Apparently crossing one’s fingers in hopes the Governor wouldn’t sign all the employment laws put in front of him doesn’t work. I know this because the following laws were signed and will go into effective in 2018:
SB63 mandates you must allow up to 12 weeks of unpaid time off for parental baby bonding leave. This new law hits companies of 20+ employees but eligibility rules apply. You are also required to maintain and pay for health insurance while the employee is on this leave. This is protected time off so you must give the employee their “same or similar position” upon their return to work. Previously, this type and length of leave was only available for employees of companies with 50+ employees.
Prior Salary History
AB168 will prohibit companies from asking applicants about their prior salary/wages at previous jobs. You may also be penalized for not providing your pay ranges when requested. The concept is to ensure you are paying a fair market value for the position itself rather than basing the wage/salary on what they previously earned. In theory, this may also make it harder for the applicant to ask for a higher wage based on wanting to make as much or more than they were previously earning. Make sure you eliminate the salary question on your employment applications.
AB1008, also known as ban-the-box legislation, prohibits you from asking about criminal history prior to giving the applicant a conditional offer of employment. We believe this means no background check that includes criminal history until after you’ve made a conditional offer. Then the applicant has 5 days to refute what you found, if the findings result in a retraction of the offer. Legally, you will have a few hoops to jump through with required documents. This law affects companies with 5+ employees.
One thing these new laws have in common is the need for you to document everything. Some of the documentation will be required by law and the rest is needed to protect your company. While we’ve always recommended documenting, now it’s becoming crucial to avoid penalties and lawsuits.
Often, when people think about sexual harassment, they have images of someone being groped or crude suggestions. However, in a legal sense, harassment definitions are like The Blob… continuously growing and moving.
The California Chamber of Commerce’s HRCalifornia Extra recently came up with a list we like because it highlights some often overlooked things that might be considered harassment today.
- Social Media — We now need to pay attention to what coworkers say to other coworkers in social media during or after hours. Just because they post something after work doesn’t mean it can’t feel harassing to the employee receiving the post. And you’ll need to deal with it.
- Looking — Female employees told me how uncomfortable they were because a male employee was watching them whenever they left or entered the workspace. Staring, glaring, and leering is often offensive but won’t always be harassing, depending on the situation. Just looking at someone isn’t the problem; the problem is when it makes the other person uncomfortable.
- Field Employees — Whether you have field employees going into other companies or you have another company’s employees coming into your business, you need to be aware of harassment potential. Yes, you can be held liable for allowing someone into your company who harasses one of your employees. Plus, you can be sued if your field employees harasses someone at a client or vendor site.
- Not Sexually Motivated — There was a court case about several guys making sexual comments to one guy. They said there was no sexual intent so it couldn’t be harassment. The judge disagreed. Harassment is harassment, with or without sexual intent.
- Consensual Relationship — Office romances happen so how do you tell those who are together by choice versus those who might feel forced into the relationship? Some clients use a written Consensual Relationship Agreement to take harassment off the table. For the rest of you, look for the power… are you aware that one of the people in the relatiosnhip might have power over the other? If so, look deeper.
- Once is Enough — While severe or pervasive behavior may be the standard, it doesn’t mean a single event can’t be harassing if it is severe or blatant enough.
- Keeping Quiet — Just because a person doesn’t tell someone to stop, doesn’t mean they like what is happening or what they are hearing. They could even laugh when you tell a joke and later file a complaint about that joke.
- Complaint Format — As a California business, you are now required to have a written Harassment Prevention Policy distributed to all employees. You also need to give employees a way to make a complaint other than in writing. Your managers need to be trained so they can recognize the different forms of potential harassment and report it so you can investigate appropriately.
- Higher Bar — When writing a harassment policy, have a policy that is more strict than the law. This way you’re dealing with failure to follow your policy before you’re dealing with violating harassment laws.
- Confidentiality — No matter how much an employee may beg you to keep what they tell you confidential, it’s just not possible. You can promise to maintain confidentiality as much as possible, but you can’t investigate the claim if you can’t talk to others. Every person in management must know to report potential claims, even if it doesn’t follow the chain of command.
