Archive for the ‘Talent Management’ Category

A Proactive Approach to Employee Discipline – Progressive Discipline Policy

employee disciplineIt seems logical for an employer to terminate an employee at the first sign of a performance or behavioral issue; however on the contrary an immediate termination can potentially be more costly than keeping the employee on staff. The cost to recruit, attract and select a candidate can range from $1,500 to upwards of $5,000, depending on the number of people involved in the process and their salaries. Through the implementation of a progressive discipline policy, employers can provide a structured corrective action process that seeks to proactively prevent the recurrence of undesirable behavior and/or performance issues.

A progressive discipline policy is valuable because it offers advantages for both employers and employees. From an employee perspective, the increasingly severe penalties imposed for repeated offenses allow employees an opportunity to improve their performance or behavior in each step. The existence of an adequately communicated progressive action policy keeps employees informed about where they stand in a disciplinary situation and what consequences to expect. Employees can also use the progressive discipline documentation to illustrate their improvements during performance appraisals/ reviews. Furthermore, communication among parties is enhanced because both parties are in acknowledgement of poor behavior/ performance, consequences, and tactics to improve and track progress. Employees have a chance to communicate their reasons for their performance or behavior so that both parties can reach an agreeable remedy.

Specifically for managers/ employers, the progressive discipline system is valuable due to the simplicity and consistency of the disciplinary steps. It eliminates the guesswork involved in determining when to end the employment relationship or if the final decision holds merit. Employers can use the system to improve retention by demonstrating that “good” performance/ behavior will yield positive feedback. The system also advocates documentation of each step, which allows employers to maintain personnel files that accurately reflect the employee’s job performance and work history.      

Additionally, a well – structured progressive action policy serves as a strong defense during a wrongful termination lawsuit. The consistent structure helps guide the process and ensures employees are treated fairly and in accordance with company policy. Documentation of an employee’s corrective action plan serves as evidence to prove the employer attempted to correct the problem and treat the employee fairly. If an employee files a formal complaint, lawsuit or alleges they were subjected to unfair employment practices, the employer may be able to reduce their liability for wrongful termination based on documentation outlining the employee’s inappropriate behavior or poor performance.  The U.S. Chamber of Commerce encourages the use of progressive discipline for this reason, stating that “A progressive discipline policy provides the business with a system that is fair and easily defensible against a challenge.” 

“Documentation is a fundamental step in the implementation of an effective progressive discipline policy not only because it can reduce legal and financial costs but also because it provides legitimacy to the corrective action plan. Through documentation, the employer can clearly explain the cause for the discipline and outline areas for improvement; while the employee has the opportunity to express their perspective on the issue. Documentation is that extra step that is well worth taking.” – Dana Chatelain, SPHR, Human Resource Manager of SCI Companies.   

The typical stages of progressive discipline systems are counseling, verbal warning, written warning, suspension and finally, separation/discharge (termination).

  • Stage 1: Counseling – The objective of counseling is to improve employee behavior and clarify expectations. It is a direct approach to address personal or organizational issues negatively affecting job performance or overall behavior.
  • Stage 2: Verbal Warning – This is a documented counseling conversation with an employee to specifically outline the issue, get to the root cause by providing guidelines and outlining expected improvement and consequences.
  •   Stage 3: Written Warning – This is a documented written statement that specifically outlines the recurring behavior, violation and expectations for improvement and potential consequences for recurring behavior.
  • Stage 4: Suspension: If there is no further improvement, a suspension ranging from one day to two weeks or more may be issued depending upon the seriousness of the infraction.
  •  Stage 5Separation/Discharge – Separation/Discharge, also called termination, results when the employee’s behavior has still not improved. It can also occur without prior disciplinary action in case of serious offenses (or gross misconduct) like theft of company property, assault, etc.

An overall Best Practice recommendation is to clearly document poor work performance and/or inappropriate work behaviors at each stage of the process by using standard forms. Documentation should show at one or more points during the progressive method that the employee’s position was in jeopardy if he/she did not demonstrate improvement.

