Another update from the Jungle….

Stan’s been in business for five years. His employees are 20-somethings who like to work collaboratively and take lots of coffee breaks.  Stan doesn’t understand why they want to live on healthy junk like kale while slurping gallons of coffee, but they’re happy.  As long as the work is done and clients are happy, Stan is happy.  

He never paid much attention to labor laws. He pays each worker a fixed amount each week and they work at their own pace.  Ashley seems to get her best ideas at 2 a.m.  Ryan and Carson work best as a team but need supervision to stay on task. His employees work at home, in coffee shops, and occasionally even show up to work in the office.

Then he hears about the new overtime rules that are effective on December 1st.  Stan rapidly reviews his employees.  A quick estimate demonstrates that most of his workers earn below the new salary threshold. Stan’s bottom line can’t take across the board salary increases. Besides, many of his workers couldn’t meet the duties test to be exempt.

That means most of his employees will need to be paid overtime if they work more than 40 hours a week. Stan mentally reviews his staff. None of them has ever completed a time sheet. Stan calls an “all hands” meeting like he does when a client has a short deadline.

He explains to his employees that they need to begin keeping track of their time. He also says that any overtime must be pre-approved. His office manager demonstrates how to use the new time-tracking software. Everyone nods like they understand.

In the first week, only two employees actually record their time each day. Ashley complains that she can’t remember to “clock in” when an idea strikes her at 2 in the morning. Ryan and Carson think they’re too valuable to the company to be penalized and they ignore the software completely.  After a few weeks, Stan is furious.

What should Stan do next?

1. He can send a screeching email every Monday morning listing the offenders from the previous week.
2. He can assign all the worst performers to the most annoying client where they will all flame out together.   
3. He can follow a progressive discipline policy that inexorably clears out the people who can’t or won’t follow the rules.    

In the actual situation, the employer used a combination of the options outlined above to ensure compliance with the law. A few creative people were lost but the majority stayed and the company continued to grow successfully.    

If your company is struggling with HR issues, Corporate Compliance Risk Advisor can help you create HR policies that are appropriate for your company’s size and then serve as a resource to your staff as the policies are implemented.

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