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CCH® HR MANAGEMENT - 11/20/09

Attorney provides tips for avoiding legal claims in the New Year

The start of a new year provides a natural opportunity for employers to implement changes in policies and procedures to reduce exposure to legal claims and make the business more competitive in this challenging economy. Changes introduced at the beginning of a new year seem less abrupt to employees, and are therefore less disruptive to employee morale.

James J. McDonald, Jr., a managing partner of the Irvine, Calif. office of the national labor and employment law firm Fisher & Phillips LLP, suggests the following changes be considered:

1. Develop an employee handbook. If you don’t have an employee handbook, have one prepared and ready to distribute at the beginning of the New Year. A good employee handbook makes it clear what is expected of employees. It reduces the likelihood of inconsistent application of policies that can lead to discrimination claims, and it ensures that every employee has been informed of important policies such as the policy against harassment, employment at will and arbitration of disputes.
2. Consider reclassifying employees. If the overtime exempt status of some employees seems questionable, the New Year is a good time to reclassify them as non-exempt. Pay particular attention to office employees who perform mostly routine work, “leads” in manufacturing or service jobs, and retail managers who spend most of their time serving customers. Job descriptions for employees switched to non-exempt status should be revised to more accurately reflect their job duties.
3. Think about implmenting pay-for-performance plan. Instead of granting automatic pay raises at the first of the year or on an employee’s anniversary date, consider implementing a pay-for-performance plan that ties employee compensation to job performance and/or the overall performance of the company.
4. Revise your vacation policy. You can save money two ways by revising your vacation policy. First, you can impose a waiting period of three or six months before new employees qualify for vacation benefits. This eliminates the need to pay accrued vacation to short-term employees who do not work out. Second, if you have a “paid time off” or “PTO” policy split it into vacation and sick leave. This is because while you must pay accrued vacation to terminating employees, you need not pay unused sick leave unless you combine it with vacation time into “PTO.”
5. Eliminate some paid holidays. You can eliminate some paid holidays. Some employers have paid holidays such as Presidents’ Day, Martin Luther King Day, Christmas Eve and the employee’s birthday as paid holidays. Employers are not required by law to provide paid holidays, so you can cut back on some of these paid holidays to improve productivity.
6. Review the health plan. Take a look at your employee health plan. Are employees bearing their fair share of the costs of the plan, in terms of premiums and deductible amounts? Is the plan providing adequate coverage, given the cost — or would another plan provide better coverage for the same or lower cost? Consider providing a stipend to employees who may decline coverage under your plan because they can be covered under a spouse’s plan.

Source: Fisher & Phillips LLP; www.laborlawyers.com.

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