“I have an employee who isn’t doing well but I’m reluctant to fire him because I’d have to pay unemployment. What should I do?”
Your HR Survival Tip
Worrying about whether an employee will collect unemployment is never a good reason to keep a bad employee. That bad employee will bring down morale and productivity in your company.
EDD (CA’s Employment Development Department) keeps track of all your employees and you are legally required to notify EDD each time you hire an employee. Payroll companies will usually do this for you but you want to make sure that’s happening. This is how they know who has been working with you (legally).
Your initial unemployment rate is pre-determined by your industry’s standard for unemployment claims. Whether it goes up or down is based on the quantity and size of claims you have. However, it seems like it’s really hard to lower your rate. The monies paid through your taxes are put into a state pool and they track your company’s share of the pool.
When an employee files a claim, EDD looks back at the employee’s earnings over the last 4 or 5 full quarters to determine the amount of weekly unemployment this employee can earn. If you were not the only employer in those quarters, the amount pulled from your pool would be a percentage. For example, if you were the employer for only one of the four quarters, your pool would pay just 25% of the unemployment paid to the employee.
If an employee asks EDD how to re-open a claim, the employee is told they need only work one day to be eligible. There is no minimum time an employee needs to be working for you to be eligible for unemployment. One day of work can qualify them for unemployment.
California wants to provide unemployment to individuals so they make it pretty easy for ex-employees to file. Lately, it seems the only reasons an employee may not receive unemployment is when they resign or for insubordination (e.g., rude/yelling at a supervisor in front of others… but it’s not insubordination if the employee and supervisor are alone).
When you receive a claim, only respond to the notice if you feel you have a good reason to fight the claim and want the opportunity for a hearing to give your reason. Otherwise, just file the form upon receipt… it does tell you this if you read the form carefully If you are fighting it, act fast. There is a very short deadline and EDD may not accept a late request for a hearing.
If you attend a hearing, bring copies of anything pertinent you’d like to give the judge and add to the file. Also, arrive early and ask to see the file. This will give you the opportunity to see what the employee told EDD. When you are in front of the judge, do not speak until asked a question by the judge or the judge has told you to speak. You will get shut down quickly if you try to respond to anything the employee is saying before the judge gives you permission to talk.
Instead of worrying about unemployment, you might give some thought to the training and supervision given your employee… are you allowing them to go bad? Time spent working with employees to ensure their success may result in fewer unemployment claims.
“I am expecting money from my receivables and an investor. However, right now I’m strapped for cash for payroll. What are my options?”
Your HR Survival Tip
Whenever money is tight, you need to understand your legal obligations and work to satisfy those before going further. Payroll is one of those obligations.
There are a few ways you can reduce your current payroll cost, which is often one of your largest operating costs. However, you cannot legally withhold or delay paychecks. An employee must have their paycheck within 7 or 10 calendar days after the period worked. The difference of 7 versus 10 is based on which payroll cycle you have (i.e., semi-monthly, weekly, etc.). No matter what your employees might say or agree to; you must pay on time.
You also can’t move the pay date. Even if the new date is within the required time frame, another rule is that you need to keep to the promised schedule. If you’ve said the pay date is the 5th and the 20th, then you must stick with that.
Consider just being honest with employees that the company is going through financial issues and you need to make some immediate changes. Options you could implement are below. When considering these options, either have the choice affect everyone or choose the individuals carefully so the chosen few won’t be viewed as discriminatory.
- Cut back on schedules — Reduce employees’ working hours temporarily.
- Cut back on wages — Reduce the amount each employee is paid temporarily. For example, a 10-50% pay cut until you have sufficient funds for payroll. If and when you receive the expected monies, you can opt to catch them up. However, you could keep the pay cut but you need to recognize employees may leave rather than continuing to work at reduced wages.
- Reduce your headcount — A layoff is appropriate if you plan to hire the individuals back. Otherwise, consider a more permanent reduction in force (RIF)… this is better known as downsizing.
The bottom line is, if employees are putting in hours, they must be paid in full and on time. You can’t play with that. The only thing you can do is reduce your payroll to a level that is affordable right now. Don’t wait until you’re facing a payroll with no money. Not only is that bad for morale but you could end up with fines and penalties that could make your financial situation even worse.
