Question: How long are employers required to continue paying medical premiums for employees who are on an unpaid medical leave of absence? (more…)
Frequently Asked Questions
Question: What Must I Give Employees Who Are Leaving Our Company?
A “For Your Benefits” brochure published by the CA EDD outlining an employee’s rights to several state benefit programs. The most recent publication (DE2320) is dated November 2006. You may order these from our office or download the lengthy EDD DE form 2320 here.
The California Health Insurance Premium Payment (HIPP) Program also requires that employers give separating employees notice of their rights under the HIPP laws for assistance in paying medical premiums. You may download a sample HIPP Notice here.
All of the above forms and more are available to our clients at our website library. Contact us for the password. An employee or his/her dependents losing group health coverage may be eligible for COBRA continuation of coverage and must receive a COBRA Continuation Coverage Election Notice outlining all the rights under this extensive law. This Notice does not have to be delivered to the employee on the final work day. However, timing and proof of delivery are very important under this law. The employer must notify the plan administrator within 30 days of the employee’s loss of coverage. The plan administrator must send to the employee (and covered dependents) the Notice within 14 days. COBRA Notices will vary. We suggest you contact your insurance carrier first, and we can certainly advise as well.
Employers with 20 or fewer employees will be covered by Cal-COBRA and will have these notification services completed by the insurance carrier. Larger employers will have to administer this notification process internally or hire a third party to do so. Penalties for delaying this Notice are significant, ranging from $100/day for each day of non-compliance to $500,000 or 10% of the health plan costs (whichever is less) for major violations.
Employees who also have profit sharing, retirement funds, 401k, etc. should also receive notice of the options of the disbursement of these funds, although this does not have to be done by the last day of work. Each plan should have a notice period set out in the plan documents.
By the way, an employee whose employment is separated may request a W-2 prior to the normal January cycle. If requested, the W-2 must be sent for all wages paid during the current calendar year. The form must be sent within 30 days of the request or, if later, within 30 days of your last payment of wages to the employee.
Question: We have to cut expenses significantly – and it’s come down to reducing headcount. What should we consider?
Answer: I’m pretty tired of hearing about this economic down turn, how about you? Unfortunately, we have heard from many clients challenged with cutting back payroll expenses as their customers evaporate. So what should you consider when you have to make that tough decision to eliminate positions? There are very few laws in the private sector around how to determine and conduct a permanent layoff or reduction in force (RIF). There are no legal requirements around laying off employees based on seniority or bumping rights back to the last held job. However, it is important that you have defensible criteria for determining which positions and employees are affected by a layoff. Here are a few considerations:
- Focus on the business functions/position(s) to be cut back first, then on the incumbents. Does the work group you’re considering have a common purpose, the same job title or skills? Can you clearly outline that the position to be eliminated is the least necessary based on business needs? Avoid “laying off” an employee as a pretext for addressing a poor performer.
- Do you have any written layoff criteria your company has committed to in your policy manual or employee handbook? Outside of a collective bargaining agreement most employers will not have written layoff criteria such as seniority in job, seniority with the company, or performance. We recommend that you not outline/commit to these in a policy manual unless your company is prone to regular layoffs.
- Do you have documented performance history on all employees in the work group/job title or department? Ideally, the employer would lay off the poorest performer. Proving that may be a challenge if there are not written appraisals in the file. This performance record may also include awards, disciplinary actions, customer complaints or compliments. In the absence of historical performance data, the employer may prepare a performance appraisal on each employee in the work group, evaluating everyone on the same criteria.
- Once you’ve determined who is to be RIFed based on business needs and clearly objective criteria (performance history, training, seniority) then look at the profile of the employees who will be affected. Are they representative of your work force? In other words, if 75% of your work force is under age 40, then a similar percentage of your RIFed employees should be under age 40. There may be exceptions for this based on unique skill sets, but watch out for great imbalances in the make up of your RIFed staff. Sending everyone over age 50 out the door and leaving only the GenXers to run the shop may raise an initial discrimination complaint.