Additional HR Best Practices

  • Address any violation immediately to avoid escalation of the issue.
  • Ensure an effective and fair disciplinary process by avoiding discriminatory behavior or personal bias.
  • Provide effective criticism to offenders focusing on behavior or performance issue, not on the person or personality.
  • Include all progressive discipline forms and documents in the employee’s personnel file track progress of behavior and/or performance.
  • Apply the progressive discipline steps consistently to all employees.

Revised Expiration Date of the FMLA Certification Forms

As of December 31 2011, the Family and Medical Leave Act (FMLA) Certification forms expired, leaving many employers wondering what forms to use in attempts to remain in compliance and when a new form will be released. The Department of Labor (DOL) announced that the outdated forms could still be used although these forms lack mention of important regulations, including 2010 Amendments for Military Family Leave and the Genetic Information Nondiscrimination Act of 2008 (GINA).

At the beginning of 2012, the DOL released the forms with a temporary expiration date on a monthly basis. The delay in the revision date was due to a review of the forms by the Office of Management and Budget (OMB). Under the Paperwork Reduction Act of 1995, the DOL is required to submit FMLA forms to OMB for approval. The form was initially approved in late 2008 and carried a three (3) year expiration date, the maximum time frame allowed.

 Recently, the forms were released with an expiration date of February 28 2015, but the new forms do not include any substantive changes (view updated forms below). The DOL did not use this opportunity to update the shortcomings of the expired forms.

The U.S. Equal Employment Opportunity Commission (EEOC) recommends employers include language pertaining to GINA in a customized version of the form. GINA requires employers who request medical certifications from employees to safeguard against the collection of any genetic information about the individual.

 The Genetic Information Nondiscrimination Act of 2008 (GINA) prohibits employers and other entities covered by GINA Title II from requesting or requiring genetic information of an individual or family member of the individual, except as specifically allowed by this law. To comply with this law, we are asking that you not provide any genetic information when responding to this request for medical information. “Genetic information,” as defined by GINA, includes an individual’s family medical history, the results of an individual’s or family member’s genetic tests, the fact that an individual or an individual’s family member sought or received genetic services, and genetic information of a fetus carried by an individual or an individual’s family member or an embryo lawfully held by an individual or family member receiving assistive reproductive services.

Calculating Overtime Pay

Many employers find it difficult to accurately calculate overtime due to complex calculations  and changing regulations. The burden falls on the employer to properly classify an employee (as exempt or non-exempt) and provide compensation in compliance with the Fair Labor Standards Act (FLSA). According to the Wage and Hour Division of the Department of Labor, employers were fined $3.1 million in penalties for FLSA violations in 2008 and more than 197,000 employees received a total of $140.2 million in lawsuits regarding minimum wage and overtime back wages. The growth in employee lawsuits can also be observed in 2010; the number of FLSA lawsuits filed in federal courts in the second quarter of 2010 were 22 percent higher than in the first quarter of 2010.

Exempt vs. Non-Exempt

As determined by the FLSA, employees are placed in an either the exempt or the non-exempt category based on the employee’s job duties and responsibilities. The exemption refers to an employee’s eligibility to be paid overtime for hours worked over 40 in a workweek. If an employee is in the non-exempt category, the employee must be paid overtime, which is an additional one-half of an employee’s regular rate of pay for all hours worked over 40 in a workweek. Some states may have different and more stringent guidelines.

To help avoid penalties involved in calculating overtime, the FLSA recommends compliance with three key guidelines:(1) identify an employee’s regular rate of pay; (2) determine what activities count as hours worked; and (3) apply the FLSA definition of a workweek. Employers are encouraged to comply with these guidelines and retain documentation of compliance to serve as a good faith effort during a Department of Labor (DOL) audit.

Determine What Counts as Hour Worked

Hours worked include the entire time an employee is on duty, on company gorunds or at any other prescribed place of work. The time the employee is “permitted” to work as well as time the employee voluntarily stays late to finish work or comes in early counts as hours worked.

Apply the FLSA Definition of a Workweek

FLSA defines a workweek as a fixed and regularly recurring period of 168 hours, or seven consecutive 24-hour periods. The workweek can begin on any day of the week and at any hour of the day. The frequency of an employee’s pay (i.e. bi-weekly, semi-monthly, monthly) has no impact on determining the fixed workweek. When calculating overtime payment, each workweek must be analyzed individually; two or more workweeks cannot be combined. The workweek is determined by the employee’s start and stop times which remain fixed regardless of the hours the employee is scheduled to work. However, the start and stop times can be changed, as long as the change is intended to be permanent and complies with overtime requirements.

