The AR Group Uncommonly Smart Law 2019-05-04T17:54:41Z https://theargroup.com/feed/atom/ WordPress Victoria Aguilar https://www.theargroup.com <![CDATA[Up Close and Personnel]]> https://theargroup.com/?p=536 2019-05-04T17:30:51Z 2016-02-24T16:05:36Z Personnel File Documents The importance of having in place complete, accurate, and appropriate employee records cannot be overstated.? Remembering that 25% of court actions are employment-related, the employee file is often a landmine where plaintiff?s attorneys make hay with the contents. Accordingly, creating and maintaining appropriate employee files is a critical first step in establishment... Read More

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]]> Personnel File Documents

The importance of having in place complete, accurate, and appropriate employee records cannot be overstated.? Remembering that 25% of court actions are employment-related, the employee file is often a landmine where plaintiff?s attorneys make hay with the contents. Accordingly, creating and maintaining appropriate employee files is a critical first step in establishment of an effective human capital management infrastructure.

There is no ?one size fits all? approach to what should be included in employee files.? While some state laws impose restrictions on the type of information to be contained in an employee file and various federal laws impose restrictions on when different types of employee-related documentation may be destroyed, there are some common practices that small business employers should be aware of and adhere to. ?Ultimately, when devising an approach for employee file management, employers should design a suitable approach for their operation.

Create an employee file for each employee prior to (or on) the date of hire. ?Most, but not all, important job-related documents should be placed in the file, including:

  • job description
  • job application and/or resume
  • offer of employment
  • IRS Form W-4 (the Employee’s Withholding Allowance Certificate)
  • receipt or signed acknowledgment of employee handbook
  • performance evaluations
  • forms relating to employee benefits
  • forms providing next of kin and emergency contacts
  • complaints from customers and/or coworkers
  • awards or citations for excellent performance
  • records of attendance or completion of training programs
  • warnings and/or other disciplinary actions
  • notes on attendance or tardiness
  • any contract, written agreement, receipt, or acknowledgment between the employee and the employer (such as a non-compete agreement, an employment contract, or an agreement relating to a company-provided property), and
  • documents relating to the termination of the employment relationship (such as reasons, if any, why the employee left or was terminated, unemployment documents, insurance continuation forms, etc.)

What NOT to Keep in a Personnel File

Employee files should not be a receptacle for every document, note, or thought about the employee, and employee files should never contain any of the following:

Medical records. Employers are legally required to keep worker medical records (disability/accommodation requests, worker compensation claims, etc.) in a separate file — and access to a Medical Record file must be limited to a select few who have a need to know.

Form I-9s. Form I-9s must be completed for each employee within three days of an employee?s start date.? This Form should be placed into a separate file and located in a different drawer from the employee files. ?Failure to properly segregate these forms from employee files compromises employee privacy and opens employers up to additional questions, investigation, and penalties.

Unnecessary Material. Although employee files may contain any job-related documents, employers are wise to carefully consider what they will include and consistently apply a standard approach to employee file management.? It is important to remember that in many states, employees have the right to view their files. ?Indiscreet entries that do not directly relate to job performance and qualifications will prove to be problematic. ?A good rule of thumb: Don?t put anything in a personnel file that you would not want a jury to see.

Considerations in Conducting an Employee File Audit

When conducting a self-audit of an employee file, consider whether the file:

  • Contains every written evaluation of the employee
  • Reflects all of the employee’s raises, promotions, and commendations
  • Shows every warning or other disciplinary action taken against the employee
  • Has been updated to reflect the employee’s current status (e.g., following disciplinary action including a performance improvement plan)
  • Reflects the employee?s agreement with any and all updated policy statements (e.g. updated Employee Handbook Acknowledgement)
  • Contains current versions of every contract or other agreement between employer and employee

Smart Tip: Active employee files should be maintained in a location that is easily accessed by HR personnel, but kept in a cabinet that is locked when not in use.? Meanwhile, terminated employee files should be separated from the active files and retained only to the extent required by state law record retention requirements. ?Terminated employee files, however, like active employee files, must be kept in a file that is locked and not easily accessed, except by authorized personnel.

