January 4, 2017

silhouette of a man in a business suit giving a shrug with a question mark, representing uncertainty about Trump FLSA overtime rulesRunning a business and managing employees means dealing with a constant flow of HR issues – and the inevitable questions that arise. Here are a handful of the most common tough HR questions I get from employers, and some answers that might just help you, too.

  1. Can I withhold advanced PTO from an employee’s last paycheck?
  2. “I let an employee take advanced time off for paid vacation and she just called in and quit this morning. She worked here three months and took the entire 5 days of vacation to “go visit her sick family member.” Can I withhold the extra days from her last paycheck?”

    Answer:

    The rules regarding your situation vary from state to state. A few states allow final deductions as long as you establish in advance an acknowledged written policy, in addition to other agreements and requests, outlining your vacation benefits. Here are just a few of the items you need to know about and address properly to comply with your state’s rules:

    • Earned
    • Accrued
    • Use it or lose it
    • Cap
    • Buy Back

    You must also establish that vacation time is a benefit and that it is not subject to overtime. One common misconception is the idea that “comp time” (a form of vacation/time off) is legal in the private sector and can be used to offset overtime.

    Most states consider vacation benefits akin to wages, on several different levels. In these states, it’s a wage violation to withhold anything an employee has already earned from a final paycheck. Getting this critical point wrong can result in treble damages and attorney’s fees.

    An increasing number of states also require a certain amount of paid sick time, and impose various regulations upon it. Sometimes this time may be used to care for a sick family member, so you need to make sure you’re already in compliance there as well.

    It’s also important to understand the difference between federal rules and state rules. These rules vary greatly, from heavily in favor of employees, to not at all in favor of employees. If multiple rules apply, in general, you must follow the rule most favorable to the employee. That said, you should probably not withhold the advanced vacation, unless the employee signs a consent for you to do so. Call us for more guidance.

  3. Is it better to not have an employee handbook in an at-will state?
  4. “A couple of people, including an attorney, told me it’s better to not have an employee handbook in a right to work/at-will state because my employees might use it against me. The attorney also told me he could get me out of just about anything.”

    Answer:

    This is double-edged guidance that we, and thousands of other professionals (including many attorneys) disagree with. First, I want to address a common misconception many employers have about “right to work” states. The terms “at will” and “right to work” have two different meanings that are important to understand.

    In general, “right to work” rules prevent unionized employers from taking adverse action or supporting a hiring or firing policy that forces employees to pay union dues. In layman’s terms, everyone in that state has a right to work – they don’t have to capitulate to any union requirements to get or keep a job.

    “At will” means that you or your employee are free to end your working relationship for any reason at all – or even no reason at all. As simple as that sounds, there is a major caveat: employers may not fire, refuse to hire, or take an adverse action against an employee for an unlawful reason. Since employment lawsuits and government enforcement are both at epidemic levels, employers must accept at-will employment as an employment basic. It’s a concept you must get right every time, and work diligently to establish and maintain. However, it’s not bulletproof or an all-encompassing employer shield.

    Addressing the attorney who advised you “he could get you out of anything”… did the attorney also volunteer to represent you for free? He likely neglected to advise you that it can easily cost well over $30,000 to defend and win an employment lawsuit. On the other hand, a well-written employee handbook, combined with expert support and a little training, can stop many complaints and employment lawsuits in their tracks. The attorney was likely saying, “since you can’t afford my legal expertise on a continuing basis, you should hope for the best and hire me if and when you need me.”

    The attorney was right about one thing, and I mean dead-on correct. You can get in a lot of trouble using self-made, borrowed, outdated, or cookie-cutter handbooks. Since most employers can’t afford to keep an attorney on retainer at $200 an hour, or hire an internal HR expert for $80,000 per year, they either try to put together a handbook on their own or simply go without. CEDR solves this problem by making it easy for you to develop an affordable, credible, customized employee handbook and get the support you need to implement your workplace policies.

