Question of the Week

Coverage is defined by your policy terms, outlining specific protections and exclusions based on your needs.

Question of the Week

What is a total compensation statement?

A total compensation statement is a document that provides employees with a view of their compensation beyond just wages or salary. It’s meant to give employees a complete picture of what the company has invested in them. It details not only base pay but also bonuses, paid time off, health and wellness benefits, retirement program matching, and any other perks that are funded by the employer.

You can find an example of a total compensation statement on the platform. If you decide to provide a total compensation statement to your employees, we recommend explaining the purpose of the document to them and preparing managers to answer questions that may come up.

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What is a “plan document” with respect to insurance plans offered by private employers?

A plan document is the official governing document of employee benefit plans, such as health, welfare, and retirement plans. The Employee Retirement Income Security Act (ERISA) requires that almost all private employers that sponsor benefit plans have corresponding plan documents.

Your plan document should include specific information about the plan, such as eligibility, funding and contribution requirements, details about each benefit, and ERISA disclosures. You should have separate ERISA plan documents for retirement plans and the health and welfare plans because the structure, funding, and legal requirements for these plan types differ.

ERISA also requires a summarization of the plan document, called the Summary Plan Description (SPD), to be provided to employees within 90 days of becoming covered under the plan and when the plan document is changed. The SPD should be written in plain language so it’s easy for employees to understand the plan’s features and benefits.

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I read that FMLA entitles eligible employees to 12 weeks of unpaid, job-protected leave. What does “job-protected” mean?

When a leave of absence is “job-protected,” you can’t terminate or demote the employee, or take away any benefit they earned or were entitled to, simply because they took that time off. Upon their return, you generally need to restore them to their original job or an equivalent position with the same pay, benefits, and other terms and conditions of employment. It enables employees to take time off without having to worry about losing their job or facing other adverse employment action.

Job-protected leave does not, however, provide safeguards against layoffs or job changes that would have occurred even if the employee hadn’t taken leave. It also doesn’t prohibit you from disciplining or terminating an employee after their leave. That said, if you need to take adverse action while they’re on leave or shortly afterwards, it’s especially important to document the legitimate business reasons for the action in case the employee claims your motives are retaliatory.

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What does my employee mean when they say they’re going to “file a claim” for discrimination with the EEOC?

In the context, filing a claim of discrimination means lodging a formal complaint with the Equal Employment Opportunity Commission (EEOC). The EEOC is the federal agency that enforces Title VII of the Civil Rights Act, where most of our federal employment discrimination prohibitions come from. A claim can be filed by an employee, former employees, or job applicant. The claim will assert that they were discriminated against by the employer because of their race, color, religion, sex, pregnancy, gender identity, sexual orientation, national origin, age, disability, genetic information, or another protected characteristic.

When the EEOC receives a claim of discrimination, it sends a notice of the charge to the employer. The notice will either ask the parties to participate in a mediation program to resolve the claim or instruct the employer to provide a written answer to the charge before it investigates. Although discrimination claims usually need to be filed with the EEOC before a person can sue, filers don’t have to wait for the EEOC to investigate and can instead ask for a “right to sue” letter, which will usually end the EEOC’s investigation. A lawsuit may follow, depending on the outcome and circumstances.

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Can we ask applicants to share their pronouns on our job application?

In general, yes. There are some things to consider.

First, the question should be optional and clearly stated as such on the application.

Second, if you ask for pronouns on the application, screeners and interviewers should use them. Your workplace culture won’t come across as authentic or inclusive if the applicant’s stated pronouns are disregarded.

Third, ensure that those making hiring recommendations or decisions understand that a candidate’s choice to identify or not identify their pronouns, as well as the pronouns they choose, should not figure into the hiring decision. Collecting this information could lead to a discrimination claim if an applicant believed they were excluded because of their gender identity.

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What is a health flexible spending account?

A health flexible spending account (HFSA) lets employees set aside pre-tax money from their paycheck during the year, and they can use this money to pay for eligible healthcare expenses for themselves, their spouse, or their dependents. The funds in these accounts are typically “use it or lose it,” with some exceptions for carryover or grace period options, based on the employer’s plan design.

