Key takeaways

What is employee monitoring?

Employee monitoring refers to the use of tools and strategies by employers to track workforce activities and productivity. This can include monitoring:

• Computer usage.
• Internet browsing.
• Emails.
• Physical movements.

In some cases, employee monitoring can improve productivity and provide insight into workplace activities, but it can also erode employee trust and make workers feel like they are being unfairly punished and micromanaged.

In some cases, the best solution may be to implement performance management software. This alternative to workplace monitoring helps cultivate a culture of trust and transparency at every level of the business.

However, workplace monitoring is a necessary precaution for businesses, like those in the finance, field service, and healthcare industries. It is possible to successfully implement workplace monitoring tools and tactics as long as companies follow a collaborative and transparent approach that doesn’t violate employees’ privacy rights.

Also read: Why is Employee Performance Management Important?

Why should HR be involved in employee monitoring?

In any business, the HR department is responsible for maintaining the balance between the employer’s right to monitor employees and the employees’ right to privacy. This balance is delicate, and mishandling it can lead to decreased morale, a loss of trust, and potential legal challenges. 

Not all forms of monitoring are created equal, and some are more intrusive than others. For instance, monitoring software that tracks keystrokes or screenshots might seem necessary in highly regulated industries like healthcare or financial services, but in other environments, it could be perceived as overly invasive. The HR team’s role is to assess whether these tools align with your company’s values and abide by relevant laws.

As an HR leader, you must work with other stakeholders to develop clear policies that explain how you will implement employee monitoring. These policies should be transparent so all employees understand what is being monitored and why, along with how the data will be used. For example, you may decide to use the data you collect to identify productivity trends and provide recommendations that will improve employees’ work-life balance. 

The HR team is also responsible for fielding concerns, grievances, and accommodations requests that are connected to employee monitoring. Employees may feel uncomfortable or even violated if they believe they are being overly scrutinized; in some cases, employee monitoring without clear implementation guidelines can lead to discrimination or harassment. It’s your responsibility to establish clear processes and communication channels for employees to voice their concerns and resolve issues like these. Otherwise, employee monitoring might create more problems than it solves.

Key types of employee monitoring

Employee monitoring can take various forms depending on the business needs and the level of oversight required. Here are some common types of employee monitoring, along with some popular tools.

Pros and cons of employee monitoring

What are the benefits of workplace monitoring?

When done right, workplace monitoring can offer many potential benefits to your business. Namely, this kind of monitoring can lead to increased productivity, faster threat assessment, and more evidence-based decision-making opportunities.

What are the drawbacks of workplace monitoring?

The benefits of workplace tracking are also balanced by the potential negative effects of employee monitoring. These include lower employee morale, higher turnover, weakened cybersecurity, and bigger compliance risks.

How should HR teams approach monitoring employees?

There are many situations that make workplace monitoring software a smart risk management investment, and in these cases, human resources (HR) teams must approach workplace monitoring with sensitivity and care.

Identify specific needs and goals

HR teams need to think deeply about whether or not workplace monitoring will address the symptoms or the underlying problem. For instance, if you don’t trust your employees not to steal, then you may be better off hiring new people that you do trust than obsessively monitoring workers that you don’t.

Decision-makers should also reflect on whether their lack of trust stems from the employees’ behavior or from top-down pressure from micromanaging leaders. If performance issues are a concern, it may be more productive to broach the concerns with the employee(s) and explore the possibilities of performance management software than to jump straight to workplace surveillance.

Research potential software solutions

As business leaders weigh these questions, they need to keep in mind that different workplace monitoring tools are more suited to certain goals. For example, security cameras can help prevent theft but won’t protect sensitive data from being hacked.

Meanwhile, remote monitoring software can help prevent time theft by work-from-home employees, but it won’t help the company keep track of field techs’ locations. Workplace monitoring tools should match the goals your company is trying to accomplish.

Ask employees for feedback

Transparency from the start is of paramount importance, so HR teams should ask for input from employees on what kinds of surveillance and what level of monitoring they would be comfortable with. For example, personal devices should not be monitored, even if employees do work activities on them.

Once a decision is made, HR leaders should communicate what data is being collected, how often it is updated, and how long it is kept. Leaders then need to be able to clearly explain how workplace monitoring contributes to achieving legitimate business goals, such as hitting revenue targets or keeping techs safe in the field.

Furthermore, this data should also be used to benefit employees—by informing performance bonuses, for example—instead of just punishing them for infractions. Employees should also be given access to their personal data if possible.

Legal implications of employee monitoring

If you’re certain that implementing employee monitoring solutions is right for your business, tread carefully to ensure you’re compliant. Employee monitoring has significant legal implications and ailure to comply with the law can lead to serious consequences, including suits, fines, and reputational damage.

Federal law

While employers have broad authority to take actions to protect their business interests, employees also have privacy rights, especially when using their personal devices. The extent of these rights can vary depending on where your business is located and where your employees work from. However,employees have a reasonable expectation of privacy in certain situations, like personal phone calls and non-work-related activities during breaks. You can alleviate some of these concerns by being transparent about what’s being monitored.

The only federal law specifically addressing the monitoring of electronic communications at work is the Electronic Communications Privacy Act of 1986 (ECPA). Though this law is nearly 40 years old and not adopted to modern workplaces,you must still comply with its regulations.

The ECPA prohibits employers from intercepting employees’ oral, wire, and electronic communications. However, there are two exceptions: business purpose and consent. 

• Business purpose: This exception allows employers to monitor employees if the business can show a legitimate business purpose. This is an extremely low bar for employers to meet.
• Consent: This exception permits monitoring as long as the employee has given their consent. Notably, the consent exception isn’t limited to business communications, meaning employers can monitor personal communications if they have employee consent.

Best practices for staying compliant

1. Consult legal counsel: Before implementing any monitoring software, consult with an employment lawyer to ensure your methods comply with federal, state, and local laws.
2. Develop a clear policy: Create a clear and transparent monitoring policy which outlines the scope and purpose. Make sure that you communicate this policy to the employees and that you obtain their consent.
3. Limit the scope of monitoring: Avoid monitoring non-work-related activities or personal communications, as this could infringe on employees’ privacy rights.
4. Regularly review and update policies: Monitoring laws and regulations can change, so it’s essential to review and update your policies regularly to ensure ongoing compliance. 
5. Train managers and HR: Ensure all managers and HR staff are trained on the legal implications of employee monitoring and understand how to implement monitoring practices fairly and legally.