 

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Reaping What You Sow]]> https://theargroup.com/?p=534 2019-05-04T17:30:51Z 2016-02-18T09:45:52Z Employers are increasingly reflecting on the utility of their performance management programs, particularly in light of a growing trend to do away with such systems entirely. ?While it is without question that many traditional programs — typically involving annual merit and bonus systems — aren?t doing what they were designed to do: drive and reward... Read More

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]]> Employers are increasingly reflecting on the utility of their performance management programs, particularly in light of a growing trend to do away with such systems entirely. ?While it is without question that many traditional programs — typically involving annual merit and bonus systems — aren?t doing what they were designed to do: drive and reward individual performance, it is neither fair nor appropriate to declare the traditional performance management structure the problem.? After all, many shortcomings related to performance management programs may actually result from execution, not design.? That said, as with any system or program that has been allowed to exist because it has always existed, it is important to question whether the same ol? approach to performance management might require updating. ?Wholesale changes to performance management systems, however, should be undertaken cautiously, particularly because of the need to supplant such systems with another ostensibly better-suited program. ?Taking time to understand what worked and didn?t work with one?s traditional approach to performance management is critical to understanding how to design a more appropriate program.

 

Performance Management Options

Many tools are now available that are arguably more effective at differentiating pay based on performance than the traditional annual merit increase performance-based system.? In addition to trendy, ?ratings-less? systems often popular with entrepreneurial companies, employers may consider making use of recognition awards, spot bonuses, and systems that allow for ?step increases? throughout the year based on employee growth, development, or productivity.? Annual short-term incentive programs, in which bonus targets of a certain percentage of salary are set, may also be effective in many cultures, particularly since they make it easier to differentiate rewards based on performance in a way that annual merit increases have not.

 

Rethinking Plan Design

It is critical for employers interested in migrating away from a more traditional model of performance management to assess whether the right metrics are in place to enable objective evaluation of their current program and of any contemplated programs or systems. ?Ultimately, performance management systems must include a robust ?objective-setting? process that is aligned on at least an annual basis with organizational, team, and individual goals. ?It is also important to honestly evaluate the likelihood that the organization?s front-line management will effectively deliver results that invariably will provide significant upside for those who over-deliver while offering other who under-deliver less favorable news. ?Beyond the methods and mechanics of a new performance management program, employers must take time to consider how a new system will align with company culture.? It?s critical to ensure that the cultural underpinnings of such a plan reflect the ethos of the business, and that the company has effective and transparent communication strategies in place to promote introduction of a new system.? Failure to adequately consider what actually motivates your employees (hint:? it is not always money), whether the culture promotes meaningful ?buy-in? or how to explain and introduce the new system will undoubtedly reduce the effectiveness of the new program.

 

Smart Tip:? To the extent that an employer uses a performance management program, ensure that the success of the system is evaluated on an annual basis using metrics, so as to drive employee engagement.

 

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Covering Your Assets – Why Use Non-Compete Agreements?]]> https://theargroup.com/?p=531 2019-05-04T17:30:51Z 2016-02-03T16:37:24Z Too often, we encounter small business owners who have expressed reluctance to use non-compete and other restrictive covenant agreements.? In addition to expressing concern over the cost of engaging legal counsel to draft an agreement, many believe that their business is too small to worry about non-competes or similar restrictive covenants. The term ?non-compete agreement?... Read More

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]]> Too often, we encounter small business owners who have expressed reluctance to use non-compete and other restrictive covenant agreements.? In addition to expressing concern over the cost of engaging legal counsel to draft an agreement, many believe that their business is too small to worry about non-competes or similar restrictive covenants.

The term ?non-compete agreement? technically refers to a contract that precludes a person from engaging in certain acts of competition for a prescribed period of time within a prescribed geographic area.? The term, however, is often used broadly to refer to any contract by which someone has any type of competitive restrictions, including non-solicit, non-recruit, non-disclosure and confidentiality agreements.? The reasons small business owners might want to use one or more of these covenants are diverse, but often compelling.? Some of the more common considerations include:

