What do Hewlett Packard’s spy operations, Wells Fargo’s fake customer accounts, and Mylan Pharmaceutical’s price-gouging all have in common?
A lapse in Business Ethics.
What does “Business Ethics” mean? The short definition is a moral code of conduct companies adopt and pledge to follow. “Ethical Standards forbid tolerance of and participation in activities considered immoral, unlawful, unfair, dangerous, irresponsible and generally harmful.” Businesses can lower the risk of becoming lawsuit targets by setting ethical standards.
First things first, Accountable Leadership is key to any business. Businesses that are considered to be “ethical” have a high moral code and expect honest and trustworthy behavior from everyone in their organizations. Whether they are Chief Executive Officers or other high-level company leaders, it’s required that they hold themselves accountable for following and enforcing the same ethical standards as their employees.
Author Laurie Haughey of “Athletes Off the Field: A Model for Team Building and Leadership Development Through Service Learning,” cites 5 high-standard goals of ethical leaders:
- Communication in which ethical behavior is both carried out and instilled in a company’s brand.
- High-quality products & services that everyone in the organization takes responsibility for producing.
- Collaboration with diverse groups of advisors.
- Succession planning in which future company leaders pledge to maintain ethical behavior.
- Tenure – which requires leaders to work for the company in the most ethical way until they decide to leave.
The next question you will want to ask is, “What does acceptable conduct look like?”
Through internal rules of conduct, businesses can maintain ethical workplace behavior. A good way for companies to establish rules of conduct, so that everyone is aware and is held to the same standards, is to publish a Rules of Conduct policy in their Employee Handbook and require employee’s to sign agreements stating that they read and understood the rules and consequences for violating them. It’s up to managers to run an “Ethical Office.” Companies who are considered to have an “ethical office” promote honesty and trust in communicating with employees, directors, stockholders, and customers.
A lapse in ethics has led some businesses to exaggerate their earnings, products’ capabilities, and stock values due to companies bending to the pressures of meeting sales goals. A lot of times, companies overpromise and under deliver their services. Nowadays, customers are more vigilant and less accepting of unethical behavior, leaving it up to organizations to conduct themselves based on a higher moral code.
HR can head up ethics initiatives in their organizations. HR knows how to help employers behave like good corporate citizens for their employees and the surrounding communities, and operate within the law.
Bolden-Barrett, V. (2017, March 17). The keys to running an ethical organization. Retrieved March 20, 2017, from http://www.hrdive.com/news/the-keys-to-running-an-ethical-organization/438355/
Employers should be careful how they deal with absenteeism by exempt employees.
Don’t dock an exempt employee’s paycheck for missing less than one full day of work because it could destroy their exemption and entitle them to time-and-a-half for all overtime they have worked in the past or work in the future. However, the FLSA does allow for partial day absences to be paid through an employee’s accrual bank of PTO, Vacation, or Sick hours. The only exception for docking a salary exempt employees pay for a partial day absence is if the absence is covered by the FMLA, and the employee has exhausted their accrual bank hours.
Full Day deductions of pay from a salary exempt employee are allowed only under the following circumstances:
- During the initial or final week of employment the employees pay may be reduced to reflect the actual hours worked.
- Full-day absences for personal reasons.
- Full day absences for disciplinary suspension for safety violations.
- Full day absences in which an employee has exhausted their entitled Paid Leave plan balances.
- FMLA Absences.
Two other attendance issues protected by law are employees called to jury duty and employees who request time off for religious reasons. State and federal laws generally require employers to give workers leave when called to serve on a jury. And employers may have to bend their attendance rules to accommodate a worker’s religious practices or beliefs.
A key to curbing abuse is to have an absenteeism policy that clearly sets forth which absences are allowed, and what behavior will subject the employee to discipline.
One of the biggest HR topics last year was the Notice of Proposed Rulemaking in regards to the FLSA Overtime Exemption. While the final rule has not been published, and therefore the standards and amounts are not set in stone, the NPRM has slated that the minimum annual salary threshold for executive, administrative, and professional overtime exemptions will in essence double by increasing from $23,660 to $50,440.
