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When is an employee with an alcohol or drug problem protected under the Americans with Disabilities Act?  The 7th Circuit Court of Appeals recently addressed this issue. A police chief rear-ended a car on his way home after he had consumed at least four glasses of wine. His blood alcohol level was nearly three times the Illinois legal limit.

The chief was placed on administrative leave and then terminated based on a pattern of errors in judgment, his inability to perform his duties, since his driver’s license had been revoked, and for engaging in conduct below the standards expected in the job.  The chief sued and claimed that his employer had discriminated based on his alcoholism and by refusing to accommodate his alcoholism.

The Court of Appeals dismissed this case, finding that the police chief was not a qualified individual with a disability because he had failed to comply with universal workplace rules and he could not perform the essential functions of the job because he was unable to operate a motor vehicle because of the suspended driver’s license.

The court pointed out that employers can discipline employees for the violation of workplace rules, even if the violation is caused by a disability. The discipline can include termination.  The Equal Employment Opportunity Commission takes the position that the ADA protects an alcoholic if the individual can meet the definition of disability:

• If the condition is so severe that it substantially limits one or more major life activities.
• The ADA also protects a recovered drug addict if the person is no longer engaging in the illegal use of drugs.
• The ADA does not protect employees who currently use illegal drugs.

However, the EEOC expects alcoholics and illegal drug users to meet the same performance and conduct standards as all other employees.

These conditions do not excuse poor job performance or other unsatisfactory behavior, including absenteeism, tardiness, insubordination or involvement in on-the-job accidents.  The ADA allows employers to prohibit the use of alcohol and illegal drugs in the workplace. Employers also are allowed to discipline employees who come to work under the influence of drugs or alcohol.

As always, employers must be consistent in their administration of discipline. For example, an employer should not terminate someone who is known to have an alcohol problem if the individual comes in late and then allow other employees to be tardy.

Finally, employers can refer employees to employee assistance programs, but they are not required to refer employees to employee assistance programs in lieu of discipline.

California’s labor department has issued updated guidelines on whether internships should be paid or unpaid, with the new rules giving employers slightly more latitude not to pay them.
Many wage and hour regulators maintain that interns must be paid if their work is of “immediate advantage” to the employer, but the California agency’s top lawyer advised that such an advantage can be offset — and the intern not be paid — if the employer provides close supervision and lays out money for training.

The DLSE regulator stated that interns could do occasional work done by regular employees, as long as it “does not unreasonably replace or impede the education objective for the intern and effectively displace regular workers.”

Over all, the guidance from the California Division of Labor Standards Enforcement was emphatic that for internships to be unpaid, they must be educational and predominantly for the benefit of the intern, not the employer. Therefore; there still aren’t going to be many circumstances where for-profit companies can have unpaid internships and still be in compliance with the law.

The federal government has established six criteria (which are also embraced by California) to determine when internships can be unpaid.

Wage-hour laws typically apply only to “employees” or an employment relationship. Properly classified interns escape minimum wage and other requirements because they are not considered “employees.” If considered employees, interns must be paid at least the minimum wage.

Criteria for Private Sector Internships

How does one tell an employee from an intern? The U.S. Department (“DOL”) of Labor and the California Division of Labor Standards Enforcement (“DLSE”) apply the same six criteria:

• The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment;
• The internship experience is for the benefit of the intern;
• The intern does not displace regular employees, but works under close supervision of existing staff;
• The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded;
• The intern is not necessarily entitled to a job at the conclusion of the internship; and
• The employer and the intern understand the intern is not entitled to wages for the time spent in the internship.

Consequences of Misclassification

In this time of enhanced regulatory enforcement, particularly at the federal level, it pays to get it right when it comes to unpaid internships. The price of misclassifying workers as interns rather than employees is very high. In addition to minimum wage and overtime for all hours worked, a host of penalties may apply under California law. These include a special penalty equivalent to the wages for failure to pay minimum wage, as well as assorted penalties for improper recordkeeping, late payment, missed meal periods or rest breaks, etc. Then there are the claims for improper exclusion from benefit plans and other contractual employee benefits such as vacation.

Human Resources 4U can help with interns or other wage classification issues.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

I continually get questions regarding Pregnancy Disability Leave (PDL) in California so here is a general overview of the regulations.

