In accordance with the Fair Labor Standards Act regulations, exempt employees who are required to be paid on a salary basis may not have their pay reduced for variations in the quantity or quality of work performed. Employees who feel their pay has been improperly reduced should report this immediately following the procedures specified below. Provisions Mandated by the Salary Basis Rules 1. Exempt employees normally must receive their full salary for any week in which they perform any work, without regard to the number of days or hours worked. However, exempt employees need not be paid for any workweek in which they perform NO work at all for the organization. 2. Deductions from pay cannot be made as a result of absences due to the circumstances listed below. Such improper pay deductions are therefore specifically prohibited by [Company Name], regardless of the circumstances. Managers or supervisors violating this policy will be subject to investigation of their pay practices and appropriate corrective action in accordance with normal procedures. a. Jury duty. b. Attendance as a witness. c. Temporary military leave. d. Absences caused by the ployer. e. Absences caused by the operating requirements of the business. f. Partial day amounts other than those specifically discussed below. 3. The few exceptions to the requirement to pay exempt employees on a salary basis are listed below. In these cases deductions may be permissible as long as they are consistent with other company policies and practices. a. Absences of one or more full days for personal reasons other than sickness or disability (partial days must be paid). [Note: Be sure your vacation or PTO policy is clear on when such a deduction would occur, such as when an employee has exhausted all vacation or PTO leave.] b. Absences of one or more full days due to sickness or disability. [Note: This would be an option only if company policy provides compensation for loss of pay due to sickness or disability. This exception can apply when the employee is not yet eligible for the sickness/disability policy or has exhausted the paid leave benefits it provides.] c. Fees received by the employee for jury or witness duty or military leave may be applied to offset the pay otherwise due to the employee for the week. No deductions can be made for failure to work for these reasons, however. d. Penalties imposed by infractions of safety rules of major significance. [Note: Company policy on safety should be very clear regarding major versus minor safety violations and the consequences of such violations. A deduction from pay as a penalty for violations of major safety rules can be made in any amount.] e. Unpaid disciplinary suspensions of one or more full days in accordance with [Name of Company]’s disciplinary policy. [Note: Companies must establish a written policy, applicable to all employees, specifying workplace conduct rules and the consequences for violating such rules in order to make a deduction under this section. The preamble to the final rule suggests that “workplace conduct” violations should be of a serious nature, and does not apply to discipline for performance or attendance issues. Legal advice is therefore encouraged before updating any workplace conduct policies to include partial week suspension as a disciplinary option for exempt employees.] f. Deductions for the first and last week of employment, when only part of the week is worked by the employee, as long as this practice is consistently applied to all exempt employees in the same circumstances. g. Deductions for unpaid leave taken in accordance with a legitimate absence under the Family and Medical Leave Act. Posted May 28, 2008 by Kevin Gramian at Optimum Outsourcing.

Who is Covered

Title III of the Consumer Credit Protection Act (CCPA) protects employees from discharge by their employers because their wages have been garnished for any one debt, and it limits the amount of an employee’s earnings that may be garnished in any one week. Title III applies to all employers and individuals who receive earnings for personal services (including wages, salaries, commissions, bonuses and income from a pension or retirement program, but ordinarily not including tips).

Basic Provisions/Requirements

Wage garnishment occurs when an employer withholds the earnings of an individual for the payment of a debt as the result of a court order or other equitable procedure. Title III prohibits an employer from discharging an employee because his or her earnings have been subject to garnishment for any one debt, regardless of the number of levies made or proceedings brought to collect it. Title III does not, however, protect an employee from discharge if the employee’s earnings have been subject to garnishment for a second or subsequent debt.

Title III also protects employees by limiting the amount of earnings that may be garnished in any workweek or pay period to the lesser of 25 percent of disposable earnings or the amount by which disposable earnings are greater than 30 times the federal minimum hourly wage prescribed by Section 6(a)(1) of the Fair Labor Standards Act of 1938. This limit applies regardless of how many garnishment orders an employer receives. As of September 1, 1997, the federal minimum wage is $5.15 per hour.

In court orders for child support or alimony, Title III allows up to 50 percent of an employee’s disposable earnings to be garnished if the employee is supporting a current spouse or child, and up to 60 percent if the employee is not doing so. An additional five percent may be garnished for support payments over 12 weeks in arrears. The restrictions noted in the preceding paragraph do not apply to such garnishments.

