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What is FUTA and how to calculate it

Summary:

  • FUTA is a payroll tax used for unemployment benefits. Unlike FICA taxes, it’s solely covered by the employer.

  • FUTA can be as low as $42 per employee annually, but it can quickly become significant for bigger workforces spanning different states.

  • Payroll software simplifies and automates FUTA calculations, ensuring timely payments and accurate filing.

The Federal Unemployment Tax Act (FUTA) is a key component of payroll taxes and a critical responsibility of employers. It funds unemployment benefits and provides a safety net for unemployed workers. 

A clear understanding of FUTA and other payroll taxes is vital for business owners. This guide will explain what employers need to know about FUTA, how to calculate it, and practical tips to simplify the process.

What is FUTA?

Administered by the Department of Labor, FUTA is a payroll tax intended to fund unemployment insurance and job programs across the United States. Unlike the Federal Insurance Contributions Act taxes (Social Security and Medicare), FUTA is solely the employer’s responsibility. There is no employee contribution or employer match. However, the FUTA amount an employer owes is directly tied to employee wages. 

Generally, employers are obligated to pay FUTA if they:

  • Paid wages of $1,500 or more to employees in any calendar quarter during the last two years. 
  • Had at least one employee for part of a day in 20 or more different weeks during the previous two years.

The Internal Revenue Service (IRS) uses a rolling assessment model for the above criteria, which looks at current operations and recent employment patterns. As we transition to 2025, the reference years for calculation are 2023 and 2024.

FUTA rules for agriculture and household employers
Because of their work patterns and employment relationships, there are specific rules for household and agricultural employers. For instance, agricultural work is seasonal, while household employees are often hired in small-scale settings. 

Household: 

Employers must pay FUTA taxes for household employees who perform work in a private home, local college club, fraternity or sorority chapter if they pay a total of $1,000 or more in cash wages during any calendar quarter in the current or preceding two calendar years.

Agriculture:

Employers who have farmworkers must pay FUTA taxes if they:

  • Paid cash wages of $20,000 or more to farmworkers during any calendar quarter in the current or preceding two calendar years
  • Employed 10 or more farmworkers working at any time during 20 or more different weeks in the current or previous two years.

Are there FUTA exemptions for small businesses and self-employed individuals?

If you’re running a small business and don’t meet the IRS criteria, you are exempt from FUTA tax. The same goes if you hire independent contractors instead of full-time employees.

Self-employed individuals are generally exempt from FUTA tax liabilities. 

Also read: How to Manage Compliance for Contractors

FUTA credit reduction

The FUTA tax rate is 6% and applies to the first $7,000 of an employee’s annual wages. This is known as the federal wage base. Most employers can qualify for a 5.4% tax credit, bringing the FUTA tax rate down to just 0.6% per employee. That’s only $42 per employee per year if all conditions are met. 

Employers can qualify for the tax credit under the following conditions: 

  • The State Unemployment Tax Act (SUTA) tax must be fully paid by the Form 940 deadline, before January 31.
  • The FUTA applies to the same $7,000 wage base. You automatically meet this condition if your state’s wage base is higher. If it’s lower, you may not qualify for the full tax credit. 
  • The state is not a credit reduction state. A state is considered a credit reduction state if it received a loan from the federal government to fund its unemployment benefits and failed to pay it back within two years. If the state has an outstanding loan balance from the federal government on January 1 for two consecutive years and fails to repay it in full by November 10 of the second year, the FUTA tax credit for employers in that state is reduced by 0.3% each year, and the loan remains unpaid.

How to calculate FUTA tax liability

FUTA tax is calculated quarterly for deposit purposes. The tax report, on the other hand, is filed annually through the Form 940. 

Here are two example methods of FUTA calculations, assuming that the employer is eligible for the maximum credit (5.4%): 

Example 1: 

  1. Subtract the maximum allowable state credit (5.4%) from the FUTA rate (6.0% in 2024).
  2. Multiply each employee’s wages, up to the $7,000 wage base, by 0.6%.
  3. Total these amounts for your net quarterly FUTA tax liability.

Example 2:

  1. Calculate the gross FUTA tax liability by multiplying each employee’s taxable wages (up to $7,000) by the full FUTA rate of 6.0%.
  2. Determine the maximum allowable credit by multiplying the same taxable wages by 5.4%.
  3. Subtract the credit amount from the gross liability to get the net liability.

