Greetings!
Welcome to Kiesling Associates' new monthly HR Matters newsletter.
Kiesling Associates is a CPA & Consulting firm in business since 1952. Our niche is in providing HR services to small and mid-sized organizations. We will provide proven solutions to enhance your business while allowing you to spend more time concentrating on operational matters.
Sincerely,
Brian Blahnik
Kiesling Associates LLP
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Auditing Your Human Resource Practices
Effective management of human assets is critical to business success. In an increasingly complex and litigious business environment, personnel problems can have a detrimental effect on a company's bottom line. Companies must operate within the confines of a heavily-regulated employee environment. This includes dealing with a seemingly endless number of complex laws and regulations. Noncompliance problems can be, and frequently are, the basis for significant financial risk.
A proactive measure that a company can take as preventative maintenance against potential problems is to conduct a Human Resources compliance audit. These types of audits are an essential part of a comprehensive strategy to help a company avoid legal liability.
An HR audit is a diagnostic tool. It allows an employer-through a comprehensive, systematic assessment-to examine and evaluate its personnel-related systems and compliance with various federal and state employment laws. Generally, depending upon the scope and reason for conducting the audit, an employer will want to focus on the following eight areas:
- Record Keeping (personnel files, confidential records, I-9 and other forms.)
- Employee Communications (handbook, policies and procedures, required postings.)
- Hiring (effective interviewing, job descriptions, background checks, offers, application.)
- Employee Relations (performance management, disciplinary procedures, employee recognition, turnover.)
- Mandated Benefits (HIPAA, unemployment insurance, workers' compensation, COBRA.)
- Group Benefits (medical & dental, time-off, proper disclaimers, retirement plans, communication tools.)
- Compensation (methods, consistency, exemption laws, payroll practices.)
- Training and Development (employee orientation, staff development, technical and safety, leadership, career planning.)
An HR audit provides an opportunity to assess what an organization is doing right, as well as how things might be done differently, legally, more efficiently or with reduced costs. When planned and conducted effectively, the audit should help managers:
- Ensure legal compliance.
- Identify opportunities for improvement, as well as areas of potential future risk.
- Improve efficiency and productivity so that the organization can better serve employees and customers.
- Strengthen current systems, processes, and procedures while concentrating on effectiveness and efficiency.
- Ensure the organization's practices and policies are in sync with the organization's long-term business strategy.
- Improve employee communications and morale.
- Provide a "reality check" in order to identify any gaps between what is intended and what is actually being delivered.
An HR audit really boils down to identifying problems and finding solutions in an attempt to address problems before they become unmanageable or costly. Managers must continually review the company's practices against the changing legal and regulatory landscape, as well as against the best practices of other companies. Identifying gaps between policy and practice can not only increase legal compliance but can also increase staff effectiveness and enhance overall employee satisfaction. |
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Employee Handbooks: Common Legal Mistakes
Your employee handbook is an important document. Not only does it help employees understand company policies, promote solid company-employee communication and set a consistent standard of expectations, but it can also have serious legal ramifications.
In many employment lawsuits, your handbook will be a key piece of evidence that can either protect your company or provide ammunition for the employee (or former employee) who is suing you. It is vital that your handbook is thorough, up to date, legally compliant, understandable and readily available to all employees. It is also wise to make employees sign a form stating that they received and reviewed the employee handbook, so that they cannot later claim during a lawsuit that they were unaware of a particular policy.
The following areas are examples of common legal mistakes employers make with their employee handbook.
Changing Laws and Requirements
It is vital that you update your handbook regularly to comply with new and changing laws, both federal and state. In addition, you should provide employees with all handbook updates (or notify them if the handbook is published online). For significant legal changes, you may want to have employees sign another document acknowledging that they are aware of the altered policy. In addition, it is a good idea to have a disclaimer that the handbook may change at any time.
Employee Rights
Many handbooks make the mistake of outlining employer rights but glossing over the rights of employees. Some employers fear that including employee rights will encourage more employees to file lawsuits, but omitting them leaves you open to significant legal liability.