  5. Is it better not to give a reason when I fire someone?
  6. “I’ve heard it’s better not to give a reason when I fire someone because I’m in an at-will state. That means I can fire an employee for any reason. The guy I bought my practice from and two different practice managers told me to just ‘let her go.'”

    Answer:

    When you don’t give someone a reason for firing them, who gets to make up the reason? If you guessed the employee, you are right. But, in today’s litigious society, it’s often actually the employee and the person representing the employee who make up the story for you. Whether that person is a crafty employee attorney or someone from the EEOC, you are now at the mercy of their version of why you fired the employee.

    You can counter this by using a well written Progressive Corrective Coaching (PCC) policy in your handbook. This policy gives you and your manger(s) a consistent method of documenting issues with any employee. If and when you must fire, you will be able to provide actual performance- and job-requirements-based reasons for termination, supported by the written coaching process. Adopting the PCC process can be devastating to anyone attempting to extort a settlement through creative threats and complaints against you. For an in-depth trainer on the use of PCC, click here.

  7. Can I make my employees sign an agreement for no overtime pay?
  8. “I was in Florida last week and saw you speak at a study group, and I didn’t want to stand up and embarrass you on the overtime issue. I have an agreement that all my employees sign that lets them know I don’t pay overtime. If they need a job that pays overtime, they know they need to work somewhere else. I would have a hard time buying your handbook when you got this part wrong.”

    My reply: Who advised you and wrote that agreement?

    Here’s the type of answer I typically hear: “If you mean who told me about it, it was a buddy of mine, who said his accountant wrote up an agreement that he’d been using for years. So, I just put one together myself.”

    My reply: How much did your practice gross last year?

    His answer: “I’m willing to tell you we had a good year and it was more than a million dollars. Why?”

    Answer:

    All businesses that gross more than $500,000 per year are subject to the FLSA (Federal Labor Standards Act). Under the FLSA, all hourly employees who work over 40 hours must be paid at 1.5 times their regular rate of pay. You can learn more about calculating regular rate of pay here.

    As a side note: a limited number of states, such as California, have lowered the requirement to 8 hours per day. For the rest of us, employees may not sign away, nor may any employer reach an agreement, which removes the overtime pay requirement.

    This is a prime example of how often bad, outdated, and just plain wrong advice spreads from person to person. I urge you to get in touch with a qualified HR professional to confirm what I am telling you. I also urge you to clean this up and get help ASAP, before an aggrieved employee files a complaint.

    It’s also important for you to understand that your written, signed agreement could be used against you as proof that you are not paying overtime properly. There are many other basic, easy-to-follow requirements of the FLSA that we strongly suggest you comply with, starting now.

  9. Can I add a provision that says employees can’t talk about their wages?
  10. “I’ve seen you speak at seminars a couple of times and I’ve been by your table, too. You probably don’t remember me. I decided to go with my local attorney and do a handbook with her. I just got my book back and it has a provision that says employees are not to speak about their wages. I remember you made a big deal out of this policy being a bad thing. Can I get more details?

    Answer:

    This is a no-brainer. It is a bad thing.

    In 2009, Congress passed the Lilly Ledbetter Fair Pay Act. The Act expands the penalties and time frame an employee has to file a wage discrimination lawsuit. Employees who can’t discuss their pay can’t discover they are being discriminated against and therefore can’t bring a lawsuit under the Act.

    The EEOC published an opinion letter to help employers understand that enforcing this type of policy may also violate many of the EEOC’s standards, which can be used against any employer.

    In addition, the National Labor Relations Act (NLRA), which is enforced by the National Labor Relations Board (NLRB), essentially gives employees the legal right to act together or communicate with each other to try to improve their pay and working conditions or fix job-related problems. The activities or communications involved here are called “Protected Concerted Activity” or “Section 7 Rights.” The NLRB has deemed the practice of forbidding wage and benefit discussions to be in direct violation of the Act. Over the last several years, the NLRB has heightened its regulating activity. This means the Board is now going after businesses of all types, unionized or not, with a much broader interpretation of the NLRA, especially in the context of social media and online communications.

