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The Resource Newsletter for Home and Hospice Care
December 2010
Home Care
The Law
LEGAL HOT TOPIC:
How to Get Paperwork from Your Employees
By Robert W. Markette, Jr., CHC*. This issue’s legal hot topic focuses
on employee paperwork. Your agency has likely encountered an
employee who turns in timesheets, charting and other paperwork late.
Some employees fail to turn in the paperwork at all. When confronted
by an employee who refuses to turn in paperwork, many agencies
withhold the employee’s paycheck until the required paperwork is
received. However, this practice violates federal wage and hour laws.
This article provides a brief summary of federal and state wage
payment laws and discusses some options available to an agency to
address the dilemma caused by not receiving paperwork from employees
on time.
pgs. 2-7
* This article was adapted from an article written by Caryn Beougher
Published by Indiana Association for Home and Hospice Care, Inc.
6320-G Rucker Road
Indianapolis, IN 46220
www.iahhc.org n (317) 775-6675
LEGAL HOT TOPIC/Robert W. Markette, Jr., CHC
How to Get Paperwork from
Your Employees
Don’t let frustration with tardy paperwork turn into an
illegal scenario. There are several legal ways to motivate
your employees to turn in paperwork on time.
Y
our agency has likely encountered an employee who turns in timesheets,
charting and other paperwork late. Some employees fail to turn in
the paperwork at all. When confronted by an employee who refuses to
turn in paperwork, many agencies withhold the employee’s paycheck until the
required paperwork is received. However, this practice violates federal wage
and hour laws.
Many agencies remain unaware of the risks associated with withholding a paycheck as a form of punishment. Both federal and state statutes regulate the
payment of wages, and dictate what amounts may be deducted from wages.
This article provides a brief summary of federal wage payment laws and discusses some options available to an agency to address the dilemma caused by
not receiving paperwork from employees on time. Although state laws also address this issue, the federal wage payment laws set a minimum standard that
makes this an issue in any state.
Wage Payment Laws
Both federal and state laws control the payment of wages to employees. The
federal Fair Labor Standards Act (FLSA) requires that covered employers pay
every employee overtime and at least minimum wage, unless that employee
falls within one of a limited list of exemptions.
An agency is subject to the FLSA if it grosses $500,000 or more and has at
least two employees who meet the commerce requirement. Employees meet
the commerce requirement if they are engaged in commerce, produce goods for
commerce, or handle, sell or work on goods that have moved across state lines.
Even if your agency does not meet this test, individual employees will be covered by the FLSA if they are engaged in commerce or produce goods for commerce. Given the wide scope of the FLSA, most agencies are covered and must
comply with the FLSA’s requirements.
The FLSA imposes penalties upon covered employers for failing to pay overtime and at least the federal minimum wage. Either the federal Department
of Labor or the individual employee can sue an employer to recover the unpaid
wages, liquidated damages, and civil monetary penalties. Liquidated damages
are an additional amount a court can award to the employee equal to double
the sum of the wages that should have been paid. In addition, the FLSA allows
the employee to recover attorney’s fees and the costs of the action. The fees
and costs involved in such a lawsuit will far exceed the unpaid wages represented by a single paycheck.
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Withholding the Paycheck
Many home health care employers will complain
that if the employee does not turn in her documentation, they do not know what the employee earned.
The Department of Labor (DOL) does not agree.
The Department of Labor expects you as the employer to know what hours your employees worked.
The Department of Labor would point to your
schedule and argue that you knew the employees
approximate hours, because you scheduled them
to work that week. You would be expected to assume they worked the scheduled shifts. You may
be required to estimate drive times, but you should
have a pretty good estimate of what the employee
earned.
The other common objection to paying an employee who had failed to turn in
her documentation is that the agency cannot get paid without the documentation. The agency will then say – ‘if I don’t get paid, how can I pay the employee?’
Again, the DOL disagrees. As an employer, you undertake the risk of getting
paid. A great example is General Motors. General Motors pays a lot of employees to build cars. GM has to pay those employees regardless of whether
the cars sell. Similarly, you must pay your employees for providing care to
your patients, even if you do not get paid for providing the care.
This leads many agencies to throw their hands up in the air in frustration.
But before you give up there are some ways other than withholding a paycheck, to get an employee to submit her paperwork.