Employees want and deserve to work without being harassed or feeling uncomfortable. You have a legal responsibility to make that happen but the first step is recognizing all the variations of harassment. Consider training every supervisory employee, even if you aren’t legally required to do so. In the end, the cost of training is extremely low compared to the risks resulting from a lack of training.
“I’m considering providing raises soon but don’t know how to approach it or what is considered a normal increase now.”
Your HR Survival Tip
Wage increases can be tricky because you have to watch minimum wage changes that may also affect your bottom line. While the voters have said they want minimum wages to increase each year, they didn’t tell us how to come up with the extra money or how to avoid the ripple effect of higher wages.
The latest statistics show 3% is the average increase planned for 2018. That’s actually a tiny bit higher than we’ve been seeing since the recession but you have to be counting your pennies to notice the difference.
Depending upon your work location, many hourly employees have been seeing double-digit increases thanks to increases in minimum wage. While you can’t view those increases as employee rewards, I know they do play into the bigger picture of the cost of employees. When wages increase… your taxes increase, your workers’ compensation insurance premiums increase, and the cost of paid time off is now more.
Remember to review any salaries you’re paying. There is a minimum salary (currently $41,600) that increases every time the state minimum wage goes up. If someone’s salary is so close to the minimum that you need to worry about it, question whether the position is truly exempt.
I’m not a believer in cost of living increases for your workforce. I strongly believe in merit increases or other types of rewards for employees who are helping your company move to the next level. Why pay more for employees who just show up for work?
Most companies are finding other ways to reward employees that don’t include pay increases every year. Consider short and long-term incentive plans, milestone bonuses, etc. Maybe you’re willing to bonus an employee who goes to the effort of being cross-trained so you have a more flexible workforce. Really brainstorm ways to reward employees for performance that don’t permanently increase your costs. Let us know if you want help!
“I am interested in adding health insurance coverage for my employees. What are most companies paying toward employee premiums?”
Your HR Survival Tip
In our opinion, too many small companies are paying a higher percentage toward the employee’s premium than we prefer.
While larger companies have moved toward bigger co-pays for employees, we are seeing small companies often paying 100% of the employee-only premium. This is not what we advise.
Small companies have only so much money they can pay toward employee benefits and you’re paying higher prices than large companies due to your small group. When you pay 100% of the most costly benefit (health insurance), you are often using up all your benefit dollars for that one benefit. You also get employees signing up just because it’s free… even if they have coverage elsewhere.
If you pay 90%, that’s still a great benefit at a very low cost to the employee. If even one employee doesn’t sign up (because they have other coverage), you are saving at least $200 per month. You may even save the same amount just from the 10% you’re not paying toward their premium.
Your $200+/month savings equals $1,200+ over the year. This would make a big dent in the administrative costs of a 401(k) plan, or pay for a dental and/or vision plan, or pay for life insurance, or pay for an EAP (Employee Assistance Program). Wouldn’t employees feel you have a more comprehensive benefit program if it included more than just health insurance?
Ensuring your employees have health insurance doesn’t mean you need to go overboard with your offering. Most small companies require the employee to pay the whole cost of dependent coverage. What if you only paid 75% of the employee-only coverage but now could offer 25% toward dependent coverage? Look at the demographics of your employees… are they primarily single, married, have families? Do you know if the spouse is working and also has coverage?
Make sure your benefit dollars are being used for the right benefits that will be viewed by your employees as a real benefit. They don’t always want what you may want or feel they need. Develop a benefit program that fits your employees and helps your company with recruitment and retention. Talk with us about your plan design.
There has been activity in two areas regarding employment law in California. One is deemed to be good, even great, news and the other is not so great for smaller companies.
The good news is a court ruling that may affect many of you regarding vacation pay. A company had a policy stating employees earn one week of vacation after one year of employment. When an employee left the company after 6 months, he filed a claim that he was due half the vacation promised after one year.
CA law states earned vacation time is part of the employee’s wages and it is earned each day of work. Vacation time, once earned, cannot be lost… it is used or paid out. If the employee doesn’t use their earned vacation, the total unused time can be limited by a cap that will make the employee stop earning more vacation time until the employee’s balance is below that cap.
A 2009 court case decided the employee was due a portion of the first year’s vacation. However, in that case, the company’s policy stated employees earn one week of vacation during their first year of employment but they couldn’t use it until after one year. Since their way of writing the policy made it clear vacation time was being earned in that first year, the company had to pay out the earned time.
