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As this bizjournals.com article suggests, many employers don't understand all of the variables in calculating overtime, particularly in relation to bonuses. The small business in the article was sued for overtime violations by three employees after paying their employees a bonus for doing a good job. The employees alleged that the bonus increased their regular rate of pay and sued for the additional overtime due them for the period covered by the bonus. The business owners spent $400,000 defending the lawsuit before settling.
"The difference between the amount actually paid and the higher rate was trivial, but all the fees made it an exorbitant amount," said one of the owners.
Under the FLSA, non-discretionary bonuses such as might be paid out in pay-for-performance plans, change an employee's "regular rate" of pay retroactively. So, that $2,000 year-end bonus for meeting performance objectives may adjust the regular rate of pay for a full-time employee who worked 150 hours overtime during the year by 89¢ ($2,000 / 2,230 regular and overtime hours).
So, the employer is liable to the employee for one-half of the extra 89¢ for each overtime hour worked for a total of $133.50.
[NOTE: I had to double check my process with the DOL's website. Initially, I only applied the bonus to the hours that were regularly scheduled (assuming 40 hours per week), which resulted in a slightly higher "regular rate" and a higher overtime rate. I believe some states' own wage and hour laws may calculate bonus overtime this way.]
Performance-based bonuses are probably still preferable to many other compensation schemes in a tight economy, but employers need to plan ahead to make sure they don't have to defend a lawsuit next year due to the impact of this year's bonus.
Though written from the job seeker's point of view, the article does a fair job of highlighting the increasing flexibility by legislatures and courts to erase or limit the use by employers of "minor" criminal offenses. There was, however, one significant error by the author related to the legal use of criminal records.
When I was on the HR manager side of the desk, I was always dubious of using credit as a predictor of dishonesty. Now, after more than a decade as the owner of a background investigations firm, I routinely try to dissuade clients from even looking at applicants' or employees' credit reports. In many cases, I've just refused to sell the reports to employers who I believed were going to use them unwisely.
I have yet to see a study that correlates bad credit and dishonesty.
Like so-called "national" criminal records and other database-based screening products, credit reports are instant, relatively inexpensive, and easy to sell. They are also full of information that is often neither job-relevant or accurate. The problem is that too many HR folks aren't educated by their screening partners in the appropriate use of these and other selection tools (personality assesments come to mind).
While we would all like to have perfect employees without any financial. personal, or professional blemish, they don't exist. Employers who paint candidates with less than ideal credit or a criminal history with a broad brush will often miss opportunities to add qualified and committed employees to their organizations.
Smart employers have a plan on how they will evaluate any screening results before they ever order the background check. They make sure the criteria is job-related and that there is a clear business-necessity for any adverse decisions that may be made. That will help keep you out of court and help you build a competitive workforce.
The National Retail Federation just released a report that organized retail crime (ORC) has jumped by 8%. This increase is attributable in large part to economic pressures on retailers who've had to cut back their staffing and loss prevention efforts.
ORC often involves collusion with retail employees. In fact, according to the University of Florida's National Retail Security Survey, almost half of all retail shrink (loss of products between manufacture and point-of-sale), is related to employee theft. This is the single largest source of shrink.
Despite all the talk of HR's "seat at the table," in many organizations, HR is still a paper-pushing function. In others, we're the equivalent of Dr. No. Is it any wonder that HR is still not seen as a partner in many companies?
In this much-delayed edition of The Imperative Podcast, I interview Lisa Autry. Lisa is an employment law attorney and consultant who was actually in HR before she sold out and went to law school. She's got some great things to say about how HR has contributed to the sometimes negative perceptions opertions managers have toward us and how we can change them - especially when economic times are tough.
Lisa will be the speaker at the April 1st Mid-Cities HR Association Meeting.
One would be hard-pressed to find someone unaware that the government is currently trying to pass a stimulus bill to help jump start our economy. However, finding someone fully aware of the specific details outlined in both versions of the bill (i.e. House and Senate versions) might prove more difficult.
The New York Times reported that the two versions of the stimulus overlap on "90-plus percent" of the issues. But after the Senate passes their version today, a conference committee will begin drafting a final version of the bill, making the necessary compromises on the other 10 percent of the issues.
It is in this 10 percent where employers and HR professionals can find a signicant difference between the two bills. The House version of the stimulus plan included the following stipulation:
SEC. 1114. REQUIRED PARTICIPATION IN E-VERIFY PROGRAM. None of the funds made available in this Act may be used to enter into a contract with an entity that does not participate in the E-Verify program described in section 401(b) of the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (8 U.S.C. 1324a note).
This provision was removed from the Senate version of the bill, but it could be reinstated as compromises are discussed later this week.
E-Verify is the federal government's program for verifying online new hires' authorization to work in the US. President Obama has put on hold until May a Bush Administration Executive Order that would required all federal contractors to utilize the system.
Now that the merger of Wells Fargo and Wachovia is complete, Wells Fargo has decided to terminate 175 Wachovia employees who were previously Wells Fargo employees. They do not meet Well Fargo's employment criteria based upon their history with Wells Fargo, said a spokesman. The 175 employees were less than 10% of the 2,000 former Wells Fargo employees at Wachovia.
OK, I'm an HR guy and business owner, not an investment guru. However, I've found that by reading some of the really smart guys who are thought leaders in the investment world (and politics, technology, business, etc.), I can better understand issues facing HR and business owners. One of those thought leaders is John Mauldin. The following is an excerpt from his weekly Thoughts from the Frontline newsletter that explains some of the confusion I've felt when trying to understand recent unemployment numbers. Maybe it will help you, too. Regards, --COFFEY
There are some who see a ray of hope in the recent jobless claims reports, which have dropped back to "only" 467,000 in initial unemployment claims, down from 491,000 for the last week, after being over 500,000 for several weeks. Those numbers are seasonally adjusted. That hope disappears if you look at the actual numbers.
In this podcast, Mike interviews Michael Layman, the keynote speaker for the symposium. Michael is the Manager of Employment and Labor Legislation for the Society for Human Resources Management and he will be discussing the many federal public policy issues expected to impact human resources professionals in the coming year.
On Tuesday, the Bureau of Labor Statistics released the regional breakdown of the November employment statistics. Although the nation as a whole saw an increase in unemployment (6.5% in November), the Dallas-Fort Worth area actually saw a net increase of 46,900 nonfarm payroll jobs over the previous year. This was second only in the nation to the Houston area, which added 54,300 jobs in the previous 12 months.
In November, the McAllen, Texas area saw the largest percentage employment increase in the US with a 3.9% increase. They were followed by Grand Junction, Colo. (+3.4 percent), Laredo, Texas (+3.0 percent), and College Station-Bryan, Texas (+2.8 percent). Overall, Texas saw a 2.1% increase in nonfarm payroll jobs.
All in all, Texas continues to weather this recession significantly better than the rest of the United States.
