Workforce Q&A
Question:
I’m the new HR manager for a business with 30 employees. The owner told me there is no policy handbook, and that individual policy memos have worked fine for her. How important is it for my company to have a policy manual?
Answer
Answer:
Policies and procedures are generally up to the employer to define and enforce. The employment at will doctrine in Texas gives employers the right to set policies and change them at will depending upon the needs of the business. The only exceptions are so well-established that most employers do not even consider them to be policy areas, i.e., certain practices involving pay, discrimination, safety, and benefits that are regulated under specific statutes. Policies can be oral or written or both, but ideally, all important policies should be in writing. The best policies in the world will do no good at all if the employees are unaware of them. In Texas, policies are generally not regarded as binding employment contracts.
Along with required standards, communicate your company’s goals and culture in your policies. Assemble all previous policies and procedures, whether written or unwritten, and determine what will be continued or changed in the new policies. Get input from employees and managers. Have key company personnel review the draft, incorporate any needed changes, and have the final version reviewed by an employment law attorney. Have each employee sign a form acknowledging receipt. After giving all employees copies, train supervisory personnel in how to use the handbook.
Although employers have the right to change policies at will, always try to give advance notice. Try to anticipate potential problems and think of alternatives when amending policies. If a policy change alters an employee’s work relationship so adversely that a reasonable employee would quit under the circumstances, your company could risk losing an unemployment claim. Ill-advised or badly-timed policy changes could also present your company with drops in employee morale and productivity.
Above all, try to follow your own policies, especially with respect to disciplinary matters. Even-handed enforcement of fair policies helps show that a discharged employee either knew or should have known that a particular problem could lead to discharge, helps indicate that the employee was not singled out for discriminatory treatment, and can also help dispel the notion that an employee was somehow wrongfully discharged.
Question:
We are looking at ways to improve our company’s viability in these tough economic times, and there just seems no way to do that without small-scale layoffs. Some of the most vulnerable employees have been here a long time, and we are concerned about liability, even though we feel we have a strong business case for downsizing. Is there anything we can do to protect ourselves? We are looking at ways to improve our company’s viability in these tough economic times, and there just seems no way to do that without small-scale layoffs. Some of the most vulnerable employees have been here a long time, and we are concerned about liability, even though we feel we have a strong business case for downsizing. Is there anything we can do to protect ourselves?
Answer
Answer:
Many employers, even small ones, are concerned about the increasing number of discrimination and employment lawsuits. Age discrimination filings last year increased 28.7%, and overall discrimination claims (age, gender, race, national origin, disability, etc.) during the same period were up 15%, according to the U. S. Equal Employment Opportunity Commission. So this is a serious question and, with the biggest driver of claims activity being unemployment, it’s not likely to go away in the near future.
Your best defense is employment practices liability (EPL) insurance, though a recent survey released by the Chubb Group of Insurance Companiesindicates that a whopping 63% of companies do not have it. The three main reasons given by employers for declining this coverage are (1) the perception that their particular risk is low, (2) the assumption that they are covered under other policies, and (3) affordability.
Risk is greater now than ever with increased attention being given to discrimination laws, widening employer liability and making it easier for employees to file claims. Employment practices are not generally covered by workers’ compensation, liability and umbrella policies, though many employers believe they are. And perhaps the biggest reason to consider EPL insurance is that you can’t afford not to. The average total cost of an EPL-related claim is $63,114. When a jury is involved, costs skyrocket to an average of $200,000.
The good news is that EPL insurance comes with several options, and consultation with an experienced broker can help any company make smart, affordable choices. One way to limit the cost is by choosing lower limits of protection, though at least $100,000 in limits is often recommended. Another way to is to consider whether you need EPL as a standalone product, or if you would benefit from combining it in a package with other coverages, such as directors and officers liability, fiduciary liability, crime, fidelity and other employer risks.
Perhaps the best way of limiting your exposure to employment practices claims is to prevent them with proactive, up-to-date human resource policies and loss prevention strategies, another advantage of seeking advice from a risk management professional. In today’s political and economic climate, better safe than sorry.
Question:
Our company has more than 50 employees. I know that the new FMLA regulations became effective this year. Do we need to do anything now to comply?
Answer
Answer:
The new FMLA regulations went into effect January 16, 2009. While the effect of these regulations is far beyond the scope of this article, there are several steps your company should take now, if you haven’t already, to comply with the new regulations.
1.Revise your current FMLA policy in your employee handbook.
You need to ensure that the policy contained in your handbook is consistent with the new FMLA regulations, including the new types of FMLA military family leave. At a minimum, all of the information that is contained in the FMLA poster entitled “Notice to Employees of Rights Under the FMLA” should be included.
