We know…. You’re a small company with a lot of responsibilities and expenses. There is no way you could offer Paid Time Off to your staff. But what if you could offer PTO to your employees at the same time you reduce unplanned absences and increased your benefit offerings in the eyes of your employees? Many savvy California employers are considering offering PTO instead of sick leave. Before making this decision, make sure you understand the advantages and disadvantages to each approach and determine which plan is best for your business.
Did you know that since 2015 nearly all businesses in the state of California are required to provide paid sick leave (PSL) to employees? In addition to the California requirements, over 20 cities and local ordinances (including the city of San Diego) have their own sick requirements which often provide a greater benefit than the California plan. Therefore, if you have employees scattered across California you may have to understand, provide and administer several different sick leave policies. The sick leave requirement allows companies to meet the sick requirements through their own sick or PTO plan as long as that plan meets all the requirements of California’s Paid Sick Leave. A few of those requirements include posting and notification requirements, properly calculating and accruing or granting the leave, and other components of implementation.
Sick calls are particularly challenging in a small businesses with limited staff. As California employees have gotten used to seeing sick leave on their paystubs (a requirement of the PSL law), employers have started to notice a disturbing trend - The frequency of sick calls has increased! Sick leave is use it or lose it and employees realize if they don’t take it they won’t be able to bank the time for future sick needs or be cashed out upon termination. This tends to reward poor employees (those willing to call in sick when they are not sick) and does nothing to reward those who would never call in sick unless they were truly ill.
Why consider offering PTO instead of sick? Employees tend to prefer Paid Time Off and see it as a benefit offering vs. a statutory mandated requirement. PTO provides employees with one bank for vacation, sick or personal time and allows them to use it as appropriate for their circumstances. Employees enjoy the flexibility in how the time is spent and prefer not having to call in “sick” when they are not. For employees that are never sick, they can use the time for vacation or personal usage. For those employers who had typically offered sick, vacation and personal time, it allows them the convenience of managing only 1 leave bank. Also, for most employers it tends to reduce the amount of unexpected sick calls since employees can request PTO ahead of time instead of feigning illness. One important drawback to PTO is that it must be paid out at termination, unlike paid sick leave. Also, you must allow the maximum PTO bank to be 1.5X the employees’ annual accrual rate.
Offering PTO in lieu of sick is not for every business. If you do elect to offer PTO consider if the accrual method (when employees earn a small chunk of PTO each payroll instead of being granted the full amount when they become eligible) or grant method (providing the full amount by the required date) makes more sense for your business. It’s also important to cap the maximum PTO employees can have in their bank to limit your liability when an employee terminates employment. No matter which method you choose make sure you a strong payroll partner to help you track and accrue the leave as well as a written company policy in place that is clearly communicated to your employees. There are many requirements and nuances to the sick leave and PTO requirements so be sure to get help from a professional before you implement a new policy. Check out our cheat sheet at http://www.northcountyhr.com/resources.html to see more of the advantages and disadvantages of each type of plan.
You spend a considerable amount of time trying to find just the right candidate for the job. You filter through applications and resumes, conduct interviews, and way pros and cons. You’ve offered the job contingent on passing the background check. Just when you think you’re ready to hire the perfect candidate, a red flag goes up upon receiving the background check results. What do you do now? Legally there are steps you must take if you are considering rescinding the job offer due to a criminal conviction. Background checks, including criminal convictions, are regulated by the FCRA (Federal Credit Reporting Act). The intent of the FCRA is to provide and fair and accurate summary of this data for consumers and applicants.
Let’s say you discover a criminal conviction. Before you decide to deny an applicant, you must determine how that conviction affects the job, known as an “individualized assessment”. The intent of the individualized assessment is to determine if the conviction has a direct and adverse relationship with the specific job duties that justifies the employer denying employment. What is the nature and gravity of the offense? How long ago did it happen? Was it job-related or would it impact the specific job you are offering the candidate? For example, it may not make sense to decline a candidate with a felony DUI conviction if their role in the company doesn’t include any driving activities. However, you could easily justify denying a candidate with an embezzlement conviction for a job as your CFO. This is also the time to engage with the applicant to hear their side of the story. There may have been extenuating circumstances or a narrative of personal growth and rehabilitation since the conviction.
After this consideration, if you still feel the conviction may be a deal-breaker, the next step is the notice requirement. There are two parts. The first notice, the pre-adverse action notice, is a letter stating that the background check results are being reviewed and a decision is pending. Include a copy of the report and a “summary of your rights under the fair credit reporting agency act”, informing them that they have an opportunity to respond and the deadline. Keep copies of everything. Then wait at least five business days for a response. This gives the applicant a chance to explain or dispute the findings. You must consider any response before making a final decision. If they notify you within those five days that they are collecting evidence or working on their response, you must give them five additional days.
So, now it’s been five days since the first notice letter was sent. Either there has been no response, or you have received an explanation from the applicant arguing his case. You considered all the available information and have decided that you still want to rescind the job offer. Now you must send the second notice, the Adverse Action Notice. This must specifically express denial of employment and that it was due (or partially due) to the results of the background check. You should also include the contact information for the vendor that performed the background check on your behalf. Include procedures for challenging the decision or requesting reconsideration and notice of the right to file a complaint with the California Department of Fair Employment and Housing. Keep copies of everything.
It would be a shame to lose a prospective applicant due to an unfortunate blemish on a background check. We would all love to be the giver of second chances, but sometimes it isn’t a sensible decision for your business. By making sure you follow the Fair Credit and Report Act, you can protect yourself from legal action and know that you’ve done the right thing.
Laura Henderson is a Human Resources professional with over 20 years experience working with a variety of businesses.