Author: Gus Anderson

Posted on

5 Surprising Lunch Break Statistics in the US (2023)

Summary

  • Research shows how taking lunch breaks enhances employee engagement and productivity. Despite this, lunch breaks are getting shorter and many employees fear being judged for taking them. 

  • While there is no federal law stating that companies should offer breaks, many states have implemented their own. 

  • Employers should properly schedule and track compliant lunch breaks to avoid lawsuits and improve workplace culture. 

What do lunch breaks look like in your office? Are your employees “desktop diners,” eating their packed lunches in front of their screens (most likely scrolling through social media) before getting on with their workday? Do they venture out in search of fresh air and some time away from their screens? Or has your company ended up with a workplace culture where employees skip break time altogether? 

There’s plenty of evidence showing that taking a proper lunch break in the middle of the day is vital for people’s well-being and maintaining a better work-life balance. Employees who take their lunch breaks have been found to have higher levels of job satisfaction and productivity and are less likely to suffer from burnout. 

Whitepaper: How to Reduce Burnout of Hourly Employees

Here are five statistics we’ve collected that should give you a clearer picture of the state of the American lunch hour. With these findings in mind, we have prepared some tips on how your human resources team can implement break policies and create a work environment that does lunchtime right.

1. Employees who take their lunch break are more engaged

In late 2017, Tork carried out a survey amongst 1,600 North American employees throughout the United States and Canada. The Take Back the Lunch Break survey findings show that North American workers who take their lunch break show higher levels of engagement than those who didn’t.

The respondents who took their lunch break scored higher with metrics that are normally linked to engagement: job satisfaction, the likelihood to stay with their current company, and the chances that they would recommend their company as a good place to work. Ninety-four percent said that they feel happier when they take their lunch break.

Another study found that 39% of employees who regularly took their lunch breaks reported having a better work-life balance. 

2. Taking lunch breaks boosts productivity

Research also shows that work performance and productivity increase when employees take their lunch breaks during work hours.

Tork’s Take Back the Lunch Break uncovered some interesting stats on this. They found that:

  • 94% of respondents said that stepping away from a task they’re working on helps them to get a fresh perspective on it.
  • 91% of employees and 93% of bosses surveyed agreed that taking a break helps them maintain mental focus.
  • 88% of employees and 91% of bosses said that they feel refreshed and reenergized after taking a break.

The World Health Organization (WHO) has found that work environments that increase employee anxiety and depression cost the global economy an astounding $1 trillion per year. ezCater’s The Lunch Report study uncovered links between lunch breaks and mental health:

  • 40% of employees said taking a lunch break reduces stress.
  • 39% felt more productive after a break.
  • 37% reported feeling less burnt out when they regularly took time to rest. 

3. Younger employees fear being judged for taking their breaks

Findings from The Lunch Report also show that a quarter of Gen Z workers hesitate to take their lunch break because they worry about what their bosses might think.

Another reason Gen Z and millennial workers cited for skipping their lunch break is that they feel they have too much work to do: 

  • 21% said they don’t have enough time for a proper break.
  • 1 in 5 don’t take breaks so that they can finish work ASAP.
  • 19% said that they have too many meetings or tend to have meetings during lunch hour.

4. Lunch breaks are getting shorter

A study from 2018 found that the average lunch break is getting shorter as we move further away from the concept of the “lunch hour.” The average break in 2018 was 39 minutes; this was down from 43 minutes in 2014. 

The study found differences in lunch break lengths across the country. Workers in Salt Lake City, De Moines, and Cincinnati take the shortest breaks, while those in San Francisco, Los Angeles, and Miami break the longest.

5. Some people don’t take their lunch breaks … and some do so at their desks

Tork’s 2022 study, as part of its continued Take Back The Lunch Break campaign, reveals how many employees are not taking any breaks multiple times a week — 39% of respondents said that they “occasionally, rarely or never take breaks.” The study found that 91% of people are working just as much or more than before the pandemic. Despite this, people are still not taking the breaks they need. 

The study also found that “women are over twice as likely (67%) not to take a break than men (33%).” Women who do remote work are more likely to spend the breaks they do take doing household chores than their male counterparts. 

The Lunch Report also found that 1 in 10 employees never break away from their desks, and 70% “eat while they work at least once a week.” They found that only 10% of Gen Z workers said that they never eat at their desks. In comparison, 26% of millennials and 48% of baby boomers said that they never dined at their desktops.

How employers can create a lunch break culture that fosters a happier workplace

As an employer or a People Ops professional, there are a number of ways you can ensure that your company culture is one that does lunch breaks in a way that is beneficial to your co-workers as well as your organization’s bottom line. 

Know the law

On a federal level, there are no laws that dictate whether or not you need to enforce lunch breaks in your workplace. When employers do offer breaks, federal law states that any breaks under 20 minutes need to be paid by the employer. Any breaks over the 30-minute mark are classified as off the clock.

Some states have implemented their own laws on lunch breaks in the workplace. In Kentucky, for example, companies need to offer their employees a meal break. This is a reasonable unpaid period (normally between 20 and 30 minutes) taken any time after the third and before the fifth hour of consecutive hours of work. Kentucky companies must also offer rest breaks of 10 minutes after every four hours of work. This time is paid. 

Management should set an example

Many workers still feel uncomfortable taking their breaks for fear of being judged by their superiors. This doesn’t help when many C-Suite executives and management personnel can often be seen skipping lunch breaks themselves or eating at their desks. 

A simple way to create a company culture of taking lunch breaks is for management to actually take their lunch breaks and do it visibility. In the case of remote teams, management can use things like “Out to lunch” statuses on Slack and by blocking parts of their daily calendars for lunch.

Actions like these give your employees “permission” to embrace their own lunch breaks and not feel like outliers when doing so. Tork’s study found that over 9 in 10 employees claim they are more likely to stay at a company where management actively encourages their teams to take their lunch breaks. 

Create or enhance your break room

Having a designated break room within your office is a great way to harness a healthy lunch break culture within your organization. If you do have a room you can utilize as a breakroom, or if you already have one, there are a number of things you can do to encourage your employees to actually make use of it:

  • Provide enough seating space for everyone.
  • Decorate the space to make it feel welcoming.
  • Make sure it is well-equipped with the appliances and storage space needed, e.g., fridge, microwave, and coffee-making facilities.
  • Encourage social interaction by leaving activity items such as cards and games.

Consider catered lunches

Some companies occasionally offer in-office catered lunch to their employees as an incentive. While this is an added expense, research shows that paying for your employees’ lunch from time to time can have a positive impact on morale and engagement. 

The Lunch Report found that 23% of respondents would return to the office full-time if catered lunches were made available for free, and 65% said that they would plan to work on-site more often if complimentary lunches were provided.

Manage your company’s lunch break culture more effectively with Workforce.com

Enhancing your lunch break culture is highly beneficial to your business, but it does add a layer of complexity to your scheduling. Workforce.com offers employee scheduling and time tracking solutions that help make your life easier and ensure you remain compliant with any state laws.

Workforce.com’s scheduling automatically populates shifts with compliant lunch and rest breaks according to local state law. Your employees can view all of this information right on their phones. The Time Clock App allows employees to easily clock out and back in for breaks, as breaks are tracked in real time.

With Workforce.com, your staff will take the breaks they need, and you will avoid unnecessary fines. To find out more about how Workforce.com can handle your scheduling needs, give us a call today. 

