I’ve just ordered my family’s holiday cards and started making my gift lists. I know that the holidays will creep up on us quickly and before I relax with a gingerbread latte, there is work to be done. I wanted to share my list of the five HR-related to-dos California employers should consider before the end of this year.
- Review Your Independent Contractors: This year’s numerous court decisions and administrative guidelines make it virtually impossible for companies to categorize workers as independent contractors. Now is a good time to review who you are still paying via Form 1099. January 1 is the best time to convert misclassified independent contractors to W-2 employees so that tax paperwork will be as clean as possible and hopefully not raise any concerns. When in doubt, classify workers as employees and talk to your attorney to help craft the appropriate communication. For classification criteria if you choose to continue to work with contractors, I invite you to read a Law360 article written by my colleague Colin Dougherty, entitled “Nothing New in DOL Worker Misclassification Memo.”
- Ensure Employees Are Properly Classified: While the DOL’s proposed amendments to increase the salary threshold for employee overtime exemptions are usually ignored by CA employers, if these amendments pass, they will indeed impact many CA workplaces. So, it is worth taking a look at questionably classified employees whose salaries are below the proposed threshold. Effective January 1, 2016, this amount in California will increase to approximately $800 per week ($41,600 per year) when California’s minimum wage increases to $10.00 per hour. The new federal proposal raises that amount to $970 per week ($50,440 annually). There is also a proposed increase in the “highly compensated” exemption from $100,000 to $125,148 annually. You may have a suspicion that some of your employees within this salary band should be earning overtime, in which case, the new year is as good a time as any to minimize overtime liability and reclassify those employees.
- Organize Personnel Files: Consider this a second chance at spring cleaning. At the end of each year, take the time to organize your employee files and I-9 Forms and separate the terminated employees from the active. Keep I-9 files separate from employee personnel files and maintain them for one-year post-termination. Keep terminated employee personnel files for three years after the date of separation. Once that retention requirement has been met, grab the shredder.
- Review Your Paystubs: Why start another year wondering if you might get hit with the PAGA suits that are plaguing other California employers? Don’t assume your third-party payroll provider has it covered. Especially with the new reporting requirements on paid sick leave, best practices demand that accounting, human resources and payroll administrators are collaborating to ensure compliance. Luci Li recently posted a go-to list of what must be included on every employee’s regular wage statement.
- Analyze Compensation Practices: The California Fair Pay Act goes into effect January 1st so your policies and practices need to be in compliance. Evaluate employees by job duties, not title, to ensure men and women are compensated equally. If you find disparity, either fix it or be sure you can justify it. Jeff Polsky recently posted a rundown on the Fair Pay Act and what factors can legitimately be used to justify pay disparities.
Well, until the year-end close-out phone calls start rolling in, I think I’ll head over and get that latte… in a red cup, of course.