I recently received this email from a competitor of ours, BLR. While I believe they have excellent compliance resources I also believe they are dead wrong in what is most important.

You see, the #1 goal of HR should be to help grow the company. That’s the biggest risk ownership will ever face. That’s what they tell us in our surveys and in my workshops with them. That means you help hire well, drive performance and retain your winners. Guess what?…do that and chances are you don’t get sued. And, any exposure to an EPLI claim should be capped with the purchase of an EPLI policy.

Unfortunately, the lawyers and compliance publishers want to you live in fear, not abundance. My advice…don’t listen to that nonsense! Get your compliance blocking and tackling in place and then look to be a strategic partner. There are a ton of tools on HR That Works to help you do just that!

The Department of Labor (“DOL”) has issued Technical Release 2013-02 outlining employers’ obligations to provide notice to employees of coverage options under the Affordable Care Act’s health insurance exchanges (which the Departments have re-branded as “marketplaces”). The original deadline to provide this notice was March 1, 2013; however, the DOL delayed the requirement pending regulations to be issued at a later date. Although the DOL has still not released the promised regulations, the guidance sets a new effective date of October 1, 2013, the same day that open enrollment on exchanges is scheduled to begin. The DOL said that it issued this guidance in response to employer requests for model notices, as well as to coordinate with recent IRS guidance on minimum value.

Content & Delivery. The guidance reiterates that the notice requirement applies to all employers who are subject to the FLSA. These employers must provide notice to current employees by October 1, 2013. Regarding new employees, the guidance specifies that, beginning on October 1, 2013, employers must provide notice to new employees at the time of hiring. For 2014, however, the DOL will consider notice to be provided at the time of hiring if the notice is provided within 14 days of an employee’s start date. The notice must be provided automatically and free of charge. While the notice must be in written form, it may be provided via mail or electronically (if existing requirements for electronic disclosures are met).

The notice must be written in a manner calculated to be understood by the average employee and must inform employees of the following:

• information regarding the existence of the Marketplace (again, formerly referred to as exchanges), including a description of the services provided by the Marketplace, and the manner in which the employee may contact the Marketplace to request assistance;
• that the employee may be eligible for a premium tax credit under section 36B of the Internal Revenue Code, if the employer plan’s share of the total allowed costs of benefits provided under the plan is less than 60 percent of such costs and the employee purchases a qualified health plan through the Marketplace; and
• if the employee purchases a qualified health plan through the Marketplace, the employee may lose the employer contribution (if any) to any health benefits plan offered by the employer and that all or a portion of such contribution may be excludable from income for Federal income tax purposes.

To satisfy the content requirements, model language is available on the DOL’s website at www.dol.gov/ebsa/healthreform. There is one model for employers who do not offer a health plan and another model for employers who offer a health plan for some or all employees.  Employers may use one of these models, as applicable, or a modified version, provided the notice meets the content requirements described above.

The language of the model notices is relatively straightforward; however, the notices leave out certain important information that will undoubtedly create additional challenges and frustration for employers’ HR departments. For example, although the content requirements specify that employers must inform employees of the manner in which the employee may contact the Marketplace to request assistance, the model language only directs an employee to the HealthCare.gov webpage for more information. The model notices also are not state specific–i.e. they do not specify what type of exchange will be run in the particular state.

This guidance will remain in effect until the DOL issues regulations or other guidance. The DOL specified that future regulations or other guidance on these issues will provide adequate time to comply with any additional or modified requirements. When that additional guidance will come is unclear; however, the model notices’ approval by the Office of Management & Budget (required under the Paperwork Reduction Act) expires on November 30, 2013.

Deadline for employers to comply with notice requirements is October 1, 2013.

Article courtesy of Worklaw® Network firm Lehr Middlebrooks & Vreeland, P.C.

Here is a link to the 2013 Consumer Action Handbook. I would make sure all my employees are familiar with it!