Any employer with 5 or more employees must offer PDL. There is no length of service requirement so employees become eligible at their date of hire. The maximum amount of time for PDL is 4 months (or 88 working days or 704 hours). Part-time employees are entitled to a pro-rated amount and the PDL may be taken on an intermittent basis.

The specific types of absences covered are:
• Pregnancy
     o Severe morning sickness
     o Prenatal care
• Childbirth
• Related medical conditions
     o Such as a miscarriage

The employer may require a medical certification as long as it requires medical certifications for other types of disabilities. The employer should provide a written job description for the medical provider and ask that the medical certification state whether the employee can continue doing their job and/or the anticipated begin and return to work disability dates.

PDL is generally unpaid unless the employer provides pay for other types of disability leave. The employer can require that employees use their paid sick leave to cover PDL and employees can elect to use their vacation and/or PTO paid leave, as well. The employer doesn’t have to continue to provide health benefits unless it continues health benefits for other types of disabilities. Employees who take PDL are eligible for State Disability Leave.

Employees are entitled to be returned to the position they left upon their return to work.

Keep in mind that if your employees are also eligible for FMLA/CFRA leave (generally 50 or more employees), PDL becomes more complicated and you have to comply with all the laws.

Human Resources 4U can help with your leave policies.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

The EDD does not question the employer’s right to discharge an employee, or the employee’s right to quit. The EDD is looking beyond that question to whether or not the circumstances of the separation fit the requirements of the UI code. The wording of separation documents is critical. There is a great distinction in the UI code as to whether the reason for separation can be defined as the claimant’s inability to perform the work or a “willful and wanton disregard of the employer’s interests.” Here are some things to keep in mind.

UI Guidelines
Never give false or inaccurate information to the EDD. Claimant’s can get False Statement Penalties, but employer’s can get False Statement penalties up to 10 times the claimant’s weekly benefit amount. If the claimant makes a false statement to the EDD, make the EDD aware of it. If you get a Notice of Potential False Statement Liability, appeal it.

Don’t misclassify employees as independent contractors, the penalties involved here will go way beyond paying UI claims.

Always respond to the initial claim form even if you agree with the claimant’s reasons. If you don’t respond to the claim on a timely basis, you are not considered “an interested party.” Therefore, if you later disagree with any charges from that person’s claim, you have no rights to object to the charges.

Complete all EDD forms if there is money involved and you feel you have a right to relief of charges. You will not get relief if you don’t. Make sure to include all supporting documentation including the DE 1545 along with your protest.

The EDD will send such forms as DE 4614, DE 428, DE 2088, Notice of Potential False Statement, Notice of Potential Tax Liability, and Notice of Denial of Petition. Failure to appeal any of them within the time limit is costly. You can appeal any ruling against you and the effort can result in substantial savings to your account.

There are several reasons where an employer may be relieved of charges even if the claimant is collecting UI benefits.
• Did the claimant leave to accompany a spouse or domestic partner?
• Was it because of domestic violence?
• Was the use alcohol or drugs involved?
• Did the employee leave your company for another job?
• Was the claimant a student returning to school or on a work/study program?
• Have you offered work to a past employee currently collecting UI benefits?
• Is the past employee caring for children or some other individual that precludes them from accepting work?

Do not assume that short-term employees don’t cost you any money for unemployment insurance. Every dollar someone earns in wages contributes to potential liability on your reserve account. It’s just as important to do the documentation on a short-term employee as it is for an employee who has worked for you longer.

If an employee quits, but you want the person off your property prior to the effective day of the resignation, give serious thought to paying the employee through the time of notice. If not, the separation is considered a discharge, and the employee would be eligible for unemployment insurance benefits.

Hearings
• Read the instructions on all forms, including the Notice of Hearing.
• Have your facts in order and available for when the EDD adjudicator calls for more information about a past employee.
• Ask the EDD representative for the EDD their fax number or email. That’s where you should send supporting documentation, so you know the decision maker will see it.
• Go to the hearing.
• Go with witnesses and documentation. You are not going to win if you don’t show up.

Remember, every dollar on a DE 1545 could mean the difference between paying the next higher rate or the next lower rate.