The most recent case was different because their policy specifically stated the employee earned no vacation during the first year of employment. Take a look at how your policy is written and let us help you update it, if needed.
The bad news is that CA’s SB63 has passed through the legislature and is now ready for the governor’s signature. If this bill is made into law, companies with only 20 or more employees will now have to provide employees with up to 12 weeks of unpaid time off each year for family/medical purposes. Currently, similar laws (FMLA, CFRA) only affect companies with 50+ employees.
SB63 provides eligible employees protected time off for certain things, such as baby bonding and medical issues for themselves or family. Pregnant employees would have available both the time off provided in CA’s Pregnancy Disability Leave (up to 3 months) and the 12 weeks available through this bill because they cannot overlap. While you do not pay for any of this time off, the employee could receive supplemental pay from the state for about 3 months while on leave.
Aside from having employees off work for up to 12 weeks, companies will have additional administrative responsibilities in the form of various documents to be sent in a timely manner and tracking the time off related to these leaves. Remember, this is protected time off so hiring someone to fill their position will be on a temporary basis because the employee must be provided with their same or similar job when they return from the leave.
We’ll let you know if the governor signs or vetoes this bill. Even if the bill is vetoed, remember you can still allow employees unpaid time off as a personal leave of absence to accommodate baby bonding or medical leaves for your employees.
“I’ve been trying to give employees goals but, when I ask about how they’re doing on their goals, I hear excuses about how they’ve been too busy or they are waiting on someone else before they can move forward, etc. How can I make them take the goals more seriously?”
Your HR Survival Tip
The first step in having employees take your goals seriously is to make sure you’re taking them seriously. While it’s fine if you create the goals, you’ll find more cooperation if the employee has a say in what those goals might be.
There are three steps that will help you. You need buy-in from the employee regarding the goals to get them excited and in agreement with you; you need to structure each goal so they know what needs to be done and when; and you need a carrot.
Start with the initial buy-in by giving the employee a brief outline of what you are thinking. Then ask the employee to come up some ideas about this. Set a time to finalize detailed goals.
The structure of goals can make or break this project. Details will help both of you determine whether each goal was successfully accomplished.
- Specific — Rather than saying you want significant, more, better, etc., say what you really want. Example 1: You must produce at least 25 widgets consistently each week. The work must be of high quality, with no returns. Example 2: You must increase sales next quarter by 5% and maintain that level going forward.
- Measurable — Quantify anything possible. It creates a target for both of you, plus everyone knows what is being measured. Without something specific to measure, how does your employee know they have achieved the goal?
- Achievable — Can this goal realistically be achieved or did you put the bar so high they don’t even try? It’s one thing to make the employee stretch a bit but it’s a problem if they need a ladder to reach the goal.
- Relevant — Does the goal make sense to the employee and the employee’s job? Make sure the goal helps the employee move forward in gaining more knowledge, better skills, a higher-level of productivity, or something else of value.
- Timelines — I’ve seen goals written on annual reviews and, a year later, they wonder why the employee didn’t accomplish the goal after being given a whole year to do it. When you give employees too much time, they are more likely to procrastinate until too late. If the goal has value, it needs a deadline. Otherwise, you’re just making a suggestion. Don’t make due dates so tight the employee is completely stressed or has to work extra hours just to meet that date.
You and the employee should sit down and discuss any goal. Everything can be broken down into steps that will get you to the end result you want. Help the employee see this and work out smaller steps and deadlines that will ensure the goal is reached by the final deadline. If an employee is new to goals, it’s also helpful to have weekly meetings to discuss the progress and any problems that have come up.
Goals usually help your business grow so you want employees to have a successful experience in reaching their goals so the company meets its goals. However, most people need a carrot. What is the “carrot” for your employees to motivate them to achieve the goals? And what happens when they aren’t successful? Are you building the goals into your compensation or bonus programs? Give employees their “why” for achieving the goal and watch their faces… are they excited or are they trying hard not to roll their eyes and sigh? That look will usually tell you if you’ve created a good goal program for your employees.
“I often hire someone as a temp to do a bit of contract work for me. The job usually only lasts from 2-4 weeks and I pay them an agreed-upon amount. Is this the same as the independent contractors you’ve written about?”
