Department of Labor. Overtime Protection

Today the Department of Labor announced a proposed rule that would extend overtime protections to nearly 5 million white collar workers within the first year of its implementation.  Failure to update the overtime regulations has left an exception to overtime eligibility originally meant for highly-compensated executive, administrative, and professional employees now applying to workers earning as little as $23,660 a year.  For example, a convenience store manager, fast food assistant manager, or some office workers may be expected to work 50 or 60 hours a week or more, making less than the poverty level for a family of four, and not receive a dime of overtime pay.  Today's proposed regulation is a critical first step toward ensuring that hard-working Americans are compensated fairly and have a chance to get ahead.

Living Wage for Washington Vetoed

Washington, D.C.'s Mayor Vincent Gray on Thursday vetoed the so-called "living wage bill" that would have required big-box retailers such as Wal-Mart to pay workers at least $12.50 an hour.

“While the intentions of its supporters were good, this bill is simply a woefully inadequate and flawed vehicle for achieving the goal we all share,” said Gray in a statement. Formally called the Large Retailer Accountability Act of 013 (LRAA), Gray's statement said the bill would have harmed job growth and economic development.

The bill had set up a clash between the mayor, the bill's supporters and the big retail chains that was being watched closely by labor and other cities across the nation. Workers at retailers and fast food restaurants have been holding increasingly large and vocal protests to boost the federal minimum wage of $7.25 an hour. Businesses have argued that raising the wage would end up harming workers by reducing jobs.

Wal-Mart had said it would not build three of six planned stores if the D.C. bill became law. The D.C. Council approved it in July on an 8-5 vote, which is one short of a veto-proof majority. Major U.S. retailers, also including Target Corp. and Home Depot Inc., had opposed the bill.

The bill would only affect retailers with stores of 75,000 square feet or larger, at least $1 billion in annual sales and non-unionized workforces.

The bill isn't totally dead, however. Washington, D.C.'s council can override the veto with a two-thirds vote within 30 days, according to The Washington Post. That vote could come as early as Tuesday.

Unemployment and Older Workers

The unemployment rate for workers aged 55 and over was 5 percent in July, according to the most recent data available from the Bureau of Labor Statistics.  That's still higher than historical averages but it's much lower than the overall unemployment rate of 7.4 percent, and below the unemployment rate for any younger group of workers.

Workers aged 55 and over also are the only ones to have seen their ranks grow substantially since 2007, the year the nation went into recession.  There were 31.6 million employed people aged 55 and over in July, according to the BLS, up from 25.9 million in July of 2007.  That's partly demographics:  As baby boomers age, more are becoming part of the 55-plus group.

The unemployment rate for Americans 55 and older is lower than for any other age group the government tracks, and far below the national average.  But if an older workers loses a job, the length of time that person will stay unemployed is typically much longer than for any other age group.

The government is scheduled to release August unemployment numbers on Friday, and forecasters are expecting the economy to have added around 200,000 jobs.

Working Families Flexibility Act (H.R.1406)

(Not to be confused with the Flexibility For Working Families Act)

Over heavy opposition by the Democrats, a hotly debated bill was passed May 8th by House Republicans that will potentially loosen federal overtime laws.  The bill would amend long-standing labor laws (the 75 year old FLSA) by allowing private-sector employers to offer compensatory time off in lieu of time-and-a-half pay for overtime.  (The protections under FLSA were put in place to prevent employers from abusing the system and avoiding paying overtime to workers who put in more than 40 hours per week.)

The supporters of the bill have pitched it as an update to federal law, with the obligatory fluff that "it's about helping working moms and dads, providing the ability to commit time at home," per Rep. Martha Roby (R-Ala). 

Under the bill, employees may use their comp time only at the employer's convenience.     If a business is necessarily inflexible when it comes to scheduling time off as the business may relay on a small number of employees for an entire function, then comp time may not be a viable alternative.  For the small employer, the concern may be the potential lost productivity and the additional paperwork for tracking comp time accrued and used.

Yes, the bill has put in provisions to protect against abuse, and only offers the workers a chance to opt for the extra time off if that's what they want.  But I side with the Democrats that such an option is ripe for abuse by unscrupulous employers.  The bill is a potential way for extra work to be imposed on workers with no additional cost to the employer. 

Vicki Shabo is the Director of Work and Family Programs of the non-partisan National Partnership for Women and Families.  Her organization is staunchly opposed to H.R. 1406 and sees it as a wolf dressed in sheep's clothing.  "This is a dangerous proposal that pretends to be something that will help working families.  It will take money out of worker's pockets for overtime pay that they otherwise would have received in wages and instead replace it with possibly an empty promise or a mirage of time that's out in front of them that they may never be able to take."

"For the record, there are many ways for Congress to improve both worker pay and work life balance, including raising the minimum wage, instituting paid sick leave, ending discriminatory pay practices, easing the formation of unions and promoting advance notice for worker scheduling,  The House bill ignores what is helpful and embraces what is harmful."  The New York Times, May 10, 2013.

