February 2011 Compliance and Culture Newsletter

“What would you become if you identified your greatest strengths and removed your worst constraints?”     – Flip Flippen, author of The Flip Side

This issue discusses:

• Editor’s Column: Become a Human Resources Superstar!
• The Disability Interactive Process
• ‘Got A Minute?’
• Wage & Hour Insights: Salary Deductions for Exempt Employees
• Most Employers Fail FLSA Compliance
• What Documents Should an Employee’s Personnel File Not Include?
• Distracted Driving
• Occupational Fraud and Abuse

We have also provided you with the Form of the Month

Please click here to view the newsletter in PDF.

Editor’s Column: Become a Human Resources Superstar!

Seth Godin defines the new American Dream as: “Be remarkable. Be generous. Make art. Connect people and ideas.” Today’s strategic HR executive embraces this concept. As I see it, four attributes or characteristics make or break an HR executive’s ability to generate powerful relationships (of course, these four factors apply to everyone else, too). They are: Trust, direction, communication, and commitment.

Trust. The first concern every business owner or executive should be to surround themselves with people they can trust. What makes a person trustworthy is the fact that they can do something and have a desire to do so because they have the skills, training, and experience.

One way to become a trustworthy human resource executive is to become a PHR or SPHR. Another way is to be a constant learner: Turn off the TV and pick up a book, or read one of the many reports on HR That Works. Desire motivates the successful HR person to get things done – new things, not just familiar ones.

Direction. Superstars have a clear sense of their direction, vision, mission, values, goals, and plans. Unfortunately, as Mary Kay was famous for saying, “Most people plan their vacations better than their careers.” Just how good do you want to be? What do you have to do to get there? Have you mapped out a plan to get you there step by step? Is your plan in alignment with the greater needs of the organization? Have you had this conversation with your boss or the owner?

Then, give yourself benchmarks to determine how you’re doing. How would you know if you were on course? What results must you achieve, and by when? Break these benchmarks down into a clear plan for the week. What are your typical recurring tasks, and when will you perform them? What value-added tasks will you accomplish this week? When? How long will they take? At the end of the week, evaluate how you did, make adjustments, and set your plan for the next week.

Remember, successful executives have a clear sense of direction. As Napoleon Hill stated in Think and Grow Rich, “They have a burning desire for a particular purpose.”

Communication. One of the top challenges in any relationship involves communication, including how you talk with yourself. To be a good communicator is an inside-out job. What’s your daily “self-talk”? One business school study found that 80% of self-talk is about what we want to have that we don’t, or who we want to be that we’re not. What an incredible waste of time!

Instead, look to the Scriptures. For more than 2,000 years, the 23rd Psalm has reminded us that we “shall not want.” Focus on your gifts: Your intelligence and drive, the people around you, your clients, the fact that people need your work, and so forth. When my self-talk focuses on glorifying what I’ve been given, life becomes far richer both emotionally and financially. That’s good self-talk.

What’s the value of your communication with others? If I asked your significant other, BFF, or a colleague what you could do to communicate more effectively, and then asked you to guess what they said, you’d be fairly accurate. Most of us know what we can do to become better communicators. For one thing, we can listen more closely. This requires us to be present and stop running for a moment so that we can focus on the other person. Try this for five minutes. You’ll be amazed by how others respond to it.

Next, focus on making more positive deposits than negative ones. The authors of the excellent book Leadership and Self-Deception point out that most people deceive themselves into believing that they do more positive communication than negative. This is a natural by-product of running 75 miles per hour. Ask yourself this: When you’re running 75mph and someone’s trying to talk to you, how does it feel to them? Does it feel like a positive experience? Does it feel like you care? Probably not. This is why, although you might have good intentions, your outcomes might not be good. Finally, focus on creating a positive experience in your relations with others by making them feel good about themselves – finding the good that’s in them. Then you might even laugh together.

