Ignoring Labor Regulations Will Result in Heavy Fines

Posted on Nov 13, 2008 by apresley in Articles

In many locales, labor laws for the service industry severely limit the number of hours that a non-exempt employee can work.   Hours worked can be limited by the industry, age, job description (position worked), hourly rate, holiday, length of shift, or even the day of the week.   If your business works with service unions, these rules can become even more complicated, requiring that managers spend time tracking breaks and meal periods and indicating whether or not employees wanted to take their break.   Some states and insurance companies perform regular Labor & Industries audits, imposing heavy fines or insurance premium increases for non-compliant businesses.

Example: A sandwich restaurant in California employs three sandwich specialists, all of which are scheduled to work less than 8 hours a day, six days of the upcoming work week.   On the first day of the schedule one of the employees fails to show up for work and is terminated by management.   The remaining two employees must work work the additional 28 hours at the business to cover the terminated employee.   Neither employee receives a day off during the work week.   Under California law, each of the employees must be paid 1.5x overtime for more than 8 hours of work in a given day, and 1.5x overtime for more than 40 hours per work week.   Additionally, the two sandwich specialists will receive 1.5x , 2.0x overtime on the 7th day of their work week, as neither employee will receive a break this week.   Failing to pay these increased wages is grounds for a lawsuit and an investigation by the state.   Insufficient staffing may cost this California business several thousand dollars , in a single week!

Careful managers schedule around these frequently changing and complicated rules, ensuring that their business is compliant with all applicable labor regulations.   However, businesses can inadvertently land themselves in hot-water when employees fail to show up, quit, or are terminated for otherwise legitimate reasons.   Inexperienced managers, overburdened by other areas of schedule creation can forget about these rules, which are not core to the “making money” aspect of their business.   Stiff fines and lawsuits are the result of failing to be in compliance.

In uncertain economic times managers must be able to schedule labor correctly in a consistent manner, keep employees happy, and reduce fines imposed by legislative authorities, such as the Department of Labor.   Businesses should seek to use cost-effective computer systems, such as TimeForge, to ensure that proper scheduling techniques are utilized.   Effective scheduling software will be able to schedule meal and break periods, accurately calculate overtime costs, and archive previous schedules for managerial review.

Example: The general manager at a car wash business needs to ensure that one manager is always on duty, as well as a number of attendants to apply soap to the vehicles before vehicles enter the automated car wash machinery.   Each attendant is required to receive a number of breaks during their shift, and this particular business prefers to hire employees who are minors to fill “holes” in the schedule.   During a normal work day, between five and seven employees are working.   By not carefully scheduling the break and meal periods and minor rules, the manager may end up with a shortage of staff as multiple employees take breaks (or leave for the day) at the same time and minor employees leave for home.   During the labor shortage, customers will not be serviced appropriately.   Alternatively, the manager may choose not to send employees homes or allow breaks to proceed , grounds for heavy fines, a lawsuit, and/or increased insurance premiums.

Labor & Industries (L&I) audits are common in some US states (California, Washington, Oregon, and New York are especially common) in restaurant, food-service, retail, construction, and hospitality-related industries.   These audits are performed by the state or by insurance companies to verify that the business has complied with all applicable regulations.   Audits focus on unpaid overtime, minors working too late or too early, break and meal periods that are not properly documented, and other violations.   Rule infractions can be punished with stiff fines and/or insurance premium increases.

Make sure that all employees are aware of the applicable rules for the city, county, and state / province.   Follow federal / national rules (where applicable), corporate rules, and insurance regulations (if applicable).   Where possible, automated scheduling systems should be utilized to enforce these rules reducing the administrative burden placed on managers – allowing management to work on other pressing issues such as training, customer service, and management tasks which cannot be automated by cost-effective technology solutions.

Related articles or pages

0 Comments

Management Time is Money, Schedule it Wisely

Posted on Sep 08, 2008 by apresley in Articles

Managers are More Expensive than Non-Salaried Staff

In many industries including retail, hospitality, food-service, hotels, and manufacturing, salaried management staff are usually several times more expensive than non-salaried staff at the same business. In many cases, one member of the salaried staff can be more expensive than five or six non-salaried staff members. In addition to their hourly-wage, managers are eligible for benefits such as life insurance, health insurance, expensive overtime, or additional perks like free food or discounted merchandise rates.

Example: Restaurant servers (waiters) in the state of Texas commonly receive less than three dollars per hour in compensation from the business (the rest of the minimum wage must be received in tips from customers during the shift). However, a manager at the same store may receive more than twenty or thirty dollars per hour, implying that the manager is “worth” between 400% and 1000% more than a single server.

