compensation – Workforce

May 22, 2021June 29, 2023

Slow rehiring of child care workers may stymie employers’ return to workplace plans

Employers are navigating a variety of issues as employees gradually return to a more permanent physical workplace.

According to a new survey by Aon, 52 percent of employers said employees will return onsite in the third quarter, and 81 percent of those organizations already have a tentative date in mind. A May 2021 survey by law firm Littler, however, reveals a disparity in employers’ plans and employees’ preferences when it comes to hybrid work models and returning to physical workplaces.

There are several reasons employees may hesitate returning to the workplace. Chief among them for parents of young children, returning to work means finding quality, affordable child care.

Reestablishing pre-pandemic connections to daycare facilities is a challenge for many workers who are remote or unemployed and looking to return to work. The pandemic has crushed many small businesses, and child care centers are no exception, said Lauren Gill, head of people at New York-based child care provider Vivvi, which has 200 employees working on three campuses. Thousands of child care facilities have closed since March 2020, Gill said, and experts say that will have a profound impact on working families, especially women.

“Our challenge as an industry is how to rebuild and provide increased access,” Gill said.

Women bear the brunt of caregiving

The Center for American Progress found that the pandemic led to a 144 percent increase in child care-related work absences from September through November 2020, compared with the same period in 2019. The pandemic also led three in 10 women with children under 18 to temporarily or permanently leave the workforce to become a primary caregiver to children.

“The pandemic exacerbated the issues, resulting in over 2.2 million women leaving the workforce and the average parent spending 27 more hours per week on child care,” Gill said. “This has forced organizations to confront the fact that child care is a universal concern that affects all employees and that employee benefits have inadequately addressed this issue. Inadequate access to quality child care has been a challenge for individual families, for employers and for the U.S. economy for a long time.”

Fatima Goss Graves, president and CEO of the National Women’s Law Center, said that child care providers bring invaluable benefits to children and their families every day.

“Our entire economy is dependent upon their labor, yet razor-thin margins and a dearth of public investment mean the workers themselves receive poverty-level wages and few benefits,” Goss Graves said in a statement commemorating National Child Care Provider Appreciation Day in May.

Early childhood education is already a physically and emotionally demanding field, said Kae Bieber, education programs manager at nonprofit ACCA Child Development Center in Annandale, Virginia. The additional workload from health precautions coupled with the stress of working in a field that exposes employees directly to COVID-19 has made it difficult to fill positions.

At the pandemic’s onset ACCA kept its doors open for the children of essential workers, Bieber said. The number of children dropped from over 210 to 40 in the early days of the pandemic.

Struggling now to fill positions

As more parents returned to work and enrollment increased, Bieber said they have struggled to find qualified staff to fill positions vacated by employees who left during the pandemic. Some employees felt pressure to find a less stressful, safer choice for them and their family, so they left, she recalled.

“With the limitations on capacity due to COVID regulations and the need for staff, wait lists for quality child care are increasing,” she said. “Most often, a parent may get the call to return to the office but then still must wait until child care is available. This causes stress on the parents during an already extremely challenging time.”

Kae Bieber, child care — Kae Bieber, education programs manager at the ACCA Child Development Center.

As ACCA — which has an infant-toddler center as well as a preschool building with 12 classrooms — began restaffing its workforce of 65 hourly employees, Bieber found job candidates were hesitant to join the field. Early childhood education previously was seen as a good starting point for someone interested in working with children and education, she said.

“Now a potential candidate must consider the low wage in comparison to the sacrifice they will be making with their lives for themselves and their family,” she said. “We may have 30 responses to one job posting but when a potential candidate sees the reality of the amount of work and exposure in-person, they do not see the value in their work due to the low wage.”

While money may not be everything, Bieber believes that if they were able to offer hazard pay as additional support during the pandemic, ACCA would not have lost as many child care professionals. In a worker’s mind, she said, they could at least feel as if they were being compensated in some way for the exposure they were faced with and bringing to their homes.

“No matter how vested someone’s heart may be, if their ability to provide for their family is struggling and they are now facing exposure to a deadly virus each day, it can be very difficult to rationalize staying in that position.”

Employees move on for safety and pay

Good employees were forced to choose between staying with a profession they loved versus switching to a job with less exposure and often higher wages, she said. The added sanitation measures quadrupled workloads in an already labor-intensive environment. Interaction with children also changed dramatically due to social distancing guidelines.