Commitment. Successful executives are committed. Good old Zig Ziglar provided me with a favorite quote about commitment: “Commitment is doing those things you said you were going to do long after the mood you said them in has worn off.” How committed are you? You might get the things I’ve stated above, but are you committed to delivering on them? Think in terms of rainy day commitments. Successful people commit to getting things done even when it doesn’t feel good to do them. “Sunshine commitment” is always easy. Our personal culture shows up when things feel unfair, not when everything is nice and sunny.

If it feels unfair that your success isn’t coming fast enough, consider the “flywheel effect.” As Jim Collins states in Good to Great, success doesn’t happen overnight. Like a flywheel, it takes some time to kick in. Then you’ll wonder what took it so long. Commitment requires a balance between urgency and patience. Because nothing happens without people taking action, we need a sense of urgency. At the same time, like a Zen master, we have to allow things to unfold as they are – not necessarily as we wanted them to be. I can tell you from personal experience that if you remain committed to something long enough, you will achieve success — just not when or how you expected it!

So, let’s sum up. If you’re in the HR role, what makes you trustworthy to your superiors? They can trust you with payroll and benefits administration, but can they also trust you to think strategically in a way that helps grow the bottom line? Do you have a written plan for this, with short and long-term goals, and specific benchmarks? Just how good do you want to be? What expectations do you have of yourself? How well do you work with others? Do you play team? Are you a pleasure to work with? Do you give as much as you take? Are you capable of being present and in the now, if even for short periods? Just how strong is your commitment? How would your superiors know this without you saying anything about it? What actions would they expect to see? What bridges are you willing to burn and what are you willing to stop doing as part of this commitment?

Here’s hoping that this either confirms the path you’re on and helps to reinforce it, or alternatively, serves as the good swift kick you might need. Success is a choice. Every one of these strategies should inherently feel right. Apply them toward your success.

The Disability Interactive Process

The law requires that employer and employee engage in an interactive dialogue concerning accommodating a disability. This process includes these issues:

1. The employee’s limitations.
2. The nature and requirements of the job.
3. Identification of essential job functions versus marginal ones.
4. Modification of the job to meet the employee’s limitations.
5. Distribution of certain duties to other employees or dispensing with them entirely.
6. The employer’s record of requiring jobholders to perform certain disputed duties.
7. Possible undue hardship on the employer from granting certain accommodations.
8. Provision of an alternative vacant position for which the employee is qualified.

The courts have been quick to recognize that much of the data is in the employee’s hands when it comes to their disability and in the employer’s hands when it comes to possible accommodations. Remember, the side that gives up on the accommodation dialogue first generally loses.

For accommodation support, go to the Job Accommodation Network website or contact the HR That Works Hotline.

‘Got A Minute?’

One of the most difficult challenges managers or executives face is having their days ruled by “got-a-minutes.” The executive or manager is usually more proficient or knowledgeable about a certain subject, which makes it tempting for employees to avoid taking personal responsibility for finding an answer and going to an “easy” source. All too often, this source is you. Answering a “got-a-minute” is like throwing that employee a fish: It disrupts your concentration and prevents them from learning how to fish.

To help avoid interruptions to your days by “got-a-minutes?,” tell your subordinates that you’re willing to give everyone at least five minutes between 4:00 and 4:30 to discuss any issues that are semi-urgent in nature, leaving less serious issues for the regular weekly meeting. The only immediate “got-a-minute” questions permitted will be those rated as “emergency issues” (9 or above on a scale of 10). Work with your team to define these issues. Let employees voice their concerns and reach a consensus. Agree that you too will refrain from throwing “got-a-minutes” their way.

This approach should eliminate more than 80% of the trivial “got-a-minutes” that knock you off course. Moreover, during these 4:00 meetings, employees will be more focused on their requests. Let them know that if they think the matter will take more than five minutes they should be prepared and perhaps even use an outline. Encourage them to tell you what efforts they’ve made to deal with the issue and where they’re “stuck.” Perhaps all they need is permission to move forward.