Better ways to track employee productivity

Tracking employee productivity is essential, but relying solely on monitoring tools can lead to a culture of mistrust and micromanagement. Instead of fixating on every keystroke or website visited, consider more effective and positive approaches to measure productivity and ensure security.

Use project management systems

One of the best ways to track productivity without intrusive monitoring is by using project management systems. Tools like Asana, ClickUp, or Monday allow you to assign tasks, set deadlines, and track progress in real-time. These platforms include a clear overview of who is working on what and how projects are progressing.

Moreover, these tools encourage accountability and transparency while allowing employees the freedom to manage their own time and workload. With project management systems, you can easily see if someone is falling behind without needing to constantly watch over their shoulder.

Trust employees

Trust is a cornerstone of any successful workplace. If you’ve hired competent, skilled professionals, you should be able to trust them to do their jobs. Instead of focusing on monitoring every minute of their day, focus on outcomes. 

Are projects being completed on time? Are the quality and results meeting expectations? If the answer is yes, then it’s clear your employees are productive, regardless of how they structure their day.

Creating a culture of trust means giving employees the autonomy to manage their own work. This not only boosts morale but also increases overall productivity. Employees who feel trusted are more likely to take ownership of their work and go the extra mile to achieve success.

Rethink monitoring and micromanagement

If you feel the need to monitor and micromanage, it might be time to take a step back and evaluate the root cause. Constant monitoring often points to deeper issues, like poor hiring practices or trust issues. If you don’t trust your employees to work effectively without being watched, it might indicate you’re not hiring the right people or setting obtainable company goals.

Excessive monitoring can lead to employee dissatisfaction and burnout, which ultimately reduces productivity. Instead of monitoring and micromanaging, focus on setting clear goals and expectations, providing the necessary tools and support, then stepping back to let your employees do their jobs.

Employee monitoring FAQs

If you’re looking for workplace monitoring tools, check out our Remote Monitoring Management (RMM) Software Guide. However, if your business’s needs are centered around performance management, explore top solutions in our Performance Management Software Guide.

The post How to Monitor Employees in 2025 (Without Overstepping) appeared first on TechnologyAdvice.

Key takeaways

How to fire an employee legally

Unlike many European nations, private employers in the U.S. (excluding Montana) are considered “at will.” Even though employment in the U.S. is predominantly “at will,” this doesn’t mean you can (or should) fire an employee for no reason. For example, you cannot fire employees for illegal reasons, such as discrimination or whistleblowing. Moreover, releases without rhyme or reason can negatively affect remaining employees’ morale, leading to reduced productivity, increased requests for time off, or fear of decreased job security. 

Familiarize yourself with the steps below so you can reduce the dread associated with employee terminations and streamline the process for managers across your organization.

Also read: HR’s Role in Change Management

1. Develop a legal termination policy

Although at-will employers do not need policies that outline termination procedures like employee handbooks, they are not excused from adhering to applicable federal, state, and local laws. Termination policies are great ways to demonstrate that you are trying to follow these laws. Moreover, they serve as a guidebook for current and incoming employees about company expectations and appropriate conduct in the workplace. 

A good termination procedure is a combination of several different policies, including:

• Employee codes of conduct.
• Work rules.
• Lists of fireable offenses.
• Progressive discipline steps.
• Incident investigation procedures.
• Exit interviews.
• Benefit termination steps.

Your termination poilcy should also identify who is responsible for handling the employee termination, such as a direct manager, a member of HR, or both. If you don’t have a dedicated HR team, take advantage of your Employment Practices Liability Insurance (EPLI) hotline if available, or contact an employment law attorney to verify that your termination procedure is legally sound.

2. Communicate with the employee beforehand

Unless an employee commits a serious or inexcusable offense that warrants immediate dismissal, such as sexual harassment, violence, or other illegal activity, employees should not be surprised their jobs are in jeopardy. However, remaining silent and hoping an employee will magically improve is not the answer — until the employee is put “on notice,” they may be unaware their performance is suffering and take no measures to change.

Before deciding to terminate someone, it’s crucial to ask yourself if the company has done everything it can to support that employee’s success. Whether seasoned veterans or fresh faces, employees need and deserve clear guidance, regular feedback, and the resources to improve.

I firmly believe termination should be a last resort only after you’ve exhausted efforts to help the employee succeed. I once worked with a small business owner who really struggled giving tough feedback. They kept hoping the employee would turn things around on their own, but that didn’t happen. By the time they decided to fire the person, it was a much bigger, messier situation than it had to be.

If you’re upfront with someone early on, you can sometimes avoid that awkward, painful termination process later. Of course, there are exceptions, like cases of severe misconduct or a true lack of applicable skills, but most of the time, it’s a matter of putting in the effort to ensure the employee has received the right tools and support.

Communication with employees can take many different forms, including: 

• Informal conversations.
• Performance reviews.
• Performance improvement plans (PIPs).
• Disciplinary action.
• Suspensions.
• Last chance agreements.

What’s important is sitting down with poor performers and providing ample performance-based metrics and other documentation that shows where they need improvement. Moreover, managers should document these conversations and have employees sign off on the documentation. In some cases, this documentation could be the evidence you need to prove you did not fire an employee for an illegal reason in wrongful termination suits.

Some employers like Ford Motor Co. have taken unconventional measures, such as offering severance agreements to underperformers in place of rigorous performance enhancement plans that may lead to traditional discharges. This gives underperforming employees a chance to leave with a monetary incentive instead of risking future financial loss if their performance does not improve. Whatever you decide, communicating with employees about their performance and documenting those conversations should come before the termination conversation as often as possible.

3. Prepare before the termination meeting

It’s time to start preparing for the discharge conversation if there is no improvement in an employee’s performance or behavior after a set number of conversations, performance reviews, and written warnings. You should start gathering the following offboarding documentation for the meeting: 

• Documentation of past conversations.
• Disciplinary warnings.
• Termination form.
• Termination of benefits information (COBRA).
• Last paycheck (if applicable).