FUTA calculations can be straightforward if operating in a non-credit reduction state that matches the federal wage base. However, it can become more complicated when you operate in states considered credit reduction states or states where the wage base is different from the federal one. 

When are FUTA liabilities paid?

FUTA tax payments are typically due quarterly, but whether you need to pay each quarter depends on how much FUTA tax you owe. 

Quarterly payment due dates

If you owe FUTA taxes for the quarter, payments are due by:

  • April 30 for the first quarter
  • July 31 for the  second quarter
  • October 31 for the  third quarter
  • January 31 for the fourth quarter of the previous calendar year

Do you need to pay this quarter? 

Here are general guidelines in terms of timing your FUTA deposits:

  • If you have $500 or more in FUTA liability in a calendar year, you should pay by the next quarterly deadline. 
  • If it’s less than $500 in a quarter, you can roll it over to the next quarter and continue doing so until your cumulative amount due is more than $500. 
  • If your liability for the entire year is less than $500, you can wait and pay it when filing Form 940, due by January 31.

What if the deadline falls on a non-business day (weekend or legal holiday)? You can make your payments on the next business day, which will still be considered on time.

How to pay FUTA tax liabilities

FUTA taxes are primarily paid to the U.S. government via the Electronic Federal Tax Payment System (EFTPS). This 24/7 free service offered by the U.S. Department of Treasury, allows employers to make payments, track payment history, schedule a payment in advance, and get support when making tax payments. 

An alternative method is same-day wire transfers, where the employer makes direct payments via bank, but this can incur transaction fees. Another option is to delegate tax payments through a payroll service provider or tax professional.

Reporting FUTA Tax Payments

FUTA taxes are reported annually using Form 940, the Employer’s Annual Federal Unemployment Tax Return. In this IRS form, employers document all FUTA tax payments made during the year and disclose any remaining amounts due.

The filing deadline is January 31, but if all FUTA tax deposits are paid on time, employers get a grace period until February 10 to submit the form. While Form 940 focuses exclusively on federal unemployment taxes, it’s often compared to Form 941, which covers payroll taxes like Social Security and federal income tax withheld from employees’ wages.

FUTA and SUTA: What sets them apart?

FUTA and SUTA are similar because they have the same overarching purpose: to fund unemployment programs. However, there are some operational differences. The most obvious difference is that FUTA is imposed on a federal level, while SUTA is a state-specific tax that goes to unemployment insurance programs for eligible workers in the state. 

Another key difference is the FUTA tax credit. Employers who make timely SUTA payments can qualify for up to a 5.4% credit, which can reduce their FUTA liability. On the other hand, SUTA is strictly a state-imposed tax and doesn’t have a tax credit system. 

Like FUTA, SUTA tax is also imposed on a wage base. However, FUTA uses a uniform base of $7,000, while SUTA wage bases vary. Some states like Arkansas and California follow the same $7,000 base as the federal government. While states like Washington and New York impose higher bases. Specific industries have additional assessments or alternate rates, so it’s always good pratice to review your state’s latest guidelines. 

Another key difference between FUTA and SUTA is who foots the bill. FUTA is entirely paid by the employer. In the case of SUTA, some states like Pennsylvania and New Jersey, require both employers and employees to contribute.

Simplify FUTA calculations with Workforce.com

FUTA tax liabilities may seem small at just $42 per employee annually, but, it can quickly increase as your workforce grows and spans multiple states. As a result, managing FUTA and other payroll taxes can become more complex. 

Workforce.com can help you stay on top of FUTA tax liabilities and other employment taxes. Here are some of the ways the platform can help streamline your process.

Automated payroll calculations and reporting

Workforce.com’s payroll system automatically calculates wages when you reach the FUTA wage base. It helps ensure timely tax payments and handles overtime, payroll taxes , and deductions. 

Accurate time and attendance tracking

Since FUTA calculations are tied to wages, accurate time and attendance tracking is essential. Wokforce.com ensures that employee hours are recorded in real-time so that hourly wages are always precise and tax calculation errors are avoided. 

Unified employee data

Employee information, such as pay rates and employment status, is centralized in a single profile, eliminating redundant data entry. This single source of information powers payroll computations and includes FUTA tax liabilities. 

