The settlement resolves allegations that the City of Signal Hill in Los Angeles County violated the FCA during its hiring process for a Public Works position, according to an announcement from the California Civil Rights Department (CRD).

Applicant Receives Job Offer

In 2025, the CRD received a complaint from an applicant who’d sought a water systems operator position with the city. The role included responsibilities such as repairing hydrants and pipelines, reading water meters, treating groundwater, and handling customer service.

After completing multiple rounds of interviews, the applicant received a conditional offer of employment.

Job Offer Rescinded After Background Check

The city conducted a background check, then pulled the offer.

According to the applicant, the city failed to conduct an individualized assessment of the applicant’s conviction history – an analysis the FCA requires before an employer can deny employment based on a criminal record. The city also allegedly disregarded information the applicant submitted, challenging the accuracy of the background check. Additionally, the complaint alleged the city relied on a conviction history that was more than seven years old and had no connection to the job.

What the Fair Chance Act Requires

The FCA is a California law that took effect January 1, 2018, and applies to employers with five or more employees. The law generally prohibits covered employers from asking about an applicant’s conviction history before extending a conditional offer of employment.

Once a job offer is made and a background check is conducted, employers can’t simply rescind the offer based on a criminal record. Instead, employers have to conduct an individualized assessment – an analysis of whether the specific conviction has a direct and adverse relationship to the job in question.

Employers must also allow applicants to respond. If an applicant submits information challenging the accuracy of the background report or offers evidence of rehabilitation or mitigating circumstances, the employer must consider that information before making a final decision.

Settlement Includes $93K Payout — Plus Other Relief

Following the CRD’s investigation, the parties resolved the matter through mediation. Without admitting wrongdoing, the City of Signal Hill agreed to:

• Pay $93,000 in compensation to the applicant
• Modify its hiring policies to ensure compliance with the FCA
• Update the notices provided to applicants when employment decisions involve criminal history
• Consider information submitted by applicants before making a final decision
• Train staff on FCA requirements, including how to evaluate rehabilitation and mitigating evidence, and
• Report to the CRD for one year on all job denials tied to criminal history, including the positions involved, the convictions relied upon and whether applicants submitted rehabilitation or mitigation evidence.

HR Takeaways

Ban-the-box and fair-chance hiring laws now cover jurisdictions across the country – including over 150 cities and counties – though the specific compliance requirements vary widely.

For multistate employers, building a consistent hiring process across jurisdictions takes deliberate planning. One practical approach: Build your criminal history review process around California’s requirements. The FCA is widely considered one of the most comprehensive fair chance laws in the country. Employers that meet its standards are well-positioned to satisfy the less stringent requirements in other jurisdictions.

The Signal Hill case offers two lessons for any hiring program, regardless of where your organization operates.

Skipping the Individualized Assessment

The FCA doesn’t allow employers to reject an applicant simply because a background check returns a conviction. The law requires a fact-specific analysis: Does this particular conviction have a direct and adverse relationship to this particular job?

Employers should document that assessment in writing. The analysis should address the nature of the conviction, the time elapsed, evidence of rehabilitation and the specific duties of the role. A blanket policy that automatically disqualifies applicants with any criminal history is a compliance risk in California – and an increasing risk in other jurisdictions moving in the same direction.

Ignoring Applicant Responses

Once an employer provides notice of a preliminary decision to rescind a job offer based on criminal history, the applicant has the right to respond. That response may include evidence challenging the accuracy of the background check or documentation of rehabilitation.

Ignoring that response – or failing to document that it was considered – is exactly the kind of procedural gap that draws regulatory scrutiny. Build the response period into your hiring timeline and document how the applicant’s submission was weighed before any final decision is made.

The two most likely mistakes: treating a dependent’s account the same as an employee’s own account and coding pre-tax employer contributions as post-tax.

What Are Trump Accounts? 

Trump Accounts are a new type of IRA for individuals under 18, established under the One Big Beautiful Bill Act. Employers can contribute up to $2,500 per employee per year under Section 128, and the accounts open July 4, 2026.

The DOL confirmed these will not be treated as ERISA plans if the program is structured to meet safe harbor conditions – no plan document, no Form 5500, no fiduciary obligations.

Different Contribution Types and Setups

For payroll purposes, Trump Account contributions fall into two categories: Section 128 contributions – which can come from the employer directly or through employee pre-tax salary reduction (treated as employer contributions under Section 125) – and post-tax employee payroll deductions.  

They carry different tax treatment, different basis rules and different eligibility conditions. Each needs its own coding. 

The Cafeteria Plan Split: Dependent Account or Employee Account?

In most cases, an employer’s Trump Account contribution goes to a dependent’s account – a child under 18. In that situation, the contribution can run through a Section 125 cafeteria plan salary reduction arrangement. This treatment is reflected in IRS Notice 2025-68.

The exception is when the employee is the account beneficiary – a 16- or 17-year-old employee whose employer contributes to their own account. In that case, the cafeteria plan option is not available. That’s a narrow scenario, but it requires a different approach.

Basis Tracking: Pre-Tax vs. Post-Tax

Section 128 employer contributions are excluded from the employee’s gross income and create no basis in the account. Post-tax employee payroll deductions do create basis.

These two contribution types need to be configured as distinct deduction codes so the basis difference is captured correctly from the first contribution. The error compounds with every pay period that is processed. 

Limits to Track and Enforce

Two limits apply — and they overlap, which makes them tricky to track.