While at-will employers are not required to have written warnings or other documentation before firing an employee, it can help organize the termination conversation and serve as evidence in the event of a lawsuit.

Direct managers should recruit a reliable witness, such as someone from HR or another higher-up, and prepare a script outlining the important aspects of the termination conversation ahead of time. A witness serves as a way to substantiate the events of the termination conversation in case of a lawsuit. Meanwhile, writing a script allows you to make sure the termination decision aligns with company policies and that management followed progressive discipline steps appropriately.

Planning the date and time when to have the conversation is just as critical. For example, some employers have termination meetings on Fridays, so employees have the weekend to recover; others choose Mondays or Tuesdays, so employees have the week to find new positions. The best solution balances the employee’s particular circumstance with the schedule of the manager hosting the termination meeting.

In contrast, you should avoid holding the termination conversation as an impromptu meeting at the end of the day. A neutral, discreet area increases the chances of privacy for the employee to be emotional. It also mitigates the chances that an employee can take any adverse action against the company, such as stealing clients or causing property damage.

4. Make sure risk management protocols are in place

You should plan to secure company property and information following an employee’s termination. Allow them to turn in company property, such as IDs, keys, uniforms, or computers, within a timeframe outlined in your policy guidebook. Administrators or IT should immediately remove the employee’s access to e-mails, applications, or other company programs. If the employee works remotely, you should consider providing pre-paid shipping labels and extra time for them to return their company-issued items. 

If the employee does not return company property, there is little you can do to retrieve it — it’s illegal to withhold final paychecks from employees until they return the company property. However, deducting the cost of company property from the employee’s final pay is permissible in some states if the employee is non-exempt from overtime. 

In most cases, you need a signed company property deduction authorization from the employee before withholding any money from their last check. The deduction should not bring the employee’s last paycheck below minimum wage. Because of conflicting laws in each state, you may want to include in their severance agreements a clause stating that an employee’s severance pay will be deducted for any unreturned company equipment.

Finally, have someone escort the employee to their workstation to retrieve any personal items. An escort can ensure an employee only takes personal items, not company property or proprietary information. They also act as a monitor to make sure that the employee does not create any excessive disruptions. 

In some circumstances, having the employee retrieve their items may be dangerous after the termination conversation. If safety is a concern, you should notify the employee that you will ship their items to their home and a timeframe within which to expect them. In addition, you should make a good-faith effort to return the items to the employee to avoid legal issues later. Finally, if safety becomes a serious concern when returning an employee’s items, you may consider reaching out to their local police department for assistance.

5. Be brief and don’t make it personal

The termination conversation is often stressful for the employee, manager, and witness. However, you can reduce stress and minimize risk by following these best practices in the termination meeting: 

• Prepare a termination script.
• Provide evidence that supports the case for termination, such as policy violations, poor performance history, or attendance records.
• Allow the employee to ask questions and be brief in responses.
• Have the manager, witness, and employee sign a termination form acknowledging the reason for termination.

During the conversation, you may feel bad for the employee, especially if they become distressed and plead for their job — don’t take this personally. While empathy is important, so is remaining professional, courteous, and unwavering in the decision to terminate. Check your feelings at the door and use the evidence you compiled to explain the termination decision and provide some amount of closure.

In the same vein, you should avoid insulting or demeaning the employee. Instead, aim to be polite and professional in the termination conversation. In doing so, you will set a standard to treat all employees respectfully, even during difficult times.

Also read: How to Transition to a Results-Only Work Environment

6. Provide information on any necessary benefits

During the employee’s termination conversation, managers should set aside some time to discuss the following:

• Last paycheck: Depending on the state, you may be required to provide the employee’s last paycheck immediately, within 24 hours to a few days, or by the next regularly scheduled payday. Failing to follow the appropriate laws could result in severe fines. In California, for example, penalties accrue for every day an employee’s last paycheck is withheld.
• COBRA paperwork: Most employers who offer medical insurance benefits qualify for COBRA and must provide the necessary paperwork to the employee within 30 days of termination. Considering COBRA includes information on extending employee benefits, you should have this paperwork ready to present to the employee during the termination conversation.
• Severance agreement: If you offer a severance agreement to the employee, carefully outline the details. For example, employees should know how much, when, and for how long their severance pay will last. Employees must also understand what kinds of future claims they are releasing from the company’s responsibility.
• Unemployment insurance information: Employees are entitled to apply for unemployment insurance benefits following termination, regardless of whether or not they are eligible. In most cases, states require employers to provide information about how to apply for unemployment benefits during the employee’s exit, along with the employer’s FEIN, unemployment account number, and business name and address. Failure to do so may result in fines or future lawsuits.
  

7. Communicate the employee’s exit with the rest of the staff

No matter what you do, you can’t prevent news of an employee’s exit from spreading to the rest of the staff. However, you can be tactful in how they present the information. 

You should consider the reason for the employee’s termination before sharing the news with the staff. For instance, firing someone for sexual harassment requires a different approach than firing someone for poor performance. In these cases, before sharing, it’s wise to consult outside counsel to avoid any legal missteps, such as privacy violations or adverse effects on remaining employees’ morale.

Regardless of the circumstances, brevity is key. Don’t elaborate on the reason for the employee’s termination since there may be legal consequences (for example, being sued for slander). Instead, focus on short-term and long-term backfill plans so the rest of the team understands how this decision will impact their jobs. Additionally, clarify any changes in reporting structure, especially if the former employee was a people manager.

According to Zeeshan Arif, CEO and founder of the software development company Whizpool, “Terminations can lead to feelings of abandonment or betrayal if the terminated employee has been with the company for a long time.” They could also cause remaining employees to feel their jobs are also in jeopardy. Therefore, it’s important to remain impartial and professional when sharing the news and focus on the company’s future. Doing so will allay any fears among remaining staff that their jobs are in jeopardy and increase feelings of trust in a company’s transparency. 

Also read: 6 Strategies to Reduce High Employee Turnover + Free Calculator (2024)

Employer’s rights

Even though the U.S. largely operates under at-will employment laws, you can’t just terminate an employee without considering your legal boundaries. As an employer, you have the right to make decisions about your workforce that are in the best interest of your business, including letting employees go. However, it’s important to know where your rights end and employee protections begin.