If you run an hourly workforce, discover how Workforce.com can help you comply with FUTA obligations and other payroll or labor regulations. Want to see it in action? Get a demo and learn how it can simplify HR, scheduling, and payroll for your hourly team. 

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Ratio of IT Staff to Employees

IT worker fixes computer

In short, knowing how many IT staff you need is not a straightforward answer. There are many factors you’ll need to consider if you want to come to a truly accurate number; things like industry, the tech savviness of your workforce, and organizational size all come into play. Even the time zones you operate in can impact the final number.

The best thing you can do is consider each factor, decide on a ratio (the number of employees supported by each IT worker), and then refine your number through trial and error. Hopefully, we can help with the former part of this process.

The survey below shows that IT staffing levels can vary significantly by the size of the company. For example, the typical IT staffing ratio is 1:27 among all companies included in the survey. However, companies with 500 or fewer employees typically have an IT staffing ratio of about 1:18, while companies with 10,000 or more employees have a ratio of about 1:40.

Ratio of IT Staff to Total Employees

Organization Size

25th Percentile

50th Percentile (median)

75th Percentile

Org. Count

By # Employees
Less than 500 1:8 01:18 01:34 16
500 to <1,000 01:14 01:25 01:40 14
1,000 to <5,000 01:11 01:23 01:45 38
5,000 to <10,000 01:10 01:25 01:53 15
10,000 or more 01:23 01:40 02:52 20

By Annual $ Volume
Less than $200M 01:11 01:19 01:34 25
$200M to < $500M 01:19 01:36 02:01 20
$500M to < $1B 01:11 01:31 01:53 17
$1B to < $5B 01:20 01:36 02:22 20
$5B or More 01:10 01:15 01:25 20

All Org.

01:11

01:27

01:52

103

Survey shared with permission from Organizing for Results: IT Structures and Staffing Survey by people3, Mercer Human Resource Consulting, and ITAA.

Know your labor ratios beyond IT

The importance of labor ratios extends far beyond the limits of IT. While it is undoubtedly good to figure out exactly how much IT support to have on hand, it is arguably much more important (especially for shift-based businesses) to understand the ratio of customer-facing staff they need on a daily basis.

Figuring this out is no easy task. You’ll need to account for predicted customer demand, labor costs, role-based certifications, time off, and much more.

Luckily, in the age of AI, there is a way to let technology do all this thinking for you. With labor forecasting software, you can quickly determine the correct ratio of staff you need to meet demand during every shift. Check out how this works below:

Interested in learning more? Watch our free webinar below, where we dive into more details about labor forecasting best practices.

Webinar: How to Forecast Your Schedule Based on Demand

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Most Common 12-hour Shift Schedules (2023)

Post Summary

  • 12-hour shift schedules boost morale and lower inconsistency

  • Pick from a variety of the best 12-hour shift scheduling examples

  • Labor law compliance and occupational fatigue concerns need to be accounted for

So, you are considering a 12-hour hour shift schedule. This is a bold move that has the potential to increase both employee efficiency and morale. But how do you properly manage to transition your workforce to four extra hours per shift? Debbie in HR needs her priorities balanced with that of Dale down in the warehouse; their daily routines are at the mercy of you, the all-powerful manager. This is a lot of pressure, I know. 

This pressure to make the perfect schedule stems mostly from all the potential benefits your company stands to gain from making the change. Workers get extended time off, allowing for a generally better work-life balance in the long run. 12-hour shifts also have lower turnover, resulting in fewer errors in employee miscommunication and inconsistency between shifts. Lower shift turnover also means less unproductive downtime – the value from this adds up quickly after a year. 

All of these benefits are great and all, but let’s slow our roll. The first step is to choose a specific type of 12-hour schedule. Fortunately, there are many options to choose from for organizations operating 24/7. 

So, let’s dive into some of the best 12-hour shift schedule examples. Make sure to evaluate them with your employees before adopting any particular one.

 

The DuPont

Named after the company where it originated in the late 1950s, its most notable feature is seven straight days off during every 28-day rotation. It uses four teams and two twelve-hour rotating day and night shifts to provide 24/7 coverage on a four-week cycle. Each team works 4 consecutive night shifts, followed by 3 days off duty, then 3 consecutive day shifts, followed by 1 day off duty, then 3 consecutive night shifts, then 3 days off duty, then 4 consecutive day shifts, then finally 7 consecutive days off duty.

