Top 10 HR Traps For Small Businesses. 2015, Paychex, Inc. All rights reserved.

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1 Top 10 HR Traps For Small Businesses 2015, Paychex, Inc. All rights reserved.

2 Paychex HR Solutions Top 10 HR Traps Disclaimer: This Paychex seminar is for general information purposes only. It should not be considered legal advice or interpreted as a legal opinion of any specific facts or circumstances. If you require legal or accounting advice or need other professional assistance, you should consult an attorney or other professional advisor to discuss your particular facts and circumstances. 2

3 Background Paychex offers: 45 years of experience America s largest provider of outsourced HR Services Industry leader in employee benefits and health insurance administration Dedicated human resources professionals 3

4 Today s Agenda Identify small business HR needs and discuss how to proactively manage issues. Job Descriptions Forms I-9 Employee Classifications Payment of Overtime Hours Handbook Policies Workplace Harassment Family and Medical Leave Act (FLMA) Health Care Reform Employment-at-Will Anti-Discrimination 4

5 JOB DESCRIPTIONS HR ISSUE #1

6 Job Descriptions: What Is It? Job descriptions may assist you in: Complying with the Americans with Disabilities Act (ADA) Determining exempt and non-exempt classifications Providing an accurate picture of the job to applicants Interviewing for and identifying key skills and abilities Setting goals Measuring and tracking performance 6

7 Job Descriptions: Pitfalls to Avoid Using outdated job descriptions may: Limit your ability to hire the most qualified candidate Make it more difficult to conduct performance management tasks 7

8 Job Descriptions: 1. Do you have updated and accurate job descriptions for all positions? 2. Do you have a specific point in your business process when you review job descriptions? 3. Are you familiar with the essential functions of each position? 8

9 Job Descriptions: Take Action Today Update current job descriptions. Ensure all required skills and job related experience necessary for the position are listed. Remove skills that are outdated; add new ones as needed. Dedicate a point in time to review and update job descriptions. For example, any time the duties of the position change, or when hiring a new person. 9

10 FORMS I-9 HR ISSUE #2

11 Forms I-9: What Is It? Forms I-9: Are REQUIRED to document employee identity and eligibility to work in the United States Are required by the DHS under the Immigration Reform and Control Act (IRCA) Are required for all employees hired after November 6, 1986 Note: Some employers are ALSO required to use E-Verify. 11

12 Forms I-9: Pitfalls to Avoid Employers may be at risk for violations where they: Require applicants to complete the Form I-9 before an accepted offer of employment Require particular documentation from the list of acceptable documentation from the employee Neglect to complete all sections of the Form I-9 Fail to re-verify expired documentation where applicable Inconsistently photocopy documentation 12

13 Forms I-9: Take Action Today Have the employee complete Section 1 of the Form I-9 on their first day of employment. Make sure the employee provides proper documentation of identity and authorization to work so you can complete the form within three business days of the date of hire. Refer to the last page of Form I-9 for a list of acceptable documentation. If documentation is unavailable, the employee must produce a receipt showing that the documentation has been applied for. Actual documentation must be provided within 90 days. 13

14 Forms I-9: Take Action Today Retain Forms I-9 separately from the employee s general personnel file or store electronically in compliance with electronic storage requirements. Keep for three years after the date of employment begins, or one year after the date the person s employment is terminated, whichever is later. Use Paychex HR Online, if applicable, to generate reports to include expired documentation data to assist in the re-verification process, where applicable. 14

15 EMPLOYEE CLASSIFICATION HR ISSUE #3

16 Employee Classification: What Is It? Employee classification: Classifies employees as either exempt or nonexempt under federal wage and hour law Employees can be exempt from some or all of the provisions of the Fair Labor Standards Act (FLSA), including minimum wage and overtime standards 16

17 Employee Classification: What Is It? Employers may be at risk for violations under the FLSA if they: Classify all employees who are paid on a salary basis as exempt Assign employee classifications based on the job title rather than job duties and the level and method of payment. For example: An operations manager does not automatically qualify for the executive exemption simply because the position s title includes manager. 17

18 Employee Classification: Take Action Today Become more familiar with the two types of classifications (exempt and non-exempt) and requirements for each under the FLSA and state wage and hour law. Contact legal counsel whenever a position s classification is in question. Be consistent when classifying exemptions. Remember that a position must be exempt under both federal and applicable state law to be exempt from overtime and minimum wage. 18

