Bonus Considerations

“As we come to the end of the year, I’m considering bonuses for my employees. Has anything changed I need to know?”

Your HR Survival Tip

Employees typically love to receive cash bonuses at any time. However, as a business, you need to consider whether you are taking full advantage of this particular benefit so your business benefits, too.

The laws have become very picky about non-discretionary bonuses. A non-discretionary bonus is one that is expected and, often, the amount the employee might get is also known based on certain criteria. Many companies have had their bonus plan in place for so long it would likely be considered non-discretionary for legal purposes. Non-discretionary bonuses must now calculate an overtime amount based on any overtime worked by hourly employees over the bonus period. Yes, it’s another strange calculation California requires so let us know if you need help with it.

If you want a discretionary bonus plan, employees should haven’t any expectation of a bonus, should wonder if there will even be one, wonder when it might be, and have no clue about how much they might receive. Does your bonus plan fit this? If not, it could be considered  [click to read more …]

New Somethings from Newsom

California’s Governor Newsom must have writer’s cramp from signing so many bills into law. All the laws below are scheduled to go into effect on January 1st, 2020, unless someone manages to stop or change them. We have:

AB51 Mandatory Arbitration Agreements — The agreements have been seeing some changes but now we won’t be able to require employees to sign one to keep their jobs. Without the ability to force arbitration agreements, companies may see more lawsuits.AB707 Arbitration Fees — Steep ramifications may be seen if the party initiating an arbitration agreement fails to pay the appropriate fees within 30 days.AB5 Independent Contractors — This bill has already been discussed in the last two articles so we won’t waste your time repeating the information.AB749 No-Rehire Provisions — Often settlement agreements include a provision that the company will not rehire that employee. However, this bill prohibits that option so the ex-employee will no longer be automatically prevented from being rehired.AB9 Claims Extended 2 Years — The deadline for filing a complaint with the DFEH (Department of Fair Employment and Housing) has been extended to 3 years from the previous 1-year deadline. The DFEH handles all types of California’s harassment claims.SB142 Lactation Accommodation — We  [click to read more …]

New Rules for Contractors, Part 1

We’ve been waiting for more than a year to hear more information about independent contractors. Last year the California Supreme Court created the ABC test, which made it difficult to justify using independent contractors.

The decision to hire someone as an independent contractor lies with the hiring company. If your company misclassifies that worker, your company will be the only one held legally responsible. The contractor holds no liability so it’s important you do your due diligence. The default is they are an employee and they are subject to the ABC test.

The passing of AB5 clarifies who will be exempt from the ABC test. If they are exempt from ABC, they must instead pass the Borello test. Let’s first look at the parts of each test.

ABC Test

The workers must pass all 3 points. If they fail any of these, they must be an employee.

A — You can’t control the services or how the worker performs the work (this means you can only tell them the outcome you want, not how they get there).B — The work performed must be outside the usual course of your business (this means the work they do doesn’t touch your clients,  [click to read more …]

Rigid Policies

“We have new employees who are pushing back on some of our long-term policies. How do I deal with them?”

Your HR Survival Tip

Before dealing with employees who aren’t following your policies, first, stop and think about those policies. Are they outdated? Do they still fit the situation? Can you fully explain the intent of the policy so it makes sense to your employees?

We often see companies continuing a policy without even remembering why they created it…or whether it’s still relevant. Companies change and policy reviews ensure your policies are changing and keeping up with the company.

Example 1: You have a consulting firm and require a retainer when new clients sign up. However, you have now started hiring consultants who are bringing their clients with them to your firm. Many of those clients may not be happy to learn they need to pay you a retainer when they already paid a retainer at your consultant’s old firm. You may want two different policies regarding the treatment of new clients based on how you obtained that client.

Example 2: A new employee has an eligibility period for various benefits. That’s standard. However, what about rehires? Do they  [click to read more …]

Discriminatory Offers

“I think I’ve found a fabulous candidate for a position. However, he’s asking for an extra week of vacation each year. Do I just add that to the offer letter?”

Your HR Survival Tip

When you have a hard time finding good candidates, it’s easy to feel you must bend over backward to give them everything they want. However, before you bend, sit and think about how that wish list plays out.

Discrimination can hit many different areas within the workplace. When you look at the various equal pay laws, you see how much both the state and federal governments are trying to level things out. Even the Affordable Care Act (aka “Obamacare”) originally required all levels of employees to be offered exactly the same coverages for the same premiums.

When you are considering offering different levels of any benefit, you need to make sure the employees offered each level are clearly separate and identifiable. For example, you can create differences based on length of employment, field vs. office, management vs. non-management, etc.