If you’re in an at-will state, you’re allowed to terminate an employee with or without cause at any time during their employment. On the other side of the same coin, an employee can leave the job anytime, with or without reason or notice. Employment contracts or union collective bargaining agreements are the only ways to modify an employer’s at-will status.

Limitations of at-will employment

While at-will employment gives you broad ability to terminate employees, there are several legal limitations to keep in mind. Firing an employee for an unlawful reason, even if you don’t think you’re doing anything wrong, can lead to significant legal consequences. Here are a few key exceptions to at-will employment you need to know.

Mistakes to avoid when firing an employee

Understanding the legal boundaries is key but it’s only part of the goal. The other part is to avoid mistakes when terminating an employee. These errors can easily be avoided with proper planning, communication, and documentation.

Remember the humanity in termination

When you’re in the position of firing someone, it’s easy to focus on the logistics — following procedures, protecting the company, and making sure you’ve ticked all the legal boxes. At the end of the day, though, you’re delivering life-changing news to another human being. They have bills, families, and emotions tied up in this job, and that’s something we can’t ignore, no matter how routine the process might feel.

No matter how hard the conversation, remember that people are resilient, but they’re also vulnerable in moments like these. Taking an extra minute to listen, even if the decision is final, or offering a small gesture of goodwill can go a long way. After all, the employee’s experience in that moment will likely shape how they view your company, and it might even influence how other employees feel about their job security and value within the organization.

The post How to Fire an Employee (and Stay Out of Trouble) appeared first on TechnologyAdvice.

If you’re looking for tools to help keep track of drug-testing procedures, check out our HR Software Guide for solutions to help mitigate risk in the workplace.

Why do companies drug test?

Generally, companies require an employee to drug test for the following reasons:

• To reduce the risk of injuries or other accidents on the job.
• To protect the safety of customers and employees.
• To prevent property damage.
• To reduce company liability.
• To save the company costs related to injuries or company damage.
• To maintain workplace productivity and efficiency.

The process of drug testing employees

Company policies vary, but many employers require workers to submit to an on-site, rapid drug test before sending those with positive tests to a medical facility for confirmation testing. The drug tests themselves require either hair, urine, saliva, or blood samples from which employers can screen for the following drugs:

• THC (cannabinoids, marijuana).
• Cocaine.
• Amphetamines and methamphetamines.
• Phencyclidine (PCP).
• Opioids (opium, codeine, morphine, heroin).
• Hallucinogens (LSD, ecstasy).
• Alcohol (additional test).

Risks of drug testing in the workplace

If safety is not the cornerstone of a job position, then implementing a workplace drug-testing program may have more drawbacks than benefits. In particular, drug tests tend to be inaccurate and expensive, violate employee privacy, lower company morale, and inhibit an employer’s recruitment efforts.

When do companies drug test?

Formal drug-testing policies typically list four scenarios that prompt an employee drug test: pre-employment, post-accident, random, and reasonable suspicion. Companies could drug test employees in all or some of these scenarios. But whatever they decide, employers must document the policy and enforce it consistently among all employees in the same situation.

Pre-employment

Pre-employment drug testing typically occurs after an employer makes a job offer to the employee but before the employee starts, pending the drug test results. Employers hiring for positions in safety-sensitive roles, like truck driving or operating heavy equipment, use pre-employment drug screening to prevent hiring candidates who may pose a safety risk to business operations before hiring them.However, employers without a bonafide safety concern should hesitate to include pre-employment screening as part of their onboarding process, as it could stall recruitment efforts, especially in areas where certain substances are legal.

Post-accident

Post-accident drug testing occurs after an employee injures themselves on the job. While many employers conduct post-accident testing to deter drug use on the job, it can also prevent employees from reporting a workplace injury for fear of reprisal following positive results.

Instead, employers should consider a more nuanced post-accident drug test, such as one that tests individuals only if potential drug use could have contributed to the accident.

Random

Random drug testing is one of the most effective workplace drug use deterrents. Employers select employees at random for unannounced drug testing. Although great for businesses in high-risk industries like construction or transportation, companies should be wary before randomly testing all employees. Obligating employees to drug test in low-risk jobs like office work could infringe on employees’ right to privacy.

Reasonable suspicion

Reasonable suspicion drug testing involves drug testing employees for the following reasons:

• Showing physical or behavioral signs of intoxication, such as slurred speech or disorientation.
• Participating in unsafe work habits.
• Showing signs of being unfit for duty.

Although reasonable suspicion drug testing is meant to prevent injuries or accidents in the workplace before they happen, employers should also be careful such testing does not interfere with employee civil rights, such as those under the Americans with Disabilities Act.

Other scenarios

Outside of the four main scenarios, employers could also drug test employees after completing a substance abuse rehabilitation program or as part of an annual physical testing program in specific industries. Testing in these instances must align with employers’ safety policies without violating any federal, state, local, or civil rights laws.

Can employers legally drug test employees?

Yes, but it’s complicated. Drug testing employees is a requirement for some, such as employers with federal contracts under the Drug-Free Workplace Act of 1988 or in safety-sensitive industries like aviation, transit, and defense. Outside of these instances, private employers in the U.S. are not required to have drug-free or drug-testing policies.

Despite the lack of federal regulation, this does not mean employers shouldn’t drug test their employees, nor should all employers have a zero-tolerance drug-testing policy. Instead, employers must be aware of the intersection of state, local, and other workers’ rights laws when deciding to drug test employees.

State laws

Drug-testing laws vary by state. In some states, like Michigan, there are no laws prohibiting employers from establishing drug-testing policies in the workplace. However, other states, like Maine or Ohio, dictate who can be tested, how they can be tested, how much advance notice they receive, and how to discipline or rehabilitate employees following a positive test.

To make matters more complicated is the growing legalization of marijuana and other psychedelics for either medicinal or recreational use. Employers, especially those in safety-conscious industries like construction and transportation, are concerned with how these laws conflict with their already well-established drug-testing programs.

Because marijuana continues to be a Schedule I controlled substance at the federal level, employers have some leeway when testing for cannabis. While employers must still follow the drug-testing laws of the states of their employees, they can still test for marijuana use.

