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August Hot Topics:
- FLSA Requirements
By Frank Drdek, Senior Consultant, Human Resources Professional Group - California Workers' Comp News Flash - Behind the Scenes Overhaul
By Eric Sheetz, Commercial Insurance Broker, The Michael Ehrenfeld Co. - Best Practices for Handling Payroll
By Fred Patterson, lll, District Sales Manager, AmCheck - Will You Be Able to Keep Your MVP's?
By Alden Reynoso, VP Recruiting and Client Services, Human Resources Professional Group - EEO-1 Reporting Deadline Approaching - September 30, 2012
Use our checklist to review your options and obligations.
Exempt or Non-Exempt?
Understanding the Fair Labor Standards Act
By Frank Drdek, Senior Consultant, Human Resources Professional Group
One study estimates that approximately 70% of businesses are not in compliance with wage and hour laws, which means that you are very likely at risk for some infraction you may not even know about.
Wage and hour lawsuits were the most common type of labor and employment lawsuit filed in federal court in 2011. In fact, last year, there were more wage and hour lawsuits filed in federal court than all other kinds of employment cases combined. 2012 is expected to continue this trend.
To make matters worse, many wage and hour cases become class or collective action lawsuits. This means you could be sued by several employees, not just one employee. And a class-action lawsuit will exponentially increase the amount of damages you’ll be facing—as well as the amount of time and paperwork it will take to clear up the turmoil.
The good news is that businesses can protect themselves. By understanding some of the key concepts in wage and hour law and knowing how to spot potential risks before they develop into government inquiries or private lawsuits, businesses can dramatically reduce their legal exposure in the wage and hour law area.
The Fair Labor Standards Act (FLSA) is a federal law that requires most non-exempt employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay should be equated to time and one-half their regular rate of pay for all hours worked over 40 hours in a workweek. The FLSA also sets out the federal minimum wage and restrictions on child labor.
Most companies are certainly committed to, and abide by, all laws governing the treatment of employees. Therefore it’s important that all managers have a general understanding of FLSA rules. The FLSA is a very complicated law and this communication is simply a high-level overview, but note: making exempt/non-exempt determinations should be a detailed process.
Determining FLSA Status
The U.S. Department of Labor (DOL) regulates how employees are to be paid, based on the following two categories:
1. |
"Exempt" from overtime (meaning they will not receive overtime pay), for jobs that require, among other things, significant independent decision-making or executive/management duties and a base salary that is at least two times the federal minimum wage; or |
2. |
"Non-exempt" from overtime (meaning they will receive overtime pay for overtime hours worked), for all other jobs. |
Exempt categories include Professional, Administrative, Executive, Outside Sales and certain Computer employees.
In order for a Supervisor or Manager to be classified as an exempt employee, they generally must have at least two direct reports reflected in eWorkforce, their primary duty must be supervising or managing, and they must have responsibility for hiring, performance, compensation, timekeeping, and termination.
Determining whether an employee is exempt or non-exempt is about following the law and is a decision that requires expert facilitation.
It is not about:
1. The desire or ability to pay overtime;
2. Granting an employee a flexible work schedule;
3. An employee's "status" or value to the Company; or
4. Recognizing an employee’s knowledge because he/she has been around for a long time and is the "go-to" person for department issues and questions.
It is about the basic following facts:
Non-Exempt |
Exempt
(Must spend 50% or more of their time
in these types of activities) |
Focus is on completing specific tasks or activities supporting implementation of procedures.
May require decision-making, but with limited financial implications to the Company.
Not limited to manufacturing or administrative support roles.
Not a manager, but may be a lead, providing direction to other employees with similar duties. |
Creative, innovative responsibilities requiring advanced decision-making skills.
Has the authority to make policy, procedure, process, or design changes to impact business.
Works independently; typically has flexibility and authority over daily work priorities. |
Please contact HRPG if you have any questions and/or concerns regarding an employee's FLSA status. HRPG will complete a job analysis and upon review and approval from your company, will assist in making any necessary changes to an employee's FLSA status. Human Resources Professional Group will assist and facilitate this process to a successful end.
We invite you to contact HRPG if you would like to discuss ways that HRPG may assist your company in working through any of the HR challenges you see for 2012. Contact us at rdavies@hrpg.com or (619)421-0074.
