Archive for June, 2011

DOL Restores and Updates Functional Affirmative Action Program Process for Federal Contractors and Subcontractors

 The U.S. Department of Labor’s Office of Federal Contract Compliance Programs has released a new directive to outline the process by which federal supply and service contractors can apply for Functional Affirmative Action Program agreements, which can be viewed at http://www.dol.gov/ofccp/regs/compliance/directives/dir296.htm.

“The FAAP is back and is better than before,” said OFCCP Director Patricia A. Shiu. “Over the past year, I have listened to comments from the contractor community and employee groups, and determined that this is a useful tool for ensuring that federal contractors and subcontractors meet their obligations to provide equal employment opportunity for everyone. I am pleased to share updated guidance that responds to the feedback we received while also renewing our commitment to ensuring discrimination-free workplaces.”

Under Executive Order 11246, any company with 50 or more employees and a federal contract of $50,000 or more is required to develop a written affirmative action program for each of its establishments. An AAP helps contractors identify and analyze potential disparities related to the employment of women and minorities. Where disparities exist, contractors can use AAPs to articulate specific procedures they will follow and good faith efforts they will make to provide equal employment opportunities. FAAP agreements allow large contractors the flexibility to create AAPs by functional or business units rather than by individual establishments. For example, a company could develop an affirmative action program for all sales associates across multiple offices in different states as opposed to creating one for each work site.

OFCCP reviewed its policies regarding the FAAP process and made significant changes, including requiring written approval by the agency’s director before contractors can begin developing FAAP agreements, thereby eliminating the provision for automatic approval if OFCCP failed to act upon the request within 120 days; changing the expiration date for each agreement from three to five years, at which point a renewal will have to be approved; and adding the possibility of a compliance evaluation by OFCCP should contractors fail to submit the required annual updates to their agreements.

All contractors who currently have an approved FAAP agreement will be required to renew it in accordance with the new guidance. Contractors without these agreements should continue to maintain and develop establishment-based AAPs. Answers to frequently asked questions about the FAAP can be found at http://www.dol.gov/ofccp/regs/compliance/faqs/faapfaqs.htm.

The new guidance rescinds a previous directive, Administrative Notice/Functional AAP, issued March 21, 2002, and ends a yearlong suspension in the acceptance of requests to develop or renew FAAP agreements while the program was under review.

In addition to Executive Order 11246, OFCCP’s legal authority exists under Section 503 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. As amended, these three laws hold those who do business with the federal government, both contractors and subcontractors, to the fair and reasonable standard that they not discriminate in employment on the basis of gender, race, color, religion, national origin, disability or status as a protected veteran. For more information, call OFCCP’s toll-free helpline at 800-397-6251 or visit http://www.dol.gov/ofccp/.

Read the news release here: http://www.dol.gov/opa/media/press/ofccp/OFCCP20110973.htm

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9th Circuit Issues an Important Opinion re Broad ERISA Liability for Third Party Insurers

Bottom line of this opinion is that potential liability under ERISA is not limited to a benefits plan or the plan administrator with a fiduciary relationship. A third party insurer can also be sued. You can read the short opinion in its entirety at http://www.ca9.uscourts.gov/datastore/opinions/2011/06/22/07-56869.pdf

Board Proposes Rules to Reform Pre- and Post-Election Representation Case Procedures

The National Labor Relations Board will publish in the Federal Register tomorrow a Notice of Proposed Rulemaking, which proposes amendments to its existing rules and regulations governing procedures in representation cases. The proposed amendments are intended to reduce unnecessary litigation, streamline pre- and post-election procedures, and facilitate the use of electronic communications and document filing. 

“One of the most important duties of the NLRB is conducting secret-ballot elections to determine whether employees want to be represented by a labor union,” said Chairman Wilma B. Liebman in a statement. “Resolving representation questions quickly, fairly, and accurately has been an overriding goal of American labor law for more than 75 years.” Click here to view her full statement. 

If finally adopted after a public notice-and-comment process, the proposed amendments would:

  •  Allow for electronic filing of election petitions and other documents.
     
  • Ensure that employees, employers and unions receive and exchange timely information they need to understand and participate in the representation case process.
     
