5 "Common-sense" HR Policies That Are Actually Against the Law

Posted By Mike Meyer, Friday, February 26, 2021

clocking in with time card

By CEDR HR Solutions

If there is one thing that employers can take with them from the rollercoaster ride of keeping up with 2020's legislative chaos, it's this: HR is more complicated than many business owners realize.

This shouldn't come as a surprise. After all, you opened a medical spa because you were a beauty and aesthetics expert with the drive to take your offerings to a higher level, not because you were obsessed with detangling the complexities of HR and employment law compliance.

It's for this reason that many small-to-midsize business owners and managers turn straight to their favorite search engine for their HR needs. And, although finding HR guidance online may be easy, finding guidance that is actually compliant with the laws that apply to your business, and that won't leave your medical spa vulnerable to expensive audits and/or employment litigation, is a completely different story.

If the legislative nightmare of the last year has you wondering what else might surprise you when it comes to HR and employment law compliance, you're not alone.

After reviewing and writing thousands upon thousands of employee handbooks over the course of more than 15 years in business, the HR experts at CEDR HR Solutions have seen a number of policies continuously pop up that are not only ill-advised, but also downright illegal, and each could easily lead to lawsuits that are very costly to resolve.

Here are five of the most common "common-sense" policies that employers use, despite the fact that they are blatantly against the law.

"Employees May Not Discuss Their Salaries..."

We'e all been there. When employees start openly talking about and comparing their salaries, things can get awkward fast. So, intending to avoid any potential drama, many employers issue outright bans on their employees' ability to discuss their salaries with one another.

Although it might seem to make sense at first glance, issuing such a policy, in practice, is against the law.

According to the National Labor Relations Act of 1935 (NLRA), which applies to all employers, employees have the right to talk to each other about their working conditions and to join together in collective bargaining efforts to improve those conditions. The kicker is that the protections apply even when zero union activity is taking place.

This right to discuss working conditions applies directly to how employees are paid. This means that, by law, employers cannot distribute policies intended to directly or indirectly prevent their employees from talking about their salaries. Having a policy that forbids salary discussions is a gift to a lawyer who ends up representing an employee.

"Employees May Not Say Anything on Social Media That Might Cast the Business in a Negative Light..."

It seems like common sense, right? If an employee wants to keep their job with a company, they should avoid saying anything bad about that company in any public capacity.

Well, unfortunately, this policy is also against the law.

This, again, comes back to the limitations placed on employers by the NLRA. It is your employees' right to talk about their working conditions and to do so under the broadest terms, and this includes discussions that take place on social media, including after work.

Having a policy on the books that prevents your employees from discussing working conditions on social media is another gift to an employment attorney. That's because they can easily point to that policy as evidence that you make efforts to suppress legal work-related activity by your employees.

"All Bonuses Are Paid at the Owner's or Management's Discretion..."

Once employers realize that certain bonus payments have to be factored into overtime calculations as part of an employee's base rate of pay, they naturally want to find ways to prevent those payments from compounding as overtime. After all, the bonus should be enough, right?

If your employees work more than 40 hours per week—or eight per day in California and certain other states—and you use an incentive-based performance bonus model, this next part is something worth understanding.

Since the rule about what sort of bonuses must be included in overtime calculations comes down to whether or not a bonus was "discretionary," many employers are mistakenly informed that they can cast all bonuses under that "discretionary" heading and wash their hands of overtime obligations. However, the reality of the situation is that it doesn't work that way.

A bonus is only considered "discretionary" under the law if it is in no way tied to a performance metric or incentivizes certain behavior. Holiday bonuses are the most common type of discretionary bonus, as they are not tied to any performance-based metric and are issued solely at the discretion of the business owner. Therefore, holiday bonuses are not required to be included in overtime calculations.

Bonuses that are dependent on a performance metric—such as those given for meeting a sales goal, increasing the number of referrals for a given period, etc.—are known as "outcome-based" bonuses, and they are, by definition, not discretionary bonuses. Outcome-based bonuses, therefore, must be included in any overtime considerations that overlap with the pay periods associated with bonus qualification.