I highly doubt that this bill will go much further. The White House stated in early May that the president would be advised to veto such legislation on the grounds that it would weaken protections in the Fair Labor Standards Act.

NLRA

Let's talk NLRA for a moment.  There appears to be some lingering confusion.

The federal National Labor Relations Act governs the rights and responsibilities of unions and private employers.  Excluded, with some exceptions, are public employees, independent contractors, employees of Federal, state or local government, etc. 

An employee doesn't have to be a member of a union to be protected under the NLRA as it protects the rights of employees to engage in "concerted activity."   "Concerted activity" takes place when two or more employees take action for their "mutual aid or protection regarding terms and conditions of employment."  This protection can extend to work-related conversations conducted on social media such as Facebook and Twitter.

Many employers prohibit employees discussing compensation or wage levels in the workplace, often communicating that such information is confidential.  These same employers would be surprised to learn that this policy or practice would violate federal labor law.    The National Labor Relations Act contains a provision, Section 7 (29 U.S.C. § 157), that gives all employees the right to "engage in concerted activities", including the right to discuss their terms and conditions of employment with each other. Section 8(a)(1) of the NLRA (29 U.S.C. § 158(a)(1)) makes it an unfair labor practice for an employer to deny or limit the Section 7 rights of employees. Based upon those two provisions, the National Labor Relations Board (NLRB) has taken the position for decades now that employers may not prohibit employees from discussing their pay and benefits, and that any attempts to do so actually violate the NLRA.

A couple of tips:

1. You can't prohibit employees from discussing compensation or benefits, but you can prohibit them from holding such discussions during assigned work hours.
2. Clearly communicate that employees are protected in discussing their own pay as well as pay and benefits of secondary employees if information was obtained through ordinary conversation with the second party. 
3. If information was accessed in a manner that was restricted, such as access to confidential files or other off-limit information, the company can take steps to uphold confidentiality.

Pending Legislation in Texas

Below is a small sampling of employment-related legislation filed in the Texas Legislature.   If passed and signed into law, these will have a tremendous impact on Texas employers.

HB238/SB237
Prohibition of employment discrimination on the basis of sexual orientation or gender identity or expression.

HB321
Deferred adjudication may not be used as a factor in employment decisions, housing or issuance of state licenses.

HB667
Puts leave for foster children on same basis as leave for biological or adopted children.

HB950
Incorporates federal law in the Lily Ledbetter Fair Pay Act of 2009.

HB1829
Relating to safe patient handling and movement practices at hospitals and nursing homes.  No retaliation or discrimination toward staff members who refuse to participate in unsafe handling of patients.

HB1188
Relating to limiting the liability of persons who employ persons with criminal convictions.  Tightens up on standards for proving negligent hiring and supervision of employees with prior convictions.

HB494/SB741
Extends to two years the time limit for filing a wage claim with Texas Workforce Commission.

SB340
If TWC finds bad faith on employer's part for failure to pay wages, it "shall" impose a penalty (instead of "may").

Happy Birthday to the Equal Pay Act

50 years ago today the Equal Pay Act was signed by President John F. Kennedy.  While equal pay is the law, the nation still faces gender wage disparities.  In 2012, women generally earned 77 percent of men's wages.  For African-American and Latina women, the number is even lower.    We have made progress, but it's not enough.

The Equal Pay Act requires that men and women in the same workplace be given equal pay for equal work.  The jobs need not be identical, but they must be substantially equal.  Remember that job descriptions and titles are irrelevant. 

On the front line of this battle is the EEOC who has made enforcing equal pay laws one of its six priorities as outlined in the Strategic Enforcement Plan.

The Importance of Training Managers

What is the cost to an employer when a manager doesn't recognize s/he is acting in a discriminatory manner?   Some managers don't seem to understand what discrimination means, or oftentimes how to recognize it.  Discrimination, and the cost of discrimination, is a problem that companies just can't ignore.

In an EEOC Press release of 1/23/2013 the Dallas-based Fries Restaurant Management will pay a former employee $25,000 to settle a religious discrimination lawsuit.  The employee, Ashanti McShan, is a member of the Christian Pentecostal Church which requires women to wear either skirts or dresses.  During the interview process with Burger King, Ashanti requested a religious accommodation to wear a black skirt versus the black uniform pants.  She was told by the interviewing manager that her accommodation would be granted.  However, during her orientation the store manager advised her she could not wear a skirt and had to leave the store.  McShan attempted to contact higher management, and was unable to speak with anyone.  She was later discharged as a result of the accommodation denial.   Title VII of the Civil Rights Act of 1964 prohibits religious discrimination.  It requires employers to make reasonable accommodation as long as such does not pose an undue hardship on the organization.   