The Section 128 cap is $2,500 per employee per year, subject to cost-of-living adjustments after 2027. This cap covers direct employer contributions and employee pre-tax salary reduction contributions combined. If the employer puts in $1,500 directly, the employee only has $1,000 left in pre-tax salary reduction room. The cap also applies per employee, not per dependent – so an employee with three children in Trump Accounts gets $2,500 total across all three, not $2,500 per child.

The $5,000 aggregate cap per beneficiary covers employer contributions plus any post-tax contributions, including those made through payroll deduction. Government contributions – including the Treasury’s $1,000 pilot program payment – don’t count toward either cap. Because employer contributions count toward both caps, payroll needs to track them at two levels – the employee level for the Section 128 cap and the beneficiary level for the $5,000 cap.

Nondiscrimination Requirements

Section 128 Trump Account contribution programs carry nondiscrimination requirements similar to those that apply to dependent care assistance programs under Section 129.

That means the program must be tested for nondiscrimination in contributions, benefits and eligibility. Employees must also receive notification of the program and statements of benefits provided. 

What Changes at the End of the Growth Period

Trump Accounts have a growth period that runs until January 1 of the year the beneficiary turns 18. After that date, employers can no longer make Section 128 contributions – that tax exclusion applies only while the beneficiary is under 18.

Employees can still contribute through post-tax payroll deductions after the growth period ends, as long as the program meets IRA payroll deduction safe harbor conditions.

Action Steps for Payroll

July 4 is just around the corner. Before the first contribution processes, payroll teams need to work through several setup decisions:

• Confirm whether your organization plans to offer Section 128 employer contributions, employee salary reduction through a cafeteria plan, or both.
• Establish or amend a Section 125 cafeteria plan to allow Trump Account contributions if that option is part of your program.
• Set up separate deduction codes for Section 128 contributions and post-tax employee deductions.
• Configure limit tracking at the employee level for the $2,500 cap and the beneficiary level for the $5,000 cap.
• Coordinate with HR on nondiscrimination testing requirements.

Why? Everyone wants to win, and despite the overused phrase, there are very few actual “win-win” situations in business.

You want to get the best people to make an impact as quickly as possible. The best people want to get paid lots of money, love their job and never get stressed.

Ideal, but not easy.

Employers are hiring: The most recent data from the Bureau of Labor shows hiring is up while job openings remain the same.

But the struggle to hire is real: 75% of employers say they find it difficult to fill job vacancies, according to research from Manpower.

And job candidates are having difficulties, too: Nearly half in a ResumeGenius report say job searching has negatively affected their mental well-being.

If Hiring Sucks, Reputation is at Risk

What’s more, if you don’t orchestrate an impressive hiring process, you might lose out on ideal candidates: More than a quarter of job seekers declined a job offer because they had poor experiences in the recruiting process, according to a report from CareerPlug.

And when word gets out on something like that, employers will likely see an even smaller pool of future applicants.

But, “by treating all candidates fairly and professionally, hiring managers can help shape the way they think about the company, even if they were not a good fit for the role,” says Rebecca Ray, Executive Vice President, Human Capital at The Conference Board.

That’s a start. And here are seven more ways to make sure your hiring process doesn’t suck.

1. Ditch the Degrees

More than 70% of job candidates apply for jobs they’re interested in. Just about 55% apply for jobs they’re qualified for.

“This means that those who do not have the formal education required by many companies may not apply for a position, even if they gained the necessary skills and experience through other means,” says Robin Erickson, Vice President, Human Capital at The Conference Board. “To increase the pool of qualified candidates and find the best fit for a role … remove degree requirements from job descriptions when they are not necessary.”

Some experts suggest looking for candidates with about 75% of the skills, knowing they’ll be able to pick up the other skills.

2. Broaden the Range

Invite candidates to apply for one or many roles — even those you aren’t necessarily hiring for but don’t post ghost jobs. Then consider candidates for multiple roles when they have a lot of overlapping skills.

When you broaden the range, candidates and you will become more aligned for more, maybe better, possibilities.

3. Condense the Job

Rather than hire for full-time, long-term positions, offer more short-term paid projects, apprenticeships and internships.

This can help you reach a new candidate pool — people who aren’t immediately interested in long-term work. Then you and potential employees can figure out if it’s a good fit before committing to a full-time hire.

4. Open an Alumni Network

Call on former employees to speed up the hiring and onboarding process. Stay in touch with and reach out to alumni with valuable institutional knowledge to come back.

Or, if they aren’t interested in a return, ask them to recommend other people or hiring channels to recruit candidates.

5. Broaden Your Scope

Find new candidates in hidden populations.

• Retirees: Many retirees want to unretire. Post jobs at senior community and living centers and churches. Make it easier for them to apply, eliminating some of the online assessments and applications.
• Previously incarcerated workers. Many organizations make second-chance hiring easier to facilitate nowadays.
• Neurodiverse. The neurodiverse population in increasingly interested in work and gaining skills to contribute significantly to employers.

6. Get More Social

Keep a closer eye on social media platforms to find new talent. You want to watch out for layoff lists and posts about job upheavals.

Sure, that’s not pleasant news and may seem predatory, but it’s a quick way to find candidates who are likely eager and open to the hiring process.

7. Partner in Your Community

Get involved with educational and local institutions, such as community colleges, job centers and vocational schools.

Work with them to create or tailor curriculum, experiences and opportunities to build a talent pipeline that leads to your workplace. This way, you can streamline some of the process as you get familiar with candidates as they come through your programs. Same goes for them: They see and experience what it might be like working for you.

