All posts by stu

Bonuses, Employee benefits, Employee Referral, Engagement, Human Resources, Recruiting, Retention

Create a Supercharged Employee Referral Program

Recruiting has been tough in recent years. We have many clients who successfully use an employee referral bonus program to supercharge their recruitment of talent. Employee referral programs accomplish three important objectives: (1) it engages employees in the business and adds excitement; (2) it pays current employees (instead of recruiting companies) for qualified leads; and (3) it expands the company recruiting reach to passive job seekers. Here are some steps to create an effective employee referral program:

  • Define the program’s objectives: Before creating an employee referral program, it is essential to understand what you want to achieve with it. Your objectives may include reducing recruitment costs, improving employee retention rates, exciting employees and finding good candidates.
  • Determine rewards and incentives: Decide on the type of rewards or incentives you will offer to employees who refer successful candidates. Monetary incentives (bonus or cash), or non-monetary (paid day off) or a gift card. Set the value appropriately – we have clients using $100 for entry level workers to $3,000 for highly paid professionals. Make the reward worth the effort of referring qualified candidates.
  • Develop a communication plan: Once you create the program objectives and incentives, write a communication plan (email, flyer etc..) to inform employees about the referral program. Use multiple channels, including emails, social media, and team meetings, to spread the word.
  • Create referral guidelines: Establish clear guidelines for the referral process. Outline the positions that are open for referral, the basic qualifications required and how the referral process works. Employees need understand how to refer candidates and what information they need to provide (include the employee’s name on the application, or with the shared resume).
  • Monitor the program: Track the number of referrals received, the success rate of referrals, and the overall cost-effectiveness of the program. Regularly review the program’s performance and make necessary changes to improve its effectiveness. We have a client that receives 50% of its new hires through the referral process!
  • Publically recognize and reward successful referrals: Recognize employees who make successful referrals in a public way. Celebrate their achievements and make sure they feel appreciated for their contributions to the company’s success. Company communications and social media are great ways to show appreciation to those employees.
  • Continuously improve the program: Keep improving the employee referral program over time. Solicit feedback from employees and candidates to identify areas for improvement and make changes accordingly.

By following these steps, your company can create a supercharged and effective employee referral program that will bring qualified candidates to your door and also help you retain top talent.

Compensation, Employee Handbook, Employee Policies, HR Compliance, Salaried employees, Wage and Hour

PTO Can be Docked from Salaried Employees

Paid time off is a fringe benefit and is not considered part of a worker’s salary ruled a federal appeals court on March 15, 2023. In a case brought by employees (nurses, physical therapists and social workers) at Bayada Home Health Care, the judges concluded that the company can take away paid leave when salaried workers do not meet productivity quotas. The Philadelphia-based 3rd U.S. Circuit Court of Appeals unanimously ruled that Bayada Home Health Care Inc did not violate federal wage law by docking salaried employees’ paid time off, or PTO, when they did not work required weekly hours. This was the first time that an appellate court ruled on whether docking PTO from salaried employees causes them to lose their exemption from overtime.

While a salary is a fixed amount of compensation paid out at regular intervals, paid time off is a fringe benefit that has no effect on a worker’s wages and can be paid irregularly, such as when an employee leaves a company. The court did not agree with the employees’ argument that deducting PTO when they did not reach a weekly productivity quota, meant that they were paid based on how much they worked and were not salaried employees exempt from overtime pay under the federal Fair Labor Standards Act. This decision affirmed a federal judge’s 2021 ruling for the company. (Higgins v. Bayada Home Health Care Inc., No. 21-3286 (3d Cir., March 15, 2023).

As a refresher, employees can be exempt from overtime if they have exempt duties and are paid on a salary basis. Being paid on a “salary basis” means an employee regularly receives a predetermined amount of compensation each pay period on a weekly, or less frequent, basis. The predetermined amount cannot be reduced because of variations in the quality or quantity of the employee’s work. Read more about the Salary Basis rules.