2.Post the new FMLA poster.
The new regulations require employers to post this “Notice to Employees of Rights Under the FMLA” in a location where it can be easily seen by employees and applicants for employment.
3.Train supervisors and human resource personnel to be aware of new regulations.
4.Begin using the new FMLA forms.
a.The Notice of Eligibility and Rights and Responsibilities form
This notice must be given to employees within five (5) business days of an employee’s request for leave for an FMLA qualifying reason.
b.The Certification form
The Certification form should be provided to the employee, along with the Notice of Eligibility and Rights and Responsibilities form, within five (5) business days of an employee’s request for leave for an FMLA qualifying reason. Employees must be given at least fifteen (15) days to return a completed certification.
c.The Designation form
The Designation Notice notifies the employee whether the leave is FMLA qualifying or non-FMLA qualifying, whether the employee will be required to substitute paid leave, and whether a fitness for duty certification will be required to return from leave. An employer must provide a Designation Notice to an employee requesting leave within five (5) business days after the employer’s determination of whether the leave qualifies as FMLA leave.
5.. Improve and document communications with employees about leave-related issues.
Finally, the new forms referenced above, are available on the Department of Labor website at www.wagehour.dol.gov.
Question:
What is the current law on partial-day absences for exempt employees? Can an employer make an exempt employee use vacation time for hours taken off in a day for personal reasons? How about partial days for sick leave?
Answer
Answer:
An employee that is not exempt from the overtime provisions under the Fair Labor Standards Act (“FLSA”) is typically paid based on the quantity of work performed. Thus, an employer generally does not have to compensate an employee for time that an employee is away from the workplace not performing work.
However, when an employee is paid on a salary basis and is exempt (e.g., executive, administrative or professional) from the overtime provisions of the FLSA, an improper deduction can jeopardize the exempt status of all employees in that job class. The most common appropriate full-day deductions from an employee’s salary include:
•One or more full days for personal reasons other than sickness or accident
•One or more full days for absences because of sickness or disability, if the employer has a plan, policy or practice providing compensation for loss of salary due to sickness or disability.
•One or more full days for unpaid suspensions imposed in good faith for infractions of written workplace conduct rules applicable to all employees.
Appropriate partial-day deductions include:
•A set off of salary payments in a particular week with compensation paid for military duty or jury duty during that same week.
•A deduction made as penalty imposed in good faith for violation of safety rules (of major significance).
•A deduction made for any hours taken as qualified unpaid FMLA leave.
Moreover, the Department of Labor has long held that an employer may deduct time from leave banks (such as vacation or sick leave) without regard to the rules set forth above, so long as an employer receives his guaranteed salary for that particular week. However, once an employee exhausts his leave bank—or even has a negative balance—the employer may not deduct from the salary unless it meets one of the tests set forth above.
Question:
Our company is trying to reduce its payroll costs, and would like to require employees to take a forced vacation or sabbatical. Are there any legal problems with requiring employees to take unpaid time off?
Answer
Answer:
Generally speaking, it is legal in Texas for employers to require employees to take a forced vacation or unpaid sabbatical. From a business perspective, this may be a better alternative than more drastic measures such as layoffs, in terms of preserving employee morale and having enough employees when business picks up again. However, there are a number of legal implications employers should consider when implementing these measures.
First, employers should make sure a forced vacation/sabbatical does not violate the terms of any employment agreement. Or if an employer has union employees, the employer should confirm the vacation/sabbatical does not run afoul of any union collective bargaining agreement.
Second, employers should provide employees with clear notice that no work is to be performed during the vacation/sabbatical and take measures to ensure this directive is followed. Such measures might include requiring employees to return employer-owed remote access devices and prohibiting employees from accessing company e-mail while on vacation/sabbatical. Keep in mind that employees who perform work must be paid for that work, even if the work is not authorized. If employees are engaging in work while on vacation/sabbatical, this can undermine any cost savings to the employer, because the employer will have to pay the employees for the work or risk exposure to potentially significant liability. Engaging in unauthorized work should therefore be treated as a serious disciplinary issue.
Third, because exempt employees must be paid their entire salary for weeks they perform any work, vacations/sabbaticals for exempt employees should be in full week increments.
Finally, as with any employment decision, employers should select employees for vacations/sabbaticals based on objective business criteria, and the criteria used should not have an adverse impact on any protected group.
Overall, forced vacations/sabbaticals can be an effective way for employers to manage costs in uncertain economic times if implemented in a considered, careful manner, ideally with the assistance of legal counsel.