Or, for more information on how to improve your scheduling, check out our free webinar below:

Webinar: How to Optimize Your Staff Schedules

Posted on

Free overtime calculator

Summary:

  • Overtime refers to any and all hours worked beyond the standard 40-hour work week. According to the FLSA, it should be paid at a rate no less than 1.5x the regular hourly pay rate. – More

  • Only non-exempt employees are eligible for overtime pay – More

  • Miscalculating and underpaying overtime can result in DOL fines lawsuits. Avoid this by using time and attendance software and by running routine audits. – More

Ah, yes, overtime. You probably loved it back in high school working your summer lifeguarding job at the local pool. But flash forward to the present, and it has probably lost some of its luster, becoming more of a necessary evil in your day-to-day business operations.

While it is undoubtedly convenient to have employees stay late or work extra days while short-staffed, this convenience comes at the price of higher labor costs and sensitive calculations.

Luckily, we have a solution for you: the trusty overtime calculator. 

What is overtime?

But wait, let’s back up for a second and clearly define the concept of overtime. 

Overtime refers to any and all hours worked beyond the 40-hour standard work week. According to the DOL, employees “must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay.”

In other words, employees must receive 1.5x their regular hourly wage for working overtime, at minimum. Overtime pay rates vary, however – and herein lies the key difference between overtime and another common term: time and half. 

Overtime vs. time and a half

While overtime is a blanket term referring to the time worked beyond 40 hours in a week, “time and a half” is a specific rate at which overtime pay is calculated. Time and a half is the legal minimum for overtime. 

Overtime pay can also be calculated at higher rates, like double or triple time. Many businesses do this once overtime hours reach a certain threshold, or if the overtime shift occurs during a critical period of the day. 

Who is eligible for overtime? 

Typically, hourly workers who make less than $684 a week, or $35,568 a year, are entitled to minimum wage and overtime protections under the Fair Labor Standard Act. Specifically, they have the right to overtime pay at 1.5x their regular hourly rate. However, the FLSA also deems workers who have limited artistic, scientific, executive, or administrative responsibilities as eligible for overtime as well, regardless of their weekly earnings.

Examples of employees who receive overtime include: 

  • Construction workers
  • Plumbers
  • Mechanics
  • Firefighters
  • Police officers

People who primarily do non-manual work and earn more than $684 a week are generally deemed “exempt” from the FLSA right to overtime. While exempt employees typically hold salaried, white-collar jobs, this is not always the case. 

Read More: Exempt vs. Non-Exempt Employees

How to calculate overtime

In its most basic form, calculating overtime pay is really quite simple. Just take the employee’s regular hourly rate and multiply it by the overtime rate. Then, take the resulting number and multiply it by the number of overtime hours worked. 

For a more in-depth example of how this works, check out our detailed guide to how to calculate time and a half.

For many businesses, computing overtime isn’t always this simple. To get overtime pay right, you first need to determine the regular rate – this becomes much more difficult when dealing with variables like shift differentials, commissions, bonuses, and holidays. One miscalculated bonus or forgotten holiday could throw off an entire overtime computation, landing you in hot water with not only your employee but the U.S. Department of Labor. 

Penalties for getting overtime wrong

Whether intentional or not, miscalculating overtime pay can lead to underpaying your workers – which eventually leads to legal action. 

In 2022, a district court judge in Alabama upheld a $13.2 million lawsuit in favor of some steelworkers. Their employer had not been paying overtime correctly due to the use of a suspect rounding policy that rounded clock-ins and clock-outs down by 30 minutes. 

While the employer of course claimed to be unaware of the mistake, blaming it on their previous lawyer, ignorance is not a valid excuse here. You see, it was found that they had acted in bad faith by not keeping accurate and complete work time records. If they had been keeping complete records, it would have shown they had every intention of following FLSA standards. 

How to avoid overtime lawsuits

The last thing you want is a $13.2 million lawsuit on your hands for making simple computation mistakes. Routine timekeeping miscalculations can add up over the years and result in a significant amount of unpaid overtime that you don’t want on your hands. Here are a couple of the best ways to safeguard against this happening:

Keep accurate and complete wage and hour records

Act in good faith and you’ll have nothing to hide. Keep daily records of hours worked and wages owed so you’ll always have a paper trail to fall back on if the DOL ever comes knocking. 

Also, consider running routine overtime audits. If you catch a mistake, address it quickly before it snowballs into a larger issue. And of course, keep records of these audits to demonstrate a proper intention to abide by FLSA standards. 

For more on this, check out our Q&A with Annette Idalski, a Labor and Employment Trial Attorney and Partner at Seyfarth Shaw LLP.

Q&A: Employers sued for wage and hour violations

Use software to calculate overtime for you

Calculating overtime may be a breeze for one employee, but when you are dealing with hundreds, as well as things like bonuses, vacation hours, and shift differentials, things suddenly become much more tricky.

Overtime needs to be calculated accurately and on time, not just for the sake of your employees, but for the survival of your business. Sure, you can use spreadsheets and phone calculators to figure it all out. But the easier choice is to use dedicated time and attendance software to do the tedious admin work for you. Not only does it automatically track hours of work and compute overtime compensation for you, but it also accounts for any and all overtime laws unique to your region.

A time tracking platform like Workforce.com automatically recognizes when staff go into overtime, quickly flagging and recording these hours alongside regular hours on digital timecards. At the end of the pay period, all you have to do is quickly approve and export these timesheets with a few clicks. Yes, it’s true, paying your employees accurately is that easy. 

If you are ready to get started calculating overtime pay, sign up for a free trial today, or, get in touch with our team.

Or, if you’d like to find out more about how to avoid overtime in the first place, check out our free webinar below:

Webinar: How to lower your overtime hours

Posted on

Clawback provisions: A safety net against employee fraud losses

Close up painting of a dog's claw

Summary

  • Clawback provisions are usually included as clauses in employee contracts and are used to recoup funds and incentive-based benefits in predetermined situations. 

  • Clawback clauses can be used in various situations and across different industries, from clawing back bonuses unrightfully awarded to company executives to funds given on unprofitable home loans.

  • Setting up a clawback policy for your company ensures that, should you ever need to recoup funds from your employees, the procedures to do so are in place and transparent.

Imagine you’re a restaurant owner with a team of people you pay by the hour. You find out that one or more of your employees have been falsifying their time cards and that you have lost a significant amount of money to time theft.

Or maybe you run a retail store and offer your sales team a commission over and above their monthly salary. You then find out that one of your employees has been over-reporting on their performance and has received bonuses that they weren’t rightfully entitled to. 

In either of these situations, you could be legally entitled to a refund of the money you’ve spent through clawback provisions. 

Clawback provisions are clauses that are sometimes found in employment contracts that allow a business to reclaim money that has already been paid out to the employees in the case of misconduct, unethical behavior, or poor performance. 

Clawback provisions can be used in a number of scenarios to help employers recoup losses — from senior executives breaching contracts to government contractors delivering substandard work. As an employer, setting up a clawback policy will standardize the process while ensuring that you stay compliant with local, state, or federal law. 

Situations in which clawback provisions can apply  

From high-level executive compensation to clawback policies used in retail stores, there are a number of different situations where companies may utilize such clauses. 