Compliance, Employee Policies, General HR Questions, Non-complete Agreements

FTC Proposes Rule to Ban Non-compete Clauses: What Happens next?

In January, the Federal Trade Commission (FTC) proposed a new rule that would ban employers from imposing noncompetes on their workers, a widespread and often exploitative practice that suppresses wages, hampers innovation, and blocks entrepreneurs from starting new businesses. By stopping this practice, the agency estimates that the new proposed rule could increase wages by nearly $300 billion per year and expand career opportunities for about 30 million Americans. Read more from the FTC.

The FTC is seeking public comment on the proposed rule, which is based on a preliminary finding that noncompetes constitute an unfair method of competition and therefore violate Section 5 of the Federal Trade Commission Act. The FTC’s proposed rule would generally prohibit employers from using noncompete clauses. Specifically, the FTC’s new rule would make it illegal for an employer to:

  • enter into or attempt to enter into a non-compete with a worker;
  • maintain a noncompete with a worker; or
  • represent to a worker, under certain circumstances, that the worker is subject to a non-compete.

The proposed rule would apply to independent contractors and anyone who works for an employer, whether paid or unpaid. It would also require employers to rescind existing noncompetes and actively inform workers that they are no longer in effect. The proposed rule would generally not apply to other types of employment restrictions, like non-disclosure agreements. However, other types of employment restrictions could be subject to the rule if they are so broad in scope that they function as non-competes.

If you are interested in reading more about what might happen if this regulation goes into effect, and how employees will need to respond, read these FAQs.

Compliance, Concerted Activity, Downsizing and Restructuring, Employee Rights, NLRB, Section 7 Rights, Termination

Is it Illegal to Use a Non-Disparagement Clause in Severance Agreements?

Recently, the Biden Administration’s National Labor Relations Board (NRLB) reversed well-established principles and ruled that confidentiality and non-disparagement clauses in severance agreements violate Section 7 of the National Labor Relations Act (the NLRA) if they restrict workers from engaging in protected activity. For instance, the agency concluded that protected activity includes: criticizing employer policies with coworkers and former coworkers; discussing severance, wages, and other terms and conditions of employment; and cooperating in NLRB investigations. This new position reverses the precedent under the previous administration and long-established historical principles. The McLaren-McComb decision immediately applies to employers.

The ruling involved a hospital employee that was laid off with 11 other employees. They were all given a severance agreement that contained standards release of claims, and also (1) a confidentiality clause prohibiting the sharing of the terms of the Severance Agreement with anyone other than a spouse or professional advisors, unless compelled to do so by a court; and (2) a non-disparagement clause that prohibited the employee from disparaging the hospital or affiliated persons. These are very common clauses in severance agreements and were written broadly without any limiting language.

According to the NLRB, the language was illegal because it violated the National Labor Relations Act (NLRA) because it forced the employee to agree to unlawful restrictions, in order to get the monetary benefits. Section 7 of the NLRA states that non-supervisory employees have the right to join together to advance their interests as employees and engage in “concerted activity,” which is not limited to unionizing activities and could include discussing wages or other workplace concerns or opposing unlawful conduct in the workplace.

Important takeaways:

  • The decision applies to union and non-union employers.
  • Severance agreement language should be adjusted to allow an employee to cooperate with the NLRB, discuss wages, and exercise any other rights protected by Section 7.
  • The decision (and Section 7 rights) do not apply to supervisors. Supervisors include individuals with the authority to hire, discharge, direct, or take certain other actions with respect to other employees, through the use of independent judgment.
  • The decision applies to all types of agreements, including those that were completed prior to the date of the McLaren Macomb decision.

Read more here.

Compensation, Compliance, Department of Labor, Exempt Employee, HR Compliance, Salaried employees, Wage and Hour

“Highly Compensated Employee” Exemption Requires Payment on a Salary Basis

A highly-paid offshore tool pusher worker sued Helix Energy Solutions because he was not paid overtime. He was considered exempt under the “highly compensated employee” exemption (Wage and Hour law) but was paid on a day rate, not a salary. In late February, the Supreme Court decided that the worker must be paid overtime because the exemption required that an employee be paid on a “salary basis”. Day-rate compensation plans do not qualify for the exemption. This rule applied even though the employee received day-rate compensation that netted him over $200,000 per year.