Human Resources 4U can help in responding to UI claims.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

Wage and hour litigation seems to growing into a big business for employees and their attorneys; especially, if they can smell a class action potential. All employers can take steps to avoid getting themselves into these types of lawsuits by paying careful attention to the law. Here is the basic rule and some common problem areas.

The Basic Rule
To be classified as exempt you must be “primarily engaged in” exempt work as defined in the labor code and earn at least 2 times the minimum wage (this currently amounts to $640 per week in CA). There are 3 main types of exemptions (Executive, Administrative, and Professional) and each have very specific criteria assigned to them.

Trap 1: “Comp Time”
Never give a non-exempt employee “comp time” instead of overtime pay. The basic rule in CA is overtime (time and a half) must be paid for any time worked in excess of 8 hours in a day and 40 hours in a week. There are some minor exceptions (formal make-up time and alternate work schedules) to this but you cannot let employees bank overtime to be taken at a later date.

Trap 2: Pay a Salary - Classify as Exempt
Pay a person a salary as opposed to paying them by the hour has no bearing on their eligibility for overtime pay. To be exempt from overtime pay for almost all jobs, you must meet the criteria for either the administrative, executive or professional exemption. These criteria are strict and not easily attained. It is the job duties that determine eligibility for overtime pay not how they are paid or what their job title is.

Trap 3: Not Paying Overtime on all Earnings
Properly paying non-exempt employees for overtime in a week where they earn additional nondiscretionary compensation beyond their base pay is complicated but it’s the law. Basically, you must roll into their base pay any additional earnings for the week and recalculate an “adjusted” hourly rate. For example; if an employee’s base pay is $10 per hour and they work 50 hours for the week, they would be paid $15 per hour for their overtime work. Now let’s say they earned a production bonus of $50 for the week. Their total earnings are now $550 or an “adjusted” average of $11 per hour. For overtime work during this week, their overtime pay would now be based on $11 per hour rather than $10 per hour. Therefore you would have to pay them $16.50 for each hour of overtime worked.

Trap 4: Call It a Sales Job – Classify as Exempt
Just because the person is selling doesn’t necessarily mean they are exempt. Again it is the job duties that determine the exempt status not how you pay them. To be eligible for the sales exemption you must primarily be doing “outside” sales. That means sales at the customer’s place of business. If you are making sales from your office or even from your home or by mail, internet or telephone, you are not eligible for the sales exemption. Keep in mind that exempt sales staff must still be paid at least the minimum wage for time worked regardless of their amount of sales commission earned.

Trap 5: Pay a Commission – Classify as Exempt
Just because you pay someone a commission doesn’t mean that you don’t have to pay them overtime. Some inside sales commissioned employees may be exempt but they must work for a retail or service business and earn at least 1.5 times the minimum wage and over 50% of their pay must come from commissions. Also, in CA you can only be exempt as a commissioned employee if you meet all the above tests and are covered under wage orders 4 (Professional, Technical, Clerical, Mechanical and Similar Occupations) or 7 (Mercantile Industry). For any other wage order an inside sales commissioned employee would automatically be non-exempt and eligible for overtime pay. Therefore if you have a full time employee that earns only $250 in a given week (commission plus base pay), and otherwise meets the criteria for this exemption, you still must pay them $480 for the week (40 x $12.00) for them to be exempt.

Trap 6: Call Them an Independent Contractor – Pay as Exempt
Just because you call someone an independent contract (IC) doesn’t make them one. Once again it is the job duties that determine independent contractor status (see my blog on ICs for more information on this topic). If it is determined that the person in question was not an IC, the IRS or the Labor Board would then determine if they should have been classified as exempt or non-exempt. If it is determined that they should have been non-exempt, you will owe them overtime for all excess hours worked in addition to all the penalties associated with not paying them as an employee.

Getting It Wrong Is Expensive
Generally, for wage and hour violations, there is a 3 year look back plus penalties, interest and attorney fees. So even getting 3 hours a week, wrong for a $15 an hour job for a couple of years could wind up costing you upwards of $10,000 per employee. You don’t want to get this wrong!

If you are interested in getting an outside opinion on how your employees should be classified, Human Resources 4U can help.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

Both the federal Americans with Disabilities Act and the California Fair Employment and Housing Act require employers to provide an employee with a disability “reasonable accommodation.” This means a modification or adjustment to the workplace that enables the employee to perform the “essential functions” of the job (see my prior blogs on Job Descriptions for more information on “essential functions”).