“Children thrive off of closeness, hugs, smiles, high fives, pats on the back and interacting with each other,” Bieber said. “We lost that, literally overnight. We went from creating high quality learning experiences to supervising social distancing and implementing nonstop sanitation. Our staff began to question if they were doing more harm than good by having children play six feet apart and keep their distance from the children. They had a very difficult time adjusting to the new normal.”

Stagnant wages for caregivers

Though there is a greater appreciation for child care, Gill said many programs are restricted in their ability to boost wages since they are under-enrolled and recovering from months on end collecting little or no tuition.

“We haven’t seen a major shift in wages in the child care industry since the pandemic,” she said.

Gill added that as a sector, they need to think about how to make early childhood education a true career with all of the financial stability, respect and growth opportunities that other careers offer both in the wake of the pandemic and beyond.

“We should never make educators choose between their passion and a comfortable life,” she said. “It’s vital that they become synonymous.”

Entice candidates by prioritizing benefits

There are opportunities to bring stability to the child care industry and its professionals. Only 4 percent of employers offered subsidized child-care centers or programs, according to the Society for Human Resource Management’s 2019 employee benefits survey. There is a huge opportunity to move the needle, Gill said.

“Employer partnerships are a path to bringing high-quality care and early learning to more families” while helping employers recruit and retain top talent and increase productivity across the board, Gill said.

As a private employer that has partnered with organizations including the New York Presbyterian Hospital network, Gill said Vivvi built its business model with competitive wages for teachers at its core. “While we haven’t shifted our compensation strategy as a result of the pandemic, we continue to offer full-time, salaried roles and offer a full suite of benefits,” she said.

Some employers are looking at offering employee benefits that give employees options for access to affordable and quality child and elder care options, said Michelle Barrett Falconer, co-chair of the Leaves of Absence and Disability Accommodation Practice Group at Littler Mendelson.

“If an employee has access to affordable, quality child and elder care, the employee may not need to take time off from work using a paid family leave statute to address those caregiving obligations,” Barrett Falconer said.

Higher wages are not yet a reality for early childhood, Bieber said, although with the Biden administration’s new American Rescue Plan, she sees hope that wages for early childhood workers could begin to increase and meet a living wage for early childhood educators.

“The child care industry desperately needs legislation in place to recognize early childhood education as a valued profession and the message from top to bottom in our society needs to place emphasis on the recognition and need for quality child care,” Bieber said.

Having spent most of her career in education, Gill said that supporting the educational development of future generations is a monumental and vitally important task. Affordable, quality child care can be transformative for working families and make for happier, more productive employees, she said.

“When parents have peace of mind, they can pursue their goals outside of the home and be better, happier parents as a result.”

May 18, 2021June 29, 2023

Predictive scheduling laws: What they cover and how to comply

Over the past five years, the United States has seen a wave of new predictive scheduling laws aimed at providing employees with more predictable work schedules.

These predictive scheduling laws are designed to provide stability to individuals so that they can attend to their child care, health, education and, in many cases, second jobs. Early predictive scheduling laws only applied to retail establishments and restaurants, with limited penalties and no private right of action (i.e. employees could not sue for violations of the law).

However, more recent predictive scheduling laws cover a much broader array of industries, with far more draconian penalties, and allow for employee-initiated class action litigation. While these laws are well intentioned, they do present significant challenges for employers in terms of staffing, costs, document retention and general compliance.

This is because the legislation is relatively new and varies by city. Moreover, these laws often require dramatic departures from historical hiring and scheduling practices. The result is a patchwork of new laws, with limited guiding precedent and substantial penalties for noncompliance. As an employer, you would do well to heed these laws and take appropriate steps to ensure you are compliant.

Where have predictive scheduling laws been passed?

Many jurisdictions have considered, or are considering, passing predictive scheduling laws. So far, two states — Vermont and Oregon — and eight municipalities — San Francisco, Berkeley, Emeryville, San Jose, Seattle, New York, Chicago and Philadelphia — have passed laws. The laws in these jurisdictions are similar but different enough to discourage larger employers from creating company-wide policies and procedures for national compliance. Looking at 2021 and beyond, that list is likely to grow. Connecticut, Illinois, Maine, Michigan, Minnesota, New Jersey, North Carolina and Rhode Island all have predictive scheduling laws or equivalents under consideration.

Though most laws require employers to pay their employees predictability pay when their schedules are changed without advance notice, many laws contain different requirements regarding the amount of predictability pay owed, as well as exceptions to predictability pay entitlement. Accordingly, the differences in predictive scheduling laws not only require different scheduling policies, they require tailored and distinct payroll practices as well. Failure to properly pay employees under predictability pay rules can create federal and state wage and hour exposure as well.