The Fair Labor Standards Act (FLSA) regulations contain a special rule for “highly compensated” employees who are paid total annual compensation of $107,432 or more. A highly compensated employee is deemed exempt under Section 13(a)(1) if:

  1. The employee earns total annual compensation of $107,432 or more, which includes at least $684* per week paid on a salary or fee basis;
  2. The employee’s primary duty includes performing office or non-manual work; and
  3. The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

Additionally, the weekly salary amount of $684 must be paid in its entirety. Employers may not use nondiscretionary bonuses and incentive payments (including commissions) to satisfy any portion of the weekly standard salary level for HCEs.

The Supreme Court concluded that the day rate did not satisfy the salary basis test, and the employee was entitled to overtime because a day rate is not a fixed salary paid regardless of the amount of time worked or pay received.  Although there are some very limited circumstances under which an employee can receive a “day rate” and still satisfy the salary basis test, for those exceptions to apply, there must be a pre-determined, minimum amount of pay, and a reasonable relationship must exist between the guaranteed amount and the amount actually earned.  The easiest solution to avoid problems is to stop using the day rate method and put employees that satisfy the duties test of an overtime exemption and put them on salary.

300 Log, Employee Injury, HR Compliance, Injury Statistics, ITA, OSHA, Record Keeping, Safety

OSHA Form 300A Posting Starts February 1 and Electronic Submission is due by March 2

Covered employers (having more than 10 employees at any point in 2022) are required to post the Occupational Safety and Health Administration (OSHA) Form 300A (Summary of Injuries) from February 1 through April 30 unless their industry qualifies as an exempt low-risk industry. The employee count is based on the number of employees in the entire company. Employers are not required to create OSHA injury and illness records for any establishment classified in the following North American Industry Classification System (NAICS).

All covered employers are required to post Form 300A even if they didn’t have any recordable incidents in 2022. Recordable incidents are required to be maintained on the OSHA Form 300 Log of Work-Related Injuries and Illnesses. OSHA Form 300A must be signed (and certified) by a company executive and posted in a conspicuous location for employees and where other important notices are customarily posted. OSHA records must be maintained at the worksite for at least five years.

Electronic Reporting: Employers must submit their 2022 Form 300A data to OSHA if they have 250 or more employees or have 20–249 employees and are in certain high-risk industries. Employers must send this data electronically, using OSHA’s online Injury Tracking Application (ITA). The deadline to submit the report is March 2, 2023.

On March 30, 2022, OSHA published a new rule to improve the Tracking of Workplace Injuries and Illnesses that would require establishments with 20 or more employees, in certain high-hazard industries to continue to electronically submit Form 300A Annual Summary information once a year to OSHA. Establishments with 100 or more employees in the highest-hazard industries to submit Form 300 Log and Form 301 Incident Report information once a year to OSHA. And, establishments with 250 or more employees, not in designated high-hazard industries, would no longer be required to electronically submit recordkeeping information to OSHA.

Update: The OSHA Injury Tracking Application (ITA) transitioned its login procedure to the public’s one account access to government applications, Login.gov. All current and new account holders must connect their ITA account to a Login.gov account with the same email address to access the application for the 2023 collection of Calendar Year 2022 Form 300A data.

Drug and Alcohol, Drug Free Workplace, Human Resources, Risk Management, Safety

Random Drug Testing services for Florida Drug-Free Workplaces

Random drug testing will deter drug use, which helps stop accidents and improve safety. The Florida drug-free workplace statute allows but does not require, random drug testing of employees. A random drug test is not a test based on reasonable suspicion of employee drug use, or a targeted test. Statistically random testing is truly “random” and the names of employees selected for testing were selected from a pool or list using a pre-determined rate. Each person on the list, or in the pool, has an equal chance of being selected (and could be re-selected during the year). The definition of “random” is ”made, done, or chosen without method or conscious decision.” Names cannot be selected based on employer favoritism or specific cause.