Here’s how bad it is: According to Sage’s report, “The Changing Face of HR:“

• 81% of HR pros are regularly stressed
• 84% are personally burned out
• 95% feel HR is too much work
• 91% agree the last several years have been challenging, and
• 62% are considering leaving HR.

We tend to overlook this occupational hazard: HR and other executives focus on employees’ well-being while neglecting their own. In reality, you likely provide health advice and resources but don’t use them.

“Executives are just as much at risk as their employees. Executives may face different challenges, but face the same risk of overwhelming exhaustion, detachment and ineffectiveness that others may face,” says  Dr. Millard Brown, the Chief Medical Officer at Spring Health.

If HR is burned out, you can’t help employees avoid burnout. In fact, you probably can’t help anyone with anything, at any time.

Recognize the Signs

To avoid – or bounce back from – burnout, the first thing is to recognize and admit you’re suffering.

“As leaders, we can only serve and attend to the needs of those we lead if we are well-grounded, open to hearing feedback, and present in the moment,” Brown says. “We have the opportunity to lead by example in recognizing and taking the time to care for ourselves so that we can then lead others well with intention.”

Burnout becomes visible in three critical areas: Professional. Emotional. Physical. Look for these signs.

Professional

• Inefficacy: You’ve lost confidence and belief in your ability to be effective
• Mental distance: You feel detached, negative and/or cynical about your work
• Mental drain: You feel tired of your work, demands and expectations, and
• Spinning wheels: You accomplish little or nothing while working toward the same issues and concerns over and over.

Emotional

• Feeling unappreciated, bored and/or resentful
• Impatience and irritability with colleagues, clients and/or family
• Feeling detached, isolated and lonely
• Feeling overwhelmed, disillusioned, apathetic and/or hopeless
• Excessive self-criticism and dissatisfaction
• Difficulties with concentration, and
• Anxiety and depression.

Physical

• Chronic fatigue
• Chest pains and headaches
• Insomnia
• Appetite and weight loss or, on the other side, binge eating and weight gain
• Breathlessness, dizziness palpitations, and/or feeling faint
• Frequent illnesses and infections from a compromised immune system, and
• Withdrawal from social and professional situations.

5 Ways to Manage (or Avoid) Burnout

The hope is you aren’t suffering from this many or this degree of symptoms. But the research showed the truth is that nearly all HR pros found the last few years challenging.

So even if you feel stressed, but not yet burned out, you want to regain control. Here are five proven strategies:

1. Get Serious about Self-Care

It’s relatively simple to promote self-care, but not so simple to practice it. Executives get busy putting out fires, strategizing and staying focused on success for the good of all employees. So you put self-care on a back burner.

“Commit to practicing self-care with adequate sleep, proper nutrition, regular exercise, and maintaining social connections with others,” Brown says. “You may not be able to do it all at once, but you can pick one to start with and commit to a plan of action to build new practices in caring for yourself.”

That’s the key: Start with just one element of self-care that’s most important – and achievable – for you to accomplish.

2. Step Away Every Day

You want to purposefully step away from work every day. The good news is you don’t have to step away for an hour or half an hour (although that’s a good lunch break). You can take microbreaks – short moments to pause, breathe and reset your nervous system – throughout the day. You can find tips on that in this episode of HRMorning’s 3-Point.

“Many leaders nowadays have found that a regular meditation practice is one ritual that helps them take care of themselves daily and protect against burnout,” says Jo Ilfeld, Founder and CEO of Incite to Leadership. “But that’s not the only way; regular time outdoors, a spiritual practice, or a gratitude journal are all research-proven ways to help leaders prevent a downward slide toward burnout.”

3. Unplug — But Not as Much as You Think!

We all know it’s important to unplug from our devices, but it’s so hard to do when it feels like someone or something on the other end needs attention.

Still, “research has shown us that leaders that completely unplug for one night mid-week – just one, folks! – were much more likely to look forward to going to work in the mornings and feel fulfilled at their jobs,” Ilfeld says. “Taking one night off a week is a small price to pay for continued energy, and it’s also great modeling and permission for your team so they don’t get burned out as well.”

4. Talk About Burnout

Feeling burned out doesn’t have to be a secret or a badge of shame.

You just want to approach the conversation with your boss with a plan. Ron Carucci, author of Rising to Power, suggests you talk about burnout with your boss like this:

• Get over yourself. You help people. You don’t normally ask for help. But burnout is more real than ever. If you’ve always had an honest relationship with your boss, he or she will respect how you feel and what you need.
• Be honest, specific. Tell your boss you wouldn’t bring it up if it wasn’t critical to you. Explain that you’re uncomfortable with the situation. Then give specific details of what you’re experiencing – any symptoms from the list above.
• Take responsibility for anything that has suffered – work quality, your attitude, personal relationships. Don’t apologize for being burned out. Just recognize what burnout has done to your performance or behavior.
• Ask for help. Be clear that you want help, what the solution might look like and how you want to be part of the solution. Avoid complaining or demanding.

5. Be Social

It’s lonely at the top – and nothing proves that more than when you burn out and have no one to turn to for support.

You support employees. Who can help when you’re stressed or overwhelmed?

Some experts suggest executives pursue workshops, peer support groups, retreats and professional organizations. Those can help you gain a fresh perspective and positive attitude. Don’t wait until you’re stressed, either. If you’re involved with similarly situated people, you already have a network of support.

A study by SHRM of 1,000 U.S. employees showed that 57% experienced or witnessed incivility at work weekly; a poll of the same sample from 2025 showed that 74% are having to adjust the way they communicate at work to avoid conflict.

