By Mary Dunlap, CFP®, and Debra M. Girvin, SPHR
As a business owner, your success hinges not only on your efforts, but those of your employees. Fumbling the employer-employee relationship can create unhappy workers and potentially cost you thousands of dollars in fines-not to mention the loss of good will, time and training. Here are five best practices when it comes to human capital. Look for more best practices, including how to handle worker's compensation and the Family Medical Leave Act, in the January/February 2010 issue of Practice Management Solutions.
Pay Overtime When Appropriate
Simply deciding to pay someone a salary does not automatically make them ineligible or exempt from overtime. Many salaried employees are overtime eligible. Understanding who is eligible for overtime and when it needs to be paid is one of the most confusing topics for business owners. See the sidebar for a quick test of overtime eligibility.
As a business owner, you need to be aware of and practice the correct federal and state regulations, because the burden of proof is on the employer in cases where overtime should have been paid. What is considered overtime varies by state and whether you are covered by a collective bargaining agreement.
It is not uncommon for agencies, lawyers and courts to look back several years for past payments owed as well as look at other employees to see if incorrect practices were widespread. Add up the time spent in an audit, potential overtime pay going back a few years-even a class-action lawsuit-and the dollars add up!
Keep Personnel Folders Confidential
When an employee requests to see their personnel folder, the employer can't refuse. State laws vary as to how and what employees can view. You should know your state's procedures to avoid possible negative publicity and reactions. Contact your state's department of labor for details. To be certain you are keeping your records in an appropriate fashion, consult a human resource professional or legal counsel.
Medical records of employees and their families require special treatment. The Americans with Disabilities Act (ADA) requires that medical information about employees and family members be held in a separate, secure folder or location, with limited access by the firm's management. This information is confidential and should only be shared with those having a bona fide reason to access the information.
The privacy and security rules of the Health Insurance Portability and Accountability Act (HIPAA) also affect employers when it comes to employee medical information when applying for benefits or for specific employer-required tests such as drug tests and physicals.
Be very careful what you keep in employee folders. Know who can view the employee's folder and what procedures are required to release information.
Have Clear Job Descriptions
Your planning or advisory practice likely has diverse functions requiring different talents, schedules and work performance for each role. At the same time, employees are seeking to balance their work and personal schedules.
When business expectations for process, procedure and results don't match employees' expectations for flexibility, reward and promotion, you get frustration and loss of morale. And we know that low morale translates into lost productivity and possible employee turnover. Various studies have calculated the cost of employee turnover to be anywhere from one to three (and more) times the annual salary for the position. Maintaining solid job expectations and standards effectively bridges gaps and misunderstandings.
Job descriptions should contain:
- Tasks-the specific work required to accomplish business goals.
- Schedule-the hours and days worked to accomplish the tasks and expected business results.
- Talents and experience-the qualities that are absolutely required and that the business will not train for; however, you could list what can be taught.
- Expectations and standards-the details on how the tasks should be completed, including the time it should take, work style, method, communication and essential deadlines.
When defining expectations for an existing position and employee, be sure to include the employee's thoughts when defining realistic expectations.
Provide Solid Workplace Policies
Solid workplace policies can attract and retain employees because they define the culture of the organization by giving clear guidance, but they must also be followed in a fair and respectful manner. Today's workforce is culturally and generationally diverse. Employers want to communicate how to work and function in the workplace, and employees want to work for an employer who understands their needs.
Properly worded workplace policies (and job descriptions) should define consequences of actions. You increase morale and good will when everyone knows what is expected and there is a sense of fairness.
Sample contents of a thorough workplace policy package include:
- Introduction (purpose, changes, about the company, employee relations philosophy)
- Equal employment opportunity statement
- Categories of employment (exempt, non-exempt, full-time, part-time, regular, temporary)
- Recording time (hours worked, anniversary dates)
- Payroll
- Immigration Reform and Control Act (Form I-9)
- Where job duties are recorded and when performance appraisals are scheduled
- Employee benefits (medical, life, disability, time off, holidays, etc.)
- Leave of absence (military, bereavement, etc.)
- Care of equipment
- Electronic communications policies
- Dress code
- Employee resignation (giving notice)
- Adverse weather conditions
- Harassment
- Sexual harassment
- Code of conduct
- Workplace violence
Mary Dunlap, CFP®, of Mary Dunlap Consulting, helps financial planning firms attract, develop and retain the best people for their teams. Debra M. Girvin, SPHR, has worked in human resources and benefits management since 1985. Both Dunlap and Girvin are members of the Society for Human Resource Management. Contact them at marydunlapconsulting@verizon.net.
Sidebar
Should You Pay Overtime?
The Fair Labor Standards Act (FLSA) provides minimum wage and overtime pay standards, however certain types of employees are exempt from overtime. Understanding which employees are exempt and which are not can be tricky. Here is a sample test to assist you, however, do not rely solely on this test. Use this is a guideline and consult an expert.
Testing for Exempt Status
- Employee must be compensated on a salaried basis, as defined in the regulations, at a rate not less than $455 per week.
- Employee's primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise.
- Employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent.
- Employee must have the authority to hire or fire other employees, or the employee's recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
Administrative Exemption
To qualify for the administrative employee exemption, all of the following must be met:
- Employee must be compensated not less than $455 per week.
- Employee's primary duty must be performance of office or non-manual work directly related to the management or general business operations of the employer or employer's customers.
- Employee's primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
Professional Exemptions
To qualify for the learned professional employee exemption, all of the following must be met:
- Employee must be compensated not less than $455 per week.
- Employee's primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment.
- The advanced knowledge must be in a field of science or learning and must be customarily acquired by a prolonged course of specialized intellectual instruction.
To qualify for the creative professional employee exemption, all of the following must be met:
- Employee must be compensated not less than $455 per week.
- Employee's primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
Computer Employee Exemption
To qualify for the computer employee exemption, the following must be met:
- Employee must be compensated either on a salaried basis of not less than $455 per week or, if compensated on an hourly basis, at a rate not less than $27.63 an hour.
- Employee must be employed as a computer systems analyst, computer programmer, software engineer or other similarly skilled worker in the computer field performing the duties described below:
- The application of systems analysis techniques and procedures, including consulting with users to determine hardware, software or system functional specifications.
- The design, development, documentation, analysis, creation, testing or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications.
- The design, documentation, testing, creation or modification of computer programs related to machine operating systems.
- A combination of the aforementioned duties, the performance of which requires the same level of skills.
Outside Sales Exemption
To qualify for the outside sales employee exemption, all of the following must be met:
- Employee's primary duty must be making sales (as defined in FLSA), or obtaining orders or contracts for services or for the use of facilities for which consideration will be paid by the client or customer.
- Employee must be customarily and regularly engaged away from the employer's place or places of business.
Source: U.S. Department of Labor, Fair Labor Standards Act (FLSA) exemption from minimum wage and overtime pay provided by Section 13(a)(1) as defined by Regulations 29 CFR, part 541.