Setting up a random drug testing policy requires adding language to your Florida drug-free workplace policy. Specifically, identifying how many employees will be tested, how often and a description of the random name selection. Here is some sample language to consider: “The company will randomly drug test employees on a quarterly basis starting [date]. Employees are selected for random testing using a random number generator computer program. Each [quarter or month], on a day selected at random using the program, the HR department will pull a random selection of _____ employee names. Once the names are selected, HR will immediately notify the employees and testing must be completed on the same workday. An employee that does not complete the mandated drug test, without a legitimate reason, will be subject to discipline, up to and including immediate discharge.”

A random number generator program should be used to ensure that the employees selected for drug testing are truly random and this protects the company from allegations of discrimination and bias. Random number software uses an algorithm for generating a sequence of numbers whose properties approximate the properties of sequences of random numbers. Consultstu can serve as a third party to help you revise your drug testing policy and pull the names for your random testing. We can also generate lab authorizations for drug testing. Our computer software will generate a random date (for the month or quarter) for your drug testing and random names for testing. Call us today for more information about random drug testing services.

Compensation, Compliance, Employment Poster, Human Resources, IRS, Payroll, Posters, W2

Checklist of HR and Payroll Updates for 2023

Happy new year! It’s now time to review and update your company’s HR and payroll practices and documents for 2023. As we close out 2022, and begin 2023, it’s time for human resources and payroll to take some important January actions. Here is Consultstu’s 10 point HR checklist to help you get up to date with needed changes and fast-changing federal and Florida rules and regulations. Here are the 2023 HR & payroll updates.

  1. Update the new hire packet with 2023 documents. Replace your W4 with the 2023 version. Optional – send the new W4 to existing employees to see if they would like to make changes for 2023.
  2. Ensure you are using the right Form I-9 (expiration date for 2022, and even though it expired, the USCIS has authorized its use until it is replaced). A new form is coming in early/mid 2023.
  3. Go through the terminated employee I9s, and purge old I9 forms. The retention rule is a minimum of 3 years or 1 year after termination, whichever is longer.
  4. If group insurance plans renew on January 1, update the Heathcare Exchange form (mandated by ACA) with current group health insurance renewal information (contribution cost and eligibility) and add to page 2
  5. Check your state and federal workplace posters to ensure the latest versions are posted. See the Florida Department of Economic Opportunity webpage for free versions.
  6. Review, update and post the updated observed holiday schedule for 2023, and add to the Employee Handbook.
  7. Review recruiting and retention strategies for 2023 to stay current with the labor market conditions. Check the trending labor rates for key positions and obtain current compensation data to validate existing salary bands.
  8. Review the Employee Handbook for updates. Did your employee count increase or decrease? Policy changes? Were there any new issues that need to be addressed? Publish your updated Handbook and get employees to sign off.
  9. Check minimum wage rates (Florida MW rate increased on September 30, 2022) and minimum salary level under federal law to maintain exemption from overtime. Federal wage and hour plans to change the minimum salary level for exempt employees, so be prepared in 2023. Some states have set their own minimum salary levels, that are greater than the federal law.
  10. Travel policy update and 2023 mileage change. If your company provides mileage reimbursement, review the new rates effective January 1st, 2023. The rate increases to 65.5 cents per mile.

Here is one last recommendation. To prepare accurate W2s and 1099 forms at the end of January, ask employees to update their addresses, phone numbers and personal email. Depending on your payroll system, obtain employee consent to electronic delivery of their W2 forms. IRS Regulations require an employer to receive affirmative consent from its employees in order to deliver Forms W2 electronically. 

Compensation, Compliance, Department of Labor, Fair Labor Standards Act, HR Compliance, Payroll, Salaried employees, Wage and Hour

Salary Reduction for an Exempt Employee: What are the rules?