Reasons to Combat Workplace Conflict

There are a myriad of reasons workplaces need to tackle this, with protecting productivity and reputation being two of the top priorities. This is going to affect your bottom line, too: A study by Oxford University reported a strong positive correlation between employee well-being and a company’s value and profitability.

We see four common drivers that HR leaders need to tackle to keep one step ahead.

1. Growing Further Apart

Our team is observing that the increasing polarization of society is inevitably bleeding into workplaces and directly affecting people’s ability to work together.

With a volatile political and wider world, there is widespread intolerance for other people’s views, and it’s stopping people from collaborating with colleagues they perceive as on ‘the other side’ of the divide.

A 2025 survey of 2,000 U.S. adults found that 64% experienced or witnessed political conflict at work that year. Furthermore, 11% say the number of disagreements has escalated, and 8% report they have become more hostile or disruptive, highlighting that this is a growing issue.

How can workplaces tackle this? Edelman’s 2026 Trust Barometer suggests employers may actually be better-placed than anyone. They were ranked as the best institution to broker trust between people, with a better performance score than NGOs, the government, and the media.

But, to be clear, that brokering will not just happen. Organizations and their leaders have to promote the idea that everyone has to put individual differences aside if we’re going to be productive. Our recent experience is that this is something most leaders and managers feel increasingly ill-equipped to do.

The challenge is that we’re simply not used to talking about these things at work – in fact many of us have actively steered away from politics, religion, etc. Plus, we don’t have the relationship foundations with work colleagues that we might with a parent or close friend. But we do still have a common interest in helping the company succeed. That message needs to come from HR and leaders, and be felt across the entire organization.

2. The Culture of ‘Me’

Related to this ongoing polarization – but also deserving of a dedicated section – is how modern life is increasingly designed around the individual. Our social media feeds are tailored by algorithms, advertising is targeted to our personal preferences, and we decide exactly which shows we watch and when. As AI becomes more embedded in the workplace, even the answers we receive to our questions are customized to us as individuals.

This individualization is starting to shape how people show up at work. Employees are more likely to prioritize their own needs and expectations over those of the wider team. Tensions around hybrid working illustrate this clearly: Discussions often centre on “How often do I have to be in the office?” rather than “What difference does my presence make to my colleagues?”

Over time, this mindset weakens the sense of shared community at work. That sense of belonging has long been a key part of the implicit agreement between employers and employees. Its erosion is helping to create conditions where disagreement and conflict are more likely to arise.

To combat this, companies could consider facilitating working group discussions on where individual flexibility meets company needs. This probably needs to encompass hybrid work, communication styles and commercial priorities. Helping people understand that contrast exists and providing opportunities to meet in the middle can be rewarding work. 

3. The Generation Gaps

Another big driver of conflict: stereotypes about age groups now circulate faster and more widely than ever, while workplaces have increased generational spread.

Algorithm-driven news feeds and meme culture encourage oversimplified and often damaging assumptions about how different generations think, behave, and work. The result is a steady erosion of trust, with resentment taking root sometimes even before people have actually worked together.

These assumptions surface most clearly in day-to-day communication. Digitally native employees tend to rely on online platforms as their default space for collaboration, debate, and expression. For colleagues who built their careers before this shift, the same behaviors can feel informal, distracting, out of place and possibly disrespectful. A simple emoji in a project discussion can be interpreted as either clarity or carelessness, depending on who’s reading it.

One solution here is dedicated training that gets to the root cause. Internal bias sessions can help workers recognise assumptions like this. We all make them, and we need to understand how they impact our ability to work together productively.

Addressing this through multi-communication approaches is also important. Written formats such as Teams or Slack are just as important, given the widespread use of these relatively new tools in the workplace, where people are now adopting social media anonymity behaviors (despite not being anonymous).

4. Managers in the Middle

One thing in common with all of these different drivers of conflict is that the impacts tend to land squarely with managers.

Supporting such a wide range of expectations, habits and preferences is no small task — and it helps explain why we see line management disputes feature so prominently. SHRM research shows that when U.S. workers leave a job because of the culture, 58% claim their manager is the main reason.

When did the manager’s role expand to include translating between communication styles, balancing competing norms, mitigating political disagreements and actively challenging generational bias — all while keeping the work moving forward?

This translates to almost superhuman expectations now on managers to solve every people puzzle.

More realistically, we need to nurture managers who can create and police neutral settings and enforce protocols that prioritize collective output over personal preferences; we need robust containers in which diverse work styles can coexist; and we need managers who are upskilled in detecting and appropriately handling early-stage workplace conflict. All of which can be taught.

To do this, we are seeing a shift in manager development away from fictional classroom scenarios and towards pattern-based rehearsal of real moments. Using new AI tools, managers can practice their situations: The underperformance they’re avoiding, the conflict they’re sugar-coating, the decision they’re delaying and the feedback they’re softening.

It’s undeniable that workplace conflict will grow this year. Can we stop it? Of course, we can. But the first step is accepting and addressing these very real movements, and taking action against them.

A good one will almost ensure employee buy-in for the change. Even better, you might gain champion changemakers.

What’s Up in This Episode: A Communication Plan that Works

In this episode of HRMorning’s 3-Point, we have a practical approach to rolling out changes. Joel Kirk, Associate Director of Talent Engagement at Blue Cross Blue Shield of Massachusetts, shows us how his team communicated before and throughout a new initiative that impacted all employees. The change was positive, but change is not always comfortable. So good communication made it a great experience.

Click, watch and listen for more details on communicating to gain employee buy-in.