It is also worth noting that some states have gone in the opposite direction, prohibiting the use of predictive scheduling legislation. Since 2017 Tennessee, Georgia, Iowa and Arkansas have all made it illegal for local government to require employers to adopt scheduling or hiring practices other than those already required by federal law.

What do predictive scheduling laws require?

While predictive scheduling laws from many of the jurisdictions contain several nuanced differences, there are general requirements that are common to many of them.

Advance notice of work schedule, generally at least 14 days.
A written estimate of each employee’s anticipated work schedule (at the time of hire).
Predictability pay in the absence of sufficient advance notice of work schedule.
Exceptions to eligibility for predictability pay.
A right to rest requirement to prevent “clopening” (i.e. no employee should be required to close up at night and open up the next day), as well as amplified pay for close-in-time work shifts.
Offers of additional hours to current part-time employees before hiring a new employee.
Posting requirements.
Stringent documentation and document retention requirements. This generally includes work schedules, written scheduling estimates, documents evidencing predictability pay, and documents related to offers of additional hours.

Though not common, some jurisdictions, such as Seattle and Philadelphia, encouraged employers to engage in an “interactive process” with employees who request a modification to their work schedules. Notably, this idea of an “interactive scheduling process” is one that has endured and presents additional managerial burdens for employers.

How to comply with predictive scheduling law

Determine applicability. Employers operating in a jurisdiction with a predictive scheduling law in place should first determine whether they qualify as a “covered employer” under the applicable law. While many laws only apply to certain employers in the restaurant and retail industries, other laws have a more expansive definition of “covered employer.”
Create policies and forms. Once an employer determines that it is covered, it should develop policies and forms tailored to each applicable law. Sample forms that would be helpful to have on hand include, but are not limited to: a notice of change in work schedule, a notice of offer of additional hours, an estimate of work schedule and hours, and a template work schedule. Additionally, employers should consider maintaining working checklists that managers can use to ensure compliance.
Train managers. Once the policies and forms are prepared, employers should train their managers on the applicable laws, as they will largely be responsible for facilitating and documenting compliance.
Ensure proper data maintenance. Because compliance with predictive scheduling laws requires retention of a high volume of documents, employers should ensure they have proper mechanisms in place for storing documents and data.
Audit for compliance. In order to ensure compliance with any applicable predictive scheduling laws, employers should periodically conduct internal audits to ensure policies are being followed and documents retained.
Use technology to predict staffing needs. In order to avoid predictability pay, employers may want to use technology and data analytics provided by software such as Workforce.com to anticipate future staffing needs. Setting schedules based on reliable data may decrease the need for unanticipated scheduling changes and thus reduce the likelihood of predictability pay.

Predict staffing requirements — Workforce can track your wage costs against your income over time and automatically recommend
the best staff schedules based on predicted demand.

Predictive scheduling compliance doesn’t need to be a problem

If you run a business that is affected by predictive scheduling laws, or think that it may become a reality in your state soon, then it’s easy to look at these new requirements and only see the additional administrative burden. There are benefits to businesses, however.

Academic research has shown that employees with stable, predictable schedules are happier, healthier and more likely to stay with their employer for the long term. You can also mitigate many of the requirements of predictive scheduling by using labor compliance software from Workforce.com to manage your employees. Not only does it handle the collection and auditing of shift data, it can keep track of relevant labor legislation and automatically warn you if any of your workers’ shifts are in breach of the law wherever you operate. So don’t be afraid of predictive scheduling. It’s easier to comply with than you think, and can make your business run more smoothly.

April 28, 2021August 31, 2022

Biden administration announces $15 minimum wage for all federal contractors

On April 27, the White House announced that effective Jan. 30, 2022, all federal contractors will be required to incorporate a $15 minimum wage in new contract solicitations, and by March 30, 2022, all federal agencies will need to implement the minimum wage into new contracts and into existing contracts with annual options to renew.

The Executive Order that implements these changes will also tie this new minimum wage to inflation and adjust accordingly annually, eliminate the tipped minimum wage for federal contractors by 2024, and extends the required $15 minimum wage to federal contract workers with disabilities.

“But Jon,” you ask, “I’m not a federal contractor; why should I care?”

You should care because this Executive Order will move the minimum wage needle. Other companies will have to begin voluntarily offering a $15 minimum wage to compete in the job market for new hires. As a result, eventually and over time a $15 minimum wage will spread to all employers nationwide. If Congress won’t act on this issue, President Biden will force employers to act on their own.