“Many employers have decided to treat marijuana as they do alcohol — only prohibiting the use of marijuana during the workday as well as forbidding employees from being under the influence of the drug at work,” said Jonathan Sigel, a partner at Mirick O’Connell in Massachusetts. “Employers (in high-risk industries) often choose to continue testing for marijuana for their safety-sensitive jobs because of the greater risk of potential harm that could be caused by an employee who is under the influence of marijuana at work.”

In other words, prohibiting controlled substances only while employees are at work is one way employers attempt to maintain safety standards while juggling new state legislation.

Employee protections

Federally, employees have certain protections under the Americans with Disabilities Act, the Family Medical Leave Act, Title VII of the Civil Rights Act of 1964, and the National Labor Relations Act. In short, these laws prevent employers from singling out certain protected groups over others for drug testing or denying employees protected unpaid leave for substance abuse rehabilitation. Additionally, employers with a collective bargaining agreement must negotiate with their unions before implementing a drug-testing policy.

Even if both federal and states allow employers to implement a drug-testing policy, employers must consider how their employees’ legal behavior will affect their drug test results and infringe on their civil liberties. Incorrectly requiring an employee to test could result in hefty fines or lawsuits for wrongful termination, defamation, discrimination, or invasion of privacy.

For example, employers with a “reasonable suspicion” policy — drug testing an employee if the company believes they are under the influence at work — could have negative consequences for employers. Employers could inadvertently target individuals with legal prescriptions for controlled substances or a disability. This could lead to a discrimination lawsuit or cause current and incoming employees to look unfavorably at the organization. This is especially true with marijuana legalization.

“We (need) to reorient how businesses (think) about marijuana use generally,” said Heather Hammond, an employment law attorney at Gravel & Shea in Vermont. “Since it is legal to buy and use the substance for recreational purposes (in some states), employers (need) to adjust their expectations for employees’ off-work conduct.”

Before penalizing their workforce, employers need to consider whether drug testing is truly a safety issue. If the need is there, consult local employment law attorneys before developing a drug-testing program or requiring an individual to submit to testing.

Legal updates

Recent developments in drug-related legislation have significant implications for workplace drug testing policies. Notably, the DOJ has proposed reclassifying marijuana as a Schedule III substance, a less dangerous category than its antiquated Schedule I status. If enacted, this change could affect employers by potentially altering drug-free workplace policies.

“While continuing to test for marijuana is lawful,” suggests employment law attorney Hammond, “each employer has to decide for itself whether it makes business sense to eliminate that pool of potential workers from its ranks” since marijuana is now legal in some form in more than half the country. If your policy tests for illegal drugs, this may not include marijuana so attorney Hammond suggests updating your policy to “prohibit the use or possession of ‘controlled’ substances, and specifically list marijuana as an example of such a substance.”

As more people use marijuana recreationally and medicinally, more workers are subsequently testing positive for marijuana. This could also influence employers to reconsider drug testing. With these trends in mind, it’s important for businesses to stay updated on evolving regulations to ensure compliant, effective, and fair policies.

Best practices for creating and maintaining a drug testing policy

1. Understand legal requirements. Stay updated on federal, state, and local laws related to drug testing, particularly recent changes like the DOJ’s proposed reclassification of marijuana, and ensure that internal policies comply with these regulations.
2. Define clear objectives. Establish the purpose of the drug testing policy, such as ensuring workplace safety, complying with regulations, or maintaining productivity and communicate these objectives clearly to employees.
3. Develop a comprehensive policy. The policy should outline the types of drug tests conducted, the substances tested for, and the consequences of positive results. Moreover, it should be enforced fairly and consistently.
4. Implement with transparency. Inform employees about the policy before implementation and provide them the details on when and how testing will occur, their rights, and how their privacy will be protected.
5. Train and educate. Train managers and HR personnel on the policy’s implementation and how to handle sensitive situations. Offer employees education on substance abuse prevention and the resources available to them.
6. Maintain records. Keep thorough records of all drug tests conducted, results, and any actions taken. This helps in defending against potential legal challenges and ensures consistency in policy enforcement.
7. Review and update regularly. Periodically review the existing drug testing policy to ensure it remains compliant with evolving laws and effective in achieving workplace goals. Update the policy as needed and communicate any changes to employees.

Should employers implement a drug-testing policy?

The decision to implement a drug-testing policy is a business one requiring careful consideration. Some questions employers should ask themselves before starting a drug-testing program include:

• Does my industry require drug testing?
• What are our risks for injuries in the workplace?
• Where are my employees located? Are they impacted by any state or local drug-testing laws?
• What is the cost of implementing a drug-testing program?
• How will a drug-testing program affect our company culture?

“For some businesses, the reason (to drug test) is a clear state or federal mandate, in which case the analysis is straightforward,” according to Murray. “For others, the reasons are less clear.”

In other words, in high-risk industries like construction, healthcare, and manufacturing, employers can and probably should implement a drug-testing program to ensure the safety of the business and its workers. However, private-sector employers outside of safety-sensitive industries should reevaluate their existing drug-testing policies or hesitate before implementing a policy.

As drug-testing laws evolve and change, so do workers’ outlooks on these practices. Perhaps a more achievable way to promote safety and productivity in the workplace is for employers to focus less on drug testing and more on performance and results, so employees have the freedom to live their private lives as they choose.

If drug-testing policies are an absolute must for your industry, check out HR Software and Onboarding Software Guides for solutions to help with your compliance concerns.

The post Employer’s Guide to Drug Testing in the Workplace appeared first on TechnologyAdvice.

What is the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a federal law that sets minimum wage, overtime pay eligibility, recordkeeping, and child labor standards. Enacted in 1938, it ensures workers receive minimum compensation and protects them from exploitation. 

At its core, the FLSA establishes the minimum wage employers must pay their employees. It also mandates overtime pay at one and a half times the regular rate for hours worked over 40 in a workweek. However, the FLSA does not define full-time or part-time employment. The FLSA also requires employers to maintain accurate records of employees’ work hours and wages, while adhering to employee privacy. 

