HR News & Views Blog » Compliance

February 15, 2012

FLSA and “Matters of Significance”

Filed under: Compensation,Compliance,FLSA,General HR Buzz,Hiring & Jobs — Joyce Campbell, HR Content Manager @ 10:29 am

Q. The FLSA administrative exemption really confuses me. I understand the first part of the exemption – that an employee’s primary duty must consist of the performance of office or nonmanual work directly related to the management or general business operations of the employer or the employer’s customers. But then it goes on to say the primary duty must also include the exercise of discretion and independent judgment with respect to “matters of significance.” How am I supposed to know what matters of significance means?

A. Out of all the exemption tests, the administrative exemption is considered to be the most ambiguous in terms of interpretation. According to the Department of Labor (DOL), the term “matters of significance” refers to the level of importance or consequence of the work performed. An employee does not exercise discretion and independent judgment with respect to matters of significance merely because the employer will experience financial losses if the employee fails to perform the job properly. Similarly, an employee who operates very expensive equipment does not exercise discretion and independent judgment with respect to matters of significance merely because improper performance of the employee’s duties may cause serious financial loss to the employer.

So what do matters of significance mean? To start with you can ask yourself if the employee in the position:

have authority to formulate, affect, interpret, or implement management policies or operating practices?
contribute to long-term or short-term business objectives?
represent the company in handling complaints, arbitrating disputes, or resolving grievances?
have authority to waive or deviate from established policies and procedures without prior approval?

The answers to these questions will assist in determining if matters of significance are part of the employee’s position. As always, it is recommended to review exempt status with your employment law attorney before making a final determination. The DOL also has a fact sheet regarding the Administrative Exemption which you can access by clicking here.

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February 2, 2012

Consistency: A Resolution You Need to Keep

Filed under: Compliance,Employment Law — Olivia @ 11:50 am

With the warm weather we’ve been having in Kansas – 65 degrees yesterday, when a year ago it was ice and snow – it’s really difficult to believe today is Groundhog Day, and Punxsutawney Phil prognosticated six more weeks of winter. I know I’m not the first one who has wondered why we need a groundhog to tell us something the calendar tells us every year.

But yes, it is February. Did you make any resolutions at the start of 2012? How are your business resolutions holding up? I read yesterday that about one third of all people who made a resolution have already dropped the ball and gone back to their old ways.

Regardless of your resolution results, today is a new day and can be a new start. Recently, I came across a blog at SHRM’s We Know Next, written by Jonathan Segal. He discussed EEO termination claims and the danger of inconsistent policy application.

We all know the importance of consistency when it comes to policies. There is no company that is perfect at consistently applying policy every single time – companies employ people, and people (despite what they may think about themselves) are not perfect. So, what can you do?

Start today with a documented commitment to apply policies consistently and fairly. Regardless of how things may have been handled in the past, effective today you will consistently apply policies. Aside from the benefit of being fair to your employees, you are reducing future legal risk that could be posed with unfair or inconsistent policies.

“This does not eliminate the legal risk. But it should minimize it materially. And the legal risk that remains must be balanced against the business risk of tolerating substandard conduct to avoid any legal risk.”

Here are a few other tips to keep in mind:

Review policies and procedures on a regular basis – at least annually.
Employment law is always changing – be sure your policies reflect the most current laws.
Request feedback from managers regarding policy wording – Are policies concise and easy for them to understand?
Conduct training for new managers (and reviews for other managers) to ensure they have an understanding of the basics of employment law and how it applies to their treatment of employees.
Take your employee opinion survey results to heart – Do your employees believe managers fairly and consistently apply policies?

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February 1, 2012

FLSA Question of the Week – How Do We Handle Travel Time?

Filed under: Compensation,Compliance,FLSA,General HR Buzz,Salaries & Pay — Joyce Campbell, HR Content Manager @ 9:22 am

With the increased focus on Wage and Hour issues by the Department of Labor, I thought it might be helpful to post a few blogs regarding common FLSA questions. Today’s question regards travel time, which is one of those areas that seems to pop up every now and then.

How do we handle travel time?

Under the Fair Labor Standards Act (FLSA) determining whether travel time is considered “hours worked” (and nonexempt employees must be paid) is often confusing and may depend upon the type of travel involved.

Ordinary Home to Work Travel. Normal travel from home to work is not work time, whether an employee works at a fixed site or at different job sites.

Special Home to Work Assignments. Travel in which an employee who regularly works at a fixed location is given a special assignment to work at a different location is not ordinary work travel. Such travel is considered work time. However, the employee’s normal home to work travel time may be deducted from the work time, as she would have had to go to work anyway.

Daily Work Travel. Time spent traveling as part of an employee’s principal job activities, such as from job site to job site during the work day is considered “hours worked.”

Overnight Travel. Travel away from home is work time when it cuts across the employee’s workday. Travel on non-working days is also considered “hours worked” if it occurs during normal working hours. For example, if an employee normally works from 9:00 a.m. to 5:00 p.m. on Monday through Friday, the travel time during these hours is also considered work time on Saturday and Sunday.