  • Standardize timeframes for parties to resolve or litigate issues before and after elections.
     
  • Require parties to identify issues and describe evidence soon after an election petition is filed to facilitate resolution and eliminate unnecessary litigation.
     
  • Defer litigation of most voter eligibility issues until after the election.
     
  • Require employers to provide a final voter list in electronic form soon after the scheduling of an election, including voters’ telephone numbers and email addresses when available.
     
  • Consolidate all election-related appeals to the Board into a single post-election appeals process and thereby eliminate delay in holding elections currently attributable to the possibility of pre-election appeals.
     
  • Make Board review of post-election decisions discretionary rather than mandatory.

For details on the proposed amendments, view our fact sheet here and summary here.

As the Notice of Proposed Rulemaking states: 

The Board believes that the proposed amendments would remove unnecessary barriers to the fair and expeditious resolution of questions concerning representation. The proposed amendments would simplify representation-case procedures and render them more transparent and uniform across regions, eliminate unnecessary litigation, and consolidate requests for Board review of regional directors’ pre- and post-election determinations into a single, post-election request.  The proposed amendments would allow the Board to more promptly determine if there is a question concerning representation and, if so, to resolve it by conducting a secret ballot election.

Board Member Brian Hayes dissented from the proposed rulemaking.  In his opinion, 

The Board and General Counsel are consistently meeting their publicly-stated performance goals under the current representation election process, providing an expeditious and fair resolution to parties in the vast majority of cases, less than 10 percent of which involve contested preelection issues.  Without any attempt to identify particular problems in cases where the process has failed, the majority has announced its intent to provide a more expeditious preelection process and a more limited postelection process that tilts heavily against employers’ rights to engage in legitimate free speech and to petition the government for redress.  Disclaiming any statutory obligation to provide any preliminary notice and opportunity to comment, the majority deigns to permit a limited written comment period and a single hearing when the myriad issues raised by the proposed rules cry out for far greater public participation in the rulemaking process both before and after formal publication of the proposed rule.  The majority acts in apparent furtherance of the interests of a narrow constituency, and at the great expense of undermining public trust in the fairness of Board elections.

His dissent may be found here.

In the Notice of Proposed Rulemaking, the Board responded to the dissent.

Note to employers: The NRLB will continue its efforts to help unionize the workplace. It is simply a political issue so don’t get too caught up in the logic of it. Do be aware of your exposure and rights however.

United States Department of Labor EBSA – Homepage Update

The Department of Labor’s Employee Benefits Security Administration has updated its website with the following:

Wal-Mart Stores, Inc. v. Dukes

Respondents, current or former employees of petitioner Wal-Mart, sought judgment against the company for injunctive and declaratory relief, punitive damages, and backpay, on behalf of themselves and a nationwide class of some 1.5 million female employees, because of Wal-Mart’s alleged discrimination against women in violation of Title VII of the Civil Rights Act of 1964. They claim that local managers exercise their discretion over pay and promotions disproportionately in favor of men, which has an unlawful disparate impact on female employees; and that Wal-Mart’s refusal to cabin its managers’ authority amounts to disparate treatment. The District Court certified the class, finding that respondents satisfied Federal Rule of Civil Procedure 23(a), and Rule 23(b)(2)’s requirement of showing that “the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” The Ninth Circuit substantially affirmed, concluding, inter alia, that respondents met Rule 23(a)(2)’s commonality requirement and that their backpay claims could be certified as part of a (b)(2) class because those claims did not predominate over the declaratory and injunctive relief requests. It also ruled that the class action could be manageably tried without depriving Wal-Mart of its right to present its statutory defenses if the District Court selected a random set of claims for valuation and then extrapolated the validity and value of the untested claims from the sample set.

Held:

1. The certification of the plaintiff class was not consistent with Rule 23(a). Pp. 8–20.

(a) Rule 23(a)(2) requires a party seeking class certification to prove that the class has common “questions of law or fact.” Their claims must depend upon a common contention of such a nature that it is capable of classwide resolution—which means that determination of its truth or falsity will resolve an issue that is central to the validity of each one of the claims in one stroke. Here, proof of commonality necessarily overlaps with respondents’ merits contention that Wal-Mart engages in a pattern or practice of discrimination. The crux of a Title VII inquiry is “the reason for a particular employment decision,” Cooper v. Federal Reserve Bank ofRichmond, 467

U. S. 867, 876, and respondents wish to sue for millions of employment decisions at once. Without some glue holding together the alleged reasons for those decisions, it will be impossible to say that examination of all the class members’ claims will produce a common answer to the crucial discrimination question. Pp. 8–12.