Florida Courts:  In Hurley v. Kent of Naples, on or about 2005, Patrick Hurley was diagnosed with depression and related mental health symptoms.  The doctor who provided the diagnosis, and the therapist, both advised that he should take medical leave.   The employee advised the company senior officer that he had been diagnosed with depression and needed time off to deal with it.  Having accumulated several weeks of vacation, the employee requested to take most of the year off on vacation.   His request was denied and he was terminated.  Obviously an FMLA suit, alleging interference with FMLA rights and retaliation, followed and Hurley won.  (FMLA entitles eligible employees to take unpaid, job-protected leave for certain family and medical reasons.)    The estimated judgement:

• $200,000 for actual monetary losses
• $353,901.85 for front pay
• $200,000 liquidated damages
• $233,109.75 for attorneys' fees
• $21,329.36 for "costs."

Texas courts: In an EEOC press release of December 18, 2012, Dillard's will pay $2 million to settle a class action disability discrimination lawsuit. Dillard's Inc, enforced a maximum-leave policy limiting the amount of health-related leave an employee could take. Additionally, since 2005, Dillard's had a national policy and practice that required employees to disclose the exact nature of their medical conditions to be approved for sick leave. Further, Dillard's terminated a class of employees nationwide for taking sick leave beyond the maximum amount of time allowed. This policy violated the ADA which prohibits employers from making inquiries into the disabilities of employee's unless it is job-related and necessary for the conduct of business.  The second violation was that managers/supervisors (or even HR) did not regularly engage in an interactive process with employees to determine if more leave was allowed under the ADA as an accommodation.  (More information is available on the EEOC website.)  While you can't blame the managers for this company-wide form of discrimination, logically HR should have identified the violation and pushed for policy reform.  But, who's to say that they didn't?

When discharging an employee who just revealed the need to take time off for a medical condition, use caution. Make sure the discharge reason is unrelated to the request.  Remember, firing an employee who is pregnant has legal risk.  Firing an employee because she is pregnant is illegal.

Employers can take steps to prevent discrimination claims by ensuring that all managers are properly trained.  Please invest in training your managers. 

"The best way to begin is to begin." 
                        - Benjamin Franklin.

Concerted Activity

When you think of the term "concerted activity" there is often an automatic assumption that a union, or union activity, is involved.  But that's not always the case.  Section 7 of the NLRA states "Employees shall have the right to self-organize, to form, join, or assist labor organizations, to bargain collectively through representatives of their choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, and shall also have the right to refrain from any or all such activities. . . " 

 

Protected concerted activity sometimes has nothing to do with unions at all.   Employees who get together and complain to management about their pay or benefits is engaged in concerted activity.   Concerted activity can include internal complaints of discrimination, discriminatory harassment complaints, etc., all of which is protected by Section 7 of the NLRA.  

Effective Job Advertisements: A Bit Of Humor

For a job advertisement to be effective it needs to provide information that captures the interest of the best candidates.  And yet, it must avoid any discriminatory language that might violate federal or state laws.  The advertisement should provide enough information about the job, including the education, experience and skills that will allow the candidate to decide whether or not s/he is a fit.  For just a moment I want to poke fun at a few current job advertisements I ran across.

For the first advertisement, let's roll on over to Craigslist/Houston and look at the advertisement for a "National Director of Human Resources."  We all know that there are guidelines for employers to use during the selection process. These guidelines ensure that the information requested is of business necessity only and is job-related.  This organization wants a complete profile including a picture and a short video of the candidate.  Really?  Requesting that an applicant submit a photograph, mandatory or optionally, at any time before hiring is an unfair pre-employment inquiry.  Can you read potentially discriminatory?  Employer please take note, it is totally acceptable to request a photograph after hiring and if for identification purposes.

Example number 2 can be found on CareerBuilder.com.  A real estate organization in San Antonio is seeking an HR Department Manager.  The posting reads, "Human Resource experience is not required."  Okay, not a problem - if there was an educational requirement in lieu of experience!  This organization is requesting that the individual create policies and procedures and be responsible for employment law.  There is a long laundry list of responsibilities for the position. As a potential employer, you should ponder some of the basic requirements of the position.  Take the time to properly identify and develop a description of the required behaviors, abilities, skills, and knowledge of the position.  My 17 year old could apply for the position and, theoretically, couldn't be disqualified from the application process.  He does have the reliable transportation, a valid driver's license and vehicle insurance that is requested in the posting.  With a base pay of $45 - 90K, I'm sure he'd just love it. 

 

The last posting, back at Craiglist/Houston, advertises a "2-day HR Gig."  The potential employer is requesting a "very experienced HR professional (2-5 years)" to work with them on a two day engagement.  The job?  Represent the employer on a two day "introduction presentation/session" with a client.  The individual is coached and prepped on the company, then on day two, the individual presents the information to the client.  The compensation for this jewel of a job "will be interesting" according to the advertisement.  I'd run from this one.  But, if any brave soul accepts this position, I'd be morbidly interested in the details!  I think there's smoke and mirrors involved here.