 

The 2-3-2

This schedule emerged in the 1960s and became popular in the 1980s. It’s sometimes known as EOWEO or “every other weekend off.” Employees follow a 14-day pattern of 2 days on, 2 off, 3 days on, 2 off, 2 days on and then 3 off.

Workers know they’ll have a three-day weekend off every other weekend and won’t have to work more than three-night shifts in a row. However, workers don’t get more than three days off in a row unlike with many other 12-hour rotating schedules. Also, this schedule often requires workers to rotate rapidly between night and day shifts – this can be quite fatiguing.

A slightly adjusted version of this schedule is called the Pitman schedule and features the same 2-3-2 format. However, with the Pitman, there are two or more teams. Some of these teams are on day shifts while others are on nights.

 

4 On, 4 Off

Here, employees work four days or nights and then have four days or nights off. At some companies, workers stay on nights for as long as 24 days; at others, they switch every eight days. It usually consists of two teams, one covers day shifts and the other covers night shifts.

This schedule offers workers enough time off to recuperate. Also, in every eight-week cycle, workers have one period in which they get three straight weekends off.

Alternatively, management could adopt a three on, three off schedule, which, I would hope, should be fairly self-explanatory to you at this point.

 

5-5-2-2 and 5-2-2-5

If you are looking to maximize days off, this one might be for you. Two sequences are in the schedule here. On a two-week cycle, one squad works 5 days on then has 5 days off, then 2 days on 2 days off. The second squad works 5 days on and has 2 days off, then 2 days on and 5 days off. This sequence is repeated with two more squads for night shifts. 

This method is great for getting consistent long breaks. However, workers are also subject to working five 12-hour days over a seven-day stretch with only a two-day break in the mix.

 

Solving the 12-hour Shift Schedule

Overwhelmed yet? I wouldn’t blame you. Crafting these schedules for yourself may seem like a daunting task. Luckily, Workforce.com has a solution for this task, offering software that combines a simple user interface with comprehensive employee scheduling automation. If you are a business staffed by hourly employees in retail, hospitality, food & beverage, or healthcare, workforce management software could be the answer to your 12-hour shift problems. 

Here are a few of its key features:

Shift Patterns

The shift pattern tool allows managers to create schedules that follow “rules” like the recommended schedules listed above. Employees can be assigned to teams that follow certain patterns. Once a shift pattern is created, managers can then save and use it to auto-generate future schedules. 

Shift Parameters

Workforce.com also allows managers to auto-build shifts based on demand. Managers can set parameters for every shift, like making them all 12 hours minimum in length. While this method sacrifices a consistent 12-hour shift schedule pattern, it properly adjusts for consumer demand and makes the scheduling process even faster. 

Compliance

Beyond the obvious logistical hurdles of manually creating a 12-hour schedule, errors in labor compliance and break scheduling are additional causes for concern. Luckily, Workforce.com has compliance features such as classification tags designed to conform your business with regional labor and union policies regarding minimum wage, overtime, and break schedules.

Breaks in particular are a tricky part of the 12-hour schedule equation. Employee burnout resulting from excessive work demands and mismanaged break planning can be quite a common problem with this style of schedule. 

Oh, you want an example? I’ll give you one. Nurses are especially prone to a condition deemed “occupational fatigue” when working 12-hour shifts according to a study published earlier this year in The Journal of Nursing Administration. The last thing a hospital or a patient wants is a bleary-eyed nurse haphazardly administering the wrong meds. 

Employee burnout like this is something you absolutely want to avoid. Proper measures need to be taken to ensure workers subject to 12-hour shifts have sufficient recovery time between and during shifts. Luckily, Workforce.com makes it quick and easy to set up breaks to be automatically built into every employee’s schedule. Managers can also track breaks in real-time via notifications to ensure employees are taking properly timed breaks. 

Labor Tracking

And remember: often, switching from an 8-hour to a 12-hour shift schedule can increase wages by around 2%. Workforce.com ensures cost neutrality during the switching process via live labor tracking that can tell you exactly when employees are working and how they are being compensated for their time.

 

Not for everyone

It is also worth knowing that 12-hour rotating shifts are not always applicable to every industry. For jobs requiring strenuous physical activity or long hours in the outdoors, 12-hour shifts may be too physically draining for employees to handle on a daily basis. Older employees and single parents may also find difficulty adapting to 12-hour shift schedules.

