Vaccination and Mask Update

“I’d like to make sure all my employees are vaccinated and even continue wearing masks to protect everyone but what can and can’t I do?”

Your HR Survival Tip

Even as more people are getting vaccinated, we still struggle with how to handle the COVID-related questions and policies in the workplace.

Masks are still strongly recommended by the CDC (Centers for Disease Control) even after vaccination, unless you are surrounded only by others who have been vaccinated. Continuing to wear a mask protects everyone around you and your company can have a policy requiring masks at work, just like before the vaccinations began. If you have a policy in place but find some employees are not following it, you’ll want to find out why they are not following the policy, ensure they understand it, reinforce your reasons for it, and let them know disciplinary action may follow if they do not adhere to it. Employees won’t take the policy seriously if you don’t.

Conversations about whether or not someone is vaccinated and whether they plan to be are common. In the workplace, you want to be careful about those questions. While employees may chat amongst themselves about it, make it clear employees do not have to respond to other employees who may be casually curious.

Those same questions take on a different tone when they come from anyone in management and shouldn’t be asked casually. Decide why you care about employees being vaccinated. A simple yes or no question about whether an employee is vaccinated if fine but make sure the employee understands you do not want any information about medical conditions.

  • If you have decided you need proof of vaccination, ask only for a copy of their vaccination card and keep it in their medical file. This is confidential information and shouldn’t be shared with others.
  • You cannot treat employees who are and are not vaccinated differently without providing valid justifications for those differences.
  • Do not ask any questions about why the employee has not been vaccinated, how a vaccination affected them, or anything that can’t be answered with a simple yes or no. This could lead to you receiving personal medical information that you do not want or need and could put the company at risk.

Keep in mind that carelessly asking about reasons or vaccinations can potentially open your company up to legal obligations under ADA (Americans with Disabilities Act) or even GINA (Genetic Information Nondiscrimination Act). This is a time when you really want to avoid having too much information about your employees. If you need to know about vaccinations, create a policy and a process for collecting and tracking the information so no one is asking the wrong thing.

Hit After Hit

Is it a surprise to anyone that our payroll taxes will be increasing to cover the huge unemployment hit from COVID? Or that California has a new bill going through the legislature that could be very costly to employers?

Job Killer Bill

A bill, AB 1192, has been deemed by the California Chamber of Commerce as a job killer. This bill would require employers to provide annual reporting of wage and hour data and employee benefits for all employees in the

U.S. The plan is to then share that information on the web so employers will be publicly shamed for not providing more pay or benefits… even when they are not legally required to do so. The expectation is this would result in frivolous litigation and settlement demands.

Unemployment Fund Depletion

HR JungleWhen California runs out of money in their unemployment fund, they borrow from the feds. California’s unemployment fund is nearly $22 billion in debt to the federal government based on what was paid out through early April, 2021. The expectation is that our unemployment fund will go further in the hole by the end of this year… to a negative $40 billion. Even during the Great Recession, the debt was only $10 billion and it took nearly a decade to pay off that loan with increased payroll taxes.

There are only 20 states that went into unemployment debt because many used some of the CARES Act funding to lower their debt. However, California didn’t do that and now we lead the pack with the highest debt. The runner up is New York with $10.2 billion in debt… less than half of our debt. The other 18 states are mostly under $1 billion in debt.

What does this mean to your company? Based on current laws regarding our two consecutive years of fund insolvency, tax increases will begin in 2023 and will continue until the fund is again solvent. Normally, when there is a plus amount in the unemployment fund, you pay 0.6% unemployment tax for the first $7000 each employee earns. But each year we continue to be in the hole, we’ll see that tax increase by 0.3%. After 18 years, we will max out on those tax increases but the difference we’d be paying would be $420 (the max) per $7000 versus the $42 we paid before the fund went into the hole.

Higher payroll taxes often affect a company’s willingness to hire. However, you know we’ll bite the bullet if it becomes necessary to hire to fully recover from the devastation experienced over the past year. The federal government is unlikely to provide assistance or forgiveness for the amount owed but people are reviewing the language of the American Rescue Act to determine if there might be some help there. We can only hope!

Time to Start Saving

“I’m trying to decide whether it’s best to add a 401(k) plan to my benefits or use CalSavers. Is there a benefit to either?”

Your HR Survival Tip

CalSavers is the retirement plan California has created that allows employers to offer a way for employees to save toward retirement. Actually, the state is trying to force people to save but this is one of those occasions where their plan is a good idea overall. There are benefits from both a 401(k) plan and the new CalSavers plan so which you choose will come down to which benefits you prefer.

