proof that the employee did, indeed, receive the memo.

If the employee refuses to sign, there is one other method you can try. In the bottom corner of the memo’s last page, handwrite “refused to sign” and ask the employee to initial that statement. Although you still don’t have their full signature, the initials add value. If there is another person in the room, they can make a note on it for you that they witnessed the memo being given to the employee. Otherwise, you need to make a note at the bottom that the employee refused to sign, then initial and date your note.

Is Your Commission Plan Compliant?

“I provide commissions to several employees for selling or upselling certain products. Some sales result in a flat $50 commission, while others are a percentage of my profit.”

Your HR Survival Tips

California employers have been required to provide written commission plans since 2013. However, we still see many companies that either have a plan that is non-compliant or just don’t understand California’s definition of commissions. Let’s deal first with the definition: (a) the employee must be directly involved in making the sale and (b) the commission must be a percentage of the sale.

As you can see, the definition did not include a flat fee option. If you are paying a specific dollar amount, it’s legally considered a bonus rather than a commission. Commissions are NOT (a) short-term productivity bonuses such as those paid to retail clerks or (b) bonus and profit-sharing plans… unless you offered to pay a fixed percentage of sales or profits as compensation for work.

You may need more than one commission plan to accommodate the various types of commissioned employees you have. However, the template will be very similar because your commission plan(s):

  • Must be provided in writing to each commissioned employee — Tip: Put the employee’s name as the Participant early in the document so it’s easy to see you’re using the correct plan.
  • Must explain the method(s) used to compute the commission amount — Tip: No one wants to read a large spreadsheet… keep it as simple as you can but make sure it covers everything. The Labor Commissioner’s Office wants the employee to be able to easily calculate their own commission each period. It should not be based on net profits because the employee (and judges) don’t know how to calculate that amount. Instead, “10% of the gross sale” is very easy to calculate and you could lower the percentage if needed to cover your other expenses.
  • Must state the condition(s) that need to be satisfied for a commission to be earned, including the timing of each condition — Tip: Think about what exactly defines the very moment when you are willing to pay a commission. If that moment occurs, you will owe the commission and not be able to get it back. Many companies want to receive payment in full before they are willing to consider the sale complete.
  • Must discuss deductions for commission advances — Tip: Never use the word “draw” if you are paying any part of the commission in advance of it being fully earned. The courts have stated “draw” does not give you the right to get that payment back but will accept the use of “advances” so choose your language carefully.
  • Must clarify the status of commissions upon the termination of employment — Tip: This is the number one problem with most agreements and why they end up in front of the Labor Commissioner’s Office. Define when the employee is no longer earning any portion of the commissions and be fair about it.
  • Must state when and how the commission will be paid — Tip: Pay the commission within a reasonable time. It’s not unusual for October’s commissions to be paid out with the mid- to late-November payroll, depending on your sales process and calculations needed.
  • Must include anything else needed to ensure your plan is understood — Tip: Add definitions to terms and jargon used within your plan… remember that a judge won’t understand your industry’s terms, acronyms, or catchphrases.
  • Must be acknowledged as received by the employee by providing a signed receipt — Tip: If you’re concerned about lawsuits, consider adding a place on each page for the employee to initial, plus signing the receipt.

Remember that this agreement remains in effect legally for as long as the employee continues to work for you… or until it is replaced and superseded by a new agreement. It will not automatically expire, it must be replaced or voided. Give employees plenty of notice when notifying them of a new plan.

The law doesn’t yet have any penalties for not complying with this law. This is most likely because noncompliance leaves you strangely open to a variety of employee lawsuits. We think the government feels the threat of employee lawsuits may carry more weight toward compliance than a fine.

Your OSHA Summary Should be Posted

“When and where do I need to post my OSHA log? What should I include?”

Your HR Survival Tips

Your OSHA summary should have been posted on 2/1. An OSHA log and summary are kept by every company and show what, if any, workplace injuries, illnesses, and accidents you may have had in the past calendar year. You are responsible for maintaining a safe workplace, including safety training, so these documents show everyone how you’ve done.

OSHA logs (Form 301) are maintained for each incident and COVID-19 can be a recordable illness if an employee was infected as a result of performing their work-related duties. Use your logs to summarize everything on Form 300A (the Summary). The forms are easy to find online and come with instructions. Post your Summary near your employment law posters from 2/1 through 4/30 every year.

