Limiting Absences, Employees Leaving Without Paying, and Yearly Bonuses

Welcome back to another edition of HR Basecamp Roundup! This week, we tackle some interesting and common issues that come up in workplaces more often than you think. If you haven’t joined our HR Basecamp Facebook group yet, be sure to join so you can participate in these discussions in real time! Podcasts and Resources in this Roundup:

• Why Progressive Corrective Coaching Is Better Than Progressive Discipline
• Episode 408: The Ins and Outs of Employee Bonuses
• How to Handle the End-of-Year Bonus

I tend to be pretty understanding and flexible when it comes to attendance because I know that things happen and days don’t always go as planned. But lately I feel like some employees are taking advantage of this and there have been more unexcused absences than normal. Can I set a limit to unexcused absences in my attendance policy?

The legal side of things: Having a strict limit on the number of permitted absences can create a lot of legal risk, which is surprising to many.

If your state, city, or county has any type of law allowing employees to take paid or unpaid time off, you are, of course, not able to take any adverse action for absences taken using that protected time.

If you do not have a law like that, or if you do but the employee is taking additional time off, there are still many risk areas. The reason for the employee’s absence may have legal protection. Think pregnancy, bereavement, disabilities, jury duty, military service, illness, etc. Of course not every absence related to those reasons will be automatically protected, but it’s an important element to consider; taking adverse action based on an “unexcused absence” that’s actually protected can land you in hot water.

We see many policies that employers write that they think get them around this issue. The policy basically says that employees won’t be penalized for those types of protected absences. The problem with that is that you are now telling the employee that in order to keep their job they have to disclose to you information that they may otherwise wish to keep private.

And, frankly, you may wish that they had kept it private as well. You can’t unknow something after the fact. Once the employee tells you the extra few days they need to take off are for cancer diagnostic testing, any future adverse actions you take will be colored by the fact that you are aware of this potential serious medical condition.

Now for the human approach: The limit to unexcused absences can be hard to define. Ultimately, it comes down to your tolerance level. However, setting an exact number and putting it in the handbook makes it basically impossible for you to have any flexibility, which can backfire. In general, we recommend keeping your handbook policy more general about the fact that excessive absences are something that you are able to address.

Before doing anything, reflect on whether this is an issue across your entire staff or if it’s limited to a select individual or handful of employees. This will help determine whether this is a policy issue or an individualized one. If it’s the same one or two employees who are taking advantage of a generous policy, this should be addressed by progressive corrective coaching rather than a policy change.

This can start as a written warning to simply review your policies and procedures, bring attention to the importance of coming to work, and note that continued absences could lead to further adverse action. This gives the employees an opportunity to improve while also alerting them to the fact that their absences are being tracked.

If it’s more than just a handful of team members, we need to take a look at how your attendance policy is structured and how you’ve been handling unexcused absences so far. We often see employers who actually have a solid policy in place but aren’t properly enforcing it. Our advisors can help you determine what, if any, changes should be made in order to help curb the issues you’re having. Learn more about how CEDR can help with your handbook and attendance issues.

An employee quit suddenly while I was out of the office. They have an outstanding balance for dental work they received while employed. I reached out to them to try to arrange payment but I have not heard back. Can I deduct the cost of treatment from their final paycheck if they don’t respond?

The legal side of things: Tread lightly when it comes to any payroll deduction. Each state has its own laws that dictate which kind of deductions are permitted and some laws are so strict to make it virtually impossible to fully recoup money owed by an employee.

Because the issue here is money the employee owes as a patient, rather than employee, it makes it even harder to do. You very likely gave the employee a discount for their treatment due to them being an employee. Therefore to you, this is a matter of the employee paying for an employment benefit. Under the eyes of the law, however, there is still a firm line between their obligations to you as an employee, and those as a patient.

State laws typically only allow employers to get paid back for money owed to them by an employee in their capacity as a customer or patient if the employee authorized it in writing. And even when this is done, many states don’t allow a “balloon” payment at the end. This means that if the employee agreed to pay back a certain amount per paycheck, you aren’t able to go above that standard amount in their final paycheck.

All of this is to say, what you are able to do depends upon what your state law allows and what you have in writing with your employee. If you are unable to make a payroll deduction, you need to pursue payment from this individual in the same manner you would for any other patient.

Now for the human approach: The truth is that payroll deductions for treatment should be a last resort. Ideally, there is a payment agreement set up at the time that the employee receives treatment so you can ensure you have a way of getting payment directly from the person receiving treatment, regardless of their status as an employee. This will always be the safest option.

It’s not uncommon for some steps to be skipped and corners to be cut when you’re providing treatment as an employee benefit. This can come back to bite you in a lot of ways. Remember, when the employee is “in the chair,” they are your patient. This means your obligations around recordkeeping, HIPAA, and billing are the same as they are for any other patient.

Even if your state allows deductions for treatment and you have the required authorization on file, making deductions on a final paycheck can get complicated depending on how much is owed. It’s not as simple as deducting the full cost. There are other considerations, such as whether any deduction would reduce their wages below minimum wage and what to do when their final paycheck is less than the amount owed.

CEDR members should reach out to the Solution Center before setting up any deductions. Our advisors will double-check your state law and make sure you’re in compliance. We’ll also provide you with the necessary paperwork.

If you didn’t receive prior written authorization, then we'd recommend seeking payment from them through your normal processes of collecting payment on patient balances. Without the employee having signed something authorizing payroll deductions to pay for their patient balance, you have to keep their employee and patient status separate.

I am planning on providing an end-of-year bonus for the first time. What’s the best way to do this?

The legal side of things: The same laws that apply to your regular bonus programs apply to end-of-year bonuses as well. This means that you need to be clear about whether your bonus is discretionary or non-discretionary. If non-discretionary, you’re going to have to spend some time doing extra math to determine how the bonus payment raises the overtime rate for any overtime hours that were worked over the course of the year. We don’t recommend doing this, so make sure it’s a discretionary bonus!

If you’re not familiar with these distinctions, here’s our shortest breakdown of the Department of Labor (DOL) rules.

Discretionary bonuses are paid entirely at your discretion, in amounts that are at your discretion, and not worked toward by the employee.

Non discretionary bonuses are something an employee knows they are working toward earning based on established criteria. Since this is a form of compensation the employee is actively working toward earning, it needs to be apportioned into all relevant workweeks so that it can be included in overtime pay calculations.

Regardless of the type of bonus, remember that it is subject to payroll taxes. This cannot be avoided by paying it in cash or through gift cards.

Now for the human approach: Step one is deciding what kind of bonus you want to provide and comparing that to what you are capable of providing. Providing an end-of-year bonus when you’re able to is great for employee morale and retention, but make sure it’s a financially sound decision.

Next, decide how much you are giving each employee. If this is a discretionary bonus, you can use whatever method you want to determine how much to give each employee - as long as you're not making those decisions in some type of discriminatory way (like somehow all the men end up getting more than the women, for example).

Once you have your numbers in order, get creative! The best part about being able to provide a bonus is showing your employees how appreciated they are. Plan out how you’re going to communicate with them about the bonus. Even if you aren’t able to provide the amount you wanted, make sure to take the time to highlight your employees’ hard work and let them know how well-deserved the bonus is.

• Extra Credit Reading: How to Handle the End-of-Year Bonus
• Extra Credit Listening: Episode 408: The Ins and Outs of Employee Bonuses