by Kris Simmons | Business Resource, HR News, Human Resources, Legal Compliance, Payroll, Servant HR
NOTE: The requirements and timeline for the ban on Non-Competes by the FTC may be affected by pending litigation. Until we learn otherwise, the current effective date is September 4, 2024.
April was a busy month for both the Federal Trade Commission and the Department of Labor. The FTC rolled out a long-anticipated ban on non-competes between employers and employees. The DOL also had a long-awaited rule published increasing the salary threshold for “white-collar” exempt employees. Both changes may affect you and your team so here are the highlights and implications:
FTC’s Intent to Ban Non-competes
The FTC argues that non-compete agreements have been overused by employers preventing employees from being able to leave a position to work for a competitor or start a competing business. Originally, non-compete agreements and clause language were used to deter executive-level employees from leaving an organization to work for a direct competitor or start a business that would be considered a direct competitor. Over time, companies expanded their non-compete agreements to the rest of the employee population with fewer exceptions than before.
The ban will affect all businesses that use non-compete language in their employment agreements with employees. Now that the Final Rule has been published in the Federal Register on May 5, 2024, companies will have 120 days (until September 4, 2024) to notify employees that the non-competes they once agreed to are now unenforceable. Some Senior Executives may still have non-compete agreements that will remain enforceable, but that is only the case if they made no less than $151,164 in the preceding year and have policymaking powers within their role at the company (this if fewer than 0.75% of all workers). Going forward no new non-competes are allowed to be written and enforced between employers and employees, even if the employees are Senior Executives as defined by the Final Rule.
DOL’s Phasing Approach to Increasing White Collar Exempt Salary Thresholds
The DOL announced that income thresholds for the 5 recognized “white collar” exempt classifications will be increased in two phases. On July 1, 2024, the minimum salary will increase from $35,568 annually to $43,888 annually. On January 1, 2025, the minimum salary threshold will increase a second time to $58,656 annually.
What is next for employers is to take a closer look at the pay practices to ensure compliance with these changes. Generally speaking, to qualify for these exemptions employees must (1) be paid on a salary basis, (2) be paid at least the designated minimum weekly salary, and (3) perform certain duties.
There are a few ways employers can adjust to remain compliant without simply increasing wages.
For starters, it is a much easier shift to make when reclassifying an exempt employee as a non-exempt employee. This would mean the only “threshold” the employer would need to meet would be paying the individual at least minimum wage. That said, should the individual work any hours over 40 within a given work week, they should be paid a premium of 1.5 times their wage per hour for those hours in excess of 40. Lastly, when making that adjustment, employers can decide to pay that person a set salary assuming for at least 40 hours worked in a given workweek or they can require the employee to begin tracking their time to only be paid for hours worked.
Other facts to note per the DOL’s announcement pertaining to the salary threshold increase:
- Starting on July 1, 2027, the salary threshold will be automatically updated every three years.
- The Highly Compensated Employee (HCE) exemption annual salary will increase from $107,432 to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025.
- Employees exempt from overtime as they serve as bona fide teachers or outside sales representatives remain unaffected by these increased salary levels.
Servant HR is here to serve you and your team!
Leading up to these announcements, Servant HR has already begun the process of evaluating who will be affected by both of these major changes. For clients who have non-compete language involved at all in the employment relationship, Servant HR is reviewing the agreements that have been made up to now and will provide affected clients with recommendations on how to move forward that is compliant with the requirements set forth by the FTC. As the FTC’s Final Rule was published on May 7, 2024, we have 120 days, or up until September 4, 2024, to set a new pathway forward and execute on notifying affected employees, pending further litigation as mentioned above.
For clients who have employees currently classified as exempt, Servant HR will inform clients of the affected employees and chart potential paths forward. This will also be an excellent opportunity to revisit the FLSA’s duties and responsibilities tests to make sure that employees have been properly classified as exempt aside from the salary threshold increases.
by Mike Yoder | Culture, HR News, HR Tips, Human Resources
The transition to remote work due to Covid-19 has presented multiple challenges for employers.