(b)

General Telephone Co. of Southwest v. Falcon, 457 U. S. 147, describes the proper approach to commonality. On the facts of this case, the conceptual gap between an individual’s discrimination claim and “the existence of a class of persons who have suffered the same injury,” id., at 157–158, must be bridged by “[s]ignificant proof that an employer operated under a general policy of discrimination,” id., at 159, n. 15. Such proof is absent here. Wal-Mart’s announced policy forbids sex discrimination, and the company has penalties for denials of equal opportunity. Respondents’ only evidence of a general discrimination policy was a sociologist’s analysis asserting that Wal-Mart’s corporate culture made it vulnerable to gender bias. But be-cause he could not estimate what percent of Wal-Mart employment decisions might be determined by stereotypical thinking, his testimony was worlds away from “significant proof” that Wal-Mart “operated under a general policy of discrimination.” Pp. 12–14.

(c)

The only corporate policy that the plaintiffs’ evidence convincingly establishes is Wal-Mart’s “policy” of giving local supervisors discretion over employment matters. While such a policy could be the basis of a Title VII disparate-impact claim, recognizing that a claim “can” exist does not mean that every employee in a company with that policy has a common claim. In a company of Wal-Mart’s size and geographical scope, it is unlikely that all managers would exercise their discretion in a common way without some common direction. Respondents’ attempt to show such direction by means of statistical and anecdotal evidence falls well short. Pp. 14–20.

2. Respondents’ backpay claims were improperly certified under Rule 23(b)(2). Pp. 20–27.

(a) Claims for monetary relief may not be certified under Rule 23(b)(2), at least where the monetary relief is not incidental to the requested injunctive or declaratory relief. It is unnecessary to decide whether monetary claims can ever be certified under the Rule be-cause, at a minimum, claims for individualized relief, like backpay, are excluded. Rule 23(b)(2) applies only when a single, indivisible remedy would provide relief to each class member. The Rule’s history and structure indicate that individualized monetary claims be-long instead in Rule 23(b)(3), with its procedural protections of pre-dominance, superiority, mandatory notice, and the right to opt out. Pp. 20–23.

(b)

Respondents nonetheless argue that their backpay claims were appropriately certified under Rule 23(b)(2) because those claims do not “predominate” over their injunctive and declaratory relief re-quests. That interpretation has no basis in the Rule’s text and does obvious violence to the Rule’s structural features. The mere “pre-dominance” of a proper (b)(2) injunctive claim does nothing to justify eliminating Rule 23(b)(3)’s procedural protections, and creates incentives for class representatives to place at risk potentially valid monetary relief claims. Moreover, a district court would have to reevaluate the roster of class members continuously to excise those who leave their employment and become ineligible for classwide injunctive or declaratory relief. By contrast, in a properly certified (b)(3) class action for backpay, it would be irrelevant whether the plaintiffs are still employed at Wal-Mart. It follows that backpay claims should not be certified under Rule 23(b)(2). Pp. 23–26.

(c)

It is unnecessary to decide whether there are any forms of “incidental” monetary relief that are consistent with the above interpretation of Rule 23(b)(2) and the Due Process Clause because respondents’ backpay claims are not incidental to their requested injunction. Wal-Mart is entitled to individualized determinations of each employee’s eligibility for backpay. Once a plaintiff establishes a pattern or practice of discrimination, a district court must usually conduct “additional proceedings . . . to determine the scope of individual relief.” Teamsters v. United States, 431 U. S. 324, 361. The company can then raise individual affirmative defenses and demonstrate that its action was lawful. Id., at 362. The Ninth Circuit erred in trying to replace such proceedings with Trial by Formula. Because Rule 23 cannot be interpreted to “abridge, enlarge or modify any substantive right,” 28U. S. C. §2072(b), a class cannot be certified on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims. Pp. 26–27.