April 27, 2021November 14, 2022

Wage law implications of employer-sponsored earned wage access products

Nearly 40 percent of Americans struggle to cover an unexpected $400 expense, according to a 2019 report by the Federal Reserve.

Earned wage access products, or EWAPs, offer a potential solution to this problem by allowing employees to be paid in real time for the hours the employee has already worked, instead of waiting until payday to receive payment. Each EWAP employs a different system for advancing earned wages and recouping those amounts from the employer.

The majority of EWAPs require employees to download an application on their phone, through which employees can request an advance on their earned wages. The advance on the employee’s paycheck is typically paid to the employee by depositing the funds into an account or loading it onto a payroll card. This advance is then deducted from the employee’s next paycheck, along with any applicable fees.

Explaining the EWAP models

There are two distinct EWAP models: employer-sponsored and direct-to-consumer. In an employer-sponsored model, the employer directly contracts with the EWAP application provider and the EWAP application is integrated into the employer’s payroll systems. Examples of employer-sponsored EWAP applications include Instant, DailyPay and Earnin. In the direct-to-consumer model, the EWAP provider offers services directly to the employee and recoups advanced funds directly from the employee’s bank accounts after the employee gets paid.

EWAPs provide employees with greater flexibility to use their paychecks in a manner that fits their financial needs. Employees can meet unexpected expenses without resorting to overdrafts, high interest credit cards or payday loans.

By offering EWAPs as part of their benefit packages employers can help curb employee financial stress, which can lower employee absenteeism and potentially increase employee productivity and employee retention. Companies including Walmart and McDonald’s offer EWAP options to its employees.

State, federal oversight of EWAPs

Due to the nascency of EWAPs, there is little regulation at either the state or federal levels. Regardless, employers considering EWAPs as part of their benefit packages must carefully evaluate whether the EWAP implicates wage laws that an employer must comply with.

For instance, employers considering EWAPs that deposit an employee’s earned wages into an account set up by the EWAP provider could run afoul of state direct deposit laws.

Most states, such as New York and California, only permit employers to pay wages by direct deposit with the written consent of the employee. Employee authorizations allowing direct deposits of wages into an employee’s bank account may not extend to the deposit of funds into a separate EWAP provider created account. Accordingly, employers should consider obtaining additional written authorizations from employees to deposit their earned wages into an EWAP account to ensure compliance with applicable direct deposit laws.

Potential for additional fees

As an alternative to direct deposit, employers also have the option to utilize EWAPs that deposit an employee’s earned wages onto payroll cards. Employers should be wary of any transaction or loading fees imposed on an employee by the EWAP provider or the third-party payroll card issuer. This is because many states, such as California, require employees paid via a payroll card to have access to their full wages without any fees. In other states, such as Minnesota, while employers are prohibited from charging an employee any participation or loading fees to receive wages, EWAP providers may charge employees transaction fees to access their earned wages. In such circumstances, the employer should provide the employee with a written disclosure upfront stating the terms and conditions of the payroll card option, including a complete itemized list of all fees that may be deducted from the employee’s payroll card account. Alternatively, in order to avoid this potential issue altogether, employers should consider paying all such fees instead of the employee, if possible.

Most EWAP providers charge a monthly membership fee ranging from $5 to $8 a month or a per transaction fee ranging from $1.99 to $3.99 per transfer, which are either paid by the employer or the employee. These fees are typically deducted from an employee’s paycheck, along with the advanced wages. Generally, an employer may not deduct or withhold any part of an employee’s wages without employee authorization. Albeit nominal, membership and transaction fees may be considered as wage deductions. As a result, employers should consider paying any such fees on behalf of its employees, or obtain written authorization from its employees allowing EWAP providers to directly charge the employee any fees, in order to comply with wage deduction requirements.

Wage assignment laws

Moreover, EWAPs that require employers to transfer an employee’s earned wages into an account set up by the EWAP provider may also implicate assignment laws. Wage assignments are prohibited in some states and regulated to varying degrees in others. Some states require specific authorizations or significantly limit how much money an employee can assign to a third party.

In California, no more than 50 percent of the employee’s wages may be assigned at the time of the payment of wages, and the wage assignment must be notarized, and include written consent of the employee’s spouse if married. This is an important consideration for employers, as wage assignment laws vary from state to state.

As more employers offer EWAPs as part of their benefit packages, it is imperative that employers closely examine the particular EWAP’s payment structure in order to understand the benefits and legal risks of the application. At a minimum, employers should consider paying all transaction fees and obtain any relevant authorizations so as to not infringe on any state-specific wage laws.