“I want to hire a few high school kids for the summer. Do I need to do anything special?”
Your HR Survival Tip
Schools are ending and students are eager to get a summer job. However, when hiring anyone under 18 years of age, you want to be careful of the child labor laws. There are differences for the age of the minor, as well as whether they have graduated.
A minor, for the purpose of California’s child labor laws, is considered to be anyone under 18 who has not yet graduated high school or passed the High School Proficiency Exam. However, federal law doesn’t care about schooling and that law applies to everyone under 18 years of age.
Minors need a Certificate of Age form completed and signed by the employer and parent or legal guardian. This form is also called Statement of Intent to Employ a Minor and Request for a Work Permit. It has a long title but is basically a pretty simple form. This is where you’ll list the hours and days you intend to have the minor work. This form also covers you for the federal law. Even a minor in your own family needs to have this form completed. A work permit is required even when the school is having a winter or summer break.
- The minor obtains the Statement of Intent form from their school or online and completes the “Minor” section.
- The minor requests that the employer and their parent/guardian complete their section of the form, then returns it to the appropriate school authority.
- The school verifies the information and, if the requirements are met, may issue a work permit (“Permit to Employ and Work”).
- Once you have received the work permit, you can add the minor to your payroll and set their schedule.
Minors as young as 12 may qualify for a work permit but the younger they are, the tighter the rules. Even a minor who is 14-15 can only work for 3 hours per day (18 per week) but not during school hours when school is in session. It should be no surprise to learn that minors who are 16-17 years old have the most freedom in their work schedules. For example, a 16-17 year old can work 4 hours on school days or 8 hours on non-school days while school is in session. They can work 8 hours when school isn’t in session. There are very specific schedules for the different ages, including time of day, so make sure you match the schedule to the age of your minor employees.
This is just a general summary so be sure to review the laws that pertain to what you’re trying to do. Don’t forget to notify your workers’ compensation carrier because you are obligated to have coverage for your minors. Since most minors are hired to just do basic work, plan on paying minimum wage. You may be the first employer for your minor so you’ll need to train them on using timecards and taking rest and meal breaks. No pressure, but their time with you could be a life-altering experience. Make it a positive one!
Part 1 of this article covered pregnancy-related leaves to the delivery and medically-related disability period. Part 2 will discuss the options for the employee once the doctor has released her from the medical disability (usually with 8 weeks from the date of birth).
Your HR Survival Tip
Once the medical disability period is over, additional leave is considered baby bonding time off. Baby bonding is time off for either parent to bond with the baby within the first 12 months from the date of birth. All leaves available for baby bonding are unpaid time off and availability and job protection is dependent on the size of the company.
Many people believe Paid Family Leave is a leave to which they are entitled but that’s not true. This is actually a supplemental pay plan that is available ONLY IF the company or a law allows the employee to have baby bonding time off. The employee must qualify for a leave of absence before Paid Family Leave is available.
Leaves in companies with less than 20 employees — The only leave available in companies of this size is a personal leave of absence. The company is not required to offer personal leaves and, if they do, the leave does not include legal protection of the employee’s job.
Leaves in companies with 20-49 employees — The New Parent Leave Act (NPLA) provides either parent up to 12 protected weeks off for baby bonding within the first year. The time off must be in 2-week blocks except on 2 occasions.
Leaves in companies with 50 or more employees — Family Medical Leave Act (FMLA) and California Family Rights Act (CFRA) provide either parent with up to 12 protected weeks off by baby bonding. Leave may be taken intermittently within the first year of birth. The employee’s same or similar job must be provided upon her return to work.
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Companies have a legal obligation to provide a location where the mother may express milk in private. There are many rules regarding the locationÖ it must be a lockable room, it cannot be the restroom, it must contain a refrigerator for the milk, etc. Women are expected to express milk primarily during rest and meal breaks. Employees should give the company as much notice as possible when planning to return to work so the company has time to create a lactation location, if needed.
As mentioned in Part 1, pregnancy leave is very protected in California. Both the employee and the employer have rights. These articles are just a synopsis to provide a basis understanding but you need professional advice when this situation arises. Learn how the law applies specifically to your company so you can handle pregnancies with confidence.
