Are PTO Plans Right for Your Organization?

Consolidated paid time off (PTO) plans, or PTO banks, give employees
flexibility in using their paid leave and are generally easy to implement.
Use the guidelines below to determine if a PTO plan is right for your
organization.
What happens under your vacation or sick leave policy if an employee
needs to stay home with a sick child? Or, what do you do if an employee
wants to take two days off to attend a nonwork-related seminar?

Under a traditional policy that separates vacation and sick days,
employees often feel as if they are forced to fake an illness to avoid
using their vacation allowance. With a paid time off (PTO) bank, you can
give employees a set number of paid days a year and then let them
choose how the days will be used.

Learn more about PTO plans.

Pregnancy Leave When Not Covered by FMLA (Q&A)

Do you know what your obligations are to a pregnant employee who is
not covered by the FMLA? Find out what steps you should take to
prevent pregnancy discrimination.Q: If an employee needs leave for pregnancy-related issues, do we
have to reinstate her after the leave? Do we have to provide a certain
number of weeks of leave? We have 45 employees and are not covered
by the FMLA.

A: If your organization is not covered by the Family and Medical
Leave Act (FMLA) or if an employee is not eligible for FMLA leave, then
you still must comply with the Pregnancy Discrimination Act (PDA),
any internal policies, and any state laws requiring pregnancy leaves of
absence.

(The FMLA generally applies to employers with 50 or more employees
and all public agencies and schools, and provides leave and
reinstatement rights for various family and medical reasons, including
pregnancy. (Click to download a free FMLA Checklist.)
An eligible employee is one who: (1) has worked for the employer for at
least 12 months (not necessarily consecutively); (2) has worked for the
employer for at least 1,250 hours in the previous 12 months; and (3) works
at or is assigned to a worksite that has 50 or more employees or which is
within 75 miles of employer worksites that taken together have a total
of 50 or more employees.)

The PDA, found at 42 U.S.C. §2000e(k), amended Title VII of the Civil
Rights Act to prohibit discrimination based on pregnancy. It applies to
employers with 15 or more employees and requires employers to treat
women affected by pregnancy, childbirth, or related medical conditions
the same as employees who are on leave for other temporary medical
disabilities. Thus, because the PDA is an antidiscrimination law rather
than a law mandating leave, it does not require covered employers to
grant pregnancy leaves. Instead, it only entitles pregnant employees to
the same leave and benefits granted to nonpregnant employees with
other temporary medical disabilities.

So, if your organization regularly grants leaves for other temporary
medical disabilities and guarantees reinstatement, then you should treat
pregnant employees in the same manner. As explained in the Equal
Employment Opportunity Commission (EEOC) guidelines interpreting the
PDA, found in 29 C.F.R. §1604.10(b), any policies relating to the
commencement and duration of leave, the availability of leave
extensions, the accrual during leave of seniority and other accrued
benefits and privileges, insurance coverage, and reinstatement after
leave must apply equally to pregnancy and other disabilities.

Although you may not treat pregnant employees differently if the
differences affect them adversely compared to others with temporary
medical conditions, you may be able to treat them more favorably. In the
Supreme Court's ruling in California Fed. Sav. & Loan Ass'n v. Guerra,
479 U.S. 272 (1987), the Court upheld a California statute requiring
employers to provide female employees an unpaid leave for pregnancy
disability and to reinstate those employees when they are able to return
to work unless the job is no longer available. The Court held that a state
could mandate the provision of a benefit to pregnant employees that is
not granted to other disabled employees. This decision appears to allow
employers to give pregnant employees greater leave flexibility than is
given to other temporarily disabled employees.

You also should check state law for any additional pregnancy leave
obligations. Some states have laws guaranteeing pregnant employees
leaves and reinstatement rights. For example, the California statute,
discussed above and validated by the Supreme Court, requires
employers with five or more employees to provide female employees
with up to four months of leave in connection with a period of disability
resulting from pregnancy, childbirth, or related medical conditions.

Health Coverage Obligations under the FMLA

Untangling the Family and Medical Leave Act (FMLA) health care
coverage requirements can be a daunting task. What coverage must be
maintained when an employee takes leave and what coverage is the
employee entitled to upon reinstatement? Who pays the premium is
another tricky area.

Although the FMLA allows you to terminate insurance coverage for
nonpayment of premiums or permits your employee to drop the
insurance while on unpaid leave, either scenario could cause problems
when the employee returns to work and must be restored to full
coverage. A review of FMLA guidelines will help you make the right
decisions about maintaining health care benefits and paying premiums
when an employee requests FMLA leave. (Click to download a free FMLA Checklist.)FMLA Health Care Coverage Guidelines

The FMLA, which requires covered employers to provide up to 12
workweeks of leave to eligible employees for various family and medical
reasons, has specific requirements about continuation of health care
coverage when leave is taken and about how you should handle
payment of premiums. In addition, upon return to work, the employee
must be fully restored to health care coverage subject to any changes
that may have occurred. Each of these topics is addressed, below.

