Common Misconceptions about Payroll Companies - Who is Responsible?

It is the employer’s responsibility to ensure the employment laws are being complied with, and it is prudent to review these practices and audit the practices of your payroll company.

Payroll companies provide useful and comprehensive services their clients in the aspects of tax filing and data management.

However, we have discovered that some companies become complacent and believe that the services provided by their payroll companies goes beyond what they will actually do for you.

Below are some of the common misconceptions we often hear from our clients regarding their payroll companies:

Our payroll company understands the wage and hour laws and will pay our employees legally.

Employers must themselves ensure they are paying the minimum wage in effect for the city, county or state the employee is working in. Here is a list of the local minimum wage rates in California:

City	Minimum Wage Rate
Berkeley	$11/hour ($12.53/hour effective October 1, 2016)
El Cerrito	$11.60/hour effective July 1, 2016
Emeryville	$13/hour for businesses with 55 or fewer employees (effective July 1, 2016) $14.82/hour for businesses with more than 55 employees (effective July 1, 2016)
Long Beach*	$14.07/hour (effective July 1, 2016)
Los Angeles City	$10.50/hour (effective July 1, 2016 for employers with 26 or more employees; requirement for smaller employers delayed until 2017) $15.37/hour (hotel workers)
Los Angeles County	$10.50/hour (effective July 1, 2016 for employers with 26 or more employees; requirement for smaller employers delayed until 2017)
Mountain View	$11/hour effective July 1, 2016($13/hour beginning January 1, 2017)
Oakland	$12.55/hour
Palo Alto	$11/hour
Pasadena	$10.50/hour (effective July 1, 2016 for employers with 26 or more employees; requirement for smaller employers delayed until 2017)
Richmond	$11.52/hour ($12.30/hour effective January 1, 2017)
San Diego	$10.50/hour effective approximately July 11, 2016($11.50/hour effective January 1, 2017)
San Francisco	$13/hour effective July 1, 2016
San José	$10.30/hour
Santa Clara	$11/hour
Santa Monica	$10.50/hour (effective July 1, 2016 for employers with 26 or more employees; requirement for smaller employers delayed until 2017) $13.25/hour*
Sunnyvale	$11/hour effective July 1, 2016 ($13/hour effective January 1, 2017)

Our payroll company will correctly accrue sick leave for our employees

Recent changes in pay sick leave laws in Los Angeles and San Diego took effect on July 1, 2016.

Many employers may believe that their payroll company automatically changed the accrual rates programmed in their systems to reflect the change in the ordinances.

This is not the case and employers need to make sure that their employees are accruing sick leave appropriately for where they are working.

Below is a current list of cities with Paid Sick Leave laws that differ from the California State Law.  Note - that several cities are now considering enacting laws that differ:

City	City Website
Emeryville	http://www.ci.emeryville.ca.us/1024/Minimum-Wage-Ordinance
Los Angeles	http://clkrep.lacity.org/onlinedocs/2014/14-1371_ORD_184320_6-2-16.pdf
Oakland	http://www2.oaklandnet.com/Government/o/CityAdministration/d/MinimumWage/OAK051451
San Diego	http://docs.sandiego.gov/council_reso_ordinance/rao2014/O-20390.pdf
San Francisco	http://sfgov.org/olse/paid-sick-leave-ordinance-pslo
Santa Monica	http://beta.smgov.net/strategic-goals/inclusive-diverse-community/minimum-wage-ordinance

Our payroll company will correctly itemized pay statements.

Employers must provide California employees with itemized wage statements clearly detailing how their pay is calculated.

Items that must be included on pay statements are:

1. Gross wages earned;
2. Total hours worked by a nonexempt, hourly employee;
3. All deductions;
4. Net wages earned;
5. The inclusive dates for the period the employee is paid;
6. The name of the employee and the last four digits of his/her social security number or an employee identification number;
7. The employer’s legal name and address;
8. Accrued Paid Sick Leave;
9. All applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate; and
10. For employees paid on a piece-rate basis, the number of piece rate units earned, regardless of time worked.

