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Ask the HR Expert: Benefits & Compensation

Posted by NEHRA  December 7, 2009 09:00 AM

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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. While the law generally does not require that employees on FMLA be provided holiday pay, the law does dictate that those employees on FMLA leave cannot be treated differently than employees on other kinds of leave, including on vacation or non-FMLA type leaves. Hence, an employer is free to establish its own policy concerning the provision or non-provision of benefits for employees on leave, but must uniformly apply it to all leave-taking employees.

As the Department of Labor outlines in 29 CFR 825.209 (at: http://www.dol.gov/dol/allcfr/esa/title_29/part_825/29CFR825.209.htm) :

“An employee’s entitlement to benefits other than group health benefits during a period of FMLA leave (e.g., holiday pay) is to be determined by the employer’s established policy for providing such benefits when the employee is on other forms of leave (paid or unpaid as appropriate).”

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

Q. My employer in Massachusetts has a "use it or lose it" policy for vacation time. I have four weeks of earned vacation and I have submitted for the time but they will not allow me to take it. They state too many employees are taking time off in the next four months and we need employees at work. My question is do they have the right to not allow me to take the vacation time and force me to forfeit my compensation for this time?

A. It is my understanding that your employer cannot refuse your vacation request AND also fail to compensate you for your time, especially where it appears you were not given a reasonable opportunity to use the accumulated vacation time.

Employers in Massachusetts are not required to offer vacation to their employees, however, if they do offer it as part of the employment contract, they generally must compensate you for it with time or money. Although employers do have wide discretion to approve or deny vacation requests, in Massachusetts, where the Attorney General’s Office and the Supreme Judicial Court have determined that vacation time is considered wages, employers usually must pay their employees “wages” for vacation time that was not able to be used.

Of course, your situation is a little different than that of many other Massachusetts employees, where your employer has established a “use it or lose it” policy. Due to this kind of policy, your employer might well argue that it is legitimate for the company not to pay you or give you your vacation time, where you had adequate prior notice of the policy. Still, these types of policies are likely not enforceable if the employer has not given its employees a reasonable opportunity to use the accumulated vacation time; denying you vacation time during 4 months of the year (1/3 of the year) seems extreme, unless you were clearly told earlier that you needed to take the vacation at a proscribed period of time.

Regarding your specific situation and whether you have a right to collect monetary compensation for your unused vacation time (which I think you do), I would like to know whether your employer gave you notice as to when you needed to take vacation. In addition, I would like to know if your employer has an established, written policy concerning the specific time of year when you can take the vacation. Further, I would want to delve into how your employer determines who can and cannot take vacations and when, where employers are required by law to treat employees uniformly and equitably.

— JULIE SCHWARTZ WEBBER, J.D. - 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. Based on our experience, most U.S. based companies with operations in other countries provide a benefits package that is best aligned with common practice and the regulatory environment in each specific country. Common practice can vary widely by individual country. For instance, in some European countries, it may be common to provide management-level employees with a company car or auto allowance. When competing for talent, the company will often feel obligated to match each country's common benefit practice. From a regulatory perspective, certain benefits may already be provided by the government (e.g., healthcare coverage). In these situations for example, a company may not have to provide a health insurance benefit, or they may offer a "premium" plan that provides coverage over-and-above the government sponsored benefit.

However, it is always advisable for your company to develop a benefits strategy (including guiding principles). Your strategy will help you to guide your approach to delivering benefits across the countries where you operate. To align with your company's financial goals, your benefits strategy should generally reflect your targeted investment in benefits (e.g, "we target the median value of benefits of our peer group in the countries where we operate"). A benefits strategy will enable you to monitor your benefits program over time and guide any adjustments you need to make to stay competitive.

JEFF ARNOLD

Q. Can you suggest a sample of the verbiage HR should supply to the managers of associates who are in jobs that we have determined need to be non-exempt and were classified as exempt? I have drafted a letter for the associate and manager to sign acknowledging of the FLSA status change and to report the number or hours of overtime over the last two years that we will be paying them for. Any pitfalls to avoid in the conversation about changes in FLSA status?

A. As you know, this is a very sensitive area from both a legal and employee relations perspective. As such, we would recommend that you work closely with your legal counsel in developing the "talking points" for managers with reclassified associates. That said, there are a couple of resources that we would recommend.

If you are a member of the Northeast Human Resources Association (NEHRA), you will have access to the CCH Legal Database from the NEHRA website (www.nehra.com). CCH provides access to a variety of forms, policies and checklists that you can reference to develop the verbiage for managers. The CCH Database can be found under the "Resources & Information" tab on the NEHRA website. From there, select the "Tools" tab and then select "Forms, Policies and Checklists" from the HR Tools section of the page. You will be able to enter search terms such as "FLSA", "exempt" and "reclassify" to focus the resources available.

If you are a member of the Society for Human Resource Management (SHRM), you will want to review some of the resources offered on the SHRM website. Specifically, the Templates and Tools section offers information that may be relevant for your specific situation. If you have a login to www.shrm.org, you can find the information at:
http://www.shrm.org/TemplatesTools/Samples/HRForms/Articles/Pages/CMS_009384.aspx.

JEFF ARNOLD

Q. Can an employee on company approved long-term disability be terminated while under doctor's care? Does the company have to provide health insurance to employee while on approved long-term disability even if employee has been terminated but is still receiving long-term disability payment through company?

A. Yes. An employee who is disabled and receiving benefits under the company sponsored LTD plan can be terminated in accordance with company policy. In addition, an employer should ensure that the employee’s termination does not violate any federal regulations (e.g., FMLA, ADA). Once terminated, the former employee will be eligible to continue medical benefits under COBRA. The employer is not obligated to provide subsidized health insurance after termination.

PEGGY SHEEDY

Q. If FMLA has been exhausted, and employee is still out on Short Term Disability, is the Employer required to provide the same position when employee returns to work after Short Term Disability expires, and the employee has gone beyond the 12 weeks of FMLA?

A.
If FMLA has been exhausted, and employee is still out on Short Term Disability, the employer is NOT required to provide the same position when the employee returns to work after Short Term Disability expires, provided employer's leave policy is in agreement.

PEGGY SHEEDY

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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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