Finding a reasonable accommodation can be difficult process. However; there are some guidelines to follow to ensure you are doing your best to find a reasonable accommodation. Remember, according to the ADA and FEHA, the employer must provide an effective and necessary accommodation, unless doing so would be an undue hardship—that is, extremely difficult and costly.

The Duty to Engage in the Interactive Process
As an employer you have a duty to engage in an interactive process with an employee requesting an accommodation. The duty to engage in the interactive process and the duty to provide a reasonable accommodation are separate. The purpose of the interactive process is to determine what reasonable accommodation the employee needs. Once the employee and employer have established this, the employer must provide the accommodation. The employee does not have an ongoing duty to keep communicating with the employer. In other words, the employer and employee share an obligation to find an accommodation. But once they do, the employer has the obligation to implement it.

The Duty to Provide a Reasonable Accommodation
A recent Court of Appeal decision took a rigid approach to reasonable accommodation, specifically stating that “a single failure to make reasonable accommodation can have tragic consequences.” So, even a single error may be sufficient to sustain a jury award.

Here are some guidelines that may help in the prevention of ADA claims.
• Involve the right people in the interactive process: Have a clearly written process as to how the interactive process works; including which members of management should conduct these discussions. Make sure that the managers engaging in the interactive process are specifically trained and knowledgeable about the process.
• Ensure those who need to know about the accommodation do: If the employee needing the accommodation could be supervised by several different people, make sure they all know about the agreed upon accommodation. At the same time, providing information about a needed accommodation does not mean releasing private medical information, or telling people who do not need to know. Additionally, supervisors must be trained to keep confidential information about accommodations and to prevent discrimination and retaliation against employees with disabilities.
• Establish open communication: Employers also can improve open communication with simple steps like periodically checking in with the affected employee to ensure an accommodation is working and reiterating the organization’s commitment to a long-term, sustainable solution. You might want to establish a designated person or persons to call in case the employee is not given the accommodation. This simple step might prevent innocent errors turning into litigation.
• Make sure the accommodation makes sense: An accommodation needs to meet legal standards, but it must also be practical. As the employer, you need not provide the employee’s choice of accommodation.
• Ask for input: Set up a process in your policies, meetings, and follow up communications where you solicit regular feedback and input and remind employees that you expect them to speak up right away if an accommodation is not working.
• Immediately address inadvertent errors: Employers may be able to avoid lawsuits by addressing inadvertent wrongs as soon as they happen.

Conclusion
By adopting and carefully and consistently following a few important guidelines, an employer may be able to avoid painful litigation when it is time to provide—and maintain—a reasonable accommodation.

Human Resources 4U specializes in helping companies develop effective Human Resource ADA processes and procedures.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

In part 1, we discussed Human Resource systems and processes. Today we will look at the employee benefits side of the equation. Most (but not all) benefits will cost the company money. However, I believe the more benefits you can offer; the greater will be your ability to retain employees. Not every business can afford to offer all benefits but most companies should be able to offer some benefits.

High Cost Benefits
The high cost benefits are, not surprisingly, the ones considered the most important to employees. The benefits in this group are; health, vacation/PTO, holidays, sick/personal time, and training with medical being the most critical. There are a wide range of offerings available to employers, one of which should be able to fit in most employers’ budget. They can range all the way from just a catastrophic medical benefit policy to the HMO/PPO models. Any good insurance broker should be able to present all of these options to you. Vacation/PTO, holiday, and sick/personal time are self explanatory. All employees want time off. As an employer, you need to decide at what level you can afford to fund these benefits. You also need to take into consideration what your competitors are doing. If your offerings are poor relative to your competitors, you will most likely have higher attrition rates. Training as a benefit is often overlooked. The costs can be considerable; however, training including in-house training, offsite training, and tuition reimbursement programs are consistently shown to be ones those employees’ value. Most employees today are looking for ways to enhance their skills. The way you approach training will have an impact on both the employee’s value to you as a productive employee and on retention.

