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“I have an employee, Joe, who is 66. Although he hasn’t talked about retiring, I’d like to start planning to find and train his replacement so we’ll be ready when he retires. How do I initiate that conversation?”
Your HR Survival Tip
You don’t initiate that conversation. Period.
Most discussions about retirement can very easily backfire on you. Initiating that discussion may look like you are pushing the older employee out. Especially if you even hint at a possibly younger replacement.
A previous court decision resulted in a “workable” rule that basically said if the age difference between the employee and their replacement is less than 10 years, there may not be a case for age discrimination. However, that changes if additional evidence shows the employer considered the employee’s age to be significant. It may also make a difference if the replacement is under 40 and the employee is over 40.
You make an employee’s age “significant” if you, or your employees, make comments such as “the old guy,” “let someone younger do that,” “your ideas are obsolete,” “you’re slow,” “your knowledge is ancient,” or “old fuddy-duddy.” Allowing phrases like these to be used in the workplace, even in good humor, can help make a legal case for an older employee. Make sure everyone is treated, and talked about, with respect.
If you want to provide retirement information, provide it as part of an all-employee meeting so no one is singled out. Make sure useful information is provided for employees of all ages. This can be a great topic even if you don’t have employees near retirement age.
You are currently concerned about someone at retirement age, but employees come and go at any age. A viable option is to consider cross-training several employees (not just Joe). Retirement is only one reason an employee leaves a company. Don’t leave yourself open to losing company knowledge or worrying about losing a specific person. Back up what (and who) is important to your company.
“A few of my employees have asked about job descriptions. I don’t have anything written but do walk them through their job duties when they start working for me. Why would I want or need anything in writing?”
Your HR Survival Tip
While job descriptions are not legally required, they are highly recommended. I’m not talking about those 6-12 bullets you’re tempted to throw on a piece of paper. A well-written job description can be very useful to you by:
- Making sure all employees are aware of the specific tasks associated with their job and accountable for the successful performance of those tasks;
- Having the necessary information and facts available to recruit and/or advertise a position;
- Determining the exempt (salaried) or non-exempt (hourly) status of the job;
- Serving as a guide for onboarding, training, monitoring, evaluating job performance, and setting goals;
- Helping when you have a workers’ compensation claim by ensuring the doctor understands what the physical aspects of the job are; and
- Establishing the “essential” job functions to facilitate compliance with the Americans with Disabilities Act (ADA) and adding protection for your company.
Your job descriptions should begin with a 2-3 sentence summary of the job’s content, purpose, and scope. Think of this as your employee’s 30-second description of their job.
This is followed by 5-8 duties and responsibilities in order of priority, the performance of which is critical to job success or failure. Provide as much specific information as possible, i.e., how, what, with and for whom, where, and specific examples of frequency or average number completed within a specific time frame. I like to see these items written as short paragraphs but with specific detail, such as “create correspondence using Microsoft Office programs.” Detail any type of machines, materials, tools, computers, and computer operations used in performing the job functions.
The “Requirements” must be the minimum levels of knowledge, skill, and ability you’ll accept. You don’t want to tell someone they aren’t qualified and then hire someone else who doesn’t meet those requirements. Be specific, such as “At least 3 years of experience in Human Resources with increasing responsibilities.” If there are things you’d like to find in an applicant but can’t justify making it a requirement, add it to the “Desired Job Skills” category.
“Working Conditions” include specifics about the work environment that might be significant to the performance of the job or to job satisfaction. For example, it may be important to note the noise level, amount of travel, limited space (like working in a cubicle), special equipment or clothing necessary, and safety and health factors.
Once you have a good job description, make sure you and your employees are on the same page with what they are actually doing. This is a living document, which means it doesn’t stay any more stagnant than your business does. Update those descriptions every year to ensure they are current and useful.
While it can be a little time-consuming to first create a job description, it’s worthwhile if you really use it. There are a lot of templates available online to get you started or give you ideas.
“I have employees in the field who have company cell phones with GPS tracking. This is so great because I can log in anytime and see where they are and how long they’ve been there. However, one of my employees, Joe has removed the GPS tracking device. Can I fire him for that?”
