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Ask the HR Expert: Benefits & Compensation

Posted by NEHRA  June 8, 2009 09:00 AM

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Q. My company always closes early (2:00 pm) on the day before a holiday. It is such a standard/expected “perk” that most people rely on, and our Chief People Officer even sent an email at the beginning of the season to remind people. Our employees often ask the question, "If I was planning on taking PTO that day, would I charge 4 hours or 8 hours?" We always used to tell them they should only charge 4 hours of PTO time, since everyone is being let off early and enjoying a half day. Now, however, we have a few new HR people who think that this wrong and changing the policy. They are telling people they must charge all 8 hours. This just doesn't sound right to me that we are not consistently applying a perk to all employees. What is the correct way to handle this situation?

A. The answer to your question depends on whether your office is officially closed for business at 2 pm the day before a holiday, or whether the office is still open and only non-essential employees can leave early. In most cases, the “perk” you are describing, applies to most, but not all employees, and the office remains open for business, requiring critical workers (e.g., receptionists, those in operations, those working on time-sensitive projects) to remain at the office to contend with customers, vendors, and the like. In this case, where the office is still officially open, you are required to charge for 8 hours of PTO time. If, on the other hand, the office closes formally, as if it is a holiday, and all workers leave and no business is being conducted, then you would be correct in only charging for 4 hours of PTO time.

— JULIE WEBBER, Policy Specialist at the Sloan Work and Family Research Network (on behalf of HR Expert JUDI CASEY)

Q. After 25 years with a non-profit, I am ready to retire. As a non-profit, my organization says there are no assurances of future resources. There is a board policy that proposed a retirement plan at 80% of current salary. What or how should I approach this delicate situation?

A. This is indeed a delicate and sensitive situation, especially as our country is entrenched in a deep economic recession. Unfortunately, additional information is needed to answer your query properly. Have you shared with the Board that you are planning on retiring yet? What did those conversations look like and did they result in any informal or formal plans? When was the board policy regarding the retirement plan proposed? Was the policy, in fact, implemented? Do you have a separate binding contract that includes language about retirement?

It seems to me that if you have not shared your plans for retiring, you should follow standard procedure for such discussions, as soon as you are ready to do so. Ultimately, you need to talk about timelines and benefits. Of course, your dedicated 25 years of service will play a large part in the discussion, however, as you pointed out, the non-profit status of your organization, as well as the economic uncertainty facing our country, will also play a part in the outcome.

— JULIE WEBBER, Policy Specialist at the Sloan Work and Family Research Network (on behalf of HR Expert JUDI CASEY)

Q. What is customary for US based small and medium companies with offices in other countries regarding benefits? Do they attempt to make employees equal across national boundaries (same health benefits, same disability income benefits, etc) or do they select a schedule of benefits by what is customary in the individual company - even though it may be substantially different from the US HQ schedule of benefits?

A. Generally, small and medium companies design their non-US benefit programs based on the regulatory requirements and customs of the country they are operating in while still considering their corporate benefits philosophy of their US Headquarters.

Compliance of local regulations on mandatory benefit programs is the first consideration and most important issue facing employers operating satellite offices internationally. Laws and regulations may differ substantially by country, are evolving and often do not correlate directly to the US employer’s benefit program. In addition, employers often adopt supplementary benefit programs as a key tool to attract and retain talents with plan designs often following the typical local practice in their particular industry and group size. Lastly, the employer should evaluate how their non-US plans fit in their corporate philosophy and overall benefit strategy. By focusing on regulatory compliance, local customs, and a holistic approach to the corporate vision, the employer can create cohesive multinational benefit programs.


Q. Our corporation currently has a sick time policy that does not state any limit in its handbook-although it does state that under managers’ discretion sick time may be cut off if deemed abuse. My question is since each store within our company is under the corporate umbrella’s policy, does it have to be consistent from store to store and if not can sick time be arbitrarily cut off for any employee in one particular store if the manager says you have used too much?

A. When dealing with a company that has many stores operating under a corporate umbrella policy and procedures should be consistent from store to store. The corporate handbook is the first and final resource for both management and employees regarding the sick time policy and should set the standard. The current sick time policy leaves the determination of time off to individual store managers and creates legal exposure for the company in two ways.

First, it increases exposure for EEO discrimination claims. By leaving the standard up to the managers, the company is giving free reign to managers to exercise their powers in a discriminatory manner. Even if the manager is not deliberately discriminatory, the lack of a standard may lead to arbitrary or inconsistent enforcement which may appear discriminatory or make it difficult to defend against a charge of discrimination.