The law and processes about pregnancy leave are often misunderstood and a concern with smaller employers. This is part 1 of 2 articles that will, hopefully, answer many of your questions.
Your HR Survival Tip
A pregnancy is treated the same as any other medical disability and, for that reason, everything is tied to a doctor’s note. In California, this is the most protected leave we have, over time they have closed all the loopholes. You are subject to this law when you have 5 or more employees, counting the owner(s).
Upon hearing an employee is pregnant, the company should provide the employee the following:
- Pregnancy Disability Leave notice
- Pregnancy Disability Leave brochure
- State Disability Insurance brochure
- Paid Family Leave brochure
Doctor’s notes help protect the employee because it keeps the absences under the pregnancy-related disability. Therefore, if the employee misses work due to morning sickness or any other reason remotely tied to a real or perceived pregnancy, a doctor’s note is needed. The doctor should be asking the company to accommodate these absences. You want the doctor’s note even if the employee has ample sick/PTO time available due to the protections. If your employee is coming in late, etc. and blaming it on the pregnancy, tell her she must have a doctor’s note or the time off won’t be protected. This also helps ensure she is getting proper medical care throughout the pregnancy.
When the delivery date is getting close, the employee must have a doctor’s note stating she is unable to work any longer before she stops working. If the employee decides to stop working without that note, it’s could be considered a resignation. The doctor will typically provide a note no more than 2 weeks prior to the expected delivery date unless there are medical reasons for having the employee stop working earlier.
You may think a friendly doctor might write a note just to help the employee stop working much earlier. However, the doctor must provide the state with medical information backing up the time off. Unless it’s true, it’s hard to say it was a medical necessity without putting the doctor at risk from the state.
Once the employee is within approximately 2 weeks of the delivery date, she can apply for SDI (state disability insurance). The state typically pays about 66% of the normal wages for a total of about 8 weeks for a normal delivery. The employee is responsible for filing the claim and the company will receive a form to verify the wage information and dates the employee has provided. At this time, the doctor is also verifying information with the state. Filing and responding online is faster than mailing forms but both work.
Pregnancy Disability Leave can last up to 693 hours (~4 months) for a full-time employee if there are continued medical issues. This leave is only for the actual medical disability, not baby bonding. The law protects the employee’s job… you must give her back the same or similar job. If you hire someone to fill in while she is out, that person will either have to be moved to another position or terminated.
While your employee is on leave, the most common complaint we hear is that you have found she wasn’t as great as you thought for one reason or another. This is often a supervisory issue, not hers. Consider it a wake-up call that you need to do a better job ensuring all your employees are actually doing their work.
The next, and last, article will address the associated leaves and return to work.
“I have a college student who would like to intern with my company. She needs to acquire service learning hours but the school doesn’t have an internship program set up for this. Is it possible to still have her as an unpaid intern?”
Your HR Survival Tip
We have always stated unpaid interns must be associated with an internship program through their school so the student gets credit in exchange for participating in the program. Otherwise, the “intern” needed to be an hourly employee. However, earlier this year the US Department of Labor (DOL) decided to abandon the old test used to determine if someone qualified as an unpaid intern.
The new test isn’t that different except it doesn’t require an accredited school internship program and, instead, focuses on who the primary beneficiary of the internship may be. Bottom line, an unpaid intern should truly benefit from time spent as an intern with you… more than your company does. Here are the points in the new test:
- The internship training should be similar to training received in an education environment.
- The experience is focused on benefitting the intern.
- No regular employees are displaced because you have an intern and the intern is closely supervised by your existing staff.
- The training the intern receives from you doesn’t immediately help your company and may, on occasion, even impede your normal business operations.
- The intern is not entitled or even expecting to receive a job offer at the end of the internship.
- Both the company and the intern fully understand the internship is unpaid time.
As mentioned above, most of this was really part of the old test. However, now the strongest focus will be on ensuring the intern truly benefits from spending time as your intern. Many companies felt they could have interns doing all the grunt work and the intern benefitted just from seeing the activity around them. But that wasn’t and isn’t true. Make sure your internship program provides real training for the intern. You’re giving back by helping students learn more about the jobs that caused them to go for that major and developing more skills to help with their studies.