Transcript (edited for clarity):

When you have a new initiative or program, you probably need employees to buy into it. And since you’ve spent money and time, you definitely don’t want to take chances on how well they’ll adopt it. So before you launch something, you’ll want to hear about how this team communicated a big change to the way they were going to recruit and hire from within.

Joel Kirk, Associate Director of Talent Engagement, Blue Cross Blue Shield of Massachusetts: “One of the things we’re realizing about communicating is that you have to meet people where they’re at. Some people want to watch a video. Some people want to listen to a podcast. Some people want to read the email. So we’re approaching it in a couple of different ways so people will really get the information.”

So that’s the critical first step. Know that you need to communicate changes in a variety of ways. For Kirk and his HR team, the initial word on their new internal job site was an email blast. It explained the platform, its capabilities, and how they could set up their profiles. From there …

Kirk: “We shot some videos. It was kind of at first, the team was like, ‘Really, are we doing this?’ And I was like, ‘Yeah, we’re doing this. Let’s give it a personal touch. Let’s let our associates know how excited we are about it to help spread that excitement.'” 

You see, it wasn’t just about sharing information now. It was about emotion, too. This final round of communication makes room for both.

Kirk: “Then we’re going to be some road shows, going into our service centers. They’re, obviously, a big part of our employee base. They do these monthly Power Hours with their associates when they talk about career development, and we’re going to go into that and present and let them know about it, and kind of give them the best tips and tricks. And we’ll do roadshows throughout the company, as well.”

Talk about making an impression. We’ll get more into Kirk and his team’s new internal hiring strategy in another episode. For now, if you want to get buy-in on any change or initiative, communicate like this:

• Mix it up. Remember what Kirk said: Meet people where they are. Use different comm channels – email, video, conversations, whatever it takes.
• Get people excited. When you communicate, show people what has you or your team excited about what’s coming.
• Get out there. In this case, literally meet people where they are. Show them what’s new and the tips and tricks they can try to handle it.

This is a great success you can learn from, right? Fortunately, we have more on the HRMorning website. Check out our Case Studies, where you’ll find other real-world practical tips. Thanks for joining me again.

The question came from an employer that pays a quarterly non-discretionary bonus to eligible employees, some of whom work overtime. The DOL responded by issuing Opinion Letter FLSA2026-6.

How the Quarterly Bonus Was Structured

Under the FLSA, non-discretionary bonuses paid to overtime-eligible employees typically require employers to go back and recompute the regular rate for each workweek in the bonus period – then pay any additional overtime premium that results. For a quarterly bonus, that is a significant administrative undertaking.

But an exception exists: A bonus that increases an employee’s total earnings – straight time and overtime combined – by the same fixed percentage already includes the overtime premium on the bonus. No retroactive recalculation required.

The employer here used a bonus pool tied to quarterly sales revenue. Each eligible employee’s share was determined by calculating what percentage their total gross earnings represented of all eligible employees’ combined gross earnings for the quarter. The question was whether that pool-based structure still qualified for the exception.

What the DOL Found

The DOL concluded it did. Because the pool formula incorporates both straight-time and overtime earnings when determining each employee’s share, the overtime component is already embedded in the payout. Requiring an additional overtime adjustment on top of that would amount to paying overtime twice on the same earnings.

DOL Opinion Letter FLSA2026-6: Key Conditions

The percentage of total earnings approach isn’t a free pass. The DOL identified several conditions that must be met:

• Total earnings used in the calculation must include overtime pay – not just straight-time earnings
• The bonus cannot apply a higher percentage increase to straight-time earnings than to overtime earnings. A structure that weights straight time more heavily is not carrying its own overtime cost and recomputation is required
• The calculation cannot include items previously excluded from the regular rate – discretionary bonuses, expense reimbursements, or employer benefit contributions. Including those distorts the base and breaks the proportionality, and
• A bonus that decreases as overtime hours increase also disqualifies – the DOL treats that as evasion of the FLSA’s overtime requirements.

If those conditions are met, the employer distributes the bonus and moves on. No retroactive regular rate recalculation. No additional overtime payment.

Practical Takeaway

For payroll teams managing non-discretionary bonus programs, best practices include:

• Confirm the bonus calculation includes both straight-time and overtime earnings. Exclude overtime and the percentage of total earnings treatment does not apply
• Keep excluded items – discretionary bonuses, expense reimbursements, benefit contributions – out of the earnings base
• Verify the same percentage increase applies to overtime as to straight-time earnings. Dilute the overtime portion and you have FLSA exposure, and
• Confirm payroll is executing the calculation the way the bonus plan describes it. A mismatch between the plan document and actual payroll practice is where compliance breaks down.

Salary? Sure, that helps. Flexibility? Yep, that’s important, but not the top one. Work/life balance? Maybe.

They’re all key to why employees stay, but those are things good employees can find from nearly all employers these days.

But they aren’t THE critical element.

What employees want most: a positive work environment.

Employees Stay for Culture

It’s all about the culture. Employees stay at organizations where they have positive relationships and experiences.

Eighty-three percent of employees value a positive work environment, according to iHire’s Talent Retention Report. It’s the top reason they stay where they are.

On the flipside, the top reason employees leave is that they feel they’re in a toxic environment.

The other top reasons employees stay also reflect the focus on a positive work culture:

• A work/life balance priority (68%)
• Workplace flexibility (54%)
• Health insurance (68%)
• Retirement plan (60%), and
• Career growth and professional development opportunities (61%).

Still, the most critical element to employee retention is a positive culture built on good relationships and rewarding work.