Empower employees to figure things out for themselves. If your time is worth $100 an hour and theirs is worth $20 an hour, let them take a few hours to figure out the answer for themselves.

Wage & Hour Insights: Salary Deductions for Exempt Employees

If you missed the webinar, “Are You Ready for a Wage & Hour Audit?,” a recording is available in the HR That Works Webinar area or Media Library. During and following the webinar, the presenters received numerous questions about wage and hour law issues — unfortunately many more than they could respond to during the program.

Here’s a response to two questions about deductions from the salary of exempt employees:

Q. When an exempt employee runs out of sick pay, can an employer deduct one day’s pay for the sick day?
A. Yes. Generally, you must pay exempt employees on a “salary basis,” meaning that they must receive a guaranteed salary for each workweek, without any reduction due to the number of hours worked or the quality or quantity of work performed. However, deductions are allowed in certain limited circumstances, such as the absence of an exempt employee for one or more full workdays due to personal reasons other than sickness or disability, or illness or an accident for an employee covered under a sick-pay policy. If an exempt employee uses up all of their sick days under the sick leave policy, you may still take deductions for any further full-day absences.

Q. Can we allow exempt employees to take sick or vacation time off by the hour or in half-day increments?
A. Yes. However, once an exempt employee exhausts available sick leave, you can only take deductions for any future absences if the employee is absent for a full day, unless the absence is for intermittent or reduced-schedule FMLA leave. Watch the FMLA Webinar for more practical insights on intermittent FMLA leave.

Most Employers Fail FLSA Compliance

According to the Department of Labor, more than four in five employers don’t comply with wage and hour requirements. Furthermore, wage and hour class actions (referred to as “collective actions”), outnumber all other employment class action lawsuits combined. Yet for employers, wage and hour compliance too often fails to receive the same priority as concerns about workplace harassment and discrimination. Employers know that problem prevention and management training reduce the risk of employment claims and help achieve a favorable outcome if claims arise. Let’s discuss such an approach concerning wage and hour requirements.

If there’s a single issue that every employee has in common and one question that most employees raise at least once a year, it has something to do with pay. Yet, many employers state that pay should not be discussed, which usually intends to cover confidential salary information. However, a by-product of this culture might be that employees don’t raise concerns about pay within the organization but instead, go directly to a plaintiff’s attorney or the Department of Labor. Note that unlike other employment claims, there is no legal requirement that an employee file a complaint with the Department of Labor; he or she may proceed directly to court.

Wage and hour claims often involve multiple individuals and can quickly add up to a lot of money. For example, if an employer is inappropriately docking an employee for a break, chances are this employer is doing the same thing with several other employees. Multiply that by the three-year “look-back” period for wage and hour violations, by the number of hours of the violation, and the number of employees involved. Then double this total and add interest and attorneys’ fees, and it won’t take long before the employer faces a six-figure risk.

So what to do about this? As a threshold recommendation, we suggest that you elevate pay issues to the same level of culture, compliance, and concern as workplace harassment and discrimination. Provide employees with what the DOL refers to as a “safe harbor” policy, employer pay practices, which practices are prohibited, and directs employees to whom within the organization to ask about pay. The objective should be that no employee ever needs to take a question about pay to anyone outside of the organization. For a copy of our Model Safe Harbor Policy, please click here.

Employers should also audit their wage and hour practices thoroughly on an annual basis. Are exempt employees classified properly? Are independent contractors bona fide independent contractors (in business to make a profit), or are they misclassified? Do you provide breaks, for how long, and with or without pay? If your organization pays an incentive, do you calculate this incentive in determining an employee’s overtime compensation? If an employee’s pay may be docked, is this in writing and applied consistently?

Article courtesy of Worklaw® Network firm Lehr Middlebrooks Vreeland.

What Documents Should an Employee’s Personnel File Not Include?