Travel during non-work hours is not considered “hours worked” unless the employee is actually performing work while traveling. Time spent in travel away from home outside of normal working hours as an airplane, train, bus, or car passenger is not work time. However, an employee who drives a car, bus, or other means of transportation, or an employee required to assist her is considered to be working.

Remember that many states also address wage and hour issues and may impose stricter requirements beyond the FLSA.

If you have any specific FLSA questions you would like answered, please let us know by commenting on this blog.

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January 30, 2012

W-2 Changes for 2012 – Prepare Now!

Filed under: Benefits,Compensation,Compliance,Employment Law,General HR Buzz — Joyce Campbell, HR Content Manager @ 2:31 pm

We heard it was going to happen and now it is just around the corner. What am I referring to? The requirement as part of the Patient Protection and Affordable Care Act (PPACA) which mandates employers must report on employess’ W-2 forms the cost of their group health insurance coverage. This information must be furnished on 2012 W-2 forms, which generally must be provided to employees by the end of January 2013.

Although this is a year away, some of the calculations may be time consuming so it is advised to begin capturing this data now in order to be prepared when January 2013 rolls around. The new reporting requirement applies to employers that file 250 or more W-2s. The reported amount should reflect the aggregate cost of all reportable benefits that the employee received under all group health plans that the employees’ participated in during all or part of the 2012 plan year. What does this include? Some examples are:

Major medical benefits
Integrated vision plan coverage
Executive physicals

For more specific information, please go to the IRS’s website and review Notice 2012-9.

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January 27, 2012

HR Fact Friday: FLSA Companionship Exemption To Be Narrowed?

Filed under: Compliance,Employment Law,FLSA,General HR Buzz — Paul Hendrycks, VP HR Sales and Marketing @ 6:00 am

For many years, the DOL has recognized an exemption from the Fair Labor Standards Act (FLSA) for persons employed as domestic companions. The exemption excluded many home care and personal assistance workers, who provided companionship services for the sick and elderly at home, from FLSA’s overtime and minimum wage requirements. A detailed DOL discussion of the existing exemption can be found here: http://www.dol.gov/whd/regs/compliance/whdfs25.pdf. DOL is proposing the change this exemption. Here is DOL’s own summary of its proposed changes: “The Department is proposing to revise the regulations to accomplish two important purposes. First, the Department seeks to more clearly define the tasks that may be performed by an exempt companion. Second, the proposed regulations would limit the companionship exemption to companions employed only by the family or household using the services. Third party employers, such as health care staffing agencies, could not claim the exemption, even if the employee is jointly employed by the third party and the family or household.” A more detailed summary of the proposed DOL changes can be found here: http://www.dol.gov/whd/flsa/whdfs-NPRM-companionship.htm.

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January 6, 2012

HR Fact Friday: NLRB Poster Deadline Postponed Again

Filed under: Compliance,Legal Issues,Unions/NLRB — Paul Hendrycks, VP HR Sales and Marketing @ 2:27 pm

The National Labor Relations Board (NLRB) recently imposed a new requirement that employers post a notice to employees informing them of their rights under the National Labor Relations Act (NLRA). The new NLRB requirement was supposed to take effect as of November 14, 2011 but that deadline was later delayed until January 31, 2012. The NLRB has delayed the deadline again, and it now is set at April 30, 2012. The most recent delay is a related to a court request to postpone the effective date pending a legal challenge to the new requirement. If you want more information, follow this link to the NLRB’s FAQ on this new posting requirement: https://www.nlrb.gov/faq/poster

A copy of the new poster is available here: https://www.nlrb.gov/poster and here: https://www.nlrb.gov/sites/default/files/documents/1562/employee_rights_fnl.pdf

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January 5, 2012

Turnover: Costs and Consequences

Filed under: Benefits,Compensation,Compliance — Olivia @ 4:18 pm

In HR, we are in a unique position to understand just how significantly turnover affects our organizations. In the most recent month available (Oct. 2011), the Bureau of Labor Statistics reported that voluntary separations comprised almost half of total separations (49%). Layoffs and discharges (41%) and other separations (less than 10%), including retirement, trailed behind. Presenting these numbers, however, will get you nowhere. With our access to confidential data, we can watch for trends to determine the overall cost and determine the cause (and possible solutions).

Although estimates vary widely depending on the source, you can be sure that the costs of turnover are significant. The Harvard Business School calculated that the cost of replacing a sales representative with an annual income of $60,000 is $300,000 – three times the annual salary, plus training, expenses, benefits, and commission. Here are some costs to consider when calculating turnover:

Termination or Separation – Regardless of whether the employee was fired or quit voluntarily, you must consider costs such as: removing employee from payroll, processing benefits, and retrieving and replacing any of their equipment. In some cases, you have to consider severance pay and rising unemployment compensation.