Here are four grassroots ideas to create an even more positive work culture through relationship building:

1. Get To Know Employees On a Deeper Level

Learn a little something about employees’ families, past work experiences, hobbies or interests. It will come in handy when and if you know of other employees with things in common.

Most good managers already do this, but they don’t take the next step to help forge connections among their team members.

For example, if you know a new employee is a wine collector or an avid fly-fisherman or lives in a certain school district, introduce that employee to others who might share that connection.

This shows employees that you understand they have lives outside of the workplace and can open up to the degree they’re comfortable.

2. Be the Social Director Once In a While

You don’t have to go overboard; employees who feel their managers insist on forced socialization can come to dread it.

But make sure you give your team opportunities to enjoy each other’s company outside of the normal work experience.

Depending on the size of your group and your line of work, tailor some social events around what suits you the most. For some, it might be an occasional happy-hour gathering, an in-house spirit-building session, a work site picnic or a monthly birthday celebration.

Interacting socially with co-workers often makes employees less likely to get into arguments or squabbles later and can reduce the risk of workplace conflict.

3. Remind Middle Managers To Build Ties, Too

Employee relationship-building can’t just come from you. If you oversee a group of submanagers, encourage them to foster relationships with and between their team members.

Otherwise, you could have half of your team not benefitting from positive relationships with their co-workers.

Let your supervisors in on the upsides of encouraging workplace camaraderie, and include them in plans for getting employees to socialize and feel more comfortable with each other.

4. Make Sure Your Feedback System Is Working

Many managers like to see an honest back-and-forth among their employees but are reluctant to enter the conversation themselves.

But the underlying tool that’s absolutely necessary for encouraging employee relationships is the manager’s willingness to spark honest communication.

In a work environment that stifles it, employees won’t feel free to be open and honest with each other — or with their boss.

So make sure your employees are aware if you have an open-door policy, and don’t be shy about letting your team see you communicate freely with them.

Applaud employees when they put their heads together to come up with ideas and get creative without your prompting.

Knowing you’ll listen makes them more likely to do it, which makes working together that much more pleasant.

The sticking point: The employee had been warned about similar misconduct less than six months earlier, the court pointed out.

First Incident: Written Warning for Racially Insensitive Remark 

Barbie Bassett worked as a morning news anchor at WLBT, a television news station in Mississippi. The job required her to refrain from any conduct that could reflect negatively on the TV station or its reputation in the community. Bassett also agreed not to do anything that could insult or offend the community in a way that reflected unfavorably on her or the station.

On Oct. 28, 2022, Bassett was on live TV and used a racially insensitive remark to refer to a Black reporter’s grandmother. The station received “numerous viewer complaints” about her use of the term. Several employees also said they were offended by Bassett’s language.

Bassett received a written warning stating that the comment violated WLBT’s harassment policy because the term “is a negative depiction used during slavery to refer to an African American Grandmother,” and “[t]he Comment was insensitive and inappropriate during the newscast.” The warning also stated further violations could result in disciplinary action, including termination.

Second Incident: Snoop Dogg Quote Leads to Termination

On Mar. 8, 2023, Bassett and her co-anchors were engaging in on-air dialogue after a segment about Snoop Dogg, when she used a phrase – “fo shizzle, my …” – attributed to him. When the show went to commercial break, a Black co-anchor said to Bassett: “I can’t believe you just said the N-word on live TV.” Bassett told him that she believed the phrase meant “for real, my friend” or “for real, my brother.”

Following the broadcast, some Black employees told the station manager and the general manager (GM) that the phrase was a variation of the N-word. Bassett’s remark also generated online criticism and complaints from the community and other employees. 

The station manager and the GM met with HR and in-house counsel to discuss the incident and the meaning of the phrase. They determined the remark was derogatory and terminated Bassett’s employment.

Bassett filed a charge of race discrimination with the EEOC.

After she received a “right to sue” letter, she sued WLBT, alleging race discrimination in violation of Title VII. The case reached the Fifth Circuit.

Did Employer Have Legitimate Reason to Fire Her?

Bassett argued that the station failed to state a legitimate, nondiscriminatory reason for terminating her employment. 

But WLBT insisted that its stated reason for firing Bassett – her use of “racially offensive language on air twice” – was a legitimate reason for termination. 

Bassett argued this wasn’t a valid reason because she believed the employer was wrong about the language being offensive.

The court wasn’t swayed. It’s well established in the Fifth Circuit that firing an employee for making racially inappropriate comments is a sufficient non-discriminatory reason, it explained.

Moreover, even if the station had reached an “incorrect conclusion” regarding the offensiveness of Bassett’s on-air comments, that wasn’t enough to establish “a racial motivation behind an adverse employment action,” the court noted. “Management doesn’t have to make proper decisions, only non-discriminatory ones.” 

Did Manager’s Remark Prove Race Discrimination? 

Next, Bassett argued that even if WLBT stated a legitimate reason for termination, there was still evidence that her race was a motivating factor in the termination decision — and that should prove race discrimination. She leaned on a remark made by the GM, specifically that “there’s some things that [B]lack people can say that [W]hite people can’t say.” 

She also noted that WLBT “accepted [B]lack persons’ opinions of the meaning of [the phrase] over white persons’ opinions.”

First, the court addressed the GM’s remarks, pointing out that Bassett only quoted a portion of what he actually said. The GM concluded by saying the phrase shouldn’t have been said on air by any employee, regardless of their race.

As to Bassett’s assertion that WLBT accepted Black people’s opinions over white people’s opinions on the meaning of the phrase, the court rejected this, as no evidence supported her claim. The record showed that multiple complaints came in from Black and white viewers and employees alike. 