Schedule Managers to do Management Tasks

Businesses should ensure salaried managers perform managerial tasks while on duty, and leverage non-salaried employees for work-related duties that do not require a manager. Some tasks that managers may be charged with during a regular work day could include performing quality control, placing vendor orders, building employee schedules, training employees, processing payroll, and working with customers. Whatever management does while at work, make sure that it is something that is representative of their cost to the business.

Managers should be able to jump in and work when other non-management staff members do not show up for work or unanticipated spikes in demand require more line workers. This ability implies that the business does a good job of cross training employees, and the business is not overly reliant on any one staff member. However, if it is common practice for managers to mop the floors or clean bathrooms because other staff members do not show up, than a re-evaluation of hiring and staffing practices is recommended.

Managers are routinely asked to create efficient schedules for their business on a weekly, bi-weekly, or monthly basis. Accurately scheduling the work force several weeks in advance provides employees with a defined work schedule and allows managers to estimate upcoming expenses (payroll is often the largest expense in retail, restaurant, hospitality, and similar industries). During the process of preparing an accurate schedule, managers will check employee availability, review request logs, consider federal/state/local and corporate regulations, update employee work preferences, revise employee capabilities and training, make overtime considerations, ensure minimum work hours all while maintaining budgets and other business requirements. The entire schedule process commonly occupies a manager for 10% of every week, costing the business at least several hundred dollars each week!

Example: A restaurant that employs forty non-management staff may have two assistant managers (a front-of-house manager and a back-of-house or kitchen manager), and a general manager. Non-management staff may make between $3 and $12 per hour, while managers may be salaried between $40,000 and $60,000. One manager spending 3 hours per week on the schedule will cost the business more than $4,000 per year! Now imagine that same store is a concept with one-hundred locations – that’s almost half-a-million dollars in wasted manager time building theoretical labor schedules annually!

Changing the Employee Schedule Uses Manager Time, Which is Expensive

In addition to creating the schedule, managers often change the schedule on a daily basis. Employees may become available (and want more shifts), suddenly be unavailable (illness or termination) and not able to work, or forget when they need to be at work. Shift swapping is also common in many industries and requires a manager to spend time on each trade , employees give up shifts that were assigned to them originally, or pick up shifts that others cannot work. A shift or request log may be used for employee initiated shift trades. Managers cannot monitor theft, interact with customers, train employees, or perform quality control at the business if they are in the back-office working on a labor schedule.

Example: A car dealership has three managers, each making an average of $70,000 per year. Additionally, the car dealership has more than one-hundred (100) non-management staff, including sales personnel and mechanics. On average six employees (6% of the non-management staff) call in to check their schedule or swap shifts on a daily basis, using a total of 30 minutes per day (5 minutes per call). The dealership is open 300 days per year, costing the dealership more than $3,000 per year in schedule change costs. It may take another 6 hours per week to schedule the staff , more than $10,500 per year in direct scheduling costs!

To ensure that management staff time is spent appropriately, use technology tools to perform tasks that can be done by computers. Software tools such as TimeForge improve staff retention, and decrease the amount of time that scheduling labor consumes. TimeForge includes a number of additional tools that will assist managers in time management, including a daily manager log book, payroll processing, and other similar tools.

Related articles or pages

0 Comments

Labor and Industries Audits Made Easy

Posted on Dec 02, 2007 by apresley in TimeForge Features

In many states, the Department of Labor and Industries (L&I) performs routine audits of retail, grocery, contracting, and food-service businesses to determine if the establishment is following all federal, state, and local laws governing overtime, underage workers, and workers compensation. Like any audit, failing an L&I audit may result in heavy fines and significantly reduce profits. L&I audits may also be performed by your insurance company rather than a state agency.

Labor & Industries auditors will review your payroll, accounting, and schedules for compliance – a daunting task if your employee schedule records are kept in request books, various availability sheets, sticky-notes, scraps of paper, and Excel spreadsheets. However, with TimeForge.com, an L&I audit is simple. Historical records are always available and can be recalled by simply logging into TimeForge and running the appropriate report on any past, present or future schedule. Schedules are archived forever. Requests are stored forever. Audits are now simple!

How long does it take to make an employee schedule? It should take less than 5 minutes! Did you know that labor costs could be as much as 30% of your expenses? TimeForge can help streamline and minimize labor costs through effective labor scheduling at your restaurant, bar, or club.

Related articles or pages

0 Comments