California Workers' Comp News Flash - Behind the Scenes Overhaul
By Eric Sheetz, Commercial Insurance Broker, The Michael Ehrenfeld Co.
The two biggest players in the California work comp system are large employers and labor unions, and they are quietly crafting the biggest overhaul of the mandatory insurance program in a decade!
Their goal is to provide more care to injured workers without raising premiums for businesses.
The negotiations are focused on squeezing waste from CA’s $15-billion system, which often delays or denies compensation and medical care that could otherwise get injured workers back to work. The average compensation paid to CA workers in cases of permanent partial disability was $12,000 in 2011, which is down more than half from $25,000 in 2004, according to UC Berkeley Survey and Research Center.
The lower payouts are a result of laws approved by the Legislature in 2003/2004, which pointed to skyrocketing employer premiums. These changes provided relief to employers, who saw their premiums decline by about 60%. Insurers benefited with higher profits because they paid fewer and smaller claims.
However, experts say the changes have been tough on California injured workers.
Workers can spend years wrestling settlements from work comp courts while remaining too crippled to return to their day jobs.
Getting an agreement to strip “inefficiencies and frictions” from the system depends on everyone in the workers’ comp system taking a bit of a haircut by giving up some of their legal rights and privileges. This includes injured workers, employers, doctors, hospitals and insurance companies, says Angie Wei, Chief Lobbyist for the CA Labor Federation and the Chairwoman of a state government research bureau, the Commission on Health, Safety and Workers’ Compensation.
“There are too many lawyers in the system,” said McNally of Grimmway Farms. “We need to come up with one that’s more administrative, more predictable, more affordable, puts more money in the hands of injured workers and brings down the cost to employers.”
McNally’s call for streamlining comes as costs to insurers are starting to creep up again after plummeting from historical highs. Average insurance rates fell to $2.16 per $100 of payroll in 2008 from $6.29 in 2003, according to the WCIRB. Since then, they’ve climbed to $2.37 per $100 of payroll.
At the same time, insurance companies are reporting that they are spending more on claims, claims processing and general expenses than they are receiving in premiums paid by employers. In 2010, they spent $1.16 for every premium dollar earned, compared to 73 cents in payouts for each $1 in premiums in 2005.
For more information or questions regarding your companies risk exposure, please contact Eric Sheetz, Property and Casualty Insurance Broker for The Michael Ehrenfeld Co. at ESheetz@ehrenfeldinsurance.com, (760) 809-8510.
Best Practices for Handling Payroll
By Fred Patterson, lll, District Sales Manager, AmCheck
“In the payroll world, you have to be 99.99% correct. The errors you make mess with people’s lives.” --Jim Bolek, Regional Advisor to the American Payroll Association.
By adopting the Top 5 Essentials, payroll professionals adopt a way of doing business that leads to success for them and their organizations. Learn why the essentials may not be the things you expect.
- Have Good Sources of Information...and Advice
- Be Process Oriented
- Think Outside of Your Box
- Plan Ahead
- Balance Your Life
Information Wins - Good Information Wins More
As in any profession, it is helpful to have good sources of information. By joining local and national organizations, such as the American Payroll Association, payroll professionals have access to a wealth of information through websites, online classes, national and local events, and more, providing you with knowledge, tools and networking opportunities to enhance your success as a payroll professional. A successful payroll professional has access to good information sources, including online resources, reference guides and experienced mentors.
Concentrate Your Efforts on the Right Process
Be process oriented. Best practice companies in the Fortune 1000 spend, on average, about $85 per employee, per year, on payroll, while others spend as much as $715 per employee. Obviously there’s a large gap in expenditures and without the proper processes, you could easily be overspending in these areas. Achieving payroll best practices can provide a significant payback. Best Practices are defined as proven techniques or methodologies that lead to a desired result through the use of knowledge, experience, research, and technology. Good business processes incorporate best practices. Without the right business processes, it is impossible to achieve desired results - especially in a company’s payroll. Do not underestimate the importance of being process oriented when it comes to performing critical payroll functions for your company. Whether you are new to an organization or have been there for years, it is crucial to first understand your environment before creating and implementing new processes.