At the beginning of the pandemic, the immediate concern was providing tools for virtual communication and ensuring process maintenance. Now, almost a year in, studies are finding that productivity is largely undeterred by the shift to remote work. Many employees are able to continue their work from home – maintaining, and even exceeding in-office performance.
However, recent research from the Society for Human Resource Management (SHRM) shows 71 percent of employers are finding it difficult to adapt to remote work as a way of doing business. And a new Forbes workplace survey reported three-fourths of the U.S. workforce is having a hard time transitioning to full time remote work. So, with booming productivity, why the tough time for both employers and employees?
Even if the day-to-day is running smoothly, work from home can create feelings of isolation among team members. The new remote work environment has been proven to affect focus, a sense of collaboration, and creativity. And for many, remote work can create a high-stress environment that contributes even more to feelings of detachment, loneliness, and depression.
As organizations continue to weather the pandemic from home (with some announcing permanent transitions), employers need to be intentional in supporting efficiency, as well as mental health, a sense of belonging, and community among employees.
The following list features our top five tips for successfully managing employees and maintaining connection while working remotely.
1. Schedule regular team video-calls
A remote team predominantly uses email and other messenger apps for communication. While these channels are functional, they are often devoid of important relational aspects, such as tone and emotion. Video calls add dimension to conversation and help employees feel more connected with one another. Consider implementing mandatory video calls on a regular schedule so that everyone is seen, heard, and communicating often.
2. Give recognition generously
Appreciation goes a long way. Because employees are not seen physically, sometimes recognition of good work is forgotten. Support your employees and prevent burnout by taking extra effort to appreciate them. Public recognition, such as a company-wide message of appreciation or kudos from a high-level leader, is especially powerful. These small thank-you’s help stir a sense of ownership and confidence, while inspiring employees to work even harder.
3. Establish feedback forums
When it comes to critical changes or conflict, remote communication can feel a little awkward. To empower employees, develop a streamlined process to share and receive feedback across various functions. Design regular surveys and implement periodic one-on-one meetings. This will keep you in touch with your team and help you identify challenges in morale early on.
4. Invest in culture building
Reinforce your company values often. Not only will this promote work well-being and right conduct, but it will unify your employees by a common commitment. In addition, plan events outside of work to establish a sense of normalcy. Plan meetings over coffee or occasional group outings to keep up face-time and build connections in person. These things may feel small or inconvenient, but go a long way in building and maintaining a healthy environment.
5. Stay aware and available
Be on the lookout for signs of distress in your employees. Facilitate regular conversations, communicate a “virtual” open door policy, and use every opportunity to make clear to employees that you support and care for them. Be organized, flexible, and ask employees how they can best be managed remotely. Then listen carefully and follow-up. This sounds simple, but empathy, flexibility, and good communication are keys to managing successful workers from a distance.
Have more questions or need help developing a remote work policy? Employee relations is an area Servant HR specializes in. We’d love to help you lose the administrative burden of human resources management, so you can focus on your business. Contact us today and see how we can support you.
by Mike Yoder | Business Resource, Business Strategy, Culture, HR News, Human Resources, Legal Compliance
Coronavirus is continuing to spread globally, with 82,000 reports worldwide and 60 confirmed cases now in the United States as of this blog. Along with the global advance comes increased anxiety and confusion over how to prepare.
You may have seen that large corporations are canceling conferences, limiting travel and stocking supplies. But is this too extreme—or not extreme enough? What does this mean for smaller companies? And how can workplaces prepare?
This blog is simply intended to provide information to promote common-sense preparedness, not panic.
The Centers for Disease Control and Prevention (CDC) has published guidance that may help prevent workplace exposures to acute respiratory illness and the potential effects of more widespread outbreaks of coronavirus. Their guidance is two-fold: How employers can prevent now, and prepare for later.