Moreover, workforce management software is best suited for automating 12-hour shifts for hourly workers in retail, hospitality, staffing, and sometimes healthcare. If your business is in a much more niche industry with highly specialized needs, it would be best to look for software specific to your use case.

Get Started

Are you ready to get started scheduling 12-hour shifts? Workforce.com has your back. Go ahead, book a call today or see it in action with a free trial.

 

(Psst…be sure to check out our user reviews below!)

Workforce.com is a leader in Employee Scheduling on G2

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Workforce.com Customer Service

Find answers to our most frequently asked questions.

  1. I need to change my email and/or password
  2. I’m having trouble figuring out how to use a feature
  3. How do I report a technical problem?

I need to change my password and/or email

To change your password or email, log in to your Workforce.com account, hover over the profile dropdown in the top right corner of your screen, and click on My Profile.

 

From there, click on Change Account Details at the top of your screen. You can then update your password or email.

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 I’m having trouble figuring out how to use a feature

Visit our online library of support articles here. You can search for guides on any feature that is confusing you.

Here is how to find our support library on the platform:

While logged on to your Workforce.com dashboard, click the Help dropdown found at the top right of your screen. Here, you will find a library of tutorials and guides that should answer nearly any question you may have about how to use a specific feature. If you can’t find the answers you are looking for, please contact our team for further help.

 

I need to report a technical problem

Please contact us at support@workforce.com.

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What are some standard guidelines for working at home?

work from home, remote worker

COVID-19 is rapidly changing how businesses operate. We recognize that organizations need an extra helping hand right now. So we’re offering our platform for free to new sign-ups over the coming months.

Sign up today and our Workforce Success team will gladly provide a personal, online walkthrough of our platform to help you get started.

Set your team up for success:

Managers should meet with employees to determine how work and job requirements can be done remotely from home either full time or certain days of the week.

  • Consider the effect of working at home on customers, co-workers and management.
  • Determine technological needs and agree on securing the tools and appropriate training to ensure productivity at home.
  • Establish measurable performance goals and expectations.
  • Discuss concerns and potential challenges of working virtually and ways to address these issues.
  • Determine a process for regular check-in meetings to discuss how the virtual work arrangement is working – for you and the business.
  • Check in frequently to discuss how things are going and determine how to overcome challenges that may be identified.

Set employees up for success – at home

Help employees set up an appropriate workspace that is separate and distinct from their “home space” and conducive to working effectively without interruptions. Make sure:

  • Employees design their workspace for efficiency, with all the documents and materials they need.
  • Urge them to create a healthy workspace – good light, comfortable temperature, standing desk, ergonomic adjustable chair, computer keyboard and mouse suited to their needs, telephone headset, etc.
  • Make sure they set boundaries with family members.
  • Ensure family members understand that although they are home, they are working.
  • Establish ground rules for work hours, interruptions, noise, etc.

Focus on performance and results

Be clear on employee priorities, focusing on the expectations, tasks and responsibilities agreed upon as measures of success.

Managers and employers should be proactive in regular communications between managers, coworkers and customers to stay connected and resolve issues as they arise.

Ensure that your accomplishments, project status, outcomes and deliverables are visible as appropriate. It’s important to avoid being out of sight, out of mind.

Invite and encourage feedback from co-workers, management and customers about how a virtual work arrangement is affecting them.

Learn more: The Workforce.com platform offers plenty of features to support remote teams.

Remote workers should be accessible, responsive and reliable

Utilize appropriate communication methods so employees can stay connected with managers, co-workers and customers.

Update their email, voicemail greeting, staff calendar etc. on a regular basis with a schedule, availability (or not) and contact information.

Checking all communications platforms and voicemail frequently is imperative.

Both employers and employees can demonstrate trustworthiness by being predictable, reliable, taking promises seriously and following through on commitments.

Managing work and preserving time for life is crucial

Remote workers should find ways to “disengage” from work and have quality personal time when traditional boundaries between work and home life are no longer clear.

Set reasonable limits to work hours and determine how to meet work requirements and still preserve personal time.

Build in short breaks and work during periods of peak energy.

