Can I Reduce an Employee's Temination Notice Period?

An employer asks: "Steve gave his two weeks’ notice today, I’m worried he will be disruptive during these 2 weeks and he will contact clients and perhaps take contact information and other company documents. Can we let him go now?”.

This is a frequent question from employers and usually our answer is “yes,” but there are a couple of things to consider:

1. If you require two weeks’ notice in your employee handbook, then you can let the employee go immediately, but you must pay out the 2 weeks pay of the notice period.
2. If you do not require two weeks’ notice, then you should consider the consequences:

• For the purposes of final pay rules and unemployment insurance, the separation from employment will be considered an involuntary termination and not a voluntary quit. Therefore, you will need to provide the employee with a final check for all wages due, including any accrued and unused vacation or paid time off (PTO) at the time you tell them you are ending their employment. If you were to allow the employee to work the next two weeks, the final wages would be due on the last day of employment, more than 72 hours’ notice was given.

• The employee will be entitled to unemployment benefits if they file, as the Employment Development Department (EDD) will consider the separation to be “involuntary,” since the employee had stated an intent to work for two additional weeks, and the employer decided to end the employment at an earlier date. If you had allowed the employee to work out the notice period, they would not have been eligible for benefits.

Employers need to weigh the exposure when deciding to cut a notice period short. If the employee truly poses a risk to the environment and the intellectual property of the business, then it may be worth letting them go immediately.

Employers also have the option of letting the employee go and just paying out the notice period regardless of their policy, which may be the safest option. However, the financial impact is much less to allow them to file for unemployment. Either way, the employers should ensure they understand the implications.

Lauren Sims is the article’s author and the eqHR Solutions Director of Human Resources.

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation.

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.

How to Determine Your Employees Regular Rate of Pay

Employees Regular Rate of Pay

Both California Overtime Law and Federal Overtime Law require that non-exempt employees are paid overtime based on a "regular rate of pay." This regular rate or pay is not simply the given hourly rate of pay but is a computed rate based on all the compensation that is earned for the week. 

The regular rate of pay is calculated by dividing the total pay, except for flat sum bonus, for the by the total number of hours actually worked. The California Supreme Court recently decided, in Alvarado v. Dart Container Corporation of California, held that for purposes of calculating the regular rate, a flat sum bonus is to be allocated only to the non-overtime hours worked.

This means that the flat sum bonus should be factored into an employee’s regular rate of pay by dividing the amount of the bonus by the total number of non-overtime hours actually worked during the relevant pay period (rather than dividing all compensation received during the pay period by all hours worked), and using 1.5, not 0.5, as the multiplier for determining the employee’s overtime pay rate. 

Below are examples of how to calculate the regular rate of pay.

1. An employee is paid exclusively on an hourly basis, that amount is the regular rate of pay.

• Employee earns $10.50 per hour, overtime pay would be $15.75 at time and one-half and $21 at double time.

2. An employee is paid two or more rates by the same employer during the workweek, the regular rate is the weighted average, which is determined by dividing the employee's total straight-time earnings for the workweek, including earnings during overtime hours, by the total hours worked during the workweek, including the overtime hours.

• An employee works 32 hours at $12 per hour and 10 hours during the same workweek at $10.50 per hour, the weighted average (and thus the regular rate for that workweek) is $11.64. This amount is calculated by adding the employee's $489 straight-time pay for the workweek ((32 hours x $12/hour) + (10 hours x $10.50/hour) = $489) and dividing it by the 42 hours the employee worked ($489 / 42 hours = $11.64 per hour regular rate). The overtime premium of $5.82 (half the regular rate) is added to the employee's wages for each one and one-half overtime hour worked, and an additional overtime premium of $11.64 is added to hourly wages for each hour of double time earned.

3. An employee is paid an hourly rate plus a flat-sum bonus for the workweek, the flat-sum bonus is divided by only the non-overtime hours worked and added to the hourly rate of pay to determine the regular rate of pay to compute overtime. 

• An Employee works 32 hours at $14 per hour and earns a $50 attendance bonus, the regular rate is calculated by dividing the bonus by the number of non-overtime hours ($50 / 32 hours) for a rate of $1.56. This is added to the base hourly rate of $14 for a regular pay rate of $15.56 per hour at which overtime hours must be paid.