Legal (and Illegal) Solutions
Given the DOL’s position on paychecks and discipline, how can an agency address the problems caused by an employee who does not turn in paperwork on
time? Some suggestions - and warnings - follow.
1. Hold the employee’s paycheck until the paperwork is received.
(Illegal - do not do it!)
Sounds like an effective punishment, right? Because the employee wants to
get paid, the employee will be motivated to properly complete and turn in all
the necessary forms on time.
Unfortunately, this practice is simply unlawful. As explained earlier in this
article, an employer faces significant financial liability, including civil penalties, if the employer fails to pay wages earned by an employee.
This is true even if the agency cannot obtain reimbursement for the services
provided through the employee. The wage payment laws are designed to
protect employees, not employers. Thus, an employer must pay its employees
whether or not the employer earns or loses money. Indeed, even filing bankruptcy cannot always relieve an employer from its duty to pay wages to its
employees.
Paying an employee later than the regular payday will not fix the problem
either. Delaying payment of wages is just as unlawful as failing to pay wages
to an employee entirely, and results in the same financial liability.
If your agency is refusing to pay employees until paperwork is received - stop!
Look for another solution to the problem.
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Regardless of the length of
pay period agreed upon by
the employer and
employee, all wages earned
must be paid to the
employee within 10 business
days after the end of the
pay period.
2. Reduce the employee’s hourly or per visit pay in the pay period for which
the employee failed to turn in the paperwork. (Very risky.)
If an agency cannot withhold a paycheck entirely or delay payment of wages,
what about paying an employee less if the paperwork is not turned in on time?
For example, an employee making $11.00 per hour performs his or her regularly scheduled services during the two-week pay period, but does not give the
appropriate paperwork to the employer for that same time period. As a result,
the employer drops the employee’s hourly wage from $11.00 to the minimum
wage of $7.25 for that pay period, and pays the employee only the reduced
amount.
Like in the first option, the employee will be motivated to properly complete
and turn in all the necessary forms on time in order to receive his or her usual
wage instead of minimum wage.
Though this practice of reducing the employee’s hourly wage or per visit pay
may help an employer to avoid liability for failing to pay wages, it would create new problems. The reduction in the hourly wage might be considered an
improper deduction.
The practice may even be interpreted as imposing and collecting a fine from an
employee’s wages, thereby subjecting the employer to a fine in addition to civil
liability in court.
Also, this option creates a problem for exempt employees. Many exemptions to
minimum wage and overtime pay require that an employee be paid on a salary
or fee basis. Such a reduction in pay will result in the determination that the
employee is not salaried, causing loss of exempt status. Indeed, if the employer’s policy makes the employee’s wages subject to reduction, the employee may
no longer be considered as paid on a salary basis regardless of whether the
employer actually makes the reduction.
This approach may be acceptable in some states, but due to the potential ramifications for salaried employees, this option is not
recommended. Instead, keep reading to learn about
less risky options.
An employer faces significant
financial liability, including
civil fines, if the employer
fails to pay wages earned by
an employee. Delaying
payment of wages is just as
unlawful.
3. Reduce the employee’s hourly or per visit wage
for future pay periods. (Probably legal, but risky.)
In this scenario, the employee receives full payment
for work already done. But as a punishment for failing to comply with the job requirement of completing
and turning in certain documentation, the employer
significantly lowers the employee’s hourly rate for
work performed in the future.
Though this practice may be lawful, generally it is
not a good idea to utilize wages as a disciplinary
measure. Government agencies tend to be suspicious of actions and policies that result in decreased
wages.
This approach also raises some other issues that warrant consideration. First,
the lowered hourly rate must still meet the minimum wage requirements for
non-exempt employees.
Second, this approach creates the same problems regarding exempt employees
as the second option. Those employees paid on a salary or fee basis may no
longer qualify for exemption from minimum wage and overtime.
Third, unless the policy is carefully communicated and implemented, the
reduction in wages could be interpreted as imposing and collecting a fine from
the employee’s wages.
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Finally, if an employee fails to turn in paperwork after his or her rate has already been reduced, the employer is left with no further recourse to encourage
the employee to timely turn in the necessary paperwork.