Your HR Survival Tip
Probably not. We consider a temp to be someone’s employee who is assigned to a company for jobs that may be for short or long periods of time. While you can have your own pool of temps available to you, most are employed by an agency and you contract with the agency for that worker.
On the other hand, we consider an independent contractor to be a small business. They offer their services to you, invoice you when payment is due, and carry their own liability insurance. Plus, their fees are at risk if you aren’t pleased with the work they do.
Unless you are getting your temps through an agency, you need to put these workers on your payroll as you do with any other employee. Yes, if they don’t qualify as a business, they are employees. Only non-profits can have volunteers… everyone else is a business, an employee, or unemployed. You will always pay an employee or a business for any services you need.
There can be big fines for misclassifying these temps. Not only are you not paying payroll taxes on them but you aren’t providing paid sick leave. If you’re not prepared to put these workers on your payroll, hire or payroll them through a legitimate temp agency so you are legally compliant. Let us know if you need a referral.
“I occasionally pay people under the table when I have them participate in a working interview for 1-2 days before I decide whether or not to hire them. Once in a while, I also pay under the table when an employee is doing a different job for me on the side. Is there a better way to handle these situations to take away my risk?”
Your HR Survival Tip
Paying workers “under the table” means you are handing them cash and neither of you is reporting it (yet). There isn’t a way to take away your risk because what you are doing is illegal.
If your interview process includes having the candidate follow someone around for 1-2 days (shadowing) or actually performing the job for 1-2 days, this is compensable time. Paying this person cash instead of adding them to payroll could easily create problems for you. Yes, adding the person as an employee is more work than not doing it but that’s because you are only looking at the moment, not the long-term.
In the long-term, you need to look at a potential EDD audit because one of those people added you as an employer when they filed for unemployment. Whoops, EDD doesn’t show that person listed as one of your employees so they decide to audit you to see who else hasn’t been reported.
Your employees may have skills not needed for their usual job. However, you’ve realized one of those extra skills has value to you. The employee is happy to offer that skill in the off hours so their regular job isn’t affected with this new work. However, that other skill doesn’t make them an independent contractor… legally, it makes them an employee who is probably working more than 40 hours per week for you and isn’t being paid the overtime pay they legally deserve. Even if you pay the employee more for the extra work, unless you process the payment through payroll, it is illegal.
What happens when your employee hears from a friend that they should have been paid overtime for the off-hours work. Not one to turn down additional income, they file with the Labor Commissioner to get their money. Whoops, you just got stuck paying the employee’s taxes on that amount and then you hear from EDD and IRS about unpaid payroll taxes. You can pay an employee a different rate for hours spent working that use different skills but overtime will still apply and must be calculated based on both rates.
Don’t think your situation is a special case… EDD will win that argument. If you are not processing every penny you give a worker through your payroll, you are taking a risk. Also, pretending the person is an independent contractor adds to the risk unless they have an actual business offering that service to multiple clients. In the long-term, you’ll definitely spend a lot more time and money defending any claim than you would have spent by adding that person to your payroll and staying legally compliant. Plus, yikes, these governmental agencies might add you to their watch lists!
“I’m considering adding group health insurance for my employees. What do I need to do that the insurance broker won’t do?”
Your HR Survival Tip
It’s great you want to provide health insurance! Adding this benefit can be a big step due to the expense but you should find this will aid in recruitment and retention of employees.
You’ll want your broker to help you sign up for a Premium-Only Plan (POP) so you can take the employee’s share of any premium as a pre-tax deduction. Without a POP in place, any deductions must be made with after-tax dollars. You will always pay the full bill from the carrier and the employee’s share reimburses you.
Your broker will make a recommendation for certain plans but it will be up to you to decide how much of the premium is paid by you versus the employee. Our preference has you paying a percentage (50-100%) of the employee-only cost of the lowest level plan you offer. Employees then pay the remainder of that premium, plus the full cost of covering dependents or choosing a higher level plan. We prefer employees pay at least a small amount to save you money but to also avoid employees electing coverage just because it’s free rather than needed. You will find the amount a company might pay toward benefits will vary greatly based on your industry and ability to pay.