The Department of Labor is planning on issuing a final rule during the spring of 2016, and the effective date of the final rule would be 60 to 120 days after publication; but this is just speculation; thus now is the time to make sure you are prepared.
Below is a check list to get you started on making sure you are ready for the proposed changes. Please keep in mind that every business and industry is different, so this is not a comprehensive list, but rather a good starting point.
- Review employees job descriptions. Are they still accurate? Do the actual job duties fall within the exempt status?
- Identify exempt salaried employees with a salary below $50,440 or $970 per week.
- Identify the true hours worked per salaried exempt employee who makes less than $50,440 yearly. Start having salaried employees, which are below the $50,440 threshold, track their actual time worked if they are not already.
- Determine if it is better to raise the employee’s salary to 50,440 based on the average number of hours they are working, or if it is better to classify them as non-exempt from overtime.
- If reclassifying to non-exempt, determine if you will take their current annual salary and divide it by 2080 (40 hours per 52 weeks a year) to achieve what their new hourly rate may be.
- If employees, who will be reclassified as non-exempt, are consistently working over 40 hours per week, consider if overtime will be allowed or if it will be discouraged, and if so how much will be allowed.
- If you will implement a policy discouraging overtime for employees newly classified as Non-exempt, determine if certain tasks and jobs will need to be reassigned to another employee.
- Determine if additional employees need to be hired as a result of job duty changes, rather than possibly incurring additional overtime.
- Take a look at “remote work” for salaried employees. If employees who are currently exempt will be reclassified as non-exempt, now is the time to look at your policies regarding after work hours business phone calls and emails that are being read and/or responded to.
- Prepare a plan of how to explain the classification changes to employees, and what the changes will mean to them and their paychecks.
Summing it up, look at job descriptions, pay rates near the threshold, and especially at hours worked. If you are unsure of just how many hours those exempt employees are working, now is the time to start tracking them.
For further questions regarding the proposed changes, please contact our HR/Client Services Department at 770-339-0000 or ClientServices@hr-startegies.com. If you are in need of a Time & Attendance solution to track your employees hours, Please contact us at 770-339-0000 or TimeTracker@hr-strategies.com
Notice of Proposed Rulemaking for new Overtime Requirements
On March 13th, 2014 the White House’s Office of the Press Secretary released the Fact Sheet: Opportunity for All: Rewarding Hard Work by Strengthening Overtime Protections. As an excerpt from the fact sheet states, “The overtime and minimum wage rules are set in the Fair Labor Standards Act, originally passed by Congress in 1938, and apply broadly to private-sector workers. However, there are some exceptions to these rules, which the Department of Labor has the authority to define through regulation. One of the most commonly used exemptions is for “executive, administrative and professional” employees, the so-called “white collar” exemption.” A Presidential Memorandum was signed in 2014 instructing the Secretary of Labor to update regulations regarding who qualifies for overtime protection.
After more than 15 months of waiting, the 295 page Notice of Proposed Rulemaking (“NPRM”) was released on June 30, 2015. The NPRM is just the proposed regulations and are subject to a 60 day public comment period that will end on September 4th, 2015. This public comment period allows for all to comment with any dissatisfactions or concerns that they may have. The results of this comment period are then to be taken into consideration before the final rule is published. The comment period and subsequent review is expected to take between 6-8 months; thus, a final rule is not expected until 2016. To voice your opinions and concerns you may go to: http://www.regulations.gov/#!docketDetail;D=WHD-2015-0001.
The Proposed Changes
The NPRM as stated is 295 pages long, so here is a brief summary of what you need to know:
- The current salary threshold for the executive, administrative, and professional exemptions is $455 a week ($23,660 a year). The DOL proposes to establish the minimum qualifying weekly salary commensurate with the 40th percentile of weekly earnings for all full-time salaried employees in the United States. This would mean that the minimum weekly salary for the executive, administrative and professional exemptions will increase to $921 per week, or $47,892 annually. However, if the rule is not in effect until 2016, those numbers based on the 40th percentile will be $970 a week, or $50,440 annually.
- The proposed Rule also increases the minimum annual compensation for the highly-compensated employee exemption from $100,000 to $122,148, which is based on the 90th percentile of salaried workers’ weekly earnings.