Employers should also assess whether EWAPs implicate state and federal consumer protection, data security and privacy laws. Given that there is little current regulation on the use of such products, employers should insist on limitation of liability and indemnification clauses while negotiating contracts with EWAP providers to ensure that they will not be liable for any legal issues implicated by EWAPs in the future.

Avoid added expenses due to data entry errors and payroll oversights. Integrate your payroll system with Workforce.com’s platform for automated timesheet exports and calculations, allowing you to stay on top of your wage costs.

April 15, 2021June 29, 2023

Wage and hour violations during staff gatherings lead to substantial Labor Department fines

Employee meetings are typically meant to discuss policies, reinforce training and build organizational transparency.

Two companies discovered the hard way that if not properly monitored, such gatherings can violate wage and hour and overtime laws, leading to the Fair Labor Standards Act violations and steep financial penalties.

Investigations by the Department of Labor Wage and Hour Division determined that Keystone Adolescent Center Inc. owed workers $44,858 in back wages for time spent in meetings, while Maggiano’s Little Italy restaurant in Philadelphia owed 82 employees $116,308 in back wages for minimum wage and overtime violations stemming from pre-shift meetings.

According to investigators, supervisors and behavior specialists gathered every two weeks at Keystone Adolescent Center’s five Greenville, Pennsylvania, facilities where they discussed policy changes, completed required training and reviewed safety procedures to help the at-risk youth they serve.

Also read: Labor Department reopens the floodgate to liquidated damages in wage and hour investigations

Keystone also used the meetings to distribute paychecks, yet failed to pay 80 workers who attended these meetings and required training outside of their regular shifts for the time they spent at them. The investigation determined that — by excluding this work time from employees’ pay — Keystone Adolescent violated the FLSA, leading to the recovery of back wages for the workers.

Wage and hour violations during staff meetings

According to an April 5 Labor Department press statement, investigators found that Keystone paid employees for time spent at staff meetings and required training only if those meetings and training occurred during their scheduled shifts.

The employer failed to pay workers attending outside of their normal work hours for time they spent in those meetings and required training. Failing to record and pay for this time violated FLSA overtime and recordkeeping requirements, according to the statement.

“Employers must pay employees all the wages they legally earn, which includes paying them for any hours they work outside of their scheduled shifts,” said Wage and Hour Division District Director John DuMont in Pittsburgh.

Complying with federal, state laws

Aimee Delaney, a labor and employment law expert at law firm Hinshaw & Culbertson in Chicago, said that any time an employer requires a non-exempt employee’s attendance at a meeting, training or other mandatory event, the employer needs to realize that this time is considered hours worked and is compensable under state and federal law. This also means that if the time spent at the mandatory meeting puts the employee over 40 hours for the week, the employee is entitled to overtime for any time over 40 hours.

Aimee Delaney, wage and hour violation — Attorney Aimee Delaney, Hinshaw & Culbertson

The employer also needs to understand that state law may require overtime at different thresholds.

“One easy question an employer can ask itself when trying to determine if the time is compensable is whether the meeting or other event was mandatory, as that is usually a sign that the time must be paid,” Delaney said.

Compensation for pre-shift meetings

Oftentimes restaurant managers hold pre-shift meetings to motivate their employees, reinforce training or update the day’s menu. It is time for which employers typically should also be paying their workers, which is the lesson Maggiano’s Little Italy restaurant learned the hard way after a Labor Department investigation.

Investigators found minimum wage and overtime violations of the FLSA. In addition to the $116,308 in back wages, the Wage and Hour Division assessed a civil money penalty of $68,060 as investigators deemed the violations as willful, according to an April 12 Labor Department press statement.

The division determined that by failing to pay workers for time they spent attending pre-shift meetings, the restaurant failed to pay the required federal minimum wage. Maggiano’s Little Italy required dining room servers to attend 15- to 30-minute meetings before the start of their scheduled shifts. When employees worked more than 40 hours in a workweek, this unpaid time triggered overtime violations, according to the Labor Department.

“Restaurant workers are often among the nation’s lowest paid, and most vulnerable, particularly during the coronavirus pandemic,” said Wage and Hour District Director James Cain in Philadelphia. “When employers fail to account for all hours employees work, they deprive workers of their hard-earned wages. Other employers should use the outcome of this investigation as an opportunity to review their own pay practices, and ensure they comply with the law.”