If a reduction of an employee’s wages is implemented as part of a well-documented discipline policy with the assistance of legal counsel familiar with
wage and hour laws, this might be a potential option for non-exempt employees of some agencies. However, due to the complexity and difficulty of safely
implementing such a policy, this option is still risky.
4. Make properly completed and promptly submitted paperwork a job
requirement subject to discipline. (Legal.)
A properly drafted, communicated, and implemented progressive discipline
policy can effectively address these problem employees. For example, the
policy would identify the failure to turn in necessary documentation on time
as an offense warranting discipline. The policy would then specify that if an
employee commits an offense like failing to turn
in certain paper work, the employee would receive
a written warning. If the employee receives three
written warnings, the employee will be terminated.
Of course, the best way to introduce a new or revised employment policy is to draft the policy first,
then inform the employees of the new policy and
allow time for feedback and questions before requiring employees to comply with the changes. This
process minimizes the risk of misunderstandings.
When properly implemented, a progressive disciplinary policy provides the employee with notice of
the deficiency in performance and a chance to correct the problem.
Giving employees the opportunity to improve performance benefits the employer in multiple ways.
First, a good employee can mend his or her ways and become an asset to the
employer. Second, employees will be more likely to perceive the employer as
treating them fairly. Third, following the procedure creates a written record of
the discipline problems, which can be very helpful in refuting discrimination
claims asserted by employees terminated by the employer.
A key component of a good discipline policy is ensuring that the employees
know what is expected of them. Create a written job description that includes
proper completion and submission of all necessary timekeeping, charting, or
billing paperwork as a requirement. Identify the necessary documents and
train employees to complete them fully and correctly. Specify when, where
and to whom the employees should submit each document. Remind employees
of these job requirements from time to time and consistently enforce the rules.
In this way, employees understand what is expected of them, and will be
aware of the possible consequences of their failure to meet those expectations.
In its policy, an agency should include a statement that an employee who fails
to timely turn in required paperwork would be held personally responsible
for any loss the agency incurs as a result of that failure. Whether or not the
agency ultimately recovers the loss from the employee, the possibility of this
punishment will be a powerful motivator for the agency’s employees to properly submit the paperwork.
5. Create a bonus system. (Legal.)
A progressive discipline policy works for most agencies. Still, it focuses on
discipline rather than rewarding good behavior. A better option would be to
reward those employees who do properly complete and turn in the necessary
paperwork. At times a system of rewards, rather than punishments, is more
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Though this practice of
reducing the employee’s
hourly wage or per visit pay
may be lawful,
generally it is not a good
idea to utilize wages as a
disciplinary measure.
Government agencies tend
to be suspicious of actions
and policies that result in
decreased wages.
effective.
Instead of giving an employee a high hourly wage and then reducing it to a
lower wage, an employer could start the employee at the lower hourly wage.
When the employee correctly and promptly completes and turns in all necessary documentation, the employer would award a bonus.
This system is effective only if the base hourly wage is low enough that the bonus becomes a big incentive. For example, an employer could pay an employee
$7.25 per hour as a base rate. Once the employee turns in all properly completed paperwork for the pay period, the employer would reward the employee
with a bonus of $3 per hour worked in the pay period. The bonus significantly
increases the employee’s hourly wage. Keep in mind these numbers were
chosen randomly as examples. Each agency will determine appropriate hourly
rates based upon its own special circumstances.
This bonus system does not run afoul the DOL requirements if employees
timely receive their wages and the base hourly wage for non-exempt employees is at least minimum wage. The agency also must remember to include the
bonus payments in its calculation of a non-exempt employee’s regular rate for
overtime pay purposes.
If the system is carefully established and managed, even salaried employees
can be offered bonuses for timely completing paperwork without risking the
employees’ exempt status. Awarding bonuses to exempt employees paid per
visit, however, should be avoided if the employee’s exemption depends upon
being paid on a fee basis.
Use of a bonus system motivates employees to submit the needed paperwork,
and allows employers to collect all documentation required to receive reimbursement for its services. Everyone wins.
6. Pay the employee for the hours worked. (Legal and required.)
By far the safest route to take is to pay the employees for the hours they work
at their standard hourly rate, regardless of whether they turn in the documentation requested by the agency.