“Disposable earnings” is the amount of earnings left after legally required deductions (e.g., federal, state and local taxes, Social Security, unemployment insurance and state employee retirement systems) have been made. Deductions not required by law (e.g., union dues, health and life insurance, and charitable contributions) are not subtracted from gross earnings when the amount of disposable earnings for garnishment purposes is calculated.

Title III specifies that garnishment restrictions do not apply to bankruptcy court orders and debts due for federal and state taxes. Nor do they affect voluntary wage assignments, i.e., situations where workers voluntarily agree that their employers may turn over a specified amount of their earnings to a creditor or creditors.

Employee Rights

In most cases, Title III gives wage earners the right to receive at least partial compensation for the personal services they provide despite wage garnishment. This law also prohibits an employer from discharging an employee because of garnishment of wages for any one indebtedness. The Wage and Hour Division of the Employment Standards Administration accepts complaints of alleged Title III violations. Posted May 26, 2008 by Kevin Gramian at Optimum Outsourcing.

The Bonus Plan of [Name of Company] is designed to provide incentive compensation for all eligible employees. To be eligible for the bonus payment, an employee must have been employed as of July 1, have a satisfactory year-end performance rating and must be employed as of December 31 of the bonus plan year.

The amount of the bonus pool is based on year-end company profit. Each eligible employee’s bonus is computed as a percentage of wages or base salary received as of year-end. Bonus payments will be made no later than March 31 of the following year. The payment will be taxed at the flat IRS rate plus applicable state rates for bonus payments.

The Bonus Plan is provided at the discretion of [Name of Company]. [Name of Company] reserves the right to administer, modify or terminate the Plan with or without notice to the employees. Posted May 23, 2008 by Kevin Gramian at Optimum Outsourcing.

During employee’s first month: • Review organization’s goals/mission• Discuss department goals• Establish individual goals and action steps.• Discuss expectations of quality and quantity of work, interpersonal skills, reliability and other performance factors typically reviewed. After first three months: • Review individual goals and action steps.• Review employee performance to date either formally or informally• Discuss formal performance evaluation process. On a daily basis: • Note specific, job-related behaviors which are both positive and negative and keep for future reference.• Immediately provide feedback on areas for improvement as problems occur.• Openly praise positive behavior and good performance. • Offer opportunities to discuss performance as issues arise. Posted May 19, 2008 by Kevin Gramian at Optimum Outsourcing.