While the federal rule (DOL) has changed, keep in mind that California’s description in the IWC Orders still require the training to be supervised by a school or disinterested agency. Don’t assume CA will drop that but, so far, it appears CA may be fine following this new test. Talk with an employment law attorney to be sure your plan will work.
Make sure your interns are part of an accredited college internship program or you are providing similar training to advance that intern’s skills and knowledge. This new test is most helpful for those companies that want to help students but haven’t found (or developed) an internship program with the schools. If you can’t commit to the training, hire the intern at minimum wage and you can have them doing whatever you need on the job.
“I have a bookkeeping company and use independent contractors to service my clients. These are usually part-time people working from home. Does the new court decision change how I do this?”
Your HR Survival Tip
The California Superior Court recently issued a ruling about a delivery company’s truck drivers who were classified as independent contractors. This court ruling was specific to these drivers being eligible as part of a class action lawsuit but it may be the start of changing the qualifiers for independent contractors in general.
In the past, the Borello test was used and looked at numerous factors when EDD was deciding if someone was an independent contractor (IC). This new ruling used only three items in their test. These aren’t new but it does add focus:
- The worker is free from the control and direction of the hiring company in connection with the performance of the work. — Often a company wants to provide training, lock down work hours, or have other forms of control that aren’t allowed when using ICs.
- The worker performs work that is outside the usual course of your business. — If you have a bookkeeping company, you can’t use ICs to provide that bookkeeping to clients. The type of services your ICs could provide might be human resources, marketing, part-time CFO, or even bookkeeping. However, this bookkeeping is someone taking care of your books, not a service you offer to clients.
- The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for the hiring entity. — This is the easiest to review. Your IC should have other clients that are using their services. If you are the only client, this is an employee. They must look and act like a business with multiple clients.
None of above is new… these are things that EDD has always looked for when determining misclassifications. What is new is there were so few factors reviewed. The CA Supreme Court said failure to prove all three items were true is sufficient to consider that worker an employee.
The net is tightening and it’s time to take a hard look at anyone working with you who is not an employee. Can they easily pass this 3-point test? Even if you’re thinking “maybe” you may be at risk. The financial cost of misclassifying even one person has a big price… fine and penalties, 3-4 years of back pay for overtime and missed meal breaks, and state and federal payroll taxes that weren’t paid.
“I have a sales rep who is commission only. Recently I heard something that makes me wonder if I should also be paying a salary. What is the rule?”
Your HR Survival Tip
California has very specific rules about sales reps so it’s good that you’re asking. We often see sales reps misclassified and this can be very costly to the company.
Outside Sales Reps
An outside sales rep must spend at least 51% of their time out and about visiting prospects. We call this “knocking on doors.” They cannot conduct sales from their home or office; they must be hitting the streets. You can’t count time spent delivering the product, setting it up, etc. toward that 51%. If they still qualify as a true “outside sales rep,” the following applies:
- This position can be paid commissions only. No minimum salary is required.
- Paid sick leave must be accrued based on the assumed or agreed-upon time the sales rep is working. Other benefits, like vacation, are calculated the same way.
- You must have a commission plan in place that meets California law. This law states specific things that must be written into the plan to eliminate confusion about how commissions are earned, how they are calculated, when they are paid, and what happens upon termination of employment.
- These laws have not kept up with technology. Your sales reps may find they are much more productive when doing screen shares for demos or Skyping prospects. However, this time does not count toward the 51% needed to qualify as an outside sales rep.
Inside Sales Reps
An inside sales rep is usually the sales person who doesn’t qualify as an outside sales rep. They spend more time in an office or on the phone than they spend knocking on doors. Your inside sales rep:
- Must be paid hourly for all time worked. This does not qualify as a salaried position unless they are also a manager. You cannot count commissions toward meeting minimum wage unless you pay that period’s commissions at the same time you are paying for that period’s time.
- There is a possible exemption that would allow you to avoid overtime but the sales rep must be paid at least 1.5 times minimum wage to qualify. The exemption is only for overtime; the sales rep would still need to follow meal and rest break rules.
- You must have a commission plan in place that meets California law.
Commissions only work if the amount is a percentage of the sale (net, gross, etc.). If you pay a flat amount, that’s a bonus rather than a commission. In addition, the person earning the commission must be actively involved in making the sale… or we’re back to bonuses.
