Tag: Background Checks
The Obama administration is getting pushed back in the courts. This time in the case of EEOC v. Freeman. The overly aggressive political stances of the EEOC and NLRB are taking a toll on employer sanity and the courts are beginning to call the administration on its non-sense. The judge in this case responded to the political agenda with a legal one. Basically that there are no facts to support the position that these background checks are not done for legitimate reasons, but for discriminatory ones. Even where they may be a disparate impact in result. I’ll be very curious to see where the case evolves from here. Someday we will have an administration that once again rewards those who act responsibly, without blame or justification. That day can’t come soon enough.
As stated by the Court:
“For many employers, conducting a criminal history or credit record background check on a potential employee is a rational and legitimate component of a reasonable hiring process. The reasons for conducting such checks are obvious. Employers have a clear incentive to avoid hiring employees who have a proven tendency to defraud or steal from their employers, engage in workplace violence, or who otherwise appear to be untrustworthy and unreliable…. “While some specific uses of criminal and credit background checks may be discriminatory and violate the provision of Title VII, the EEOC bears the burden of supplying reliable expert testimony and statistical analysis that demonstrates disparate impact stemming from a specific employment practice before such a violation can be found. For the reasons explained below, the EEOC has failed to do so in this case.”
I suggest any business leader or HR executive read this very insightful opinion. One reason is that the process the company followed in managing this challenge was laudatory. In a sense the EEOC picked on the wrong company.
“No amount of happiness can buy money.” —Jack Nordhaus
This issue discusses:
- Editor’s Column: Where’s Your HR ‘Edge’?
- Social Media Background Checks Make Sense
- Life Expectancy: Reality Check
- Who’s Really Supporting The Economy?
- There’s A Lot to Know About HR!
- Getting Commissions Agreements Right
- The Cost of Not Having Employment Practice Liability Insurance
- Inspired HR: An ‘Inside-Out’ Opportunity
We have also provided you with the Form of the Month.
Please click here to view the newsletter in PDF.
Editor’s Column: Where’s Your HR ‘Edge’?
Where’s your edge? This is the question Sounds True founder, Tami Simon, asks her New Age guests. Their answer is usually the most interesting part of the interview.
So I ask you the same question. What are you doing in HR at your company that excites you? What are you doing that’s cool, different, outrageous, experimental, and otherwise, really edgy?
If your answer is silence, you have a serious problem. What do you think will happen if your competition is focused on creating an “edge” and you’re not? Kind of like Southwest Airlines vs. American, United, etc.
Pushing for the edge helps keep us going here at HR That Works. Sure we focus on doing the HR blocking and tackling as well as we can — but we also want to make sure that our clients keep looking for their edge. For example, what if you distributed the Creativity Checklist and Employee Suggestion forms to your entire workforce? I’ll bet that you can discover a lot of edge lying dormant at your company. Trust me. Just do it. One good idea can more than repay your investment in HR That Works for years to come! It can also do wonders for your career.
Here’s what we’re doing to build our edge at HR That Works:
- We recently produced the Job Security Program and book. You can find it in the Training Modules. There’s a lack of literature or programs on how to be a great employee. This program fills that void. I would encourage you to allow all your employees to spend the 90 minutes it takes to watch the program — and then task them to complete the exercises in the book.
- We’ve released the Time Management Program, a project that was years in the making. We did the Webinar months ago, got great feedback from our Members, and have produced a program that I believe all your employees and executives should watch. In today’s “squeezed” economy, time is your most precious asset.
- We’ve upgraded our website and are revamping our social media platforms. We realized that although we knew what we wanted to do with social media, we just weren’t implementing it fast enough. So we brought on third-party experts to do the job for us. If your social media platform is in the same spot we were in, using a third party can help take you to the edge.
- We’re providing cutting-edge Webinars. We’ll continue to push the edge with who we bring in to help educate you on growing your managers and company. HR is not, and should not, be viewed primarily as a way to avoid getting sued. We’re convinced that cultivating great employee relationships and a high level of trust helps minimize lawsuits. Last year we did 20 excellent webinars that you can now watch at any time. We’ll produce an equal number this year — giving us a library of more than 100 great stored webinars.
- We’ve upgraded site navigation. By now, you’ve been able to view the latest version of HR That Works. We’ve added the ability to attach documents to the audits, quizzes, and surveys. We’ll also be making it easier to upload your own documents to the SharePoint portal.
I could go on, but that’s plenty for now. I encourage you to keep asking yourself, “Where’s my edge?” To compete in today’s crazy business environment, you need to be creative, proactive, and ahead of the curve. Playing catch-up will guarantee the failure of your business — and your career.
Social Media Background Checks Make Sense
There’s been plenty of HR press about the use of social media in doing background checks on job applicants. Some attorneys have gone so far as to recommend that employers should ignore social media completely. I think that’s poor advice. If people are willing to do stupid things on their social media sites, they’ll be just as willing to do stupid things when working for you. According to a Career Builder/Harris Interactive survey, more than one in three employers rejected job candidates because of their social media activity. The four top reasons were that candidates: 1) Had posted inappropriate photos or information, 2) showed evidence of drinking or drug use, 3) demonstrated poor communication skills, or 4) badmouthed a previous employer.
