Author Archives: DSD

The Golden Rule of Employee Terminations: Don’t Wait!

July 23, 2020

The biggest mistake most employers make when it comes to employee terminations is dragging out the process.

Any experienced human resources professional will tell you that waiting around to fire an employee serves no one—not the employee, not their colleagues, and certainly not your company.

A worker who is underperforming is likely unhappy and/or unfulfilled. They are wasting their time and your company’s time, costing you productivity and profits.

Not to mention, when other employees see that a weak employee is permitted to stay without accountability despite poor performance, negative attitude, inappropriate behavior, and so on, it can result in a drop in morale and even more adverse effects on your organization.

This does NOT mean you should rush into firing someone without thinking it through! On the contrary, there are steps you should take prior to letting someone go as well as best practices for the actual firing process.

Before moving forward, it’s important that you understand:

The types of employee terminations
What to do before terminating an employee
Exactly how to fire someone

Employee terminations are one of the most difficult aspects of owning a business—and they’re always going to be somewhat painful. That’s why many organizations now focus on employee retention by implementing effective onboarding programs and consistent performance review processes.

Sometimes, the working relationship still doesn’t work out. When you have a solid employee termination policy and process in place and document all disciplinary action, the outcome will be that much easier for both parties.

Types of Employee Terminations

There are two types of employee termination every business owner should understand so that you can manage the severance and protect your company effectively.

Voluntary Termination

In the event of a voluntary termination, the employee ends the working relationship.

This may come as a standard two-week notice of resignation, verbal resignation without notice, or the unfortunate “ghosting”—when an employee simply stops showing up for work or responding to communications.

Employees who choose to end their employment are typically not eligible for unemployment benefits.

Involuntary Termination

Involuntary termination is when a business has decided to let the employee go. This type of termination falls into two categories: without cause and with cause.

Without Cause

Termination without cause includes layoffs and downsizing. These could be a result of current economic conditions, the company’s performance, or an overall restructuring.

Termination in these scenarios is not the employee’s fault, so they are usually eligible for unemployment benefits.

With Cause

This is when the employer fires an employee for a specific reason. Some of the most common causes include:

Low productivity or poor quality of work
Insubordination, dishonesty, or violating company rules
Frequent absenteeism or tardiness
Harassment and discriminatory behavior toward other employees or customers
Theft or other criminal behavior like sharing trade secrets
Violence or threats of violence against other employees or customers

The first three reasons affect your business’s efficiency and work environment and should be addressed by a manager. Termination for these reasons should be the final step after progressive discipline.

The last three causes are even more serious, as they risk the health, safety, and reputation of your employees, customers, and overall business. These situations often call for immediate termination.

Employees fired for causes like those listed above are typically not eligible for unemployment.

Can You Fire Someone for No Reason?

Most states recognize employment at-will, meaning both employers and employees can end employment at any time, without cause or notice.

Employment at-will typically doesn’t apply to employment contracts, which define specific terms and conditions that both employers and employees must meet before terminating the relationship.

Some states have additional exceptions to the at-will agreement. Both New Hampshire and Massachusetts are at-will employment states. To learn more about your state’s at-will employment, visit your local Department of Labor site.

Mutual Termination

This is when both the employer and employee agree to end the working relationship. Examples include the end of a contract or retirement.

Sometimes, mutual termination can come in the form of a forced resignation. Typically, the employee agrees to step down in exchange for some kind of compensation or assistance. For example, the company may offer a severance package that would not be provided if the employee were fired. Another example would be allowing the employee to maintain their business contact information (phone and email) even though they’re no longer on the payroll. This way, it appears they are still employed while they job search.

Those who leave under a mutual termination agreement are generally ineligible for unemployment benefits.

Before Firing an Employee

When working with a problem employee, it’s important for employers to do what they can to improve the working relationship. This should include disciplinary action, coaching, and performance feedback over a set period of time.

One thing we can’t stress enough: Document everything!

Just because you can fire an employee without cause does not mean you should. These days, it is very easy for anyone to sue anyone for any reason. The best course of action is for employers to take the proper steps and keep documentation so that they can defend themselves against potential employment discrimination charges.

If you think an employee is capable of improving their performance, encourage them with guidance and support. You might even consider creating a performance improvement plan (PIP), which involves setting measurable goals and improvement requirements.

This usually requires significant work and meetings, so we recommend only using a PIP if you are fully confident that the employee is willing and able to improve.

Regardless of how you track the employee’s improvement, record their progress. This will help the employee know how they are doing and can protect you down the road.

Unless the employee’s behavior has been egregious, termination should not occur without warning.

How to Fire Someone

So you’ve taken the steps above, given the employee coaching and opportunities for improvement, but it’s simply not the right fit. It’s time for the tough conversation.

Have a termination policy and process in place so that you can be prepared to rip off the Band-Aid. It will never be easy, but knowing exactly what you need to do and say will ensure your company is protected and the employee is able to walk out with their dignity.

Prepare Notes & a Checklist

Firing an employee is stressful and you can never truly anticipate how the conversation will go. Before you go into the meeting, outline exactly what you intend to say to stay on track. Use an employment termination checklist to ensure you cover everything before, during, and after the termination

Let the individual know what will happen next regarding their pay, benefits, unemployment, unused vacation time, references, etc. Request that they return or leave any company property. If their role required a lot of equipment, special software, or important files, make sure they leave it all in the office.

Meet Face-to-Face

Never handle employee terminations via electronic methods. This means no phone calls, texts, emails, or even letters. Always give them the courtesy of an in-person meeting. If possible, schedule the termination at the end of the day when most people will be leaving the office. This way you can ensure as much privacy as possible.

Every person deserves this much respect. You will also send the right message to your other employees.

Bring in a Witness

Bring another employee to the termination meeting (ideally, an HR person) as a witness. This can protect you in the case of an employee termination lawsuit.

Additionally, an HR professional can help guide the conversation if it becomes difficult and the hiring manager needs support. The HR representative can ensure everyone is treated fairly and reduces liability on the company.

Be Direct and Break the Bad News

When the meeting actually starts, don’t draw out the conversation. Get right to the point and tell the staff member that their employment has been terminated.

Make it clear the decision is already made and final. Don’t use language like “You will be terminated,” which could give the impression that there is still a chance to change the decision.

Reference prior discussions you’ve had about the employee’s issues and summarize the situation. Don’t go into great detail or place blame, as this could lead you down a rabbit hole and spark more arguments.

If you use too much detail, you may not be able to use any information you discover later in a subsequent lawsuit. You’ll always find something later, whether it’s important paperwork that the employee never filed or inventory that was never accounted for.

Listen to the Employee

Truly listening and understanding the employee’s reaction will help you respond appropriately.

