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Transitioning from Vacation to PTO Policy

My company is transitioning from a Vacation Policy, which included annual pay-out on Anniversary Date(s) to an Annual Accrual PTO Policy for our employees, to renew every January. My questions are: 1) Is the company obligated to still pay-out those employees who earned their vacation pay-out from the old policy?  2) When/how should we begin communicating with our policy changes as we would like this to take effect 2/1/17?

Paid time off benefits are not regulated by federal law. Thus, employers are generally able to adopt and amend such benefits as they wish. Though some states have adopted laws regarding vacation benefits, many simply require employers to adhere to their own policies. Still, it’s important to be aware of any applicable laws in your state.

Absent state law, employment contract, or collective bargaining agreement stating otherwise, it’s not required to provide a cash payout to employees who’ve earned vacation time under the old policy. However, any earned time should be allowed to carryover and not be forfeited. Requiring the forfeiture of earned time is illegal in some states. Even without a law prohibiting this, it’s just not fair to employees.

Most employees don’t like change, especially when it comes to their benefits. So, it’s important to communicate a new vacation policy in a timely manner to provide employees with ample time to ask questions and adjust vacation plans as needed. Also, sufficient time must be provided to finance/payroll to adjust take home pay as appropriate.

First, make sure the new policy is clearly written and easily understandable. Any ambiguous wording will only confuse employees and eventually you as the policy is implemented.

When distributing the new policy include a memo briefly explaining the reason for the change, the effective date, how the change will most benefit employees, any actions needed on the employees’ part, and the contact person for any questions.

Communicate the memo and new policy now via various media platforms i.e. email, company intranet, newsletter, paper mailing etc…Considering the size of your company you may want to require department heads to also distribute the memo and new policy during a staff meeting.

Some companies take a more personal approach by hosting town hall meetings. During these meetings employees are encouraged to ask questions and the employer is expected to answer them clearly and honestly. These meetings make employees feel that their opinions are heard but the necessity for them really depend on your company culture.

Send a reminder as the effective date approaches, like in January. And, remember to update your employee handbook with the new policy.

Lastly, address employee concerns quickly and honestly. Being open and forthcoming will help avoid negative responses from employees.


December 4th, 2016, 1:51 PM |  Posted in: Benefits |
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Workers Comp in Texas

Is a company still liable for worker’s comp in Texas if an employee refuses medical treatment?

Worker’s comp provides wage replacement and medical benefits to employees who suffer job-related injuries or illnesses. Many states offer a state worker’s comp insurance fund, or require employers to purchase worker’s comp insurance through a private carrier or be self-insured. Some states don’t require employers to have any worker’s comp insurance at all, as is the case in Texas.

Employers with worker’s comp insurance are covered under worker’s comp laws in Texas.

Under Texas law, failure to file a claim within a year after the injury occurred or illness was believed to be related to employment relieves the employer and the employer’s insurance carrier of liability unless good cause exists for failure to file the claim within the timeframe or the claim is not contested.

If the employee has filed a claim but is now refusing a reasonable request for a medical examination or medical treatment, then his/her benefits will most likely be suspended until he/she follows the required process, depending upon the insurance plan.

Employees should be promptly and clearly informed that a refusal to submit a claim or obtain a medical examination or seek medical treatment jeopardizes their eligibility for worker’s comp benefits. Such a notice should be made in accordance with the law and insurance policy.

December 4th, 2016, 12:53 PM |  Posted in: Benefits |
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Holiday on a Weekend

Is an employer obligated to pay for a holiday if Christmas falls on a Sunday or a Saturday?

There is no federal law that requires private employers to provide employees with time off for holidays, either paid or unpaid. Any policy or practice of providing time off for holidays is at the discretion of the employer. So, if a company paid holiday falls on a non-work day there is no legal requirement that the employer provide another day off in recognition.

Keep in mind employers are bound by the terms set forth in collective bargaining agreements or employment contracts such as employee handbooks. If the employee handbook were to say that when a holiday falls on a weekend such holiday will be recognized on the following Monday then the employer would be obligated to do so.

December 1st, 2016, 2:53 PM |  Posted in: Benefits |
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Salary Laws

I was recently consulting with a company on a non-related issue, and discovered an HR policy that stated since the organization had switched to a 36 hour week (for employee satisfaction and turn over reduction) the employees would still be paid forty hours for working 36. Has anyone else ever seen that, and is it legal to do so?

Reducing employees’ hours is a common way to cut expenses when an employer is experiencing financial hardship. Usually, a reduction in hours coincides with a reduction in pay. Employers may use a reduction in employees’ hours to address other issues such as to increase employee morale and retention without affecting employees’ pay, though doing so is not all that common since it’s so costly.

The federal Fair Labor Standards Act (FLSA) requires employers to pay non-exempt employees at least the applicable minimum wage for all hours worked and overtime as applicable. Exempt employees must receive at least $455 per week.

The FLSA doesn’t prohibit employers from paying employees for time not actually worked. So, paying employees for 40 hours when they’re actually working only 36 is acceptable. But, it’s important each non-exempt employee’s hours actually worked are accurately documented to ensure overtime is applied appropriately and make sure record requirements set forth under the FLSA are being followed.

December 1st, 2016, 2:27 PM |  Posted in: Compensation |
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Holiday Pay Rules for Companies Open 7 Days a Week

If a holiday falls on a Sunday and your company is open 7 days per week, do you have to pay employees scheduled to work on Sunday holiday pay or normal pay since he/she will have the following Monday off?

The federal Fair Labor Standards Act (FLSA) establishes compensation requirements for employers. The FLSA doesn’t require pay for time not worked (i.e. paid time off for a holiday) nor does it require employers to pay a premium wage to employees who work on a holiday regardless of whether an employer is open 7 days a week. Such arrangements are considered a matter of agreement between employer and employee. It’s worth mentioning that government contractors may be subject to regulations under other federal laws.

Of course, paid time off for nationally recognized holidays and premium pay for time worked on such holidays are common benefits offered to employees.

If your policy entitles employees to holiday/premium pay for time worked on designated holidays, then you must abide by your own established terms regardless if the employee has the following day off in recognition of the holiday. It really depends on how the policy is worded and how the policy has been interpreted/applied in the past.

December 1st, 2016, 1:47 PM |  Posted in: Benefits, Compensation |
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