  1. Enhance the value of the company ? If a sale transaction is considered or there?s a need for external cash, it?s important to preserve company value. One way to accomplish that is to require employees to sign restrictive covenants.? When someone purchases or invests in a business, that investor will want assurance that the value of the investment is protected.? If key employees, with access to customers and relationships, are able to leave employment following a merger or acquisition, the value of the corporation may be adversely impacted. ?Protect the worth of your company and its assets by using appropriately tailored non-compete agreements.
  1. Qualify for trade secret protection ? Generally speaking, any valuable business information that is kept secret from competitors is subject to trade secret protection. To state the obvious, information must in fact be kept secret to be considered a trade secret.? When determining whether information should be entitled to trade secret protection, courts look at many factors, including the extent to which the owner took reasonable steps to preserve secrecy.? A widely recognized precaution includes requiring employees to agree not to use or disclose confidential or proprietary information.? In addition, if customer information is considered a trade secret, a covenant not to solicit customers may be of value.
  1. Protect customer relationships ? Small businesses tend to place client relationships in the hands of only a few employees. Without appropriate agreements in place, client relationships can walk out the door, alongside outgoing employees.? All small business owners know that it takes time to build (forget re-build) client confidence.? Clients are the lifeblood of any business, but this is particularly true for small businesses.? A small business simply cannot afford to lose clients and having the appropriate agreements in place will go a long way to protect those relationships.
  1. Enhance client confidence ? Clients entrust personal and/or business information to those who provide service and support, and they want to know that the information they share will be protected. Requiring employees to sign restrictions on use and disclosure of confidential information is a good way to provide clients with assurance that their data is safe in your care.
  1. Protect your investment ? Training resources help to attract talented employees and are a worthwhile endeavor. However, small business owners rarely take the steps needed to prevent competitors from swooping in to hire employees in whom investments have been made.
  1. Clarify expectations ? Employees rarely fully appreciate the extent to which employers expect them to leave behind the information to which they were entrusted. Ensure that your employees understand that the relationships you paid them to cultivate and maintain belong to you.? The best time to clarify expectations with employees is before a dispute arises and generally through a restrictive covenant agreement.
  1. Potential litigation ? When your business is on the line, you may have little choice but to protect your interests through legal action. Although no contract can eliminate the expense associated with litigation, carefully drafted and appropriately scoped agreements can help to minimize costs.
  1. Deter competitors ? Restrictive covenants will not generally be enforced if they serve no purpose other than to restrict competition. If your business, however, has a legitimate purpose for requiring employees to sign a restrictive covenant agreement, such as a need to protect confidential information or customer relationships, it is important to send a message to competitors that you are prepared to protect your interests.

Smart Tip: Critically consider your company?s interests and evaluate any risk your business has, if it does not have in place restrictive covenants.

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Weathering the Storm]]> https://theargroup.com/?p=527 2019-05-04T17:30:51Z 2016-01-28T16:35:28Z With all the talk about weather, particularly the massive storm that recently hit the East Coast, it’s?an opportune time to highlight how inclement weather can present??issues? in terms of managing human capital and/or responding to questions about how office closure affects compensation. ?Although?most issues created by weather-related office closures involve non-exempt employees, the reality is... Read More

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]]> City Blizzard

With all the talk about weather, particularly the massive storm that recently hit the East Coast, it’s?an opportune time to highlight how inclement weather can present??issues? in terms of managing human capital and/or responding to questions about how office closure affects compensation. ?Although?most issues created by weather-related office closures involve non-exempt employees, the reality is that employers can (and often do) inadvertently create compliance issues when they require, for example, all employees to use PTO when an office closure arises.? Read on to learn why that is not a good idea.

Family and Medical Leave Act

If the employee would have otherwise taken the entire week off on FMLA leave, then the snow day would likely be treated like a holiday and?can be charged as an FMLA day.? If, however, an employee is using FMLA leave in increments of less than one week, the snow day or office closure should not count against the employee?s FMLA entitlement, unless the employee is expected to come to work.? 29 C.F.R. Section 825.200(h).

Fair Labor Standards Act

Non-exempt employees?only get paid for hours worked. ?Therefore, if the office is closed for a snow day and the non-exempt employee does not work, the employee does not get paid. ?However, if that employee works?remotely, then the employee should get paid for that time. ?So, ensure that either: (a) non-exempt employees are instructed not to work remotely; or (b) non-exempt employees who work remotely are reminded to accurately track their time. [Note:?if a non-exempt employee in the first category ignores instruction not to work remotely, that employee still must be paid, but s/he may be disciplined for failure to follow direction]. Additionally, if a non-exempt employee is required to remain ?on-call,? s/he must be compensated (unless the employee can use that time for their own personal benefit).

Exempt employees?who performed any work during the week in which the office is closed for a snow day are entitled to receive full wages for the week. ?If the exempt employee has accrued some paid time off, s/he may be required to use PTO?for the snow day. ?However, if the exempt employee has no accrued PTO, pay can?t be docked. ?Deducting an exempt employee?s wages may convert that employee?s status to non-exempt, and expose the?company?to liability for overtime.