 

Happy recruiting!

Fiscal Cliff: Payroll Department Take Note!

With Congress averting the plunge off the fiscal cliff, here's a couple of items for payroll professionals to take note of.

H.R. 8, The American Taxpayer Relief Act of 2012, made permanent Bush-era tax rates for all but the highest earners.  This means no tax increase in income tax rates for employees taxed at the 10%, 15%, 25%, 28% and 33% rates.  It is anticipated that President Obama will sign the bill this week.  H.R. 8 also includes a few other payroll provisions including; the employer wage credit for employees who are on military leave is extended retroactive to January 1, 2012 and will expire on December 31, 2013; and, employer-provided educational assistance under tax code Section 127 is permanently extended.

Effective January 1, employers must resume withholding at the 6.2% Social Security payroll tax.  Congress declined to extend the payroll tax economic stimulus that took place in 2011 and 2012 in which the employee's share of payroll tax was lowered to 4.2%.  Underwithholding should be corrected as soon as possible, but not later than March 31, 2013.  Consider notifying employees this week of changes that will impact their take-home pay! The increase to 6.2% for employees means that an employee with an income of $50,000 to $75,000 will pay an average of $985 more in taxes. 

On January 1 the IRS released the 2013 Percentage Method Tables indicating that employers should implement the 2013 tables ASAP, but not later than February 15th.  Unfortunately these tables do not reflect the H.R. 8's tax brackets.  Keep an eye out for updated tables.  In addition to reissuing the 2013 withholding tables, we're waiting on the release of the 2013 Form W-4.

Happy New Year!

 

Wage & Hour Division: Right To Know Rule

Previously DOL's Wage and Hour Division announced plans to update recordkeeping requirements that are associated with the Fair Labor Standards Act.  The DOL stated that it “proposes to update the recordkeeping regulations under the Fair Labor Standards Act in order to enhance the transparency and disclosure to workers of their status as the employer's employee or some other status, such as an independent contractor, and if an employee, how their pay is computed.”  

Identified as the "Right to Know" rule, the DOL’s original timeline for the regulation was October 2011.   In the most recent edition of the Unified Regulatory Agenda, published on January 20, 2012, the DOL moved the “Right to Know” rules into a category labeled “Long Term Actions.” The DOL defines “Long Term Actions” as those items “under development but which the agency does not expect to have a regulatory action within the 12 months after publication of this edition of the Unified Agenda.” That initially put off any action on the Right To Know until at least January 2013.

With the re-election of Obama, the "Right to Know" rules are expected to re-emerge as a major issue to workers and we can now expect the department to move forward once again on this proposal.

Under the FLSA, employees are entitled to overtime unless they're executives who manage, hire and fire employees; administrators who make key decisions; or professionals with advanced degrees, among other criteria.  (Also exempt are IT workers and sales representatives.)  Rank and file employees are commonly and wrongly classified as exempt.   These low-level employees, with limited responsibilities, are dressed up to look like managers so that employers don't have to pay for overtime.   U.S. workers are putting in more than 40 hours per week through a variety of practices including:

• Jobs misclassified as exempt;
• Smartphones and other technology allowing business to bleed into personal time; and,
• Employees working off the clock.

Acting Wage and Hour Administrator Nancy Leppink called the Right to Know rule one of the Wage and Hour Division's priorities, stating "We're continuing to work on that regulation," and that "We're learning about what the issues are" from the Department's ongoing misclassification enforcement initiative.

A record-high 7,064 FLSA suits were filed in federal court during the year-long period ending March 31st.  The WHD reported that over $225 million in back wages for FLSA violations were collected during this period.   These numbers provide reinforcement for the belief that FLSA claims will continue to gain momentum into 2013 and beyond.  

Employers know that FLSA collective actions are more prevalent than ever and they are costly to defend or resolve.  With the majority of the lawsuits pertaining to employee misclassification, it's an incentive to the employer to carefully review how employees are classified. 

 

Exempt / Non Exempt

If your organization is struggling with the exempt / non exempt issue, the below article by Business Management Daily provides some good advice.

'Explosive' growth in wage lawsuits; cases hit all-time high

U.S. employees filed a record 7,064 federal wage-and-hour lawsuits in the fiscal year ending June 30, "a continuation of the explosive growth in these suits that has marked the past decade,” according to attorney analysts at the Seyfarth Shaw law firm.

The three most common triggers: misclassification of employees, unpaid off-the-clock work and miscalculation of overtime pay. In its recent report, the firm said that class actions under the FLSA are dominating the legal scene. Another notable trend is the increase in back-wage suits on behalf of higher-income employees, such as those in financial services.

