In California, vacation pay is considered another form of wages that vests as it is earned. An employer’s policy that provides for the forfeiture of vacation pay that is not used by a specified time which is also called a “use it or lose it” policy is illegal under California law and will not be recognized by the state's labor commissioner.
However, California law does allow employers to place a cap or ceiling on vacation accruals. This is allowable under California law because while a ‘use it or lose it’ policy results in a forfeiture of accrued vacation pay, a cap simply places a limit on the amount of vacation that can accrue. This means that once a certain level or amount of accrued vacation is earned but not taken, no further vacation or vacation pay accrues until the balance falls below the cap.
The employee's visa status and international employment are not of issue here; However, the main question is whether the employer is required, under U.S. and state law, to give transferring or terminating employees a payout for their unused vacation time. There is no federal law that addresses payouts of unused vacation time to terminating or transferring employees. Ohio also does not have a law that requires an employee to provide vacation payouts for unused vacation time upon termination or transfer. It is up to the employer to decide how to treat the employee's remaining vacation, which would normally be done in accordance with company policy.
Some states, such as California, do have laws that require employers to pay employees for unused vacation time after the employees leave or are terminated from the company. However, many states treat vacation pay as a matter of company policy. No states address how transferring employees affects vacation pay.
Under the Fair Labor Standards Act (FLSA), compensability for “call-in” or “on-call” employment covers not only time spent performing job duties within a worker's normal schedule, but also idle or stand-by time if it is controlled or requested by the employer, suffered or permitted by the employer, or devoted primarily to the employer's benefit. These requirements affect non-exempt employees only; exempt employees are not affected by the FLSA's minimum wage and overtime provisions.
Sexual harassment training is recognized as an excellent practice standard for any employer in all 50 U.S. states. In fact, the U.S. Supreme Court has stated that for a company to reduce liability for harassment claims it must train employees and supervisors, require employees to report incidents of harassment, thoroughly investigate all reports and take corrective action when necessary. However, except for a few states, sexual harassment training is recommended rather than required.
Currently, California, Connecticut and Maine are the only three U.S. states that require employers to provide periodic sexual harassment training to supervisors and/or employees. Training is generally required to include information and practical guidance on federal and state sexual harassment laws, as well as the prevention of sexual harassment and its disciplinary consequences. These states require training to be presented by knowledgeable and experienced educators and provide practical examples that show supervisors how to prevent sexual harassment, discrimination, and retaliation.
Although there may be a few situations where an unpaid intern is legal, in most cases in a for-profit company, it’s not. In order to qualify as an unpaid internship, the U.S. Department of Labor provides six criteria that must be met. However, to put it simple, for an unpaid intern to be legal, no work can be performed by the intern that is of any benefit at all to the company. That is, the intern cannot deliver mail, sort files, input data into computers, file papers, organize a person’s calendar, conduct market research, write reports, or any other job that assists the employer in any way in running their business. An example of a legal unpaid intern is where the job is part of a formal school program and the intern is strictly shadowing one of the company’s employees.
Although many companies have relied upon unpaid interns as a way to minimize costs and provide opportunities to eager workers who are willing to work for free, such an approach can create expensive back tax liabilities. As with misclassification of an employee as an independent contractor, employers with misclassified unpaid interns face potential liability for unpaid wages and violations relating to failure to pay minimum wage, which could be significant for a full-time intern. In addition to the wages due to unpaid interns, the employer could face potential liability for overtime and missed meal or rest periods depending on the state you’re operating in.
Restricting an employee’s ability to discuss wages is unlawful and exposes an employer to liability. In addition to various state labor codes protecting the rights of employees to discuss their wages and working conditions with others, Section 7 of the National Labor Relations Act (NLRA) grants employees the right to form, join or assist unions, to engage in other concerted activities, or to refrain from doing so. Section 8 of the NLRA further protects this entitlement and makes it an unfair labor practice for an employer to “interfere with, restrain, or coerce employees in the exercise of the rights guaranteed” under Section 7.