  • Time theft — when employees who are paid by the hour falsify the number of hours they have worked. This also includes buddy punching, where colleagues clock in on each other’s behalf. 
  • False performance report — some employees receive commissions and bonuses based on performance. Clawbacks can be used if it transpires that an employee has over-reported their performance to receive these benefits. 
  • Government contracts — in situations where contractors do not carry out the work as outlined in their contracts or if the work isn’t done to a specified quality. The funds received for this contract can be clawed back.  
  • Executive compensation — used when company executives breach a contractual agreement. One such agreement could be that they are not allowed to work for a competitor until a certain period of time elapses. 
  • Life insurance — insurance companies can claw back any payments the customer has received if they cancel their policy.  
  • Pensions — if there is any evidence of fraud or misuse of information by the pensioner, companies can claw back amounts given for pensions. 
  • Mortgage lending — banks and mortgage companies can recoup money given out for home loans if they turn out to be unprofitable. 
  • Medicaid reimbursement — if a Medicaid recipient dies, states grant Medicaid offices the possibility to recoup money paid toward healthcare. For example, if the Medicaid office has preemptively spent funds on nursing home costs, and this is no longer needed since the patient has passed away. 

Setting up a clawback policy

Setting up a clawback provisions policy and writing it into employee contracts usually falls to a company’s HR team. There are seven steps to keep in mind when introducing clawback clauses into your organization’s policies.

  1. Identify the types of funds or compensation that are applicable to your company’s clawback clause. Will your clauses cover things like bonuses, stock options, carried interest, and overtime?
  2. What penalties will you add on over and above the reinstatement of funds? This includes further fees and/or disciplinary action.
  3. To which employees does your policy apply? It might not be relevant for employees who do not receive incentive-based compensation. You may also decide that such measures are only applicable to senior executives.
  4. In what situations will you utilize a clawback? What are the events that will trigger it? These could be based on things like underperformance, overreporting, time theft, or even through actions that could have reputational and financial consequences on the company. 
  5. What is the period of time in which a clawback is applicable? What is the cut-off point from when a bonus is received that allows a company to claw it back?
  6. Who is in charge of enforcing, and what type of discretion do they have? If executives are subject to clawbacks, you will need to go as high up as your board of directors.
  7. What are the laws or regulations in your state that regulate clawback provisions? You need to ensure that your policy does not contradict any applicable laws. 

How federal law regulates clawback provisions

Over the past couple of decades, situations have arisen that led to clawbacks forming parts of federal statutes. 

The Sarbanes-Oxley Act of 2002 (a.k.a. SOX Act of 2002) was passed as a result of a number of scandals involving the misuse of funds in some high-profile public companies such as Enron and Worldcom. The US congress passed the law, which created stronger guidelines for the recordkeeping and reporting of accounting information. It allowed for clawbacks of bonuses and incentive-based compensation from executive officers in the case of abuse. 

The Emergency Economic Stabilization Act of 2008 (EESA) was passed in response to the financial crisis of that same year that came about primarily from the prevalence of subprime mortgages. The EESA allows for clawbacks in cases where there is inaccurate financial reporting and also requires more accountability amongst executives. 

The Securities and Exchange Commission (SEC) rule in 2015, associated with the Dodd-Frank Act of 2010, allows for clawbacks of funds paid to executives in the case of an accounting restatement.

Airtight time and attendance can reduce clawbacks four hourly businesses

Clawback provisions are a great way to ensure that your company is protected from misconduct and abuse. However, it is never ideal to be in a situation where clawbacks are necessary in the first place. Luckily, there are several things hourly businesses can do to prevent time theft and avoid clawbacks. 

An automated time and attendance solution makes it much more difficult for employees to carry out time theft. Paper timesheets are easily manipulated, and legacy time clocks allow for excuses surrounding lost or misplaced time cards. A cloud-based time-keeping solution like Workforce.com records employee hours in real-time, calculating pay instantly and compiling digital timesheets on a daily basis. You can then edit and export these timesheets directly to your payroll system come pay run.

Unlike outdated time clock hardware, Workforce.com lets employees clock-in via mobile device or tablet. All time punches are geo-located, meaning you’ll instantly know if an employee clocks-in early or late while not on-site. Managers can set up geofences as well to ensure staff can only clock in once they arrive at work. 

Alongside accurate data, you’ll need to create an extensive time and attendance policy. You should consider local, state, and federal time-theft regulations and build your policy from there. It should include information about clocking-in and clocking-out procedures, break time, and the use of phones and social media while on the job. You must communicate your policy well to your employees and ensure they take it on board. 

Finally, your policy must outline any disciplinary actions that will be taken in the case that it is broken. These preventative measures can start with a verbal warning and escalate higher if needed. This way, you can avoid having to claw back funds you’ve given to your employees unless absolutely necessary. 

Interested in perfecting your time and attendance management with mobile time clocks and digital timesheets? Contact us today to learn more.

Posted on

Work-life balance statistics you need to know to build a happier workforce

Husky Astronaut balancing on a narrow beam

Summary

  • US workers are working longer hours and spending less time on themselves than their OECD counterparts. – More

  • Health and well-being have become more of a priority for workers since the COVID-19 pandemic. – More

  • Employee burnout has increased since the pandemic and is wreaking havoc on work-life balance. – More

  • Low engagement and work-life imbalance mean that over 50% of US workers are quiet quitting. – More

  • Workers in labor-intensive industries (particularly restaurants) are unhappy at work. – More

  • Trials across the world have shown that a four-day workweek might work wonders in improving work-life balance. – More

Having a better work-life balance is about much more than just having more time away from the office. A good work-life balance means satisfaction and fulfillment during the workday as well as in other areas of your life. It includes engagement at work and enough time and energy for personal and family life. 

The World Health Organization argues that work can either be protective or disruptive to a person’s mental health. A healthy and well-compensated work environment makes people feel accomplished and confident and is a great way for people with psychosocial disabilities to integrate into society. An environment that creates a poor work-life balance can negatively affect someone’s mental health and well-being. 

Since the COVID-19 pandemic, people’s attitudes and approaches to work have been shifting. Employees are demanding more flexibility, prioritizing their well-being and personal time while also wanting more from their professional lives. Human resources executives must create the conditions to help their colleagues achieve the best work-life balance possible if they want a happier, more engaged workforce.      

American workers work more and play less than their OECD counterparts

According to work-life balance statistics presented by the Organisation for Economic Co-operation and Development (OECD), the United States ranks 29th for work-life balance out of the 41 member countries. Italy, Denmark, and Norway top the list.

Ten percent of American employees are working long hours compared to the OECD average. The Netherlands is the country with the lowest number of employees taking on long working hours at just 0.3%. 

US workers typically dedicate 61% of their day to personal care and leisure activities, which amounts to 14.6 hours per day. This is lower than the OECD average of 15 hours per day. Italy is the OECD member country with the most time devoted to personal care and leisure, with 69% of their day or 16.5 hours. 

For the United States to increase its work-life balance ranking, the OECD suggests improving the lives of working families through policy. The US is the only OECD country that does not have a national paid parental leave program. They suggest that paid leave programs will result in a number of benefits, including better child well-being and more new mothers returning to work. 

More employees are prioritizing their health and well-being 

According to Microsoft, the COVID-19 pandemic caused people to re-prioritize how they approach work. More workers now consider how their jobs affect their health and well-being as a major part of the “worth it equation” — in other words, what people want from work and what they’re willing to give in return.

The research shows that 53% of respondents are more likely to prioritize health and well-being – especially parents (55%) and women (56%). Forty-seven percent of workers are now more likely to prioritize their family and personal life ahead of work.

Employees are now valuing the importance of work-life balance, and their employers need to understand and embrace this shift. This could include extending healthcare benefits to include family members as well as making work schedules and time off more flexible. 