In both types of suits, the key is the time an employee puts in outside regular work hours. Companies should be particularly careful about hourly employees working extra time while off the clock. Even five or 10 minutes worked voluntarily off the clock can add up to a large verdict when multiplied out over a period of years.

Advice: Make it clear to all hourly employees that you prohibit any work over breaks, or before and after shifts.

In one recent lawsuit, a company allowed administrative staff to track their own hours on time sheets. It also allowed them to take comp time. It could only rely on handwritten time records when disputes arose over how much time employees had worked, how much the em­­ployer owed them and whether some of the comp time should have been overtime. In such cases, the employer loses because it's the employer's responsibility to keep proper records.

Record-keeping requirements for exempt employees differ from those for nonexempt workers.

Exempt records to keep

Because you don't pay exempt em­­ployees by the hour, you shouldn't track the exact number of hours they work on a daily basis. Doing so might appear to a wage-hour auditor as if you are indeed basing pay on the number of hours worked, which might raise the question of whether the employee is truly exempt.

However, just because a worker is exempt doesn't mean your company is freed from keeping records on him. With exempt workers, you should keep records that describe the workweek and the wages paid for that period. Specifically, you should keep the following records concerning exempt staff:

• Personal information, including name, home address, occupation, gender, birth date for workers under age 19 and the person's workplace identification number
• Time of day and day of the week when the workweek begins
• Total wages paid each pay period
• Date of payment and the pay period covered by each payment.

Your records for exempt employees also can track the days employees use for sick, vacation and personal leave.

 

Exempt records to keep

Because you don't pay exempt em­­ployees by the hour, you shouldn't track the exact number of hours they work on a daily basis. Doing so might appear to a wage-hour auditor as if you are indeed basing pay on the number of hours worked, which might raise the question of whether the employee is truly exempt.

However, just because a worker is exempt doesn't mean your company is freed from keeping records on him. With exempt workers, you should keep records that describe the workweek and the wages paid for that period. Specifically, you should keep the following records concerning exempt staff:

• Personal information, including name, home address, occupation, gender, birth date for workers under age 19 and the person's workplace identification number
• Time of day and day of the week when the workweek begins
• Total wages paid each pay period
• Date of payment and the pay period covered by each payment.

Your records for exempt employees also can track the days employees use for sick, vacation and personal leave.

Nonexempt records to keep

With nonexempt, hourly employees, you need to collect more details:

• Personal information, including name, home address, occupation, gender, birth date for workers under age 19 and the person's workplace identification number
• Time of day and day of the week when the workweek begins
• Regular hourly pay rate for any week when overtime is due (include an explanation of the way wages are paid—such as per hour, per day, per week, per commission—plus the amount and nature of each payment that's excluded from the regular rate)
• Hours worked each day and week
• Total daily or weekly straight-time earnings (not counting overtime)
• Total weekly overtime earnings
• Total additions to or deductions from the employee's wages each pay period, plus an explanation of the nature and dates of those additions or deductions
• Total wages paid each pay period
• Date of payment and the pay period.

If employees are working under a special certificate that allows you to pay below minimum wage—such as a "training” wage for students—your records must note that fact, too.

And for how long

The FLSA requires you to keep the following records for at least two years:

• Basic employment and earnings records
• Work-time schedules (timecards)
• Wage rate tables
• Order, shipping and billing records
• Records of additions to or deductions from wages paid.

In addition, keep these records for at least three years:

• Payroll records
• Employee agreements, such as collective bargaining agreements and individual contracts
• Sales and purchase records.

Yes, Congress has tinkered with the FLSA over the years.

Yes, the Labor Department has issued pages of regulations, interpretations and examples.

Yes, these changes are often confusing for employers and workers alike.

Is that an excuse for misunderstanding the law? No.

The FLSA is complicated and full of traps for unwary employers. And attorneys who represent unhappy workers are ready to take advantage of any misstep you take. Your best protection is awareness. Make sure you understand the fine points of the law, and work to ensure that your business is in compliance.

From the Ground Up, The Performance Appraisal

We all know how important a PA process is even if the annual process is about as much fun as a root canal.  It's a necessary evil for all businesses.  Employees need formal feedback.  When they don't have it they feel ignored. If they feel ignored, do you think they'll be motivated to go the extra mile?  Probably not.

Now, take a company with 100+ employees that has no PA program in place, and the fun begins.  The entire PA process has to be developed from the ground up. 

Process:  What type of process should be used?  An on-line appraisal?  Paper-based appraisal?  Electronic or manual tracking program?   What type of rating system will be used?  Should a software program be purchased?

Manager Training:  The value of the PA process.  Legal aspects.  Manager PA preparation.  Conducting the PA.  Rater Errors.  Setting Goals/Objectives.  What are the do’s and don’ts of the PA?  And, most importantly, what is the definition of leadership? 

Timing:  Focal/Common Review Dates or Anniversary Review Date?  What are the pros/cons of each?  What option is best for the organization?  For the employees?   Will the performance appraisal process be tied to annual compensation increases?