19 Employee Classification: Take Action Today Non-exempt employees: Must receive at least the applicable minimum wage for the first 40 hours of work Must receive time-and-one-half their regular rate of pay for all hours worked over 40 in a workweek Typically perform work that is routine, with set rules and standards Note: State wage laws may vary and offer greater protection for covered employees. 19

20 Employee Classification: Take Action Today To be exempt, the employee: must generally be paid on a salary basis must receive a minimum salary of at least $455* a week (where applicable), and must meet the general duties test of one of the white collar exemptions. *THE MINIMUM SALARY THRESHOLD IS LIKELY TO CHANGE SOMETIME IN

21 PAYMENT FOR OVERTIME HOURS HR ISSUE #4

22 Payment for Overtime Hours: What Is It? Non-exempt employees who work more than 40 hours in a workweek must receive overtime pay at a rate of at least one and one-half times their regular rate of pay. Employers are required to retain complete and accurate records, including payment for overtime hours, for at least three years. 22

23 Payment for Overtime Hours: What Is It? The regular rate of pay must be at least minimum wage, be calculated for each work week and the calculation should include all applicable remuneration received during the pay period. Certain Remuneration may be excluded from the calculation, including: pay for expenses incurred on the employer s behalf premium pay for hours worked on Saturdays, Sundays, and holidays discretionary bonuses (a bonus paid to an employee that is not required due to any contractual obligation) gifts/payments in the nature of gifts on special occasions, and holiday, vacation, or sick pay. 23

24 Payment for Overtime Hours: Pitfalls to Avoid Employers may be at risk for violations if they: Average the hours worked between two workweeks when computing overtime pay Exclude non-discretionary bonuses, such as production bonuses, when calculating the regular rate of pay used to determine the overtime rate Provide comp time to non-exempt employees in lieu of overtime pay Fail to correctly calculate the regular rate of pay for employees who receive two or more different rates of pay Fail to retain complete and accurate records for the required period of time 24

25 Payment for Overtime Hours: Reflection Point Do you have any non-exempt employees who go above and beyond by offering to take work home or start work early? Do you offer comp time? Do you have non-exempt employees who check their work over the weekend or after hours? 25

26 Payment for Overtime Hours: Take Action Today Become familiar with each type of compensable time on the Department of Labor website ( for example, waiting or on-call time, travel time, training time, etc. Consult with legal counsel to ensure your overtime payment practices comply with the FLSA. Include non-discretionary bonuses, such as production bonuses, when calculating the regular rate of pay used to determine the overtime rate. 26

27 HANDBOOK POLICIES HR ISSUE #5

28 Handbook Policies: What Are They? Employee handbooks can provide a way to document and communicate your company policies to employees. Effective communication may help: Establish basic ground rules for employee conduct Set the tone for interpersonal relations Allow employers to more consistently implement their policies and practices 28

29 Handbook Policies: Pitfalls to Avoid Poorly Written Handbooks Can Be A Liability Where: The written policies do not reflect current practices The written policies are not updated to reflect current applicable employment laws The written policies haven t been reviewed by legal counsel 29

30 Handbook Policies: Take Action Today Have legal counsel review your employee handbook or written policies to ensure it does not create an implied contract of employment. Implement handbook policies in a consistent manner to help avoid potential litigation. Remember, despite what is written in your employee handbook, your actual practice can be considered to be your policy in litigation. 30

31 WORKPLACE HARASSMENT HR ISSUE #6

32 Workplace Harassment: What Is It? Harassment, based on a protected class, is prohibited by law. Unlawful harassment may be based on veteran status, uniform service member status, race, color, religion, sex, national origin, age, physical or mental disability, genetic information, or any other protected class at the federal, state, or local level. 32

33 Workplace Harassment: Pitfalls to Avoid If an employer fails to include no harassment policies in their handbooks, they may increase their risk of litigation. Employers also need to be aware of specific state requirements that may include: Annual distribution of the company s sexual harassment policy and/or written notice to employees, and/or sexual harassment training for supervisors/managers and/or employees. Mandatory postings 33