“You’re off to great places, today is the day: Your mountain is waiting, so get on your way!” –Dr. Seuss

This issue discusses:

• Editor’s Column: 10 Personnel Management Challenges for CEOs
• Make Sure Volunteer Workers Carry Workers Comp
• EEOC Credit Report Lawsuit Dismissed
• 2012 EEOC Claims Near 100,000 Mark
• An Employee Referral System That Works

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

Please click here to view the newsletter in PDF.

Editor’s Column: 10 Personnel Management Challenges for CEOs

Over the years, I’ve had the chance to do hundreds of three-hour workshops for CEOs about personnel practices. In light of this experience, I’d like to share 10 challenges that CEOs and executives face when it comes to personnel management.

1. The difficulty in finding new talent. The good news is that most of these employers expect to do more hiring than firing this year. The challenge is that most of the good employees are already taken. Perhaps the biggest mistake is thinking that you find these people, as opposed to attracting them. To attract talent, you have to position yourself as an employer of choice – a great place to work. Companies such as Costco, Southwest Airlines, and my beloved In-N-Out Burger do this so well that they don’t need to go find anybody.
2. Problems in retaining top talent. This is the flipside of the conversation above. In the marketplace of talent swapping, some companies will win, while others lose. To what degree do you have a philosophy, strategies, and tools to make sure you are retaining top talent? Do you understand why people either come to work for you (through a post-hire survey) or why they leave you (an exit interview)? Do you tap into their opinions and concerns with surveys, focus groups, and one-on-one conversations? Remember: Turnover is contagious.
3. Lack of managerial leadership. When we run 75 miles an hour and promote people into management, chances are that this happens with little or no training. Fact is, half of managers in your industry are above average and half are below average. Guess who gets more training? You need to train managers in business acumen, communication, basic compliance, team building, and systems understanding. Most important, they need training in time management so that they can spend 80% of their time adding the value they can – and only 20% doing administrative tasks.
4. Low employee engagement. This is easy to understand when we’ve just gone through a difficult recession, which has limited raises, cut benefits, and stunted growth opportunities. On top of that, it feels that we have a federal government that fosters an us versus them mentality with the workforce. Perhaps the question for leadership is “how can we help our employees?” How can we help them become more productive so they can grow in their careers? How can we help them find greater meaning in the work they do every day? How can we help them gain more control over the direction of their career? As Shakespeare stated so eloquently, “To work we love with delight we go.” What would it take for your employees to love the work they do every day?
5. Failure of management to benchmark or improve performance. Performance management is one of my favorite subjects. To begin with, do you have a specific goal for improving performance? Sure, you want sales to increase by 10%, but do customer service reps, the receptionist, and the CEO have a goal to increase their specific performance by 10%? The next question is: What are you trying to improve? What aspect of performance is most important? If you have a high growth company, perhaps what matters most is quick hiring, onboarding, and training performance. If you’re a restaurant, perhaps your food is great but your wait staff is abysmal. Focus on your strategic objective.
   Here’s a question I encourage everyone to ask those who report to them and, if you’re the one doing the reporting, to ask yourself: “What are the three most important things this employee does every day?” What good is a performance management approach if you can’t be on the same page as this question? When you have determined this, ask: “How would you know if you were doing your job well without having to ask me or without my having to tell you?” Once the employee can answer this question to your mutual satisfaction, you have legitimate benchmarks. The question then becomes: How can you improve? What training, resources, support, etc. do you need to supply this employee so they can perform at their best? Remember, as both Peter Drucker and Dr. Deming said: Nine out of ten employees want to do a good job every day; it’s the system they find themselves in that creates problems.