603 F. 3d 571, reversed.

SCALIA, J., delivered the opinion of the Court, in which ROBERTS, C. J., and KENNEDY, THOMAS, and ALITO, JJ., joined, and in which GINS-BURG, BREYER, SOTOMAYOR, and KAGAN, JJ., joined as to Parts I and III. GINSBURG, J., filed an opinion concurring in part and dissenting in part, in which BREYER, SOTOMAYOR, and KAGAN, JJ., joined.

http://www.supremecourt.gov/opinions/10pdf/10-277.pdf

Transitioning Employees to Managers


Don Phin goes over Transitioning Employees to Managers in this short video.

The NLRB Takes On Social Media

The National Labor Relations Board (NLRB) has been tackling the issue of when the use of social media constitutes “concerted activity” by employees and when that concerted activity is protected under the National Labor Relations Act (NLRA). In April 2011, an NLRB associate general counsel concluded that an employee’s sarcastic “tweets” were not protected concerted activity. In May 2011, the NLRB announced that it was suing two different employers for terminating employees based on their personal Facebook postings, which the NLRB deemed to be protected concerted activity.

Section 7 of the NLRA protects employees who engage in “concerted activity” regarding their “mutual aid and protection.” This has been interpreted to mean that an employee’s actions to raise and discuss concerns about the terms and conditions of employment or to seek to involve other employees in employment issues is protected by Section 7. Whether an employee’s actions constitute protected concerted activity, however, can sometimes be difficult to determine.

Inappropriate and Offensive Tweets Were Unprotected

A reporter with the Arizona Daily Star was terminated because of messages he had posted on Twitter. In early 2010, in reference to punning headlines, the reporter tweeted that some of his colleagues “are the most witty and creative people in the world. Or at least they think they are.” The reporter was told by his managers that he was prohibited from airing grievances or commenting about the Daily Star in any public forum. He continued tweeting about matters related to his beat as a public safety reporter, including a number of sarcastic tweets about city homicides. He was then instructed to refrain from tweeting about anything work related. The reporter also posted a tweet in which he mocked a local television station for a misspelling, stating “Stupid TV people.” A station producer who found the tweet unprofessional contacted the Daily Star. The reporter was suspended and then subsequently terminated for his tweeting activity, which the Daily Star believed to be drawing negative attention to the newspaper.

In an Advice Memorandum responding to the reporter’s NLRB charge that he was terminated in violation of the NLRA, the NLRB’s associate general counsel concluded that the reporter “was terminated for writing inappropriate and offensive Twitter postings that did not involve protected concerted activity” because such tweets were not related to the terms and conditions of his employment. The associate general counsel noted, however, that the employer made statements that could be interpreted to prohibit protected Section 7 activities. Specifically, the associate general counsel referenced the instructions to the reporter to refrain from airing his grievances or commenting about the paper in any public forum, and to stop tweeting about anything work-related. The associate general counsel noted that these statements, which occurred in the context of discipline of the reporter, were not general rules. Moreover, the associate general counsel noted that, “although the statements arguably constituted unlawful restrictions on the [reporter’s] own Section 7 activities, it would not effectuate the purposes and policies of the [NLRA] to issue a complaint where the statements were directed to a single employee who was lawfully discharged.”

Facebook Postings May Be Protected

The NLRB issued a press release on May 18, 2011, announcing that it had issued a complaint against a social services non-profit organization for terminating five employees based on their Facebook postings. The NLRB stated that, prior to a meeting with management to discuss working conditions, an employee posted to her Facebook page a coworker’s allegation that employees were not doing enough to help the organization’s clients. Other employees responded to the posting by defending their work performance and criticizing working conditions, including staffing and workload. The five employees participating in the Facebook discussion were then terminated, on the grounds that their postings harassed the employee referenced in the initial posting. The NLRB asserts that the Facebook discussion constitutes protected concerted activity because it involved the terms and conditions of employment, including staffing levels and job performance.