Identify an Employee’s Regular Rate of Pay     

An employee’s regular rate of pay is the weighted average of the employee’s hourly rate. To calculate calculate the rate of pay, divide the total pay for employment in a workweek by the total number of hours actually worked. Total pay is all payments made to or on behalf of the employee including shift differential, non-discretionary bonuses, promotional bonuses and cost-of-living adjustments. Payments made in the form of goods or facilities customarily provided by the employer are also included. For example, if an employee’s wages include lodging, the reasonable cost or the fair value of that lodging is added to the employee’s earning before determining his/her regular rate. However, deductions for board, lodging or similar facilities do not affect the regular rate of pay calculation; thus the calculation should be made before the deductions are made.

Statutory Exclusions

As per the FLSA, certain payments are excluded from the regular rate of pay. These exclusions include:

  • Payment for gifts for holidays, special occasions, or as a reward for service;
  • Payment made for occasional periods when no work is performed due to vacation, holiday, or failure of the employer to provide sufficient work;
  • Premium payments for overtime, or for working on weekends and holidays; and
  • Benefits for life insurance and health insurance.

 Four Steps to Calculating Total Weekly Compensation

  • Step 1: Regular Pay= Total Pay for Workweek + Additional Compensation – Exclusions
  • Step 2: Regular rate of Pay= Regular Pay divided by Total Hours Worked
  • Step 3: Premium Pay for Overtime= Regular Rate of Pay multiplied by 0.5, multiplied by (Total Hours Worked – 40)
  • Step 4: Total Weekly Compensation= Total Pay for Workweek + Premium Pay for Overtime

Companies should review their compensation and incentive practices to ensure compliance with all applicable Wage & Hour laws to avoid problems or investigations by the DOL. For more information, please visit the DOL’s website:

Limit your Liability: I-9 Compliance Best Practices

Employers, are you in compliance with I-9 requirements? In the 2011 fiscal year, the Immigration and Customs Enforcement (ICE) issued a record 2,393 notices of inspections (for federal Form I-9 and supporting documents), a more than 375% increase from FY2008. Additionally, during FY2011, ICE issued 331 final administrative fine orders, totaling more than $9 million in fines levied on employers (compared to 18 final orders in FY2008, totaling $675,000 in fines).

The increase in investigations and fines demonstrates ICE’s intent to ensure employers comply with I-9 requirements. According to the U.S. Citizenship and Immigration Services, all employers must complete and retain a Form I-9 for each individual employed in the United States. Form I-9 must be completed within three days of the new hire’s employment. On the I-9 form, employers must confirm the employee’s employment eligibility and authenticity of  the employee’s identification document(s). If there is not an employer representative available to review the authenticity of the original documents and to sign the I-9 form, these documents must be presented to a Public Notary  for certification.

Best Practices

Companies should assess the current state of I-9 documents to ensure compliance and minimize exposure to audits.

1. Conduct a voluntary audit of I-9 forms currently on file – By reviewing I-9s for errors, corrections can be made legally. The audit can bring common errors to light so that training can be implemented to correct these issues.

2. Prepare an I-9 process – Develop a written policy and process to maintain I-9 compliance. The USCIS I-9 Employer Handbook provides great resources  including information on:

  • The appropriate action to take when an employee fails to present documentation in a timely manner.
  • What to do when the Company is notified of a Social Security mismatch.

3.  Appoint a final reviewer – Assign one person to view I-9 documents before they are processed. If there is an error, the person who signed off on Section 2 of the form must correct the mistakes or provide any missing information or documentation.

4. Make note of common errors – According to ICE, the most common errors found during an I-9 audit are:

  • A Form I-9 was not completed for an employee;
  • Employee citizenship or employment eligibility attestation is not completed in Section 1 of the form;
  • Employee’s signature is missing in Section 1 of the form;
  • Employer or its authorized representative has failed to complete Section 2 of the form verifying employment and identity documents; and
  • Employer’s signature is missing in Section 2 of the form.