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Get Smart with the New I-9 Form]]> https://theargroup.com/?p=524 2019-05-04T17:30:51Z 2016-01-20T16:58:20Z   ?Smart? Form I-9 to be Released in 2016 All employers are required to complete and maintain a Form I-9 for each employee hired, in order to verify identity and authorization to work in the United States. ?Form I-9s are regulated by the U.S. Citizenship and Immigration Services (USCIS or Agency), which wants to create... Read More

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]]>  

?Smart? Form I-9 to be Released in 2016

All employers are required to complete and maintain a Form I-9 for each employee hired, in order to verify identity and authorization to work in the United States. ?Form I-9s are regulated by the U.S. Citizenship and Immigration Services (USCIS or Agency), which wants to create a new ?smart? version.? The changes are intended to reduce user error by simplifying the form in a manner intended to address some common points of confusion caused by the most recent version.

Expected Changes

Anticipated changes include new drop-down menus, as well as field checks that include error messages to ensure accurate data entry during the employment verification process.

With the proposed ?Smart? Form, employers will be able to:

  • Check certain fields to ensure information is entered correctly. ?For example, the form will validate the correct number of digits for a Social Security number or an expiration date on an identity document.
  • View instructions on the screen to complete each field. ?Help buttons will be integrated.
  • Clear the form to start over.
  • Enter required additional information in dedicated fields, instead of making notes in the margins, as is currently done.
  • Choose options from drop-down lists of acceptable identification documents in Section 2.
  • Add information about multiple preparers and translators, each of whom must complete a separate preparer and/or translator section. ?The proposed instructions include a widely expanded section on preparers and translators, including a new warning that ?If you serve as a preparer or translator and fail to sign your name in this field, you may be subject to criminal prosecution.?

Other suggested changes include:

  • Requiring new hires to provide only ?other last names used? in Section 1, rather than ?other names used.?
  • Streamlining the certification in Section 1 for certain foreign nationals, by asking for either a Form I-94 number or foreign passport information, rather than both.
  • Separating the instructions from the form. ?However, employers are still required to present the instructions to the employee completing the form.

The “Smart” Form I-9 will also generate a quick-response matrix barcode, or QR code, once printed. As many familiar with the most recent version of the Form I-9 know, its introduction in 2013 raised eyebrows when it included a conspicuous and unusable box, intended for a future barcode. ?With the proposed ?Smart? Form I-9, the bar code will be used to facilitate government auditor review.

Not an Electronic I-9

Even though the proposed ?Smart? I-9 is to be completed electronically, it is not an ?electronic? I-9, as defined by USCIS regulations. ?This is because employers will still need to print the form, obtain handwritten signatures, store in a safe place, monitor re-verifications and up-dates with a calendaring system, and retype information into E-Verify, if required.

Public comments on the proposed changes will be accepted through January 25, 2016. ?At that time, USCIS may make changes to the form, based on feedback, and will publish a second notice in the Federal Register. ?The public will then have an additional 30 days to comment. ?Notably, the current version of the Form I-9 expires on March 31, 2016. ?Accord-ingly, USCIS will need to either extend or revise the current I-9 Form so that HR and hiring managers can continue completing new forms for newly hired employees since the new ?Smart? Form will not be introduced by that date.

It is not yet known if employers will be required to use the new ?Smart? Form I-9. ?In the past, USCIS has allowed employers to use one or more previous editions of the I-9 in situations where the most recent version had only minor modifications. ?However, with introduction of this ?Smart? Form I-9, many suspect that the Agency will want employers to use the updated version?either by completing it on a computer or on paper.

 

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[A Wrinkle in?Overtime]]> https://theargroup.com/?p=521 2019-05-04T17:54:41Z 2016-01-14T21:04:58Z Background Overtime regulations were first implemented as part of the original Fair Labor Standards Act (FLSA) in 1938 to provide minimum protections to American workers.? Although the FLSA deals with worker compensation, it has not been regularly updated, a fact that has drawn the attention of the Obama Administration. ?Accordingly, last year the DOL issued... Read More

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]]> Background

Overtime regulations were first implemented as part of the original Fair Labor Standards Act (FLSA) in 1938 to provide minimum protections to American workers.? Although the FLSA deals with worker compensation, it has not been regularly updated, a fact that has drawn the attention of the Obama Administration. ?Accordingly, last year the DOL issued a Notice of Proposed Rulemaking, in which it proposed significant changes to the FLSA, with the inten-tion to carry out those changes by January 1, 2016. ?The sweeping changes were immed-iately met with opposition by the business community, and implementation was delayed until sometime in 2016. ?Few expect a delay beyond June 2016, which means that employers must get ready to assure compliance with new standards that will increase the minimum salary and compensation level needed for executive, administrative and professional employees (EAP) to be exempt from overtime payment.? This objective is to be accomplished through:

  1. An increase to the minimum salary level for full-time salaried employees to be exempt from overtime pay.
  2. An increase to the total compensation requirement needed for highly-compensated employees to be exempt from overtime pay.
  3. Implementation of an automatic mechanism for increases to the standard minimum salary levels required to qualify for overtime exemption going forward.