The federal minimum wage has not increased since 2009 and many states have taken it upon themselves to increase their state minimum wage. Make sure you know your state minimum wage because, if it’s higher than the FLSA standard, you’ll need to follow the state minimum wage. Be aware that, in today’s remote work environment, you need to follow the higher minimum wage where your employee works. 

Why was the FLSA established?

The FLSA was established to combat exploitative labor practices. The Great Depression left many workers vulnerable to low wages and poor working conditions. In 1938, President Franklin D. Roosevelt signed the Fair Wage Act into law to protect workers and ensure fair labor standards. Broadly, it aimed to improve the overall quality of life for workers.

The key reasons for establishing the FLSA included eliminating oppressive child labor, ensuring fair wages, and setting maximum working hours. These measures were designed to promote a healthier work-life balance and prevent exploitation. Major milestones in the FLSA’s history include amendments that raised the minimum wage, expanded coverage, and strengthened child labor protections. Over the years, the FLSA has adapted to changing labor markets, ensuring it remains relevant today.

Key provisions of the FLSA

Key provisions of the FLSA include minimum wage requirements, overtime pay standards, child labor regulations, and recordkeeping requirements.

Minimum wage requirements

The FLSA sets the federal minimum wage at $7.25 per hour. This wage floor ensures that all workers receive a baseline level of pay, preventing exploitative compensation practices. However, many states and municipalities have established higher minimum wages. As an HR professional, you must know federal, state, and local laws to ensure compliance at all levels.

For example, California’s minimum wage is significantly higher than the federal rate, reflecting the state’s higher cost of living. When state or local minimum wages exceed the federal minimum, employers must pay the higher rate. Staying updated on these changes is crucial to avoid legal issues and ensure fair pay for employees.

Using payroll software like ADP or Paycor can help automate compliance with these varying wage requirements. These systems can track and update wage rates automatically, reducing the risk of errors and non-compliance.

Overtime pay standards

Overtime pay standards under the FLSA require that non-exempt employees receive one and a half times their regular pay rate for any hours worked over 40 in a workweek. This regulation is designed to ensure employees are fairly compensated for long hours and to discourage excessive overtime.

Accurately tracking hours worked is essential to comply with these standards. Many payroll apps offer time-tracking features that can automatically calculate overtime pay, ensuring employees receive the correct compensation. These systems can also alert HR professionals to potential overtime issues, allowing for proactive management.

It’s important to properly classify employees as exempt or non-exempt based on their job duties and salary levels. Misclassification—one of the most costly payroll errors—can lead to significant penalties and back pay obligations. Regular audits of job classifications and pay practices can help maintain compliance.

Child labor regulations

The FLSA includes strict child labor regulations to protect minors from hazardous work and excessive hours. These regulations vary by age and job type, with specific restrictions for different age groups.

For example, minors under 14 are generally prohibited from working, except in certain limited roles. Those aged 14 and 15 can work, but with restrictions on hours and types of jobs. They cannot work during school hours, and their work hours are limited to ensure they can focus on their education. Minors aged 16 and 17 can work more hours but are still restricted from hazardous occupations, such as operating heavy machinery or working in manufacturing roles. HR professionals must be familiar with these regulations to avoid violations and ensure the safety of young workers.

Recordkeeping requirements

The FLSA mandates that employers maintain accurate records of hours worked, wages paid, and other employment conditions. This includes tracking time worked each day, total hours worked each week, pay rates, and any deductions or additions to wages. Accurate record-keeping is essential for compliance and to resolve any potential disputes over pay. Employers must keep these records for at least three years. Failure to maintain proper records can result in fines and legal challenges.

Other FLSA provisions

Beyond minimum wage, overtime, child labor, and recordkeeping, the FLSA also addresses other critical areas. It sets standards for equal pay, requiring that men and women receive equal pay for equal work. This provision aims to eliminate gender-based wage discrimination in the workplace.

The FLSA also includes regulations on tip credits, allowing employers to count tips received by employees as part of their minimum wage. However, employers must ensure that tipped employees receive at least the federal minimum wage when tips are included. If tips do not meet this threshold, the employer must make up the difference.

How the FLSA works

The FLSA mainly involves setting and enforcing labor standards. The Wage and Hour Division (WHD) of the Department of Labor ensures compliance. They investigate complaints, conduct inspections, and impose penalties for violations. To avoid costly fines and potential lawsuits, follow the following steps:

Violations and penalties

Common violations of the FLSA can lead to significant penalties. Here are some examples:

Penalties for non-compliance with the FLSA can be severe. Employers may owe back wages and an equal amount in liquidated damages. Child labor violations can incur fines of up to $10,000 per occurrence. In extreme cases, criminal prosecution is possible, leading to fines and imprisonment.

Steps employers can take to avoid violations

• Conduct regular audits: Review payroll and classification practices frequently to ensure compliance.
• Train HR staff: Ensure your HR team understands FLSA requirements and stays updated on changes.
• Use reliable payroll systems: Implement payroll software that automates compliance and record-keeping.
• Classify employees correctly: Clearly define job roles and classify employees as exempt or non-exempt based on duties and salary.
• Maintain accurate records: Keep detailed records of hours worked and wages paid for all employees.
• Monitor child labor compliance: Ensure minors are working within the legal limits set by the FLSA.
• Seek legal advice: Consult with legal counsel to navigate complex situations and ensure your practices comply with the FLSA.

Is the Fair Labor Standards Act still relevant today?

Yes, the FLSA is still highly relevant today. Despite being enacted in 1938, the fair labor standards act continues to play a crucial role in protecting workers’ rights. The FLSA remains a cornerstone of labor law in the United States because it encompasses essential labor standards that ensure fair wages and working conditions. Recent updates have expanded overtime eligibility and raised the salary threshold for exempt employees, reflecting changes in the labor market, though there is still no provision mandating severance pay.

The Department of Labor regularly reviews and updates FLSA regulations. Recent changes include clarifications on tip pooling and joint employer status. These updates help adapt the FLSA to contemporary work environments, maintaining its relevance. HR professionals must stay informed about these updates. Understanding the FLSA’s current relevance and recent changes helps ensure compliance and protects employees’ rights, while ensuring your business avoids legal headaches.

The post What is the Fair Labor Standards Act (FLSA)? appeared first on TechnologyAdvice.