Employee or Independent Contractor: Employer Guidelines

Are you finding it difficult to differentiate between employees and independent contractors? Well accurately defining a worker’s classification status may be a more serious issue than you might have anticipated. The U.S. Department of Labor (DOL) released the 2012 proposed budget, which emphasized a strong focus on identifying employers who misclassify workers as independent contractors versus employees. The DOL requested an additional $46 million to support a multi-agency initiative with the Wage and Hour Division (WHD), the Office of Federal Contract Compliance Claims (OFCCP) and the Occupational Safety and Health Administration (OSHA) to combat employee misclassification. In recent years, the DOL has “cracked-down” on employers for intentionally misclassifying employees as a means to escape payment of employment taxes, overtime compensation, and benefits.

 An employee is an individual, who is employed by one employer that provides training and control on how duties are performed. However, independent contractors operate under their own business name and may employ other workers to work under their direction. When a worker is classified as an employee, the employer is responsible for paying payroll taxes and overtime compensation, as well as complying with Wage and Hour law requirements such as providing meal periods and rest breaks and reimbursing workers for business expenses. Additionally, employers must cover employees under their worker’s compensation insurance, and are liable for payment of unemployment insurance, disability insurance and social security.

There is no universal system to differentiate between employees and independent contractors.

The DOL recommends using the “Economic Realities” Test. Defining factors are based on :
  • Degree of control in regards to the way work is done and the nature of control
  • Opportunities for profit or loss
  • Investment in the facilities and equipment of the business
  • Permanency or length of relationship with business
  • Degree of skill need to perform their job
  • Impact work performed has on scope of business
IRS uses the common law test known as the “Right-to-Control” Test
  • Level of instruction
  • Amount of training
  • Degree of business integration
  • Extent of personal services
  • Control of assistants
  • Continuity of relationship
  • Flexibility of schedule
  • Demands for full-time work
  • Need for on-site services
  • Sequence of work
  • Requirements for reports
  • Method of payment
  • Payment of business or travel expenses
  • Provision of tools and materials
  • Investment in facilities
  • Realization of profit or loss
  • Work for multiple companies
 Consequences of Misclassification
  • Misclassification of an Employee – If the employer mistakenly classifies an employee as an independent contractor, the employee can recover back pay, liquidated damages and attorney’s fees. According to the Fair Labor Standard Act (FLSA), employers are required to pay employees at least minimum wage (currently $7.25) for each hour worked. Employees must receive overtime compensation for all hours worked exceeding 40 hours in a workweek, at a minimum of one and a half times the regular pay rate. Employees have up to two years to seek recovery of back pay or three years if there is proof of willful FLSA violation by the employer.
  • Misclassification of an Independent Contractor– Employers could encounter financial consequences if the worker is classified as an employee instead of independent contractor. Employers could be paying unnecessary income tax, Federal Insurance Contribution Act (FICA) tax and Federal Unemployment Tax (FUTA) as well as overtime compensation and excessive benefit charges.
HR Best Practices
  • Perform a Classification Audit – A well executed classification audit will reveal gap areas that can potentially lead to costly legal disputes and government fines. Classification audits also serve as good faith evidence for compliance with FLSA.
  • Use IRS Form in case of Confusion in Determining the Status – When the status of a worker is unclear, employers are encouraged to complete IRS Form SS-8  and submit the form to the Internal Revenue Service (IRS). The IRS will review the facts and circumstances and officially determine the worker’s status. This form may be filed by either the business or the worker.
  • Seek External Resources – It may be best to seek the assistance of legal counsel or consult an HR outsourcing provider if  classification of  an employee’s status becomes too complex.

New Poster Requirements for 2012

Employers, are you prepared for 2012? During 2011, the Department of Labor (DOL) introduced several new poster requirements effective January 1, 2012. Additionally, several states issued legislation altering state posters pertaining to benefits, minimum wage and safety regulations.

 Workplace posters  inform employees and employers of their rights and responsibilities. Employers must post mandatory workplace posters in areas clearly visible to the majority of their employees (i.e., break rooms, hallway, and entrances/exits).