34 Workplace Harassment: Reflection Point 1. Do your non-harassment policies include steps for how an employee can report harassment in the workplace? 2. Do you require employees to sign-off on your company policies, i.e., an acknowledgement of receipt of policies? 3. Do you provide annual non-harassment training for all employees? 4. Do you provide additional training for your managers and supervisors? 5. Have your reviewed state-specific requirements where applicable? 34

35 Workplace Harassment: Take Action Today Review your non-harassment/sexual harassment policies. Distribute your non-harassment/sexual harassment policies. Designate AND TRAIN a member of management to be responsible for responding to harassment claims immediately. Ensure that you have a no-retaliation statement in your policy and managers and supervisors are trained not to retaliate against individuals who report harassment or participate in an investigation of harassment. 35

36 FAMILY AND MEDICAL LEAVE ACT HR ISSUE #7

37 Family and Medical Leave Act: What Is It? The Family and Medical Leave Act (FMLA) applies to: All private employers who employ 50 or more employees for each working day during 20 or more calendar workweeks (not necessarily consecutive workweeks) in the current or preceding calendar year Public agencies (including state, local, and federal employers), as well as public and private elementary and secondary schools, regardless of the number of employees. 37

38 Family and Medical Leave Act: What Is It? An eligible employee can use FMLA leave: For the birth of a child, or adoption or foster care placement To care for a spouse, child, or parent with a serious health condition For the employee s own serious health condition To tend to certain qualifying exigencies arising out of active military duty To care for a covered service member with a serious injury or illness. 38

39 Family and Medical Leave Act: Pitfalls to Avoid Employers may be at risk for violations if they: Fail to understanding and comply with FMLA regulations including notice and recordkeeping requirements Fail to recognize that employees may be covered under various laws and benefits during an FMLA-qualified leave 39

40 Family and Medical Leave Act: Take Action Today The Department of Labor website ( offers resources that can assist employers in understanding their responsibilities regarding the FLMA and the interaction with Americans with Disabilities Act. 40

41 HEALTH CARE REFORM HR ISSUE #8

42 Health Care Reform: What Is It? Two new laws: Patient Protection and Affordable Care Act Signed into law by President Obama on March 23, 2010 Health Care and Education Reconciliation Act Signed into law by President Obama on March 30,

43 Health Care Reform: Who Is Affected? Small, mid-size, and large businesses Employers who cover dependents Dependent child coverage extends to adult child dependents up to age 26 FSA, HSA, and HRA participants The elderly and sick Tax-exempt businesses 43

44 Health Care Reform: Pitfalls to Avoid Not fully understanding the provisions of health care reform Not responding to the employer requirements under those provisions 44

45 Health Care Reform: Grandfathered Plans If you had a plan in place before March 23, 2010, and you didn t lose your grandfathered status, your plan is exempt from some, but not all, provisions of health care reform. Be aware that if your plan is grandfathered it may not be exempt from these provisions indefinitely. You can lose your grandfathered status by making significant changes that reduce benefits or increase costs, such as increasing the plan deductibles, copayments, or co-insurance. 45

46 Health Care Reform: Over-the-Counter Medications Over-the-counter medications are not reimbursable under HSAs, FSAs, HRAs, or Archer MSAs. There are two exceptions: Insulin Any over-the-counter medication prescribed by a physician Over-the-counter expenses, other than drugs, may continue to be reimbursed without prescriptions. 46

47 Health Care Reform: Preventive Care Coverage Non-grandfathered group health plans and health insurance issuers offering group or individual health insurance must provide coverage for recommended preventive care without any cost-sharing requirements, as long as services are rendered by physicians and other health care professionals who participate in the plan's network. 47

48 Health Care Reform: Form W-2 Reporting Requirement Employers who filed 250 or more Forms W-2 in the previous tax year are required to report the value of certain employer-sponsored health benefits on their employees Forms W-2. 48

49 Health Care Reform: Summary of Benefits and Coverage and Uniform Glossary Under health care reform, health insurers and group health plans must provide clear, consistent, and comparable information about health plan benefits and coverage, so that consumers can easily compare health plans and choose the coverage that best fits their needs. Health insurers and group health plans must also provide a uniform glossary of commonly-used health coverage terms. 49

50 Health Care Reform: 90-Day Waiting Period The 90-day Waiting Period provision mandates that any waiting period for a group health plan beginning on or after January 1, 2014 cannot exceed 90 days. Failure to comply is subject to a penalty tax. 50