Risk management is not about eliminating risk. As Walter Olson once stated, “There’s no such thing as the golden shore of legal compliance.” Ask yourself: Which is the greater risk — facing a potential discrimination claim because they showed one of the bad behaviors discussed above, or hiring them and allowing them to damage your company? You get the idea of where I think the real risk lies. The bottom line: Don’t hire a candidate until you learn everything you legally can about them.
Life Expectancy: Reality Check
How long can you expect to live? A “life expectancy analysis” provided by Lincoln Financial Group lists the impact of various factors on reducing average longevity:
- Driving record (DUI): 12 years
- Smoking: 10 years
- Hard or recreational drugs: 10 years
- Drinking: 7 years
- Lack of exercise: 6 years
- High blood pressure: 6 years
- Poor nutrition: 5 years
- Gender (male): 4 years
- Family history of heart disease: 4 years
- Failure to use seat belts: 4 years
- Neglect of regular physical exam: 2 years
- Stress: 1 to 2 years
The big three are obviously drug, alcohol, and tobacco addiction. When you add poor eating and exercise habits to the mix, you have a formula for disaster. Any wellness program must keep curbing these killers at the top of the list.
Who’s Really Supporting The Economy?
According to a report from ADP, the companies that we help with HR That Works usually have fewer than 500 employees — a size category that produce 97% of the jobs added in the private sector during April 2012! Although most of these companies intend to maintain their current level of employment, 31% expect to add more workers, compared with only 13% that expect to reduce their head count.
Interestingly, according to a Simply Hired survey, 39% of college graduates would prefer to work for a small or medium-sized business (compared with 27% at a large corporation, 19% in the public sector, 11% for nonprofits, and 4% with a start -up). The respondents see job security as their No. 1 priority (33%) followed by salary (23%), benefits (23%), and company culture (18%).
The Catch-22 is that smaller companies often offer less job security, benefits, and salary. Looks like the greatest opportunity then is to focus on building a great culture!
There’s A Lot to Know About HR!
In just three pages of the recent SHRM HR Magazine, you’ll find these topics:
|FatigueGood listenerHealth care benefitsLeadershipMotivation/morale
Working with finance
A separate article on benefits included these subjects:
|401(k)Alternative medicineBenefits coordinationCatastrophic coverageClaims management
- Available 24/7
- Negotiation ability
- Total premium cost saved
|DeductiblesEAPEducation about usage of benefitsEnrollment assistanceERISA, HIPAA, ADA, FMLA, state laws
|Overlaps/gapsPension plansPet insurancePreventive care/wellnessRetirement planning
Total compensation statements
Younger worker buy-in
The point is that there’s a lot to know about HR. Great HR executives are constant learners — they have to be!
Getting Commissions Agreements Right
A recent California case, DeLeon v. Verizon Wireless, involved an attack on the company’s commission program for alleged violation of a labor code section that prohibits the secret underpayment of wages. Basically, the complaint was that the Verizon employees who were paid both a wage and a commission should not have been charged back against those commissions for customers who did not fulfill their agreements.
Verizon prevailed for these reasons:
- The commission was clearly defined as such, and the employees already received a wage that satisfied minimum wage standards.
- Employees knew that the commissions were not final until the customer completed their contract period, and that anything paid was considered an advance on commissions.
- Employees underwent training which included the chargeback feature.
- The court reminded employees that “the essence of an advance is that at the time of payment the employer cannot determine whether the commission will eventually be earned because a condition to the employee’s right to the commission has yet to occur or its occurrence as yet is otherwise unascertainable.” In this case, an advance was not a wage because all conditions for performance have not been satisfied.
- The court reminded employers that a chargeback based on “unidentified returns” from the wages of all sale associates violates the law. There are also cases in which the employee cannot be charged with business losses i.e. work comp claims, theft, etc.
Settling commission claims can be costly — so get the agreement right!
The Cost of Not Having Employment Practice Liability Insurance
According to insurance industry estimates, fewer than 50% of companies carry EPLI — and the smaller the employer, the lower the percentage. Although the cost of coverage varies, a $1 million policy with a $5,000 deductible usually costs from $50 to $250 a year per employee. When you think about obtaining EPLI, weigh the cost of this protection against the likelihood of a claim, settlement, verdict, etc.
Check out the cost figures on claims, derived from Jury Verdict Research and other sources:
- Median award (2004-2010:) $199,600
- Mean award (2004-2010): $632,589
- Median settlement (2004-2010): $85,000
- Mean settlement (2004-2010): $515,816
- Nearly two in four plaintiffs’ verdict (39%) ranged from $100,000 to $500,000 range; 12% of verdicts were $1 million or more. Note: Verdicts tend to be higher in state cases than in federal ones.
- Legal fees, stress, additional exposures, etc. — a minimum of $25,000 per claim and going up from there.