The form must be certified (i.e., signed) by an owner, corporate officer, or the highest-ranking person at the company. If you have more than one work site, a summary should be posted at each work site if that site is expected to be in operation for more than one year. You may group the information together into one summary if your various work sites are in operation for less than one year.

OSHA has been implementing and enforcing more rules for the workplace so you want to pay attention. Maintaining a safe workplace isn’t that hard. In California, we have Cal/OSHA, and several years ago they required a written Injury and Illness Prevention Plan (IIPP) for every company. If you need a good safety plan or help to make yours better, let us introduce you to our experts.

What Happens Behind Your Back?

“I may not be new to supervising others, but I don’t think I’m very good at it.”

Your HR Survival Tips

As a supervisor, your primary responsibility is to make sure your employees are performing as expected. But supervising takes time, which you may not have in abundance. So what do you do? Communicate.

Yes, talk with your employees, both individually and as a group. That may not sound like a time-saving method, but we guarantee that early communication can eliminate or lessen the need for much more time spent down the road.

If you make it a habit to communicate frequently, you’ll discover it takes less and less time. We have found it’s best to have one-on-one meetings for 10-15 minutes each week. If you have trouble figuring out what to say, here are a few conversation ideas:

  • What did you accomplish this week?
  • What do you have planned for next week?
  • Do you have any suggestions for changes or improvements in the way the work is done or for the department/company?
  • You can also use this time to reinforce recent positive behaviors or to correct negative behaviors.

It may be a little uncomfortable at first but, once your employees understand that you are interested and listening, they (and you) will gain more confidence in sharing information.

In addition, have a brief weekly meeting with all your employees together. This is a great time to update them on the status of the workload, discuss any special projects on the horizon, or to brainstorm ideas on how to improve one of your processes. As an employee once told me, “My supervisor hired me for my expertise, but never asks my opinion.” Don’t make this mistake and take the chance of losing good employees!

You will find that your employees stay more motivated and engaged in their work when they feel they have an active role in the process. These friendly meetings also open the door for easier communication about performance issues. Need more help? Check out our recorded performance webinars.

Keep Cupid Under Control

“How do I make sure office romances can’t hurt my company?”

Your HR Survival Tip

There are no guarantees but there are things you can do to reduce your risks regarding office romances. Looking at the statistics, 65% of workers have had or are in a workplace relationship, 12% have dated their subordinates, and 19% have dated their superiors. It’s the last two that put your company most at risk.

We know employees potentially spend more time with coworkers than with their own family and friends so it’s no wonder romances happen. It would be great if your supervisory staff fully understood the dangers to themselves and to your company by engaging in an office romance. You can reduce your risk with a few simple steps.

  • In California, all companies with 5+ employees anywhere must provide compliant sexual harassment prevention training to all CA employees. This may help your employees understand what constitutes harassment… and the fact that the supervisory staff can be charged with harassment, in addition to the company.
  • Make a policy requiring all romantic relationships must be reported to HR. This step makes it easier to protect everyone. If a perceived romance isn’t reported, HR should ask the participants about their behavior.
  • Confirm the relationship is consensual. Have HR speak individually with each participant in the relationship and put in writing this is a consensual relationship. By meeting individually with each person, they have the opportunity to tell you it is not consensual. Having it in writing makes it much easier to defend any claim later.

Relationships can easily appear consensual but, as they often do, relationships end. Once a person is angry, they are more likely to strike back by filing a claim. Without the consensual relationship confirmed in writing, it can be difficult to fight the claim. We have a Consensual Relationship Agreement available in our HR DIY Store.

Friendly versus Friends

“I have a few employees who I consider to also be my friends. However, I’m noticing these friends don’t take me as seriously as my other employees do. How can I change this?”

Your HR Survival Tip

We see each other at work almost more than our family so it’s no wonder that coworkers become friends. Some of these friendships can even last much longer than the job itself. However, there is a difference when you are the owner or a manager.

As you mentioned, “friends” often don’t take you as seriously as other employees. This makes it much harder to be a good manager. If you neglect to discipline your friend in the same way you would another employee, two things happen. One, you potentially have a discrimination claim, and, two, your management style and policies are altered to accommodate the friendship instead of protecting the company and properly doing your job.