4. For employees paid by the piece or commission, one of the following methods may be used to determine the regular rate of pay for purposes of computing overtime:

•  The piece or commission rate is used as the regular rate, and the employee is paid one and one-half times this rate for production during the first 4 overtime hours in a workday and double time for all hours worked beyond 12 in a workday.
• Divide the employee's total earnings for the workweek by the total hours worked during the workweek. For each overtime hour worked, the employee is entitled to an additional one-half the regular rate for hours requiring time and one-half and an additional full rate for hours requiring double time.

5. To compute the overtime rate of pay for a full-time (40-hours per week) salaried, nonexempt employee, the employee's regular hourly rate equals 1/40th of the employee's regular weekly salary.

6. To compute the hourly rate for a nonexempt employee paid on a fixed weekly salary:

• Multiply the monthly remuneration by 12 (months) to obtain the annual salary.
• Divide the annual salary by 52 (weeks) to obtain the weekly salary.
• Divide the weekly salary by the number of regular work hours up to the legal maximum hours per week (40) to obtain the regular hourly rate.

Employers should remember that California law requires that overtime wages be paid no later than the regularly scheduled payday of the payroll period following that in which overtime was earned. While the law permits the delay of overtime pay by one payroll cycle, any straight time hours worked must be paid on the regular payday of the payroll period in which they were earned.

Lauren Sims is the article’s author and the Director of Human Resources.

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation.

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.

Protect Yourself when Providing Employee References?

Reference checks are a useful way for employers to gather information about applicants that might not be discovered through the application and interview process. However, despite the usefulness of reference checking, many employers are concerned about lawsuits from former employees based on information provided in response to a request for a reference, and liability for the actions of employees where the company failed to conduct a thorough reference check. 

California is one of many states that provides immunity to employers when they provide reference material to prospective employers. This means that an employer cannot be sued for defamation, as long as the employer provides information related to job performance, qualifications, and eligibility for rehire. It does not protect statements about an employee's constitutionally protected speech or activities, nor statements about an employee's union or other concerted activities. 

An employer is protected if its statements are based on credible evidence. Employers should be careful that if they choose to provide information, the information must be truthful. The employer should not provide a glowing reference for an employee who was terminated for misconduct for example. An employer is no obligation to provide a reference for an employee, but once they chose to do so, they have a duty not to misrepresent the facts. 

Below are a few general guidelines for providing references for prior employees:

1. Maintain control of the information- limit who can give references and what information can be provided. All reference requests should go through a single person, usually an HR professional.
2. Be consistent in how requests are handled- ensure that the same process is followed for each reference request to avoid any claims of discrimination.
3. Get permission from the employee- require all job candidates to complete an application form that includes a release for employers from which they might request a reference.
4. Limit remarks to the inquiry- focus on the employee's work habits and conduct (timeliness, ability to get along with co-workers, etc.) and job performance and do not discuss the employee's personal life, marital problems, even if those personal problems affected their work performance.
5. Exercise good judgment in determining what negative information should be volunteered if the reference seeker does not ask specific questions related to an area of deficiency or poor work. Ensure that all comments are related to the job, critical to successful job performance, and critical to the performance of the job.
6. Provide truthful information- former employees certainly will have a case for claiming defamation if false information is provided. Even when providing true information, you must be cautious of the way in which it is presented. Opinions about an employee's character ("he was unmotivated and lazy") are far more susceptible to legal actions that are objective measures of job performance ("he only completed half of his assignments on time").
7. Give specific facts- instead of saying that an employee was unable to achieve deadlines, say “We had a 30-day turnaround time for completing projects, and he/she usually averaged 40 days to complete the projects.” Let the caller reach their own conclusions about the performance.

Many employers have chosen to limit the content of their communications with prospective employers to simply stating facts like:

• The dates of the worker’s employment,
• Their job title, and
• Whether they are would re-hire the employee.

Even in companies where this is the policy, there is still risk that managers will be contacted directly to provide a reference. In industries that are close-knit, it often happens that managers from one company will call a manager from another to discuss a potential candidate. This is why it is important that companies train their managers on how to provide information in a way that doesn’t expose them to defamation claims.

Lauren Sims is the article’s author and the eqHR Solutions Director of Human Resources.

Whenever you require professional Human Resources or Payroll guidance to navigate the ever-changing landscape of California and Federal Employment Laws & Regulations, contact us for a no-obligation consultation.

eqHR Solutions provides professional, tactical and strategic human resources support; ADP payroll product implementation/training and payroll processing services for businesses throughout Southern California.