- Loss of pre-claim non-productivity due to the fear of not letting a poor performer go because you might get sued — hard to quantify.
- Impact on the company’s loss of reputation among all stakeholders — priceless.
Note: The mean is the arithmetical average of a group of scores. The mean is sensitive to extreme scores when population samples are small. Means are often used with samples of larger sizes. The median is the middle score in a list of scores; it’s the point at which half the scores are higher and half the scores are lower. Because medians are less sensitive to extreme scores, they’re probably a better indicator with smaller samples.
That’s the potential exposure. What’s the potential of getting hit with it? According to CNA, an employer is more likely to face an EPLI claim than a Property or General Liability claim. Almost 75% of litigation against corporations involves employment disputes. Nearly 100,000 sector charges were filed in 2011 against private employers under EEOC statutes, leading to more than $450 million in settlements and charges. This does not include statistically-based claims or settlements that never see the EEOC, state agency or courtroom. More than 40% of Employment Practices claims are filed against companies with 15-100 employees.
Doing some rough math, there are about 6 million companies in the U.S. Although many of these firms are too small to bother suing, some 2.5 million businesses have 15 or more employees. My experience tells me that tripling the number of EEOC claims give a fairly realistic number of total claims filed. Dividing 2.5 million companies by 300,000 claims comes to roughly a one in eight chance of experiencing a claim during a given year — which means the firm can expect to face at least one employment-related claim over an eight-year period (of course, this probability depends on the size of the company, location, compliance practices, culture, etc.).
By purchasing EPLI, you not only cap your risk at $5,000 to $10,000 a year, but you allow yourself the freedom to let go of poor performers without the threat of litigation. Let’s say a 50-person company pays $7,200 a year (an average of $120 per employee) for EPLI coverage. Over an eight-year period, this comes to a total cost of $57,600, plus the time value of those dollars. The chances are that the company will face a claim at some time during those eight years, which will cost an average of $85,000 just to settle, plus another $25,000 in legal fees, for a total of $110,000 (see the average premium cost and settlement figures above). You’d still come out $52,400 ahead — not to mention eliminating the hassle. If the case goes to verdict, those numbers can easily triple. Bear in mind that there is no way you can amortize this expense! Of course, you might easily face more than one claim during the policy term.
The bottom line: Not getting EPLI is a gamble that could significantly impact or even wipe out your cash flow at any time.
If you’re interested in a checklist for purchasing EPLI, please contact me email@example.com.
Inspired HR: An ‘Inside-Out’ Opportunity
Because so few companies have inspired HR practices, those that do enjoy an enormous competitive advantage. Unfortunately, all too many businesses don’t take advantage of this opportunity. Here’s why:
- Cultivating great HR practices must be an “inside-out” job. I’ve reached this conclusion after coaching and working with hundreds of HR executives over the years. Those who believe, achieve. There are a number of reasons why someone might not believe that they’re capable of producing great HR practices:
- They don’t have the skill set. If that’s the case, they can learn one critical aspect of HR at a time and implement this expertise. Most people can only do things one step at a time anyway.
- They don’t feel they have the time it takes to improve HR practices. The solution is to make the time. Great HR practices offer a cost-effective return on investment. I advise HR executives to save at least five hours a week by outsourcing or delegating these activities, so they can in turn devote this time to strategic activities.
- They don’t believe they have the support of top management. When it comes to business owners, nothing is more important than demonstrating the potential ROI of good HR practices. This is why we’ve created the HR Cost Calculator. I start my CEO workshops with an hour-long review of this form so that participants understand the math surrounding their HR practices.
- Private companies, unlike their publicly held counterparts, aren’t required to have anything but basic compliance. There’s no Board of Directors demanding that they get their HR act together; as a result, most privately-held firms do little or no real HR.
- HR professionals don’t get managers on their side. Begin by surveying them. HR That Works members can use the HR Department Survey to have managers rank specific practices and comment on opportunities for improvement.
- Failing to educate everyone in the company about the opportunities that a good HR program offers them. Learn to let people know the progress you’ve made every month and how this impacts best practices and the bottom line. Show that your HR practices are better than those of the competition.
Form of the Month
10 Steps to Getting a Raise (PDF) – This form identifies the correct process for asking for a raise — the right way!
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Today, the Equal Employment Opportunity Commission (EEOC) released the first updates in nearly 25 years to its guidelines on when and how employers may inquire into an applicant’s arrest and conviction history. According to the EEOC, the new Guidance clarifies and updates the EEOC’s longstanding policy concerning the use of arrest and conviction records in employment, which will assist job seekers, employees, employers, and many other agency stakeholders. Our preliminary analysis confirms that the Guidelines do not appear to represent a fundamental shift in the EEOC’s positions, but rather summarize pre-existing guidelines and principles based on applicable case law and available demographic research.