6. Misaligned compensation, benefits, and incentives. Here’s another of my favorite subjects. Exactly why do you have healthcare, 401(k) or other benefits? Do they help you to hire better talent? If so, how would you know? Do benefits help you retain talent and improve performance? How would you know? If these benefits don’t tie into your strategic objectives, the chances are that you’re wasting many of them – and at a hefty price tag. I’ve begun working with a genius who is turning the benefits sales process on its head. By running algorithms of employee data and healthcare expenses, he can define the optimum benefit mix for an employer, which it then takes to the marketplace – as opposed to the marketplace telling the employer what plans are available for their demographics. Finally, how benefits are managed can impact productivity. For example, sick pay can actually grow healthcare expenses and reduce productivity. Not surprisingly, San Francisco and now Portland actually require employers to offer sick pay. How about providing wellness pay or paying people for being at work? Bear in mind that any incentive you use has both negative and positive consequences.
7. Failure to execute strategic initiatives. We live in a rapidly shifting business environment that requires us to manage change quickly and successfully. If you haven’t done so, please watch the recorded webinar I did on Change Management and have your entire management team do the same. (If you don’t have access to HR That Works, let me know and I’ll send you a link to it). The webinar makes two major points: First, one of the traps of the hero is over-commitment. This holds true of both individuals and the company as a whole. When we over-commit, we tend not to live up to our commitments – which generates mistrust. Secondly, strategic initiatives require buy-in. Just as in sales you want to make the purchase the buyer’s idea, when it comes to change management, you want it to be the idea of your supervisors and employees. Give them some ownership of the idea and you’ll find them onboard with it. Because change will remain a constant, we’ll need to keep, coaxing, encouraging, and inspiring each other towards growth. When we stop the over-commitment and focus on execution, we’ll keep growing the bottom line.
8. Finding time for management. Too many executives and managers mismanage their use of time so badly that they’re on overload and unable to take on any growth objectives. Most top CEOs I know take at least a few days a month away from the job so that they can work on the business instead of just working in the business. Google is smart enough to allow its employees to do this one day a week. As Stephen Covey reminded us in the Seven Habits of Successful People, you need to keep sharpening the sword. Everyone in your company needs to understand and execute time management techniques. I’ve produced an HR That Works Time Management Training Module that can help you and your managers with this.
9. Lack of commitment to or interest in human resources. I realize that many business owners and executives feel that HR is boring, or worse. They didn’t have to know anything about it to start a business. Even though they often have little or no idea on how to run an HR department or function, in one-on-one meetings with their peers in Vistage, executives usually describe personnel issues as the major challenge facing them. The fact that employee relations just isn’t their thing provides an incredible opportunity for HR professionals to offer the expertise needed.
10. Failure to understand the bottom line potential of HR. Business owners are revenue animals who often don’t see personnel practice as generating revenue. This has been a long-standing uphill battle for HR. There’s a reason why Fast Company magazine years ago published an article, “Why I Hate HR.” In reality, many companies have great HR practices which form the foundation of their bottom line success. For example Jack Welch stressed the importance of HR practices as an economic driver in his years at GE. In fact, he’s still talking about it.