On May 24, 2011, the NLRB announced in another press release that it had issued a complaint against a car dealership for terminating a sales employee because of Facebook posts that were critical of the dealership. According to the NLRB, the employee and other sales co-workers were unhappy that only hotdogs and bottled water were being offered to customers at a dealership event introducing a new BMW model. The sales employees believed that their commissions could suffer as a result. The employee then posted photos and commentary on his Facebook account, to which other employees had access, that were critical of the food served at the event. The NLRB considers his subsequent termination to be a violation of Section 7, because his posting involved discussion among employees regarding the terms and conditions of employment, thereby constituting protected concerted activity.

Both of these cases will proceed to hearing unless they are settled, like the October 27, 2010 complaint that the NLRB issued against an ambulance service for terminating an employee who posted negative comments on her Facebook page about her supervisor and responded to further comments by her co-workers, as we discussed in our February E-Update. In its press release regarding the settlement, the NLRB stated that the employer had agreed to amend its overbroad social media policies to permit employees to discuss working conditions with co-workers. The employer also agreed not to discipline or discharge employees who engaged in such discussions.

Practical Impact

As we suggested in our February E-Update, employers should carefully draft social media policies so as to avoid an overly broad reach, which the NLRB is challenging. In addition, before taking disciplinary action against employees for social media activities, employers must consider the content of the employee’s commentary, and whether other employees are involved in any discussion. If the discussion is related to the workplace, it is likely to be considered to be protected by Section 7 by the NLRB.

Article courtersy of Worklaw® Network Member firm Shawe Rosenthal (www.shawe.com).

I Smell a Rat–NLRB Says Giant Rats Are OK!

Sheet Metal Workers International Association, Local 15, AFL-CIO and Galencare, Inc., d/b/a Brandon Regional Medical Center and Energy Air, Inc.(12-CC-01258 et al.; 356 NLRB No. 162) Tampa, FL, May 26, 2011.

In this secondary boycott case, the Board majority found that the Union did not violate Section 8(b)(4)(ii)(B) by displaying a large inflatable rat on public property in front of a hospital to protest its hiring of nonunion contractors. The majority also found that the act of a union member standing at a hospital entrance displaying a leaflet with two outstretched arms was not unlawful. The Union had a primary labor dispute with the two contracting companies over the alleged payment of substandard wages and benefits below. Applying its reasoning in Carpenters Local 1506 (Eliason & Knuth), 355 NLRB No. 159 (2010), the Board reversed the administrative law judge and found that the rat display and leaflet display by the union member was not picketing and so was not coercive and unlawful.  Finally, the Board found that because the rat and leaflet display was similar to other “expressive activity” that the Supreme Court has held is protected by the First Amendment, serious constitutional questions would be raised if the Union’s conduct here was found unlawful.

Relying on his dissenting opinion in Eliason, Member Hayes stated that he would affirm the judge’s finding that the rat display and the leaflet display by the union member were unlawful because both actions constituted picketing.  Member Hayes found that the rat display was “tantamount to picketing”, and because the First Amendment does not protect secondary picketing, Member Hayes found no constitutional barrier in finding a violation. 

Charges were filed by the Sheet Metal Workers Local 15.  Administrative Law Judge George Carson II issued his decision on December 7, 2004.  Chairman Liebman, and Members Becker, Pearce, and Hayes participated.

June 2011 Compliance and Culture Newsletter

“Punishing honest mistakes stifles creativity. I want people moving and shaking the earth, and they’re going to make mistakes.”  —Ross Perot

This issue discusses:

  • Editor’s Column: The Two Views of Human Resources
  • Dealing with Body Odor and Other Hygiene Problems
  • The Lawsuits are Coming! The Lawsuits are Coming!
  • Auditing Your Wage and Hour Practices
  • Are Your Employees Grumpy About Groupon?
  • Workforce Planning Risks

We have also provided you with the Form of the Month.

Please click here to view the newsletter in PDF.

The Two Views of Human Resources

Here’s what HR professionals are told to worry about most:

  • FMLA, ADA, EEOC, DOL, OSHA, NLRB, FLSA, OFCCP, GINA, HIPAA, COBRA, Title VII, etc.
  • Discipline, termination, layoffs, bullies, violence, EPLI, etc.
  • Protecting ourselves from all the above.

