Every month, we prepare one or two topical questions and answers for our association clients. Here are the 2013 Q&As, all in one place. Happy Holidays and we look forward to touching base in the new year!
Q: Every December my father delights in distributing bonuses to his employees. Unfortunately, the amount he distributes to each employee varies based on who he likes. Is preferential treatment in discretionary holiday bonuses okay? I’m worried it’s not.
A: You are right to be concerned. In the same way that regular pay is discretionary (managers can set pay according to their discretion), holiday bonuses are discretionary. That said, it is against the law to treat similar employees differently on the basis of age, sex, religion, color, ethnicity, veteran status, disability and, in many states, sexual orientation or identity. While he may not be intentionally discriminating against employees, if his decisions truly are arbitrary he will be unlikely to defend his practices if they result in a claim of discrimination. Instead, encourage your father to establish some non-discriminatory performance standards or goals upon which to base his holiday bonus gifts.
Q: We want to hire a new customer service representative and need to put together an offer letter. What should be in an offer letter and do I really need one?
A: An offer letter is a good practice as it provides all of the critical information related to the employee’s new job. You should be sure to include language that states that the offer is “at will” and that nothing in the offer letter should be construed as a contractual employment agreement. In addition to this language, your offer letter should include:
- Start Date
- Position title and description
- Wage/Salary and pay cycle information
- General benefit and vacation information (specific information should be provided at a later date)
- Non-compete, non-solicitation and confidentiality language
Finally, you should recognize that this offer is a legal document and, as a best practice, have it reviewed by legal counsel.
Q: My Account Executive feels that I am micromanaging her and that I don’t trust that she’s working while she’s out of the office. It’s not that I don’t trust her, I just want an accounting of what she’s doing when she’s away. What should I do?
A: The workplace is changing. Many sales people are rarely in the office. Many other types of employees are telecommuting and others are working “flex” hours. Instead of taking an accounting of where each employee is throughout the day, the modern-day manager must now gauge their employees’ performance by their output. For many, this is a difficult transition but the harder you push against this new workplace, the more out-of-step you will appear to your employees. My advice is to decide what level of performance you want to see from your account executive: how many calls; how many visits; how many new orders; how many sales? If she satisfies your expectations, then how, where and when she does it should be of little concern.
Q: I read that effective October 1, 2013, employers will have to provide notifications to their employees about health insurance reform. Does this apply to everyone? What is required?
A: Yes, effective October 1, 2013, you must provide a notice that explains how the new Health Insurance Markteplace works and how employees may access coverage. It applies to any company that is covered by the National Labor Relations Act (pretty much everyone with one or more employee) and with annual sales of $500,000 or more. The good news is that the US Department of Labor has created a notification that satisfies the requirement. You can find it at http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf.
Q: We are hiring a new salesperson and I would like her to take a behavioral test to make sure she’s a hunter. Is that okay to do in the hiring process?
A: Absolutely and it is highly recommended but only under the following circumstances. First, you have to treat all of your candidates/employees similarly. For example, if you are hiring five new salespeople and you only test one that can be problematic. Second, you should be sure to use a test that has construct and content validity – meaning they test what they say they are going to test and they don’t adversely impact any minority population. You can ask about validity and adverse impact results of any reputable testing company. We highly recommend TTI’s TriMetrix HD Assessment.
Q: We had a great summer intern and he is now going back to school. We’d like to give him a bonus for his work – is there any problem with doing this?
A: There is nothing wrong with giving a bonus per-se, but realize that, as with all bonuses, it is considered compensation and should be treated as such with tax withholdings. Presumably, you have been paying your intern at least minimum wage for his work unless you offered him a bona-fide internship (most companies that I work with do not have bona fide internships). If you don’t want to create a tax event for your intern, think about giving him a gift card as a thank-you.
Q. Do I have to pay my employees time and a half for work performed on a holiday?
A. It is best to check with your particular state law, but generally overtime is required to be paid only after an employee works more than 40 hours in one week, regardless of whether or not a holiday occurs in the workweek. Whether or not to require employees to work on a holiday is the employer’s choice.
Q: We have 27 employees and currently provide health insurance. Will we be required to do so in the future? Are there minimum levels of coverage that we will have to provide?
A: For small businesses (fewer than 50 full time equivalent employees) there is no requirement that you provide health insurance. There is, however, a tax incentive for those small businesses that do provide health insurance so you’ll want to check with your tax consultant to make sure you’re benefiting from that incentive. In 2014, the insurance marketplace for small businesses is likely going to change. You should talk with your insurance broker to figure out whether your current policy will still be offered and, if not, what plans will be available to you next year.