Delaney noted that the Labor Department has a number of resources that explain the law and regulations on this topic specifically and there are specific rules on when activities by a non-exempt employee outside of work hours must be considered hours worked and/or compensable.

She also pointed out that vigorous enforcement of wage and hour and overtime laws is nothing new.

“While there may be a number of areas that employers can expect stricter compliance enforcement on with the new administration, this is a fairly settled area of the law and violations of this nature have been and will continue to be enforced regardless of a change in administration at the top,” she said.

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February 8, 2021February 23, 2021

Have you felt the pain of a wage-and-hour investigation or lawsuit?

For the past three years, the Department of Labor has been trying to get employees PAID for their unpaid overtime and minimum wages.

That’s PAID, as in the Payroll Audit Independent Determination program, a creation of the Trump administration that allowed employers to self-report FLSA violations to the Department of Labor without risk of litigation, enforcement proceedings, or liquidated damages.

As of last week, however, the PAID program is history, as the DOL announced its immediate end.

From the DOL’s news release:

“Workers are entitled to every penny they have earned,” said Wage and Hour Division Principal Deputy Administrator Jessica Looman. “The Payroll Audit Independent Determination program deprived workers of their rights and put employers that play by the rules at a disadvantage. The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.”

Pay close attention to that last sentence: “The U.S. Department of Labor will rigorously enforce the law, and we will use all the enforcement tools we have available.” The era of federal agencies playing nice with employers through education and outreach is over. At least for the next four years, businesses should expect agency priorities to be enforcement, not education.

This means that if you have not recently audited all of your employment practices, your time is running out.

In the context of the FLSA, the question is not whether companies need to audit their wage and hour compliance, but whether they properly prioritize doing so before someone calls them on it.

It is immeasurably less expensive to get out in front of a potential problem and audit on the front-end instead of litigating or settling a claim on the back end. The time for companies to get their hands around these issues is now, and not when employees, their lawyers, or the DOL start asking the difficult questions about how employees are paid.

January 27, 2021

Tread carefully if offering employees financial incentives to get the COVID-19 vaccine

To a nation waiting for action, let me be clearest on this point: Help is on the way.

Those were the words of President Biden in announcing the ordering of 200 million additional COVID-19 vaccine doses, a hike in the distribution of doses to states, and a promise that there will be enough doses to fully vaccinate 300 million Americans by the end of summer.

It’s an ambitious plan, but it’s what we need to end a pandemic that has already claimed the lives of more than 425,000 Americans and will claim hundreds of thousands more before we close the book on COVID-19.

Vaccines, however, only work if people actually accept syringes in their arms. Too many of us say that they won’t.

According to one recent survey, 39 percent of Americans say that they either probably or definitely will not get the COVID-19 vaccine when it becomes available to them. Another survey pegs the number at 37 percent. While these percentages are trending down, and more of us say that we trust the vaccine and will get it, the needle on this issue isn’t moving quickly enough. According to Dr. Fauci, to reach herd immunity (the only thing that will end this pandemic), we need between 75 and 85 percent of the population to be vaccinated.

To overcome this vaccine hesitancy, some employers are offering their employees a financial incentive to obtain the COVID-19 vaccine when it becomes available. Retailers such as Trader Joe’s, Dollar General, and Instacart are offering small incentives such as a couple of hours of additional paid time off, or nominal (e.g., $25) stipends. Nursing homes, whose employees come in contact with our most vulnerable population, are offering similar incentives to their workers. Others are offering free marijuana (full disclosure: they are marijuana dispensaries).

If you are considering offering a financial incentive to entice your employees to obtain the vaccine when it’s available to them, I caution you to tread carefully to make sure that you do it within the bounds of our equal employment opportunity laws.

1. Vaccination rules must have exceptions for employees’ disabilities under the ADA and employees’ sincerely held religious beliefs under Title VII. For this reason, if you are offering employees a financial incentive to get vaccinated, you better be prepared to offer the same exact incentive to those who cannot get vaccinated because of one of these legally protected reasons.

2. Incentive programs must comply with the EEOC’s wellness program regulations. Admittedly, these regulations will not be final until March 8.

Given that COVID-19 vaccinations will stretch for months beyond that date, however, employers should be aware of these rules and the risks they pose. Under these proposed and soon to be final rules, employers may not offer any more than a “de minimis incentive” to encourage employees to participate in a wellness program such as one that incentivizes the receipt of the COVID-19 vaccine.

The EEOC does not define “de minimus,” but uses the example of a water bottle or a gift card of modest value as “de minimus” and a $50 per month reduction in annual health care costs, paying for an annual gym membership, or an airline ticket as “not de minimus.”