Employee personnel files contain documents that track the “vital statistics” of employment, such as new hire paperwork, background check records, handbook receipts, payroll withholding and benefits election forms, and disciplinary and performance related documents. However, these files should not include certain types of records:

• Documents that reflect medical information should go in separate files in order to comply with the privacy provisions of the Americans with Disabilities Act. The Genetic Information and Nondisclosure Act also requires that information about an employee’s genetic makeup be treated as private (family medical history might reflect such information and must be treated accordingly). Self-insured employers are also subject to the privacy rules of the Health Insurance Portability and Accountability Act.
• Records of investigations of complaints – Witness statements, employee complaint forms, investigative notes, etc. Keeping these in personnel files means that an employee’s request to review his/her file will require you either to disclose witness statements that might have been taken in confidence or remove them from the file, which could create questions of integrity.
• I-9 forms and the associated backup records. Keep these in a separate file to ensure that if the company undergoes an audit, it will not have to provide an investigator with access to entire employee personnel files (or, alternatively, require HR staff to cull through personnel files to retrieve all I-9s).
• Employee EEO-1 or other government required self-identification forms that reveal race, national origin, and gender.
• Other sensitive information, including e-mails between company officials and legal counsel or notes of conversations with counsel, should never go into an employee’s personnel file. Otherwise, the company might unwittingly waive the attorney-client privilege when affording the employee access to his or her file (or producing it during litigation to the plaintiff’s attorney).

Article courtesy of Worklaw® Network firm Shawe Rosenthal.

For more information on record retention, check out the Form of the Month.

Distracted Driving

None of us can ignore the safety issue that distracted drivers present. The CDC and DOT are campaigning to reduce distracted driving. The federal government has a Web site devoted to this danger. How distracted are your employees – or you – behind the wheel?

Occupational Fraud and Abuse

A Report to the Nation on Occupational Fraud and Abuse by the Association of Certified Fraud Examiners provides a wealth of valuable information for any company. According to the report:

• Organizations with fewer than 100 employees have a higher rate of fraud exposure to billing, check tampering, skimming, expense reimbursement, cash on hand, payroll, and larceny than their counterparts do. Conversely, employers with more than 100 employees have a greater exposure to corruption and non-cash theft. The most common anti-fraud controls include audits, codes of conduct, management review, hotlines, and training.
• Companies with 100 or more employees are almost twice as likely as smaller organizations to employ anti-fraud controls.
• It generally takes some time to detect fraud. Financial statement fraud had a median duration of 27 months. Check-tampering, expense reimbursement, billing, and payroll scams 24 months; corruption, cash on hand, skimming, and larceny 18 months.

The list of fraud examples is instructive:

1. Skimming a small percentage of cash payments or assets.
2. Accepting payment from a customer, failing to record the sale and instead pocketing the money.
3. Stealing cash and checks from daily receipts before they can be deposited into the bank.
4. Creating a shell company and billing employer for services not actually rendered.
5. Purchasing personal items and submitting invoices to employer for payment.
6. Filing fraudulent expense reports for personal travel, nonexistent meals, etc.
7. Stealing blank company checks, and making them out to themselves or an accomplice.
8. Stealing outgoing checks to a vendor and depositing them into their own account.
9. Claiming overtime for hours not worked.
10. Adding ghost employees to the payroll.
11. Fraudulently voiding a cash register sale and stealing the cash.
12. Stealing inventory from a warehouse or storeroom.
13. Stealing or misusing confidential customer financial information.

Nearly one in five frauds were exposed by tips from fellow workers. Many organizations provide employee-tip hotlines. Perhaps you should too.

Click here to read the report.

Form of the Month

Personnel Record Retention Checklist (PDF)

This form provides guidelines on record retention. Remember to keep medical records and investigation records separately.

Podcast

Click here 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:

©2011 Reprinted with permission from HRThatWorks.com, a powerful program designed to inspire great HR practices.

Podcast: Play in new window | Download