Bassett failed to provide evidence showing WLBT used her race as a motivating factor in her termination, the court concluded. Instead, the “evidence suggests she was fired for using language on air that WLBT concluded – after receiving numerous employee and viewer complaints – was racially offensive,” the court concluded.

The race discrimination claim failed, so the appeals court affirmed the ruling in the employer’s favor. 

HR Takeaways

This case offers a clear blueprint for defending a termination decision.

Write Warnings That Work

The written warning issued after the first incident named the policy violated, explained why the language was offensive, and stated that further violations could result in termination. That specificity is what made the termination defensible six months later. A vague warning leaves room for dispute.

Consult HR and Counsel Before You Act

Before terminating Bassett, management consulted with HR and in-house counsel. That step demonstrates a deliberate, good-faith process – and you’ll want to be able to show that in a race discrimination dispute. Courts will take notice.

Being Wrong Isn’t the Same as Being Discriminatory

The court was clear: An employer doesn’t have to reach the correct conclusion about whether employee conduct was offensive. Instead, it has to show the reason for termination wasn’t discriminatory. Documented, policy-based decision-making is how employers prove that.

Bassett v. Gray Media Group, Inc., No. 25-60278 (5th Cir. 5/22/26).

No matter what you talk about – productivity, leadership, professional growth, retention, recognition, culture, well-being – everything ties back to employee engagement.

Not to mention the fact it is the most important indicator to gauge work satisfaction.

But lately, it’s at risk. The percentage of U.S. employees who are actively engaged at work is at 31%, according to Gallup’s survey — the gold standard for gauging engagement sentiment for two decades. The problem is that employee engagement has been in decline since it peaked six years ago.

Still, some things don’t change. Gallup researchers found engagement often comes down to “basic needs.” Some of those being communication, respect and concern.

Bottom line, employees still want their work to mean something, and they want to feel like they matter. Not just that: They want to be excited to work for an organization and feel a sense of belonging.

To help improve employee engagement at work, here are 10 tips:

1. Communicate Consistently

Organizations that have high levels of employee engagement have open and transparent communication – formal and informal – between management and employees.

Why is that so important?

Open and transparent communication about company goals, progress and changes makes employees feel well-informed, recognized and heard. It also nurtures trust, and when employees trust their organization, they’ll go above and beyond with their efforts.  

Open, two-way communication also makes employees feel cared about and safe to share their honest feedback and opinions, knowing there won’t be any repercussions. Whether this communication is in an open forum like a town hall, employee engagement surveys or day-to-day conversations, transparency from the top down ensures employees will do the same.

And employees who are invested in their organization are less likely to fly the coop.

2. Offer Growth Opportunities

If you want an engaged workforce, provide more opportunities for growth and development.

Employees need — and want — challenging work to stay engaged, and a lot of employees say theirs isn’t. More interesting, managers often don’t challenge their workers enough “to learn and achieve higher results,” according to results from DecisionWise employee surveys.

On the flip side, you don’t want to stretch employees too thin, which will only lead to stress and burnout.

It’s a balancing act, but one that’s vital to engagement.

How employees perceive their ability for growth within a company and the development opportunities available to them is a key predictor of employee engagement. When employees contemplate their opportunities for growth and development, they’re thinking of promotions, raises and career advancement.

Providing employees with training and skill development is important, but those things aren’t perceived as actual growth and development opportunities. There must be places for employees to rise in the ranks for true employee engagement.

How can companies do that in today’s unstable environment?

Make the promotions and growth opportunities simple and small to give employees a sense of growth and development, says DecisionWise. They’ve seen companies with high engagement scores maintain them throughout economic downturns. The key was talking about development and succession plans on a regular basis – departmentally and throughout the organization.

You’ll also want to cross-train to engage employees and give them even more opportunities for advancement. It also helps the company by having people who are available to cover for each other.

3. Recognize, Reward Employees

When employees feel recognized and are rewarded for their dedication and hard work, they feel appreciated and that their company cares about them. That in turn creates engaged employees.

One study found that 82% of employees think “recognition is an important part of their happiness at work.” It makes good business sense: Satisfied, engaged employees work harder, produce better work and stick around longer.

Recognition often costs nothing but a little bit of time to let employees know they’re doing excellent work. When used appropriately, praise allows staff to know exactly what they’re doing right – so they can keep doing it – and that management has noticed and appreciates all their efforts.

While it doesn’t have to cost a lot, it does have to be “real,” according to Unleashing the Human Element at work: Transforming Workplaces Through Recognition by Gallup and Workhuman. That means, to make an impact, bosses want their recognition to be fulfilling, authentic, equitable, embedded in the culture and personalized.

Of course, employees wouldn’t mind getting a little something for their efforts. When managers give rewards, employees know they’re valued because the company has invested in them.

These rewards don’t have to be expensive or flashy either. Little things and fun activities can be all it takes to give employees that sense of being a valuable part of an organization.

For instance, employees value a Friday afternoon off, an extra vacation day or a day off to volunteer at a favorite charity.

The important thing is to make the reward personalized to what the deserving employee would want. Cookie-cutter gifts don’t cut it anymore; neither does company swag. It’s fine to give your employees swag gifts, but don’t use them for rewards. Why? Because employees don’t see them as heartfelt.

Aren’t sure what your employees want? Ask them.

4. Foster a Positive Work Environment

Another key factor to improve employee engagement in the workplace is providing a positive work environment.

Employees who have a positive work environment are happy. Happy employees are more motivated and perform better.