- For the first time since the Fair Labor Standards Act was passed in 1938, the DOL proposes to automatically increase the minimum weekly salary requirement each year based on data from the Bureau of Labor Statistics. The Department, however, has not chosen between the two different indexing methods that it has studied.
- Keeping the levels chained to the 40th and 90th percentiles of earnings.
- Adjusting the amounts based on changes in inflation by tying them to the Consumer Price Index.
- There had been talk of changing the “duties test” for the executive, administrative, and professional exemptions; however, at this time there is nothing proposed regarding the duties test in the NPRM. Rather the DOL is only seeking public comments on the issue, which means that there may be revisions in the future.
Why the Change?
The last time the rule for the weekly salary that must be paid to an employee in order for the employee to be eligible for the executive, administrative and professional FLSA overtime exemptions were updated was in 2004. The minimum annual salary level for these exempt classifications under the 2004 regulations is $23,660, which is now below the poverty line for a family of four. By changing the exemption qualifications there will be a dramatic increase in the number of salaried employees who are entitled to overtime pay. It is estimated that these proposed changes will qualify approximately 4.6 million more employees nationally for overtime if the proposed rule is adopted.
What Comes Next?
By possibly changing the rules as to who qualifies as exempt vs. non-exempt from overtime, in regards to the income threshold for salary exempt status being raised; many employers are sure to be exposed to further FLSA cases. Now is the time to review your employee’s exemption classifications and to prepare to look into your compensation plans for your exempt employees, especially those who are salaried exempt making less than $970 a week.
We urge you to review the following:
DOL Press Release on the NPRM at http://www.dol.gov/whd/overtime/NPRM2015/
The Wage and Hour Fact Sheet at http://www.dol.gov/whd/overtime/NPRM2015/factsheet.htm
The FAQ’s regarding the Overtime NPRM at http://www.dol.gov/whd/overtime/NPRM2015/faq.htm
As always, HR Strategies is here to answer any questions or concerns that you have regarding the NPRM or other aspects of the FLSA and Wage & Hour. You may contact us at 770-339-0000.
This month, as 2014 comes to a close, we took a look back at some of the most important blog topics we have covered in order to help you prepare for 2015!
Some of the topics of greatest interest and importance covered the rise in regulatory compliance and employment laws, and the crack down of various government agencies to make sure your company is in compliance. Beyond that we have also provided you with insight into taxable and non-taxable income, employee relations, and employer policies. We want to thank all of our loyal blog followers and more importantly our clients for the opportunity to keep you informed of what has been happening in 2014 in the world of HR and here at HR Strategies. We look forward to 2015!
This month, as 2014 comes to a close, we are taking a look back at some of the most important blog topics we have covered both in case you missed them, and to help you prepare for 2015!
How’s Your Handbook?
Employment doesn’t just mean the hiring, paying, and perhaps the eventual termination of an employee. Employment means everything in the life cycle of an employee with your company.
As an employer you rely on your employees to get the job done, and to get it done well in an efficient and profitable manner. Just as you rely on them, they rely on you to manage them well, and to meet their needs. The relationship between employer and employee is a complex one, with both needing things from the other. On top of that an employer must make sure that they are meeting government guidelines on employment practices. These are just a few of the many complex issues that are a part of Human Resources.
A good employee handbook is an important tool in documenting your company policies, benefit programs, and expectations of the company – including acceptable and inacceptable behaviors and disciplinary measures. Businesses need to make sure that the policies, procedures, and other material listed within their employee handbooks are not only consistent, but also in line with the many Federal and State rules and regulations regarding employment.
Employment laws are continuously evolving and becoming more complex, and the many agencies that oversee them are continuing to crack down on employers who are in violation of the laws. Not only are the agencies continually cracking down on the employers, litigation is also on the rise by employee’s, and their representing layers, who feel they have been “wronged” by an employer for a myriad of employment law related issues. It is imperative that employers continue to review their employee handbooks for policies that need to be revised or added.
HR Strategies human resources department is here to assist with all of the employee lifecycle. We are able to not only aide you in developing customized employee handbooks, but in developing the employee policies and procedures that go into the handbook. We are proud to act as your partner in the human resource of your business.