For Workforce.com users there are features on our platform available to keep communication lines open during this difficult time. Chat with your staff, schedule according to operational changes, manage leave, clock in and out remotely, and communicate changes through custom events, among other things.

Source: Diane Burrus, WFD Consulting, Waltham, Massachusetts, April 4, 2013.

The information contained in this article is intended to provide useful information on the topic covered, but should not be construed as legal advice or a legal opinion. Also remember that state laws may differ from the federal law.

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Companies, Beware Your Photo and Recording Rules

If your company has policies prohibiting audio or video recording or taking pictures in the workplace and restricts cellphone use at work to nonworking times or nonwork areas, then beware.

A recent National Labor Relations Board decision calls into question the validity of such policies. Even if not promulgated in response to any union activity or otherwise intended to interfere with employees’ rights under the National Labor Relations Act, such policies could still be found unlawful.   

In Whole Foods Market Inc., the NLRB was presented with the issue whether the grocery chain violated Section 8(a)(1) of the NLRA by maintaining two similar work rules that prohibited recordings in the workplace without prior management approval. An administrative law judge found the no-recording rules did not explicitly restrict employees’ rights because the rules did not prohibit employees from engaging in protected, concerted activities under Section 7 of the NLRA. Additionally, the judge did not view the act of making recordings in the workplace as its own protected right. Contrary to the sound decision of the judge, a divided NLRB found the rules unlawfully infringed upon employees’ Section 7 rights.

Illustration by Mike Centeno

Section 7 gives employees “the right to self-organization, to form, join or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.”

Whole Foods is yet another in a long series of NLRB decisions broadening its interpretation of employees’ Section 7 right to engage in other concerted activities for the purposes of mutual aid or protection by finding a seemingly neutral and benign company policy unlawful under the NLRA. While the act of recording generally is an individual act and prohibiting such recordings does not, in and of itself, prevent an employee from voicing concerns about terms and conditions of employment, the NLRB nevertheless found the rules unlawful. 

Based on this finding, one might think Whole Foods had no business reason for its rules or that the rules were intended to interfere with employees’ Section 7 rights, but that simply was not the case. The rules set forth the grocer’s legitimate business justification for the recording restriction, which was “to encourage open communication, free exchange of ideas, spontaneous and honest dialogue and an atmosphere of trust.” Further, the rules were in no way discriminatory.

They applied to both supervisors and employees, they applied all of the time, and they applied whether employees were engaged in protected, concerted activity.  Whole Foods also supported its business rationale with evidence that the rules aided the grocer in fostering free and open dialogue in three areas:

·      Group meetings, which included discussions of employee complaints as well as discussions of proprietary business information.

·      Peer review panels that reviewed termination decisions.

·      Meetings where employee requests for emergency assistance were discussed, which often included discussions of very private information about employees, including personal health issues.

Whole Foods simply wanted to ensure these types of candid exchanges continued in its stores. The board majority, however, did not find these to be overriding business reasons for the rules.   

And while the NLRB did not hold that companies are prohibited from having any policies that restrict recording in the workplace, it held that such policies must be narrowly tailored such that employees “understand that Section 7 activity is not being restricted.” The problem with this holding is that it is unclear how significant an employer’s business interests must be for a no-recording policy to pass muster.

Based on this decision, it is not enough that an employer seeks to continue open and honest exchanges in the workplace.

It likewise seems that a policy simply prohibiting all use of cellphones or other recording devices during working time or in working areas could be found overly broad. Thus, the NLRB offers as examples of protected, concerted conduct the photographing of unsafe equipment and the recording of discussions about terms and conditions of employment — both of which are likely to occur during working time and in work areas. 

The NLRB did not, in Whole Foods, overrule earlier precedent that found lawful a hospital’s policy restricting employees from recording images in a patient-care setting, but employers are left to wonder what business considerations short of patient privacy will suffice to justify no-recording policies.

Arguments can be made that employers should be allowed to protect things like trade secrets and proprietary equipment or processes, and perhaps there will be other sanctioned policies to protect the privacy of other types of customers or clients. These, however, are unanswered questions following the Whole Foods decision. 

While Whole Foods is being appealed to the U.S. Court of Appeals for the 2nd Circuit, the NLRB will likely continue to scrutinize these types of policies.

In the meantime, companies should closely examine their own recording and cellphone usage policies and assess the risks vs. the reward of such policies. At a minimum, companies should understand the potential risks of maintaining no-recording policies and define their best business case for maintaining such policies.

