The end of the year has arrived. In this Advisor, we review the injunction affecting the FLSA overtime rules, examine various company organizational structures, and provide some tips for holding holiday parties.
Federal Overtime Rules on Hold
Tuesday afternoon, a federal judge for the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on the Department of Labor’s new overtime rules, which were slated to go into effect in just over a week on December 1, 2016. The judge ruled that the Department of Labor (DOL) likely overstepped its rulemaking authority by raising the salary threshold as high as it did and by implementing the automatic increase every three years.
What this means now:
- The effective date of the rules has been delayed indefinitely.
- Employers may choose not to implement the changes they had planned for Dec. 1 compliance.
- The new rules have not been thrown out or invalidated – at least not yet.
The judge has not made a final ruling in the case, but the fact that he issued the injunction suggests that he is leaning in favor of the groups that want to stop the rule changes. It is also possible that his final decision will allow some parts of the rule to stand but not others. The DOL has indicated that in the meantime they are considering their legal options with respect to the preliminary injunction.
Employers are obviously wondering whether they should move forward with the changes they have been planning. Unfortunately, this is a difficult question to answer and ultimately a business decision, which is much harder than a compliance decision. Although employers are not required to make changes, they may want to consider the following:
- Will it hurt the bottom line to make the changes? If so, how much?
- Will it be difficult to undo changes that have already been made?
- How will employees feel about the decision? Did they like the changes? Hate the changes?
- Is the new pay structure better than what is in place now?
- If the changes aren’t implemented now, will it be possible to make them on short notice in the future?
At this point, we do not know how long the injunction will be in place or if the rules will be thrown out entirely. We will be keeping an extremely close eye on this case and will issue further eAlerts when actionable information is made available.
Organizing Your Company for Effective Communication
Imagine a car so poorly designed that pressing the accelerator sometimes feeds gasoline to the engine, sometimes feeds it onto the tires, and sometimes feeds it into the trunk. The car would always stink and only sometimes drive. Seems silly, right? No one would try to drive a car like that! And yet many companies suffer from basically the same problem as this unreliable car.
Companies need fuel to move forward just as cars do. The fuel for companies is information. Decisions must be made based on what’s happening inside and outside the company. If information isn’t getting to where it needs to go, then those decisions cannot be made or made well. Solutions can’t be proposed and tested if problems aren’t brought to the right party’s attention. And often one department can’t do its job if it’s unaware of what’s happening in another department. The right hand should always know what the left hand is doing and be operating with the same information!
Unfortunately, it doesn’t suffice to tell everyone to talk to each other and share information. Structural groundwork must be laid to establish clear channels of communication. Fortunately, you don’t need to reinvent the wheel. There are several effective company structures that, when implemented correctly, will help information flow from department to department or person to person. The trick is determining which one would work best for your company.
The functional structure is the most common of the bunch. In this hierarchical structure, the head of each functional area reports directly to the CEO. Picture a pyramid or family tree. As its name implies, this arrangement groups employees and operations into functional units (sales, marketing, HR, etc.). With its clear, vertical lines of communication, the functional structure keeps the CEO apprised of problems and developments in each department, enabling centralized decision-making.
Horizontal communication (department-to-department) isn’t stressed as much in this structure, so it’s important for companies that use this arrangement to establish effective ways for functional areas to communicate with one another and be aware of what everyone is doing. The CEO can help with this endeavor by providing everyone with regular summaries of what’s happening in each department.
The functional structure will not work well for every company. Businesses with separate product lines or distinct sets of customers may want a product-based structure instead. In this arrangement, the company is divided into separate product lines, each with its own functional divisions. The division has information flow up and down through each product line, but not so much among them.
There are other divisional structures to consider. Larger companies with operations in different regions, countries, markets, or industries will often use a geographical or other decentralized structure based on whichever divisions make the most sense. The various divisions each report to the CEO, but the depth and breadth of operations makes it necessary for VPs or other leaders to make major decisions for their division.
No matter what structure you use, it helps to chart the reporting channels so everyone can see how information flows throughout the company. Our featured Tool of the Month is an example of one such chart, but there isn’t an absolute set way to create one. The key is to keep it simple. The purpose of the chart is to give everyone a bird’s-eye view of the place each unit has in the company so they can easily and clearly see the paths of communication and lines of reporting. To see our Company Organizational Chart Sample, go to the Support Center, click on the Documents tab, select Guides, and look under HR Administration.
A chart, however, is only a means to an end. The important thing is to have an organizational structure that makes sense for the type of company you have – one that effectively and efficiently gets information where it needs to go.
Question & Answer
Q: Christmas Day and New Year’s Day fall on a Sunday this year – what is the norm for office employees who work Monday-Friday? Do companies typically give the Friday before or the Monday after the holiday off? Our employees always have those holidays off, but we’re unsure what to do this year since those holidays fall on a non-work day.
A: First, I want to point out that you are not required to offer an alternate day off from work. However, most employers do elect to offer another day off when a holiday falls on a weekend. The most common policy we see is that if the holiday falls on a Saturday, the Friday before is given off. And if the holiday falls on a Sunday, the Monday after is given off. Consequently, we anticipate that most office employers will be closed on Monday, December 26th and Monday, January 2nd.