If you own, run, manage, or advise a company, addressing these HR challenges provides a unique competitive advantage!

Make Sure Volunteer Workers Carry Workers Comp

The California case of Diane Minish v. Hanuman Fellowship carries a valuable lesson for anyone involved with nonprofit organizations.

After Diane Minish, a volunteer worker with the nonprofit Hanuman Fellowship was accidentally thrown from a forklift, she sued the organization for negligence. Hanuman argued the exclusivity of Workers Compensation as a remedy, claiming that its Comp policy covered the plaintiff. Although Minish did receive comp benefits, she felt they were too low – and so she sued for more. As in many states, under California law, “private, nonprofit organizations are not required to provide [Workers Compensation] coverage for volunteers (see §§ 3700 [requiring coverage for employees]; 3352, subd. (i) [volunteers are not employees]), section 3363.6 allows them to do so if they choose.” Although the statute is awkward and disjointed, it provides, in essence, that a volunteer becomes a covered employee if the board [of the nonprofit] so declares in writing before any work-related injury.

Minish argued that she had not agreed to this arrangement:

“Plaintiff contends that under section 3363.6, a declaration rendering volunteers covered employees does not become effective unless and until an affected volunteer has notice of the declaration and voluntarily accepts Workers Compensation coverage before any injury. Thus, because the undisputed evidence establishes that she did not receive such notice and did not voluntarily accept Workers Compensation coverage before the accident, the Act was inapplicable. “

The court disagreed, ruling that

“Here, of course, without the slightest advance warning, Hanuman plunged Minish into the toils of the Workers Compensation system not only without her knowledge, but – as soon as she learned of it – very much against her will. Section 3363.6 does not explicitly require notice to volunteers that they have been deemed volunteer/employees. Nor does the statute provide that such status must be accepted by each volunteer individually…. In short, we reject the plaintiff’s claim that section 3363.6 imposes a notice and acceptance requirement.”

However, the court dismissed the argument that Minish was “estopped” from denying the exclusivity because of the fact that she used the Workers Comp system. So, although the suit will go back to court, chances are that she will lose in her attempt to claim negligence.

The bottom line: Whether you sit on a non-profit board, run a non-profit, or advise one, make sure you do what’s required under state law to make sure that your volunteers: a) sign liability waivers and b) get Workers Comp coverage. Doing so will help avoid an ultra-expensive negligence claim. Also, make sure that your insurance coverage addresses such claims where the doctrine of workers comp exclusivity does not apply.

EEOC Credit Report Lawsuit Dismissed

The EEOC received plenty of publicity from its 2010 lawsuit against Kaplan Higher Education (EEOC v. Kaplan Higher Educ. Corp., N.D. Ohio), alleging that the company’s use of credit reports as a factor in hiring decisions for financial aid positions had a discriminatory impact based on race and, thus violated Title VII of the 1964 Civil Rights Act. A federal district court dismissed the EEOC suit on January 28, 2013.

Kaplan did not track the race of its applicants, and was not required to do so. To show a discriminatory impact based on race, the EEOC hired expert “raters” to determine the race of applicants by pictures and other information, and thus evaluate whether Kaplan’s practice had a discriminatory impact. In dismissing the case, the court held that the commission failed “to present sufficient evidence that use of ‘race raters’ is reliable.” The court also chastised the EEOC saying that, “It is clear that EEOC itself frowns on the very practice it seeks to rely on in this case and offers no evidence that visual means is accepted by the scientific community as a means of determining race.” The court concluded that because EEOC’s expert “relied on data obtained by unreliable means … whether the jury could ultimately ‘correct’ the process employed by the ‘race raters’ is irrelevant.”

The court ultimately dismissed the case because the EEOC did not provide sufficient evidence to make its case.

Don’t be surprised if the commission keeps pursuing claims that the use of tests, credit reports, and other background checks has a discriminatory impact on blacks, Hispanics, women, and others. The EEOC will simply look for another case and try to correct the evidentiary issue that resulted in the dismissal of its claims against Kaplan.

2012 EEOC Claims Near 100,000 Mark

The Equal Employment Opportunity Commission handled nearly 100,000 claims in 2012. According to the commission’s press release, “The U.S. Equal Employment Opportunity Commission (EEOC) …received 99,412 private sector workplace discrimination charges during fiscal year 2012, down slightly from the previous year. The year-end data also show that retaliation (37,836), race (33,512) and sex discrimination (30,356), which includes allegations of sexual harassment and pregnancy were, respectively, the most frequently filed charges. The fiscal year 2012 enforcement and litigation statistics, which include trend data, are available on the EEOC’s website.

The press release added that:

“In fiscal year 2012, the EEOC filed 122 lawsuits, including 86 individual suits, 26 multiple-victim suits (with fewer than 20 victims) and 10 systemic suits. The EEOC’s legal staff resolved 254 lawsuits for a total monetary recovery of $44.2 million. EEOC also continued its emphasis on eliminating systemic patterns of discrimination in the workplace. In fiscal year 2012, EEOC completed 240 systemic investigations which in part resulted in 46 settlements or conciliation agreements. These settlements, achieved without litigation, secured $36.2 million for the victims of unlawful discrimination”

What the EEOC didn’t mention is that it’s backing off a bit on its aggressive litigation stance due to a combination of tight budgets and mixed courtroom results. For example, as mentioned in the previous article, a federal district court recently dismissed the commission’s well-publicized credit background lawsuit.