Tanja L. Thompson is co-chair of the Traditional Labor Practice at Littler Mendelson in Memphis, Tennessee. Comment below, or email editors@workforce.com.

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Roadmaps: Building a Health and Wellness Benefits Plan

In a job market where a recent survey noted that 1 in 5 employees are determined to land a new job this year, a robust benefits package could go a long way to help retain the worker who’s contemplating a move or entice the ones who are on the hunt for a new opportunity.

Building better benefits offerings will take time, effort, research and good old-fashioned communication. As in, talking to your employees. What do they want? What do they need?

One consideration they likely will want is a comprehensive wellness plan. Wellness is no longer trendy or a fad, but organizations without a wellness plan should analyze whether it’s a fit for its employee population. Some employers are taking preventive steps with nagging health issues such as back pain by offering employees incentives to look at other options before surgery.

This Workforce Roadmap helps encapsulate the themes and ideas of what was written in this special section on developing and maintaining a well workplace.

Plan, Do, Review

Plan

  • Assess your employees’ needs. Is there literally a lot of heavy lifting involved? Or, is your workforce largely confined to desks? What takes up your largest workers’ compensation claims?
  • Learn how the Affordable Care Act affects your workforce. By now, you should have a good handle on the effects of Obamacare on your organization. With new forms like the 1095-C and the so-called “Cadillac” tax, the ACA is having a dramatic effect on how health care plans are managed.
  • What about wellness? If you haven’t implemented a wellness program in your organization, you’re lagging behind your competitors. But that doesn’t mean you are too late. Assess several vendors and consider your options.

Do

  • Communicate. Then communicate some more. It has been said that people would rather clean their toilet than deal with their benefits. And while this might sound obvious, HR needs to communicate frequently and consistentlywith employees regarding the benefits program. Is there an employee assistance program available and how does it work? What’s the coverage on such things as vision and accidental death? Are there options to include elder care or child care assistance?
  • Motivate. Then motivate some more. Just because you put apples and bananas in the break room doesn’t mean you’ve set the motivation health machine in motion. Quarterly health fairs, motivational speakers, wellness tips and recipes placed in employee communications are all part of the repetitive drum you must beat to make wellness integral to your workplace.
  • Schedule an ergonomic overhaul. Look around. When was the last time your organization updated its office furniture? Not only will a room full of new chairs and standing desks improve morale, but also it will modernize the look and feel of the office environment and help boost productivity.

Review

  • Don’t put all your wellness eggs in one ROI basket. Managers want to see the return on investment. Given that it can be a costly, complicated process with murky results, focus on “VOI,” or value on investment. Did you cut absenteeism? Are there fewer claims among the diabetic population? Tell the story through the progress you’re making on employees’ individual health.
  • Track your ACA compliance. Federal agencies are stiffening compliance rules with each passing year. Consult your benefits advisers regularly to measure your progress.
  • Quit fiddling with it. Don’t make changes unless something is actually broken. Employees become suspicious when you constantly revamp a program. If you must make adjustments, change one element at a time and track the impact on the entire program before implementing it.
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Online Recruiting

More than 20 years into the age of the World Wide Web, online recruiting long ago replaced the print newspaper help-wanted ad as the venue of choice for recruitment. But many employers are still struggling to figure out the optimal way to use the Internet and the fragmented world of job boards, job “aggregators” and social media sites so they can source the best candidates at the least cost. Recruiters and consultants experienced in these spaces suggested some answers in a series of interviews in late 2015 conducted by Bloomberg BNA.

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How to Address Transgender Employment Issues in the Workplace

Title VII of the Civil Rights Act of 1964, the federal law prohibiting discrimination by private employers, does not expressly prohibit employment discrimination based on gender identity or expression. The U.S. Equal Employment Opportunity Commission and many federal courts, however, have held Title VII prohibits discrimination against transgender individuals. An increasing number of state laws provide similar protection.  

Currently, 19 states, the District of Columbia, and Puerto Rico have laws expressly prohibiting discrimination based on gender identity or expression. Employers therefore cannot afford to ignore the rights of transgender employees.