Q: One of our employees posted something very disparaging about our company on his Facebook page. He did this on his personal time so I don’t know if we can discipline him for this? Please help as his comments have gone viral and I’m worried about the damage it will do to our reputation in the community.
A: First, if you don’t already have one, you need a social networking policy, which outlines what employees can and cannot do with the Internet and social networking sites in relation to their job. The courts have weighed in on this and decided that some speech on the internet is “protected speech” under the National Labor Relations Act. Even if you are not happy about what the employee said, employer rights are not so clear. Before you take any action against the employee, you should seek help from an attorney or HR consultant to help you draft a policy or help you in interpreting your rights as an employer.
Q. We recently hired a few people that have not worked out due to either personality fit or skill set. These candidates interviewed very well but when they got on the job they were less than stellar and frankly just not the right fit for our culture. In the future, how can we insure we are hiring the right person?
A. To garner more insurance over hiring the right candidate, I suggest you develop a hiring team who will review the candidates – a team approach is very effective. Make sure you have a good set of interview questions prepared that focus on the technical aspects of the job. Ask “behavioral interview” questions by asking the candidate, “tell me about a time…” Have them tell you about how they have acted, performed and dealt with situations in the past – it’s the best indicator of how they will act in the future.
We also strongly recommend doing behavioral style assessments on candidates to see what their true behavioral style and motivators are. We feel so strongly about this that we won’t do a recruiting project without one. Without this data, you’re really just assessing how well the candidate interviews which is not a determinant of future behavior.
Q. What are the most important qualities to look for in a potential job candidate?
A. Most hiring decisions are based on the candidate’s resume and how well they perform in an interview. As recruiters, we encourage clients to go beyond this two-dimensional assessment and to consider the rule of thirds: 1/3 of the decision should be based on the candidate’s experience, skills and documented ability; 1/3 should be based on their performance on behavioral style assessment testing; and 1/3 based on the candidate’s “fit” with the culture of the company. If the candidate hits the mark in all three of these critical areas, it enhances the chances that this person will turn out to be highly engaged, highly productive and an overall top performer.
Q: One of my employees just received a jury duty notice but it is at a critical time of year for our business and we can’t afford for the employee to be gone. Is there a way we can request an exemption to the court?
A: Yes, you can file an exemption by writing a letter to the judge or the court that issued the summons. You can explain the circumstances and honorably request that the employee be relieved of jury duties because it would place an undue hardship on your business. The judge may excuse your employee from acting as a juror or defer that service on the basis of an undue hardship or extreme inconvenience. The court will balance the request with the public need and issue a determination, so a request for excusal does not necessarily mean the court will grant the request. Most importantly, you must not discharge or retaliate against an employee who chooses to perform jury service despite your objections.
Q. What is meant by “Employment at Will”?
A. Some states are considered “At-Will” states, which refers to the common law rule regarding the employer-employee relationship and allowing for the termination of the relationship by either party without notice and without cause. Many employers make clear their right to employ at-will with specific language in their personnel policies and employee handbooks. To support its at-will status, it is advisable that an employer clearly state in the handbook that the company’s personnel policies are not to be construed as a contract of employment.
While declaring and retaining at-will status provides an employer greater flexibility in the workplace, in all states the burden of proof is on the employer to ensure that a termination is not the result of wrongful discrimination (for reasons such as age, sex, race, color, national origin, religion, disability, veteran status, family status, genetic information or sexual orientation). Accordingly, being an at-will employer is not a cure-all or a substitute for establishing clear policies, keeping thorough documentation and applying consistent administrative practices in all facets of the employer-employee relationship.
Q. Do I have to pay out my employees’ unused vacation time or severance pay upon termination?
A. You want to verify with your state law as some states may vary. Generally, vacation pay, holiday pay, bonuses, sick leave and severance pay are examples of wage agreements, which may be made between employers and employees as a part of the employee’s total compensation package. There is no requirement to offer these benefits. But you are required to honor any already established policy or agreement relating to the payment of benefits such as accrued vacation or severance pay upon termination. If the employee qualifies and is eligible for benefits, you should pay those upon termination as well.
Q. Am I required by law to do employee performance reviews?
A. No. The Fair Labor Standards Act (FLSA) does not require that employers conduct performance evaluations. Performance evaluations are generally a matter of agreement between an employer and employee. While law does not require them, they are highly recommended to establish expectations, manage performance and increase employee engagement.