If you are concerned about shift or client coverage on those Mondays, a less common but more creative approach is to implement flex holidays. With this option, you would allow half of your workforce to have the Friday before the holiday off and the other half to have the Monday after the holiday off. You could even allow them to select which one they would prefer. This option is often a nice way to handle holidays for companies that are concerned about shift coverage and would like at least a skeleton crew to manage pressing issues. Everyone gets a three-day holiday weekend, but with the least amount of disturbance to clients. And employees often appreciate the flexibility of selecting their day off around the holidays.
Celebrating Responsibly at Holiday Parties
Employees appreciate recognition of their hard work over the year, and year-end holiday parties are a fun way to celebrate. But alcohol can be a liability. Partygoers who overindulge could cause an accident at or after the party, or they might act in ways that violate your harassment policy.
You have more potential liability if the event is required instead of optional, as employers may be liable for employee misconduct and negligence when the employee is acting “in the course and scope of employment.”
There are steps you can take to protect both yourself and your employees. Here are some practices you might consider:
- Do not make the event mandatory and clearly communicate that attendance is optional. Make sure that managers and supervisors do not imply that failure to attend would count against the employee in any way.
- Avoid conducting any work-related activities, such as award presentations or company updates, at the event. To further support the non-work nature of the event, hold it off-site and outside of regular business hours and allow employees to bring a guest.
- In advance of the event, set expectations around respectful behavior and encourage employees to drink responsibly. Remind employees that company policies, including harassment and other conduct policies, apply at the event.
- Have a plan to ensure that no minors or visibly intoxicated attendees are served alcohol. If possible, hire professional servers (or hold the event at a staffed facility) who will, as part of their job, politely refuse to serve anyone who they perceive has had enough to drink.
- Consider hosting a cash bar where employees purchase the alcohol. This will reduce the likelihood of a claim that the employer provided alcohol directly to employees. It will also reduce consumption.
- Provide employees with a set number of drink tickets so that each attendee is limited in the number of alcoholic drinks they will be served (there are obvious limits to the usefulness of this tactic, but it may be somewhat helpful).
- Avoid entertainment and event locations that may be potentially provocative, risqué, or offensive. These atmospheres, especially when combined with alcohol, may become conducive to sexual harassment.
- Plan for how employees who have been drinking will get home. This may involve providing taxis or public transit options at no cost to the employees, arranging for group transportation, or encouraging employees to designate a driver at the beginning of the event.
- Provide ample food and non-alcoholic beverages, both for safety reasons and so non-drinkers know you’ve given them consideration.
- Even if you don’t want or plan to provide taxi service, don’t think twice about calling and paying for one if an intoxicated employee has no way home than driving themselves. This is not the time to teach employees a lesson, and from a cost-benefit point of view, it may be the best $30 the company ever spends.
While these steps will not eliminate all the risks, they can help reduce liability and help your employees celebrate the year safely and responsibly.
Tool of the Month:
Organizational Chart Models Template
Have you considered charting your company organizational structure? This handy sample chart shows you a basic design in an easy-to-understand format. To see the Organizational Chart Models Template, go to the Support Center, click on the Documents tab, select Forms, and look under HR Administration. Check it out!
Why You Should Consider Progressive Discipline Before Termination
Terminating employment always comes with risk, even when it’s done for good cause. You can reduce this risk by using progressive discipline. Join us on the HR Support Center on or after the 15th as we discuss the steps and benefits of progressive discipline. Find this new HR Cast under the Learning tab.
Employee retention is one of the most difficult and expensive challenges faced by business owners, managers, and HR departments. Although the keys to retention and low turnover aren’t easy, they are simple. And many research dollars have come to the same conclusion. To keep the right employees around, these three things are essential:
- Pick the right people in the first place. This means thoughtful recruiting and advertising and careful interviewing. Skills are important, but so is fit. The more time you and other employees can spend with candidates, the surer you’ll be that they’ll fit in at your workplace.
- Make sure your compensation and benefits remain competitive. This is a tall order and may squeeze your bottom line in ways that make you uncomfortable, but it’s absolutely necessary if retention is at the top of your priority list. Make it a goal to do a yearly analysis of employees’ total compensation package to ensure that it’s at least keeping up with the market.
- Be appreciative. A little gratitude can go a long way. And you can show it in a number of ways – from flexibility when employees need it, to a willingness to hear out ideas, to employee appreciation programs. The more you can treat employees like individuals rather than cogs in the machine, the happier they’ll be.
You’ll find an assortment of articles and webcasts on recruiting, hiring, flexibility, culture, and more in “Articles” and “HR Casts” under the Learning tab in the HR Support Center.
Rounding employees’ time is legal under the Fair Labor Standards Act as long as doing so doesn’t result in the employee being shorted pay over an extended time. Although the Department of Labor doesn’t specify how many pay periods over which timekeeping must even out, employers who round should spot check at least every four pay periods or two months, whichever is shorter.
To ensure that rounding is fair, time should be rounded both up and down, and to an increment no larger than 15 minutes, e.g., rounding time to the nearest quarter hour or ten minutes. Keep in mind that rounding only works for an employee’s regularly scheduled workday or shift. It does not allow employers to disregard time spent working if that time is less than a certain number of minutes. For instance, if employees spend seven minutes a day checking their work email after hours, employers would not be allowed to round that time to zero and avoid payment.
For more information check out the 2-Minute HR Training, “Time Tracking and Rounding: When Not Every Minute Counts” under the Learning tab in the HR Support Center.
“Great things in business are never done by one person. They’re done by a team of people.”
– Steve Jobs
December 1 – World AIDS Day
December 7 – Pearl Harbor Remembrance
December 10 – Human Rights Day
December 21 – Winter Solstice
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