If your payroll audit tells you it’s time to upgrade your software, use our Payroll Software Guide to find the tool that’s right for you.

What is a payroll audit?

A payroll audit is a thorough examination of your payroll processes to ensure accuracy, compliance, and efficiency. During an audit, you will review employee rosters, payroll reports, and reconcile against employee hours, payments, and company accounts. If you’re doing payroll yourself, you might even find some errors from manual calculation that need to be corrected. Using payroll software—even free payroll software—and a checklist can expedite processing payroll, ensuring you don’t miss any steps while identifying areas for improvement.

Benefits of conducting a payroll audit

Payroll audits help you realize when your process is slightly off, where there might be gaps, and what’s going well. Here are a few key benefits.

Improves payroll accuracy

Payroll accuracy is crucial and here’s why: A 2017 survey found that 49% of employees will start looking for a new job after just two payroll errors. While understandable, the risk to employee retention and satisfaction places extra pressure on you to ensure absolute accuracy. Ultimately, these audits help you preserve your employees’ trust in the payroll process by ensuring they’re paid accurately and on time and, if necessary, rectifying errors before they have an impact.

Ensures compliance

Payroll audits also help verify your compliance with federal, state, and local labor and employment laws. This can reduce the risk of costly legal disputes and penalties. Failing to make a timely tax deposit, for example, can result in a fine of up to 15% of the total tax due. For many small businesses, this penalty is debilitating.

Uncovers inefficiencies and fraud

What’s more, payroll audits can uncover inefficiencies and fraud, allowing you to streamline payroll processes and improve overall operational efficiency.

Mark Wilkinson, Co-Founder and Financial Officer at Yabby, notes the value of preventative action: “If you’re doing [audits] often, you’re making sure that you won’t have to put in a huge chunk of time in the future.” Just like doing laundry each week means you won’t run out of socks at the end of the month, getting over the initial payroll audit hurdle will help your team avoid a significant administrative burden down the road.

What should a payroll audit include?

Successful payroll audits analyze the following information in your company’s payroll processes:

• Employee rosters.
• Employee pay, including overtime, variable, and atypical payments.
• Time clock data, such as hours worked and days off.
• Taxes and deductions, including benefit deductions.
• Number of payrolls, including any atypical payrolls.
• General ledger and bank account reconciliations.

When reviewing the data in the payroll audit, you should double-check that your processes adhere to updated federal, state, or local laws and make adjustments or issue corrections as necessary. ‌For example, many states update their minimum wage laws at the beginning of the year. You should make sure all affected employees’ pay rates are updated appropriately.

Pay attention to errors in the records. Some errors could be as simple as a typo — such as transposing two numbers — while others could point to fraud, embezzlement, wage theft, or time theft. Thus, payroll audits benefit both employees and employers; employees’ pay records are double-checked for accuracy while employers’ accounts are protected from significant financial loss.

Free payroll audit checklist template

Is the thought of conducting your own payroll audit daunting? Start with this payroll audit checklist to make the process easier.

How do you audit payroll records?

To implement an effective payroll audit, first determine the parameters of your payroll audit, collect necessary employee pay data, and reconcile them with time records, tax payments, and financial ledgers. At the end of the audit, you can then take measures to improve your payroll processes to mitigate future errors.

1. Determine the payroll audit timeframe and stakeholders

The first step in a payroll audit is understanding when the payroll audit should take place and who is involved. To do that, ask yourself the following questions:

2. Generate reports and examine the data

Gather employee rosters, payroll registers, and other payroll reports covering the lookback period. These reports should cover employee start and termination dates, job titles, pay rates, deductions, taxes, and other pertinent employment details.

3. Confirm payments match hours worked

Pull time clock data and make sure all employees are being paid appropriately for their actual time worked during each pay period. For example, if an employee works 47 hours in a pay period when they normally work 35, investigate to understand why.

Next, double check overtime hours are being paid correctly. Generally, non-exempt employees must be paid at their time-and-a-half (overtime) rate for any hours worked over 40 hours in a week according to the Fair Labor Standards Act. However, this could differ depending on international, state, or local laws, collective bargaining agreements, or contracts.

For example, in California non-exempt employees must be paid at their overtime rate for any hours worked over 8 in a day and at their double time rate for any hours worked over 12 in a day. Employers should pay employees any owed overtime retro pay as soon as it is discovered.

What if you notice discrepancies with an employee’s hours?

Before assuming an employee acted maliciously, you should do some due diligence to rule out other issues like technical glitches and clerical errors. False accusations can destroy employee trust and team morale, so if you can’t find evidence of an employee’s wrongdoing, it’s worth having an open dialogue to get a better understanding of what may have happened.

If the investigation reveals someone else clearly clocking in on someone else’s behalf, however, this could be grounds for disciplinary action against both employees for time theft. To proactively avoid situations like this, consider modifying your policies and procedures or adopting time clock software with features that make buddy punching more difficult.

For example, Homebase reduces the likelihood of buddy punching by taking a picture of employees and requiring them to input a unique pin code when they clock in. You can also use the software’s geo-fencing features to restrict off-site clock-ins.

Visit Homebase

4. Double-check that variable and atypical payments are correct

Variable payments are payments based on an employee or company’s overall performance and include factors like bonuses, commissions, shift differentials, or tips. Check that there is documentation in place to support these variable pay structures, such as a handbook policy or employment contract.

Each variable payment should be labeled differently for tracking purposes. Differentiating variable payments from regular or overtime rates demonstrates employers are adhering to tip laws since they differ across U.S. jurisdictions.

Paid time off (PTO) payments should also be labeled and paid correctly. This includes distinguishing payments like vacation, sick, holiday, bereavement, personal time, or jury duty according to company policies.

Label these payments separately from regular rates to promote accurate paid leave tracking and to effectively diagnose policy procedures in need of improvement. Say, for example, you discover the payroll department paid an employee for two weeks of vacation when they had only accrued one. One way you could prevent this from happening again is to update your vacation policy to require signed employee and manager authorization before payment.