What employers can do now
As all workplaces are encouraged to take safety measures, it’s important that employers communicate preparedness to employees. Employers should also be careful not to make determinations of risk based on race or country of origin. The following recommendations should be used to prepare and prevent the spread of the virus, but any confirmed illness should remain confidential.
- Emphasize hygiene etiquette
Post information around the office that encourages staying home when sick and explains cough and sneeze etiquette and handwashing in areas where they are likely to be seen. Provide tissues and alcohol-based hand sanitizer around the workplace to encourage prevention throughout the day. This is nothing new. This counsel is actually what should normally be followed to reduce the spreading of any sickness in the workplace.
Employees should be encouraged to notify their supervisor and stay home if they are feeling sick. Ensure that your company’s sick leave policies are flexible and in line with public health guidance, and communicate these policies consistently so that employees are aware. Some may need to stay home to care for a sick family member or may not be able to obtain a doctor’s note within the usual timeframe. Be flexible and make sure your employees know their health is a priority.
- Advise caution for traveling employees
Direct employees to the CDC’s Traveler’s Health Notices for the latest guidance and recommendations for each country to which employees may travel. Advise employees to check themselves for symptoms of respiratory illness before starting travel and ensure that employees who become sick while traveling can notify a supervisor and contact a healthcare provider. If outside the U.S., sick employees should follow your company’s policy for obtaining medical care or contact a healthcare provider or overseas medical assistance company to assist them with finding an appropriate healthcare provider in that country.
In the rare event your employee is confirmed to have coronavirus, employers should inform fellow employees of their possible exposure, but maintain privacy and confidentiality as required by the Americans with Disabilities Act (ADA) and HIPAA. Employees exposed to a co-worker can conduct a risk assessment per guidance by the CDC. This is not an easy balance – so you may want to obtain some counsel in the event of a confirmed case in your workplace.
Creating an outbreak response plan
The severity of the illness or how many people will fall ill is still unknown, but the CDC has said the current risk in the U.S. from the virus is low. However, employers are still encouraged to develop plans in case the virus becomes more widespread. This could potentially result in containment efforts that might include closing schools, limiting public transportation or canceling large gatherings. The following bullets recommend action items for employers in the event that coronavirus becomes even more widespread.
- Review policies for compliance
Review your company’s human resources policies to ensure practices are consistent with public health recommendations and existing state and federal workplace laws. For more information on employer responsibilities, visit the websites of the Department of Labor and the Equal Employment Opportunity Commission.
Depending on your business, employees may be able to telecommute or flex their normal working hours to increase physical distance between other employees. This may be necessary in the event of an outbreak, as state and local health authorities could recommend social distancing strategies. Employers should ensure that technology and policies are in place to support employees who can work from home.
Identify now the essential functions, roles and elements within your business to maintain regular operations. Develop a plan now for how your business will operate (or not operate) if employees are unable to come to work or if essential functions are inhibited.
Information should be communicated to employees and business partners about your company’s disease outbreak plan. Establish a process now for this communication and set up triggers that will activate the response plan. Employers should anticipate employee fear, rumors and misinformation, so be careful that communication addresses these anxieties.
- Stay informed in the community
According to the CDC, local conditions will influence the decisions that public health officials make regarding community-level strategies. Employers should take the time now to learn the plans in place for each community in which the business is located.
Looking ahead
Taking preventative and proactive measures now will prepare both employers and employees in the event that coronavirus does become more widespread. Rather than scrambling last minute, an overly cautious approach will make employees feel confident, informed and safe.
As your PEO, we’re here to support you. This blog is intended to promote preparedness, NOT panic. Have further questions or concerns? Give us a call today and we’ll be happy to take steps with you toward protection and compliance.
See the following links to more information about coronavirus:
by Mike Yoder | Business Resource, Business Strategy, HR News, HR Tips, Human Resources, Legal Compliance, Outsourcing, Payroll, Servant HR
Servant HR provides fully integrated HR services—giving employers the freedom to focus on the success and growth of their businesses. Operating as a PEO enables us to take on the administrative load that comes with paying employees, offering benefits, managing risk and more.