Reconciling the carrier’s bill every month is crucial. Insurance carriers don’t add or terminate employees as quickly as you might expect. You could see a back charge of 2 months of premiums because the bill is catching up on a new employee’s premiums. When someone’s coverage terminates, you submit their termination to the carrier but keep paying the full premium until the carrier pulls them off the plan and reimburses you for any premiums previously charged. If you try to deduct that employee’s premium off the bill, you’ll get a notice from the carrier stating you did not pay the bill in full and are now subject to cancellation. If an employee hasn’t been added or dropped by the end of 2 months, talk with your carrier or broker to ensure they received the change.
Pay stubs must list each deduction separately so the employees can easily see how much it’s costing them for each plan. Deductions on the paycheck are fairly easy to calculate once you know the employee’s premium amount for each plan they have elected and what portion the employee must pay:
- Semi-monthly payroll (twice per month): Enter half of the employee’s monthly portion for each pay period.
- Biweekly payroll (every 2 weeks): Multiply the employee’s monthly portion by 12 (months), then divide that amount by 26 (pay periods in a year) and you have the deduction for each pay period.
- Weekly payroll (every week): Multiply the employee’s monthly portion by 12 (months), then divide that amount by 52 (pay periods in a year) and you have the deduction for each pay period.
When an employee’s employment terminates (voluntary or involuntary), their insurance coverage will end on the last day of the month regardless of when in that month their employment terminated. The employee will owe their share for the full month so let the employee know you will be pulling the remaining deductions from their final paycheck. Regardless of the employee’s plans for future coverage, you are legally obligated to offer COBRA (Consolidated Omnibus Budget Reconciliation Act) within 14 days of their coverage ending. If they elect COBRA, they are continuing the same insurance but paying their full premium for up to 18 months.
As a last step, create a policy that clearly states what happens to the employee’s coverage during leaves of absence. You need to decide how the employee’s share of the premium will be paid when they aren’t receiving a paycheck and how long the employee must be off before you’ll offer COBRA instead of keeping them active on your plan. This step is important because you’re potentially ending the employee’s medical coverage while they may be off work due to medical problems. Also, make sure your policy reflects the legal requirements for certain types of leaves. Having a policy in place, and signed by the employee before they begin a leave, will make this transition easier for both you and the employee.
“I’d like to make my company a good place for employees but I’m not sure what that should include. How do I figure it out?”
Your HR Survival Tip
It can be difficult for small companies to provide a full benefit package to employees. However, don’t get stuck into thinking benefits are just things that cost money. Employees look at the bigger picture.
In a recent survey on employee loyalty vs. benefits (by Thomsons Online Benefits), the responses were counted in two ways that could be significant to you. This first count was based on employees stating this item HIGHLY impacts their loyalty:
- 57% = Salary (offering the most money make get employees to stay but do you want them staying only for the paycheck?)
- 52% = Career opportunities (no one dreams of doing the exact same job for the next 10 years)
- 50% = Benefits (this is the insurance, etc.)
- 50% = Professional development (even if you don’t have a higher level position available doesn’t mean you can’t design training for the future)
- 48% = The job itself (they want to feel they are well-placed based on the work and their skills and knowledge)
- 42% = Company culture (the culture determines if they are excited about coming to work because you have created a great atmosphere that is encouraging)
- 42% = Their coworkers (employees want to like their coworkers and know everyone can work together)
- 37% = Convenience of their commute (those long commutes add time to their total workday and you’ll need to pay very well to keep those commuters)
The rankings below shifted quite a bit when employees chose the items that SOMEWHAT impact their loyalty. You can see the thinking is a bit more about now rather than next year:
- 47% = Convenience of their commute (employees really want to have more time with friends and family and aren’t willing to suffer long commutes most of the time)
- 44% = Company culture
- 43% = Their coworkers
- 41% = The job itself
- 36% = Benefits
- 36% = Professional development
- 34% = Career opportunities
- 31% = Salary (notice how the money fell to the bottom?)
As you can see by these lists, what employees want can be very different. You can’t always do much with salary or their commute, so instead focus on the other categories.
Small companies are challenged by many of these but it helps to actually talk with your employees individually to find out what’s important to each of them… it will vary. Then start looking for ways to give them what they want. It may be in very small ways to start but any movement forward is usually viewed positively and will let them know you’re trying. Talk with us if you need ideas!