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• When reducing employees’ hours, keep in mind that many states have a work-sharing clause. In California, for example, if a worker’s wage is reduced by 10% or more, they can apply for unemployment and receive some benefits. – Mark Spring, partner, Carlton Disante & Freudenberger, LLP
• Before sending someone home early when business is slow, consider the regulations regarding the pay of hourly employees who report at their scheduled time but are sent home before their shifts end. It varies by state, but the general rule (and the case in California) is that employers must pay at least half of the employee’s scheduled shift, but not more than four hours. For example, if someone is scheduled for eight hours and they work for 30 minutes, they must be paid for four hours. One way to minimize this reporting-pay issue is to schedule shorter shifts. – Tiffanny Brosnan, partner, Snell & Wilmer, LLP
• Be careful when it comes to exempt employees. Typically, there is a salary threshold for employees who are exempt from overtime (management). They need to maintain a threshold pay that entitles them to that exemption. Don’t do anything to risk that, otherwise you’ll have to pay overtime. – Tiffanny Brosnan
• If you do provide severance and ask people to waive their rights to legal action against you by signing a release, there are some state-specific requirements for this waiver and release. Be sure to execute accordingly. – Diane Pfadenhauer, president, Employment Practices Advisors
• Understand and comply with your state’s regulations concerning what needs to happen on the last day of work. In particular, don’t make mistakes in how and when a terminated employee must be paid. For example, in California, you must have the final check for the employee when they leave. – Tiffanny Brosnan
• There is a federal requirement as to the notification you must provide to employees being laid off – the WARN Act – which usually impacts large businesses and massive layoffs. But there are also state-specific notification requirements, depending on the size of the company, number of layoffs, and number of locations. – Diane Pfadenhauer
• Regarding termination in general, employers aren’t required to have backup documentation, but if there is ever litigation, it helps to have support documents. Warnings, notices, and terminations can be done verbally – but if that’s the case, I recommend at least putting notes in the employee’s file. – Tiffanny Brosnan