HR JungleIf your company does not have a 401(k) or similar retirement plan in place, you will be required to register for CalSavers. The deadlines for registering are staggered: 9/30/2020 for companies with 100+ employees; 6/30/2021 for those with 50+ employees; and 6/30/2022 for companies with 5+ employees. If you have a retirement plan in place, you do not need to register but you might try just to confirm the state knows you have a plan.

CalSavers — VS —  401(k)-Type Plans

  • It is free to register your company and participate. VS There is an annual administrative fee.
  • There are no costs involved when employees participate. VS There is a per participant cost.
  • Employee participation is automatic unless the employee opts out. VS Employees must meet eligibility requirements before being allowed to participate.
  • Employees may opt out but, if they participate, the contribution is 5% to start. VS Participating employees can choose to contribute any percentage or dollar amount, within limits.
  • You upload employees when you first start the program and then add new hires within 30 days so they can participate. VS You may set an eligibility period, such as one year, before employees are eligible to participate.
  • CalSavers contacts each employee to discuss the program with them. VS Usually the plan has a financial planner who can discuss options with employees.
  • You are not allowed to add money to an employee’s account or offer a company match. VS You can add bonuses or a match to your employee’s account.
  • Employees are responsible for ensuring they do not contribute more than legally allowed each year (or it will be returned and taxed). VS Your TPA (third party administrator) helps monitor the account balances and make needed adjustments.
  • The state chooses the terms of the IRAs and which investments are offered. VS You have fiduciary responsibility for the funds/stocks available in the plan but you can offer a wide selection.
  • Employees maintain control of their account when they terminate so they can choose to keep it or add their next employer. VS Employees may keep their money in your plan upon termination or choose to roll it out to another plan or IRA.

Any retirement plan is a benefit to your employees. As the employer, you just need to determine whether CalSavers or an independent plan best serves your purposes. Often the high earners want a plan but they also really like a company match, which is only possible with an independent plan. However, if you don’t see spending the money on an independent plan as a good use of your benefit dollars, CalSavers allows you to offer a plan at no cost to you.

Things to Think About

There are several items of interest right now. We decided to provide a short paragraph about each so you have some awareness of the latest things to think about!

Remote Workers — We are hearing about a couple of things that are newer requests. One is a request for companies to pay a portion of the employee’s rent since you’re now requiring them to work from home. The other is overtime pay for calls after hours… when the after-hours timing is due to time zone differences because employees aren’t necessarily local anymore. Deciding to change part or all of your office to fully remote means you need to consider the fact that you’ve shifted costs from your company to the employee. Since it’s not supposed to cost the employee anything to work for you, plan to reimburse employees for actual added costs in addition to reimbursements for the inconveniences an employee experiences by having part of their home become their office.

COVID-19 Supplemental Paid Sick Leave — California’s Governor Newson has signed SB 95, which requires up to 80 hours of paid sick leave for employees off work due to COVID reasons. This only applies to companies of 25+ employees but is retroactive to 1/1/2021 and runs through 9/30/2021. The eligibility reasons are basically the same as they were for FFCRA (Families First Coronavirus Response Act) last year. Keep in mind the FFCRA is still available so, if the employee is eligible, use the Federal money first.

Worst Cities for Doing Business — A study listed five cities as the most difficult for business. It’s no surprise that San Diego, San Jose, and Los Angeles were three of the five. The other two were Newark and New York City. No California city made the top ten best cities for business… again, no surprise.

Rounding Timeclock Entries — If you round an employee’s time to the nearest quarter or tenth of an hour, make sure you only round when they clock in at the beginning of the day and when they clock out at the end of the day. The California Supreme Court has recently made it clear that rounding for the meal break will get you in trouble. California is strict about when the meal break begins and how long it lasts so rounding the out/in meal break times will inevitably make it appear that non-exempt (hourly) employees did not get their legally required meal break on time and for the full 30 minutes, per our state laws.

Mandating COVID Vaccinations — While California allows businesses to require employees to get vaccinated, attorneys are recommending you don’t require it. The problem is it’s hard to get 100% of your employees to vaccinate because you must take into account religious and medical exceptions. When you start making decisions about whether those exceptions are real is when you start to slide down that rabbit hole. It’s better to strongly encourage employees to get vaccinated. Think about incentives for those who vaccinate rather than punishments for those who don’t.