Workforce.com offers a flexible scheduling solution that makes it easier for employees to take time off and swap shifts. Flexible scheduling is particularly useful for caregivers or those with chronic health conditions who might need to take unexpected personal days or want to utilize vacation time to spend time with loved ones. 

Increased burnout is a “career killer”

The level of burnout experienced amongst US workers has increased since the COVID-19 pandemic. In a nationwide survey by Indeed, 67% of US workers claimed that burnout worsened during the pandemic.  

In a pre-COVID survey, 43% of respondents were experiencing burnout. In 2021, that percentage increased to 52%. Millennials continue to experience the most burnout, with 59% of respondents feeling burnt out – a 6% increase since COVID. More baby boomers are experiencing burnout — a 7% increase from 24% to 31%. Gen Z and Gen X respondents showed the highest increase in burnout, with 11% and 14%, respectively.  

Gallup has conducted extensive research on employee burnout and the effect it has on employees as well as their companies. Burnt-out employees are significantly more likely to take sick days, require medical care, and search for new jobs. 

Employers can help their teams reduce stress levels and burnout by:

  • Collecting regular feedback about concerns and addressing them through feedback tools and communication apps.
  • Actively caring for employee well-being by organizing health and wellness activities or providing employees with stipends to cover expenses like therapy, health, wellness, and sports activities.
  • Encouraging employees to take regular breaks by incorporating break time into scheduling.
  • Offering hybrid and remote work when possible to employees who want it. 
  • Avoiding stressful understaffing situations by using labor forecasting. 

 

Webinar: How to Forecast Based on Demand

Many unhappy employees are “quiet quitting”

Your employees who are experiencing a work-life imbalance might be quiet quitting. Quiet quitting refers to how people are doing just enough to meet their job responsibilities and not get fired. This is not just bad for employee well-being but also for your organization’s productivity. 

In one study, Gallup estimates that over half of US workers are quiet quitters. By the beginning of the summer of 2022, “the ratio of engaged to actively disengaged employees was 1.8 to 1”. This is the lowest engagement reported in nearly a decade.  

Companies looking to increase employee engagement to eliminate quiet quitting need to tackle poor management practices. 

Focus on training your managers and helping them adapt to new, hybrid ways of working. If their work-life balance is off, the rest of the team will feel the impact. But if they can model what engagement and satisfaction at both home and work look like in this new work format, employees will likely follow. 

Together, managers and employees should find ways to minimize burnout and prioritize mental health. They should have at least one meaningful one-to-one conversation per week. These conversations could uncover the initiatives and changes management needs to make to create more satisfying work environments. It is also an opportunity for employees to talk about any struggles they may be experiencing outside of work that can be impacting performance. 

 

Webinar: How to Identify Employee Flight Risk

 

Workers in labor-intensive industries are less satisfied at work

Employees in some industries are more prone to worse work-life balance than others, particularly labor-intensive industries with low Net Promoter Scores and high turnover rates.

Statista found that restaurants have the lowest Net Promoter Score among employees, at 14%. The commerce industry (20%) and the public service sector (22%) followed the service industry at the bottom of the table. In August 2021, 971,000 employees quit their jobs in leisure and hospitality – the highest number of resignations recorded.

A report by One Fair Wage shed some light on why restaurant work, in particular, exhibited low job satisfaction statistics and high employee turnover rates. Low wages and tips cause 76% of restaurant workers to quit their jobs.

Many others were leaving due to hostility and harassment at work. Thirty-nine percent of restaurant workers had concerns about hostility and harassment from customers and 26% from their co-workers and/or management.

Restaurant owners and HR staff need to have frequent conversations with employees about working conditions and employee well-being in order to harness better conditions for work-life balance. Regular team and one-to-one meetings need to be scheduled. Anonymous feedback forms should also be available in order to find out more about employees’ concerns.

The four-day workweek could be key to addressing employee work-life imbalance

Many companies around the world have been experimenting with four-day workweeks to address work-life balance issues and to increase employee engagement and retention. 

Between 2015 and 2017, the Reykjavík City Council and the Icelandic National Government carried out two trials of four-day workweeks. The experiment, which involved over 1% of Iceland’s working population, increased employee work-life balance as well as productivity. Microsoft Japan also trialed a four-day workweek and enjoyed a 40% increase in productivity. 

US companies looking to introduce a four-day workweek should start by enhancing their workforce management processes. To do this, they should:

  1. Keep labor costs under control. Scheduling and time-tracking processes need to be fine-tuned to keep overtime under control and mitigate time theft.
  2. Reduce administrative work through automation. Workforce management solutions can automate tedious, time-consuming administrative tasks and save employee time and labor costs. Such solutions include automatic scheduling and payroll integrations. 
  3. Use labor forecasting to schedule shifts in a way that avoids under or overstaffing and increases productivity. 

 

Webinar: How to Rollout a 4-Day Workweek

A well-managed workforce is a happy workforce

There are a number of ways you can help your employees achieve a more harmonious work-life balance, from ensuring they have enough time and energy outside of work to enjoy their personal lives to investing in their physical and mental health. 

An important element of a healthy work-life balance is an environment that reduces workplace stress and brings out the best in people. With Workforce.com, you can create better scheduling and communication processes that foster such an environment. 

Get in touch with us and see how Workforce.com can help you build a happier workforce.

Posted on

What is Earned Wage Access (EWA)? A Few Considerations

An astronaut husky holding an iiphone with money raining down

Summary

  • Earned wage access (EWA) programs are an increasingly popular way for employees to access their earned wages before their next scheduled payday.
  • Implementing an EWA program helps employers attract and retain top talent and reduces employee absenteeism. 
  • Before implementing an EWA program, ensure that any direct deposit arrangements are compliant with your state laws and consider the associated charges for using an EWA service.

In a bid to improve employee retention in the current landscape, employers are turning to advancements in payment technology and alternative payroll processes. One solution that is gaining momentum is earned wage access (EWA), also known as on-demand pay. 

Earned wage access programs allow employees early access to parts of their salaries before their scheduled pay period. Unlike payday loans and advances, EWA solutions only grant employees access to money that they have already earned.  

Initially a concept that gained popularity in the gig economy, EWA programs have now drawn the attention of employers and employees across all industries. Research shows that access to EWA has become a priority for job seekers around the country. 

From small businesses to large corporations, there are a number of things to consider before adding EWA as an employee benefit to your retention strategy. Employers must understand the different EWA models out there as well as the common features across EWA providers, integrating it into their payroll system and remaining in line with any regulatory requirements. 

The two types of EWA models

Earned wage access products generally require employees to download a mobile app that they will later use to gain on-demand access to their salaries. These advances are paid directly into the employees’ account or to a dedicated pay card. EWA products function in one of two ways.

  • Employer-sponsored – In these cases, the employer contracts an EWA service provider and integrates it directly into their own payroll system using an API. In these models, the employer pays a flat rate for the use of the service.
  • Direct-to-consumer – Here, an agreement is set up directly between the employee and the EWA provider. The employee receives funds directly into their account and is charged a transaction fee each time a withdrawal is made. 

The 4 main features of an EWA service 

Although there are differences between earned wage access services, there are four core features that are common in any solution out there.