Question:
In an effort to motivate better attendance, our company wants to adopt a perfect attendance bonus program. If an employee is away from work on a leave protected under the Family and Medical Leave Act (“FMLA”), are we allowed to count that absence against the employee for purposes of qualification for the perfect attendance bonus?
Answer
Answer:
The answer has changed as a result of the new FMLA regulations that became effective on January 16.
Under the previous United States Department of Labor (“DOL”) regulations, employers were prohibited from disqualifying employees from perfect attendance awards based on the employee having taken FMLA leave. The DOL’s old view was that bonuses or other awards for perfect attendance do not require performance by the employee but rather contemplate the absence of occurrences, and an employee who otherwise met the requirements for such a bonus could not be disqualified because the employee had taken FMLA leave.
In a dramatic shift, in the new regulations, the DOL instructs that if a bonus or other payment is based on the achievement of a specified goal, such as hours worked, products sold or perfect attendance, and the employee has not met the goal due to FMLA leave, then the payment may be denied to the employee, unless otherwise paid to employees on an equivalent leave status for a reason that does not qualify as FMLA leave.
In other words, an employer can disqualify an employee from receiving a perfect attendance award because the employee took leave or was otherwise absent, including for an FMLA-protected absence, if the rules for disqualification are applied in a non-discriminatory manner. For example, if an employee who used paid vacation for a non-FMLA purpose would receive the payment, then the employee who uses paid vacation for an FMLA-protected purpose also must receive the payment. (Of course, under the FMLA, generally, an employer can require the use of, or an employee can choose to use, paid leave, such as vacation or sick leave, while the employee is on FMLA leave.)
With this new rule, employers now have the opportunity to make use of perfect attendance awards to encourage exemplary attendance. However, because the award program must be completely non-discriminatory, an employer should ensure that an employment attorney carefully reviews any proposed award program, in conjunction with the employer’s other leave and attendance policies, to confirm that the program is lawful.
Question:
We are a growing business currently with 50 employees. We’ve heard a lot about the Lilly Ledbetter Fair Pay Act. What is its significance and what practices should we adopt going forward to ensure compliance?
Answer
Answer:
The Lilly Ledbetter Fair Pay Act represents a significant change to employment discrimination laws, including Title VII, the Age Discrimination in Employment Act and the Americans with Disabilities Act, with respect to pay discrimination. In a nutshell, the Act eliminates the time limit within which an employee must file a charge of pay discrimination. For example, if an employer in 1990 makes a discriminatory decision to pay an equally qualified/experienced female employee less than a male employee in the same job and as a result, the female employee continues to earn less than the comparable male employee in 2009, the female employee can file a discrimination charge based on a paycheck issued in 2009, even though the actual decision was made in 1990. Under the law before the Act, a charge and resulting lawsuit filed in 2009 would be untimely if the discriminatory decision were made in 1990.
What does this mean to employers such as you? The Act will make it more difficult to defend pay discrimination lawsuits, particularly where the decision was made years in the past, since the supervisor who made the decision may no longer be employed, or even if the supervisor is employed, memories fade over time. To avoid problems going forward, your business may want to consider adopting a formalized pay administration program that relies upon measurable objectives uniformly and consistently applied within job classifications. Your business also needs to train supervisors on the impact of the Act and on the need to document carefully and thoroughly pay decisions and why they are made, e.g., evaluations, experience levels, qualifications. You also need to put in place a record retention program that maintains pay records and supporting documentation for longer time periods, since lawsuits might not result until years after a pay decision is actually made.
Question:
We are moving our plant to a different site. If some of the employees choose not to travel to work at the other site, will they be able to collect unemployment benefits if they quit?
Answer
Answer:
The Texas Unemployment Compensation Act allows for differing interpretations regarding when an employee is eligible for unemployment benefits based on a voluntary separation of employment that results from a plant’s relocation. The answer depends on the distance between the old and new locations of the plant and the extent and availability of the employee’s means of transportation to the new location.
As a general rule, if a plant relocates to another city or state, it is likely that the employees will be eligible for unemployment benefits. More specifically, a distance of ten miles between the old location and the new location is typically considered a reasonable distance to expect that an employee can travel; eighty miles has been considered unreasonable.
The availability of public transportation and shared transportation (i.e. car-pooling) can render an employee ineligible for unemployment based on plant’s relocation. For example, if an employee is able to carpool with a co-employee who lives near that employee’s home, the employee will most likely not be eligible for unemployment benefits (so long as the distance between the locations is reasonable). If that employee cannot reasonably access or rely on public transportation or car-pooling to travel to the new location, he or she will probably be eligible for unemployment.
