Question: Do we pay the minimum wage of the state where our headquarters is located or the state an employee does the work?

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Answer: This comes up a lot with employers who have people working remotely or at a work site in a different state. The answer is simple: Employees should be paid the minimum wage for the state in which they work, whether this is a satellite office or their own home. Beyond that, it’s important to be aware that some cities and counties have even higher minimum wages than the state they are located in. In general, with most employment laws, you should adhere to the law that is most beneficial to the employee.

Compensation Strategy Checklist

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Too many organizations are disorganized when it comes to compensation. They make compensation-related decisions in a haphazard manner that:

  • Discounts applicable laws and regulations
  • Obscures whether their approach to compensation generates appropriate ROI
  • Makes compensation and payroll management unnecessarily difficult.

This kind of ad hoc approach to compensation often results from being overwhelmed by all the related considerations. To help, The Weston Group breaks down compensation management, strategy, and compliance into component parts for business owners and executives to carefully consider. We help clarify the issues that need to be addressed and the questions that must be answered.  Things to consider include:

  • Compensation Policies
    • Have you developed a written compensation policy that guides executives and promotes consistency in compensation decision-making throughout the organization?
    • Does your compensation policy or strategy address a total compensation package that includes incentives, bonuses, and/or any other financial benefits you offer, in addition to salaries and wages?
    • Are decisions regarding compensation, promotions, and merit raises based on objective, fair criteria? Are those criteria included in your compensation policy?
    • Are any bonuses or incentive payments tied to clearly documented triggers (e.g., sales performance or profit-based measures)?
  • Compensation Strategy 
    • Have you researched and developed compensation benchmarks appropriate for your industry and geographic region?
    • Have you documented your reasoning for any one-off or unusual compensation decisions to ensure they are reasonable?
    • Do you regularly review and adjust compensation levels and plans? Note that some positions / geographic areas require regular reviews (e.g. every year).
    • Does your compensation strategy account for cost of living allowances?
    • When reviewing compensation plans, do you solicit employee feedback? For example, if you might be considering a new incentive payment program, it would be helpful to ensure the program would actually incent performance.
  • Regulatory Compliance
    • Have you audited all currently exempt positions to ensure they meet salary requirements and the duties test? Remember, job title alone does not determine employee classification.
    • Have you considered reclassifying employees, both to comply with the law and for strategic purposes? For example, it might be more cost-effective to hire additional employees than to pay existing employees significant overtime.
    • Do you have training procedures to ensure employees understand when and how they need to manage time-keeping?
    • Do you have procedures in place to ensure pay equity where required by law (e.g., you’re not systematically discriminating against a protected class)?
    • Have you reviewed pay practices to ensure they align with the Fair Labor Standards Act?
    • Have you reviewed pay practices to ensure they align with any applicable state and local laws?

This list of questions and considerations is just the start. Compensation is complicated! Fortunately, The Weston Group specializes in healthcare compensation planning.  We have seasoned (and certified) compensations available and updated salary data for all industries across the US.

Does “at-will employment” mean we can terminate without risk?

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Answer:  No, termination always comes with some risk, even when the employment is at-will. While at-will employment allows either the employer or the employee to terminate the employment relationship at any time, with or without notice, and with or without cause, it does not permit you to terminate employment based on the employee exercising a legal right or belonging to a protected class (e.g., race, sex, religion, national origin).

There’s even some risk when the termination is for cause, because a terminated employee could claim that your reasoning is just for show, and that they were actually terminated for an illegal reason. That risk grows exponentially when you don’t provide the employee with a sensible reason for the termination.

Consequently, the safest way to terminate an employee is to have documentation that justifies the legitimate business reasons behind the termination. This documentation would include infractions of policy, instances of poor performance, and any disciplinary or corrective action taken. The more you can do to show that you had a legitimate business reason, the harder it will be for an employee to fill in the blank with their own

This is a question we get from our clients often and it is so important to understand the risks.

How long should we keep employee timecards?

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Under the Fair Labor Standards Act, you are required to keep such records for at least three years from time of creation. However, we recommend that personnel records, including payroll records and timecards, be kept for seven years from the date the record is made or the date of termination, whichever is longer. That way, if you are subject to an IRS audit (which could go back seven years), you have this supporting documentation available upon request.

If you’re currently using a paper timekeeping system and you don’t want to store that much paper around the office for seven years, you can scan paper documents for electronic storage. Just make sure you have a reliable and secure method for storing this sensitive information and are able to access it as needed.