Here’s what should concern them most:

  • Hiring, orientation, training, performance, teamwork, leadership, time management, systems, strategy, branding, communication, quality, customer service and marketing.
  • Creating a constant improvement process in each of these areas because they help to grow the company.

Of course, you can’t ignore compliance concerns as the article below points out. However, the legalistic concerns can overwhelm and distract us to the point that they blind us to what really matters. Here’s my challenge to HR professionals – whether you’re part or full-time; young or old; experienced or inexperienced, and no matter the size of your company. Carve out time to help your company improve in these strategic growth areas. Make yourself relevant to the bottom line. HR That Works offers a variety of excellent tools to help you do exactly that.

Dealing with Body Odor and Other Hygiene Problems

HR folks have to deal with some unpleasant subjects, and this is certainly one of them. Body odor can present a real workplace challenge. Just ask any space shuttle astronaut or submarine officer. People can have offensive odors for a number of reasons:

  • Soiled clothing or shoes
  • Lack of bathing
  • Bad breath
  • Incontinence
  • Menstruation
  • Liver and other organ problems
  • Diet
  • Bad perfume
  • Too much perfume
  • Smoking
  • A problem with sweating
  • Disability

Employers can try to prevent this problem in general by providing effective air circulation systems, odor eaters, employee uniforms, employee flexibility – and, if necessary, a human resource policy.

To deal with body odor, follow these steps:

  • First, verify all complaints personally to make sure there’s no teasing, bullying, etc. Then verify the complaint personally.
  • If the employee has body odor, have a direct conversation – don’t beat around the bush. Often, employees won’t realize they have a problem until you tell them. Say, “We’ve had complaints from a number of co-workers about offensive body odor and I have had those complaints verified. (If appropriate: I can understand their concern). Are you aware that you have this problem?
  • At this point, an employee can deny knowing about the problem (honestly or otherwise) or, they can admit knowing about it. They can say either that they’ll try to take care of the problem or that they don’t care what other people think about it. They might also claim that they’ve tried to do all they can, but they have a physical disability that prevents them from doing any better.
  • If an employee does not claim to have a medical problem and won’t do anything to improve their condition, you have the right to terminate them, or perhaps even better, give them unpaid time off to think about whether they want to come back to work a “fresher” person. If they claim there’s a medical basis, you need to have an accommodation discussion (more on that later). Either way, ask the employee to take care of the problem and ask if there’s any way you can help them. This is a matter of common decency, whether required by the ADA or not.
  • Watch out for any potential discrimination or national origin claims that the employee might make based on what you say or by what managers or co-workers have said. Go back to these employees and let them know you’re taking care of the problem and that they should not tease or discuss it with the employee.
  • Consider holding accommodation discussions. If the employee claims the problem arises from a disability and you’re subject to the ADA (15 or more employees) or FEHA (five or more in California), you’re required to have an accommodation dialogue. Begin by starting a paper trail and have the employee get their physician to identify the nature of their disability, the limitations, and ways to mitigate its effects. Use the forms on HR That Works. Accommodations might include working from home, allowing the employee to obtain the appropriate treatment, moving their working location, or perhaps reassigning them to another job.

Ultimately, if there’s no “reasonable” accommodation because anything you can do would cause an undue burden on the company, you do not have to accommodate that employee. For further accommodation information, check out the HR That Works ADA Training Module. Also, consider looking at the Job Accommodation Network’s Web site at www.askjan.org.

The Lawsuits are Coming! The Lawsuits are Coming!

A recent article in Corporate Counsel Magazine discussed the reality that “employees are suing like never before.” For example, “skycaps, bank loan officers, bartenders, phone company engineers, financial research associates, exotic dancers, drug store assistant managers, computer technicians, janitors, paramedics, delivery truck drivers, exterminators, waiters, cable TV repair workers, and chicken processors all sued their employers over pay issues in 2010.” Defense counsel claims that the employment law arena is like “the new slip and fall cases for plaintiffs’ attorneys.” Of course, the recession, layoffs, high unemployment, and an administration that encourages victimization have a lot to do with it.