According to the Grote Consulting Corporation, there are four primary emotions people experience after being fired and certain ways to handle each one:

Shock: Acknowledge the emotion without debating or defending your decision. Repeat the message.
Denial: Make sure the individual has heard and understood the message. Continue to repeat the message as necessary.
Anger: Acknowledge the anger but don’t debate the employee’s merits or defend your decision. Remain firm.
Grief: Acknowledge the emotion, then keep the conversation moving. Focus on their future.

End on a Respectful Note

Thank the employee for their contributions, then accompany them to their desk to collect their belongings if appropriate.

If the employee is upset or emotional, make arrangements for them to come in after work or on a weekend to pick up their things. You can also offer to send their things to them. This will ensure they don’t encounter their colleagues and allows you to confirm that important paperwork, files, and other items are all there.

Finally, walk the former employee out, shake their hand, and wish them the best.

Shut Down Their Access & Accounts

Since you don’t know how the employee will react, be sure to remove their access to electronic systems like email, the company database, intranet, customer contact portals, etc. Do this as soon as possible, whether during the termination meeting, slightly before, or immediately after.

This may require coordinating with your IT staff. Removing access to any digital accounts can prevent negative interactions or loss of electronic files.

Managing Employee Terminations Successfully

When you have a poorly performing employee, the first step is to take action. Don’t wait around hoping the situation will rectify itself or the employee will eventually leave on their own accord. And keep records of all efforts you take regarding disciplinary actions.

No matter the reason for termination, maintain an attitude of respect and make it a priority to protect the employee’s dignity. This is the best way to protect your company and its reputation.

If you need help creating or refining your termination process and policy, or if you’re looking to bring an HR consultant into the fold for those difficult conversations, BlueLion’s experts are here to help. We will make sure your business is prepared for all termination situations. Contact us at 603-818-4131 or info@bluelionllc.com today to learn more!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

5 Stages of New Employee Onboarding

July 20, 2020

Did you know that effective new employee onboarding can increase retention by 25% and improve employee performance by 11%?

This is just one stat that proves the impact an onboarding program has on both new employees and the overall culture of a company. Onboarding isn’t just a luxury or an optional part of human resource management. It’s essential to making a new employee feel welcome, comfortable, and happy in their new role.

When employees feel that they are set up for success, they will be more productive and engaged.

If you’re wondering, But what is an onboarding process? And how do I make sure mine is up to par?

That’s what we’re answering in this post, including:

The difference between onboarding and orientation
Keys to a successful onboarding process
A new employee onboarding checklist for each stage

By the end, you’ll understand how important a good onboarding program is and what you need to get started creating or improving one of your own.

New Employee Onboarding vs. Orientation: What’s the Difference?

New employee onboarding and orientation are often confused with each other. While both are important parts of the new hire process, they are two different things.

New Employee Orientation

Orientation can be viewed as one part of the onboarding process, typically taking place in the first days or weeks of employment. This is a one-time event welcoming the employee to your company. It usually includes:

Introduction to the organization’s culture, mission, vision, and values
Paperwork and routine tasks
Explanation of benefit plans
Review of safety, health, and other key policies
Review of administrative procedures (e.g.: computer systems logins, office supply needs, etc.)

In larger companies or those that have hired several employees at a time, new employee orientation is often held in a conference-style environment. Training and information are usually delivered through presentations and/or question-and-answer sessions.

Orientation is also a great time to schedule meetings between the new employee and leadership members to introduce themselves and explain their roles within the business.

New Employee Onboarding

The actual onboarding process is more of a long-term strategic plan that can last up to a year. This generally includes:

A detailed introduction to the employee’s department
Participating in meetings and starter projects with coworkers
Learning the business culture and objectives
Regular meetings with their manager

This is the period when new employees will learn the ins and outs of their roles and responsibilities as well as the company’s processes.

Show your newest recruits how their work will contribute to the overall company goals and success.

Keys to a Successful New Employee Onboarding Process

Just as onboarding is vital for the new employee, it’s also an important part of acclimating the rest of the team to any adjustments in roles and responsibilities.

Below is a list of questions that the Society for Human Resource Management (SHRM) recommends employers should answer to ensure team and upper management buy-in:

When will onboarding start?
How long will it last?
What impression do you want new hires to walk away with at the end of the first day?
What do new employees need to know about the culture and work environment?
What role will HR play in the process? What about direct managers? Co-workers?
What kind of goals do you want to set for new employees?
How will you gather feedback on the program and measure its success?

Once your HR team and upper management have answered these questions, you can come up with a solid onboarding program to help new employees get quickly acclimated to company culture, policies, and their role.

New Employee Onboarding Checklist by Stage

We’ve broken up a high-level new employee onboarding checklist by stage. You can edit this checklist based on your industry, business, and each specific role, then implement it in your own onboarding process. This will help you and your team nail down the objectives for each stage of onboarding, ensuring the new team member feels welcome and supported.

Onboarding Starts Pre-Hire

Many employers forget that the onboarding and hiring processes go hand-in-hand. With a solid hiring process, you’ll give candidates a positive first impression of your company.

Your hiring process should include:

Providing a crystal clear job description
Explaining to candidates how the hiring process is structured and how long it typically takes
Timely and frequent follow-up with candidates
Encouraging and fully responding to questions they may have during the interview
Being upfront about reference and background checks

Your offer stage should include:

A scheduled phone offer (a phone call is more personal)
Follow-up with a warm, enthusiastic offer letter
Salary negotiations handled respectfully and openly
Start date (with flexibility) to share with both new employee and their colleagues

Before the First Day

According to HR experts, there are several items you can prepare and take care of before the new employee starts to guarantee a smooth transition. Taking care of the following before they even start will show your new hire that you are ready and excited for them to dive in.

Prepare and send paperwork ahead of time
Set up their office with their computer, relevant software, and other necessary equipment
Use an online onboarding portal
Provide any other key information or tips they need to know for their first day (e.g.: office dress, where to go, who to report to, etc.)

Day 1: Starting Off On the Right Foot

The main goals for a new employee’s first day should be setting expectations and introducing objectives. They should spend this time getting to know their job and new coworkers.

There is a large emphasis on the social aspect, so make sure everyone gives the newbie a warm welcome! In fact, 76% of new hires feel socialization is most important.

The first day should include:

Giving the new hire an in-depth office tour and inform them of their schedule
Taking them out to lunch with their manager(s) and key team members
Make both the new employee and the entire team aware of roles and responsibilities to prevent miscommunication and resentment
Starting the orientation (as addressed earlier)

The First Few Months: Settling In

90% of employees decide whether they want to stay or leave within that first six months.

Employee onboarding shouldn’t stop after the first few days or weeks! This means regularly checking in with your new team members to see how they’re progressing during these critical months.