Employees can use their HFSA funds for many healthcare-related costs allowed by the IRS, such as insurance plan deductibles and copays, prescriptions and over-the-counter drugs and medications, dental and vision care, and chiropractic services. Payments for these services can be made directly to the healthcare provider or retailer using a debit card linked to the account or by filing for reimbursement with the HFSA provider.

Employees like having HFSAs as these accounts allow them to set aside pre-tax money for some of those regular costs, such as new glasses, or for a planned medical procedure, while also providing upfront access to funds to help them manage unexpected medical expenses more effectively.

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We’ve decided to bring employees back into the office a few days each week and change our remote work policies. Some employees have been grumbling about this change. What should we do?

Any time you make a change like this, you can expect a certain amount of employee complaints. People aren’t inherently great with change, and the benefits of remote work can be hard to part with. Given that, instead of trying to shut down complaints (which could potentially run afoul of employees’ rights under the National Labor Relations Act), we recommend a few things you can do to help bring employees onboard with the idea.

One way to do this would be to hold a virtual meeting where you share your reasons for returning to the office and invite employees to share—during the meeting or afterwards—what support they may need to make the return as smooth as possible.

During this meeting, be transparent about why you’re adopting a hybrid policy, noting both the benefits to the organization and to employees. Let them know that you understand that this change will cause some disruption to their lives and that you want to support them during the transition.

To help employees feel better about returning to the office, you might also consider offering perks such as a stipend for parking and commuting costs, a well-stocked fridge and snack drawer, or a more flexible in-office dress code.

While you will never be able to stop all the complaining, providing transparent communication and allowing employees to be heard is essential to gaining their support for any policy changes.

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Should we include a pay range in our job postings even though we aren’t required to by law?

We generally recommend including pay ranges in job postings even if it isn’t legally required. First, since the practice has become more common, more job seekers expect it, and many won’t apply for jobs that don’t include a pay range. By not including this information, you risk missing out on top talent. Second, sharing pay information upfront has the potential to save you time and money. You’re much less likely to have a candidate you’ve already spent a lot of time with reject your offer because the pay didn’t meet their expectations. You’re also less likely to get negotiated into a pay range that you can’t really afford or that would create pay equity issues in the organization.

That said, sharing pay information in job postings will put a spotlight on your overall pay practices and any pay disparities. Your current employees could start asking questions about their own pay, especially if their pay falls below the range for comparable work. You and your managers should prepare to have these conversations and make necessary adjustments. You can learn more about pay transparency by visiting our chart that outlines the states and localities that require pay ranges to be posted.

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What’s the difference between exempt and nonexempt and how do we know which classification to use?

Exempt and nonexempt are classifications under the Fair Labor Standards Act (FLSA), a federal law requiring that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Employees who are entitled to both minimum wage and overtime are called nonexempt, while those who are not entitled to both are called exempt.

Any position can be nonexempt. However, if you want to classify a position as exempt, it needs to qualify for one of the exemptions listed in the FLSA.

The most common exemptions are those for executive, administrative, and professional employees. These are often known as the EAP or white collar exemptions. But to qualify, each employee must pass a three-part test:

  • Duties: The employee must actually perform specific tasks and meet specific requirements depending on the exemption they’re classified under. Each exemption has its own duties test.
  • Salary level: The employee must make at least a minimum dollar amount per week, as determined by Department of Labor (DOL) rules.
  • Salary basis: The employee must be paid the same amount each week, regardless of hours worked or the quantity or quality of their work. Reducing an exempt employee’s pay is only allowed in narrow circumstances.

If an employee meets all the necessary criteria, they can be properly classified as exempt. If they don’t, they’ll need to be classified as nonexempt and paid at least minimum wage and overtime when applicable.

Note that teachers and practicing doctors and lawyers don’t have to pass the salary level and salary basis tests to be classified as exempt. And exempt computer employees (a subset of the professional category) can be paid on an hourly basis, so long as they’re paid the applicable hourly minimum, as determined by DOL rules.

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We’re considering demoting an employee. What questions should we ask ourselves to ensure we are making the right decision?