The EEOC’s Updated Guidance
No federal law explicitly prohibits employers from so inquiring into an applicant’s past criminal history, however, court decisions and EEOC guidelines have previously recognized that, in some cases, disqualifying an applicant because of an arrest or conviction record could violate the Civil Rights Act of 1964, as amended (Title VII), which prohibits employment discrimination based upon race, color, religion, sex and national origin. The updated Guidance notes that the use of criminal history may violate Title VII in one of two ways. First, Title VII may be violated when an employer treats criminal history information differently for different applicants or employees, based on their race or national origin (i.e., disparate treatment liability). Second, a violation may occur where an employer’s facially neutral policy of excluding applicants from employment based on criminal history disproportionately impacts African American and/or Hispanic applicants and is not job related and consistent with business necessity (i.e., disparate impact liability).
The Guidance distinguishes between the use of arrest and conviction records. According to the EEOC, an employer’s reliance on an arrest record in and of itself is not job related and consistent with business necessity because the fact of an arrest does not establish that criminal conduct has occurred. However, an employer may make an employment decision based on the conduct underlying an arrest if that conduct makes the individual unfit for the position in question. The EEOC further recognizes that a conviction record in most cases will usually serve as sufficient evidence that an individual engaged in particular conduct, but notes that in certain circumstances there may be reasons why an employer should not rely on a conviction record alone.
The Guidance cites to nationwide statistical data showing that African American and Hispanic individuals are arrested and convicted at a rate 2 to 3 times their proportion of the general population and states that this nationwide data provides a basis for EEOC to investigate an employer’s use of criminal records. During an investigation, the EEOC will look to whether the particular employer’s use of criminal history has a statistically significant disparate impact on any protected group.
Once a disproportionate impact is shown, the employer may only avoid liability if it can show that the reliance on criminal history is job related and consistent with business necessity. The revised Guidance sets out two circumstances in which the EEOC believes employers will consistently meet this defense:
- The employer validates the criminal conduct exclusion for the position in question under the EEOC Uniform Guidelines on Employee Selection Procedures; or
- The employer develops a targeted screen that considers at least the nature of the crime, the time elapsed, and the nature of the job. The employer’s policy must also provide an opportunity for an individualized assessment of those people identified by the screen to determine if the policy as applied is job related and consistent with business necessity.
As to the first defense, the Guidance recognizes that in most cases this will not be a viable option because of the lack of currently available studies that could provide a framework for formal validation. For the second defense, the Guidance notes that while an “individualized assessment” is not required under Title VII under all circumstances, the lack of an individualized assessment is more likely to result in a violation.
Best Practices Identified by the EEOC
The Guidance provides several examples of best practices for employers who consider criminal record information when making employment decisions (beyond a recommendation for more training). In general, the EEOC advises employers to eliminate policies or practices that “exclude people from employment based on any criminal record” and to replace them with “narrowly tailored” policies that provide for targeted, individualized screening of specific offenses based on a job’s essential requirements and actual duties. The Commission also recommends that employers keep a record of the justifications and research that supports those policies. Finally, the EEOC suggests that when asking questions about criminal records employers should limit their inquiries to records for which an exclusion would be job related for the position in question and consistent with business necessity.
Background checks remain fraught with potential pitfalls for employers. However, employers should not let those hazards stop them from performing proper due diligence on potential employees, provided that they do so in a targeted and individualized manner that relies only on criminal history in a manner that is consistent with the EEOC Guidance. We will be providing clients with more detailed guidance and training opportunities in the coming weeks on this important update of the EEOC’s views on the use of criminal history records in hiring.
These are desperate times and more and more employees are doing desperate things. How do you handle it if someone has been arrested before they were hired or even after they were hired? To begin with, the answer to this question varies on a state-by-state basis. That’s one reason why we encourage you to work with companies like our strategic partner, Global HR Research, because they conduct background checks and give you advice based on jurisdictional constraints. In some states it’s a free-for-all, if you decide not to hire someone because they were arrested, that’s OK. In other states, there is a prohibition against not hiring people because they were arrested. In fact, we know of some government contracts that require employers to hire people with an arrest record (only in America).
“Just how bad is it?” is the next question. Assuming work-related arrests are a legitimate reason for not hiring somebody, how bad was the situation? Did they steal something off a delivery truck? Did they swipe confidential data? Did they get busted smoking pot on the job or off the job? As Cicero famously said, let the punishment fit the crime.
Employers also have to be aware of negligent hiring causes of action where an arrest record was overlooked or not even looked into in the first place. For example, in one case I handled years ago, a nursing facility did not conduct background checks because it was so desperate for attendant. As a result, they hired somebody recently released from Folsom Prison for robbery and rape who, in turn, raped and murdered one of the patients. Of course, they were rightfully sued for millions of dollars. This was simply negligence on their part and doing no background checks at all is one of the greatest risk a company faces. Lastly, if the arrest occurs while in your employ, you’re certainly entitled to do your own independent investigation into the situation to determine if it makes sense to keep the employee on board. The recent fiasco at Penn State provides plenty of examples.
Of course, the smartest move to make in a situation like this is to work both with your attorney and, if it’s an executive, your public relations person.