  1. The funding of EWA – The capital for granting employees access to their funds usually comes directly from the EWA provider. The service provider pays through their own available funds or through a debt facility. The service provider verifies that the funds are, in fact, available through an integration with the employer’s payroll provider.
  2. Disbursement methods – There are various ways that funds are distributed to employees: Direct deposit, a pre-allocated bank account that the employee sets up through the EWA provider, or a prepaid card.
  3. Method of payment collection by EWA provider – The vendor is usually repaid directly from the upcoming pay cycle.
  4. The time it takes a payment to reach the employee – This varies depending on the method used:
    • Direct deposit – the next business day
    • Prepaid or debit cards – takes up to 48 hours
    • Bank transfers – instant but can carry a fee
    • EWA vendor-provided bank accounts – free and instant  

Benefits of earned wage access for employees

Earned wage access has gained popularity with employees over the last few years as a great way to ease the financial stress of trying to survive between paychecks. Rising inflation over the past few years continues to worsen as experts believe that we are hurtling toward a cost of living crisis. Forty-one percent of employees have received pay raises this year. Of these, only 28% claim to have received a raise higher than the current inflation rate. 

 

Webinar: How to Navigate the Inflation Crisis

 

One study found that the reasons for utilizing EWA varied between employees from different age groups. Gen Z workers tend to use it to pay for everyday expenses like groceries or make loan or rent payments. It reduces the stress of not having the cash flow available until the next payday. 

Millennials also used EWA to cover family-related expenses, bills, and unexpected expenses related to vehicle maintenance. Gen X and boomers rely on EWA for family expenses, bills, and groceries but also use it to cover any emergency medical expenses. Either way, EWA has broad appeal across all age groups. 

The COVID-19 pandemic and the uncertainty that followed meant that more people started to prioritize building up a financial safety net. Earned wage access makes this easier to do. Unlike payday loans and advances, employees are less likely to accumulate debt from high-interest rates and overdraft fees. 

Benefits of earned wage access for employers

Signing up for an EWA program means more work for your human resources team, but the benefits of offering your employees more flexible access to their paychecks could outweigh the effort required.

Employees continue to struggle with inflation and trying to keep up with the high costs of living. Research shows that 78% of employees are seeking alternative employment in hopes of achieving better financial well-being.

 

Webinar: How to Stop Employee Turnover

 

By offering your staff the option of EWA and contributing to their financial wellness, you are more likely to attract top talent. In fact, 76% of employees agree that it is important for employers to offer EWA. Besides attracting talent, looking out for your staff’s financial health through EWA helps you improve your employee retention. 

A lack of financial well-being is a major cause of stress for many employees. Furthermore, stress is the third-leading cause of long-term workplace absence and the fourth cause of short-term absence. Improving this situation means your employees will also be more present at work. 

What to consider before implementing an EWA program

When looking at integrating an EWA program into your company, there are two things to consider: the associated fees for you or your employees and the legal implications of doing so based on where you are based. 

It is important to understand your state’s direct deposit laws. Some states only allow employers to pay via direct deposit when the employee gives their consent through a written agreement. If the EWA program you have signed up for requires a separate bank account to be set up, this might not be applicable within that agreement. You may need to obtain additional written authorization to ensure compliance with laws and regulations.

The charges associated with EWA programs vary from one provider to another. Some involve charging employers a flat fee, while others charge employees per transaction. Before contracting an EWA service provider, you need to budget for any charges you will absorb or analyze whether or not your staff are willing to pay transaction fees themselves. 

A successful EWA program begins with accurate timekeeping 

If you are going to offer EWA, you need to ensure that the wages employees have access to are accurate as soon as they are recorded. After all, fixing pay errors is much harder when employees have already spent their money. With automated time and attendance software, you can record accurate timesheets in real-time before they even reach your payroll or EWA system. This way, you can give your employees immediate access to their funds with peace of mind.

Workforce.com’s time and attendance is also synced with an employee scheduling system, meaning you can see wage and hour variances in real-time and on timesheets. With this visibility, you’ll be able to immediately catch where and when an employee’s pay doesn’t match up to their scheduled hours.

To find out more about how to lock in accurate wages BEFORE employees get access to them, check out our whitepaper on timekeeping below, or get in touch with us today.

The Practical Guide to Time and Attendance

Posted on

New Labor Laws Taking Effect in 2023

US court house

The new year is fast approaching, and with its arrival comes a host of new labor laws that will impact millions of workers and their employers across the nation. Being aware of these changes prior to their implementation will allow for all parties affected to make a smoother transition heading into 2023.

New Year, New Minimum Wage

One such change to be on the lookout for this January is an increase to the minimum wage across various states. While the federal rate will continue to hold steady at $7.25 per hour, numerous states have established their own rates, which in some cases far exceed the federal amount that has gone unchanged for the past 13 years.

Whether due to inflationary pressures or phasing in statutory increases, minimum wages will be going up across the nation. From Maine’s bump to $13.80/hour to Washington’s boost to a nationwide high of $15.74/hour, these increases will all go into effect in 2023. 

In some states, however, it’s not so cut and dry. New York, for instance, incorporates different minimum wages for different parts of the state and different industries. So, while a New York City construction worker earning minimum wage can expect to make $15 per hour at the start of the new year, a construction worker doing similar work in upstate New York will command just $14.20 per hour. 

Another important consideration for employers to keep in mind for minimum wage changes next year is that they won’t all necessarily kick in on January 1. Several states will be enacting their wage changes at some point later in the year, including Connecticut (June 1), Oregon (July 1), Florida (Sept. 30), and Hawaii (Oct. 1). 

Finally, when it comes to the federal minimum wage, some exceptions apply under specific circumstances to workers with disabilities, tipped employees, full-time students, and workers under 20 years of age in their first 90 consecutive calendar days of employment. 

Whatever rates are finalized in each state for 2023, employers must be ready before the end of the year to meet the new minimum wage requirements and understand the rules and regulations unique to their state. Failure to observe newly implemented wage laws can result in a multitude of fines and penalties.

New Labor Laws Across the Nation

It’s not just minimum wage laws that will see changes in the year ahead. A host of new labor laws and amendments will also be initiated throughout the United States in 2023, and depending on what state you’re in, the changes can be substantial. Below are just a select few that can have a significant impact on those involved.

California

California has some of the strictest labor laws in the country, and that continues to be the case heading into 2023. An amendment to the Pay Transparency Law will now require employers to provide the pay scale for any job applicant or current employee upon request. And, employers with more than 14 employees must include the pay scale for a position in any job posting, including those positions listed on third-party sites. Employers will also need to maintain records identifying the job title and wage rate history for each employee throughout their time at the company.

Lastly, fast-food chains in the Golden State will need to read up on how to comply with the upcoming establishment of a fast-food council, depending on whether or not the referendum seeking to delay the bill is successful come December 4th. 

Colorado

Doing business in Colorado? Get ready for the Paid Medical and Family Leave (PFML) to begin next year. Employees who meet the eligibility requirements will now be able to receive 12 weeks of paid family and medical leave funded through a payroll tax paid by both employers and employees in a 50/50 split. The paid leave needs to be funded before any employee is able to take the leave. Employers and employees will start paying into PFML in 2023, and the earliest workers will be able to take this paid leave is January 1, 2024.

New York

While New York already has an established Paid Family Leave, a noteworthy change has been made to it beginning in 2023. As of the new year, the list of family members for whom eligible workers can take Paid Family Leave to care for will include siblings with serious health conditions. This includes biological siblings, adopted siblings, step-siblings, and half-siblings. The family members requiring care won’t even have to live in the state of New York.

Final Thoughts

There are myriad new and amended labor laws that will be going into effect throughout the U.S. in the coming year. Being aware of the ones your business may be subject to can help minimize the likelihood of costly fines and potential labor lawsuits down the road. Every effort should be made to stay on top of labor legislation that must be followed. 