Moderate Cost Benefits
In this category I include; dental, bereavement, jury duty, and small incentive plans. Dental benefits are becoming more valued by employees. In addition, research is showing the poor dental health is often an indicator or precursor to more serious health issues. Therefore by supporting better dental health you might be saving yourself some future medical costs. A bereavement benefits sends a message to your employees that you care. I believe that by offering 3 days of paid bereavement is a worthwhile thing for a company to do. It is not often used and it is greatly appreciated by employees. Jury duty is benefit that impacts how you are viewed as a “corporate citizen.” Jury duty can certainly impact a business negatively; however, with the restructuring of most courts, many employees will only need to miss one day to complete their jury service. Here again, I think by offering a moderate jury duty benefit (let’s say up to 3 paid days), you can help improve the image of your company. Most employees will be called to jury duty once every several years, so in the long run it is not a big expense. The final item in this category is incentive plans. Incentive plans come in many different “flavors.” What I’m suggesting here is to come up with moderate cost incentive plans that reward your employees for things like outstanding customer service, going out of their way to help fellow employees, being flexible in supporting you during “crunch” times. These programs should be discretionary and somewhat spontaneous to have the most impact.

Low or No Cost Benefits
In the final category I include, life insurance, vision, employee assistance programs (EAP), wellness, 401K plans, voluntary benefits, and “perks.” Most employers should be able to offer a basic group life insurance policy (such as $10,000 term life) at a very low cost; you could then offer them the option to buy additional insurance at their own expense through a payroll deduction. Vision is also another benefit that you can offer at a very low cost or even as an employee paid benefit. EAPs are programs that are usually “under the radar.” Employees greatly appreciate them when the need arises. The need arises many times in an employee crises situation so the benefits of such a program may not be apparent because the EAP counselors have help employees resolve issues that would otherwise have negatively impacted your business. A good EAP program will provide you with usage reports that maintain employee confidentiality and I think you would be greatly surprised by the usage. Wellness is now a “fad,” however; a good wellness program should have a direct impact the health of your employees and consequently, over time, reduce health care costs and missed time. Most of the major health carriers have a wellness component at no or little cost and many companies can now provide you with independent and comprehensive wellness programs. 401K plans are another way to help with retention. Most fees can be passed on to the plan participants and a company match is optional. Obviously, the richer you can make your 401K plan, the more it will be valued by your employees. But the bottom line is that it doesn’t have to be a costly benefit to provide your employees. Voluntary benefits seem to be a growing trend. The benefits are fully paid by the employee and can range from a cancer protection policy to homeowners insurance to pet insurance. The literature seems to indicate that employees appreciate the option to purchase these types of plans. The last item on my list is “perks.” Perks help build employee loyalty and cohesiveness. Some examples of perks are birthday parties, Halloween parties, company picnics, potluck lunches, and special time off awards. I believe that the more of these you have, the more productive your employees will be, the more they will be willing to go the extra mile for you, and the better your retention will be.

If you would like any recommendations for providers of any of the benefits I’ve described, I would be glad to make some recommendations.

I thought I would write a two part series on what I believe to be Human Resources best practices. Part 1 will focus on processes and systems I think you should have in place and part 2 will explore best practices that will have some costs attached to them but for which I feel the payback would make them worthwhile.

By having “best practices” in place I believe that you are more likely to make better hires, more effectively retain your better employees, and expeditiously terminate your poorer performers. The end result would be building a better performing and more successful enterprise.

Processes and Systems:
The first thing I think a company should have in place is a comprehensive Employee Handbook. A well written handbook lets all the employees now what your specific “rules of the road” are. It will set the tone for the organizational culture you want to have and avoid ambiguities in dealing with employee relations issues. It should also answer most of the questions employees might have, therefore saving you from having to explain and re-explain things.

The second thing I think all companies need is to set specific standards for attendance and punctuality. Most of the companies I speak with complain about attendance but none of them has ever had a specific attendance policy!

Besides the Employee Handbook and an attendance policy, there are three basic systems you should have in place: hiring, compensation, and termination.