Minimum Salary Level

While the current regulation states that an EAP employee may qualify for overtime exemption if the employee is paid at least $455 per week ($23,660 a year), the amendments increase the minimum pay to $970 a week ($50,440 a year).

The potential impact on the current workforce in the U.S. is staggering. ?An estimated 4.6 million workers exempt under the current regulations, who earn at least $455 per week but less than the proposed estimated weekly salary of $970, will become entitled to overtime payment if they work more than 40 hours per week.

Highly Compensated Employees

The proposed amendments seek to increase the current HCE threshold for EAPs from $100,000 to $122,148 annually. ?The DOL states that the increase is necessary to ensure that the threshold remains a meaningful and appropriate standard when matched with the minimal duties test and provides exemption of only bonafide exempt employees.

Automated Increases to Exemption Salary Levels

Using Bureau of Labor Statistics data, the amendments include an automated increase for both the minimum salary level and HCE thresholds. ?Accordingly, the minimum salary level exemption will be set to perpetually increase to remain at the 40th percentile of weekly earnings for full-time salaried workers and the 90th percentile of all full-time salaried employees for the HCE threshold. ?Alternatively, the amendments seek to utilize the Consumer Price Index for Urban Consumers to provide the basis for annual increases.

Strategic Planning

With appropriate planning, the impact of these amendments can be minimized.

  1. Workforce Analysis.

Conduct a workforce analysis to identify employees who were previously exempt from over-time payment but who will now be nonexempt under the proposed salary level changes. Once identified, impacted employees should be required to clock their hours (if not already doing so) so that an appropriate analysis of compensation options can be performed. ?The importance of record-keeping cannot be overstated, particularly as it relates to recording of time worked by salaried employees, including managers, who receive a base salary lower than the minimum salary level for overtime payment exemption.

  1. Minimize negative impact.

Using the workforce analysis data, determine an approach for managing the costs resulting from the regulation changes. ?Consider whether to:

  • Increase salary to maintain the exemption.
  • Reduce salary to balance the overtime payments that will likely be incurred.
  • Maintain salary and delegate some responsibilities to an existing or new employee to ensure that the previously exempt employee does not work in excess of 40 hours.
  • Do nothing, and begin paying overtime when incurred by the newly nonexempt employees.

It will also be important to revise employee job descriptions to remove nonexempt duties from EAP employees and ensure that impacted EAP employees follow the revised job duties.

Finally, it?s wise to consider eliminating flexible work arrangements that permit exempt employees, previously in the exempt salary level range, to work from home or after normal business hours to complete projects or assignments. ?Such hours worked are difficult to track and could result in unrecorded overtime hours and thus unpaid and wage-related claims under the FLSA.

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Religious Accommodation in the Workplace ? 2016]]> https://theargroup.com/?p=518 2019-05-04T17:30:51Z 2016-01-11T18:09:51Z A?December 31, 2015 Denver Post article written by Emilie Rusch and Jesse Paul reported that Cargill Meat Solutions terminated the employment of approximately 190 employees when it was unable to resolve a workplace prayer dispute with Somali workers at its Fort Morgan, Colorado meatpacking plant. ?Impacted employees allege that the plant changed its religious accommodation... Read More

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]]> A?December 31, 2015 Denver Post article written by Emilie Rusch and Jesse Paul reported that Cargill Meat Solutions terminated the employment of approximately 190 employees when it was unable to resolve a workplace prayer dispute with Somali workers at its Fort Morgan, Colorado meatpacking plant. ?Impacted employees allege that the plant changed its religious accommodation policy when the company refused to accommodate a group’s request to pray together.? In response to the company?s refusal, the group of approximately 20 employees, mostly immigrants from Somalia, failed to report to work for three consecutive days and were terminated. ?In a show of solidarity, another group of 20 employees walked out in the middle of a shift and another 160 failed to report to work, while ten others resigned.

The company asserts that it did not change its accommodation policy and that it provides a ?reflection room? for employees to use for prayer in small groups.? It offered that it cannot accommodate larger groups due to the nature of plant operations and maintained that the employees were terminated because they failed to show up for work for three days, in vio-lation of company policy.? The other employees were similarly released for violating company policy by walking off the job.