Around the one-month mark, managers should:

Schedule a one-month check-in to see how the employee is doing and to give feedback
Continue providing on-the-job training at a manageable pace
Ensure they have a mentor (56% say they want a mentor or buddy!)
Schedule another check-in between three and six months

After 90 days:

Meet with the employee for a three and/or six-month assessment
Continue with regular 1:1 meetings
Work with the employee to develop SMART goals (Specific, Measurable, Attainable, Relevant, and Time-bound)
Ask the employee for feedback on their role, the company, and the onboarding process

Getting feedback from new employees is just as important as you giving them feedback. This will help you improve your onboarding process for future team members. Plus, by checking in on a consistent basis and asking what they think, you’ll show that you truly value their opinions.

The First Year: Assessment and Future Growth

Once your employee has been working hard for a year, it’s time for you to assess their performance to determine if they’re productive and on the right track. Is the employee a good fit for the organization? Will they continue to make valuable contributions—with the right training and guidance, of course?

The difficult truth is that sometimes, the first year shows that the employee is not working out. When you have a good onboarding program in place, it will assure you that you’ve done all you can to train and integrate the individual to the best of your team’s abilities. Even if you have to make a tough decision, you’ll know it’s the right one.

On the other hand, an employee who has performed well during their first year will be ready to plan for their future development. Schedule their yearly performance review and look at their career with the company. This is the time to transition from onboarding to retention and employee satisfaction.

Implementing Your New Employee Onboarding Program

Employees who participate in a structured onboarding program are 69% more likely to stay with an organization for three years. That could mean a significant increase in your retention rate—and a significant decrease in your hiring and training costs!

Regardless of your industry or the size of your company, you need a new employee onboarding process.

The ideas and checklist recommendations we’ve shared are just the start. There are many nuances to each business, industry, and company culture that may affect what your onboarding process looks like. Whether yours is nonexistent or needs significant updating to make it more effective, BlueLion can help. We will get to know your business and policies, and review the current experience you’re providing to new employees. We will then work with you to create or improve your onboarding experience and ensure happy employees from Day 1. Contact us at info@bluelionllc.com or 603-818-4131 to speak with our HR experts today!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Everything You Need to Know About the New Hampshire Second Injury Fund

June 22, 2020

The New Hampshire Second Injury Fund (NHSIF) is a vital program of the state’s Workers’ Compensation Law and something that every business owner should be familiar with.

When used properly, this fund can help reduce risk to your company. In order to ensure both you and your employees are effectively covered, it’s important to know the ins and outs of the NHSIF. Of course, another key aspect of this is partnering with a good property and casualty commercial insurance broker.

If this all sounds new to you, we’re here to answer all your questions and walk you through it. Read on to learn:

What the NHSIF is
How it works
How employers can use it
Why it reduces risk for companies

What is the New Hampshire Second Injury Fund?

The Second Injury Fund gives employers an option to limit their compensation costs if a partially disabled employee sustains a work-related injury that leaves them more injured than it would a non-impaired employee. This can be whole or partial compensation. The worker’s pre-existing condition should be a permanent impairment that poses an obstacle in obtaining employment. It doesn’t matter where or how the employee sustained the original disability.

The fund was established by the state in 1975 as a way to encourage employers to hire individuals with preexisting injuries, conditions, and/or disabilities by helping with the workers’ compensation costs.

Previously, there was a concern that a disabled person who is injured on the job would be left more disabled than a non-disabled worker. This would result in higher workers’ compensation insurance costs like medical benefits, weekly compensation benefits, or both.

How Does it Work?

The NHSIF is meant to equalize the compensation costs that an employer and their insurance company must pay for both impaired and non-impaired workers. This removes a potential barrier to the employment of disabled individuals.

When an employee sustains a work-related injury that results in claim payments of $10,000 or more, the employer’s insurance company can apply to the SIF for reimbursements (think of it as a deductible of $10,000). The insurance carrier will request the first reimbursement after 104 weeks of treatment and/or time lost from work.

Second Injury Fund Benefits and Reimbursement

There are several ways the benefits can be reimbursed, including:

Eligible benefits, meaning medical expenses and indemnity payments (Note: Nurse case management fees and permanent impairment awards are ineligible benefits.)
Benefits up to and including week 104 of disability will be reimbursed at 50%
Benefits after week 104 or disability are reimbursed at 100%
Reimbursement is for eligible benefits paid in the prior calendar year (i.e., 2019 benefits must be requested by 9/1/2020 and will be reimbursed in 2021, usually in the first quarter)
Lump-Sum Settlements (LSS) for future indemnity benefits are reimbursable at 52 weeks per year and claim reimbursement continues until LSS is recovered. (Note: LSS must first be approved by the NHSIF, then by the New Hampshire Department of Labor.)

Additionally, there is a section under the NHSIF allowing employers to request 50% (up to $5,000 annually) for reimbursement for job modifications they make to accommodate an employee’s impairment or condition. These modifications need to be pre-approved by the SIF and you can start by submitting this form.

For example, you might provide a special keyboard, mouse, or office chair for an employee with carpal tunnel syndrome. Another example might be a truck driver who sustained a rotator cuff injury and now needs special equipment to drive, such as a lever instead of a steering wheel. This part of the program can be very helpful in mitigating your costs for these types of supplies and equipment.

Finally, the NHSIF will reimburse carriers and self-insurers for increased wages paid on a workers’ compensation claim for an injured employee who is simultaneously employed with another New Hampshire employer.

How Can Employers Use the Second Injury Fund?

To ensure you are eligible and successfully apply for the NHSIF, you will need:

Written documentation of the employee’s permanent pre-existing physical or mental impairment dated prior to the work injury and maintained confidentially and separately from the employee’s personnel file.
To have provided some special accommodation (e.g., extra breaks to check their blood sugar).
Notice to the NHSIF provided 100 weeks from the date of the subsequent injury
Various items of medical information and opinion

The best way to stay on top of this is to have an employee complete the Second Injury Fund form after they have been officially hired. We recommend employers then ask employees to update this form annually. Management can also update it any time they learn new information.

It’s best to discuss the form with each new employee in order to ensure full disclosure of any permanent physical or mental disabilities. This way, you can assure them that disclosing this information will not affect their ability to obtain worker’s compensation benefits in the case that they do sustain a work-related injury. It is important for you to get a fully accurate SIF questionnaire in order to receive partial reimbursement for benefits paid.

Requesting a completed SIF questionnaire and submitting medical information and records after the employee has been hired is legal under the Americans with Disabilities Act (ADA) and the Equal Employment Opportunities Commission (EEOC).

Find the Right Partners

The New Hampshire Second Injury Fund exists to both reduce risks for employers and ensure all employees—both impaired and non-impaired—are sufficiently compensated in the case of a work-related injury.