As acceptance grows, local governments have added gender identity to their anti-discrimination ordinances. For example, 11 counties and 23 cities in Florida, which cover 56 percent of Florida residents, have similar human rights ordinances. Additionally, in December 2015, New York City released new guidelines clarifying gender identity and expression protections under its Human Rights Law and setting forth hefty fines for violations.[1]

Recommended Practices

By revising existing policies and engaging in training, employers can foster a work environment where transgender employees are treated with respect and that reduces the likelihood of complaints by these employees. With these goals in mind, employers should consider the following steps:

Policies and training: Revise handbooks, equal opportunity, anti-harassment, open-door and similar policies to include “gender identity and expression.”

Create gender-neutral dress codes so an employee undergoing a gender transition may dress consistently with their gender identity while complying with the same standards applicable to other employees.

Train managers and employees on company policies and its complaint procedure, which should provide employees several different avenues for raising complaints and list the potential consequences of noncompliance.

Transition plan: As soon as possible after an employee announces their intent to transition, a manager and/or human resources professional should be designated as the person who will manage the transition. The employee and the designated person should then create a transition plan addressing whether the employee will take time off for medical procedures, and if so, how much; the date the employee will first transition at work; whether the employee plans a name change, and if so, when; the pronoun the employee prefers; and how co-workers should be informed about the transition and when.

Next, the employer should educate its managers regarding gender transition, discuss the transition plan and address any questions and concerns. Management should be cautioned regarding confidentiality until the transition has been announced and discuss the plan for co-worker education.

After the discussions have occurred, but before the transition date, the employer should meet with the transitioning employee, the employee’s direct supervisor(s), and the person designated to manage the transition (if someone different from the direct supervisor) to discuss the final transition plan.

Employees’ questions and concerns: After the employee’s transition is announced, the employer should educate co-workers on how to refer to the transitioning employee and employee privacy issues.

Restroom and locker room access: After an employee begins presenting full time in the gender to which they are transitioning, the employee should be permitted to use the restroom corresponding to that gender. A transgender employee does not need to have reassignment surgery or present medical documentation to use the restroom associated with their gender identity. If a co-worker is uncomfortable sharing a restroom with a transitioning employee, the co-worker — not the transgender employee — may choose other options (unisex restroom, if available; restrooms on other floors).

Name and pronoun changes: An employee has the right, without a name change, surgery or medical documentation, to be addressed by the name and pronoun that corresponds to their gender identity. The intentional or persistent refusal to respect an employee’s gender identity may constitute harassment. Management must use appropriate names and pronouns and swiftly address any employee failing to do so.

Record changes: Upon request, an employer should change an employee’s official record — as well as email address, the company telephone directory and any name plate — to reflect a change in name or gender. Payroll records might require a legal name change before the employer can alter the records.

Employers might be hesitant to proactively institute new policies and practices regarding transgender employees. But, as the law moves toward greater protection for transgender employees, employers run grave risk by not acting aggressively in this area. 

Denise Visconti is office managing shareholder of Littler’s San Diego office, Theresa Waugh and Kimberly Doud are of counsel in Littler’s Orlando office. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.

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Legal Briefing: Locking Down Best Practices on Prison Breaks

A collective bargaining agreement between Butler County, Pennsylvania, and correctional officers for the Butler County Prison provides that the employees receive a one-hour lunch break, of which 45 minutes are paid and 15 minutes are not. A collective action of correctional officers sued Butler County alleging that, under the Fair Labor Standards Act, they should be compensated for that 15 minutes because, during that time, they cannot leave the prison and must remain in uniform. After the U.S. District Court for the Western District of Pennsylvania dismissed the case, the 3rd Circuit Court of Appeals adopted the “predominant benefit test,” which has also been adopted by the 2nd, 4th, 5th, 6th, 7th, 8th, 10th and 11th circuits, and which weighs the benefits each side gets from the break to determine if the employee should be compensated. In upholding the decision, the court held that “although plaintiffs face a number of restrictions during their meal period … on balance, these restrictions did not predominantly benefit the employer.” Babcock v. Butler County, No. 14-1467 3rd Cir. (Nov. 24, 2015).

Impact: In determining whether employees should be compensated during restricted meal breaks, employers should carefully weigh whether the employee is primarily engaged in work-related activities during the break.     

Mark T. Kobata and Marty Denis are partners at the law firm Barlow, Kobata and Denis, which has offices in Beverly Hills, California, and Chicago. To comment, email editors@workforce.com.