-- Continuation of coverage. If you provide health care benefits
under a group health plan, you must provide the same health benefits
during an eligible employee's FMLA leave as would have been provided
if the employee worked throughout the leave. (If you do not provide
insurance before the leave is taken, the FMLA does not require you to
provide it during the leave.) In addition, your obligation to continue
health benefits ends when the employee notifies you that he will not
return to work from the leave. However, the notification must be
unequivocal in order to discontinue health benefits. If the employee
indicates he may not be able to return to work, but wants to, you must
continue to provide health benefits for the duration of the FMLA leave.

Note, too, that employees on unpaid leave may elect to discontinue
health insurance coverage (unless the employer pays the employee's
share of premiums) during the unpaid period of FMLA leave. However,
these employees still must be reinstated to the same insurance benefits
when they return to work.

-- Payment of premiums. The FMLA requires you to pay the
premium on health care coverage on the same terms as you paid the
premium before the employee took leave, paid or unpaid. Therefore, if
you paid 80% of the premium before the employee took leave, and the
employee paid 20%, you must continue to pay at least 80% of the
premium after the employee takes leave. You also may be more
generous, for example by paying the employee's share.

-- Reinstatement of coverage upon return to work. Upon return,
the employee must be restored to the same health benefits coverage as
provided prior to leave, subject to any changes in benefit levels that may
have occurred during the leave. A returning employee may not be
required to meet any qualification requirements normally imposed for
entry or reentry into the group health plan, including any preexisting
condition waiting period or medical examination requirements.


Make sure your company has the HR Policies needed to justify your HR decisions. Furthermore, nothing can replace old fashioned employee training and compliance documentation.

Exempt Employees Performing Nonexempt Work Q&A

Q: We have an exempt employee (i.e., exempt from the minimum wage
and overtime provisions of the Fair Labor Standards Act (FLSA)) who
would like to work in our call center on the weekends doing nonexempt
work. Can we pay her on an hourly basis for the nonexempt work, in
addition to her regular salary, without affecting her exempt status?

A: As a general rule, an employee is considered to be exempt if she is
paid on a salary basis and her job duties meet the criteria for the
administrative, executive, or professional exemptions. Thus, your
questions raise two related issues: (1) whether the exempt employee
would be performing more nonexempt work than is consistent with her
exempt status; and (2) whether she can still be considered paid on a
"salary basis" under the FLSA if you pay her additional hourly
compensation.

Regarding the first issue, the FLSA salary basis test for white-collar
exemptions requires that most exempt employees be paid a salary of at
least $455 per week and that their "primary duty" must consist of the
performance of exempt work. (Download free report: "FLSA
Exemption Regulations: Understanding The Issues.")
The FLSA regulations, found in 29 C.F.R. §541.700(b), indicate that employees
who normally spend more than 50% of their time performing exempt
work will satisfy the primary duty requirement. However, time alone is
not the sole test, and employees who spend less than 50% of their time
on exempt duties still may meet the primary duty standard if the other
factors support the exemption.

Although these regulations focus on nonexempt work related to the
exempt employee's regular job, the same analysis can be applied when
the employee works in a second, unrelated job. Thus, as long as the
exempt employee devotes over 50% of all of her working time to exempt
job duties, including the time spent in the call center doing nonexempt
work, she should continue to meet that exemption criterion.

The second issue raises the question of whether extra compensation
paid in addition to the exempt employee's salary will jeopardize the
exempt status. The FLSA regulations define "salary basis" as payment
on a weekly or less frequent basis of a predetermined amount
constituting all or part of compensation, without reductions for variations
in the quality or quantity of the work performed.

The regulations specifically allow employers to provide exempt
employees extra compensation without jeopardizing the exemption or
violating the salary basis requirement. According to the regulations,
found in 29 C.F.R. §541.604(a), if the exempt employee is guaranteed a
minimum weekly payment of at least $455, she also may be paid a
commission on sales or a percentage of profits or sales, or even
additional compensation based on hours worked beyond the normal
workweek. This additional compensation can be paid on any basis,
including a flat sum, bonus payment, straight-time hourly amount, time
and one-half, or any other basis, including paid time-off.

Note that this reference to extra payments calculated on an hourly basis
was added to the regulations in August 2004. (Download free report: "FLSA
Exemption Regulations: Understanding The Issues.") The
old regulations also allowed for extra compensation in the form of
commissions and bonuses, but did not address whether employers could
pay exempt employees extra amounts based on hours worked. Some
courts, and the Department of Labor (DOL) in nonbinding opinion letters,
have traditionally allowed employers to pay additional compensation
calculated on hours worked without affecting the exempt status. The
DOL formalized this position in the 2004 revisions.

Training Resources:
* Free HR Policies: Download free company policies for HR, Employment law compliance
* Employee Handbook: Easily create employee policies using Employee Handbook templates.