Employers are considering bribes because they work. We just need to make sure that we are doing so within the confines of the law. We don’t want to solve one problem only to create another.

October 29, 2020June 29, 2023

The rundown on wage law compliance: What organizations should know

Paying people properly is crucial to workforce management. But it goes beyond releasing pay on time. It’s about compensating workers according to the work they do and adhering to all the wage laws that apply — and there are many that organizations need to navigate.

Andrew Stirling, head of product compliance at Workforce.com, sheds light on what companies need to know about complying with wage laws, the real cost of failure to comply and the different ways organizations can meet requirements under varying rules and regulations.

Setting a compliance strategy

“To have a compliance strategy, you need to start by knowing what the rules are. That might sound trite, but you need a system for keeping current as the rules change,” Stirling said.

Businesses are generally good at evolving their practices in the face of law and regulation changes. While there’s a level of adjustment when new laws are implemented, companies tend to adapt efficiently, he explained.

Identifying the type of employment relationship a business has with its workers is crucial to getting the rules right. This has become more important as the types of work relationships have multiplied.

“With the gig economy growing, more and more workers are being engaged to work in nontraditional ways. Generally, a worker in your business will be either an employee or an independent contractor. Businesses need to be careful to assign workers to the right category, because getting this wrong means that they may not meet all the wage laws that apply,” said Stirling.

Once the rules are known, it’s time for the business to assess and implement solutions to comply with those rules. The solutions can be more than just the obvious.

For example, employee scheduling can play a key role in wage compliance. When creating schedules, managers need to be aware of when overtime will apply and how much the business must pay for those hours when it does. This becomes challenging for managers with a group of employees under different working arrangements. Without good solutions, things can fall through the cracks, resulting in underpayment or higher labor costs.

The real cost of noncompliance

Noncompliance can result in crippling financial repercussions, but it also can cause reputational damage.

“The financial costs of noncompliance are obvious,” Stirling said. “For example, if employees have been underpaid, the business might have to make large amounts of back payments in one hit. You need to have the cash on hand for that.” There are other financial costs, like penalties and legal costs to contest a court case.

But there’s also the real potential for reputational damage. That’s often a more significant motivation for employers to comply.

“An underpayment scandal can bring companies to their knees. Customers can decide to take their business elsewhere. People are less likely to visit a restaurant or shop that has been reported for underpaying their people,” he said.

Aside from a less favorable customer perspective, companies with underpayment issues can risk losing in the labor market, he said. When looking for a job, people tend to sort out who the good and bad players are, and wage compliance can be a huge factor.

Ensuring compliance at all levels

While wage compliance may mostly be seen as a job for payroll teams, HR and managers also play a crucial role. Payroll teams would primarily be responsible for the final pay outcome.

“From a payroll perspective, I would be focused on two things. One is making sure that I understand the complex wage rules that apply. The second thing is making sure that I have the correct data. Am I getting the information that I need to properly calculate pay? Are we capturing time and attendance accurately? Yes, knowing the rules are important, but the inputs need to be correct, too,” Stirling said.

HR has a leading role here. They need to have a good understanding of the business and the particular wage rules that apply. It’s also their responsibility to ensure that the right systems are in place for wage compliance.

“In my experience, HR will often document the duties of a position and then help to assign those duties to a particular minimum wage,” Stirling explained.

Managers, meanwhile, have a role in ensuring that all inputs are correct. They monitor that employees are recording time correctly and that there are no discrepancies.

“If rules in a particular jurisdiction require employees to be paid more for doing particular types of work, managers are the ones who will know,” he said. The extra payments might include allowances, commissions, bonuses and tips to the extent that they are relevant in a jurisdiction.

Managers generally play less of a role in ensuring the amount on a paycheck is correct. Still, they follow processes and systems that ensure all the information passed on to payroll is accurate.

Compliance challenges per industry

Different industries face varying compliance challenges. A lot of this difference comes from meeting customer demand or expectations.

If customer demand comes in after standard business hours and on weekends, that’s when employees need to be at work. Working outside standard business hours often will entitle an employee to overtime or other financial obligations.

“If you’re in retail or hospitality, you’d miss out on opportunities if you just open from 9 to 5. Efficient workforce management can meet these demands with cost-effective shifts without compromising service and wage law compliance,” he said.

Similar issues arise in industries that make use of machines and equipment that are most efficiently run 24/7. Mining, oil and gas, and manufacturing companies often run this way. Stirling said that this scenario also puts businesses in a space where they pay different penalties that come with varying shifts and work hours.