Employment Relationship
Your handbook needs to be explicit about the at-will employment relationship - that the employer (and the employee) has the right to terminate employment at any time, with or without cause. Also, be sure you don't have other policies that undermine this one, such as probationary periods (which can sound like employment is guaranteed for at least as long as the period) or progressive discipline policies (which may not clarify that an employee may be terminated at any time).
Exempt or Non-Exempt Classification
Wage, hour and overtime complaints are among the most common legal actions taken by employees or former employees. Be sure your handbook is clear in the distinction of exempt and non-exempt, and that all employees are classified properly. Also make sure that your overtime policy complies with state and federal laws. For instance, if you have a policy stating that overtime must be approved, you cannot mandate that unapproved overtime will not be paid - you are legally required to pay it. You can, however, otherwise discipline employees for violating such a policy.
Computer Usage
Your handbook must make clear that the company owns its computers, email and all data, and that nothing on a computer is private. You should also have clear policies if your employees have other electronic company devices.
Follow Through
Providing a comprehensive, compliant handbook is only the first step - your company must always follow through with the policies outlined. For instance, if your handbook discusses a specific procedure for conducting performance reviews, it is important that you follow it.
© 2011 Zywave, Inc. All rights reserved. |
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Wage & Hour Violations - Time Clocks and Rounding
First of all time clocks are not required. Where time clocks are used, employees who voluntarily come in before their regular starting time or remain after their closing time, do not have to be paid for such periods provided, of course, that they do not engage in any work.
That is, their early or late clock punching may be disregarded. Minor differences between the clock records and actual hours worked cannot ordinarily be avoided, the regulations say, but major discrepancies should be discouraged since they raise a doubt as to the accuracy of the records of the hours actually worked.
Example: Rounding
Many companies, particularly where time clocks are used, follow the practice of recording the employees' starting time and stopping time to the nearest 5 minutes, or to the nearest one-tenth or quarter of an hour. Presumably, this arrangement averages out so that the employees are fully compensated for all the time they actually work.
For enforcement purposes, the wage/hour division accepts this practice, provided that it is used in such a manner that it will not result, over a period of time, in failure to compensate the employees properly for all the time they have actually worked.
An employer will likely violate the FLSA minimum wage and overtime pay requirements if the employer always rounds down. Employee time from 1 to 7 minutes may be rounded down, and thus not counted as hours worked, but employee time from 8 to 14 minutes must be rounded up and counted as a quarter hour of work time.
Example: Standard Rounding
An employer docks Jack's pay by a full quarter hour (15 minutes) when he starts work more than seven minutes after the start of his scheduled shift. Does this practice comply with the FLSA requirements? Yes, as long as the Jack's time is rounded up a full quarter hour when he starts working from 8 to 14 minutes before his shift or if the employee works from 8 to 14 minutes beyond the scheduled end of his shift.
Example: Rounding to Overtime
Susan's schedule is 7 a.m. to 3:30 p.m. with a thirty minute unpaid lunch break. She clocks in 10 minutes early every day and clocks out 7 minutes late each day. The employer follows the standard rounding rules. Is Susan entitled to overtime compensation? Yes. If the employer rounds back a quarter hour each morning to 6:45 a.m. and rounds back each evening to 3:30 p.m., Susan will show a total of 41.25 hours worked during that workweek. She will be entitled to overtime compensation for the 1.25 hours over 40.
Example: 15-Minute Increments Only
An employer only records and pays for time if employees work in full 15 minute increments. Robert is paid $10 per hour and is scheduled to work 8 hours a day Monday through Friday, for a total of 40 hours a week. Robert always clocks out 12 minutes after the end of his shift. Robert is paid $400 per week. Does this comply with the FLSA? No. Robert worked an hour each week (12 minutes times 5) that was not compensated. (And that hour would be at the overtime rate.) |
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided "as is," with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose. |
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HR CONSULTING
Brian Blahnik, PHR Sr. HR Consultant
608-664-9110
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