Replacement – These costs involve advertising the position, reviewing applications and interviewing candidates, administering employment tests, verifying references and onboarding and training for the new employee. In some instances, you may also have to replace equipment, such as keys, laptops, or uniforms that were not recovered from the former employee.

Lost production – This is probably the most difficult cost to quantify, and also the largest. Production is usually affected, even if temporary workers are hired. Existing employees who must cover the departing employee’s duties may sacrifice some of their production because of the burden. After the new employee is hired, lost production costs include inevitable errors and inferior quality.

To calculate your turnover rate, the U.S. Bureau of Labor Statistics suggests dividing the number of employees in the company at midmonth by the number of departing employees each month. For example, if you have 50 employees on January 15 and 5 employees depart between January 1 and January 31, your turnover rate is 10 percent.

Look for more as we explore turnover in the coming months through the blog and our newsletter.

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December 30, 2011

HR Fact Friday: HR Trends in 2012

Filed under: Compliance,Employment Law,General HR Buzz,Management Practices — Tags: prediction, trends — Paul Hendrycks, VP HR Sales and Marketing @ 6:00 am

Are we really just one week away from the turning of the calendar to the year 2012? We work in and provide services to an industry [HR] where someone on the outside looking in may not think much ever changes. HR professionals know differently. Benefits administration, employment law, integrated talent management solutions, compensation programs, etc., etc. The list goes on. I would venture to say that every year at least one major HR program changes dramatically in most every company. And this goes equally for companies providing technology and consulting solutions to the HR marketplace like HRN.

So what predictions does Bersin & Associates see on the short horizon for 2012? According to a report published in November, 2011 and partially reprinted on SHRM.org, the following trends and changes are predicted to occur that will affect small businesses:

Deep integration of talent acquisitions—recruiting and staffing—into talent management.
Social tools and ads for finding talent will grow dramatically in 2012, forcing staffing agencies and job boards to re-engineer their offerings.

(more…)

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December 15, 2011

Communication: Best Way to Prevent Fraud (and it’s Free!)

Filed under: Communication,Compliance — Olivia @ 10:45 am

Years ago when I worked as a young teller, I can remember how strict bank policy was with regard to safeguarding customers and the bank itself. The bank took care to secure its assets and protect against theft – internally as well. We practiced “dual control,” for transfers among general ledger accounts, for example. Even with those preventive measures, there were still stories around the water cooler of employees who had embezzled money from the bank.

Occupational fraud – embezzling, theft, or misuse of resources – is a concern year-round. The added pressure of holiday stress could present the missing catalyst that propels an employee to commit fraud when they otherwise might not.

Of course, you have taken precautions, such as exercising “dual control” and locking things up around the office, but Teresa Bengston writes that you may be missing something in your measures: accounting for the fact that your employees are human.

She suggests some best practices to reduce fraud, especially during the holiday season:

Communicate with your employees – Make it a point to go over policies and procedures that are in place to prevent fraud. If they see anything of concern, they should notify management. Use every channel available to communicate with employees to be sure they receive the message.
Teach employees to identify concerns among their coworkers and help them understand the true cost of fraud and how it relates to their job.
Use your Employee Assistance Program or another source to offer help to employees who are struggling – the holidays are stressful and can be more so with added financial pressure.

As the economy shows sluggish signs of a gradual recovery, no organization can afford the extra drain of fraud, especially when low to no-cost ways of helping prevent it are as simple as communication.

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December 14, 2011

Weekly Wednesday Acronym – Another One with Potential Class Action Exposure!

Filed under: Compliance,Discrimination,Employment Law,General HR Buzz — Joyce Campbell, HR Content Manager @ 3:20 pm

I’m sure you are aware of the Fair Credit Reporting Act (FCRA), which regulates the scope and flow of information between “users” and “furnishers” of consumer information. Not only does the FCRA regulate the exchange of consumer credit information between the credit bureaus and creditors in connection with mortgage lending, but it also regulates the exchange of consumer information between employers and credit reporting agencies that provide background reports.

These regulations are triggered when an employer orders a background check report, criminal, or motor vehicle records check. For many years, it was relatively uncommon to see lawsuits or FTC enforcement actions against employers for alleged violations of the FCRA. Now, times have changed. In the past few years, there has been an unprecedented spike in class action and single-plaintiff lawsuits against employers for alleged violations of the FCRA. As a result, compliance with the various provisions of the FCRA is essential for all employers that use background reports even in part to make hiring and employment decisions.

Earlier this year, the Federal Trade Commission (FTC or “the Commission”) staff published a report entitled, 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations. This report highlights critical portions which “provide important guidance on issues of statutory interpretation”.

As such, this is another area that we need to become familiar with and watch our P’s and Q’s. I’m going to add this to my stack of reading, at least for a cursory review, so I will be familiar with what the findings are suggesting in terms of compliance. If you would like to review the report, you may find it by clicking here.

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