Your HR Survival Tip
Tracking employee movement through GPS is a great tool but it can also be the topic of lawsuits lately. While you can fire Joe for altering company property, you should look at the bigger picture first.
In California, particularly, more and more privacy laws are being enacted and you may be viewed as stomping on Joe’s privacy… especially during his non-working hours. We’ve seen how the GPS programs can show real-time movements of the employee, the route, and the length of time at each stop. Does your particular software have a way to shut down when Joe stops working for the day? If you can see what Joe is doing during his non-working hours, you may have legal issues.
Review your policies about leaving company phones on after hours and general use of that phone, plus review the GPS application’s capabilities. If shutting the GPS off during non-working hours is possible or your policy allows employees to turn the phone off when not working, then your policy can easily indicate disciplinary action for altering company equipment. You may have fewer options otherwise.
Tracking employee movement during working hours seems to be in our future. Now is the time to develop a policy that fits your business needs while being respectful of your employee’s privacy.
“Some of my employees feel they should be exempt but I’m not sure they qualify.”
Your HR Survival Tip
Employees often feel being exempt (salaried) is a sign they are in an important position. And, as far as it goes, exempt positions are important and have a higher level of responsibility. However, only the employer can designate a position as exempt and only after ensuring the salary level and the duties of the job meet federal and state requirements. Legally, the employee has nothing to say about it… no matter what they want.
The trickiest part of determining if a position is qualified to be exempt is the duties test because it can be very subjective. The tipping point is when you look at how their time is spent… at least 50% must be spent making decisions rather than doing the work. Also, look at the duties and responsibilities rather than routine tasks. Here are a few examples where we have seen companies make mistakes:
- Administrative Assistant – Typically this will be a non-exempt (hourly) position. The exempt level must spend less than 50% of the time doing office/clerical work. Instead, they are part of a large organization, and their time is spent on duties involving managing the owner or executive’s schedule, acting for them when dealing with third parties, researching and handling special projects, arranging Board or shareholder meetings, etc. Much less time is spent on clerical tasks.
- Project Coordinator — Typically this will be a non-exempt position because most of their day is spent coordinating with others, chasing project deadlines, and other administrative work. They aren’t developing or analyzing the projects themselves.
- Supervisor — Often a non-exempt position because they don’t typically have the level of responsibility of a manager. They are usually spending at least 50% of their time doing the same work as those they supervise.
As minimum wages increase, so do the minimum salaries because they are calculated based on state minimum wage. If you are trying to justify a $67,000 minimum salary, it’s very likely the position should actually be non-exempt. A true exempt-level position often pays at least 20% more. Stop trying to squeeze employees into exempt positions because you will regret it down the road.
“I have an exempt (salaried) employee I’d like to make hourly instead. How do I do that?”
Your HR Survival Tip
When minimum wages increase, the minimum salary you must pay increases. At some point that salary may start to feel too high for a particular position. You may reclassify an exempt (salaried) employee to a non-exempt (hourly) employee but you want to think it through to avoid problems. You don’t want to just change a position to hourly without being aware of the potential legal issues.
The first thing is to confirm the legality of the employee’s current classification. In other words, was this person correctly classified as exempt? A proper classification of exempt means the position meets all the requirements listed in one of the Federal exemptions, including both the salary and duties tests. A good reminder for everyone is that even a high salary doesn’t automatically mean a position will qualify as exempt. The minimum salary requirement is easy because you are either paying sufficiently or not (2 X state minimum salary = the absolute minimum salary you can pay, regardless of how few hours they work). The duties test is more challenging because there is some subjectivity involved so be conservative to be safe.
If the employee was not correctly classified as exempt, you have some issues and need to make this transition very carefully. The problems include unpaid overtime, missed meal breaks, etc., that they would have received as an hourly employee. If this is where you are, you will want to talk with us or an employment law attorney about your risks and options.
If the employee was correctly classified as exempt, the transition to non-exempt is fairly simple. Even then, you’ll want to have a solid explanation of why you are reclassifying their position because they will ask. An explanation might be that California’s annual increases are causing the minimum salary to go higher than you can pay for the position, or the amount of time off the employee has been taking will work better in an hourly role, or the position is actually changing and will no longer qualify as exempt.