Companies today face constant challenges from new regulatory requirements. Under the Obama Administration we’ve had updates to the FMLA and ADA, an expansion of the NLRB and EEOC agenda, more wage and hour and discrimination claims filed than ever, and a continuing class-action frenzy. Not surprisingly, many of these cases lack merit. Just as plaintiffs’ counsel will file large class action claims, knowing that they will probably force a company to settle rather than litigate, many individual claims also lack merit. The EEOC settles approximately 80% of claims without any finding of discrimination.

Wage and hour class action claims remain the biggest concern for large companies, Most of the companies of the size that use HR That Works (with an average of 15 to 500 employees) are too small to create a class large enough for most plaintiffs’ lawyers. However, companies remain subject to individual wage and hour claims, as well as allegations of discrimination.

Finally, there’s a widespread fear of discrimination litigation. According to the EEOC, these cases involved: Race (35.9%), sex (29.1%), disability (25.2%), and age (23.3%). Interestingly, the largest category of claims filed involved retaliation (36.3%), most of them based on Title VII complaints. Other categories of claims involved national origin (11.3%), religion (3.8%), the Equal Pay Act (1%), and GINA (.02%). As far as I can see, there’s no end in sight. We’re only beginning to deal with an activist NLRB. The EEOC wants to extend its reach, especially in background checks and compliance concerns related to government contractors. The commission has been on a hunt after 1099 misclassification cases, and 22 states have introduced legislation to outlaw bullying in the workplace.

The article concludes by noting that the U.S. Supreme Court will be ruling on three large class action cases, including Duke v. Walmart. How the court decides these cases will have a huge impact on large companies and a lesser effect on small to medium-sized firms.

Here’s the lesson in all of this: Although you might be small enough to avoid the notice of the plaintiffs’ employment bar for the moment, the odds will catch up with every employer eventually. Sound risk management requires you to have comprehensive Employment Practices Liability Insurance (EPLI), together with the necessary policies, procedures, and training. Once an employee lodges a complaint, investigate it promptly and thoroughly, usually with the help of counsel.

Auditing Your Wage and Hour Practices

Given the wage and hour litigation that misclassification claims generate, I wonder why companies pay anyone but their top executives on a salary-exempt basis. The so-called “prestige” and extra effort from employees that a company gains by offering the exempt status does not offset the potential loss of time, money, and resources arising from litigation. To minimize unnecessary wage and hour claims, the HR That Works Compliance Audit recommends some of these guidelines.

  • Audit your exempt status employees. Do they truly fit under a professional, managerial, administrative, computer or other exemption? If you determine that they don’t, see the White Paper: So You Have a Wage Claim Exposure – What Do You Do About It?Consider having attorneys conduct or manage these audits.
  • Make sure to have time records recorded and maintained accurately. Perhaps the biggest challenge in the area involves employees having time for rest and meal periods deducted automatically when, in fact, they didn’t take those breaks at the specified time. Teleworkers, remote workers, and portal-to-portal issues come up in many suits. Many smaller companies don’t have time clock mechanisms and rely on either manual entries or word of mouth. If such a company faces an audit, they’d find it hard to disprove an employee’s allegation of overtime. Make sure your managers and employees receive proper training on time-keeping protocols.
  • Have employees certify that their time records are accurate. This newsletter offers a form to help with this.
  • Consider using sophisticated methods to tie-in time clocks with time on the computer, at the register, clocking in and out of buildings, and so on.
  • Store your personnel, time and wage records for at least four years.
  • If you require employees to drive in company vehicles to and from a job site, or to transport heavy equipment to and from work, make sure that they receive proper pay for this time.
  • Provide adequate rest periods, including at least 30 minutes for lunch.
  • Be sure that salaried, non-exempt employees receive overtime pay, even without authorization.
  • Provide supervisors with overtime authorization forms (including the client or work project, work to be done and expected amount of overtime), which they must sign before an employee works overtime.
  • Make sure that your sales compensation program clearly defines when employees “earn” commissions, and what happens to uncollected commissions after the employee leaves the job.
  • Provide a cap on accruals in your PTO and vacation policies.
  • Comply with labor enforcement standards for the employment of minors (obtain work permits, etc.).

Are Your Employees Grumpy About Groupon?