51 Health Care Reform: Mandatory Insurance Coverage The individual mandate provision requires that, as of January 1, 2014, most U.S. citizens and legal residents must purchase health insurance or pay a penalty. The court ruled that the individual mandate can be construed as a tax. 51

52 Health Care Reform: FSA Contribution Limit Employee contributions to medical FSAs are limited to the lesser of a $2,500 cap for a taxable year or the company maximum. This maximum is adjusted annually for inflation, beginning in

53 Health Care Reform: Small Business Tax Credit The following changes were made in 2014: Small businesses that qualify for the full credit can receive up to 50% of the employer s contribution Small businesses wishing to take the tax credit must offer their employees coverage through a SHOP exchange 53

54 Health Care Reform: Employer Shared Responsibility Effective January 1, 2015: Applicable employers with 100 or more full-time employees, including full-time equivalent employees, may be assessed penalties if they fail to offer employees and dependents health insurance coverage meeting the established minimum essential coverage (MEC) requirements They may also be assessed penalties if they offer such coverage and it is deemed unaffordable or does not provide minimum value Effective January Enforcement of this provision for employers with full-time employees IRS Extends ACA Filing Deadlines ACA forms for all required filers, including Employer Shared Responsibility Forms 1094-C and 1095-C have been extended to manual file date May 31, 2016 and electronically file date June 30,

55 Health Care Reform: Take Action Today Visit our website to get detailed and updated information on health care reform: Visit the health care reform website: Visit the Health Insurance Marketplace: 55

56 EMPLOYMENT-AT-WILL HR ISSUE #9

57 Employment-at-Will: What Is It? Employment-at-will generally enables the employer or the employee to terminate the employment relationship at any time without cause or notice, with the exception of statutory prohibitions. An employer may not terminate an employee based on the employee s membership in any protected class. 57

58 Employment-at-Will: Pitfalls to Avoid Employers may jeopardize an employment at will relationship where they: Are not familiar with the judicial exceptions Implicitly or explicitly create a contract of employment, verbally or in writing 58

59 PROGRESSIVE DISCIPLINE: Reflection Point 1. Do you use progressive discipline to correct performance issues? 2. Do you document disciplinary situations and actions? 3. Do you document conversations with employees and store them in the employee s personnel file? If you answered no to any of these questions, consider researching and discussing your current HR policies. 59

60 ANTI-DISCRIMINATION HR ISSUE #10

61 Anti-Discrimination: What Is It? Federal laws with anti-discrimination provisions include: Title VII of the Civil Rights Act of 1964 Age Discrimination in Employment Act (ADEA) Americans With Disabilities Act (ADA) Immigration Reform and Control Act (IRCA) (includes anti-discrimination provisions) Uniformed Services Employment and Reemployment Rights Act (USERRA) Genetic Information Non-Discrimination Act (GINA) 61

62 Anti-Discrimination: Pitfalls to Avoid Employers are encouraged to: Take complaints of discrimination and retaliation seriously and conduct timely investigations Ensure supervisors and managers are training on your no-retaliation policies to ensure individuals are not terminated or reprimanded for filing a compliant of discrimination, ot for threatening to go to, or going to, the EEOC or State Human Rights Agency, the Department of Labor, OSHA, or for filing a complaint of violation Establish, publish, and distribute procedures for reporting discrimination in the workplace a clear channel for complaints Establish, publish, and distribute written policies that communicate your zero tolerance for discrimination in the workplace 62

63 Anti-Discrimination: Reflection Point 1. Do you have a written anti-discrimination policy that protects employees from retaliation? 2. Do you handle complaints in a consistent manner? 3. Do you take all complaints seriously? If you answered no to any of these questions, consider researching and discussing your current HR policies. 63

64 Anti-Discrimination: Take Action Today Take a proactive stance. Create and promote a workplace that encourages diversity and has a zero tolerance for discriminatory practices. Leverage your resources. (Paychex HR professional, legal counsel, or Equal Employment Opportunity Commission) Be consistent with discipline on anti-discrimination issues. 64

65 Summary The workplace continues to change. It s becoming more diverse, more regulated, and more unpredictable. The challenges and risks facing employers today have never been greater. 65

66 QUESTIONS? THANK YOU.