No doubt, workers across the country will be rejoicing in the new labor laws set for 2023 that benefit them in a variety of ways. Employers may not be quite as jubilant with these changes, but must nevertheless find ways to accommodate these newly imposed laws while continuing to grow their business.

Posted on

How to develop a call-out policy that reduces business impact

Abstract art of man in apron on cellphone

Summary

  • Practice compassion and consistency when handling call-outs and disciplinary action

  • Clearly communicate call-out policy across your workforce so staff and managers are on the same page

  • Streamline the call-out process with mobile-first scheduling 

Picture this: You’re looking at the clock. It’s 10 minutes before your employee is scheduled to come in for their shift — and, suddenly, your phone rings. It’s your employee calling to say something urgent came up, and they won’t be able to work. All your other team members have already requested the night off.

These kinds of scenarios put managers and supervisors in a dilemma. No business wants to operate understaffed, especially with a last-minute notice, but emergencies do sometimes happen.

Striking a balance between keeping your business running smoothly and letting employees call out when they really need to can be difficult. It’s important to have a call-out policy in place, so your entire team understands when it’s appropriate to call out and how to do so in a way that helps the business work around their absences.

Create a clear and comprehensive call-out policy

Your call-out policy should clarify everything that your team needs to know about calling out so that there’s no room for misunderstanding what’s allowed and what’s not. Putting your policies and procedures into words builds accountability and sets clear expectations on what employees need to do in order to call out. Including these five elements ensures that your call-out policy covers everything your employees need to know:

  1. Definitions: Define “call out” – specifically, an employee informing you that they’re unable to work their scheduled shift as planned. Define tardiness vs. absence — someone calling to say they’ll be late versus not working at all. You should also clarify the difference between excused and unexcused absences and what criteria you use to excuse absences. For example, absences due to medical or family emergencies should be excused, but call-outs without notice and a legitimate reason should not. 
  2. Deadlines: What is the latest time before their shift that an employee can call out in order to be excused from work? You might ask employees to call out at least eight hours before their shift starts to receive an excused absence without reason, or they can call out at any time if it’s a valid emergency.
  3. Procedure: Explain how employees should submit a formal call-out request – via phone call, email, text message, or app. Who is responsible for getting their shift covered – the employee or management? Does an employee who calls out need to follow up and provide documentation or proof, like a signed doctor’s note?
  4. Records: Explain how you track attendance and shift changes across your team for visibility – for example, timekeeping and scheduling software, paper timecards, or a retail point-of-sale system.
  5. Consequences: Describe what circumstances require disciplinary action, like reaching a certain number of absences, and what penalties employees may receive. Set a limit on unexcused absences and how many will be considered job abandonment.

Keep your call-out policy simple and easy to comprehend using simple language instead of legal jargon. Walk through all of your procedures clearly, including visual how-to guides if necessary, so that employees know exactly how to call out of work while following company policy.

Treat your employees with compassion

Nobody wants to call out if it means they’ll lose their job, even if they need to call out. But you also don’t want employees fighting through hazardous weather to come to work or struggling with a personal health matter while trying to be productive. Exercising compassion and empathy puts support structures in place so that your employees can call out of work when they need to while still following the policy. 

The key to a compassionate call-out procedure is to offer flexibility as long as employees give notice as soon as possible and can provide a good reason for their absence. Include specific wording in your documentation that allows you to excuse absences for additional reasons outside of those explicitly given in your policy.

An employee experiencing a medical emergency or car trouble right before their shift might choose a “no call, no show” if they know that they won’t be excused from work for calling out too late. But if you’re willing to excuse call-outs in these extenuating circumstances, that employee would make sure you knew why they weren’t able to show up. This lets you plan around their absence more effectively because you know about it before the fact instead of after it has already happened.

Your call-out policy should prioritize your employees’ well-being and build mutual respect for both company and employee time. Give employees a certain number of sick days or personal days that they can use to call out of work at their discretion. Tell employees that you’d prefer them to be safe and call out of work than to come in under less-than-ideal circumstances. 

Create a company culture that encourages employees to communicate their needs and put themselves first. In turn, you’ll have a workforce that has more trust in their management and communicates in a timely, transparent manner when they need to take a day off.

Apply disciplinary action fairly and consistently

There’s a fine line between using disciplinary action to assign accountability and using it to punish your employees. The difference comes down to how fair the consequences are and how consistently the rules are applied.

Whatever consequences employees receive should be proportionate to how disruptive their absences are to the business. Employees who frequently call out at the last minute without a justified reason should receive more scrutiny than those who only call out once every few months. Similarly, an unexcused, no-call, no-show absence is more serious than an employee who calls out and gets their shift covered by a co-worker.

Every employee’s situation is unique, so it can be difficult to apply the rules fairly across all circumstances. An attendance point system can remove bias from attendance tracking. With a point system, employees might accrue a certain number of points for excused absences and more for unexcused absences. These points can expire or be removed from employee records over time, ensuring that only employees who excessively miss work or call out late are flagged for disciplinary action. 

Whenever you discipline employees, make sure that those consequences are justified, backed up with evidence of unexcused absences and call-outs. Don’t display favoritism toward employees with higher seniority or longer tenure; all employees should respect the company’s call-out policy equally.

Educate employees on your call-out policy

You can’t expect employees to comply with rules if they don’t even know what those rules are. That’s why it’s important to make sure your workers understand your call-out policy well before you expect them to follow it.

Make sure that all company policies are available and readily accessible to employees. Post your call-out policy on a staff bulletin board and send it to all employees via email. Add it to your employee handbook, and then ensure that all workers have a copy. Remind employees frequently about your call-out policy, especially during time periods when they’re more likely to take time off, like a holiday, spring break, or flu season.

Ensure that all managers understand the call-out policy thoroughly so that they can accurately answer any questions from their team members. Hold training sessions as necessary for managers on your call-out policy. Go over the difference between excused and unexcused absences, what kind of disciplinary actions are appropriate, and how to document call-outs. Educating both your managers and employees so that everyone knows what’s expected of them makes your call-out policy more likely to succeed. 

Fill call-outs faster with the right tools

In an ideal world, employees would never need to call out, but in reality, things happen. Put tools and policies in place to help you expect the unexpected and navigate unforeseen circumstances with ease. The right scheduling solutions can help automate the process of backfilling call-outs, proactively reducing the impact absenteeism has on your bottom line.

Workforce.com empowers both managers and workers to deal with call-outs efficiently while staying in close communication throughout the process. Shift swaps enable employees to take ownership of calling out. Meanwhile, managers have the option to reassign shifts, offer shift bids, or even remove them if no coverage is available.

If you’re in HR and having a hard time enforcing an efficient call-out policy, here’s what you can do to back control.

For more info, go ahead and contact one of our workforce management pros today.

Posted on

PBJ Reports: What you need to know

Nurse looking at a pb&j sandwich on her screen

Summary

  • The CMS requires long-term care facilities to submit quarterly Payroll-Based Journal Reports detailing direct care labor hours and payroll information.

  • PBJ reports include information such as work hours, work dates, job titles, and more.

  • PBJ information can be compiled and submitted to the CMS manually, or, time and attendance software can automatically build PBJ reports for you.

Nearly everybody loves PB&J sandwiches, save for people with severe peanut allergies of course. These deliciously gooey creations are packed with not only taste but nostalgia for the blissful freedom of childhood.

But I am not here to sing praises to the whimsical marriage of peanut and fruit. No, instead a more important topic must be discussed concerning an extremely close relative to the PB&J sandwich: the infamous PBJ Report.

 

What is a PBJ Report?