But what exactly is a PEO again? And how is it different from the other HR service options out there? Good questions! Let’s get a lay of the land.
Defining terms
PEO stands for Professional Employer Organization. The biggest distinction of a PEO is that it offers its services through a “co-employment” relationship. Co-employment means that the PEO allocates responsibilities between the employer and the PEO, as expressed in a service agreement.
While the employer maintains their relationship with worksite employees, PEO’s provide many back-end services in a bundled offering. These often include payroll, health and welfare benefits, workers’ compensation and risk management services.
Perhaps the biggest misconception about PEO’s is that the client loses control of its workforce through the co-employment model. But this is not the case, as PEO clients retain complete control over day-to-day operations and workforce management. Employers continue to make their own hiring, termination, discipline, scheduling, promotion, safety and culture decisions.
The relationship actually provides the exact opposite, as PEO’s often add to the control and confidence of an employer. Clients have access to higher quality HR offerings, systems and processes, and benefit from PEO expertise in making big decisions.
Other options
You may have heard of an ASO as well, which stands for Administrative Services Organization. The main difference between a PEO and an ASO is the co-employment relationship. An ASO manages only day-to-day administrative operations, but does not process payroll, remit taxes, sponsor benefit programs or offer workers’ compensation coverage under the PEO umbrella. There is no shared employment relationship.
If that’s still not enough acronyms for you, there is an HRO model as well! Human Resources Outsourcing is the process of subcontracting human resources functions to an external supplier. This option has traditionally been only available to larger organizations, but like an ASO, an on-site employer remains the “employer of record” in the arrangement.
So, why a PEO?
Here are three of our favorite reasons to consider:
Compliance
For many small businesses, administering payroll is a huge task in itself. What may seem just like “cutting checks,” actually involves many parts of the business, all affected by payroll functions. PEO clients enjoy easier, more confident compliance in tax payments, and more benefits options. A PEO literally has hundreds of years of human resource experience. Partnering with a PEO provides peace of mind that a full-service team of experts is working solely for your protection.
Benefits
Another perk is there may be access to more affordable health and ancillary insurance. Alongside a PEO, you gain access to a much larger pool of employees when obtaining insurance quotes. PEO’s may receive bulk, discounted pricing so that clients are able to offer employees more comprehensive insurance coverage with better rates.
Cost
For many small business owners, cost is the most compelling reason for signing on with a PEO. Service fees for PEO’s are often significantly less expensive than hiring a full-time, in-house Human Resources professional. The PEO manages all the functions of a full-time employee, and in some cases, for as little as a quarter of the cost.
In addition, many employers struggle under the weight of being both the business owner and the HR department. The inability to balance both effectively can ultimately cause a business to suffer.
Thinking it through
Partnering with a Professional Employer Organization can have a ripple effect across an entire company, offering better health benefit options, employee management and more time for business owners to spend on what they really care about—their business.
Working with a PEO is a big decision for any company. While it may stand to benefit your business in many ways, don’t just take our word for it! Feel free to check out our reviews and explore our website resources. Learn more about our team and exactly what we do.
Still not sure if a PEO is right for you? Give us a call today! We’d love to help answer any of your questions and determine how Servant HR can serve you and your business.
by Mike Yoder | Business Resource, Hiring, HR News, Human Resources, Legal Compliance
Happy New Year, and Happy New Form W-4!
On December 5, the IRS issued the redesigned 2020 Form W-4 (Employee’s Withholding Certificate). The form is long-awaited in the payroll community, as the redesign has been postponed for years due to various concerns and time constraints. However, change can be confusing and the update has been dreaded by many employers and employees alike.
It used to be that new hires filled out their filing status and the number of allowances on the W-4. Using the W-4 personal allowances worksheet, employees calculated a number that told their employers how much money to withhold from their paychecks for federal, state and local taxes.