Retention Ending

“I’ve managed to keep most of my employees working over this past year and they’ve seemed fairly happy here. However, lately, I’ve seen signs that make me think they aren’t as happy as I thought and are looking for a new job.”

Your HR Survival Tip

Congratulations on retaining your employees when so many companies have had layoffs because of the pandemic. Employees have felt lucky to keep their jobs over the past year and haven’t wanted to do anything that might put their name on the layoff list. However, that doesn’t mean they feel their current position is the best job ever or even the best they can do.

The clock is ticking. Companies had to dramatically downsize and even close in the past year… but that’s ending and companies are looking to kickstart their businesses again. As more and more employees are vaccinated and feeling safer, they will be assessing their job and the job market. In fact, there is a study that shows nearly 50% of employees will be looking at their options.

One of the reasons we’re expecting this is because employees are becoming less fearful of taking a chance on a new company and job. Another is there are more jobs starting to open up than we’ve seen in over a year. Companies are no longer concerned they might have to shut down or downsize again so they are looking for the best employees to help them rebuild. But those great employees could turn out to be your own employees.

Studies are also showing that all this remote work is resulting in less loyalty to companies and, unsurprisingly, a feeling of being disconnected from the company. The employees aren’t building the close working relationships they did when working side by side and they aren’t feeling the effects of your company culture anymore. They feel isolated and have less reason to stay with your company versus working elsewhere. The other side effect of remote work is employees wanting jobs with better work/life balance. This has been a motivator for some time but it’s possible they’ve had more opportunity to experience a different lifestyle this past year… and want to keep it.

Many companies implemented pay cuts and a reduction of benefits during the pandemic. This was a necessary step to cut costs while dealing with the loss of business. However, employees look out for themselves and 35% of employees will be looking for more pay and better benefits. Many employees believe their managers question their productivity when working remotely. We have found that to be true. However, it’s as much or more likely the managers are now looking only at productivity and weren’t able to focus on just that one aspect of an employee’s performance when everyone worked in the office.

When employees no longer feel connected to your company or are feeling burned-out from the past year, changing employers is often viewed as a way to refresh themselves. Now is the time to prepare the company for changes. Have conversations with your employees to better understand why they stay with you, what they’d like to be different, what’s important to them, and where they see their career going. Let them know you care. Don’t assume they like remote work even it if works great for you… or that you can continue providing remote work when you know it’s better for them to be in the office. If you talk with your employees now, you may be able to hold off the mass exodus that’s expected to hit us soon.

American Rescue Plan Act of 2021

The American Rescue Plan Act (ARPA) was just signed into law last week. This article will only discuss two items from this new law, the FFCRA updates and the employee retention credit through CARES.

The Families First Coronavirus Response Act (FFCRA) initially began last year on 4/1/2020. This law required employers to notify employees of potential paid time off when they had COVID symptoms, when they couldn’t work due to lack of childcare, and a few other reasons. FFCRA expired on 12/31/2020 but was then extended to 3/31/2021. The extension removed the employer mandate requiring notification to employees and payment for COVID-related time off. However, the tax credit was still available to those companies who chose to continue offering the pay to employees.

ARPA has extended FFCRA to 9/30/2021. In addition, while not mandated, companies will continue receiving the tax credit if they pay employees for FFCRA time off. The most interesting aspect of this new law was the reset of hours for the time off. This means if an employee had previously received the allowed 80 hours of FFCRA sick pay, the clock starts over as of 4/1/2021, and the previously paid time doesn’t count against the employee’s new 80-hour max. This extension allows FFCRA pay for more reasons than before, too.

The employee retention credit through Coronavirus Aid, Relief, and Economic Security (CARES) Act has been extended through 12/31/2021, thanks to ARPA. The employee retention credit is a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after 3/12/2020 and before 1/1/2021. In order to claim the new employee retention credit, eligible employers will report their total qualified wages and the related health insurance costs for each quarter on their quarterly employment tax returns, which will be Form 941 for most employers, beginning with the second quarter. The credit is taken against the employer’s share of Social Security tax but the excess is refundable under normal procedures.

We have some experience with FFCRA pay but very little with the employee retention credit. Since we’re not tax professionals, please talk with your CPA about both tax credits to ensure you are documenting and requesting the credits appropriately.

Retaining Those Documents

“I have a few boxes of old employee files in my warehouse. Is it okay to just throw them out?”