Before the walkout, Cargill employed roughly 600 Somali workers at the plant. ?At present, more than 400 continue to work there and accommodations are still being made to allow Muslims to leave the floor in small groups to pray.

Whether the company failed to accommodate and/or retaliated against are questions that will need to be resolved.? The company acknowledges that there was a desire amongst some employees to pray in larger groups but stated that it couldn?t accommodate that, noting the adverse impact on the flow of production. ?Meanwhile, the workers maintain that they pray at different times of the day, typically taking five to ten minutes away from work as part of their legally entitled 15-minute break period or from their unpaid 30-minute lunch breaks.

Did the Company Fail to Accommodate?

Employers may not discriminate against employees or applicants based on their religious beliefs. ?This means, for example, that employers may not refuse to hire anyone who does not share their faith, promote only Jews or Catholics, or require background checks only of Muslim employees.? The law also requires employers to accommodate their employees? religious beliefs and practices, unless doing so would pose an undue hardship.

The obligation to accommodate religious practice arises from the nature of religion: unlike the other characteristics protected by discrimination laws, such as race, age, or gender, religion is not a trait one is born with, but a system of beliefs. ?And, unlike other protected traits, religion sometimes requires particular behavior while adherents are at work, such as prayer; observ-ing certain holidays; wearing specified items, types of clothing, or hair styles; or professing one’s faith to others.? Where employees have a sincere religious belief that conflicts with an employment rule or requirement, the law requires an employer to accommodate those beliefs, working with employees to find a way around the conflict. ?No one here disputes the sincerity of the employees? faith.? At issue is whether the request to pray in larger groups was unrea-sonable.? Put another way, would allowing the employees prayer in larger groups have presented an ?undue hardship? for the company?

Undue Hardship

Determining whether a requested accommodation presents an undue hardship is highly fact-based.? The EEOC has said that employers may be required to pay administrative costs, such as the cost of time spent on changing schedules or payroll information. ?Meanwhile, the courts consider the burden on the business generally. ?An accommodation will be deemed an undue hardship if it substantially harms the morale of other employees, reduces efficiency in other jobs, infringes on the rights of other workers, creates safety concerns, or requires coworkers to take on extra work that is burdensome or hazardous.

If it is true that the employees were engaging in prayer while on legally entitled breaks, it is unclear how the request to pray in larger groups would adversely impact safety, cause others to take on additional duties or impose an undue burden.? It seems that if the schedules al-ready permitted larger groups to break simultaneously, refusing to allow employees to spend their breaks together in prayer seems unreasonable.? If, however, the employees were seek-ing to dictate who would break when in order to pray together, accommodation might not be so simple.? It?s troubling that the employer appears to have not engaged in dialogue on the issue and ultimately, although the request may have in fact been unreasonable (depending on answers to various questions), the company?s lack of exchange could prove to be problematic.

Smart Tip:? When presented with a request for reasonable accommodation, remember to engage in good faith dialogue in order to determine the reasonableness based on the facts and issues presented.

 

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Compensation Trends & 2016 Best Practices]]> https://theargroup.com/?p=516 2019-05-04T17:30:51Z 2016-01-07T17:13:52Z Data from 2015 reveals that organizations of all sizes and across multiple industries, including not-for-profits, performed well, a fact that reflects continued optimism toward the U.S. economy in general. ?In an environment of growth, however slight, employers look for ways to at least maintain, if not further, revenue growth. Although revenue or charitable-giving growth objectives... Read More

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]]> Data from 2015 reveals that organizations of all sizes and across multiple industries, including not-for-profits, performed well, a fact that reflects continued optimism toward the U.S. economy in general. ?In an environment of growth, however slight, employers look for ways to at least maintain, if not further, revenue growth. Although revenue or charitable-giving growth objectives can be achieved using any number of tactics, most agree that real growth (as opposed to growth achieved through cost-cutting measures) is ultimately dependent on human capital productivity.? If your organization is looking to grow revenue (or charitable contributions), now is the time to consider ways to enhance employee engagement and inspiration and endeavor to improve your organization?s ability to secure top talent that understands and aligns with your organization?s growth objectives.