When you choose to offer or give one employee more vacation time, you are creating a case for discrimination. Are you prepared to provide the same  [click to read more …]

Have a POP

“I just started offering health insurance to my employees. Now my broker is trying to sell me something called a POP. Do I need it?”

Your HR Survival Tip

First, congratulations on providing health insurance for your employees. We know that’s a big financial hit but it does make your company better able to recruit and retain employees.

Yes, you want a POP. This is a “Premium-Only Plan” that allows you to deduct an employee’s share of the premium on a pre-tax basis. Without having a POP in place, you must deduct from the after-tax, net pay. Since a POP is typically only about $150 per year, it’s a very low amount to spend to ensure your employee’s save money when they elect your insurance.

A POP is one part of what the IRS allows under Section 125 in the Internal Revenue Code. The other parts are usually just called Section 125 plans or Flexible Spending Accounts (FSA). These allow employees to set money aside on a pre-tax basis for healthcare expenses that may not be covered by insurance, such as over-the-counter medications, eyeglasses, contact lenses, etc. Another portion can be used to pay for childcare with pre-tax monies.

While  [click to read more …]

Raise Them Up

“I know the new minimum wage goes into effect on January 1st but does it change anything else?”

Your HR Survival Tip

California’s minimum wage sees another increase on January 1st in 2019 and 2020 and 2021, etc. However, that’s just the state minimum wage. Many of you may be subject to local laws that are higher or on a different schedule than the state law. San Diego, for example, will increase to $12.00 for anyone working within San Diego city limits.

The new minimum wage in California will be $11.00 (if you have no more than 25 employees) or $12.00 (if you have 26+ employees). Companies with no more than 25 employees will continue to be $1.00 behind larger companies until 2025 when all sizes will be paying $15.00/hour.

One thing the state law affects (and the local laws don’t) is the minimum salary you’re allowed to pay and have someone eligible as salaried exempt. Only the state law applies and it is a calculation based on the state minimum wage of [2 X state minimum wage X 2080]. No matter how few or how many hours your salaried exempt person works, they must be making at least $45,760  [click to read more …]

Sick and Exempt

HR Jungle

“I have a manager who is out sick a lot and I’m trying to figure out if unpaid time is an option with exempt employees.”

Your HR Survival Tip

All California companies must have a Paid Sick Leave plan in place but the sick leave may also be provided through your PTO (Paid Time Off) plan that combines sick and vacation time. Exempt employees are those paid a salary for doing their job, irregardless of the number of hours worked. Use and payment of sick time with exempt employees is often confusing so you’re not alone.

You can be conservative and pay the exempt employee a full week’s pay even when they are absent. However, years ago, California’s Labor Commissioner provided guidance on exempt absences to help us navigate this tricky situation.

If the exempt employee calls in sick for the whole day:

and they have sick time available — you record the sick time used against their balance and they will receive full sick pay for that day. and they have some sick time but not enough for the full day — you record the sick time used (up to their balance) but still pay for the whole day.  [click to read more …]

New Employee, No Paperwork

“I hired a guy who showed up on his start date but didn’t return the next day and isn’t responding to my calls. I don’t yet have any of his paperwork completed to add him to payroll. What do I do?”

Your HR Survival Tip

While this isn’t an everyday occurrence, it does happen. This is a good reason to get all your new hire paperwork done as soon as the employee first reports to work.

As the employer, you may feel you don’t need to pay this person since you don’t have enough information to put them into your payroll system. Or perhaps you think you can just write them a check as an independent contractor. Both are wrong. This is treated basically the same as a longer-term employee who walks off the job. You have 72 hours to produce a final paycheck and wage statement (pay stub).

If no paperwork has yet been completed you probably don’t have the social security number, which is necessary to add the employee to payroll. However, you can still create a “manual check” through your payroll system… you just won’t save it because you can’t associate it with an employee in the  [click to read more …]

Are You Progressive?

HR Jungle

“I once worked at a company who followed a pattern of disciplinary actions. Now that I have my own business, I’m trying to decide if I really want to do it the same way. Are there options?”

Your HR Survival Tip

There are disciplinary options legally available and they typically fall into two categories: progressive or discretionary.

Progressive Discipline

You have a progressive policy when it specifies what happens for each occurrence. For example:

First offense = Verbal warning Second offense = Written warning #1 Third offense = Written warning #2 Fourth offense = Written warning #3 Fifth offense = Final warning Sixth offense = Termination

The problem with this type of policy is that you may be legally required to follow each step, regardless of the offense. On the other hand, it does give employees sufficient warning that the behavior may lead to termination and can’t be considered discriminatory since the same six actions are used on everyone.

Discretionary Discipline

When you have a discretionary policy, you handle discipline in the way it suggests at the Company’s discretion. We prefer this method because there are some things an employee might do that call for immediate termination and we  [click to read more …]