June 3, 2024
Many folks have the misunderstanding that human resources is just for the big organizational players or that human resources is not necessary. However, that is not the case. Human resources cover not just the administration (think first day paperwork and the like), but it encompasses employment law compliance, employee management and relations and organizational design. Let’s face it, when you start adding team members to your organization, they are critical to the success of your organization. Unfortunately, mismanagement of employees, whether compliance or poor people management, can lead to financial and legal risk exposure. Whether you have hired your first team member, thinking about it or have a team in place below is a snippet of just some of the HR areas that should actively managed to ensure best practices and compliance.
Hiring
Hiring strategy is essential. Strategy should address budget, pay structures, when to add and how many team members to add and organization structure. It is critical to forecast anticipated growth and how that will change your workforce needs in both the short term and long term. Hiring strategy should include internal procedures for hiring, including and required approvals and workflows.
Job descriptions should be well thought out and crafted prior to hiring positions. Job descriptions will serve throughout the employee life cycle. They will serve as a basis for the job postings, performance reviews and training and development.
Job postings should be accurate and clearly represent the open position. Over or under-stating to entice potential candidates to apply typically does not work out in the long term. It may be tempting to “borrow” a similar organization’s job posting, but “buyer” beware, your organization become responsible for the good, the bad and the ugly of the “borrowed” job posting.
All candidates should complete a job application, while there is no federal law mandating applications, it is a best practice for a number of reasons. Job applications allow for efficient screening of applicants, provide a legal document granting authorization to verify background, ensures applicant acknowledges the organization’s commitment to equal employment opportunities, clarify potential employment status (for example at – will) and require applicants to attest to the accuracy and truthfulness of the information they provide. It is imperative that applications do not violate any federal, state or local regulations. As a best practice only require information that is necessary to screen the applicant, and do not ask for personal or medical information.
The interviewing process can be stressful to not only the interviewee, but the interviewer as well. If you and your organization are new to interviewing, learning solid approaches and interview techniques will ensure that you are able to access the needed information to properly appraise candidates. Try to use behavioral, open-ended and previous experience type questions. These questions allow the interviewer to get a better understanding of how candidates have performed, will performance, communicate, etc. Be very careful not ask any questions that are unrelated to the position or may be potentially discriminatory (do not ask about childcare, transportation, age etc).
Crucial to the hiring strategy is ensuring compliance with state and federal reporting and hiring requirements. Your new employees will need to complete a W-2 and this information can be used to report new hires to the State Directory of New Hires (this includes rehires as well). All employers are required to verify employee’s authorization to work in the United States by completing USCIS Form I-9. Employers with 25 or more employees, state agencies and public contractors and subcontractors are required to participate in the E-Verify program.
Pay Structures
Payroll can be one of the largest regular expenses employers have. Being such a large expense, it stands to reason that employers should look at reducing that cost. However, most employers are covered under the Federal Labor Standards Act (FLSA). What that means is that employees need to be classified as exempt (from minimum wage and/or overtime) or non-exempt. The FLSA determines which employees are exempt or non-exempt based on the DUTIES they perform, not the job title. Below is a brief description of the 4 main exemptions and how to apply them.
The employee must be compensated on a salary or fee basis of at least $684 per week;
The employee’s primary duty must be managing the enterprise, or managing a customarily recognized department or subdivision of the enterprise;
The employee must customarily and regularly direct the work of at least two or more other full-time employees or their equivalent; and
The employee must have the authority to hire or fire other employees, or the employee’s suggestions and recommendations as to the hiring, firing, advancement, promotion or any other change of status of other employees must be given particular weight.
To qualify for the administrative employee exemption, all of the following tests must be met:
The employee must be compensated on a salary or fee basis of at least $684 per week;
The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.
To qualify for the learned professional employee exemption, all of the following tests must be met:
The employee must be compensated on a salary or fee basis of at least $684 per week;
The employee’s primary duty must be the performance of work requiring advanced knowledge, defined as work which is predominantly intellectual in character and which includes work requiring the consistent exercise of discretion and judgment;
The advanced knowledge must be in a field of science or learning; and
The advanced knowledge must be customarily acquired by a prolonged course of specialized intellectual instruction.
To qualify for the creative professional employee exemption, all of the following tests must be met:
The employee must be compensated on a salary or fee basis of at least $684 per week;
The employee’s primary duty must be the performance of work requiring invention, imagination, originality or talent in a recognized field of artistic or creative endeavor.
***Effective July 1, 2024 the salary threshold increases to $844 per week, then on January 1, 2025 the salary threshold increases to $1128 per week and then increases every three years thereafter. ***
Highly compensated employees performing office or non-manual work and paid total annual compensation of $107,432 or more (which must include at least $684 per week paid on a salary or fee basis) are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.
Effective July 1, 2024 the annual salary increases to $132,964 per year, including at least $844 per week paid on a salary or fee basis, then on January 1, 2025 the annual salary threshold increases to $151,164 per year, including at least $1,128 per week paid on a salary or fee basis and then increases every three years thereafter. ***
If employees do not meet the above criteria, then they are non-exempt employees and must be paid minimum wage and overtime for all hours over 40 worked in a week. The overtime rate is 1 and ½ times the regular rate of pay. Regular rate of pay is calculated below:
Total compensation in the workweek (this includes some bonuses and other pay premiums received, but excludes statutory exclusions) ÷ Total hours worked in the workweek = Regular Rate for the workweek
Separations
This is probably one of the most difficult areas for all employers. It tends to be an emotional topic, whether just the employer or employee or both. Keeping a calm, professional demeanor during the separation process and consistently applying company policies can avoid a lot of headaches down the road.
Voluntary resignations are typically straightforward. An employee decides to leave. These separations can provide insights into a number of areas relating to the “employee experience.” Having an exit interview strategy will assist in getting deeper insights into what your employees experience. Interviews can be done as a survey or in person, it is best that they are done within a few days (or prior to) the date of separation. Questions should be aimed at addressing the overall work experience. Using a combination of multiple choice, scaled and open-ended questions tend to give the best overall picture.
One last word on voluntary resignations and a word of caution. We have all been there, we have an employee that really needs to be terminated, but for one reason or the other, leadership does not terminate the employee, instead somewhere a decision is made to make work uncomfortable enough (through any number of means) to encourage the team member to resign. This is not a voluntary resignation; this is a constructive discharge and is involuntary in nature. At best workers compensation is charged back to you, worse case scenario you can expose your company to a number risks that can be costly to resolve.
Management of involuntary terminations happen and while unfortunate, having a strategy to address these types of terminations is imperative. Well developed disciplinary, performance improvement (PIP) and corrective action (CIP) strategies clarify the process of what to do when workplace expectations are not met. These strategies should also include the caveat there may be situations which warrant immediate dismissal or adjustment of any of the above process.
Documentation and consistency are essential. Document your policies for the separation and disciplinary strategies. Remember to document PIP, CIP, coaching and counselling with team members. When carrying out these strategies apply them consistently to your workforce.
Final Thoughts
HR strategies should align to your overall business strategy and culture. When designing and implementing your workforce strategies, do not remove the human element. It can be tempting to do, especially with the plethora of regulations and exposure to risk. There is no way to remove the risk from business and that includes your HR strategy. Our employees are human beings and deserve to be treated as such with compassion and respect. Finally, regularly review your strategies and policies to ensure compliance and reflect changes in business and workforce.
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