Calling an outcome-based bonus "discretionary" does not make it so, but it can leave your practice vulnerable to expensive wage claims from your employees or costly audits by the Department of Labor, Internal Revenue Service (IRS) or Equal Employment Opportunity Commission (EEOC).

"Unauthorized Overtime Will Not Be Paid..."

With very few exceptions, employers in the United States are subject to the Fair Labor Standards Act of 1938 (FLSA). If your business makes more than $500,000 in annual revenue or is engaged in interstate commerce (think ordering office stuff or medical supplies from an out-of-state distributor), you are subject to the terms of the FLSA.

Among other things, this was the law that officially defined the 40-hour workweek and set overtime requirements at time-and-a-half for all hours a non-exempt employee worked beyond that benchmark of 40 in a given week. (Note: There are separate state laws in some states that also requires overtime payments for time that an employee works beyond eight hours in a single day.)

According to the FLSA, if your non-exempt employees work more than 40 hours in a week, they are entitled to overtime. Full stop. There is no exception to the law that would allow employers to deny those payments if they did not first authorize their employees to work more than 40 hours in a week. If an employee exceeds 40 hours in a workweek, they are entitled to overtime under the law.

There are ways for employers to limit employee overtime and monitor hours to prevent them from crossing that 40-hour mark, of course. Unfortunately, a policy punitively denying overtime payments is not one of those solutions. In fact, such a policy could easily lead to an expensive wage and hour claim the moment one of your employees realizes that they and all their co-workers are actually owed money for unauthorized overtime under the law.

"Employees May Not Clock in Until the Beginning of Their Scheduled Shift..."

Again, it seems like common sense to tell employees that they can't clock in until they are scheduled to start working. Some digital punch clocks even allow you to prevent employees from clocking in before their shift officially starts, or to clock them out automatically when their shift ends.

But having such a policy in place—or setting up your timekeeping system to automatically clock employees in or out at certain times—is a surefire way to leave your business vulnerable to a wage and hour claim.

The bottom line here is that hourly employees must be paid for the time they spend working, regardless of what time it is when they start or end. If you prevent employees from clocking in and they start working anyway (or automatically clock them out and they continue working), you as an employer will be held responsible for back wages—plus fines, fees, and penalties—for all of that time should a wage and hour claim ever come your way.

Compliance Equals Confidence

It's hard to focus on running your business when you're worried about being sued or the drama of dealing with a frivolous claim. And ignoring the compliance issues that you have on the books—or pretending they don't exist—isn't going to fix the problem, either.

Having reviewed and written more than 10,000 custom employee handbooks for professionals in the dental, medical and wellness industries, the HR experts in CEDR's Solution Center can tell you that the vast majority of business owners who don't have access to support from experienced HR and/or employment law experts are operating with some form of violation on the books just waiting to be uncovered.

By arming yourself with the right information and working with industry experts to bring your business into compliance, you can prevent minor oversights from becoming major liabilities down the line.

Want to know how your business stacks up from a compliance standpoint? Register to win a free HR Compliance Review and Strategy Session with the experts in CEDR's HR Solution Center. Three lucky winners will get the chance to have their handbook reviewed by an employment law expert and discuss ways to eliminate compliance problems and build legal protections for their medical spas.

This is a great opportunity for any medical spa owner to get their regulatory ducks in a row for 2021 so you can focus on building back better, stronger and more prepared for success than ever before.

Click here to register for your chance to win.

CEDR HR Solutions believes that better workplaces make better lives. CEDR provides custom, legally compliant employee handbooks, expert human resources support and powerful team management software to owners of more than 2,000 dental, medical and wellness businesses across all 50 states. Its expert advisors work directly with business owners to find workable, compliant solutions to HR and team management issues. Because when you improve your workplace, you improve your life.

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