&Home Care The Law

The Resource Newsletter for Home and Hospice Care December 2010

LEGAL HOT TOPIC:How to Get Paperwork from Your EmployeesBy 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 46220www.iahhc.org n (317) 775-6675

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LEGAL HOT TOPIC/Robert W. Markette, Jr., CHC

How to Get Paperwork from Your EmployeesDon’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.

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.

Many agencies remain unaware of the risks associated with withholding a pay-check 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 dis-cusses some options available to an agency to address the dilemma caused by not receiving paperwork from employees on time. Although state laws also ad-dress this issue, the federal wage payment laws set a minimum standard that makes this an issue in any state.

Wage Payment LawsBoth 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 cov-ered by the FLSA if they are engaged in commerce or produce goods for com-merce. 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 over-time 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 repre-sented by a single paycheck.

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Withholding the PaycheckMany home health care employers will complain that if the employee does not turn in her documen-tation, they do not know what the employee earned. The Department of Labor (DOL) does not agree. The Department of Labor expects you as the em-ployer 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 as-sume 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 documenta-tion. The agency will then say – ‘if I don’t get paid, how can I pay the employ-ee?’

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 em-ployees 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 pay-check, to get an employee to submit her paperwork.

Legal (and Illegal) SolutionsGiven the DOL’s position on paychecks and discipline, how can an agency ad-dress 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 penal-ties, 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 bank-ruptcy 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.

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.

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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 regu-larly 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 cre-ate 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 employ-er’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 rami-fications for salaried employees, this option is not recommended. Instead, keep reading to learn about less risky options.

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 fail-ing 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 suspi-cious 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.

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.

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Finally, if an employee fails to turn in paperwork after his or her rate has al-ready 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-doc-umented discipline policy with the assistance of legal counsel familiar with wage and hour laws, this might be a potential option for non-exempt employ-ees 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 re-vised employment policy is to draft the policy first, then inform the employees of the new policy and allow time for feedback and questions before requir-ing employees to comply with the changes. This process minimizes the risk of misunderstandings. When properly implemented, a progressive disci-plinary policy provides the employee with notice of the deficiency in performance and a chance to cor-rect the problem.

Giving employees the opportunity to improve per-formance 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 prop-erly 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

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.

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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 neces-sary documentation, the employer would award a bonus.

This system is effective only if the base hourly wage is low enough that the bo-nus 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 com-pleted 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 employ-ees 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 reim-bursement 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 documen-tation requested by the agency.

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 employ-ment. In that situation, the employer has the means to know the hours the employee has worked by physically watching to ensure the employee at-tends 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.

A properly drafted, communicated and implemented policy would identify the failure to turn in necessary documentation on time as an offense warranting discipline.

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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 do-ing 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 LineMethods 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 positionYour 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 require-ments 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.

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 proce-dures.

Taking these steps will improve your agency’s relationship with its employ-ees, 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.

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.

Robert W. Markette, Jr., CHC is a partner at Gilliland & Markette LLP. He can be reached at (317) 704-2400 or rmarkette@gillilandmarkette.com.

&Home Care The LawPublished by the Indiana Association for Home & Hospice Care, Inc.

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.

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&Home Care The LawPublished by Indiana Association for Home and Hospice Care, Inc.6320-G Rucker Road Indianapolis, IN 46220www.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.