Payroll-Based Journal (PBJ) Reports are not scrumptious lunchtime meals, unfortunately. They are quarterly reports from long-term care facilities to the Centers for Medicare and Medicaid Services (CMS) detailing direct care payroll and staffing data.

This reporting began in 2010 with Section 6106 of the Affordable Care Act. In 2018, the CMS introduced the PBJ system to facilitate the process of collecting and gaining insight into direct care staffing.

Payroll-Based Journal Reports typically include the following information:

  • Employee ID
  • Labor classification/job title
  • Job title code
  • Pay type code (exempt, non-exempt, contract staff)
  • Hire date (optional)
  • Termination date (optional)
  • Work days and dates
  • Hours worked per day
  • Job/labor descriptions
  • Census data (optional)

Review the CMS’ PBJ Policy Manual for more details.

 

Why are PBJ Reports Necessary?

The broader answer to this question is that they help the CMS monitor staffing level issues within the long-term care industry. They also help increase the amount of freely accessible data available to the public for analysis. Lack of adequate staff in healthcare can have serious repercussions, and it is more commonplace than one would think with labor shortages persisting across the country.

More specifically, Payroll-Based Journal Reporting is necessary for nursing homes to maintain their Five-Star Quality Rating on the CMS’ nursing home compare website. A good rating is crucial for attracting patients and gaining referrals – something that can’t happen if a facility reports a lack of staff, or worse still, reports inaccurate staff hours.

The impact of accurate PBJ reporting cannot be overstated. In 2018, the CMS handed out 1,400 one-star reviews to nursing homes across the country for being insufficiently staffed. This came on the back of new regulation from the CMS stating that all long-term care facilities reporting four days or longer in a quarter with zero registered nurse hours on their PBJ report would receive a one-star rating. The previous cut-off was seven days.

Non-compliant PBJ reports may happen for a variety of reasons. For one, they could be due to healthcare facilities simply being understaffed. They could also occur due to manual calculation errors. Regardless, it’s essential that facilities figure out a streamlined way to record and report direct care worker hours accurately and honestly.

 

PBJ Submission

There are two methods for submitting a PBJ report to the CMS.

The first way is to manually enter all information into the CMS’ system via their website. This data would include info about employees, their hours paid to work, dates worked, and census information (optional).

Alternatively, you can skip all the manual work by using an automated time and attendance system for nursing homes or payroll system to create a report which you can then upload to the CMS website in XML file format. Seeing as the CMS’ reporting requirements are quite strict, you’ll need to ensure your report includes all the necessary data and is properly formatted according to CMS guidelines.

Registering to submit PBJ data requires several steps:

Review the CMS’ PBJ FAQ document for more information.

 

PBJ Report Deadlines

Below you can find the quarterly deadlines for PBJ submission to the CMS:

FISCAL QUARTER REPORTING PERIOD DUE DATE

1

 October 1 – December 31 February 14
2 January 1 – March 31 May 15
3 April 1 – June 30 August 14
4 July 1 – September 30 November 14

 

Automate PBJ Reporting to the CMS

Creating and submitting PBJ reports does not need to be difficult or time-consuming. With the right systems in place, maintaining staff records and generating reports is actually quite simple. What’s difficult is finding and retaining the staff you need to maintain a five-star rating.

Webinar: How to Retain Hourly Employees

With Workforce.com, long-term care facilities can automate PBJ reporting to the CMS, freeing up hours of admin time to work on more pressing issues like employee turnover and short-staffing. The cloud-based timekeeping system maintains employee info like job codes, titles, and pay rates, while recording hours worked, breaks, and pay on a daily basis. And with a click of a button, you can create an accurate PBJ report and export it as an XML file.

For more information on PBJ Reporting visit the CMS website or review their PBJ policy manual. If you want to learn more about how to automate PBJ reports, contact us today, or, visit our long-term care page to find out how to comply with the CMS’ five-star quality rating system.

Posted on

Wage and Hour Laws in 2022: What Employers Need to Know

Whether a mom-and-pop shop with a handful of employees or a large corporation staffing thousands, complying with certain state and federal labor laws is required of every business. Failure to adhere to these rules and regulations set forth by the government can lead to significant penalties and fines, not to mention plenty of bad publicity. It’s also possible for workers to file a complaint against their employers, which could result in a costly lawsuit. 

For these reasons, it’s critical for employers to familiarize themselves with the Fair Labor Standard Act (FLSA) – the labor law established to ensure employees are compensated fairly for the work they perform. This law governs such workforce practices as minimum wage, overtime pay, meal breaks, rest periods and sick leave.

While wage and hour laws are nationally enforced, they do vary from state to state, and can often change. Staying current with the latest changes in the laws that apply to your business will not only help you avoid hefty fines, but also help maintain a harmonious work relationship with employees. So, what exactly is the federal wage and hour law?

Minimum Wage

Simply put, all employees covered by the Fair Labor Standard Act must be paid at least the minimum wage. At the time of this writing, federal minimum wage laws set the minimum wage at $7.25/hour. Many states, however, have their own minimum wage requirements that call for more than the federal amount, and these amounts can vary significantly. For instance, the state minimum wage in Nebraska is $9/hour, while in New York it is now $14.20/hour.

Presently, 30 states and Washington D.C. have minimum wages above the $7.25 federal minimum wage. Only five states have not adopted a state minimum wage: Alabama, Louisiana, Mississippi, South Carolina and Tennessee. Two states, Georgia and Wyoming, actually have a minimum wage below $7.25/hour. One thing is universal, however, and that is any covered non-exempt employee will always be entitled to the highest minimum wage amount available to them.

It should be noted that there are some exceptions to receiving the federal minimum wage. Employees who collect the bulk of their pay in tips usually can be paid a lesser minimum wage than $7.25/hour. On the federal level, the tipped minimum wage is $2.13/hour. However, some states have a higher tipped minimum wage, and some states call for tipped employees to be compensated the same minimum wage as non-tipped employees. Additionally, employees under the age of 20 may be paid a minimum wage of $4.25 per hour for their initial 3 months of employment, or until they reach 20 years of age. After such time, they must be paid the regular minimum wage rate.

Earlier this year, another exception to the federal $7.25 minimum wage rate was made. The Biden administration directed its agencies to increase the minimum wage for federal employees to $15 an hour. The new policy, which took effect Jan. 30, 2022, will give a significant pay raise to approximately 70,000 federal workers. 

Overtime Pay

Along with a minimum wage, employees must be provided additional compensation apart from their standard work hours. This is considered overtime pay, and according to the US Department of Labor, employers must pay covered non-exempt employees at least one and a half times their standard pay in the event they work more than 40 hours in a single workweek. There is no limit to the number of hours employees aged 16 and older can work in any given workweek. However, the FLSA does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest. 

While not every employee’s workweek has the same start and end dates, they all have the same parameters in that they are fixed and regularly recurring periods of 168 hours — seven consecutive 24-hour periods. A workweek can begin at any hour of any day. In addition, different workweeks can be set up for different employees or groups within the company. In most cases, any overtime payment earned during a given workweek must be paid on the regular pay day for the week in which the wages were earned.

Exempt vs. Non-exempt Employees

Since ONLY non-exempt employees are eligible for overtime pay, it’s important to identify the qualifications needed for this status. According to the Department of Labor, any covered employee who earns less than $35,568 per year, or $684 per week, is entitled to overtime pay for work performed in excess of 40 hours during one workweek. Further qualifying classifications of non-exempt employees include those that are directly supervised by a manager, and those not in an executive, administrative, professional, or outside sales position.