Fortunately, you don’t have to figure it all out on your own. Work with BlueLion and a reputable property and casualty commercial insurance broker to protect your business and employees. We will educate you and make sure you have the proper processes in place to be prepared for the SIF in the case that you need it.

We also know it can be difficult to find an experienced, high-quality insurance provider. That’s why we teamed up with Tyler Halstead, Account Executive at The Rowley Agency, Inc., to bring you a complete guide on the NH SIF. Tyler will be happy to provide you with a quote that fits your budget and guide you with support and safety measures to reduce injuries and other risks to your business.

If you do have a case that is eligible for the NH SIF, Tyler and his team will make sure you are covered and receive the maximum reimbursement.

Not to mention, The Rowley Agency is an Assurex Global Partner. Assurex Global is the world’s largest privately-held risk management and commercial insurance brokerage group.

Contact us today at 603-818-4131 or info@bluelionllc.com to learn more about partnering with BlueLion and The Rowley Agency to reduce risk for your company!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

How to Classify W-2 Employees vs. 1099 Contractors in New Hampshire

June 15, 2020

Does your New Hampshire business have a new position to fill or a job that needs to get done? If so, you may be weighing the perks of a W-2 employee vs. a 1099 contractor.

Each hiring option has unique benefits and challenges. It can be difficult to determine which is the best choice for your company and the particular position you’re trying to fill. Add in the legal and tax implications, and it can become straight-up overwhelming!

That’s why BlueLion is here to walk you through properly classifying W-2 employees and 1099 contractors. We’ll answer your most burning questions, including:

Why is it vital to properly classify workers?
What happens if I misclassify an employee?
What exactly is the difference between an employee and a contractor?
What are W-2 and 1099 forms and how do I use them?

Why It’s Important to Properly Classify W-2 Employees vs. 1099 Contractors

Simply put: You MUST properly classify the people you hire because it determines how you and they are taxed.

Misclassification of employees as independent contractors is a significant issue throughout the American workforce and economy. Unfortunately, many employers do this in order to save money, since they don’t have to worry about things like benefits and minimum wage.

This is illegal and puts your business at huge risk. Employers who misclassify employees as freelancers can be subject to major financial penalties if audited by the Department of Labor.

ClassAction.com reports that:

“The most common lawsuit compensation for misclassified workers is back wages in the form of unpaid overtime and minimum wage. Under the Fair Labor Standard Act (FLSA), plaintiffs can seek liquidated damages and recover up to double what is owed to them.”

Additionally, the correct classification of workers relates to many labor standards, including:

Minimum wage and overtime requirements
Unemployment insurance
Federal and state payroll taxes
Business profits taxes
Compliance with workplace safety and health requirements
Workers’ compensation insurance

An individual must meet certain criteria set by the state of New Hampshire in order to be considered an independent contractor. Those who do not meet all of the criteria do not qualify as an independent contractor and are subject to the requirements of the law—and so are you when you hire them.

The NH Employment Security and the Department of Revenue Administration have their own tests for determining employment.

What is the Difference Between Employees and Contractors?

Before making a hiring decision, you should clearly understand the differences between a W-2 employee and a 1099 contractor. This way, you can consider the type of work you need and which type of worker is the best fit.

Who is an Employee?

You hire an employee under an employment agreement. This means you need to withhold taxes from their wages and may need to provide benefits, workers’ compensation, and the other items listed above.

You also determine when and how an employee works and what exactly they work on. This is obviously a benefit, as it means you have more control over the employee and can rely on them to be there and dedicated to your business.

One of the challenges (and the primary reason for employee misclassification) is you are responsible not only for your employees’ wages but also for paying your portion of their Social Security and Medicare taxes. You may also need to provide benefits like health insurance and paid sick leave. Then there are the additional costs, like office resources and job-specific equipment, which you will have to supply.

Who is a Contractor?

When you hire a 1099 contractor, you enter an agreement for them to work on a specific task or tasks. You are not on the hook for withholding their taxes or providing benefits; these are their responsibilities. Freelancers set their own hours and get the work done with their own tools. They also typically work with multiple clients.

Saving in areas like taxes and benefits is a major perk of working with freelancers. Independent contractors are also experts in their fields, require little training, and get the job done right while saving you time and headaches.

Because a contractor is not an employee, you don’t have much control over when and how they work. You also have to be careful when considering firing a contractor, as it could break the terms of your contract and lead to legal ramifications. There is also a chance that they could choose to sue your business should they get injured on the job (usually a nonissue with employees due to workers’ compensation).

What are W-2 and 1099 Forms and How Do I Use Them?

Now that you understand the difference between an employee and contractor and you’ve made a decision, you need to know the tax forms involved and how to use them.

A W-2 is a tax form you complete to report annual compensation your business has paid to employees and the payroll taxes you’ve withheld from that compensation. You are required to mail W-2 forms to your employees by January 31 of the following calendar year.

There are actually several types of 1099 forms, which are used to report payments you made to contractors.

1099-MISC (Copy B): Complete and send to any contractor you paid $600 or more in a calendar year by January 31
1099-MISC (Copy A): Complete and send to the IRS by January 31
Form 1096: Fill out the summary of all the 1099s you prepared and send to the IRS by January 31 (unless you filed your 1099s electronically)

BlueLion Can Help with Employee Classification

If you’re still unsure of the best course of action when it comes to hiring a W-2 employee or a 1099 contractor, BlueLion can help you make the right decision for your New Hampshire business. We will also make sure you and properly classify your employees, pay them appropriately, provide benefits when necessary, and handle their taxes correctly.

Our team is happy to guide you through the confusing world of hiring and ensure you maintain a happy and compliant workforce! Contact us at 603-818-4131 or info@bluelionllc.com today.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

5 Simple Steps to Calculating Full-Time Equivalents (FTE)

June 8, 2020

As a business owner, there are many important numbers and metrics you need to track in order to have a clear understanding of your company’s performance.

Some of these metrics, such as full-time equivalents (FTEs) are also important when it comes to remaining compliant with certain laws.

Are you currently applying for the Paycheck Protection Program (PPP) Loan Forgiveness? If so, you will also need to calculate your FTEs; however, they have certain requirements when it comes to calculating your FTE number, which we’ll explain a bit later.

What Exactly is a Full-time Equivalent?

A full-time equivalent measures the number of full-time hours being completed at your company. This is how you will measure how many full-time employees you have and how many part-time employees that can be translated into full-time terms.

An FTE is calculated by dividing an employee’s scheduled hours by the employer’s hours for a full-time workweek. If your company’s full-time workweek is 40 hours, an employee scheduled to work 40 hours per week would be 1.0 FTE. An employee scheduled to work 20 hours per week would be 0.5 FTE.