While it may be true that individuals attracted to working for nonprofit entities are generally more motivated by an organization?s mission than employees in the for-profit sector, this difference in ?purpose? does not necessarily translate to significant differences in how employers should approach compensation strategies. ?Despite the well-known fact that compensation benchmarks across all levels (e.g., non-exempt staff, exempt staff, management, and leadership) in the nonprofit sector are lower across the board, there remains a market of skilled labor interested in, if not committed to, working in the not-for-profit sector regardless of the known base compensation discrepancy. ?This means that, to some degree, for-profits and not-for-profits are not ?competing? in the same labor pool and while the nonprofit labor pool is undoubtedly smaller, cultural trends in generational attitudes suggest the possibility of unprecedented growth in the number of people who may be interested in working in mission-oriented environments.? As Baby-Boomers continue to migrate out of the workforce, and the presence of Millennial and Generation X, Y, and Z workers increases, compensation strategies that highlight multiple factors, not just base salary, become increasingly important.? This is because virtually every generation since the Boomers places greater emphasis on job satisfaction than base compensation, something not-for-profits can and should leverage.? Given these ongoing changes, employers are wise to develop more inclusive compensation and retention strategies.

The Value of ?Culture?

Millennials (adults ages 18 to 34 in 2015) currently comprise more than one-third of the American workforce and are anticipated to become the largest share of the American workforce in a few short years. ?When employers recognize that 72% of Millennial workers are willing to sacrifice higher pay in exchange for a more personally and professionally fulfilling career, it is possible to approach compen-sation strategies more holistically so as to emphasize mission, vision, and values, while also over-coming the inherent budgetary constraints that some face in setting base pay.

Merit-Based Pay Incentives Drive Mediocrity

While many nonprofits or similarly budget-conscious employers can offset the ?cost? of a lower base pay with the perceived value of working within an altruistic organization, that alone may not be enough to keep and attract a top workforce. ?Effective management of this evolving workforce may require critical review of the organization?s reliance on traditional merit-based pay incentives because compensation systems based on ?annual merit raises? tend to create a culture of entitlement?everyone expects to get something. ?In fact, in organizations that employ an annual merit review and annual raise option, 99 percent of employees receive a pay increase every year. ?Under this tra-ditional and common performance management system, everyone is rewarded, regardless of contributions actually made. ?Moreover, the merit-based system does little to provide for differentia-tion between or amongst strong contributors and non-contributors.? Even worse, the system arguably increases an organization?s financial burden unnecessarily because once salary treatment is given, it never goes away.? Accordingly, the ?cost? of merit based systems compounds exponentially over time, rewarding employees for past contributions for as long as they remain employed.

Variable Pay Incentives Reward Performance

Compensation strategies that are more directly aligned with achievement of individual, team, and organizational key performance indicators reward actual performance without unduly increasing the organization?s long-term costs. ?In addition, incentive programs that are designed to drive perform-ance and accountability reinforce the ?right? employee behavior by encouraging productivity and efficiency when made contingent on discretion, performance, and/or results achieved. Ultimately, an effectively designed incentive plan can empower your organization to deliver targeted results, while directly rewarding employees for positively influencing or achieving predetermined results with the benefits they most value.

Smart Tip: To make an incentive plan work:

* Create a direct line of sight between employee performance and tangible rewards

* Focus on a mix of qualitative and quantitative incentives tied to individual and team performance

* Devise incentives that are closely aligned with the organization?s culture

* Grant rewards in close proximity to goal attainment

* Ensure program transparency and effective employee communication tools are in place

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Permissibility of “Use It or Lose It” Policies in Colorado ? Update]]> https://theargroup.com/?p=512 2019-05-04T17:30:51Z 2015-11-19T22:15:41Z   As many of our clients are already aware, in late September, the Colorado Department of Labor (CDOL) announced that ?use-it-or-lose-it? vacation policies would no longer be permitted pursuant to its enforcement policy. ?A few short weeks later, that same office reportedly acknowledged to the Denver Post that the materials it issued on this subject... Read More

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As many of our clients are already aware, in late September, the Colorado Department of Labor (CDOL) announced that ?use-it-or-lose-it? vacation policies would no longer be permitted pursuant to its enforcement policy. ?A few short weeks later, that same office reportedly acknowledged to the Denver Post that the materials it issued on this subject were ?not clear.? ?Something of a kerfuffle followed, as employers, and the attorneys who counsel them, went all a-flutter.

In a response to the outcry of confusion, if not overt irritation, CDOL?s Division of Employment released a Frequently Asked Questions posting on its website.? While we have provided a link to the FAQ below, we?ve attempted to decode some of the points here. ?As seasoned practitioners, we still aren?t certain that the Division is clear on what it is saying, suggesting that 2016 will prove to be an interesting year on this topic.