I for one, hope the EEOC focuses more on education and conciliation, rather than litigation.

An Employee Referral System That Works

provide a valuable source of new workers, many employees are reluctant to provide referrals because they’re afraid that they’ll take the blame if the new hire doesn’t work out.

Here are a few ways to reduce this fear:

• Provide a worthwhile financial incentive for referrals. Money can do wonders to overcome the fear of embarrassment.
• Consider a mix of contests, raffles, etc. in addition to cash making referrals more fun and competitive.
• Think in terms of the new employee’s lifetime value. If a worker can earn the company $50,000 per year for an average of three years, how much would you be willing to invest to get this return? If you pay recruiters 10% to 30% of the new hire’s annual salary, does it make sense to pay an employee only 1 or 2% for a referral?
• Space out the referral bonus in quarterly payments, based on specific benchmarks. For example, you can give an initial payment for the referral, a second if the employee is hired, another one at six months, and the final one on the new hire’s anniversary date.
• Train employees on how to approach prospects and make it easy for them to tell the prospect your company story. Give them a pamphlet, some type of document, or a web page link that defines the business and the opportunity the position offers the prospect.
• Finally, measure the program’s results on a regular basis so that you can keep improving it.

Form of the Month

Workplace Violence Assessment Survey (PDF) – There’s no doubt that violence has raised its ugly head in the workplace. Here’s a form to help you assess the exposures at your company.

Podcast

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

REPRINT POLICY: Reprints are welcome! All you have to do is include the following notation with reprinted material:

©2013 Reprinted with permission from HRThatWorks.com, a powerful program designed to inspire great HR practices.

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We recently hosted a webinar with Rick Betterley of the Betterley Report. Rick is the foremost expert on Employment Practices Liability Insurance (EPLI) coverage. Here are some of the notes from our webinar with him as well as from the Betterley Report. To learn more about the Betterley Report, go to Betterley.com.

To begin with, there has been an increase in rates as well as in retentions (the deductible an employer has to pay). While there hasn’t been much change in coverage, underwriters are raising rates anywhere from 10-25%. The EPLI industry is a $1.6 billion business. According to Rick, underwriters are not very excited about insuring employee leasing and temporary staffing companies, educational and religious entities, public entities, law firms, investment banks, and the entertainment industries. Also considered undesirable employers are extended care (nursing home) facilities, real estate/property management companies, auto dealers, and technology companies. What this tells me is that all of the above mentioned entities could greatly benefit from using HR That Works!

One of the greatest concerns is the ability of an employer to select the counsel they would like to use should they get sued. Of course the insurance agencies would like to make their lives simple and work solely with one of the nationwide law firms and not with your local counsel. However, if they are qualified, chances are that during negotiation you can name those local attorneys as your panel counsel. As you can well imagine, we highly recommend you use one of the Worklaw® Network firms that helps support the HR That Works program.

One of the greatest concerns in terms of exposure are class action wage and hour claims. Most insurance companies have been very reluctant to underwrite these claims except for the cost of defense. They will not underwrite indemnification (payment of the underlying wage claim) because they feel that is greatly within an employer’s control (why bother paying for overtime when you can simply have the insurance company do so for you if ever get sued). In April, Aon announced a wage and hour coverage for large employers. Unfortunately, this coverage is not available yet for small employers, but perhaps Aon has kicked off a trend.

As Rick reminds us, most larger employers have EPLI coverage; however, for most HR That Works sized employers it’s more like a 50/50 proposition. Our advice is this: Don’t go bare and negotiate for some EPLI coverage and, if necessary, with a high retention rate.

Here are some excellent resources regarding the Affordable Care Act:

• http://www.dol.gov/ebsa/healthreform/
• http://www.healthcare.gov/law/
• http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions
• http://www.medicaid.gov/AffordableCareAct/Affordable-Care-Act.html
• http://democrats.senate.gov/pdfs/reform/patient-protection-affordable-care-act-as-passed.pdf
• http://www.dpc.senate.gov/healthreformbill/healthbill04.pdf
• http://www.whitehouse.gov/healthreform
• http://healthreform.kff.org/
• 4/18/13 Webinar Q&A

Also check your BNA State Law Summary for information on State Mandates and Health Care Exchanges.