And that’s just a toe-dip in the FTE number pool! But stick with us as we explain why this matters to your business, walk you through it step by step, and provide an easy equation to make calculating your FTE number a breeze.

Why Is This Important for Employers?

Employers may need to calculate FTEs for a few different reasons. Some use them to track revenues or profits per employee, since the calculation converts hours worked by part-time employees into full-time equivalents.

Many businesses also need to determine FTEs in order to remain compliant with laws such as The Patient Protection and Affordable Care Act. Your FTE number determines whether you’re seen as an applicable large employer (ALE).

If you’re an ALE, it means you have 50 or more employees OR a combination of full- and part-time workers that equaled 50 FTEs. And if you fall under the ALE category, the Affordable Care Act requires that you offer group health insurance. You would also need to submit 1094-C and 1095-C forms describing the coverage you provided to your employees.

How to Calculate Your Company’s Full-time Equivalents

Now that you know what a full-time equivalent is and why it’s important, let’s break down the steps to calculate it.

Note how many part-time employees you have. (The IRS defines part-timers as those who work less than 130 hours a month, or 30 hours a week.)
Write down the average number of hours each part-time employee works per week, then add them up.
Divide that number by 30.
Round down to the nearest whole number.
Add that number to the number of full-time employees.

It’s as simple as that—five simple steps to getting your FTE number. Basically, your calculation looks like this:

(Total average of part-time hours worked per week / 30) + X full-time employees = FTE number

Calculating Your Average FTE for the Paycheck Protection Program

As we noted earlier, if you are applying for the PPP Loan Forgiveness, you will need to calculate your FTE by the program’s standards. This states that you will need to calculate your FTE during the Covered Period or the Alternative Payroll Covered Period.

For each employee, note the average number of hours paid per week.
Divide that number by 40.
Round the total to the nearest tenth.

Under this program, each employee is capped at a maximum of 1.0. Keep it simple by assigning a 1.0 for full-time employees (i.e., those who work 40 hours or more per week) and 0.5 for those who work under 40 hours.

You will be eligible for loan forgiveness for certain expenses during the Covered Period or Alternative Payroll Covered Period. The government will use this average FTE to determine whether your loan forgiveness amount must be reduced based on reductions in full-time equivalent employees.

Basically, the amount of your loan forgiveness may be less if you reduced the number of employees or the average paid hours of your employees between January 1, 2020 and the end of the Covered Period. You could be exempt from this reduction, however, if you fall under the FTE Reduction Safe Harbor. These requirements are covered in more detail on the PPP application.

A Look at FTEs in Action

Since every business is different, let’s take a look at a couple of examples and types of FTEs.

Your business might have a 35-hour workweek, so you would divide the employee’s scheduled hours by 35 to determine the FTE. If you have an employee who works 21 hours per week, they would be 0.6 FTE.

If you do have a 40-hour workweek and have four part-time employees who work 10 hours per week, each employee would come to 0.25 FTE which totals 1.0 FTE.

Perhaps you have a staff of 40 full-time employees who average 30 hours a week and 20 part-timers who work 10 hours a week. Your calculation would look like this:

Total weekly hours worked by part-time employees: 10 x 20 = 200
Part-time hours divided by full-time workweek: 200 / 30 = 6.6 (Round down to 6)
Full-time employees + part-time FTE: 40 + 6 = 46

Are you in a seasonal business? Even if you hire 50+ workers, if they work 120 days or less in a year, you are not an ALE.

If you have questions about your full-time equivalent calculations and/or completing your PPP Loan Forgiveness application, BlueLion is here to help! Contact us at 603-818-4131 or info@bluelionllc.com for more information and we’ll ensure you stay compliant based on your FTEs.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Nobody #Likes Social Media Policies—But You Need One Anyway

June 1, 2020

With the number of social networks and devices available at our fingertips, social media activity has become a rising concern among employers. A disgruntled employee can Tweet something negative or post a video tirade in a matter of minutes. #stressed

How can you prevent that type of activity and protect your business when content now spreads like wildfire? First, we explain employers’ options regarding social media in a quick video tip:

Those tips just touch the surface of the vast social media landscape! Keep reading to learn:

How to manage employees in the digital world
What makes an effective social media policy
What action employers can and can’t take regarding social media and concerted activity

Tips for Managing Employee Social Media Usage

Be proactive by eliminating the reasons for employees to resort to social media to air their grievances. This starts by fostering a transparent working environment and encouraging employees to speak up, whether to their direct managers or HR.

Inform employees of all of the tools and resources available to them should they have issues (e.g.: internal complaint procedures, whistleblower hotlines, voluntary arbitration for termination cases, supervisor training, and an involved HR department). Most of all, let them know that they will truly be heard.

Although in a perfect world, every issue would be dealt with civilly and face-to-face, it is important to prepare for those less-than-pleasant social media posts. Ensure your HR team is up to speed on employee social media usage and best practices. This includes creating policies on the appropriate use of social media in regards to your business. HR should be in charge of training employees on and enforcing these policies.

What Makes a Good Social Media Policy?

A strong social media policy for employees includes very clear guidelines on what behaviors are acceptable and which are not.

Key elements of a solid social media policy include:

Rules regarding ethics, sharing of the company’s trade secrets/confidential information, and discrimination & harassment prevention
Tips for posting appropriate and respectful content
What type of social media content is unacceptable and subject to discipline, including termination
Rules about using social media at work
A rule prohibiting retaliation regarding the social media policy

Review these policies to ensure they align with your company’s culture as well as the National Labor Relations Board (NLRB) guidance and case law.

What NOT to Do In Your Social Media Policy

Avoid being either too broad or too restrictive in your social media policy. This could be unlawful by interfering with workers’ right to complain about their employer and discuss their working terms and conditions with one another.

What Employers Can and Can’t Do

You can and should get involved and hold employees accountable for social media activity like:

Harassing and bullying other employees
Conducting illegal activities (e.g.: selling drugs)
Expressing thoughts of life-threatening behavior

On the flip side, employers cannot discipline employees for protected concerted activity on social media. But how can you know if a post qualifies as protected?

First, you need to determine if the subject matter of the social media post involves the employee’s terms and conditions of employment. Employees are free to complain about their terms and working conditions. Check out our other post on concerted activity to learn more about what is considered protected.

Second, you will need to determine who the employee is intending to reach. If an employee is talking to one or more coworkers about their terms and conditions of employment, the activity is considered concerted—meaning you can’t take disciplinary action.

Additionally, employers need to be careful not to make discriminatory hiring decisions based on what they see on a candidate’s social profile.

Whether you can or should fire an employee because of a social media post depends on the situation. When you have a good social media policy for employees, the process will be that much easier. Make careful decisions based on social media actions; just because someone violates the policy, doesn’t necessarily mean you should immediately fire them. Sometimes, these issues can be addressed with the employee at hand and resolved.