What’s changed and why
Now things are a bit different. The Tax Cuts and Jobs Act (TCJA) eliminated personal exemptions, which allowed for deductions against a taxpayer’s personal income. These exemptions were tied to allowances, but since exemptions are now gone, the need to determine the number of allowances is gone as well.
Enter the new Form W-4! The form is designed to make tax withholdings more accurate. Those who fill out the 2020 form are less likely to end up with a large tax bill or a big refund when they file tax returns in 2021. This way, wages can be more accurately invested or spent on essential expenses throughout the year. Interestingly, this may actually be the biggest concern for many employees who have used their tax filing as a savings account of sorts in the past.
Not all workers must complete the 2020 Form W-4, as the IRS has designed the withholding tables to work with prior year forms as well. However, all new employees starting in 2020 or employees updating their withholdings in 2020 must use the new Form W-4. The IRS also recommends that employees revisit their W-4 forms annually to account for any life changes, such as getting married or having kids.
A step-by-step guide
So, how should your people actually fill out the form? We’re glad you asked! Listed below are the 5 simple steps for filling out the new W-4:
1.Enter Personal Information
First name, last name, social security number and filing status (single, married, head of household, etc.) are all lumped in this box. This step must be completed by all employees, so if an employee does not fill out the form at all, you are required to calculate their withholding as “Single.” This withholds their taxes at the “Single” rate, resulting in more income tax being withheld.
2. Multiple Jobs or Spouse Works
Employees should complete this step if they currently work more than one job, or if they are married filing jointly and their spouse is working as well. For this step, following option A will give employees the most accuracy (and privacy) of the three, since the new online withholding estimator will use all the relevant entries for the form. Option B provides accuracy as well, but requires manual work so there is more room for error. Option C is the easiest to complete but is the least accurate, as it assumes that both jobs have similar pay.
3. Claim Dependents
Here employees will multiply their number of dependents by specific dollar amounts. When the TCJA was enacted, the law changed so that more people would qualify for the child tax credit. Single taxpayers with an income of $200,000 or less ($400,000 if married filing jointly) are now eligible. If your employees have questions about this section, feel free to direct them to the definitions in IRS Publication 972 – Child Tax Credit if they’re looking to claim the credit.
4. Other Adjustments
This section is optional, but offers a few other things employees may want to consider when calculating their tax withholding. Other income (not from jobs) could include retirement income, dividends, or any additional income that might not be subject to direct withholding. Deductions include things like mortgage interest or charitable contributions. Extra withholding is simply any extra amount of income that the employee would like to withhold per paycheck.
5. Sign and Date
Last of all, your employee must sign the W-4 in order for the form to be valid.
And that’s it! The new W-4 definitely comes with a learning curve, but your confidence with the form will instill confidence in your employees that their taxes will be withheld accurately. More details on each of the steps above (including information on who can claim exemption from withholding) can be found on page 2 of the form.
If you’d like, you can also direct hesitant employees to the IRS Tax Withholding Estimator. Employees can use their most recent pay statements and income tax return to fill in the questions online. This will then calculate an estimate from the IRS of what their tax liability will be, and whether their current withholding is too much or not enough to meet the liability.
Questions, concerns or needing help with onboarding in general? We’re here to help! At Servant HR, we strategically partner with you to manage and optimize all your human resource responsibilities. From employee onboarding to legal counsel, we help lighten your administrative load so you can focus on what matters most. Give us a call today and see how Servant HR can serve your business in 2020!
by Mike Yoder | Culture, Employee Benefits, HR News, HR Tips, Human Resources, Servant HR
It’s the holiday season! But as many of us know, the holiday season is often cozied up right next to the flu season. Employees are calling in to claim sick days, while others trudge through the work day with cough drops and tissues in tow.
In 2018, a Walgreens survey revealed that 40% of workers admit coming in to work with the flu. This year 90% of employees admit going in to work with cold or flu symptoms. Our culture’s obsession with productivity has made “workaholism” the norm. Sick days? Those are for wimps.