Assessment:   What are the competencies that should be addressed?  Adaptability?  Analytical skills?  Conflict resolution?  Dependability?  Motivation?  Teamwork?  Will the competencies be different for salaried and hourly employees?

Objectives:  Develop a training program for the managers.  Discuss SMART objectives.  Why are objectives necessary?  What are the company goals?

Performance Improvement Plan:  Develop a process that will tie to the PA.  Train managers in the proper application and development of a PIP.   Discuss potential liabilities in a PIP.  Can I have different completion dates for different employees on a PIP?  What if the employee doesn't successfully complete the PIP? 

Salary Increases:  Merit increase?  Equity pay adjustment?  Discretionary pay increase?  COLA?    Do the managers require training in identifying the different types of increases?  Develop an approval and reporting process for any compensation adjustment.  Are there salary bands in place?  Do we need to develop competitive pay bands? 

The above are just a few of the issues that will need to be addressed.  And I'm sure the list will grow!

Final Pay

Contrary to popular belief, employers are NOT required by Federal law to give former employees their last paycheck immediately.   However, states may regulate the timing of final pay so employers are always cautioned to check their state regulations.

In Texas, the timing of final pay is regulated by the Texas Payday Law, Section 61.014.  Under the Texas Payday Law, the timing of final pay is based upon the circumstances of the employees termination.   Did the employee resign or was the employee terminated?

In those situations where an employee voluntarily resigns, quits, retired or other wise leaves employment voluntarily, the final pay is due on the next regularly-scheduled payday following the effective date of resignation.  However, if the employee is laid off, fired, or in any way involuntarily separated from employment, the final pay is due within six (6) calendar days of the discharge.

 

States differ with respect to the handling of final pay.  For instance, in California if an employee is fired, s/he must receive their check immediately.  If the employee quits, s/he must receive their final check within 72 hours.  For Connecticut, final pay is due on the next business day if the employee is fired.

 

One of the most frequent questions I am asked pertains to withholding funds from an employee due to loans, cost of company equipment, etc.  As an employer, legally you can NOT make such a deduction unless you have the employees written authorization prior to making such a deduction.  Additionally:

• Depending on the state where you and/or your employee reside, there may be additional restrictions.
• Even where deductions are authorized, the employer may not reduce the worker's final check below the applicable minimum age.

In closing, carefully check your state laws to ensure that you handle an employee's final pay properly.

H.R. 1004: Medical FSA Improvement Act of 2011

The Medical Flexible Spending Account Improvement Act of 2011, introduced recently by Reps. Charles Boustany (R-LA), John Larson (D-CT), Erik Paulsen (R-MN) and others, aims to encourage more people to use health care FSAs by eliminating the so-called “use-it-or-lose-it” rule.

The Medical FSA Improvement Act of 2011 amends the IRS Code to allow amounts in FSA (Flexible Spending Arrangements) plans, that are NOT spent for medical care, to be distributed to the participant as taxable income after the close of the plan year.  Previously such unspent amounts were forfeited by the participant to their employers at the end of the plan year (or grace period where one was offered).

The new bill, passed by committee by a 23-6 vote, would allow employees to withdraw up to $500 in taxable cash at the end of the plan year (or grace period). And the withdrawal would have to be made within seven months of the end of the plan year.

The Congressional Budget Office issued a summary regarding the impact of H.R. 1004 on the Federal Government.  In the report, the office states that “. . . . estimates that enacting H.R. 1004 would reduce revenues by about $4 million over the 2012 – 2022 period.”   

In related news:  

Earlier the IRS announced it would consider “modifying” the 28-year-old “use-it-or-lose-it” rule because the new $2,500 cap on FSA contributions limits individuals’ ability to defer large amounts of tax-free compensation into an FSA.  

The IRS guidance (www.irs.gov/pub/irs-drop/n-12-40.pdf) clarifies these aspects of that rule:

• The rule is effective for plan years starting on or after Jan. 1, 2013. The limit does not apply to plan years that begin prior to 2013.
• Employer contributions do not count toward the $2,500 limit.
• The limit is per employee. If a husband and wife both work for the same employer, each may make contributions of $2,500 per year.
• Grace period amounts from 2012 carried into 2013 do not count toward the limit. Plans can provide up to two months and 15 days in which salary contributions may be used by the employee before being subject to the “use-it-or-lose-it” rule, and the carryover does not count against the subsequent plan year’s $2,500 limitation.
• If an employer, due to “a reasonable mistake,” allows an employee to contribute more than $2,500 out of his or her salary, and the mistake is corrected by the employer, the plan will not cease to be a valid plan.

The 10 Most Common Legal Mistakes HR Makes

Business Management Daily recently ran this great article outlining common legal mistakes that "HR makes."  Well, those mistakes can be made by any employer, supervisor, and/or business leader out there.  Not just "HR."  While a lot of this is just plain common sense, we all get busy from time to time and make a mistake. 