Your HR Survival Tip

The documents in employee files have a required shelf life. The length of retention is often related to the laws concerning how much time an employee or entity has to make a claim and or file a lawsuit where those documents may be needed. Even when you are no longer legally required to keep the documents, attorneys suggest you keep them for the life of the company… just to be safe. This is much easier now that we can digitize those docs. However, be sure to store the digital files on a protected drive so only authorized employees can access them.

No matter what the document may be, do not destroy anything while the employee still works for you. If your managers keep separate notes or records, ask for copies if an employee’s manager is changing or leaving. Below is a very basic list of minimum retention requirements:

  • Recruitment, hiring, and job placement records — 3 years or longer for any claim or litigation about your hiring practices.

  • Payroll records, including timecards, time-off accruals, schedules, wage notices, wage justifications, etc. — Default to the longest of 4+ years after termination.

  • Leaves of absence detailed records — 3 years.

  • I-9 Forms — 3 years from hire date or 1 year after termination, whichever is later.

  • Personnel files — 3 years after the termination date.

  • Benefits data, such as insurance elections, beneficiaries, COBRA notices, etc. — 6 years, but at least one year after a plan terminates.

  • Retirement plan records, including 401(k) docs — indefinitely.

  • Health records, such as first aid records, drug/alcohol tests, workers’ comp, COVID-19 cases — 5 years, but add 30 more years after termination for chemical safety and toxic exposure records.

  • COVID-19 reporting, including employee notices — 3 years.

  • Litigation records — Until a claim or case is completely over. You must retain all personnel and payroll files of the involved parties and of any other employees who may be used for comparisons.

Face it, we are now in an era where you’ll need to keep some records forever so why not keep them all when it’s so easy to scan and store them? If you have paper documents, you must have them in a secure location where only authorized people have access to those boxes and documents. If you are going to either scan the documents for digital storage or plan to throw them out, the paper must be shredded. The temptation of sneaking a look at the paper or digital personnel files is often irresistible. Your responsibility is to ensure the information is secure from the curious and retained per the laws.

Legal Payroll Cycles

“I have been paying employees monthly but then I heard this may not be allowed. Why not?”

Your HR Survival Tip

California is very specific about when you pay employees. The penalties can be steep if you’re doing it wrong because there is often a fine based on each wrong check for each employee. For example, a late paycheck carries a basic fine of $100 per day per employee. In fact, in the past few years, California has also been very picky about what the wage statements (aka paystubs) have on them. Here are some basic rules about paychecks and paydays but, as usual, there may be exceptions to the following:

  • You must post the day, location (if employees pick up their checks), and time checks are available: this is found on your employment law poster and it must be on the Wage Theft Notice new hires receive.

  • If the payday falls on a weekend or holiday, you may choose to pay employees on the business day before or after but it must be the same each time.

  • The company is responsible for making sure the employee receives their paystub so you either need to forward the hard copy or confirm they actually have online access.

  • Paychecks must be available within 7 days from the end of the time worked. You cannot be later even for a holiday or weekend.

  • Standard semi-monthly (twice each month) payroll covering time worked the 1st through the 15th must be paid by the 26th of the month and time worked the 16th through the last day of the month must be paid no later than the 10th of the next month. If your semi-monthly work periods are different, you must pay within 7 days of your work period ending.

  • Most payrolls pay “in arrears” so timekeeping and payroll processing is easier. This means there is a gap between the time worked and the paycheck… usually at least 5 days. For example, a weekly or biweekly payroll is usually paid the Friday after the time worked.

  • Most salaried, exempt employees may be paid monthly but, if you do that, they must be paid by the 26th of the month and their pay must cover that whole month.

  • Hourly, non-exempt employees must be paid at least twice each month.

  • Temporary employees must be paid weekly.

  • If an employee is late submitting a timecard, you must still pay them based on the time they were scheduled to work. You reconcile and clean it up later.

Once your payroll processing schedule is set up properly, it’s not difficult to stay compliant. However, you still want to do periodic checks because technology doesn’t always work as we expect. Even if an employee agrees to a late paycheck, it’s not legal. You’re still at risk if you’re ever part of a lawsuit or EDD audit. Plus, the Labor Commissioner’s office is happy to help the employee at no charge.

It’s Not a Good Fit

“When I fire someone, I just tell them it’s not a good fit. But do I need to tell them anything?”

Your HR Survival Tip

California and several other states have an at-will employment law. This means either you or the employee can end the employment relationship at any time and for any reason, with or without notice. That’s the letter of the law. However, how it plays out in court is very different. In reality, it’s only the employee who has that much freedom.