“We now accept the fact that learning is a lifelong process of keeping abreast of change. And the most pressing task is to teach people how to learn.” – Peter Drucker
This issue discusses:
- Editor’s Column: Cases of the Week
- Blowing It
- DOL Launches New Web Site Cataloguing Employer Violations
- Will You Be Prepared If The Other Shoe Drops?
- What Employees Really Care About
- Electronic Signatures and Storage of Form I-9
- Southwest Airlines: You’ve Got to LUV Them!
- A Step-By-Step Process to Employee Problems Can Be Useful
- FMLA and Call-In Procedures
- Do Your Criminal Background Checks
- Disabled Employees and Assignment to Vacant Positions
- DOL Regulations May Require Employers to Demonstrate Compliance with Employment Laws
- Avoiding Overtime Claims
We have also provided you with the Form of the Month.
Please click here to view this month’s newsletter in PDF format.
Editor’s Column: Cases of the Week
As part of my ongoing research efforts to help our members, I discipline myself to review Find Law’s weekly appellate court case summaries. A few weeks ago, the review summarized 29 cases – count ‘em, 29:
- Rent-A-Center West, Inc. v. Jackson
- Granite Rock Co. v. Int’l. Brotherhood of Teamsters
- Rodriguez-Garcia v. Miranda-Marin
- Malone v. Lockheed Martin Corp.
- Zakrzewska v. The New School
- NLRB v. Talmadge Park
- Durakovic v. Bldg. Serv. 32 BJ Pension Fund
- Ruiz v. Cty. of Rockland
- Edwards v. A.H. Cornell & Son, Inc.
- Air Line Pilots Ass’n v. US Airways Group
- Kemp v. Holder
- Winnett v. Caterpillar, Inc.
- Pickett v. Sheridan Health Care Ctr.
- Kobus v. Coll. of St. Scholastica, Inc.
- Ringwald v. Prudential Ins. Co. of Am.
- Jones v. Nat’l. Am. Univ.
- Hawaii Stevedores, Inc. v. Ogawa
- EEOC v. Peabody Western Coal Co.
- Simonia v. Glendale Nissan/Infiniti Disability Plan
- Medlock v. United Parcel Serv., Inc.
- Narotzky v. Natrona Cty. Mem. Hosp. Bd. of Trustees
- Armstrong v. Geithner
- Schaefer v. McHugh
- Gonzalez v. Dept. of Labor
- Murthy v. Vilsack
- Bifulco v. Patient Bus. & Fin. Serv., Inc.
- Myrick v. Mastagni
- Baker v. Am. Horticulture Supply, Inc.
- Faulkinbury v. Boyd & Assoc. Inc.
Of course, none of these companies planned on being a defendant in an employment lawsuit. So, what were all the lawsuits about? Five were ERISA cases. We’ve had ERISA experts on some of our Webinars.
There were also five union cases, including one in which the company was suing the union under the Labor Management Recording Act for damages caused by a strike. In one of the union cases, the 2nd Circuit invalidated an NLRB Bush-era decision that only had two judges on the board. This is the beginning of the undoing of those Bush-era NLRB decisions. Again, we have had Webinar guests on union avoidance.
There were four race and discrimination cases, including an interesting one against a coal company by Hopi and other Native American, claiming that the coal company discriminated by favoring Navajo workers.
There were two ADA cases, one FMLA case, one privacy case, one breach of contract case, and one age discrimination case. Of the three wrongful termination cases, one was brought by a group of neurosurgeons who sued a hospital for “constructive discharge” in part because after the surgery operations shut down and the doctors left, the hospital claimed that they had stolen equipment and ordered a search of their lockers. Apparently, the search didn’t find any equipment, nor did the hospital claim that any of the surgeons specifically stole anything. The court held that it was reasonable for the hospital to do this search because it focused on instruments that could only be used in surgery.
There was a wage and hour class-action suit in California (no surprise there), claiming that security guards weren’t paid properly for their rest and meal periods. Another lawsuit was brought by a whistleblower who was transferred after testifying in an ethics probe.
That’s nearly 30 appellate cases decided during a single week in a country with millions of employers. Employment practices liability exposures might not be frequent. However, I can tell you from reading the results in these cases they are certainly severe. According to Jury Verdict Research, the average verdict hovers around $270,000, with million-dollar verdicts seemingly commonplace. Whether a company won or lost in any of these cases, it probably spent at least $200,000 in attorneys’ fees.
What should you make of all this? Very simple – be prepared to handle compliance basics! Get proper advice on managing your benefits. Focus on developing effective employee relationships and work with competent attorneys to prevent unnecessary union organization, as well as bargaining with an existing union. Make sure your HR folks stay abreast of the ADA, FMLA, age discrimination, race discrimination, and sexual harassment exposures. We have a ton of tools on HR That Works to help with those.
If you’re an HR That Works member and have a question in any one these areas, you can rely on the Hotline support of the Worklaw® members and yours truly to help get you through any tough spot.