Although more and more establishments are taking advantage of such programs as Groupon and Living Social, many of these firms – and their employees – come to regret the experience. Failure to manage these programs properly can destroy their value. Before you run an online promotion such as Groupon, ask yourself these questions:

  • What are the short-term and long-term benefits of this promotion? How does it fit into your overall marketing plan? Are you prepared to lose money on the deal short term to capture a long-term customer?
  • How will you staff around the promotion? A few days after the promotion hits, you can expect a mass influx of customers. Bear in mind that business might also peak in the last few days of the promotion as people scramble to cash in their coupons.
  • How do you position the promotion to your team? Why should they get on board with it? What’s in it for them? If you’re running a restaurant, how will you prepare employees to deal with more business, and unfamiliar, possibly annoying customers? Will you be helping them with additional staffing and/or paying overtime? Anticipate employees’ potential concerns and resistance before you launch the promotion. Get them involved in ideas that can make it a success.
  • What type of training will you provide to make sure the promotion goes according to plan? For example, when a restaurant customer presents a server with a Groupon coupon, will they react with a smile because they see a new customer and the promotion is working, or a frown because they anticipate a poor tip? Train servers to say something like “I’m glad to see that you’ve taken advantage of the Groupon promotion! My name is Amy, and I’m here to give you great service today. Please let me know how I can help. Have you been here before? (The idea is to start getting important information about new customers). Offer customers some type of “cheat sheet” to fill out and then attach to the coupon they hand in. Remember, you want to capture as much data as possible to know if this is truly a first-time customer or just someone taking advantage of the current discount.
  • How will you help the customer recognize that the wait staff lives on their tips or salespeople on their commissions? For example, I’ve heard that many Groupon restaurant customers offer lower tips, especially because they base their math on the cost of the coupon. You might want to show a recommended tip on the bill (15% of a normal bill = X. 20% = Y).
  • So that you’re on top of managing the promotion, plan to get feedback from your staff right away, and be ready to make changes on the fly.
  • Know how you’ll end the coupon customer’s experience. At the end of the visit, you might have employees say: “Thanks for visiting us today! You know, if you give us your e-mail address or phone number, we’ll e-mail or text the great specials we offer on a regular basis. If you have a business card, we’ll enter the information into the program or I can give you a card to complete. If you want to discontinue receiving these promotions at any time, just cancel the notifications.” If you’re running a restaurant, put a notice on the menu or bill to the effect that “Many customers love taking advantage of our frequent promotions. If you haven’t signed up for our notifications, please ask your server about this.”

Promotions are great. The right ones can help grow a business quickly – and destroy one quickly, too! Make sure to plan your promotions well and include your entire team in the process.

Workforce Planning Risks

Workforce planning refers to everything from filling open positions to the inclusion of HR metrics. For our purposes, think in terms of the flow of employees through the company. As with any risk management, begin by assessing the risks involved:

  • Access to available talent
  • Cost per hire and time for hire
  • Retention and turnover
  • Productivity and quality
  • Layoffs and downsizing
  • Retirement and redevelopment
  • Compensation structures
  • Compliance exposures, including Title VII violations and compensation violations.

For example, if your turnover rate is 15% and the industry rate is 11%, your company might be at greater risk. However, if your higher turnover rate results from strict performance demands, you might end up having the most profitable company in the industry. Be sure to weigh the specific risks in every situation. For example, if a company has to pay overtime because it can’t staff positions quickly enough, it ends up not only paying higher compensation, but burning out the workforce and increasing turnover, thus exacerbating the problem. The company might plan to ameliorate this risk by using a temporary staffing firm to help them with their short-term staffing needs.

Other risks are more difficult to quantify, such as a failure to conduct proper succession planning. Great companies know who’s in the pipeline for all critical positions – sometimes the bench is two or three players deep. Other companies “run bare,” putting themselves at risk if they should lose one of their key employees. One solution: Key Person insurance.

Do you have a plan to manage the workforce planning risks most critical to your organization? HR That Works provides training and strategic tools that can help you deal with many of these risks.

Form of the Month

Time Sheet Certification Form (PDF) – Use this form to make sure that employees report their work hours accurately.

(HR That Works Users can access this form in Word format by logging on to the site).

Podcast

Click here to to listen to this month’s newsletter podcast.

 

 

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