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Employee Termination in Wisconsin

Hi. I will be terminating my first employee and have some questions. We are located in Wisconsin. The employee is at-will (not salary), works 35-40 hours per week as a receptionist, has been at our veterinary clinic for just over one year. The employee is being terminated because we are in our slow season and are over staffed. We do not currently have an employee manual to reference. We rarely terminate employees so therefore I have some questions. 1. If this employee has unused vacation hours, is it required we pay her for those (prorated) upon termination if we terminate the employment? Again-no set standard based on employee handbook (yet). 2. Is there any law that says if we terminate the employment say on a Friday, with out any notice, is there a law that says we have to pay this employee for additional 2 weeks or some other period of time? I plan to pay her through the end of the work day and that’s it but my boss questioned if that was okay. Please note this employee is not a “star” by any means and so we really do not want to give her anything extra. In fact, we have a hunch that she has been steeling from the clinic but cannot prove it. NOT going to tell her this of course. Thank you for your help. Angie

Hi Angie,

Since you mention that you believe the employee is stealing, it’s important to note that laying her off should not be used to avoid dealing with the stealing issue. The decision for which employee to lay off should be based on objective business criteria, i.e. she’s the last one hired or the lowest performer.

Firing or terminating an employee is different than laying off an employee. Firing refers to separating an employee for any reason whereas laying off an employee refers to separating an employee due to economic/business reasons. The reason for the separation will be important if the employee files for unemployment.

Wisconsin, like most states, is an at-will employment state, meaning private employers can terminate an employee for any reason without cause except for reasons considered illegal under federal and state regulations. Terminations should be based on legitimate, non-discriminatory business related reasons to avoid potential wrongful termination claims. Employees may not be terminated based on sex, religion, race, age, national origin, sexual orientation, marital status, disability, or pregnancy. Additionally, employers may not terminate employees who assert their rights under state or federal labor laws, file a claim against the company for violating state or federal labor laws, or refuse to violate a law.

In Wisconsin, employers are not required to provide employees with vacation benefits, either paid or unpaid. If an employer chooses to provide such benefits, it must comply with the terms of its established policy. Absent a policy or past practice, employers must generally pay out vacation pay at separation.

An employer may establish a policy disqualifying employees from payment of accrued vacation upon separation from employment if they fail to comply with specific requirements, such as giving two weeks notice or being employed as of a specific date of the year.

There is no requirement in Wisconsin to pay an employee for any additional time not actually worked after separation. Separated employees must receive their final paychecks on the next regular payday. Any vacation payout should be included in the final paycheck.

It’s recommended for any employer, big or small, to have an employee handbook. Laws require employer actions such as minimum wage, overtime provisions, breaks, and leaves of absence. Other actions are determined by the employer such as work schedules, paid time off, and disciplinary procedures. Employee handbooks provide a central location for both legally and employer mandated policies and procedures. Additionally, established written policies ensure the fair and uniform treatment of employees, decreasing the risk of discrimination claims.


Vacation due?

Our employee handbook states that “any unused vacation is not paid out upon termination”. An attorney is telling us we do not have to pay out for terminated employees. But said employee is stating case law from the Indiana court of appeals that if an employer promises or provides paid vacation based on time worked, vacation pay is simply deferred wages (1990). Employee has signed a document stating he read the handbook. Please advise if we are covered that we are not paying the vacation time.

Unfortunately, vacation payout regulations in Indiana are not very clear. There is no law specifically requiring employers to pay out vacation time to employees at separation. However, the Indiana Department of Labor and court cases consider accrued vacation time to be compensation. Thus, an employee may be entitled to his vacation time at separation.

Case law allows employers to impose prerequisites on the use of vacation time. For example, an employee may earn vacation time but not be able to actually use the time until the employee has worked for six months. So, an employee whose employment relationship ends prior to working six months would not be eligible for the payment of vacation hours. Such stipulations must be clearly stated in the employer’s vacation policy.