At Consultstu, this is probably the most common question we receive from employers. The federal Department of Labor (and the Fair Labor Standards Act) states that exempt employees must be paid a fixed salary that cannot be reduced based on the quality and quantity of the employee’s work. To qualify for an exemption, employees must be paid not less than $684 per week (DOL is expected to raise this amount in 2023) on a salary basis. There are special salary rules associated with outside sales employees, teachers and employees practicing law and medicine. Computer professionals have a specific rule that allows them to be paid a salary, or hourly, as long as it is at least $27.63 per hour.

Getting paid on a salaried basis (Regulation 541.602) means an employee receives a pre-determined amount of compensation each pay period on a weekly, or less frequent, basis. There is a list of exceptions to the rule that an exempt employee must receive their full salary for any week in which the employee performs any work, regardless of the number of days or hours worked. Also, keep in mind that an exempt employee does not need to be paid for any workweek in which they perform no work. If an employer makes a reduction from an exempt employee’s salary because of operating requirements of the business, the employee is not considered to be paid on a salary basis (and overtime would need to be paid).

According to the Department of Labor, here is the list of permissible reductions: (1) less than a full week of work in the first and last week of employment; (2) full day off for personal reasons; (3) full day off for FMLA absence; (4) full day off for sickness or disability – if the employer has a bona fide paid leave plan; (5) full day disciplinary suspension for violating workplace conduct rules; (6) full day suspension for a major safety rule violation.

No pay deduction from a salaried employee is allowed for a partial day missed (a few hours off), but an employer can require a salaried employee to use available PTO to cover a partial absence. In addition, the following are not permissible deductions: (1) partial and full days for sickness or illness if the employer does not have a bona fide leave plan; (2) partial day suspensions; (3) holidays and other days the employer is closed (weather, emergency, lack of work); (4) partial or full days off for poor performance or poor quality of work; (5) jury duty or witness duty or temporary military duty (unless the absence is for a full week) – but salary can be offset for jury duty fees or military pay received). Read the DOL Fact Sheet #17G Salary Basis Requirement and the Part 541 Exemptions.

Business Expenses, Compensation, Compliance, Independent Contractor, Overtime

Can an employee clean the office after hours for a flat fee, or is it overtime?

This question gets asked several times a year. The scenario goes like this … a medical practice gets poor cleaning services from its vendor so an employee asks to clean the office, after hours, for a flat fee. Seems like a win-win solution. The employer receives a clean office and the employee puts some extra money in their pocket. What are the issues for the employer to consider?

The first option is employment. If the medical assistant is working 40 hours for the employer, and the cleaning work takes 6 hours per week, then the additional hours would need to be added to the 40 hours worked in her primary assignment, and overtime paid for hours in excess of 40. The key element is that the employee is rendering services to the same employer, and it does not matter that the employee is performing different work. The employer could pay the employee at a different rate of pay for the cleaning work, but the hours worked would still count toward overtime.

In calculating the overtime rate for an employee working two or more different jobs for the same employer, the Faur Labor Standards Act (FLSA) requires the use of a weighted average. Assume the medical assistant earns $18 per hour and receives $15 an hour for the after-hours, and weekend cleaning time. If the employee worked 40 hours in planning ($16 x 40= $720 and 6 hours as a cleaner ($15 x 6 = $90), the employee’s total straight-time earnings for the week is $810. The weighted average hourly rate is determined by dividing the total earnings by the total hours ($810/46 = $17.61), resulting in a half-time rate of $8.81. So, in addition to the $15 per hour for cleaning, the employee would be due an additional $8.81 for the 6 overtime hours. Her total pay is $810 plus $52.86 for overtime, for a total of $862.86. Read DOL Opinion Letter on this topic.

The second option is an independent contractor. If the employee actually has a side cleaning business, with a business EIN and other customers, then the practice could hire her cleaning company to perform the cleaning for a flat fee. The businesses should sign a service contract and maintain a business relationship. To avoid overtime, the employee must have her own independent business.

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