Hiring:
A good hiring system should look at the hiring process from recruitment through orientation. Your key hiring document is your job description, so you should make sure all your job descriptions are current and accurate. You also need to make sure your job application is branded to your company and compliant with California law. Once you have these items in place, you can start to think about creating an advertising plan; how are you going to recruit for this position? OK, now you’ve done a good job of advertising and you have a large applicant pool, what next. You might want to consider some sort of prescreening interview to shrink the pool. In any event, you must have a standard interview guide that is specific to the job and keyed off the job description. Eventually, you will have a set of interview guides for all positions that only asks legal and job related questions that anyone could use. This will allow you to develop a consistent approach to hiring. You should also be thinking of using tests. I think testing is a great idea and it is perfectly legal as long as the test is job related and you given it to all your final candidates. Now that you’ve successfully interviewed and tested your applicants, you are ready to make your selection. It is critically important that you make a “contingent” offer of employment subject to whatever background checking you will be doing. I recommend drug screening and a criminal background check as well as reference checking. All of this can be outsourced at a moderate cost. You should always be prepared to negotiate your salary offer. You’ve finally hired the person, are you finished? Not by a long shot.

Now you need to think about your new hire orientation. This is really the first time the new employee will be interacting with the company. On the procedural side, you need to make sure all your new hire “paperwork” is completed, the I-9 information checked, and you’ve given the employee all the legally required brochures from the EDD. But you also need to make the employee feel welcome! I suggest that a member of management (preferably the direct supervisor) take the employee to lunch on the first day. You should also “buddy” the employee up with a coworker that is a valued employee. Finally, you should be planning some post-orientation discussions, maybe one week after starting, then a month, etc. It is important that you let new employees know that you want them to be successful.

Compensation:
Compensation includes both pay and performance measurement. A best practice compensation system will answer these questions for you. How much of a salary increase is too much, too little? How can I distinguish between excellent, average and poor performers? What should I offer as a starting pay rate? How can I control my salary related costs?

All companies with the exception of very small ones should have a rational salary structure in place. Your salary structure will benefit you in many ways. It will give you a systematic approach to starting pay; a systematic approach to salary increases and a fair, equitable, rational approach to merit pay. It minimizes the opportunity for pay discrimination and preferential treatment claims. It is easy to understand, everyone know the rules. And lastly, supervisors like it because it minimizes defensiveness and the “squeaky wheel” approach to increases.

At the very least, a rational salary structure needs to have pay grades with structured grade minimums and maximums and a structured progression between pay grades. It can be enhanced by attaching a structured merit pay matrix linked to ranges within a pay grade.

Once you have a structure in place, you can now create a performance measurement system. You will need a performance review form(s). You will need to decide how often you will review performance. I recommend 45 days and 90 days for new hires and either annually or semiannually thereafter. There are many variations of performance appraisal forms, you could use one that that measures characteristics such as dependability, cooperation, etc. You could have a form that measures work, such as quality, quantity, etc. You could have a form that measures specific, detailed and targeted objectives, or you could have a combination of any of them. In any case, the end result should be some type of score. The score along with where they are in their pay range will determine what the merit increase will be.

Termination:
Whether an employee terminates for cause or voluntarily, you will need to have a process in place. Once again there are two components. The first is procedural. Are you giving the employee all the forms required by the EDD, COBRA or HIPPA, is the final paycheck ready, is the employee signing for it, are you explaining what additional paperwork the employee can expect, is the employee completing an exit interview?

The other part is what I call the paper trail. If the employee was terminated for cause, do you have good written documentation? I recommend a standardized and formal disciplinary process (which should be in the employee handbook). Have you created a “termination file” with all the documentation related to the termination such as performance reviews, disciplinary notices, attendance records, complaints, supervisor notes, etc? You want to do this ASAP. If you wait, people forget or move on and 10 months or a year later when you receive an agency complaint or a “lawyer letter,” you will be unprepared. You can read my prior blog “Documentation is King” for more details.

Human Resources 4U specializes in helping companies develop effective Human Resource processes and procedures.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

The California Labor Commissioner has published an Opinion Letter which provides employers with some latitude for salary reductions for exempt employees. Some companies are looking for ways to cut costs without having to lay off exempt employees. One way to do this would be to reduce the work hours of their exempt staff, with a commensurate reduction in salary. Exempt employees must generally be paid their weekly salary regardless of the number of hours they work during the week (there are some limited exceptions to this). And in the past, the Labor Commissioner has ruled that reducing hours would cause the employee to be deemed overtime eligible (and possibly entitled to back overtime wages).