Even still, HR firm Career Builder recently surveyed more than 2,200 human resource professionals and 3,700 employees about their companies’ employment practices. The survey found that 40% of workers have faked a sick day in the last 12 months.
So what’s an employer to do? How do you create a sick policy where people can take care of themselves without taking advantage?
While you will never be able to control this entirely, there are a few things your company can do to prevent these tricky situations without fostering a culture of suspicion.
Review your policy
The “sick day” concept was originally created to keep employees from abusing time off and to help track work environments in which employees were sick more frequently than other parts of the business.
However, having designated “sick days” can often force employees to compromise their integrity. Sometimes people aren’t sick, they just need a day off. If an employee’s only way to take time off is to use a sick day, it can encourage dishonesty. Also, those who believe “sick days are for wimps,” may feel guilty taking these designated days, and end up “powering through,” potentially getting other coworkers sick in the process.
Research shows that forming a modern, non-defined PTO policy fosters more positive workplace sentiments. Small businesses should still allocate a predetermined number of days off for their employees. However, an increasing amount of businesses are no longer using the antiquated terms “sick days” or “sick leave,” but instead defining all days off as paid time off (PTO).
You may or may not decide modern PTO is right for your company. However, if you decide to no longer differentiate between personal time and sick time, make sure this is clearly stated in your policy. Make sure your employees don’t think they will get all of their personal time in addition to sick days.
Model transparency
In today’s progressive workplace, more and more companies are putting everything in the open. This means everything from opening financial dealings to simply opening office doors. Of course, each business is different and must implement these ideas with discretion. Still, the principle is universal: face-to-face communication encourages honesty.
If you talk openly with your employees about significant things such as work projects, compensation, and company decisions, it is more likely that your employees will talk openly with you about their family, their health and their need for time off.
Hire honest people, include others in decision-making processes and treat all employees equally. These are just best practices in culture-making, but they inevitably affect your employees’ use of time off. If honesty is at the core of your company, it will be at the core of your time off policy as well.
Promote prevention
A report by Stericycle found that prevention efforts—like vaccinations and hand washing—are up over the last year. And while less than half of workplaces offered flu shots as a benefit (and even fewer offered on-site vaccinations), those that do are viewed more positively by their employees.
Many organizations now host on-site vaccination clinics, allowing employees to get vaccinated without sacrificing their free time. You can contact your local pharmacy or community vaccinators to come to your workplace and administer the vaccines on site.
If having on-site vaccinations isn’t an option for you, do your best to make it easy for employees to get their flu shots elsewhere in the community. Make sure that flu shots are covered by your company’s health insurance, post a list of all local vaccination sites, and be flexible to allow your employees to leave work briefly to get a flu shot.
You can also promote prevention by following the Occupational Safety and Health Administration’s suggestions. Encourage employees to wash hands frequently, cover coughs, use hand sanitizer and avoid close contact with others during flu season. You can also stock your office with hand sanitizer, a shared medicine cabinet, orange juice, Emergen-C, tea and healthy snacks for employees. These are small but significant ways to show your employees you care.
Encourage staying home
Despite those who take advantage, employers cannot dismiss the reality that many employees feel pressure to come to work sick. And having sick employees in the office can have serious consequences. The 2018-2019 flu season was one of the longest on record—and this year’s season has started early, meaning it could reach similar heights, according to the CDC.
Productivity may suffer, but employers should encourage those with the flu to stay home rather than spread the virus to co-workers. Employers should review their sick time policies to see if they put undue pressure on workers to come to work ill. You may also consider remote work arrangements for appropriate positions and situations.
Employees appreciate being treated with respect and trust. Ultimately, as an employer, it’s up to you to approve PTO arrangements and determine the validity of time off requests. However, doing everything you can to encourage health and honesty will go a long way in building the kind of workplace your employees won’t want to miss.
Interested in learning how a PEO can aid your efforts toward building a healthy culture? Along with offering HR coaching and counseling, Servant HR frees business owners from their administrative burdens to better focus on what matters most—their people and their business. Give us a call and see how we can serve you today.