Finally, atypical payments include retro-pay, backpay, expense reimbursements, signing bonuses, relocation, and contractor payments. Investigate why an employee suddenly makes more or less than they typically make in a pay period. For example, if an employee typically receives $1,000 every paycheck but suddenly starts receiving $2,000, check if the payment is from a pay rate increase, variable, or atypical payment. If not, this could be a case of payroll fraud.

5. Check the accuracy of tax withholdings and other deductions

6. Compare payroll records with the General Ledger and bank accounts

Pull the General Ledger (GL) from the lookback period and reconcile it with payroll records from the same time. Each payroll expense in the GL should match your findings from the payroll audit. If they do not, investigate further. For instance, if you notice an employee’s paycheck listed twice in the GL, it could either be a clerical error or an indication an employee was accidentally double paid.

To know for sure, repeat the same process as above, this time by comparing the payroll transactions in the GL with their payroll bank accounts. Does the bank account confirm the employee was actually paid twice? Are there any other transactions that were missed? What about uncashed payroll checks? Use this time to correct internal documentation, void and reissue any stale checks, and update procedures to prevent double payments or fraudulent activity.

7. Take advantage of payroll software

You can speed up the payroll audit process by leveraging payroll software. Instead of compiling reports for the payroll audit lookback period by hand, payroll software can instantly assemble:

• Employee rosters.
• Payroll ledgers.
• Tax reports.
• Deduction reports.
• Employee pay stubs.

Moreover, payroll software automatically calculates complicated employee pay rates, from overtime rates for shift differentials to fluctuating workweeks. Many of these solutions also include code to prevent errors, reducing the risk that a payroll audit will uncover glaring issues.

ADP, for example, has safeguards in place to notify employers of critical issues, such as missing employee data, duplicate Social Security numbers, or unbalanced transactions. Employers can then fix these errors before they finalize payroll.

Meanwhile, companies looking to save time inputting or transferring payroll information into their accounting programs can benefit from an integrated solution. QuickBooks, for instance, allows you to easily reconcile payroll reports with transactions in the GL with your combined account and payroll software.

Additionally, payroll software assists you with labor law compliance, reducing the risk of uncovering major payroll law violations during a payroll audit. For instance, Paycor automatically updates federal, state, and local tax rates and withholding limits whenever they are enacted. Because you no longer have to research and make the new calculations yourself, you can increase efficiency while ensuring employees’ tax withholdings remain accurate.

8. Address payroll processes in need of optimization

In addition to uncovering errors in need of correction, payroll audits can give you concrete action items that will help improve your processes, such as:

• Requiring managers to review timecards for accuracy.
• Adding extra steps to the payroll approval process.
• Implementing measures to flag uncashed checks.
• Limiting payroll data access to mitigate the risk of fraud.
• Evaluating if the payroll software needs to be switched or upgraded.

Failing to address and update payroll processes following the insights of a payroll audit will guarantee you continue to make the same mistakes over and over again, costing you future time and money.

9. Put a process in place for future payroll audits

Make sure systems are in place for future audits and write a policy outlining a regular payroll audit timeline. Consider the following questions when outlining their policy:

• What worked and what didn’t during the payroll audit?
• How long did the payroll audit take? Were there areas that required more time and why?
• Did everyone involved in the audit need to be involved, or were more people necessary?
• Was every area of the payroll audit addressed in a timely manner?
• Should the scope of future payroll audits expand or shrink?

In addition to addressing the questions above, prepare a payroll audit checklist to improve the efficiency of future audits.

Payroll audit best practices

To ensure your payroll audit is effective and comprehensive, consider the following best practices:

Develop a detailed audit plan

Start by outlining your objectives, scope, and timeline. If your goal is to verify tax withholdings, specify the records to check and the timeframe for completion. A checklist like the one we’ve provided above will guide you through the necessary steps, like verifying employee classification and reviewing tax filings, ensuring consistency across audits conducted by different team members.

Update policies and train your staff

Updating your payroll policies help ensure compliance and efficiency in your everyday payroll process. When you update your policies because of audit outcomes, be sure to train your staff. This training is essential to ensuring your audits have a meaningful impact.

Conduct spot checks

Conducting random spot checks on payroll data helps identify inconsistencies or errors that might not be apparent during routine audits. For example, you could randomly select a few pay periods to review in detail, checking for correct tax withholdings and accurate overtime calculations. Spot checks act as a proactive measure to catch and rectify issues promptly, enhancing the overall accuracy of your payroll process.

Involve multiple departments

Engaging relevant internal departments, like HR, accounting, and finance, ensures a comprehensive review from multiple business perspectives. To make this process as smooth as possible, establish clear communication channels and assign specific roles and responsibilities. For example, HR staff can verify employee classifications while accounting ensures accurate financial records. Setting up regular check-ins and using project management tools can help track progress and ensure timely data provision.

Schedule regular audits

Establish a routine schedule for payroll audits, whether annually, semi-annually, or quarterly, to identify issues promptly, preventing small errors from becoming significant problems. Regular audits provide ongoing oversight and ensure continuous compliance. Conducting quarterly audits might reveal discrepancies early, allowing for timely corrective action.

If necessary, seek external expertise

If your organization lacks the internal resources or expertise for a thorough audit, consider seeking external expertise and support. External auditors, accountants, HR consultants, and law firms can provide an unbiased perspective and valuable insight for improving your payroll processes. Start by consulting with your payroll provider or PEO for recommendations. Industry-specific consultants and specialized law firms can offer tailored advice and support, helping you navigate complex compliance requirements effectively.

Why you need payroll audit procedures

Payroll is one of the core functions of any business, so inefficient or inaccurate payroll processes can lead to costly mistakes. However, companies that implement a regular payroll audit process can take proactive measures to address inefficiencies and compliance risks before they become serious problems.

Not only do payroll audits prevent the likelihood of future payroll mistakes or compliance issues, but they also ensure the integrity of payroll. Even companies with no computational or transactional errors in their payroll audits can utilize payroll audit data to correct any employee miscategorizations, unfair or discriminatory pay practices, or poor record-keeping procedures.

Even without the looming threat of labor law violations, failing to conduct regular payroll audits will still cost you in the long run, as you miss out on valuable insights to improve archaic payroll procedures.

If you’re ready to search for payroll software that will support a successful audit, check out our Payroll Software Guide for solutions.

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