Maintain Social Media Compliance

Having a clear social media policy in place will prepare your company in the case of an inappropriate post on the ‘Gram or a complaint-filled chat. Plus, a documented policy and training during employee orientation will protect your business and prevent negative social media interactions. It is also important to stay up-to-date on the latest social media trends and regulations.

If you have any questions or need assistance creating an effective social media policy, contact BlueLion at 603-818-4131 or info@bluelionllc.com to learn more about our policy development services today!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Talking Salary & Concerted Activity: What Employers Can and Can’t Do

May 26, 2020

Many employers ask us if they can prevent employees from discussing work-related issues such as salary, benefits, and work conditions.

The short answer? No.

Can employees discuss wages? Yes.

Now, you may be wondering why and what you can do when these discussions do happen.

First, check out this quick video in which we provide a quick explanation of the National Labor Relations Board (NLRB) and the concerted activity law:

We’re going to explain a bit more about exactly what is protected concerted activity, what it is not, and what you as an employer can and can’t do about it.

What is Protected Concerted Activity?

Employers CANNOT prevent employees from discussing work-related issues, such as:

Talking with one or more coworkers about wages, benefits, or other working conditions
Circulating a petition asking for better hours
Participating in a concerted refusal to work in unsafe conditions
Openly talking about pay and benefits
Joining with coworkers to talk directly to an employer, government agency, or the media about workplace issues

These are considered protected concerted activity according to the NLRB. This means you cannot forbid employees from discussing salaries or other job conditions with one another in either verbal or written form.

These discussions are protected regardless of whether employees are talking to each other in person or via social media, which we’ll discuss in more detail in another post.

What about a single employee?

A single employee may engage in protected concerted activity if he or she is:

Acting on behalf of other employees
Bringing group complaints to the employer’s attention
Trying to induce group action
Seeking to prepare for group action

What is NOT covered?

If an employee:

Says or does something grossly offensive or knowingly and maliciously false
Publicly bad-mouths an employer’s products or services without relating their complaints to any labor issues

He or she can lose protection, opening them up to legal disciplinary action from the employer.

The NLRB’s January 2019 ruling in Alstate Maintenance, a case regarding an employee who protested in a group, also says that “individual griping” is not protected concerted activity. This decision signaled that many concerted activity cases involving individual griping won’t be considered, which gives employers a bit more confidence in handling similar situations.

Basically, this ruling states that just because an employee speaks out in a group does not mean that he or she is protected. As the NLRB reviews certain cases, professionals recommend that employers still proceed with caution when disciplining employees for actions taken in a group setting.

What Can Employers Do?

As we know, conversations about salary can lead to jealousy and hostility among coworkers, particularly when they don’t understand the reasons for the salary differences. We know we’ve talked a lot about what you can’t do as an employer, but how can you avoid these negative discussions and issues in the first place?

The best way to get ahead of these situations is to establish a positive and transparent working relationship with your employees. You can do this by:

Paying people fairly in the first place.
Fostering an environment of trust where employees are comfortable approaching management or HR personnel with questions or concerns about salaries or other working conditions.
Being open with employees about their wages and job potential by tell them what steps they can take to help them grow within your company.

Create a Compensation Strategy

You should have a compensation strategy in place to help with all of the above. This means detailing how pay decisions are made. Create an outline of this pay structure based on company policies, job descriptions, and industry standards. Be sure to conduct regular salary reviews to ensure yours are in line with the marketplace.

The main factors to consider when deciding compensation usually include:

Base salary
Merit increases
Bonuses
Commissions
Benefits
Shifts or hours at work
Specialized skill sets

At the end of the day, transparent practices will help you maintain a positive and productive work environment while avoiding negative discussions about pay and other issues.

How Can Your HR Team Help?

We understand that no matter what, rate of pay can be a touchy subject. That’s why BlueLion is here to help you with:

Managing the process
Mediating discussions about pay
Establishing a compensation structure
Updating or creating a handbook that is NLRB compliant

Contact us at 603-818-4131 or info@bluelionllc.com today! Our HR professionals will be happy to help you create a positive work environment and a clear pay structure.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

4 FAQs About the Massachusetts Earned Sick Leave Law—Answered

May 19, 2020

Are you a Massachusetts business owner? Or maybe you operate out of neighboring state, with certain employees spending most of their working hours in the Bay State?

Either way, you need to be familiar with the Massachusetts Earned Sick Leave Law. This important legislation protects your employees by guaranteeing them a set amount of time in the case that they need to take care of themselves or a family member.

If you’re unsure whether or not your business needs to comply with this Massachusetts law (If you’re here, it most likely does), read on to learn:

What this law is
Who has to comply
Which employees are covered
What earned sick time can be used for

What is the Massachusetts Earned Sick Leave Law?

The Massachusetts sick leave law guarantees that most employees earn 1 hour of sick leave for every 30 hours of time worked. It allows employees to accrue and use up to 40 hours in a year; however, employees do not accrue additional hours after the 40-hour cap.

This earned sick time must be paid at the employee’s standard rate. Unused leave can be rolled over to the following year but is still capped at 40 hours in that year.

Employers can choose to provide more generous sick leave, but State law only protects 40 hours of accrued and used sick leave in each 12 month period.

Note: A year can be defined as any 12-month period by the employer and must be communicated to employees upon hire. An employer must also notify employees if this 12-month period changes.

Who Has to Comply with MA Earned Sick Time Laws?

All employers in Massachusetts must provide employees with the ability to accrue and use earned sick time. The main difference is based on company size: Only businesses with 11 or more employees must provide paid earned sick time. While smaller employers must provide earned sick time, it may be unpaid.

A small Massachusetts employer may elect to make earned sick time paid and any business owner can offer more in their earned sick leave policy if they so choose.

An employer outside of the state with an employee or employees whose primary place of work is in Massachusetts must provide earned sick time.

The following types of employers are not required to provide earned sick time, but can choose to offer it:

U.S. government
Massachusetts cities and towns
Local public employers (e.g.: school committees including regional schools and educational collaboratives)

Which Employees are Eligible for Earned Sick Leave?

To qualify, an employee’s primary place of work needs to be Massachusetts. Employees start earning sick leave on their first day of employment. Employers can choose to put a 90-day probationary period in place limiting the use of sick leave, but employees are eligible to use their accrued sick time after 90 days.

Most employees who work in the Bay State are eligible, including those who are:

Full-time
Part-time
Seasonal
Per-diem
Temporary

An employee’s primary place of work is Massachusetts if:

The employee spends work hours traveling outside of Massachusetts but returns regularly to a Massachusetts base of operations before resuming a new travel schedule.
The employee telecommutes to a Massachusetts worksite.
The employee permanently relocates to Massachusetts (in which case his or her primary place of work will become Massachusetts on the first date of actual work in the state).