A July 2010 Corporate Counsel article analyzed a huge discrimination verdict rendered against Novartis in a Manhattan federal district court jury trial. The jury determined that the company discriminated against its female sales representatives, creating an insensitive and hostile working environment. Instead of taking a conciliatory approach during trial, Novartis pressed hard and according to the article, responded by labeling the plaintiffs in front of the jury with demeaning and harsh stereotypes. The jury awarded $3.36 million to the 12 named plaintiffs, plus an additional $250 million to a class of additional 5,600 other plaintiffs. Of course, Novartis plans to appeal.
Interestingly, Novartis noted that Working Mother magazine had recognized the company for 10 years in a row as one of the top 100 firms for working mothers (Integrity, anyone?).
Lesson learned: Anytime an employer goes to trial justifying its conduct, and in fact, laying it on even thicker, it runs the risk of an enormous verdict. A conciliatory approach will usually result in a settlement or smaller jury verdict. Read the article here.
DOL Launches New Web Site Cataloguing Employer Violations
The U.S. Department of Labor has launched a new Web site that reports (in a searchable format) employer violations. The site, http://ogesdw.dol.gov/, catalogues all DOL enforcement data regarding employer violations from the Employee Benefits Security Administration (“EBSA”), the Mine, Safety & Health Administration (“MSHA”), the Office of Federal Contractor Compliance Programs (“OFCCP”), the Occupational Safety & Health Administration (“OSHA”), and the Wage & Hour Division (“WHD”). The DOL’s goal in launching the site is to “make the enforcement data, collected by these agencies in the exercise of their mission, accessible and searchable, using common search criteria, by the public. It intends, also, to engage the public in new and creative ways of using this data.” The site will soon permit searches by company name. Companies should check the site frequently to ensure the accuracy of its content.
Article courtesy of Worklaw® Network firm Shawe Rosenthal (www.shawe.com)
Will You Be Prepared If The Other Shoe Drops?
There’s been a lot of press recently about the possibility of the nation falling back into a deep recession. Let’s hope not! But, just in case, are you and your management team prepared to slash costs by 10%, 20%, or more again? Do you have a Plan B for your workforce? The recession caught plenty of employers off guard. On the other hand, I know of many companies that had a Plan B in place and were able to deploy it rapidly.
Being prepared is essential for effective management of risks, whether you’re facing an economic downturn, exposure to a lawsuit, or an environmental disaster. If there’s another recession, remember that HR That Work has a number of tools to help you manage the layoff and termination process in a graceful and legal manner. I’d also recommend taking time to discuss this issue and identify the critical parameters to consider when or if the time does come.
What Employees Really Care About
I recently read that only 47% of 18-34 year olds “really care about the fate” of the enterprise for which they work – compared with 64% of those 55 and older. Although statistics like these make it easy to criticize the M generation, bear in mind that more than one-third of workers 55 and older feel the same way. So what are employees most concerned about? I won’t take you through Maslow’s Hierarchy of Needs. However, I encourage you to read the White Paper I wrote on it on HR That Works. Maslow talks in terms of survival, security, belonging, ego, and self-actualization needs. When it comes down to it, this is what most employees care about:
- A fair day’s pay. 99% of the population goes to work because they have to earn money. Depending on the employee’s needs and environment, pay can either be a major or minor motivating factor.
- An opportunity to grow at the company. Growth means job security, as well as more pay. Do your employees have a roadmap for this growth? How are you managing a situation in which there are few growth opportunities? Remember, people might know their present circumstances, but be uncertain their future. Don’t leave them guessing.
- A positive work experience. Work is innate to our souls. It’s a great source of meaning to us. Ultimately, people want to enjoy the work experience. As Joseph Campbell so famously stated, “Work can be a life-draining affair.” I hope this isn’t the case at your company, especially if you tend to retain your best people.
- A good relationship with their boss. This is perhaps the most critical part of the work experience. Do your managers empower employees or try to control them? Do they have a good bedside manner and do they encourage employees to take on new tasks and to grow in their jobs? Many a good company has lost many a good employee due to mediocre or poor managers.
Ultimately, employers must acknowledge that today’s loyalty is not to a company, but to project, career, and work relationships. Although addressing those needs might not produce the most loyal employees, it can certainly produce highly productive ones.
Remember, today’s best and brightest employees don’t have to work for you – or anyone else. What type of career and financial opportunities can you offer that they can’t get on their own or with someone else? As Daniel Pink notes, “This is a free-agent nation.” Businesses that recognize this reality will be the ones that succeed.
Electronic Signatures and Storage of Form I-9
On July 22, 2010, the Department of Homeland Security issued its Final Rule on electronic signatures and storage of Form I-9s. Under this rule, employers may:
- Complete, sign, scan, and store the Form I-9 electronically (including existing Form I-9s) so long as they meet certain “performance standards” (e.g., reasonable controls to ensure the integrity, accuracy, and reliability of the system).
- Use paper, electronic systems, or a combination to sign and store their Form I-9s
Southwest Airlines: You’ve Got to LUV Them!