Demotions, like other employment decisions, need to be handled carefully. You should ask yourself the following questions to ensure you are handling the situation fairly and legally:

  • Do you have an employment contract with this employee guaranteeing them a certain position or rate of pay? If so, demotion may not be feasible.
  • Why are you considering the demotion? Is it poor performance, restructuring, or by request? Do you have documentation to back up your reasoning? Having a clear, documented, legitimate business reason for the demotion is important.
  • If the demotion would be due to poor performance, have you tried training and coaching to help the employee improve? Have you documented these efforts? A good faith effort to help the employee improve can be helpful if they challenge the demotion.
  • How confident are you that a demotion would resolve the issue? If a demotion is not likely to be successful, would termination be more appropriate? If a demotion isn’t likely to solve the problem, another option may be preferable.
  • If their job duties would change, who will pick up the work the employee is no longer doing? Plan for this transition.
  • How would the demotion affect the employee’s pay and benefits? Be sure these changes are communicated.
  • Have you discussed the potential demotion with the employee, or will this come as a surprise to them? If a surprise, be prepared for a hard conversation.
  • Are you prepared to answer any questions or arguments the employee may have in response? Think ahead of time what the employee is likely to ask or say.
  • Have you done demotions in the past? Would this one be done for a similar reason and in a similar manner? Inconsistent practices can open you up to discrimination claims.

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We’ve just hired a remote employee who will be working in a different state. Do we need to make a new employee handbook?

You probably don’t need a whole new employee handbook, but you’ll certainly want to review the one you currently have in light of the laws in the state where the remote employee is located.

As you may know, you need to follow the laws in the state where the employee will be physically performing their work. States have a wide range of requirements regarding wages, breaks, leaves, and other employment matters, so it’s essential to learn about the requirements in the states where your remote employee will be working.

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How can we help our employees feel more comfortable providing feedback about their managers?

Employees are often uncomfortable providing feedback about their managers because they fear workplace tension or retaliation, they aren’t sure what to say, or they don’t believe anything will change. The following practices can help address these concerns:

  • Use a survey tool that will enable you to share results and feedback with managers anonymously. If you are unable to maintain anonymity by sharing the feedback directly with managers, have either the manager’s manager or someone outside of the department compile the feedback into themes to share.
  • Explain to employees how their anonymity is maintained. Insight into how the survey functions will help them feel more secure.
  • Ask questions that allow employees to give as much or as little information as they feel comfortable. Some employees may feel like writing paragraphs. Others may be inclined to provide a rating and nothing else.
  • Give employees time during the workday to complete the survey.
  • Hold managers accountable to changes they’ve committed to making.
  • Work towards creating a culture where giving and receiving candid feedback is the norm. Managers can contribute to this culture by owning up to their mistakes, acknowledging where they have room to grow, and accepting critical input graciously.
  • If retaliation occurs in response to sharing survey feedback, put an immediate stop to it.

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Do we need to pay our remote employees for a full day if they lose internet access for a few hours?

It depends on their status under the Fair Labor Standard Act (FLSA). Your exempt employees need to be paid their full salary for the day if they did any work before or after the outage (or both).Your nonexempt employees only need to be paid for time worked. So, if your employees didn’t do any other work while their internet was down, you don’t have to pay them for those hours. Note that any time they spent troubleshooting the connection, either by themselves or with your IT department, would likely qualify as work and should be paid.

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Does taking FMLA intermittently affect an employee’s full-time status or eligibility for health benefits?

No. The Family and Medical Leave Act (FMLA) is clear on this point. You must maintain the employee’s coverage under any group health plan with the same conditions as if the employee had not taken leave and been continuously working full time during the entire leave period. The specific coverage should also be maintained, both in terms of who is covered under the plan (e.g., employee, employee and spouse, employee and family) and what the coverage includes (e.g., medical, dental, vision).

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We have an exempt employee who is going to be working part-time hours indefinitely. Do we need to switch them to hourly nonexempt or can we simply reduce their salary while keeping them exempt?

You don’t necessarily need to change their classification, but the minimum salary for exempt employees—which will be determined by federal or state law—can’t be prorated based on the number of hours worked. This means you can only keep the employee as exempt if, after the salary reduction, they still make at least the applicable minimum salary. If their new pay is below the minimum for exemption, you’ll need to reclassify them as nonexempt and pay them based on the number of hours they work.

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