An exempt employee on the other hand is not subject to the same rules and regulations established by the FLSA. Those in this classification do not have to be paid overtime for extra hours worked during a given workweek. To hold exempt status, employees must earn in excess of $35,568 annually and their work must fall under an executive, professional, administrative, or outside sales category. 

The inability to distinguish non-exempt from exempt employees can negatively affect business in a variety of ways, including fines and penalties, regulatory enforcement action, and employee lawsuits for failure to pay overtime. In some cases, reclassifying an employee from exempt to non-exempt (or vice versa) is called for, but it can be a tricky path to navigate. 

For instance, a non-exempt employee whose status is changed to exempt may be angered by no longer being eligible to earn overtime pay. On the other hand, an exempt employee who is reclassified as non-exempt may see the change as a bump down in status at the company. Before making any changes to an employee’s status, management should take the time to explain the reasoning behind the decision. Whichever status an employee is given, they are still equally entitled to such additional protections as the Family Medical and Family Leaves Act, the Occupational Safety and Health Act, American’s with Disabilities Act, and even file for worker’s compensation. 

Final Thoughts

Better understanding the wage and hour laws your business is subject to can certainly help safeguard against costly fines and potential lawsuits. State labor law guides can serve as an excellent resource to determine the rules and regulations required in your area. 

Working with skilled HR and workforce management professionals is another effective way to help navigate the minefield of these unique and ever-changing laws, as is receiving legal advice from attorneys well-versed in all types of labor law. The ultimate goal is to always stay on top of the necessary labor legislation that must be followed. 

Posted on

Exempt vs. non-exempt employees: knowing the difference

employer looking at posted notes

Summary

  • Employees are exempt from FLSA requirements when they meet specific exemption criteria based on how much they earn and what their duties are.

  • State and federal laws have multiple exceptions and differences depending on location, industry, and job, so HR needs to be vigilant in determining each new classification.

  • Failure to classify employees properly can lead to DOL penalties and employee dissatisfaction.

Exemption in the context of employment classification refers to whether or not a worker is eligible for certain Fair Labor Standard Act protections regarding overtime and minimum wage. Exempt employees are non-eligible for these FLSA rights, while non-exempt employees are eligible.

The difference between exempt and non-exempt employees is often not fully understood. For instance, some people will incorrectly say all salary workers are exempt while all hourly workers are non-exempt.

While this oversimplification may often be correct, it distorts the actual difference between these two classifications and can lead to dangerous outcomes. The difference between exempt and non-exempt employees has to do with how much these workers make and the duties they perform; any employees who meet these specific (and sometimes subjective) criteria are exempt from FLSA-mandated minimum wage or overtime pay requirements.

Understanding which criteria qualifies an employee for exempt status affects both your hiring and payroll practices. Misclassifying an employee, even unknowingly, can result in serious DOL investigations and fines. Once you understand what a non-exempt employee is and why, you can hire with confidence, knowing that there are no reclassification surprises awaiting your company moving forward.

What is an exempt employee?

An exempt employee is anyone who earns a salary or makes more than $684 a week and falls under one of these specific exemption categories:

  • Exemption for executive employees: Anyone whose primary duties primarily are concerned with running the business or a major division of a company. Read the specific requirements required to qualify for the executive exemption.
  • Exemption for administrative employees: Anyone who primarily does non-manual work that relates to the management of business operations or customers. They must also be free to use their own discretion on “matters of significance.” Read the specific requirements required to qualify for the administrative exemption.
  • Exemption for professional employees: Anyone whose duties require an advanced background in the sciences or learning. Read the specific requirements required to qualify for the professional exemption.
  • Exemption for employees in computer-related occupations: Anyone whose duties primarily include advanced computer skills, including things like computer programming or data analysis. Read the specific requirements required to qualify for the computer employee exemption.
  • Exemption for outside sales employees: Anyone whose duties primarily include selling products away from the business, like a traveling salesperson. Read the specific requirements required to qualify for the outside sales exemption.
  • Exemption for highly compensated employees: Anyone who earns more than $107,432 in non-manual work that also at least partly overlaps with the executive, administrative, or professional exemptions. Read the specific requirements required to qualify for the highly compensated employee exemption.

It’s important to note that job titles alone do not satisfy these exemptions. Job duties should align with job titles in case your classifications are ever contested.

What is a non-exempt employee?

A non-exempt employee is anyone who does not meet any of the exceptions listed above. This includes anyone considered blue collar or who is employed as a first responder. Generally, salaried workers fall under some form of exemption; however, this is not always necessarily the case.

All non-exempt employees receive certain protections under the Fair Labor Standards Act (FLSA). These protections include:

These standards are updated from time to time, so be sure to check back periodically with the DOL website for any changes made to the FLSA.

What are the repercussions of misclassifying non-exempt employees?

Employee misclassification is no small matter. Even honest mistakes can lead to financial hardships and reduced morale for your employees. Here’s what you can expect if you’re forced to reclassify an employee.

  • Fines and penalties from regulators
  • Back pay for unpaid overtime or minimum wage violations
  • Employee dissatisfaction

All of this can add up to thousands of dollars for your company and be a major headache for HR as you scramble to deal with the fallout.

How to ensure you’re classifying employees correctly

To avoid the costs associated with misclassification, get all of your employee classifications accurate from the start. Here are some tips you can follow to get it right every time.

Check industry specifics

Although there is a standard set of rules for classification, there are also exceptions and distinctions for specific industries or jobs. For instance, the DOL explicitly details what youth lifeguards are allowed to do and at what age.

Before you classify an employee, be familiar with relevant exemptions that may affect the employees you hire. You can find all of these exemptions on the DOL website — just look through to see if there are any factsheets that might affect your hires.

Be wary of classifying as an independent contractor

Some businesses try to get around the exempt vs. non-exempt distinction by classifying employees as independent contractors to save money. Like exempt employees, independent contractors do not get protection under the FLSA, so businesses don’t need to pay them overtime or minimum wage. As well, because they aren’t technically employees, businesses don’t need to provide benefits or pay certain employment taxes.

However, misclassifying your employees as independent contractors runs similar risks as misclassifying non-exempt employees. Your company could be on the hook for thousands in fines, back pay, back taxes, and more if you’re forced to reclassify.

Know the state laws where you operate

Know the state laws, if any, that add extra protections for employees. A common example of this in play is in California where they have implemented more stringent salary requirements to meet exemption criteria.

Each state may have its own laws that affect minimum wage, exemption requirements, or more. Frequently review these laws to make sure they’ve not been updated and that you’re still in compliance.

Ensure duties align with job descriptions

Exemption classifications are based on what employees actually do on the job and not what their job description says. For instance, if someone holds the job title “manager,” but doesn’t have the ability to influence hiring or firing, they wouldn’t qualify under the exemption for executive employees.

HR needs to be aware of gaps between what employees do and what their stated duties are. If this gap exists and a misclassification has occurred, it’s better to deal with this problem sooner rather than later to avoid further disruptions and financial penalties.

Be proactive when it comes to compliance

Staying compliant with employee classification is just one facet of what HR departments need to handle every day to keep their businesses out of trouble with labor laws and regulations. To help them do their job more effectively, they need the right workforce management tools and education that’ll allow them to proactively make sure every facet of hiring and payroll is compliant with relevant labor laws.

To learn more about keeping your business compliant, read our Complete Guide to Wage and Hour Compliance. In this guide, you’ll see what you can do to ensure your business keeps up with the ever-changing rules and expectations of our modern economy.