    If employees are fired, suspended, or penalized for taking part in a protected group activity, the NLRB can take action to hold the employer liable for damages, lost pay, and other penalties. The NLRA also makes it a violation to even have policies that may discourage employees from protected communications. This is true even if the original intent was to prevent unprofessional communications (such as gossip or complaining). Therefore, if the NLRB finds out an employer engaged in this practice, they can and will go after that employer.

    This situation highlights the fact that all experts are not created equally. We frequently see employers borrowing or passing along this policy. This is likely an oversight on your attorney’s part. You may want to hire another attorney who specializes in employment handbooks to review the policy. Or, you could send it to us for review. In the meantime, I would advise you to stop distributing this particular policy right now.

  11. Does buying a professionally customized CEDR employee handbook have an ROI? How does the handbook pay for itself?
  12. “My father practiced for 40 years, I’ve been in practice for 10, and between us we’ve never been sued. I have a hard time justifying spending money on something like a employee handbook. Look, I get the legal side of what you say about doing it myself and getting it wrong. But I’m a businessman. I’m used to seeing a return on my investment, like when I buy a piece of equipment. What kind of return can I expect to see?”

    Answer:

    I love this question. Let’s start with the money you save because you have the proper policies in place in your employee handbook. There are state and federal rules regarding vacations, holidays, continuing education, and travel time. We keep you current on these rules to save you money. For example, last winter we had a client on the east coast take 13 employees to a training event on the west coast. On the return trip, they were stuck in the Atlanta airport for several hours overnight. Because we implemented a federal-law-compliant policy on travel time and communicated that policy to the employees in advance, the doctor saved enough in hourly wages to pay for his employee handbook. According to the doctor, the best part was that his employees were not upset. They knew what to expect and what they would be paid because their employee handbook clearly and legally addressed the issue.

    Just like you, I own a business. I know your time is so valuable that I can’t really put a dollar figure on it. It’s priceless. It’s why I get so irate when I have to return a weed-eater to Home Depot for the second time. The time it takes to return the weed-eater drives its initial $149.00 cost into the hundreds of dollars by virtue of the time I have to spend in the store as opposed to whacking weeds. The same is true of a poorly written employee handbook. If your handbook is missing critical policies, isn’t legally compliant, or you don’t have a handbook, you’re wasting valuable time and money searching for answers when issues arise. We prevent our clients from losing money by quickly and efficiently showing them how to implement their handbook’s policies on earned vacation, pregnancy leave, mandatory training, travel pay, continuing education, bonuses, and myriad other issues.

    A well-written, legally compliant employee handbook can and does save you time and money. It eliminates employee issues because it lets your employees know what to expect. It also helps you avoid employment-related legal claims. Clear, concise, consistently enforced policies are the last thing an attorney wants to see, because they make his or her job harder. They’re the first thing a government investigator wants to see, because they make his or her job easier. Although you will see your handbook pay for itself, the time and money you save when addressing issues covered in your handbook is priceless.

Let us help out with your HR questions and policies

That’s it for today’s tough questions – but that’s also just the beginning of the types of issues we help employers like you to solve on a daily basis. Have a “tough question” of your own that you’d like to see answered? Call our CEDR team at 866-414-6056 or email info@cedrsolutions.com. And if you’ve got an existing employee handbook you’re starting to think might have a few problems, let us take a look at that, too.

Friendly Disclaimer: This information is general in nature and is not intended to provide legal advice or replace individual guidance about a specific issue with an attorney or HR expert. The information on this page is general human resources guidance that is believed to be current as of the date of publication. Note that CEDR is not a law firm, and as the law is always changing, you should consult with a qualified attorney or HR expert who is familiar with all of the facts of your situation before making a decision about any human resources or employment law matter.