I’m an unabashed promoter of Southwest Airlines. As someone who travels a great deal, I find the company’s customer service, pricing, and all-around flying experience to be the best in the industry. Amazingly, in 2009, Southwest continued its profitability streak for the 37th consecutive year, a remarkable feat amidst the worst recession most of us can remember. A review of their 2009 “One” Report helps define what makes Southwest so different: Its focus or passion in three areas – performance, people, and our planet.
In terms of performance, the company reduced overhead by eliminating the bottom least productive 10% of their flights. They also increased revenue with their early-bird check-in program, and trimmed costs where possible by offering voluntary early retirement, freezing overall comp and executives’ salaries, avoiding fleet growth, and conserving jet fuel.
According to Southwest, “With a Warrior Spirit, a Servant’s Heart, and Fun-Luving Attitude, our employees carried out the mission of Southwest Airlines – dedication to the highest quality customer service, delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.” Even in a recession, they donated $11.6 million and more than 45,000 employee volunteer hours to charity.
Finally, Southwest, like many other corporations, takes its green initiative seriously.
How hard could it be to follow their example in your business?
- Eliminate the bottom 10% of clients, customers, and activities.
- Put a hold on employee count and management salaries.
- Reduce overhead and trim where possible.
- Continue to give; knowing that it always comes back to you.
- Define your culture as one with a “Warrior Spirit, Servant’s Heart, and Fun-Luving Attitude.”
Of course, if this were as easy as it sounds, all the other airlines would do it too. Not surprisingly, just about every one of Southwest’s competitors is unprofitable, horrible to fly on, and certainly not having any fun. I’ll continue to fly Southwest, own its stock, and preach its way of business because I believe in them – as do millions of others.
Note: On page seven of Southwest’s report, you can see the numerous 2009 awards and accolades, including its rank as the seventh most admired company in the world and the world’s most admired airline company; according to Fortune Magazine. Not surprisingly, they also have the highest customer satisfaction rating and the best on-time performance of any airline. Interestingly, Alaskan Airlines comes in second in both categories and they have adopted many of the Southwest ways of doing business.
A Step-By-Step Process to Employee Problems Can Be Useful
Most people find that it’s easier to solve a problem if they take a step-by-step approach. Dealing with problems in the workplace is no different – employers benefit from having a systematic process that all managers and supervisors can follow. This “Wells Fargo” approach (going by easy stages) not only helps solve problems, but also promotes consistency and fairness, while reducing the likelihood of accidently discriminating against employees by treating them differently.
Because a process can be very useful to employers, the Job Accommodation Network (JAN) is developing a series of publications that provide sample processes that employers can use or adapt in their own workplaces.
- The first publication is Dealing with Hygiene Problems in the Workplace.
- The most recent publication is Dealing with Conduct Problems in the Workplace.
Courtesy of the Job Accommodation Network.
FMLA and Call-In Procedures
One of the greatest frustrations with the “old” Family and Medical Leave Act was how it regulated company call-in procedures. With the new and improved version, the Department of Labor pretty much allows a company to require compliance with its call-in procedures so long as it doesn’t restrict the rights of the FMLA.
As the preamble to the final rule noted:
“The Department recognizes that call-in procedures are routinely enforced in the workplace and are critical to an employer’s ability to ensure appropriate staffing levels. Such procedures specify both to whom and when an employee is required to report an absence. The Department believes that employers should be able to enforce non-discriminatory call-in procedures, except where an employer’s call-in procedures are more stringent than the timing for FMLA notice. Additionally, where unusual circumstances prevent an employee from seeking FMLA-protected leave from complying with the procedures, the employee will be entitled to FMLA-protected leave, so long as the employee complies with the policy as soon as he or she can practically do so.”
So, if an employee can’t call with a foreseeable leave 30 days in advance, then they should be able to do so at least, “absent emergency situations, where an employee becomes aware of a need for FMLA leave less than 30 days in advance, the Department expects that it would be practical for the employee to provide notice of the need for leave either the same day (if the employee becomes aware of the need for leave during working hours) or the next business day (if the employee becomes aware of the need for leave after work hours).”
This month’s Form of the Month is a standard leave notice requirement that incorporates in the FMLA language. As always, if you’re an HR That Works member and have any questions about the FMLA, please don’t hesitate to contact the Hotline.
Opinion Letter: FMLA 2009-1-A does a good job of summarizing the above.
Do Your Criminal Background Checks
In workshops, I joke that “it only takes one felon to ruin a day.” This really isn’t funny, especially if such a person happens to victimize your business. Unfortunately, despite the advice that all employers should do criminal background checks on all employees, many businesses still don’t do so because they think bad things only happen to other people, or they claim that they don’t have the time or money. Remember, folks with a felonious background sell drugs, rob people, assault people, kill people, defraud people, embezzle, and engage in many other sins. I’m not saying never hire someone with a felonious background. I have some printing company clients who run their Heidelberg presses 24/7 hours a day. Most of the workers on their third shift have a criminal record. At least these companies know what type of criminal they’re dealing with. Remember this too: If you use a temporary firm, recruiter, leased employee, etc. make sure that whoever provides this person for you has done their criminal background checks.
As always, we recommend using our partner www.globalhrresearch.com.