 #1: Advertisements, Interviews, and Offer Letters

Mistake: improper language in job advertisements. Too many employers still use inappropriate terms — such as "girl," "boy," or "young" — in their job advertisements. This is particularly true when managers, rather than HR, write the ads.

Mistake: unlawful interview inquiries. Too many hiring managers ask about personal and/or protected characteristics during job interviews, which sets the employer up for a discrimination lawsuit if the applicant is not hired.

Mistake: inaccurate description of the job. Some hiring managers work so hard to get top-notch recruits in the door that they fail to be realistic with their description of the job. The unhappy employee will leave, and it will have been a shameful waste of the employer's time and money.

Mistake: inadvertent creation of contractual promises. Too many employers include language in their job offer letters that inadvertently creates an employment contract. For instance, mentioning a yearly salary implies a yearly contract.

#2: Wage and Hour Issues

Mistake: misclassification of workers. Exempt vs. non-exempt status: Finding and correcting these mistakes are an Obama administration priority. While there are many factors to consider, you're basically basing your determination on the employee's level of responsibility and/or training, and a salary test.

Mistake: mandating confidentiality of wage information. Prohibiting employees from discussing their wages is a violation of the National Labor Relations Act.

#3: Privacy Assumptions and Violations

Mistake: permitting an expectation of electronic privacy. Too many employers fail to advise employees to expect no privacy on their computers. If you asked employees, "Do you think the stuff you put into that computer is private?" you might get some interesting answers.

Mistake: improper electronic monitoring. Some states have statutes that require employers to give employees notice if they are being monitored electronically.

Mistake: inadvertently revealing private employee information. HR possesses a great deal of sensitive information about individual employees. It is your duty to keep that information confidential.

#4: Training and Performance

Mistake: failure to train supervisors. When supervisors are not trained, they're the ones who get you into trouble. They may say rude, racist, or sexist things, or be unintentionally discriminatory, and because they are in a supervisory position, the entire company is on the hook.

Mistake: misleading performance evaluations. If you try to discipline an employee for a performance/behavior problem that was never noted on their evaluation, your hands may be tied.

#5: Rough Beginnings and Sharp Endings

Mistake: sloppy start. Among HR's common errors in this area are: failing to submit the state notice of a new hire; failing to tell the employee the key terms and conditions of employment; and providing the employee with a misleading description of working conditions.

Mistake: sloppy finish. Regardless of whether a termination is voluntary or involuntary, always allow the employee to leave with dignity.

#6: Investigations

Mistake: failure to oversee supervisory investigations. As an HR professional, you know that timeliness and thoroughness are important in an investigation. But what about when a supervisor is the one investigating, not HR? It's still HR's responsibility to provide oversight.

#7: Record-Keeping/I-9 Issues

Mistake: failure to document past practices. Courts love to know not only whether the treatment of an employee was against the law or company policy, but whether it was in line with past practices.

Mistake: failure to comply with Form I-9 requirements. Failure to complete the I-9 form properly and failure to keep the form in a separate file are common mistakes employers make.

#8: Breakdowns In Communication

Mistake: failure to keep employees in the loop. Forgetting to notify employees about policy/procedure changes, outcomes of investigations/discipline issues, or unsatisfactory behavior or work quality can be a costly slip-up.

#9: Accommodations

Mistake: failure to explore accommodations. "Accommodation" can be defined as "a determination in favor of the employee." Employers should explore accommodation options when an employee: has a disability, is pregnant, is called to active military duty or has a family member called to active military duty, or wants to engage in a religious observance/practice.

#10: Non-Compete Agreements

Mistake: unreasonable scope. Obviously, an agreement prohibiting an employee from working at any position in the same general industry forever and ever isn't going to hold water.

Mistake: lack of consideration. Legally, contracts are valid only if both sides give something. If the employee gives up their right to compete, the employer must also give something. Too often, the employer gives nothing, making the non-compete agreement invalid in a court of law.

Paycheck Fairness Act Fails In Senate

Senate Republicans blocked the Paycheck Fairness Act which would have ensured that women are paid the same amount as their male counterparts.  The final vote was 52-47, effectively killing the bill for the time being.  Senate Republicans voted against the measure in the belief that it would adversely affect businesses if employees attempted to file pay-related lawsuits.

The bill would have required employers to prove that any discrepancies between male and female pay are job-related and not based on discrimination, and was pushed in part by a census report which concluded that women typically earn 77 cents for every dollar their male counterparts earn for the same position.

Senate Majority Leader Harry Reid (D-Nev.) used a procedural maneuver that gives him the ability to reintroduce the bill at a later date.