The decision to terminate an employee can raise many legal issues. The following items are designed to help an employer determine whether the termination is likely to lead to litigation. While there is no way to guarantee an employee won’t sue, reviewing the following can alert the employer to potential legal problems. Consider Company Policies and Documents Review the company’s Employee Handbook for policies which may limit the employer’s right to terminate. Is there a written employment contract or a union contract? If so, what limits does it place on the employer’s right to terminate the employee? If the company has a policy of progressive discipline, was this policy followed? • If so, was the process of progressive discipline well documented? Documentation of the progressive discipline is important evidence should a legal claim arise. • If not, can the company show a valid reason for its failure to follow its own policy? For example, an employer might terminate a violent employee without warnings or suspensions in order to protect other employees from harm. Consider Oral or Implied Contracts of Employment Will this termination breach an oral contract of employment? • An oral contract may have been created if the employee was told her job was secure, or that she would always have a job if she did a good job, or some other similar guarantee of employment. • An oral contract can be created by anyone in the company with authority over the employee. This means that the company may be held to a supervisor’s promise to an employee of secure employment, even if the supervisor did not have the company’s authorization to make such a promise. Will this termination breach an implied contract of employment? An implied contract of employment may have been created by a combination of these factors: • Long-term employment (although there is no specific number of years considered “long term,” many attorneys use five years as a guideline) • Promotions • Commendations • Lack of criticism of the employee’s performance • Other indicators of job security Consider State/Federal Laws Protecting Employees Americans with Disabilities Act • Is the employee physically or mentally disabled? • If so, were attempts made to reasonably accommodate the employee’s disability? • Were reasonable accommodation measures well documented? Title VII / California’s Fair Employment and Housing Act • Is the employee being treated in the same manner as other employees in similar situations? • Have other employees been given more chances before being terminated for the same or similar reasons as this employee? • If so, are there legitimate, non-discriminatory reasons for treating this employee differently than other employees? Is the employee pregnant? Employees are entitled to four months off for pregnancy-related disabilities. Has the employee filed a workers’ compensation claim? Terminating an employee who has filed a claim, intends to file a claim, or has testified in a worker’s compensation hearing could be considered workers’ compensation discrimination. Has the employee reported any illegal activity of the company to a state or federal agency? Even if the company is not in fact acting illegally, the termination could be seen as retaliation for “whistle-blowing” (protection for employees who report their employers to government agencies for alleged violations of state and/or federal law). Has the employee participated in any official investigation of the employer (i.e., wage or safety violation) or testified against the employer in an unemployment insurance or other hearing? Is the termination in retaliation for the employee’s exercise of protected personal rights, such as freedom of speech or political activity? Review Documentation Review the employee’s personnel file. • Is there sufficient documentation in the file to substantiate your reasons for termination? Examples include written warnings, performance reviews and attendance records. • Is there anything in the file that might be evidence of an illegal termination? For example, a supervisor may have written a warning notice to the employee that her pregnancy was causing her to be absent too often. Review personnel files for other employees who have similar problems. This comparison can point out potential discrimination issues. For example, could a female employee being terminated for attendance problems show that a male employee had the same number of absences but was not terminated? Consider the Employee’s Eligibility for Unemployment Insurance A terminated employee may be eligible for unemployment insurance unless the termination is for refusal to perform suitable work or for misconduct. Mere inability to perform the duties of the job is not considered misconduct. Consider Legal Ramifications of Not Terminating the Employee Failing to terminate an employee who has been violent or threatened violence could result in harm to other employees and lead to employer liability. Termination of an employee who has sexually harassed other employees may be necessary to fulfill an employer’s legal obligations under sexual harassment laws. Posted May 16, 2008 by Kevin Gramian at Optimum Outsourcing.

Counseling the Employee - Do’s and Don’ts • Do not reprimand employees in the presence of others or in a public place.• Determine the appropriate time and place for a disciplinary meeting.• Investigate an incident or infraction thoroughly regardless of how the situation appears at first glance.• Allow the employee a chance to respond and explain the infraction.• Disciplinary actions should always be documented in detail. The documentation should include:o who, what, when, where, and how o the effect of the conduct as it relates to performance, job related behavior or company interest.o what action will be taken because of the incident.o what action will be taken in the future if another infraction occurs.o the employee’s recourse (if any) if he/she is in disagreement with the action • Evaluate the objectiveness of the disciplinary action. • Evaluate the legal issues surrounding the disciplinary action.• Allow a third person to review the facts and proposed discipline.• Present the disciplinary action in a slow calm manner.• Listen critically and take notes.• Conclude the discussion and determine what will happen from that point.• Monitor the employee’s performance and progress. Posted May 12, 2008 by Kevin Gramian at Optimum Outsourcing.

On occasion, an employee’s performance may be impacted by absenteeism, a single incident (such as reported sexual harassment) or poor interpersonal relationships on the job). Corrective actions may range from simply counseling the employee to formal disciplinary procedures. Consider: • What are the facts surrounding the episode?• How serious is the infraction?• Was the employee informed of the work rules in advance?• Has there been adequate warning about the inappropriate behavior?• Have there been similar discipline problems in the past by this employee?• Has the employee been made aware of the consequences of this behavior?• Does the employee’s behavior hamper the day-to-day operation of the organization?• What has the history of the employee been with your organization? Has he/she been an otherwise satisfactory employee, or have there been previous documented problems or infractions of company rules?• Have you allowed the employee to tell his or her account of the infraction? (Take clear notes).• Has the employee been provoked in any manner?• Have you thoroughly investigated the issue or infraction?• Have you obtained enough evidence to prove that the employee displayed inappropriate behavior or violated the company’s policies or rules?• Has the investigation been fair and objective?• Has the investigation been timely?• Has your organization enforced rules and production standards consistently?• Have you remained uninvolved emotionally during this process?• Has the employee been referred to an Employee Assistance Program, if appropriate?• Does the discipline under consideration fit the infraction?• Is the employee aware of appeal procedures? Posted May 7, 2008 by Kevin Gramian