In short, the answer depends on the distance between the old plant and the new plant and the individual employee’s access to available means of transportation.
Question:
I understand that the American Recovery and Reinvestment Act of 2009 (“ARRA”) made changes to COBRA. What changes have been made that will affect my business?
Answer
Answer:
The American Recovery and Reinvestment Act of 2009 (“ARRA”), which is the recently passed federal economic stimulus package, includes significant provisions related to COBRA benefits for some employees. Attached is a Department of Labor (“DOL”) fact sheet addressing these provisions. Also attached is the applicable language from the ARRA.
The law provides for a 65% reduction in the cost of COBRA benefits for up to 9 months for employees who were involuntarily terminated between Sep 1, 2008 and Dec 31, 2009 (ie, all of our laid off employees), provided they otherwise qualify. It applies to those who rejected COBRA coverage when first offered, and establishes a second 60-day election period. Those employees can now change their mind and elect coverage now, even though they previously rejected coverage. The reduction is not retroactive to the date of the qualifying event for those who did initially elect coverage, but may be applied for the next 9 months of COBRA coverage. The subsidy is graduated for those who had an adjusted gross income starting at $125,000 ($250,000 for those who file joint income tax returns) in the year in which they would receive the subsidy, and is not available to those with an adjusted gross income of more than $145,000 (or $290,000 for those who file joint income tax returns).
The law has notification requirements that must be met within 60 days by the administrator of the group health plan to anyone who may qualify for the reduction. (See 5th page of ARRA attachment.) The law is set up so that the employer pays the 65% that the employee no longer must pay, and is then allowed to reduce the payroll taxes it would otherwise pay by the same amount. The Department of Labor is required to produce model notices in the next few weeks.
The new law also allows employers to offer an optional enrollment plan to allow involuntarily terminated employees to enroll in a lower cost option for coverage that is different than the coverage the employee had prior to the event that qualified them for COBRA coverage, provided the premium is no more than the premium for the coverage in which the employee was enrolled at the time of the qualifying event, and the optional coverage is coverage that is also offered to active employees at the time the qualifying employee makes the election. The optional coverage cannot be limited to dental, vision, counseling or referral services; flexible spending accounts; or services consisting primarily of wellness or first-aid care provided by an employer maintained medical facility. This optional plan is not required by the new law, and may or may not be provided depending on the employer's choice.
It is important that you get in touch with your carrier to discuss making the required notifications, orchestrate the resulting premium reductions, and coordinate the related tax credits.
The following are helpful links to Department of Labor resources to help further answer your questions.
•COBRA Premium Reduction Fact Sheet
•Job Loss Poster (8½" x 11")
•Job Loss Poster (11" x 17")
•Flyer for Employers
•Flyer for Employees
•COBRA Continuation Health Coverage FAQs for Employees
•COBRA Continuation Health Coverage FAQs for Employers
•IRS Information on COBRA Premium Reduction
•DOL Information Related to the American Recovery and Reinvestment Act of 2009
Question:
How do you handle pay issues when you have to shut down the office or company when there is inclement weather? Do you need to pay the non-exempt employees? What do you do about someone who doesn’t come in because of bad weather when others from the same area in town make it in?
Answer
Answer:
Hourly (non-exempt) employees are paid for hours worked. If an employee did not work, regardless of the reason, then the employee does not have to be paid. Of course, like most things in employment law, there are exceptions. Contracts guaranteeing a certain wage have to be honored. Likewise, policies regarding pay for periods that the business is closed due to emergencies have to be followed. Other factors to take into consideration include morale and fairness issues.
However, salaried (exempt) employees are a different matter. Those who are exempt must be paid their full salary if the business shuts down for less than a full workweek or if the employer does not have work available for the employee for the full workweek. Making improper deductions from pay can endanger the employee’s exempt status. If the business was open and work was available, deductions can be made from an exempt employee’s salary if the employee is absent from work for one or more full days for personal reasons. Deductions can also be made for a full day»s absence if it occurred because of sickness or disability, as long as the deductions are made pursuant to a bona fide sick or disability leave plan, policy or practice.
Texas law prohibits discrimination for participation in an emergency evacuation. An employer may not discharge or discriminate against an employee who leaves the employee’s place of employment to participate in a general public evacuation ordered under an emergency evacuation order. (But, emergency service personnel are exempt from this provision.) Additionally, an employee who is called to active duty in the uniformed services as a result of a national emergency has job protections.
Sometimes employees who lost some, but not all of their income due to the bad weather, may be entitled to unemployment benefits. And if you had to reduce employees’ hours, which triggers a loss in health insurance coverage, your employees may be entitled to COBRA coverage depending on the circumstances.