  • NLRB- Employee’s Right to Unionize  (effective April 30, 2012 *Second delay in implementation*)


All state posters listed below must be updated by January 1, 2012. 

  • Arizona – Minimum Wage and ADOSH (Safety and Health)
  • California: San Francisco – Minimum Wage
  • Colorado – Minimum Wage
  • Connecticut – Paid Sick Leave
  • Florida – Minimum Wage
  • Illinois –  Workers’ Compensation
  • Montana – Minimum Wage 
  • Maine –  Child Labor notice and Minimum Wage
  • New Jersey – Recordkeeping Obligations for wages, benefits, and taxes
  • New Hampshire – Minimum Wage
  • Nevada – Fair Employment and Discrimination Notice
  • Oklahoma – Workers’ Compensation
  • Ohio – Minimum Wage
  • Oregon – Minimum Wage and FMLA
  • Utah – Unemployment Insurance
  • Vermont – Minimum Wage
  • Washington – Minimum Wage

Impact of Wage Garnishments on Employers

Have you received an increase in wage garnishment orders for your employees? Well you’re not alone. Due to the current economy, many Americans are falling behind on loan, child support and credit card payments. Creditors are turning to wage garnishments as a means to collect payments on delinquent loans. A New York Times article entitled Pay Garnishment Rise as Debtors Fall Behind illustrates the growth in wage garnishments during the recession. According to the article, wage garnishments increased up to 121% in Phoenix, AZ, the highest since 2005, and 55% in Atlanta, GA, the highest since 2004. In Cleveland, OH, garnishments surged 30% between 2008 and 2009. The increase in wage garnishments presents an additional responsibility for employers who receive garnishment orders for employees.

What is a Wage Garnishment?

A wage garnishment is a legal or equitable procedure through which some portion of an employee’s earnings is withheld by an employer for payment of debt. Most garnishments are mandated through court order. Types of garnishment include bankruptcy, child support, federal and state levies, and student loans.

Employer’s Responsibility

Employers are legally mandated to comply with garnishment orders. The burden falls on the employer to forward the payment for each pay period as indicated in the order until receiving a notice of release from the order. Depending on the type of garnishment, the employer may have to send a certification along with the payment as evidence.

Federal Laws 

Title III of the Consumer Credit Protection Act (CCPA) protects employees from termination due to garnishment of one debt. The CCPA prohibits an employer from terminating an employee whose earnings are subject to garnishment for one debt, regardless of the number of levies made or preceding the collection of that debt. According to the CCPA, employers are allowed to discharge an employee if they receive two or more separate garnishments. Employer penalties for violation of termination restrictions include a fine up to $1,000 and/or imprisonment for up to one year.

Additionally, the CCPA provides that the amount of pay subject to garnishments is based on the employee’s disposable earnings. Disposable earnings are defined as the employee’s remaining funds after federal, state, and local taxes, and Unemployment Insurance are deducted. Deductions for garnishment orders must be completed before deductions for voluntary wage assignments, union dues, health and life insurance, contributions to charitable causes, purchase of saving bonds, retirement plan contributions, payments for payroll advances and purchases of work-related merchandise can be taken out of an employee’s paycheck. The CCPA also indicates the maximum amount that can be garnished from an employee’s paycheck. Only 25% of the employee’s disposable income or an amount up to 30 times the federal minimum wage (currently $7.25) can be deducted. Exemptions to this rule include garnishments for unpaid tax debts, bankruptcy court orders, child or spousal support, or voluntary wage assignments. Specifically, up to 50 percent of an employee’s disposable earnings will be garnished for child support if the employee is supporting another spouse or child. If the employee is not supporting a “second” family, their wages can be garnished up to 60%. An additional five% may be garnished for support payments.

However, depending on the state, the maximum garnishment amount may be considerably higher compared to CCPA requirements. If discrepancies exist between state law and CCP requirements, the employer should observe the law resulting in the smallest garnishment. View the wage garnishment by state for information on state requirements.

Protection of CCPA

CCPA protects all employees receiving personal earnings including wages, salaries, commissions, bonuses, or other income from pension or retirement programs. Tips are not considered as earnings under the CCPA thus are not protected by this law.