The National Labor Relations Board (NLRB) has routinely stated that employers may violate Section 8 of the NLRA if their employee handbook provisions interfere with an employee’s ability to exercise their Section 7 rights to openly discuss wages and working conditions.
Employers that violate COBRA notice requirements under the federal Consolidated Omnibus Budget Reconciliation Act of 1986 are subject to civil actions and tax penalties.
The penalties apply to all types of required COBRA notices, including: (a) initial COBRA rights notices that employers or their plan administrators must send to employees when they first become covered under group health plans, (b) notices of certain qualifying events that employers must send plan administrators, (c) COBRA election rights notices and other notices that employers or their plan administrators must send qualified beneficiaries, and (d) notices that employers or their plan administrators must send to assistance eligible individuals.
The Department of Labor and qualified beneficiaries can sue employers that fail to provide any required COBRA notices. Employers can be fined up to $110 a day for each employee, spouse, and dependent who they fail to provide required COBRA notices.
In addition, the Internal Revenue Service can assess employers non-deductible excise taxes of $100 a day for every qualified beneficiary to whom employers fail to provide notices. Tax penalties are capped at $200 per day with respect to each affected family. Employers' maximum liability for tax penalties is limited to the lesser of $500,000 or 10 percent of the preceding year's total costs of providing group health coverage.
Many employers maintain many personnel records in electronic formats. Federal law generally permits electronic maintenance of records, provided employees or government officials authorized to review such records can access them in electronic form or obtain paper versions. None of the federal laws require that records be kept in a paper format; though many require that records be easily accessible for review, copy, and transcription. Thus, based on this information, it can be assumed that electronic documents with original signatures would be acceptable as long as the documents are still easily accessible for review.
Progressive discipline is a tricky policy to enforce, especially if employees sense that management lacks the will or ability to take punitive measures, up to and including termination. Management should make sure they have probed the true cause of the problem—in this case, absenteeism. Clear communications, fair and impartial enforcement of intermediate discipline, and retraining of supervisors who allow chronic absenteeism are vital. Steps along the path to termination can include rewarding excellent attendance, denying salary increases for chronic slackers, docking pay for non-exempt employees, and replacing poor managers. Termination of a supervisor who allows employees to flout attendance policies might send an effective message to subordinates.
When it comes to per diems as reimbursement for business travel expenses, including meals and incidental expenses, the employer is permitted to use any amount(s) that it wants to. If the employer uses a rate that is higher than that listed in the IRS tables, any amount above the IRS per diem rate is taxable income. If the employer chooses to use a rate lower than the IRS rate, there is no taxability to the employee.
There are a few other rules to keep in mind with regard to the high-low method. For travel within the continental U.S. in fiscal 2011, there are two levels of per diem rates that may be used in lieu of the extensive list of rates that apply to federal employees. Under this method, several high-cost localities are identified, and the applicable per diem rate for travel to one of these localities is $233 per day ($168 for lodging and $65 for M&IE). The rate for all other locations within the continental United States (CONUS) is $160 per day ($108 for lodging, $52 for M&IE). The high-low substantiation method may not be used for travel outside CONUS or if the employer's per diem covers only M&IE.
If the employer uses the high-low substantiation method to set per diem rates for an employee, the employer generally may not switch to the per diem substantiation method for that same employee for travel within CONUS during the same calendar year. However, for travel outside the continental United States during the same year, it is permissible to switch to reimbursement for actual expenses or a meals/incidental expense per diem payment within the same calendar year, or to apply the per diem substantiation method.
Because the IRS normally revises high-low per diem substantiation rates on a fiscal year basis, employers have two options each year from Oct. 1 to Dec. 31 if they are already applying the high-low per diem substantiation method: they may continue to use the current rates and begin using the new rates from Jan. 1 to Dec. 31; or they may begin using the new rates immediately, provided those new rates are consistently applied for all employees reimbursed under this method.
Owners and relatives may not use per diem payments to substantiate travel expenses. Employees who own 10 percent of company stock and close relatives of an employer (sibling, spouse, ancestor, or descendant) must account for all travel expenses or recognize income for reimbursements and advances.