The transition itself is very simple. Create a memo, letter, or form indicating the effective date and hourly rate of pay. If this transition changes any benefits or the title, include that. Make sure the employee knows the new rules regarding tracking time, meal and rest breaks, and other non-exempt details. Although the total pay may not change, it’s still a good idea to give the employee a week or two notice of the change.
Keep in mind some employees feel the exempt classification is an acknowledgment of their value and level of position so they may feel they were demoted. That’s not the case so make sure they know you still value them.
“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
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 employees 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 employees may like the sound of implementing an FSA, do so very carefully and after you fully understand it. Since the IRS rules this, there are pros and cons for your company and for your employees with the healthcare FSA. For example:
Sam wants to set aside $1,500 so you divide that between all his paychecks for the plan year. Sam could use the whole $1,500 in January and the company is covering that… and waiting to be paid back throughout the year by Sam’s deductions. However, if Sam quits in March, the company has no way to recover the full amount used by Sam. On the other hand, if Sam didn’t have the medical needs he thought he would have and only had $200 in eligible expenses to submit, Sam would lose the excess he set aside and it would revert to the company. The IRS feels the healthcare FSA balances out because sometimes the company is the loser and sometimes it’s the employee. However, if the plan is explained to employees carefully, they are less likely to lose much money. The IRS sets the maximum allowed for use in this plan but the company can set a lower maximum to lessen the risk.
The dependent care FSA is much simpler. The employee cannot submit a receipt for more than they have already put into the plan. Therefore, the company doesn’t provide any advance. If the employee understands the plan and knows their expected expenses, this works great for them, too.
While the FSA plans can be very good, you want to fully understand the risks and limit your exposure. Buy the POP because you and your employees will save on taxes. Don’t assume you have one just because you are taking those deductions pre-tax or you may end up paying back taxes. Ask your broker to be sure.
“I have job candidates do a 1-day working interview before I decide if I’ll hire them. I write the candidates a check for the time but don’t put them on the payroll. Is this okay since I’m paying them?”
Your HR Survival Tip
Most “working interviews” involve having the candidate actually do the work they would normally do if hired. When you do that, you have created an employee who should be on your payroll. Writing a check to them instead of putting them on the payroll could be considered fraud because it shows you actually know you shouldn’t have them working without compensation.
The biggest problem is you aren’t paying state and federal payroll taxes and that can upset the governmental entities. The candidate can and might file unemployment on you, bringing you to the attention of EDD (CA’s Employment Development Division). Plus, if the candidate were injured during a working interview, you’d have to pay all medical bills yourself because this person isn’t on payroll so they won’t qualify for workers’ compensation.
The better interviewing solution is to develop some testing you can do with each candidate to give you a clearer picture of their skill or knowledge. Testing should be completed within 2 hours at most. Here are a few examples:
- Administrative – Provide the candidate with a printed letter or form to duplicate that has some particular formatting challenges, like a table, bold words, tabs, etc. When they’re done, look at the digital file to determine if they did it using the expected software features.
- Sales – Provide the candidate with an item to verbally sell you and see how they do.
- Data entry – Provide the candidate with a stack of forms that need to be input and watch their time and accuracy.
- Accounting – Have a dummy company set up already and have the candidate enter a few invoices, pay a few bills, and set up a couple of accounts.
- IT – This might be a questionnaire with issues the candidate needs to resolve or, for lower levels, the candidate might be put in front of a computer and asked to get it up and running (not knowing you left a cable unplugged).
- Physical ability – If you’ve been clear the job requires the ability to lift or move around items, present them with that physical test. Can they lift this object off the floor to table height and back down to the floor?
You must be consistent and provide the same test to everyone interviewed for that position or you could be seen as discriminatory. Every job has something you can test; you just need to be creative in figuring out what would give you the most information.
“I gave a large advance to an employee and we started deducting money from his paychecks to pay it back. However, he just resigned and still owes me $750. What are my options for getting the rest of my money?”
Your HR Survival Tip
Whenever a company “lends” money or provides equipment to an employee, you will always take the chance you won’t get it back. California does not allow you to deduct anything from that final paycheck. Yes, even if they have your phone or laptop or an outstanding loan, the value cannot be deducted without the employee’s express permission (in writing, to be safe).