For employees constantly switching locations of work, the primary place of work may be determined by assessing the state in which the employee spent the relative majority of his or her working time over the previous benefit year. Employers should make a reasonable assessment of the primary place of work for new employees.

It is also important to note that it is not necessary for an employee to spend 50% of his or her working time in Massachusetts for it to be the employee’s primary place of work.

What Can Earned Sick Time Be Used For?

Massachusetts employees can use earned sick time to take care of themselves and certain family members. The main reasons for use include:

Caring for themselves or a family member’s physical or mental illness, injury, or medical condition. (This can include preventative, home, or professional care.)
Attending routine medical appointments for the employee or family member.
Addressing the psychological, physical, or legal effects of domestic violence for either the employee or the employee’s child.
Covering travel time related to the purpose for which the sick leave was taken.

Family members are defined as:

Child: Includes biological, foster, adopted, step, and legal wards
Parent: Includes parents and parents-in-law
Spouse

Ensure Your Massachusetts Sick Leave Policy is Compliant

Massachusetts employers are required to post notice of the Earned Sick Leave Law in a conspicuous place where employees work (we recommend hanging it near your Labor Laws poster and other similar notices). You must also provide a written copy of the notice to all employees, along with your specific sick leave policy, in your handbook or manual.

It is vital for any company in Massachusetts or with employees working in the state to have a defined sick leave policy in place. If you have additional questions about the law requirements or need assistance establishing a compliant sick leave policy, contact BlueLion at 603-818-4131 or info@bluelionllc.com today! Our HR experts will provide the guidance you need and can even help you update or create a new sick leave policy.

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

How to Create a Recovery Friendly Workplace in New Hampshire

May 4, 2020

As a New Hampshire business owner, you are likely familiar with—and have possibly even been affected by—the opioid crisis in relation to your workplace.

According to the Recovery Friendly Workplace Initiative, untreated addiction costs New Hampshire’s economy $2.36 billion. Businesses take on 66% ($1.5 billion) of that cost in the form of impaired productivity and absenteeism.

Although these numbers may seem daunting at first, there are now many programs and resources for companies that want to make a difference by becoming a Recovery Friendly Workplace (RFW). Making these positive changes will establish your business as one that cares about its community and takes action to help individuals in their recovery process.

Read on to discover:

What an RFW is
Why it is important
How it works
How to create your own RFW
Policies you’ll need (and how we can help!)

What is a Recovery Friendly Workplace?

According to the RFW Initiative, an RFW is a business that supports its community by recognizing recovery from substance use disorder as a strength and by being willing to work intentionally with people in recovery.

RFWs foster a healthy and safe environment where employers, employees, and communities to work together to create positive change and remove barriers for those impacted by addiction.

RFWs use evidence-based practices and drug and alcohol policies that demonstrate an understanding of substance use disorder.

Why Is It Important?

With over 60,000 Granite Staters in recovery, there are many employees and customers on this long and challenging road.

You can support your employees by creating a healthier and safer environment, encouraging their successful recovery. Becoming an RFW will show your community and customers that your business cares about them by directly addressing addiction and behavioral health.

Additionally, workplaces that utilize evidence-based health and safety policies and programs recruit and retain a healthier, more productive, and more motivated workforce. These programs may even lower costs like:

Healthcare expenses
Costs associated with missed work
Costs of employee hiring and retraining

With the state of the labor market, your business may not be in a position to turn away promising candidates. Companies today need to strike a balance between maintaining a safe working environment and hiring good employees.

How Does It Work?

The RFW Initiative offers comprehensive guidance and training for businesses interested in becoming RFWs. You will work with Recovery Friendly Advisors (RFAs) who will help you develop and sustain RFW Initiative in your workplace. They will equip you with information and resources to promote health, well-being, and recovery among employees and their family members.

As an RFW, you will provide education and review of your company’s alcohol, tobacco, and other drug policies upon hire and annually. We’ll dive more into these policies a bit later.

RFAs will consult with employers to plan trainings to help them identify and appropriately handle substance misuse, behavioral health, and addiction issues. These trainings are always tailored to your company’s needs.

How to Make Your Business Recovery Friendly

Substance use disorder and the recovery process is a sensitive topic, so where can you start making changes in your workplace to support those in recovery?

A good first step lies in the culture. Change the language you use: Instead of using terms like “drug abuse” or “substance abuse,” use the phrase “substance use disorder.” This terminology reduces the stigma for those struggling with or taking steps toward recovery.

What other programs and routine support can you put in place to become recovery friendly?

Onsite Counseling

For certain professions (e.g.: manual labor workers), it is difficult to make appointments in traditional healthcare settings. Your business could bring an onsite counselor or provide remote counseling for both scheduled and on-demand recovery support (on-demand could be used during work breaks). This would help more people get the help they need by eliminating fear and encouraging participation.

Peer Support Groups

Group therapy appointments also typically occur during the business day. Incorporating peer support groups into the daily schedule, however, can help build a culture of mutual support thanks to open and safe discussions with coworkers who are also in recovery.

A Trained Supervisor

An RFW trained supervisor understands the challenges and needs of people in recovery—including the fact that slip-ups are a part of the process. They will know that a positive drug test indicates the need for more counseling support and closer monitoring, rather than immediate termination.

Onsite Drug Testing and Telepsychiatry

Regular onsite drug testing (where appropriate) can ensure safer work environments and indicate when individuals need more support. It also prevents the need for an individual to leave in the middle of the day for a medication appointment or to provide required toxicology testing for their program.

Offering telepsychiatry visits in a secure room onsite also enables people to get assessed regularly and helps prevent missed doses of recovery medications like buprenorphine.

For free in-depth guidance and training on how to become an RFW, you can submit a letter of interest to the Governor’s Office. A representative will meet with you and help walk you through the process with your organization’s specific needs in mind. Visit the RFW Initiative website for more information on how to become an official Recovery Friendly Workplace in New Hampshire.

What Policies Do You Need?

Now that you’re on your way to becoming recovery friendly, it’s time to reevaluate your policies. Your drug and alcohol policy should at least:

Prohibit the use, possession, sale, distribution, or manufacture of drugs and drug paraphernalia at work
Forbid employees from reporting to work while under the influence
Reserve the right to conduct searches of workspaces upon reasonable suspicion
Ensure compliance with applicable federal and state laws

Consider what makes the most sense regarding your recruitment and retention goals. Although you can elect a zero-tolerance policy, many companies are moving away from this to keep up with major shifts like the legalization of marijuana.