This information must be presented in a way that employees can easily read and understand the required information.

Assuming your payroll company is monitoring your compliance with California wage and hour laws can be an expensive and time-consuming mistake. Payroll companies are not law firms and they will not notify you if you are not paying your employees properly, calculating overtime correctly, or even ensure that the pay stubs they generate for your employees comply with the law.

Lauren Sims is the author and a principal HR Consultant with eqHR Solutions.

When you require HR or Payroll advice or help navigating the ever-changing landscape of California and Federal Employment Laws and Regulations, call us for a no obligation consultation.

eqHR Solutions is a leading human resources and payroll consulting firm, providing tactical and strategic human resources employment support, plus ADP payroll product training, for all size businesses in Southern California and the San Francisco / Bay area.

Why You Don’t Need or Want Employee Probationary Periods

Inevitably, in every Employee Handbook that we review from clients, they include a section for an “introductory period” or “probationary period.”

Typically, these periods are for the first 90 days’ post hire and are intended to give both the employer and employee an opportunity to evaluate the new working relationship and determine whether the new employee/employer relationship should continue.

However, “at-will” employment and the new eligibility requirements for providing medical benefits render introductory periods unnecessary, and we always recommend to our clients to eliminate that language from their Handbooks.

Many managers believe that they have a free pass to terminate an employee during their introductory period. This is not true!

New hires have the same protections as other employees and can be terminated at any time during the employment relationship for any legal reason. Having a special introductory period does not change that.

Here are some reasons you may also want to consider eliminating your introductory or probationary period policy:

• Introductory periods can lead to confusion regarding whether the employment relationship is “at-will”. “At-will” means that either the employee or the employer may terminate the employment relationship at any time, for any lawful reason. When employers use introductory periods, employees sometimes think that once they successfully complete an introductory period, they are no longer at risk for termination based upon their performance. This misunderstanding can lead to increased risk of wrongful termination lawsuits if the employer terminates the employee.

• The term “probationary period” may have a negative connotation for new employees. New hires may misinterpret “probationary” to mean that they are immediately placed on a disciplinary action plan at the start of their employment. This could negatively impact the employee’s perception of the company.

• Under the new California Paid Sick Leave Law, sick leave must begin accruing on the date of hire, employers cannot wait until the successful completion of an “introductory period” before accruing sick leave for their employees. Employers can, however, limit the use of sick leave until after 90 days of employments, but benefits must still accrue.
  
• California law requires that insurance coverage be made available to eligible employees as of the 60th day of employment. All calendar days must be counted, not just business days. Further, the coverage must apply by the specified day, not on the first day of the month following that day as typically offered by insurers. Indeed, if the insurer only allows enrollment as of the first of the month, employers will have to offer coverage as of the first of the month prior to the expiration of the limit. Delays caused by an individual employee’s failure to enroll are not counted.

• The fact that an individual was terminated during an introductory period would not disqualify the employee from unemployment benefits.

A much better strategy than using introductory periods is to develop an effective employment hiring process to find the best candidates for the position to avoid bad employment hires. During the interview process, employers should ask job-related and behavioral-based questions, and, where appropriate, should conduct employee post-offer job-related background and employee reference checks to help determine whether candidates have the potential to succeed in the open position.

Once hired, all employers should provide new employees with a comprehensive orientation process to familiarize them with the company (and vice versa). Supervisors should work closely with new hires, giving them the information, tools, and support they need to succeed. Supervisors should also establish clear goals, provide feedback and coaching regularly, and evaluate performance proactively and consistently.

Lauren Sims is the author and a principal HR Consultant with eqHR Solutions.

When you require HR or Payroll advice or help navigating the ever-changing landscape of California and Federal Employment Laws and Regulations, call us for a no obligation consultation.

eqHR Solutions is a leading human resources consulting firm, providing tactical and strategic human resources employment support, plus ADP payroll product training, for all size businesses in Southern California and the San Francisco / Bay area.