If you do treat everyone the same when they don’t do what you say or in accordance with your policy, the friend will be upset because they aren’t getting special treatment due to the friendship. Hopefully, that would be temporary and they would come to understand. In the end, for the good of your business, you need to let employees who are friends know they will not be treated differently in the workplace and they will be expected to follow all your rules, policies, and direction. The same applies to friends and family you are considering hiring. If they don’t understand this concept, you will either lose the employee or the friend or end up in a big fight.

It’s a tightrope you’re walking. And, as the saying goes, it’s lonely at the top. You do want to be friendly and accessible… and fair. But you may need to discipline, fire, or promote these employees in the future and must be able to fully justify your actions to them and others. Choose your priority… being a good manager/owner or being a good friend. It’s tough to be both successfully.

When an Employee is Too Good

“I have a fabulous employee that seems to want (and deserves) more than I’ll ever be able to provide. How do I handle this issue?”

Your HR Survival Tip

Is it possible for your employees to be too good for your company? Definitely. Especially when you have a small company. That may sound strange, but we’ve seen it happen several times.

You strive to hire people who are energetic, bright, and skilled. Everything works out great for a year or two and you’re patting yourself on the back about your brilliant recruiting abilities. In fact, you’ve already promoted this person once and they are ready for even more challenges.

Many companies will choose to create a new position for this stellar employee so they won’t lose them. But it’s a mistake you’ll pay for down the road. I can tell you that it’s tough to clean up a company full of employees with strange, made-up titles and inflated salaries.

Don’t promote promising employees into titles that can’t be sustained outside of your company. You aren’t doing anyone a favor by making them a senior manager with only the responsibilities of a supervisor. The title and level of responsibility should match up, both in your company and in others.

Your first responsibility is to your company. Ask yourself what positions are absolutely needed for maximum efficiency and production. If your best employees fit into those roles, great … promote them. But don’t make up roles just to placate your employees.

Small companies don’t have the number of departments and positions to allow much internal movement. Fighting this fact will only disrupt your company and lower employee morale due to perceived favoritism.

The best way to manage your stellar employee and extend the length of their employment is to find new challenges for them. Give them special projects that don’t belong to someone else. Have them help create training for others or give the training. Provide cross-training. Give them the task of coming up with ideas for expanding their position. Be imaginative.

If you are doing your job well, you need to be prepared to offer career advice that may take your best employees beyond your company. Sometimes, moving on is the only alternative for a good employee’s personal and career growth.

How to Set Goals for Employees

“I would really like to set goals for my employees but I don’t know how to create the process.”

Your HR Survival Tips

Effective goal-setting is a complex yet logical process. The following steps will help you create a simple goal-setting plan for each of your employees.

  • Identify the long-term goals — These are typically goals you’d like them to achieve over the next year. It can be learning new things or improving productivity, efficiency, or accuracy. Include metrics with goals whenever possible so you can measure success or improvement, such as increasing productivity by 5%.
  • Break down the long-term goals into short-term goals — Think about what they could do each month or quarter to ensure success in each long-term goal. Help them understand how to take baby steps toward long-term goals by asking them to make a list of what they think they need to achieve these goals. Discuss this with them to make sure they don’t need something more from you to be successful.
  • Recognize obstacles — Rarely do things move along without disruption. Make sure the goals and goal planning includes some thought about what might prevent them from achieving the goals. What obstacles might get in the way in their own job, the department, or the business?
  • Set deadlines — Every goal needs a deadline and a detailed explanation of what is expected by that date. Deadlines help both of you know which short-term goals should be completed by a specific date. Failure to meet deadlines requires you to review the reason to make sure the next deadline won’t be missed.
  • Schedule follow-ups — You are responsible for ensuring your employees are meeting deadlines and goals. Mark your own calendar with the deadlines and plan to meet with the employee to discuss the status of every goal and talk about how the process is working in general.
  • Modify as needed — While it’s great to have long-term and short-term goals, some companies are influenced by things out of their control. You need to be ready to adjust the goals while not losing sight of what you are trying to achieve with the employee.

Once you begin a goal-setting process, it’s important you keep up your end of it. This means you are checking on the status when deadlines are due, providing anything the employee needs, and discussing any problems with the employee. The moment you find you don’t have the time or interest to follow up, you’ll find the employee also loses interest. Then you both lose.