A properly drafted,
communicated and
implemented policy would
identify the failure to turn in
necessary documentation on
time as an offense
warranting discipline.
Even if the employee fails to turn in a timesheet or
other record of the hours worked by the employee?
Yes! Again, the wage payment laws are designed to
protect employees from mistreatment by employers.
Unfortunately, the laws, regulations, and opinions
of the DOL are based upon a traditional workplace
environment where employees arrive at the place
of employment and work for a certain number of
hours, after which they leave the place of employment. In that situation, the employer has the
means to know the hours the employee has worked
by physically watching to ensure the employee attends work as scheduled.
Employment with a home health or home care
agency does not fit into this traditional scheme.
Employees often do not report to a centralized place
of business; instead they report directly to the client’s private home. However,
agencies are held to the same standards as more traditional employers and are
similarly expected to know when their employees are working.
Distasteful as it may be, the solution is to pay an employee for the hours the
employee is scheduled to work. To confirm that an employee truly works the
hours reported, consider requiring the patient or patient’s representative to
sign the timekeeping sheet.
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As unfair as it seems, paying an employee for hours
worked, even if you do not get paid, is a cost of doing business. The value of a single paycheck pales
in comparison with the thousands of dollars in
potential liability and attorney’s fees you will risk
incurring by holding an employee’s paycheck.
The Bottom Line
Methods may exist to address an employee’s failure
to turn in completed paperwork other than those
discussed here. In deciding which avenue to take,
the following basic considerations should be kept in
mind.
Consider the law
Ensure that your chosen procedure complies with
applicable federal, state, and even local laws. Consult legal counsel familiar
with wage and hour laws, and the unique issues inherent in homecare, prior
to implementing a new policy to make certain all legal aspects of the decision
have been addressed. Laws, regulations, and enforcement policies can change,
so agencies should be careful to stay abreast of the current requirements.
Clarify your position
Your agency’s expectations and requirements regarding paperwork should be
communicated and explained to all affected employees. Also, they should be
clearly documented as part of the agency’s written policies and procedures.
Employees can comply only with rules they know about and understand.
You should not only tell the employees what your expectations and requirements are regarding paperwork, but you should also explain to them why
these are your policies and procedures. You should not take for granted that
your employees understand the importance of the paperwork. Explain to your
employees that the agency cannot receive reimbursement for services provided
if it does not receive the properly completed paperwork from the employees.
Be sure to point out the paperwork does have to be completed to meet the
payer’s standards, or else it is the same as not having any documentation.
At times a system of rewards,
rather than punishments,
is more effective. Instead
of giving an employee a
high hourly wage and then
reducing it to a lower wage,
an employer could start the
employee at the lower
hourly wage. When the
employee correctly and
promptly completes and
turns in all necessary
documentation, the
employer would award a
bonus.
Consistently implement your policy
The agency’s policy should be consistently and fairly implemented. Make sure
all managers and supervisors routinely follow the written policy and procedures.
Taking these steps will improve your agency’s relationship with its employees, and can help to reduce the likelihood your agency will face governmental
investigation or a lawsuit or claim filed by a disgruntled employee. Just as
importantly, this process will increase the likelihood that your employees will
turn in the documentation on time.
&
Home Care
The Law
Published by the Indiana
Robert W. Markette, Jr., CHC is a partner at Gilliland & Markette LLP.
He can be reached at (317) 704-2400 or rmarkette@gillilandmarkette.com. Association for Home &
This column, which represents the author’s view and not necessarily those of IAHHC, is for
educational and informational purporses only, is not intended to be legal advice, and should not
be used for legal guidance or to resolve specific legal problems. In all cases, agencies should seek
legal advice applicable to their own specific circumstances.
Members are encourage to submit legal topics for future issues to the Indiana Association for
Home and Hospice Care, Inc.; 6320-G Rucker Road, Indianapolis, IN 46220.
Page 7 |
Hospice Care, Inc.
&
Home Care
The Law
Published by Indiana Association for
Home and Hospice Care, Inc.
6320-G Rucker Road
Indianapolis, IN 46220
www.iahhc.org n (317) 775-6675
How to Get Paperwork from Your Employees
Don’t let frustration with tardy paperwork turn into an illegal scenario.
There are several legal ways to motivate your employees to turn in
paperwork on time.
| Page 8