- When business picks up the employer is not legally required to recall/rehire the last employee laid off. However, filling the job within a short period of time with a new (younger, non-pregnant, or non-minority) employee may raise an eyebrow that the RIF was not for legitimate business reasons, but was to eliminate an employee for non-work related (read “discriminatory”) reasons. There are no rules around the rehire period, but we suggest it be at least 6 months, and 12 months is better.
- Employers who layoff 50 or more employees may have legal reporting and notice requirements under the California and federal WARN Acts. We hope you don’t get there, but call us if you do.
Other Payroll Reduction Options
Corporate culture will drive some of this decision. Our experience has been that it’s easier on the organization to layoff one or two employees and let them get on with their lives rather than have 20 cranky employees working for less.
Question: We want to suspend an employee to get his attention. What do you think?
John has been late a number of times over the last six months. His supervisor has given him a verbal warning, and a written warning. He’s been warned that one more tardy this month and he’ll be suspended – that should get his attention!
Today, John is 20 minutes late. His three day suspension is automatic.
Question: What is the minimum pay required for outside salespersons in California?
Answer: If a Salesperson is away from the office more than 50% of the time, selling services or products, they may be considered “exempt” from overtime as an Outside Salesperson. If they are legitimately classified as “exempt” by meeting the job duties test of the Outside Sales Exemption, there is no minimum pay requirement. They can be paid a fixed salary, salary plus commission, or on a commission-only basis and there is no minimum wage or salary required.
Question: Are we required to train all California supervisors/managers in sexual harassment prevention (AB1825?)
Answer: If you have 50 employees or contractors in California, you are required to train your supervisors/managers on AB1825 within 6 months of hire and every 2 years thereafter. The AB1825 training is 2 hours and must be taught by a qualified instructor.
If you have separate companies with different Tax IDs, each Tax ID is considered a different company for purposes of counting “50” for AB1825. However, it is highly recommended that all supervisors/managers (regardless if they have fewer than 50 employees) are trained in order to reduce potential liability associated with sexual harassment or discrimination claims.
Question: Can we employ a minor who is age 16?
Answer: Yes, but there are restrictions on the employment of minors under the age of 18 that would apply in this case. You must acquire the required work permit before employing a minor. Permits are required year-round, even when school is not in session; they are issued in one school year and expire five days after a new school year begins. There are other restrictions on days of work and hours as well.
Employers must keep on file all Permits to Work and Permits to Employ, which must be open at all times for inspection by school authorities and officers of the Division of Labor Standards Enforcement. Forms are available from the CA Department of Education.
Question: If we have an employee working from 7:00 a.m. to 4:00 p.m. and then have a mandatory meeting the same day from 5:30 p.m. to 6:30 p.m., do I just pay him for the hour for the meeting (at the overtime rate) or do I have to pay him for 2 hours because he went home and then had to come back?
Answer: If the meeting takes place on an employee’s regularly scheduled work day but the employee must return sometime after the end of his or her shift to attend the meeting, an additional two hours of “reporting time pay” must be paid.
Question: We have couple of employees who work eight (8) hours per day. Currently they take one (1) hour lunch breaks after working 4 hours. Is it permitted if they take a 30 minute lunch break and then end their day 30 minutes earlier? The employees would prefer to do this.
Answer: Yes, this would be permitted as long as the meals are taken before the fifth hour of work and are duty free. The meals must be recorded on the time record with the in/out times.
Question: Our employee has been out on pregnancy disability leave for eight (8) weeks and plans on taking an additional six (6) weeks off after their pregnancy disability ends. She does not qualify for FMLA or CFRA. Do I need to do anything?
Answer: If the employee is not eligible for CFRA leave, the extended time off would not be protected under Federal or State law. The employer should first request a return-to-work doctor’s certificate confirming the end of their pregnancy disability.
The employer is not required to grant the time off. However, if the time off is granted, the employer should provide an EDD Paid Family Leave pamphlet which describes the wage replacement benefits available during time off to care for family members.