Paycheck Fairness Act 2012

Headline “Republicans voted no to equal pay for women: Act goes to Senate June 5^th.” And that's a recent May, 2012 headline. And if you don’t believe me, follow the link to the actual article: www.allvoices.com/contributed-news/12275353-the-paycheck-fairness-act-up-for-vote-next-tuesdaytell-your-senator-its-time-women-receive-equal-pay

This isn’t a new topic, or a new bill. Remember, a Paycheck Fairness Act was previously pitched in 2010. It failed 58– 41.

Let’s talk about Gov. Romney for a moment. Teamsters General President Jim Hoffa called on GOP presidential nominee Mitt Romney and the Republican Party to prove they haven't declared war on women and workers by supporting the Paycheck Fairness Act. Romney has refused to take a stand, or respond. Even the Washington Times has been unable to get a response to the five messages they’ve left him. He’s rather silent on the issue, which I feel says it all.

 

 

Gender bias in action? Yes? No? Who knows? All I know is that I agree in paycheck fairness no matter your sex, race, religion, etc. Data suggests that women make .77 on every dollar that men do. Claycord Congressman George Miller stated that women in California earn 84 cents for every dollar a man earns. That means California women have been paid $8,151 less than men by the end of that year. Same experience, skill, education,title, etc. And yet the pay differs.

Since I’m blogging from the great State of Texas, let’s look at Texas statistics.

• In 2010, the typical woman in Texas working full time, year round, was paid only 80 cents to every dollar paid to a man working full time, year round. That's 3 cents narrower than the nationwide wage gap of 77 cents.
• The wage gap persists at all levels of education. In 2010, women in Texas with a high school diploma were paid only 67 cents to every dollar paid to men with a high school diploma. Comparing women and men in Texas with a bachelor's degree, the figure was 69 cents. In fact, the typical Texas woman who has received an associate's degree or completes some college still isn't paid as much as the typical Texas man who only graduated from high school.
• The wage gap exists across occupations. For example, Texas women working full time, year round in 2010 in management, business, and financial occupations were paid only 71 cents to every dollar paid to men in the same occupations, and Texas women working full time, year round in sales and related occupations were paid only 57 cents to every dollar paid to men in the same occupations.

The above statistics provided by National Women’s Law Center. The Importance of Fair Pay for Texas Women. April 2012. www.nwlc.org

The Equal Pay Act was passed in 1963, almost 50 year sago. And yet, unfair pay practices still exist. The new Act will hold employers accountable for pay discrepancies between male and female employees while strengthening incentives to prevent pay discrimination. The employer will have to provide a valid explanation as to why a male employee, with the same qualifications/experience, is making more than his female counterpart. The employer must be able to show that wage differences are job-related, not sex-based, and are driven by business necessity.

Everywhere on the Internet, people are chiming in on this sensitive issue. Petitions are being circulated for signature. www.momsrising.org/member_stories/topic/pay-discrimination-stories/?action_id=10534741&akid=.2017705.N-Qc-v&form_name=act&rd=1

Let’s wait and see how this all unfolds. I’ll have an update for you after June 5^th.

Overtime Pay

USA Today ran an article "More American workers sue employers for overtime pay." Did you happen to read the article?

We all know where this is going. .. Lawsuits continue to increase as employees demand compensation for overtime. The technology that exists in the business world today often allows work to infringe into the personal time of employees. Personal computers, Blackberry's, smartphones, all increase the accessibility of employees and increase the off-the-clock demand of their employers.

The DOL responded to this technology by the introduction, in May of last year, of the DOL-Timesheet App. Introduced as a new electronic timesheet that allows employees to track the hours they work (in addition to break time, calculating overtime, etc.) as well as assist employees in determining the wages they are owed. The intent of the app was to provide workers with a tool that they can use to obtain wages they feel they were owed. "This app will help empower workers to understand and stand up for their rights when employees are denied their hard-earned pay," explained Labor Secretary Hilda Solis.

In a survey by the HR Policy Association last year, a third of the 155 large member firms that responded said they've restricted telecommuting as a result of the lawsuits, and 56% said they've curbed the use of communications devices outside the office.

To quote the USA Today report; "Labor has added 300 wage and hour investigators that past two years, increasing its staff by 40% to 1,050." The department "has stepped up its efforts to protect workers," particularly "in high-risk industries that employ low-wage and vulnerable workers," such as hotels and restaurants, says Nancy Leppink, deputy administrator of the wage-and-hour division.

Misclassification of employees is often at the heart of such cases. In November, Oracle agreed to pay $35 million to settle claims by 1,666 software testers, technical analysts and project managers that they were denied overtime because they were misclassified as administrators or professionals. The company did not admit wrong-doing.

73% of Wage/Hour investigations result in findings. The norm is that those findings are to the benefit of the employee. And, depending on the state you reside in, in "unjust enrichment" states, common law may allow the courts to go back up to 6 years for calculating back wage payments.

Yes, the DOL is employee friendly. An an employer you need to take the steps to ensure you have your employees properly classified.

Thanks Keith for the heads up on this article!