Second, it opens up possible exposure under HIPAA and/or the Americans with Disabilities Act. The policy forces managers to decide when the sick time is being abused, which requires them to make decisions regarding the employee's health, medical status, and possible treatment. Managers would need to request private medical information, which is likely protected under HIPAA, to make these determinations. Even if they could legitimately request the details, few managers are qualified to make assessments about an employee's health and forcing them to do so puts the organization at risk.

A well-defined corporate sick time off policy is essential to ensure non-discretionary implementation throughout the organization and to limit legal exposure.


Q. I am currently out on medical leave from my job, and just recently was approved for short term disability. Up until this point my workplace was compensating me by exhausting both my sick and vacation time. I informed my workplace I was approved for short term disability coverage, but they said they still had to exhaust my vacation time for the duration of my absence. I was under the assumption that once the Short Term Disability was approved that my company would then stop using up my vacation time in addition to the STD pay, but they say they cannot do so. Is this legal? Please advise.

A. Integration of the short term disability policy and medical leave policy is governed by your company’s leave policy. It is not a question of legality but Company policy.

The short term disability policy should be reviewed to determine:
• When short-term disability payments commence (for example: after vacation time is exhausted)
• Coordination of vacation benefits and short-term disability benefits

Option 1 - Short-term disability policies may contain a provision regarding deductible sources of income. Vacation time may be included as deductible source, reducing the short-term disability payment amount.

Option 2 - Vacation time may be used to supplements the disability payment to achieve 100% pay.

PEGGY SHEEDY (with assistance from Megan Baxter, Consultant in the Health & Benefits Practice at Aon Consulting)

Q. How do I approach my manager/HR regarding an issue of equal pay between a new employee with the same job description making more money than an experienced employee?

A. There are a number of factors that go into the determination of an employee's pay (even those with the same job description). These differentiating factors include experience (gained through previous employment), skill, job performance, education and training, etc. Therefore, it is good to have a thorough understanding of the differences in these factors that may not be clearly articulated in the job description.

In addition, it is often helpful to have an understanding of the current market pay for a particular job. If you are a member of NEHRA, you may want to access the salary tool on to review data on current market pay for a variety of jobs.

When discussing pay with your manager it is good to understand that many considerations go into a pay decision. Having this grounding will help you to have a better perspective for a more productive discussion.


Q. If you decide to use "PTO" for vacation, personal, sick, etc., how do you distinguish how much to be paid to an employee once they are terminated? Also, is a “use use or lose it” policy, whereby you must use your PTO time within a calendar year or you lose it (with the potential for a certain # of days that can carry over), something that is seen as a “best practice” policy now?

A. In most cases, if a company is using a Paid Time Off (PTO) bank for non-Holiday time off (e.g., vacation, sick, etc.) then the company must pay out the for the time that has been earned (accrued) but not yet used upon termination of employment. If your company operates in Massachusetts, General Law Chapter 149: Section 148 governs what must be paid to an employee upon termination:

Because of the concern of carrying an increasing liability for unpaid time off from year to year, it is fairly common for companies to limit or "cap" the amount of accrued PTO that can be carried over. To avoid this issue, many companies encourage their employees to use their accumulated PTO by the end of the year (or within the first 90 days of the new year). However, to alleviate potential employee relations and legal issues, many companies find it preferable to pay out the monetary value of unused PTO at the end of the year.

As always, we encourage you to seek the opinion of your legal counsel when determining the applicability of these policies for your organization.


Q. What is the standard for paying holiday pay to employees on unpaid FMLA? Is holiday pay required to be paid while on FMLA, since we should be treating them as if they were actively working?
A. This practice may vary from company to company, and is usually outlined in the Employee Handbook. A common approach is to consider whether the employees is on “paid” FMLA or “unpaid” FMLA. If an employee is on paid FMLA (which may include disability pay, sick time, personal days, and vacation time), generally the company considers the employee to be eligible for payment of the holiday. Likewise, if the employee is on unpaid FMLA leave, they would usually not qualify for holiday pay for any holidays that occur during the unpaid FMLA period. Bear in mind that you’d want to also consider any other local/state requirements surrounding holiday pay as it relates to a leave of absence, so it’s recommended that you review your policy with an employment attorney to ensure that your practice meets both federal and state requirements.

(on behalf of HR Expert BILL COLEMAN)

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About NEHRA - The Voice of HR Featuring articles and resources for Human Resources / HR professional and hiring managers from the Northeast Human Resources Association (NEHRA).

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