Disabled Employees and Assignment to Vacant Positions
The statutory duty of employers to reassign disabled employees to vacant positions is mandatory. If a disabled employee can be accommodated by reassignment to a vacant position, the employer must do more than consider the disabled employee along with other applicants; the employer must offer the employee the vacant position. In a number of situations, reassignment would be unreasonable:
- It’s not reasonable to require an employer to create a new job for the purposes of reassigning the employee to this job.
- An employer is not required to reassign a disabled employee to a position that would constitute a promotion.
- An employer is not required to reassign the disabled employee in a way that would contravene the employer’s “important fundamental policies underlying with a legitimate business interest” (a very broad, case-by-case analysis).
- The job for which the disabled employee seeks reassignment must be vacant. In determining when a position is truly vacant, courts have ruled that “a position is ‘vacant’ for the purposes of ADA’s reassignment duty when that position would have been available for a similarly-situation nondisabled employee to apply for and obtain.” For example, if a company uses temp employees and under normal circumstances, nobody could apply for or obtain this job, it’s not considered vacant under the law.
DOL Regulations May Require Employers to Demonstrate Compliance with Employment Laws
The United States Department of Labor (DOL) recently announced Plan/Prevent/Protect, a sweeping regulatory agenda that will replace the “catch me if you can” method of assuring compliance with federal employment laws. Under the Plan/Prevent/Protect strategy, the DOL has directed the Occupational Safety and Health Administration (OSHA), Mine, Safety & Health Administration (MSHA), Office of Federal Contractor Compliance Programs (OFCCP), and the Wage & Hour Division (WHD) to propose regulations that require employers to develop programs demonstrating affirmative compliance with federal wage and hour, job safety and discrimination laws. As the name of the program, implies, the DOL will issue regulations that focus on:
- Planning. Employers will be required to create a plan for identifying and correcting risks of legal violations and other risks to workers, including the designation of people within the company to ensure compliance. Employees will have the opportunity to participate in the plan’s creation and must provide their workers with the plans so that “they can fully understand them and help to monitor their implementation.”
- Prevention. Employers will need to “thoroughly and completely implement the plan in a manner that prevents legal violations. The plan cannot be a mere paper process. The employer or regulated entity cannot draft a plan and then put it on a shelf. The plan must be fully implemented for the employer to comply with the Plan/Prevent/Protect Compliance Strategy.”
- Protection. Employers must ensure that plan objectives are “met on a regular basis. Just any plan will not do. The plan must actually protect workers from violations of their workplace rights.”
Employers who fail to “address comprehensively the risks, hazards, and inequities in their workplaces will be considered out of compliance with the law” and subject to remedial action by the DOL.
Among other things, the strategy will require the WHD to promulgate regulations requiring employers to provide workers with basic employment information, including the methods of calculating their pay. An employer who wishes to exclude a worker from coverage under the Fair Labor Standards Act would need to “perform a classification analysis, disclose that analysis to the worker, and retain that analysis to give to WHD enforcement personnel who might request it.”
Avoiding Overtime Claims
Overtime claims aren’t going away. A marginal claim filed by one disgruntled employee can easily turn into a class action involving dozens of workers. To help avoid such claims, follow these guidelines:
- Make sure employees that are appropriately classified as exempt. The FLSA and the State of California have done a great job defining the scope of these classifications. Unfortunately, many employers ignore them entirely or simply try to get by with a quick self-serving analysis. You’ll find the links to these definitions at http://www.dol.gov/elaws/esa/flsa/screen75.asp and http://www.dir.ca.gov/dlse/FAQ_Overtime.htm. HR That Works Members can also view the Wage and Hour Training Module.
- Don’t blow a legitimate exemption by docking pay. Remember, you must pay an exempt employee for the whole week, if they work any part of it. There are exemptions in which employees purposely decide not to come to work, etc. If you treat somebody like a non-exempt employee, so will regulators, regardless of their title.
- Job descriptions alone won’t cut it. Regulators will look at actual job duties and ask claimants to fill out timesheets describing their activities. Under Federal law, this is a qualitative analysis in which the “primary” activity is most important. Under California law, there is also a quantitative analysis which requires the employee to be engaged in their primary activity at least 50% of the time to be exempt.
- Watch out for unauthorized overtime. Assuming someone is classified properly as non-exempt, are they abusing overtime? One printing company that began using the HR That Works Overtime Authorization Form reduced its overtime exposure by $5,000 the first month! Ask yourself: If there is overtime, is it legitimate, and if so, how do we minimize it?
- It’s almost impossible to have more exempt employees than non-exempt employees. Few types of businesses (other than law firms, medical offices, engineering or CPA firms, etc.) can get away with this. Remember, if a person isn’t an executive, a real boss, in outside sales, or highly paid as a computer professional, they are not exempt –no matter how smart they are, no matter how long they’ve worked for you, and no matter how little you control them.
Form of the Month
Leave of Absence Request Policy (PDF)
Use this form to help ensure uniform leave request procedures.
(HR That Works Users can access this form in Word format by logging on to the site).
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