The Solution Might Exist Outside of the Box
Have you ever searched for car keys all over your house, only to find them in the car? Sometimes looking for a solution to a problem at work is like the search for those elusive keys, because the solution might exist in another department, or somewhere else outside of your work sphere. For example, a missing check from this month’s payroll run might be caused by a form entry problem in another department. The form may not have anything to do with your process, so you probably wouldn’t be aware of it, but thinking outside of your area may lead you to discover the perfect fix for your problem. Payroll professionals should make an effort to understand other areas of the business.
There’s No Substitute for a Good Plan...Except Really Good Luck
Since we cannot rely on good luck to carry the day, we should devote time to creating a good plan. Having a good plan means we clearly define the process and the goal of the process. It also helps us anticipate the problems that can occur down the road. Any good plan has the following elements: requirements gathered from all constituents with a vested interest in the results; a process that meets the requirements gathered; metrics used to measure the progress of the plan; and audit and analysis of results so the plan can evolve as needed. The audit step cannot be overstressed. Federal and state governments continue to initiate new mandates and regulations that affect payroll, such as FMLA and FLSA. These are easier to manage when you consistently audit current processes. Also, by defining metrics for success, the auditing process becomes seamless.
The Payroll Manager with the Most Friends Wins
Today business moves at a breakneck speed, so it is easy to forget the softer side of life, like friends, family, or even pleasantries in the office. Work, work, work, that’s all that is really important, right? In fact, that could not be more wrong. You wouldn’t expect your car to keep on running if you did not change the oil and perform other maintenance on it during the year. Why would you expect to keep delivering the same energy at the office if you don’t maintain balance in your life? This has a direct effect on the business process. Offer your assistance to others within your organization. By working together, the struggle for each may become less.
For more information or questions regarding your payroll processes, please contact Fred Patterson III, District Sales Manager for AmCheck, a payroll solutions firm with offices throughout the United States. Fred may be reached at fred.patterson@amcheck.com or (619) 595-7900.
Will You Be Able to Keep Your MVP's?
By Alden Reynoso, VP Recruitment and Client Services, Human Resources Professional Group
The recent economic climate has given employers the sense they should be cherry picking candidates while many employees have been reluctant to change jobs without a good reason. However, current assessments of employee attitudes suggest that may be changing. This burgeoning trend is documented in the April 2012 U.S. Bureau of Labor Statistics, Job Openings and Labor Survey. That survey showed that for the first time since 2008, voluntary job separations outnumbered layoffs. The recently published 2012 Aflac WorkForces Report adds fuel to the fire when it indicates that nearly half of U.S. employees surveyed in that poll reported they are at least somewhat likely to look for a job in 2012. Additionally, those who say they are “extremely” or “very likely” to leave their jobs describe themselves as the kind of workers companies need to retain to remain competitive.
Proactive organizations are taking the opportunity to assess if their current retention strategies are effective. However, some companies may be faced with the prospect of needing to develop those strategies for the first time. Whatever your company’s position, the list below provides an overview of several factors to consider when developing or refining your retention strategy.
- Define ownership of the retention program. Like any project of importance, your retention program needs someone at the helm who will drive the efforts forward. Don’t fall into the common trap of assigning this role to someone with good ideas, but no authority to put them into action. Rather, ensure that the individual running your program is empowered to apply the resources needed to make a difference.
- Measure turnover and calculate the costs of turnover. You need a benchmark against which to measure your success. Turnover is best calculated as a battery of measurements vs. a single percentage. That battery should include a measure of preventable turnover as well as a figure for “undesirable” turnover. Calculate the costs associated with turnover. This will take some thought because not all are tangible. Turnover costs may include:
- Decreased productivity and interruptions to workflow.
- Recruiting costs associated with backfilling the position.
- Expense in time and money for training new employees as well as the loss of the expertise of the exiting employee.
- Impact on remaining employee’s morale and job satisfaction.
- Impact to Employer Brand and Company Culture.
- Identify the variables leading to voluntary separations. It is important to understand why employees leave. Typically, this information is gathered by HR during an exit interview. Additionally, you may want to assess the current level of engagement among your employees. This can be accomplished through mechanisms such as employee attitude surveys, focus groups, structured interviews or informal feedback.