It’s important for organizations to set aside some time for fun for employees.

Taking a break now and then to laugh and socialize with co-workers creates a happy supportive work environment.

For example, team-building activities can be fun and strengthen company culture. It aids in communication between team members and strengthens their bond. People who like and care about their co-workers are more engaged and more likely to stay.

But people are human and there’s going to be conflict, so part of creating a positive environment is addressing conflict and resolving it in a timely, fair and professional manner.

Let employees know their opinions are valued, but encourage them to look at things in terms of common goals among their team, department and company. When people focus on their different opinions rather than their common goals, anger creeps in.

Keep conflict constructive by encouraging employees to be inclusive of other people’s thoughts and opinions. When employees see they’re free to contribute to discussions, they feel supported by their co-workers, managers and top brass.  

5. Give Employees Autonomy

Autonomy is the right or condition of self-government. In the workplace, that means allowing people to work in a way that best suits them.

So, how does autonomy improve employee engagement?

It allows people to make choices and manage their work as they see fit. In other words, no micromanagement.

Seventy-nine percent of highly autonomous employees report high levels of engagement, according to Effectory.

Autonomy also gives employees a sense of trust – higher-ups trust them to get the job done. They can make decisions and solve problems on their own, and their higher-ups are there to provide support when needed.

That sense of trust gives employees the courage to step up and become emotionally invested in their work. When they’re emotionally invested in their work, they’re committed to providing quality work that gives them a sense of purpose. They believe what they do matters, and they’re a vital part of the organization.

Employees who work autonomously are also more likely to think freely and flex their creative muscles.

6. Offer Flexible Work Arrangements

Nothing changed the face of work since the Industrial Revolution like the Pandemic and the evolution of remote work. It changed the way employers approach work and the way employees expect to work.

And that flexibility can’t be denied as a form of engagement.

Although the number of in-office hours has slowly crept up since the pandemic started, according to data from Owl Labs, almost 40% of employees said they would still reject a job without flexible hours.

Today, researchers are finding that the idea of flexibility is different for everyone. Some employees want flexibility in where they work. Others want it when they work.

Flexibility, whether it’s where or when, helps people manage their work-life balance better. When people feel like they can take the time to care for their families and themselves physically and mentally, they’re happier and more productive. They’re also grateful and want to prove it.

So the best advice here is to work with employees as much as you can to provide as much flexibility as you can to give them balance while all the goals are met.

7. Encourage Teamwork

Employees who work on a team are more than twice as likely to be fully engaged, found ADP Research Institute.

That’s why employers should foster a team-oriented culture. When employees work in teams, they learn to trust and accept one another for the unique talents and skills they bring to the table. Since they are working toward the same end goal, it bonds them together. And employees who enjoy working together stay longer.

One fantastic way to create a team-oriented culture is through team-building activities and projects. In tip #4, we gave you links to several team-building activity stories your employees will love. Participating in fun activities allows employees to see the other side of their co-workers giving them more insight into what makes them tick. The more they learn about each other, the closer they get, the more comfortable they are working together and the more successful the team – and the company – is.

Recognizing and rewarding teams for their successes just makes them want to do even better.

8. Provide Regular Feedback

Feedback shouldn’t happen just once a year. Companies that have a strong feedback culture tend to be more engaged, aligned and successful.

When employees work as a cohesive unit, they adapt to change faster, know what’s going on throughout the organization and are in tune with each other.

The feedback that happens on an ongoing basis between employees and managers promotes trust and development. Employees know what’s expected of them and have an increased understanding of how their goals fit in with the company’s overall goals, increasing engagement.

It also works in reverse. Employees should feel free to provide feedback to their managers and teammates.

Regular feedback brings teams closer by helping team members continuously learn, grow and improve. When employees are engaged, they want to do everything they can to get better at their job.

9. Listen to Your Employees

No one wants to be ignored.

Listening to employees and acting on what they say makes them feel valued and that their voice matters. And when employees feel cared about and valued, they’re more engaged. Employees who feel ignored become disengaged.

It’s important for managers to gather regular feedback from employees. You never know when that next great lightbulb moment will happen.

When managers listen to their employees’ concerns and act on them in a timely and professional manner, employees feel heard and part of the team.

Plus, engaging in conversations allows all parties involved to learn more about each other, building trust and engagement. Listening also fosters a collaborative work environment of sharing.

10. Lead by Example

Today’s employees want to see their managers and higher-ups “walk the talk.” “Do as I say, not as I do” doesn’t cut it in the workplace.

Managers should inspire employees to copy their behavior. When employees see their managers and higher-ups leading by example with positive behaviors, it influences them to act in the same manner.

Showing employees that their executives, supervisors and managers align their practices, routines and behaviors with the company’s core values inspires them to do it too.

When a leader’s actions and words align, the team doesn’t waste energy trying to decode their intent or agenda. Leaders teach their teams to develop more effective and efficient processes.

That doesn’t mean management has to be perfect. In fact, it’s the opposite. Showing employees management makes mistakes, owns those mistakes and learns from them earns them respect and nurtures trust by being transparent. However, showing inconsistency and contradictions in how they act can damage relationships.

The Bottom Line

Engagement isn’t something companies do just to make employees feel happy. It’s a business strategy for success.

To be successful, organizations need engaged employees because they’re enthusiastic and invested in their work. And feeling positive about their work leads to better physical and mental health.

Decades of Gallup research show that highly engaged workplaces have lower levels of absenteeism, fewer quality defects and high profitability.

The bottom line is engaged employees produce better work because they’re happier and they feel like they’re part of something bigger than themselves.