At a minimum, at the time the money was advanced or loaned, you should have put into writing a repayment schedule and agreement for the employee to sign. You don’t want to start deducting money from an employee’s paycheck for any reason without written authorization (aka proof that it’s a legitimate deduction) from the employee.
Once the employee terminates, all bets are off. Since you can’t deduct the remainder owed from the final paycheck, you either have to hope the employee will send you the money or take them to small claims court. However, most companies don’t have the time or patience to use small claims court so the remainder is usually written off.
How can you avoid the loss? Instead of just setting up a repayment agreement, formalize the advance/loan with a promissory note. This should be a template from an attorney to ensure it has language allowing you to take legal action if repayment stops or even fails to begin. A legal promissory note gives you more options for collecting monies owed to you, including sending it out to a debt collector.
Of course, you avoid this problem if you only advance what can (and will) be repaid with the next paycheck. The employee could still terminate employment before the end of the pay period, but that’s less likely than over a longer period of time. Have your attorney create a template you can use if you tend to lend.
“If I have someone come to work one day just for a 30-minute meeting, do I have to pay them for the whole day? Also, what if they come to work but I don’t need them at all that day?”
Your HR Survival Tip
These are actually two different topics but they both fall under short days so we’ll cover both scenarios.
When you schedule an employee to come to work for less than a normal day, you only have to pay them for the scheduled time. You could schedule an all-hands meeting on Saturday that only lasts 30 minutes and you’d only be required to pay for that 30 minutes. Although, let’s be honest, your employees would probably stage a mutiny if you made them attend a short meeting on one of their days off! Be considerate and try to squeeze those short meetings into the regular workweek.
The other scenario happens much more often. You have 4 employees scheduled to work all day Thursday. However, Thursday morning arrives and you realize there isn’t enough work for all of them so you decide to tell Sam to go back home. You will owe Sam “reporting time pay.”
Reporting time pay means you are paying for one-half of their scheduled hours… but no more than 4 hours and no less than 2 hours. So, if Sam was:
- Scheduled for 8 hours, you’d pay for 4 hours (one-half of the scheduled amount).
- Scheduled for 2 hours, you’d pay for 2 hours (the minimum amount of reporting time pay).
- Scheduled for 6 hours, you’d pay for 3 hours (one-half of the scheduled amount).
- Scheduled for 10 hours, you’d pay for 4 hours (no more than 4 hours is due with reporting time pay).
Both your employees and your budget would appreciate better scheduling so you don’t have more employees showing up than is needed for the available work. Check your workload and the schedule… call employees (pre-bedtime ideally) to let them know you won’t need them tomorrow. They won’t have to get up early and you won’t have to pay them reporting time pay.
“I have a couple of employees who like long lunches and sometimes take 2 hours. They still work 8 hours but do I need to let them continue this?”
Your HR Survival Tip
There are practical and legal issues to consider when looking at long lunch breaks. While California requires non-exempt (hourly) employees to take at least a 30-minute meal break, the state can frown on breaks of more than one hour.
You do not have to allow any longer than 30 minutes for meal breaks but consider allowing just slightly longer (35-45 minutes) simply because you need to make sure they take at least 30 minutes. It’s hard to take exactly 30 minutes every day unless you have a very rigid schedule.
On a practical side, even if the employees work 8 hours, do their 8 hours work for you? If your business hours are normally 8a-5p but these employees stay until 6p to make up for the long lunch, is that last hour as productive for the business? Probably not if there are no customers after closing or the employees they may need to interact with have left for the day.
On the legal side, if you require the employee to take more than one hour for a meal break because you actually need them to work that hour later, this is considered a split shift. California has a payroll calculation for split shifts. The cost of using split shifts is one additional hour of minimum wage each day it happens. However, the way it’s calculated may not cost you anything. California has you apply anything over minimum wage normally paid to the employee toward that split shift pay. For example, if the employee is making $19/hour and the minimum wage is $16, you have a $3/hour overage you can apply to that one hour of minimum wage due. In a normal 8-hour day, the employee making $16/hour will have an overage of $24 ($3 x 8 hours) so you have covered split shift pay.
Overall, it’s best to stick with a standard meal break period and have employees request the additional time off as they need or want it. You then have the opportunity to approve or deny the extra time based on the business needs that day. Remember, you’re the boss!
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