- Develop Retention Solutions specific for your company culture. Your company is unique - and so will be the reasons employees want to stay. The solutions for reducing undesirable turnover will be dependent upon the trends evident in the turnover data, but examples may include:
- Adjustments to compensation and benefits packages
- Changes to employee training and career progression
- Work/life balance programs
- Recognition and/or reward programs
- Manager training initiatives
- Assessment and improvements to internal communication practices
Remember, retention strategies don’t all have to require salaries at the high end of market rates nor gigantic benefits packages. If your employees are leaving because they feel undervalued, it may be as simple as saying “Thank You” for a job well done.
- Monitor and evaluate the effectiveness of retention programs. Once a new or modified retention program has been implemented, calculate the ROI by continuing to measure turnover and track improvements. If rates are not improving, use this data as your new benchmark to re-consider your position.
As you develop your retention program, just as with any recruiting program, be prepared to work harder to retain the “best” employees. Also remember that by keeping undesirable turnover low - you are also strengthening your employer brand and the attractiveness of your organization to other top performing employees. Take the time to be prepared!
For more information or questions, contact Alden Reynoso, VP Recruiting and Client Services, Human Resources Professional Group. Alden may be reached at areynoso@hrpg.com, or (760) 730-9531.
EEO-1 Reporting Deadline Approaching - September 30, 2012
Use our checklist to review your options and obligations.
Who Must File
You must file Standard Form 100 (EEO-1) if you:
- Are a private employer subject to Title VII of the Civil Rights Act of 1964 (as amended by the Equal Employment Opportunity Act of 1972) with 100 or more employees, excluding:
- A primary or secondary school system;
- An institution of higher education;
- An Indian tribe;
- A tax-exempt private membership club other than a labor organization;
- Have fewer than 100 employees and your company is owned or affiliated with another company, or there is centralized ownership, control or management (such as central control over personnel policies and labor relations) so that the group legally constitutes a single enterprise, and the entire enterprise employs a total of 100 or more employees; or
- Are a federal contractor (private employer) who has 50 or more employees, is a prime contractor or first-tier subcontractors, and have a contract, subcontract or purchase order amounting to $50,000 or more or serve as a depository of government funds in any amount, or is a financial institution which is an issuing and paying agent for U.S. Savings Bonds.
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How to File
First-Time Filer
If you are a first-time filer, the EEOC Web site provides a simple registration form. The EEOC will issue a company number, which will then allow you to log in to the system to fill out the form.
Best Practices
File Standard Form 100 (EEO-1) via the Internet by September 30.
- Follow all filing requirements for your company, single establishment or multi-establishment.
Standard Form 100 (EEO-1) must be filed each year by September 30. You can do all your filing online at the EEOC's Web Site. This is the preferred method of filing and no software needs to be installed. Paper EEO-1 forms will be provided on request only and only in extreme cases where Internet access is not available to the employer. Requests for paper forms must be made to the EEO-1 Joint Reporting Committee by telephone or e-mail.
Regular Filer
If you have filed an EEO-1 form in previous years, you should find that part of the online form is pre-completed from the previous year. You can also access up to 10 years of your company's historical EEOC annual report information. This system uses encrypted files for data transfer to ensure data privacy.
Employment figures from any pay period in the third quarter, July through September, may be used. Employers who have been granted permission to use year-end employment figures in the past may still do so.
Multi-establishment Employers
All multi-establishment employers, i.e., employers doing business at more than one establishment, must file:
- A report covering the principal or headquarters office;
- A separate report for each establishment employing 50 or more persons; and
- A consolidated report that must include all employees by race, sex and job category in establishments with 50 or more employees and in establishments with fewer than 50 employees. Also include a list, showing the name, address, total employment and major activity for each establishment employing fewer than 50 persons.
- The total number of employees indicated on the headquarters report, plus the establishment reports, plus the list of establishments with fewer than 50 employees, must equal the total number of employees shown on the consolidated report.
All forms for a multi-establishment company must be collected by the headquarters office for its establishments or by the parent corporation for its subsidiary holdings and submitted in one package.
For the purposes of this report, the term "parent corporation" refers to any corporation that owns all or the majority stock of another corporation so that the latter stands in the relation to it of a subsidiary. |
Requesting an Extension
To request an extension, send an e-mail to e1.techassistance@eeoc.gov before September 30. Include your:
- Company name
- Company number
- Address and
- Contact information for the person responsible for the report
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We hope this reminder helps you keep on track with your compliance responsibilities. If you have any issues or questions, please do not hesitate to contact your HRPG representative.
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