On the other hand, there are many industries where working standard office hours is still the norm. “Calculating pay for people who get to work at 9 in the morning and leave at 5 in the afternoon is usually relatively easy,” he said.

Ways to stay at pace with labor law changes

There are many moving parts involved with wage law compliance, and staying on pace is crucial.

“Going to the source is always best. That’s a good start,” Stirling said. He advised signing up for government websites that explain what the law is. Businesses can often sign up for alerts to be updated should any of the laws change.

There are also subscription services to stay abreast of the labor law, including publications and journals. Another option is to join employer associations that can help keep track of changes as well.

Overcoming wage compliance challenges

Having the right people, implementing the right systems, and investing in the right technology — Stirling believes that these things can help businesses comply with wage laws.

Computers are binary and will give an output based on the input. Automated compliance is more efficient and effective than human-driven compliance. Companies must implement the right systems to make sure that both people and technology can function effectively.

“I’m a big believer in technology as a solution to a lot of these problems,” he said. “That’s where the future is. As technology becomes more powerful, the types of work that people are doing will change. They’ll spend less time crunching numbers, for example, to make sure pays are right and spend more time checking that the inputs into the technology are right.”

September 30, 2020November 16, 2020

COVID-19, hazard pay and overtime

Wage and hour compliance is complicated enough for employers. Layer a pandemic on top of wage and hour compliance, and you have an absolute nightmare for companies.

Consider, for example, hazard pay.

Suppose you are a private-sector employer that decides to offer your employees a monetary incentive to return or remain at work during the pandemic. Must you include this hazard pay in the regular rate when calculating the overtime premium for non-exempt employees receiving this payment?

According to the Department of Labor, the answer is yes.

Yes. Payments your employer provides you to perform work constitutes compensation for employment that must be included in the regular rate, subject to eight exclusions described in section 7(e) of the FLSA. None of those exclusions apply to the incentive payments described above.

The answer changes, however, if the payments are made pursuant to a state or local government program, directly from the government or indirectly passed through the employer.

Bottom line? Wage and hour issues are complex; pandemic wage and hour issues are even more complex. If you have any doubt whatsoever about whether you are correctly paying your employees, reach out to your friendly neighborhood employment lawyer for guidance.

August 26, 2020

Coronavirus Update: New DOL guidance explains employers’ obligation to track compensable telework time

timeclock, wage and hour, schedule, timesheet rounding

With more employees working from home than ever before (thanks to COVID-19), employers are facing the new reality of tracking working time for remote workers and paying for that time.

The DOL recently published a new Field Assistance Bulletin explaining the obligation of employers to pay for non-exempt employees’ “working time” and the obligation of those employees to track this time. It’s not a change in the law, but instead a great reminder of the obligations the FLSA imposes on employers and employees.

An employer is required to pay its employees for all hours worked, including work not requested but suffered or permitted, including work performed at home. If the employer knows or has reason to believe that work is being performed, the time must be counted as hours worked. An employer may have actual or constructive knowledge of additional unscheduled hours worked by their employees, and courts consider whether the employer should have acquired knowledge of such hours worked through reasonable diligence. One way an employer may exercise such diligence is by providing a reasonable reporting procedure for nonscheduled time and then compensating employees for all reported hours of work, even hours not requested by the employer. If an employee fails to report unscheduled hours worked through such a procedure, the employer is not required to undergo impractical efforts to investigate further to uncover unreported hours of work and provide compensation for those hours. However, an employer’s time reporting process will not constitute reasonable diligence where the employer either prevents or discourages an employee from accurately reporting the time he or she has worked, and an employee may not waive his or her rights to compensation under the Act.

What does this mean:

Generally an employer must pay a non-exempt employee for all time during which the employer knows, or should know through the exercise of reasonable diligence, the employee is working.
If an employer has reasonable reporting rules detailing an employee’s responsibility to report the employee’s working time, an employer must pay the employee for all such time reported.
However, if an employee fails to report time pursuant to those rules, the employer is excused from any obligation to pay for that unreported time. An employer is not required to undertake efforts efforts to investigate, uncover, and pay for unreported time.
An employer cannot, though, prevent or discourage employees from reporting working time to avoid paying for it.

What should you be doing now? Dust off your handbook and make sure it contains a policy explaining to employees their obligation to report working time and advising that they will not be paid for unreported time. Absent such a policy, you are responsible to exercise reasonable diligence to discover time employees are working, an exercise that will almost certainly miss time and result in exposure for unpaid time/overtime.