As the employer, you really do want a reason… a legal reason… when firing someone. You also want to give the employee that reason. If you don’t, they will make up their own reason and it will likely put you in a bad light. The employee will give “their” reason when filing for unemployment, when interviewing elsewhere, and possibly when talking with an attorney. Why would you want to be in that position when it’s not necessary?

Be honest. You can usually tell if someone’s not a good fit within the first 30 days. Even then, there are specifics about why they aren’t a good fit. They don’t get along with their coworkers, they aren’t a team player, they aren’t on time for work, they prefer doing things their way instead of your way, they don’t communicate well, etc. It may take a while longer before you know whether or not they can actually do the work but that’s a little different.

If you have a problem employee, you should be having weekly meetings with them about the issues you’re seeing and what your expectations are for changes. The first discussion is just that, a conversation. If you need to talk again about the same problem, recognize you may not be providing the information in a manner they “hear.” Some people are great at hearing and understanding something, others are visual and want to review it in writing, and some do best when physically doing the work instead of watching you do it. Don’t assume they are just being stubborn. Ask them how they would best understand and retain the information.

So, if the first conversation didn’t get the results you want, try having another conversation and having the employee provide you a written summary afterward. If that doesn’t help, ask them to do the work while you watch so you can see where and when the problem happens. Bottom line, you want this employee to recognize there really is a problem that needs correcting. Without that recognition, they will assume they are doing good work.

If none of your attempts have worked and you’re ready to fire them, ask yourself what HR would ask: Let me see what’s in their employee file (written documentation). Tell me about the conversations you’ve had with the employee (demonstrating you’ve actually tried to correct the problem). Have you told the employee their job is at risk if the problem isn’t fixed?

The worst type of firing is when the employee is surprised they are being fired. At that point, they should be expecting it and only the timing is a surprise. By the time you’re ready to fire, you should be able to provide them with the simplest, most legal reason for being let go. We are not in favor of putting that reason in writing simply because it can get twisted if not perfectly written and there is just no legal need to put it in writing. It is sufficient that you are able to articulate the reason in one sentence: You are consistently late to work and we have told you why it’s important but you continue to arrive late at least twice a week. You are creating problems at the job site because you are insubordinate with your supervisor even though you know this is not tolerated. You are not working at the pace needed for this position and it’s resulting in work being completed late and affecting our project deadlines. When interviewing, you said you know how to use this software but it’s been 3 months and you have not demonstrated that knowledge. As you are aware, we have worked with you to change certain behaviors but we haven’t seen the changes last more than a week or two and we are done trying.

While this is an at-will state, assume you can’t use that defense. Instead, do a better job of managing employee performance so you aren’t putting the company at risk with a weak excuse for firing an employee. When it becomes inevitable you’ll need to fire that employee, work on what you’ll say in that one sentence to provide the simplest, most legal reason.

Wage Theft

“I know I must provide a notice to new hires about wage theft but I don’t really understand it myself so I can’t explain it to my employees. What is it?”

Your HR Survival Tip

California’s Wage Theft Protection Act went into effect on 1/1/2012. This started because employees didn’t fully understand their pay stubs and couldn’t tell if they were being paid appropriately. The Act forced companies to provide the information in a way that was easy to read. Thus, the notice.

The DIR (California’s Department of Industrial Relations) uses the Labor Commissioner’s Office to fight for employees who are not being paid properly by their employers. An example of this was a case that reached a settlement last fall. A Bay Area restaurant owed 133 workers for unpaid minimum wage, overtime, and split shifts premiums. California considers this a theft of wages due to the employees. The original assessments and penalties came to $5.16 million but the final settlement ended up at $2.6 million.

How do you make sure you avoid something similar? Even employees who receive tips have a minimum wage that must be paid for all hours worked. In California, you also pay 1.5 times their hourly wage when they work overtime… which is any time over 8 hours in a day or more than 40 “regular” hours in a week.

The split shift pay comes into play when a company requires an employee to take more than an hour between the first part of their shift and the second part. A restaurant example is if you were asked to work the lunch shift from 10a-2pm, then required to come back for the dinner shift from 5pm-10pm. That required 3-hour gap is considered a split shift. California has a specific calculation you must use to determine how much extra money the employee should be paid for that split shift.

Avoid putting your company at risk by ensuring you are compliant with all pay requirements. The wage theft notice we give employees provides, as an attorney once said, everything an employee needs to be able to sue you. Make sure your processes and the notice are in sync so you aren’t open to claims.