Additionally, the Indiana Department of Labor states that employers are within their rights to require certain conditions to be met before accrued vacation pay will be paid.

Thus, one can assume that accrued vacation time must be treated as wages and, as long as established prerequisites are met, should be paid out at separation. Though the opinion of an experienced attorney should be taken in to consideration, the employer essentially bears the risk of a potential wage complaint. Thus, since the law in Indiana is not at all clear, it may be better to err on the side of caution and pay the vacation time.

Another option is to call your local Department of Labor and request them to make a determination. Doing so offers some protection for the employer in case a wage complaint is filed.


FMLA Rights

What happens after an employee exhausts their 12 weeks of FMLA coverage/protection return back to work then shortly after need to go on leave again?

The federal Family and Medical Leave Act (FMLA) entitles eligible employees to take up to 12 workweeks within a 12-month period of job protected, unpaid leave to care for newborns, newly adopted children and seriously ill family members, or to recover from their own serious illnesses. Once an employee has exhausted his leave entitlement, generally, the employee no longer has job protection, even if the employee has another qualifying situation. Thus, the employment relationship could be terminated.

However, an employee who was on leave due to his own serious medical condition may be entitled to additional rights under the federal Americans with Disabilities Act (ADA). The ADA requires covered employers to consider reasonable accommodations for employees with disabilities as defined by the act.

It must be determined if the employee’s medical condition is considered a covered disability. The ADA defines a disability as a physical or mental impairment that substantially limits a major life activity.

It is a violation of the ADA not to provide reasonable accommodation to a qualified individual with a disability, unless doing so would impose an undue hardship on the operation of the business. Undue hardship means that the accommodation would require significant difficulty or expense.
If a reasonable accommodation, such as an extended leave, is not possible or the employee is not covered by the law, the employment relationship could be terminated.

November 25th, 2014, 10:02 PM |  Posted in: Human Resources Management, Labor Laws |
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PTO/Sick time Restrictions

Is the company allowed to put limits on when PTO can be used for periods of time? Say send out a written notice saying for the next 6 months only sick time will be accepted and no vacation allowed?

There is no federal law that requires employers to provide employees with paid time off (PTO) benefits, whether sick or vacation time. Thus, unless state/municipality regulations, a collective bargaining agreement or an employment contract states otherwise, employers are able to adopt PTO policies of their choosing.

Some states and municipalities have implemented sick leave legislation. If an employee is eligible for sick leave under these laws, it would most likely be unlawful to deny the time off.

However, employers are within their rights to determine when employees can use vacation time. The needs of the company can dictate the ability for employees to use vacation time i.e. prohibiting vacation time during busy seasons. For example, it’s common for retailers to prohibit or at least limit the amount of vacation time employees can use during the last two quarters of the year due to the demands of the holiday season.

It’s recommended for employers to carefully examine the need to restrict vacation time use. Time away from work benefits both employers and employees. Increased productivity, improved employee morale, better employee retention and improved health benefits are all positive results from employees using their vacation time. Thus, consider if completely eliminating the use of vacation time for six months is really necessary.


Tax on Healthcare

Hello, recently some of our employees have asked us if 2015 will bring more taxes in the form of the amount of healthcare that employers pay for individuals healthcare. Is there anything official about this and if so what does it really mean?

The Affordable Care Act (ACA), still commonly referred to as Obama Care, requires employers to report the cost of coverage under an employer-sponsored group health plan. The coverage amount is not taxable. According to the IRS, the purpose of the reporting requirement is to provide employees useful and comparable consumer information on the cost of their health care coverage.

There is speculation that it is only a matter of time before the coverage amount is taxable. The thinking is why would it be a requirement to report the value of an individual’s coverage unless it will be eventually a taxable benefit.

November 25th, 2014, 2:33 PM |  Posted in: Benefits, Human Resources Management |
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