The Labor Commissioner has now concluded that California law permits employers to temporarily reduce an exempt employee’s salary, with a commensurate reduction in hours, without jeopardizing the employee’s overtime exempt status.This new enforcement position is extremely helpful to employers looking for ways to avoid layoffs by reducing salaries and work hours. However, there are some important conditions that still must be satisfied to maintain the employee’s exempt status.

Condition 1:

The reduction in pay and hours must be temporary, and the employer must intend to restore the employee to a full salary and schedule when business conditions improve. Therefore there is a distinct possibility that salary and workweek adjustments that are not intended to be temporary may not receive the same treatment.

Condition 2:

All of the current rules for maintaining overtime exempt status still must be satisfied. The employee still must spend more than half of the workweek performing exempt duties. The employee also must be paid a monthly salary of no less than twice the state’s minimum wage, which presently equals $2,773.33 per month. And, the employee must be paid the entire new salary even if he or she works fewer hours than scheduled.

However, be aware that a Labor Commissioner’s Opinion Letter is not binding on a court. Although the Labor Commissioner’s Opinion Letter should be considered persuasive by a court, it is certainly possible that a court could reach a different conclusion if an employee challenged the reduced salary/hour arrangement.

In addition, as an employer, you are expected to know and understand all the factors for properly determining whether an employee should be classified as exempt in the first place. Violations of the law in this area are a very common cause of litigation and the penalties and fines can be steep (there is a three year look-back period). Human Resources 4U can help you to determine if you have your employees properly classified.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.

Good documentation is what gives you credibility with both your employees and your boss. It shows that you treated employees objectively and in a consistent manner. Ultimately, it’s Exhibit A when you go to trial.

Unemployment is very high and you probably already know that employees are much more likely to sue during downturns, so good documentation is even more important than ever.

Sad but True
Have you ever been part of this scenario?
The supervisor says, “I want to fire Mike” but when you check Mike’s personnel file, there are no records of problems; the file might even be positive.

There are many reasons supervisors give for the lack of documentation (he’s having personal problems, I didn’t want to make him feel bad, he’s usually a great performer). What it all boils down to is instead of hearing excuses from the employee, the supervisor is making the excuses for the employee without ever discussing the problem with the employee! The end result is poor documentation and nothing “on the record” indicating performance problems.

Remember, should you get involved in litigation, you will live or die by your documentation. Whenever you document something always assume the end reader will be a judge or jury. If they find what you have written to be vague, confusing, unclear, or malicious, what effect do you think it will have on their decision?

Opportunities Abound
You have many opportunities to create good documentation:
• Annual reviews
• New Hire 90 day reviews
• Complaints by the employee
• Complaints against the employee (harassment, etc)
• Coaching/mentoring discussions
• Discipline

Things to Consider Before a Termination
• Have you followed your own policies?
• Have you been consistent?
• Could this firing be viewed as discriminatory?
• Could this firing be viewed as retaliatory?
• Is the employee pregnant; has an open worker’s comp claim, or preparing to go on leave?
• Do you have a well-documented business reason for the termination?
• Do you have good supporting documentation?
• Have you been fair relative to other employees in a similar situation?

Formal Discipline
For problems that ultimately result in termination, the one piece of documentation that will have the most impact is the disciplinary notice (although all the other pieces of documentation will also be of value). Therefore it is critical that you have a formal disciplinary process in place and all supervision is trained on its use. This will allow for consistency, clarity, standardization, and objectivity, all the things that a judge or jury is looking for. To that end I suggest you have a standard discipline form for which all supervisors must address the following six points.

1. Describe the problem situation. Be specific. Include dates, times, and all data pertaining to the problem.
2. Summarize previous discussions. Attach any pertinent information from previous discussion, if necessary.
3. Describe what you expect the employee to do to correct the problem. Include time parameters whenever possible.
4. Describe what actions your are taking
5. Describe what the consequences will be for continued lack of improvement.
6. Set a date for a follow-up meeting to discuss the employee’s performance relative to your expectations.

Human Resources 4U specializes in helping companies develop effective documentation procedures and in making proper termination decisions resulting in a minimized the risk of discrimination and/or retaliation claims.

Human Resources 4U is a full service Human Resources consulting company specializing in small and midsize businesses. Note: This article is presented with the understanding that we are not engaged in rendering legal advice. If legal advice is required, the services of a competent attorney should be sought.