To become an effective recovery friendly employer and carry out the support programs listed above, you’ll want to establish other policies that focus on:

Workplace education and outreach
Coordination with an employee assistance program and wellness programs
Supervisor training
HR support
Confidential access to peer recovery support

Be sure your policies are specific and you are consistent in your practices regarding substance recovery disorder issues.

“Remember that supervisors are your eyes and ears,” Sheehan Phinney attorney James Reidy advised at the 2018 SHRM Employment Law & Legislative Conference. When the rest of your team is properly trained, it will make all the difference for a successful Recovery Friendly Workplace.

Making Your NH Business Recovery Friendly

If you need help updating your policies or creating new ones to accommodate your new RFW goals, BlueLion can help through our policy development services! We also provide Human Resource on-call service, perfect for small New Hampshire businesses that have either a very small or no internal HR department.

Call us at 603-818-4131 or email us at info@bluelionllc.com to learn more about establishing a recovery friendly environment today!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.

Furlough, Layoff, or Reduction in Force: Which is Right for My Business?

April 22, 2020

There is a significant amount of confusion around three major human resource topics: Furlough, Layoff, and Reduction in Force (RIF). These terms are also often used interchangeably—which doesn’t help clarify things on either side!

As a business owner, it is very important to know the differences and how to properly handle each one. Let’s start with a video breakdown of the differences between a furlough, layoff, and RIF.

Quick Definitions

Furlough: Temporary leave-of-absence imposed by the employer that is typically unpaid for a short period of time
Layoff: Temporary cease of employment for a longer period of time (i.e., several months) with the intent to recall an employee to work
Reduction in Force: More commonly known as downsizing; permanent termination of employment in an effort to reduce costs for an employer

Now, we’re going to take a deep dive into each of these solutions. Keep reading to learn what each one means, why employers use them, how to properly implement them, and how to handle employee benefits.

Furlough

Furloughing employees is a good alternative to laying them off, particularly when you know it will only be for a brief and defined period of time.

What is a furlough and when is it used?

A furlough is generally unpaid, although in some cases may be partially paid. This form of leave typically lasts for a few weeks at most, meaning employees have either a scheduled length of time or call-back rights and expectations. A company makes this decision when trying to save money by lowering salary expenses.

Employee furloughs can occur in both public- and private-sector organizations. Furloughs are often cyclical and some businesses may have regular furloughs based on the time of year.

Other examples of furloughs include reducing employee time on the job from four to three weeks a month and asking employees to take a certain number of days off each month without pay. In some instances, furloughs can also be indefinite.

How to Implement a Furlough Effectively

Employers should pay attention to when they enact a furlough regarding exempt employees (i.e., employees who are paid a set salary every week). It is important to continue paying them on a salary basis, so as not to jeopardize their exempt status under the Fair Labor Standards Act (FLSA). The easiest way to stay compliant is to put a furlough in place that encompasses a full workweek since the FLSA states that exempt employees do not have to be paid for any week in which they perform no work.

You can choose to let employees use their vacation time/paid time off, but you are not required to say either way. This could be a way to help employees offset some of their costs during a furlough.

Finally, implement specific no-work rules during a furlough to ensure you will not have to pay any furloughed employees. An exempt employee who simply answers an email is entitled to pay. Even nonexempt employees (i.e., those entitled to overtime page who are generally paid an hourly rate) who perform any work during furlough must be paid for the time worked. It’s important to enforce a no-work policy to ensure your organization actually saves money during a furlough.

How to Handle Employee Benefits

An employer is generally required to maintain an employee’s benefits during a furlough, which is one of the main differences between this option and a layoff. This means medical, vision, and dental insurance should be covered.

As an employer, there are different ways you can manage the deductions on the benefits you pay. Visit the BlueLion YouTube channel for videos with tips on maximizing these deductions and be sure to subscribe to stay updated.

Layoff

The first thing to note here is that being laid off is NOT the same as being fired or permanently terminated! It is actually another temporary situation.

What is a layoff and when is it used?

A layoff is a temporary separation from payroll that takes place when there is not enough work for the employee to perform. The intention with a layoff is to recall or rehire the employee, usually within several months once work becomes available again. The length of a layoff is one of the main differences between this and a furlough.

Layoffs occur regularly in some industries, such as landscaping and construction in the winter when the weather does not allow for outdoor work.

How to Implement a Layoff Effectively

Employees who have been temporarily laid off should receive a return-to-work date and are eligible to collect unemployment.

Additionally, employees who are laid off have the option to use any accrued paid time off, unless you have a policy stating otherwise. We highly recommend putting a policy in place for this if you do not already have one. In New Hampshire, if you do not have a policy, you are required to pay out the employee’s paid time off. In Massachusetts, you are required to pay any accrued time off.

How to Handle Employee Benefits

You as the employer have the choice to either continue paying for a laid-off employee’s benefits (medical, vision, and dental) or ending their benefits coverage and complying with COBRA. This means you’ll need to notify them in the proper timeline and giving them all of the information they need to obtain COBRA insurance coverage.

Employers often choose to continue providing benefits coverage to employees while on an unpaid layoff for a set amount of time as an incentive to remain available for recall. At the end of the day, it is a decision your organization can make based on your resources and financial situation.

Reduction in Force (RIF)

And finally, we are onto the term most often confused with a layoff.

What is a Reduction in Force and when is it used?

A reduction in force, or downsize, is essentially a permanent termination. When an employer carries out a RIF, they have no intention of calling the employee(s) back to work.

RIFs occur in different situations, such as when a company needs to reduce its staff for economic reasons or following a merger when a business needs to eliminate redundancies (e.g., two accounting departments).

How to Handle a Reduction in Force

Make sure you comply with all of the state mandates regarding:

Paying out vacation time based on the employee’s accrued time on the last day of employment.
COBRA the benefits based on whether it’s the last day of work or the end of the month.
Informing the employee that they are eligible to collect unemployment benefits through the state (depending on what the waiting period is).
Rules and regulations about delivering an employee’s final paycheck.

Since a RIF is a permanent termination and a difficult situation, employers should be certain they are prepared and in compliance with all of the above in order to conduct as smooth of a process as possible.

Which Solution is Right for Your Business?

There could be many reasons you are considering a furlough, temporary layoff, or reduction in force for your business. Regardless of the reason, it can be challenging to handle these personnel changes effectively while making sure your organization is staying compliant. This breakdown and explanation of each type of leave should give you a better understanding of which one you need for your situation.

Whether you need further assistance putting furlough or layoff policies in place or you’re looking for more guidance on conducting one of the above, BlueLion will be happy to help. Contact us today at 603-818-4131 or email info@bluelionllc.com to schedule a consultation!

The information on this website, including its newsletters, is not, nor is it intended to be legal advice. You should contact an attorney or HR specialist for advice on your individual situation.