Misclassifying an inside sales rep as an outside sales rep is fairly common but can be very expensive. If that sales rep who is working from the office hasn’t been receiving meal and rest breaks, you may have a lot of penalties and fines in your future. Think about it this way… if they’re sitting down, that time probably won’t count toward the outside sales’ 51%.
“I received a notice that an employee needs to provide insurance for a dependent. What do I do with this?”
Your HR Survival Tip
There was a law enacted years ago with the nickname “deadbeat dad law.” The law’s primary use is to help collect child support and/or provide healthcare for dependents. Once an agency knows you’ve hired someone on their list, they send out paperwork requiring you to help them.
A few things to remember:
- Governmental agencies always mail everything. They don’t call and they don’t email. If it didn’t come in the mail, question what you received.
- You want to comply with this request as soon as possible because there is a deadline.
- You absolutely must do what the notice says, even when the employee tries to tell you the situation has changed. The only time you do something else is when you have received (in the mail) an updated notice. Meanwhile, tell the employee you are legally required to do what the notice says.
There are always very specific instructions provided on every type of notice but the package you receive can be overwhelming because they often send you multiple copies. Give one copy to the employee right away. Pull one copy for yourself so you can follow the instructions. You will have to complete parts of the document and return it to the agency. If you’re really stumped, the notice will include a phone number and name of the person handling this case and you can call them for help in complying.
If you received a garnishment, it will tell you how to calculate the amount to deduct from the employee’s paycheck and where to send it. This must be done every pay period until the total amount they cite has been paid. In addition to being used to collect back child support, garnishments are also used by IRS to collect back taxes. Talk with your payroll provider to find out if they will send the money to the agency or if you need to do it.
If you received a notice regarding a child’s healthcare, it’s probably a National Medical Support Notice (NMSN). This notice also requires you to provide information about your insurance plan. If your employee did not enroll in your insurance, the NMSN will require you to enroll both your employee and their dependent.
Most notices can be a bit confusing and scary at first but you’ll do fine if you just stop and read the document. Unlike so much other paperwork we receive from governmental agencies, they actually try to make it fairly easy to comply.
“I have an employee who has used up all his sick time. However, he continues to have a lot of absences but does provide doctor’s each time. What should I be doing?”
Your HR Survival Tip
When you have an employee who is sick a lot, the first thing you want to do is confirm how much sick time they had available and how much they used in the current plan year. The plan year could be calendar year or some other 12-month period you designated when you first created your paid sick leave policy.
You also want to make sure your sick leave policy is compliant. In addition to California’s 3 days, there are about 29 local laws with different amounts of sick leave and they all provide more than the basic state law.
Once you know you are calculating the sick leave correctly and are sure how many sick days/hours the employee has taken, forget the amount that was protected sick leave. We use the word “protected” for a reason… you can’t use this time against the employee for attendance issues.
How much additional time has the employee taken off due to illness after they ran out of sick time? Is that amount sufficient to fire the employee for attendance issues? Or would a termination at this point look like retaliation for the employee’s use of the protected sick leave?
You also need to consider what other protections might be out there for the employee. The list of protected disabilities continues to grow and doesn’t have to be noticeable to you for it to be protected so you want to be sure you’re not dealing with one of them. Smaller companies don’t need to worry about the federal Family Medical Leave Act (FMLA) or CA Family Rights Act (CFRA). However, a work-related illness or injury has certain protections and anything related to a pregnancy is very protected in CA.
You need to sit down with the employee and discuss the issue. Although you don’t really want to know the actual medical issue, you can ask if the employee knows how much more time off may be necessary or is there a way they can work more hours with certain restrictions listed by their doctor. Ideally, the employee is also looking for a way to get back to work on a regular basis as soon as possible. Document the conversation and give some thought to your next steps.
As a rule, you want to be very careful about terminating an employee when absences are medically related. While non-work-related injuries and illnesses have far fewer protections, you want to be sure you’ve looked at everything before making any big decisions. You’re dealing with medical issues on top of the potential loss of a paycheck… sympathy will always be on the side of the ill or injured employee. Now is the time to call a professional to discuss your options.