February 2024 Volume 6

OPERATIONS & MANAGEMENT

Employee Basics Checklist – A Refresher By Johanna Fabrizio Parker

as governing, you may or may not be able to get a court to agree. Multiple states are passing laws limiting or even banning non compete agreements. California, which has long banned these types of agreements, now has a requirement that (in certain situations) an employer who has an employee with a banned non-compete must expressly tell that employee that the contract is void. 4. What about pay? • For your exempt employees, are they properly classified – meaning do they meet both the job duties and salary-basis test? (There are some exempt jobs where the salary basis test does not apply.) Under federal law, an exempt employee must earn at least $684/week and there is a proposed regulation to increase that salary to $1,059/week. Some states already have higher salary levels for exempt employees, e.g., California and New York. • For your non-exempt employees, are you meeting all your minimum wage requirements? The current federal minimum wage is $7.25/hour, but again, states and localities can set higher “minimums.” • Also, for your non-exempt employees, are they recording working time correctly? This includes clocking in and out at shift start/stop times, as well as lunch/meal breaks. Do you specifically tell them not to work “off-the-clock”? • Finally for your non-exempt employees, are you calculating overtime correctly? Under federal law, you must pay time and a half of the employee’s regular rate for all hours worked in excess of 40 in a workweek. Straightforward, right? Maybe not. Have you set and communicated the workweek? You can pick any 7-day period that works for your business. Have you included everything that needs to be in the regular rate? This is not just an employee’s hourly rate. It also includes other payments, such as non-discretionary bonuses. • For all employees, are you paying on a timely basis? You will need to look at the state where the employee works. Some require payment in a particular time, e.g., weekly. • Finally, for all your employees, how are you determining pay? When there were labor shortages, I saw news reports of increased hourly rates to encourage individuals to join the team. I also saw multiple (public) social media posts from individuals about their salary negotiations. Nothing appeared to be going in the normal/usual way. If this is your experience, what is the result? Do you have pay levels that are inconsistent? And, if so, is there a disparate impact associated with the inconsistency, i.e., a protected group being treated less favorably – despite a neutral system at the outset.

Happy 2024! We can start off the year with the best of intentions, but by the end of January – and dealing with all those issues that got delayed until after the holidays – we often are just back in the day to-day and any larger goals can fall farther down our checklist. I get it. That’s why I thought I would take this opportunity to talk about some basic employee checklist issues. 1. Are my employment eligibility forms all there, and correct? Employers must verify the identity and authorization of their employees through a Form I-9. Generally, this is completed (and should be completed) at the start of employment. The forms must be filled out completely and correctly. And an employer must keep copies for three years after the date of hire or one year after employment ends (whichever is later). 2. Do I use offer letters? If so, have I reviewed them to make sure they are compliant with the law and include the necessary/wanted items? Offer letters are not required, but certainly can be helpful both in conveying the offer and in setting the overall parameters. If you have and use one, when was the last time you reviewed it? Does it include things like: (a) job classification (exempt or non-exempt), (b) at-will status, (c) affirmation that the individual is not subject to a non compete/non-solicit, or if they are, they have shared it with you; (d) Form I-9 compliance; and (e) any other offer requirements. 3. And speaking of non-compete agreements, do you use them? If so, have you reviewed them in light of all the new/revised state laws? Non-compete and non-solicit agreements (what we lawyers call “restrictive covenants”) are not a “one-size-fits-all.” They are subject to different states’ laws, and even if you designate a certain state law

FIA MAGAZINE | FEBRUARY 2024 48