“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”  ― R. Buckminster Fuller

Today is Earth Day! Companies can do some very basic things to change to a green model:

1. Recycle
2. Reduce waste, including use of plastics and paper
3. Reduce energy use
4. Telecommute and ride-share
5. Adopt a local green charity
6. Use sustainable carpeting, furniture, etc.
7. Ask employees and leaders “how can we be more green”?

Check out these great websites:

http://www.green.harvard.edu/offices
http://www.corporate-sustainability.org
http://www.envirolink.org

Here’s to supporting Mother Earth!

The Department of Labor’s Employee Benefits Security Administration has updated its website with the Annual Report on Self-Insured Group Health Plans:

• Annual Report to Congress, available at www.dol.gov/ebsa/pdf/ACAReportToCongress033113.pdf
• Appendix A, available at www.dol.gov/ebsa/pdf/ACA-ARC2013.pdf
• Appendix B, available at www.dol.gov/ebsa/pdf/ACASelfFundedHealthPlansReport033113.pdf
• News Release, available at http://www.dol.gov/ebsa/newsroom/2013/EBSA040113.html

USERRA is the law designed to protect military service personnel. The regulations that govern layoffs say:

Sec.  1002.42  What rights does an employee have under USERRA if he or she is on layoff, on strike, or on a leave of absence?

    (a) If an employee is laid off with recall rights, on strike, or on a leave of absence, he or she is an employee for purposes of USERRA. If the employee is on layoff and begins service in the uniformed services, or is laid off while performing service, he or she may be entitled to reemployment on return if the employer would have recalled the employee to employment during the period of service. Similar principles apply if the employee is on strike or on a leave of absence from work when he or she begins a period of service in the uniformed services.

    (b) If the employee is sent a recall notice during a period of service in the uniformed services and cannot resume the position of employment because of the service, he or she still remains an employee for purposes of the Act. Therefore, if the employee is otherwise eligible, he or she is entitled to reemployment following the conclusion of the period of service even if he or she did not respond to the recall notice.

    (c) If the employee is laid off before or during service in the uniformed services, and the employer would not have recalled him or her during that period of service, the employee is not entitled to reemployment following the period of service simply because he or she is a covered employee. Reemployment rights under USERRA cannot put the employee in a better position than if he or she had remained in the civilian employment position.

So, if an employee is laid off while on military leave, or if the job you had was eliminated altogether, they still may have a right to re-employment. That’s because of the escalator theory. They are entitled to keep seniority while away. So, if they hadn’t been called to duty, there’s a possibility that they could’ve “bumped” another employee with less seniority out of the way of an open job. Or, maybe they could’ve found another, different job with the employer.

Generally, they can’t be laid off simply because there were advances in technology or changes in the employer’s methods while you were on active duty. The employer must make reasonable efforts to retrain a serviceman on the new technology or processes.

If an employer doesn’t make job-related decisions based on seniority, and they would’ve been laid off even if not on military leave, then there is no protection. A good example of is when an employer makes a reduction in force (RIF) such as when it shuts down all or part of its operations.

Similarly, if workers are laid off with the expectation that they’ll be rehired or “recalled,” then, absent seniority and bumping rights, it’s possible that they’ll be rehired to a laid-off position when they return from service. USERRA isn’t meant to put servicemen (and women) into a better position than they would’ve enjoyed if not called up. Rather, it’s just supposed to make sure they’re treated fairly while away.

We are excited to be able to present this unique and dynamic full-day workshop for Business Owners and HR Executives in the Phoenix/Tempe area on May 22. Learn how you can cut benefits costs by thousands of dollars…per employee! Learn how inspired HR practices can grow the bottom line and your career! Qualifies for 7 strategic HR recertification credits.

To learn about program details click here. To register for the program click here. See you in May!