Use-It-Or-Lose-It Policies: When Are They Permissible?
According to the Division, ?use-it-or-lose-it? policies are ?permissible? under the new Colorado Wage Payment Act.? However, such policies ?may not operate to deprive an employee of earned vacation time and/or the wages associated with that time.?

What does that mean?? Let?s turn to the text which provides:

Can employers in Colorado have ?use-it-or-lose-it? provisions in vacation agreements?
Yes. ?Use-it-or-lose-it? policies are permissible under the Colorado Wage Protection Act, provided that any such policy is included in the terms of an agreement between the employer and employee. ?A ?use-it-or-lose-it? policy may not operate to deprive an employee of earned vacation time and/or the wages associated with that time. ?Any vacation pay that is ?earned and determinable? must be paid upon separation of employment. ?The terms of an agreement between the employer and employee will dictate when vacation pay is ?earned.?

How an employee can lose vacation time, without being deprived of vacation time, is not explained, and no examples are provided to address that question.

Capping Vacation Hours
Based on the Division?s FAQ, it appears that employers may cap vacation time, and may require employees to use some of their accumulated vacation time before additional time or pay may be earned. ?It seems that a policy stating that vacation time or pay is not earned until employees work the specified amount of time and actually schedule time off, may be valid.

Considering the confusing statements in the FAQ text, and until further clarification comes from the Division or through court decisions, recognize that you are taking a risk when adopting any policy that causes employees to lose vacation benefits they?ve already earned.

The Division?s FAQs can be found at:?https://www.colorado.gov/pacific/cdle/node/20161

Smart Tips:
Ensure that your vacation policy is in writing, particularly if you intend it to be a ?use it or lose it? policy. ?Having a signed acknowledgement by an employee may constitute an agreement for this purpose and is strongly encouraged. ?If you want to change your policy now, you may do so, but it may only be changed prospectively, not retrospectively, assuming you intend to implement a ?use it or lose it? provision.? Keep in mind that all vacation pay that is ?earned? and ?determinable? at the time of termination must be paid upon separation. ?Finally, be sure to define when vacation is ?earned?.? Remember that it can be accrued and possibly not ?earned? or it can be earned and simultaneously accrued.? Much turns based on drafting. Be careful.

 

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]]> Victoria Aguilar https://www.theargroup.com <![CDATA[Handling the Bomb Dropped By The DOL]]> https://theargroup.com/?p=510 2019-05-04T17:30:51Z 2015-10-15T14:43:40Z The U S Department of Labor recently dropped a bomb when it announced dramatic revisions to overtime regulations.? The new regs, which take effect in 2016, put into place new higher minimum salaries for exempt employees, even those who are compensated.? Given this development, one thing is certain:? employees have never had more cause to... Read More

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]]> The U S Department of Labor recently dropped a bomb when it announced dramatic revisions to overtime regulations.? The new regs, which take effect in 2016, put into place new higher minimum salaries for exempt employees, even those who are compensated.? Given this development, one thing is certain:? employees have never had more cause to double-check their job descriptions and pay rates in search of lawsuit fodder.? Is your business ready?

The FLSA generally requires that employers pay employees overtime?at least straight time plus one-half times their ?regular rate? of pay for every hour they work in excess of 40 hours in a particular workweek.? The FLSA and its interpretative regulations published by the DOL, however, exempt certain groups of employees from these overtime pay requirements. One such exemption, and by far the most commonly used, relates to employees working in jobs that the FLSA describes as executive, administrative, or professional?the so-called ?white collar? exemptions.

In order for employees to fall within one of the white collar exemptions, they must perform executive, administrative, or professional duties (the ?duties? test) and make a certain weekly salary (described in the NPRM as the ?salary level? requirement).? The regulations also exempt ?highly compensated? employees who ?customarily and regularly? perform one of the exempt duties of an administrative, executive or professional employee, but who do not otherwise meet the duties test.

The primary change in the DOL?s proposed FLSA rules is an increase in the minimum weekly salary to the 40th percentile of weekly earnings for full-time salaried workers based on Bureau of Labor Statistics data. The DOL projects that the 2016 level will increase to $970 per week, or $50,440 per year.? For highly compensated employees, the threshold will be set to the annualized value of the 90th percentile of earnings for full-time salaried workers, or $122,148 annually.

Smart Tip😕 It is estimated that as many as 80% of employers are misclassifying workers.? Given the anticipated changes, now is the time for employers to critically evaluate past practices and make changes, to the extent necessary.? Proactive action can help to mitigate past, present and future risk.

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