“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

Although referral programs can 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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Here is a doc created by the EEOC summarizing claims and enforcement of the ADA regulations.

On April 25, 2012, the EEOC issued updated Enforcement Guidance regarding an employer’s use of arrest and conviction records in making employment decisions. The agency also issued a Question and Answer (Q&A) document that helps explain the Guidance.

According to the EEOC, a policy or practice that excludes everyone with a criminal record from employment will not be job related and consistent with business necessity and therefore will violate Title VII, unless it is required by federal law. The Enforcement Guidance explains how the EEOC analyzes the “job related and consistent with business necessity” standard for adverse employment hiring decisions based on criminal records, and provides hypothetical examples interpreting the standard.

Arrests and convictions are treated differently for purposes of Title VII, since the fact of an arrest does not establish that criminal conduct has occurred. The EEOC acknowledges that an arrest may in some circumstances trigger an inquiry into whether the conduct underlying the arrest justifies an adverse employment action. The Guidance notes, “[a]lthough an arrest standing alone may not be used to deny an employment opportunity, an employer may make an employment decision based on the conduct underlying the arrest if the conduct makes the individual unfit for the position in question. The conduct, not the arrest, is relevant for employment purposes.”

In examining whether an employer’s policy of screening individuals based on criminal convictions violates Title VII, the EEOC will look to see whether the employer’s policy provides an opportunity for an individualized assessment for those people identified by the screen in order to determine if the policy as applied is job related and consistent with business necessity. Under the new enforcement rules, the following should be considered by an employer when screening based on criminal convictions:

• The Nature and Gravity of the Offense or Conduct. The Guidance notes: “Careful consideration of the nature and gravity of the offense or conduct is the first step in determining whether a specific crime may be relevant to concerns about risks in a particular position. The nature of the offense or conduct may be assessed with reference to the harm caused by the crime (e.g., theft causes property loss). … With respect to the gravity of the crime, offenses identified as misdemeanors may be less severe than those identified as felonies.”

• The Time that Has Passed Since the Offense, Conduct and/or Completion of the Sentence. The Guidance points out that the amount of time that had passed since the applicant’s criminal conduct occurred is probative of the risk he poses in the position in question. For example, the Guidance notes that the risk of recidivism may decline over a certain period of time.

• The Nature of the Job Held or Sought. Linking the criminal conduct to the essential functions of the position in question may assist an employer in demonstrating that its policy or practice is job related and consistent with business necessity because it “bear[s] a demonstrable relationship to successful performance of the jobs for which it was used.”

The Guidance also lists examples of employer best practices for considering criminal records in connection with employment decisions. Among other examples, the Guidance advises employers to (1) develop a narrowly tailored written policy and procedure for screening applicants and employees for criminal conduct, (2) identify essential job requirements and the actual circumstances under which the jobs are performed, (3) determine the specific offenses that may demonstrate unfitness for performing such jobs, (4) determine the duration of exclusions for criminal conduct based on all available evidence, and (5) record the justification for the policy and procedures.

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

The Equal Employment Opportunity Commission recently issued an opinion concluding that under Title VII, employees may bring discrimination claims based on their transgendered status or gender identity.

Mia Macy was a male police detective in Phoenix, Arizona.  In 2010, Macy decided to relocate to San Francisco and pursue a position with the Bureau of Alcohol, Tobacco, Firearms, and Explosives.  After the interview process, a local director for the Bureau informed Macy that she would be able to fill the position provided that she passed a background check.  While her background check was pending, Macy informed the third-party contractor responsible for filling the position that she was in the process of transitioning from male to female.  The contractor relayed this information to the Bureau.  Five days later, the Bureau notified Macy that the position had been cut due to budget restrictions.  An EEO counselor at the Bureau, however, told Macy that another applicant had been hired for the position because that individual was farther along in the background investigation process.  Macy filed a discrimination charge against the Bureau, alleging sex discrimination, and discrimination on the basis of gender identity (as a transgender woman) and sex stereotyping.  When only her sex discrimination claim was accepted, however, Macy appealed.

The Commission reversed the decision, concluding that discrimination claims based on transgender status or gender identity are covered under Title VII.  The Commission based its conclusion principally upon the United States Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) and subsequent decisions by federal courts.  In Price Waterhouse, the Supreme Court held that discrimination on the basis of gender stereotype (e.g., a woman denied partnership in a company because she was too “macho” and not “feminine” enough) is sex-based discrimination prohibited under Title VII.  Several United States Circuit Courts of Appeals have subsequently held that under this holding, Title VII bars “not just discrimination because of biological sex, but also gender stereotyping—failing to act and appear according to expectations defined by gender.”  Following this approach, the Commission reasoned that when an employer discriminates against someone because the person is transgender, the disparate treatment is “related to the sex of the victim.”  According to the Commission, this includes a person allegedly discriminated against for expressing his or her gender in a non-stereotypical fashion, and a person allegedly discriminated against because an employer is uncomfortable with or dislikes the fact that he or she has or is transitioning from one gender to another.

Going forward, employers should assume that the Commission’s opinion is legally correct.  While the Supreme Court has not specifically addressed whether transgender or gender identity discrimination claims are covered under Title VII, many lower courts have held that this is a protected class.  Therefore, given the current trend in federal courts to recognize the validity of such claims, the Commission’s opinion will certainly bolster an employee’s ability to bring gender identity and transgender discrimination claims under Title VII.

Article written by Josh Meeuwse and provided courtesy of Worklaw Network firm Franczek Radelet (www.franczek.com)>

In 2009 the US Supreme Court pretty much cut out “mixed-motive” cases in the age arena. Meaning you now have to show that “but for” age discrimination you would have suffered that loss of job, etc. If there is any legit reason for your termination then you lose. In response to this ruling the legislatures are busy trying to work their way around it and the EEOC has updated its regulations as follows (underlining mine):

§ 1625.7   Differentiations based on reasonable factors other than age (RFOA).

(b) When an employment practice uses age as a limiting criterion, the defense that the practice is justified by a reasonable factor other than age is unavailable.

(c) Any employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a “reasonable factor other than age.” An individual challenging the allegedly unlawful practice is responsible for isolating and identifying the specific employment practice that allegedly causes any observed statistical disparities.

(d) Whenever the “reasonable factors other than age” defense is raised, the employer bears the burdens of production and persuasion to demonstrate the defense. The “reasonable factors other than age” provision is not available as a defense to a claim of disparate treatment. (Meaning individual harassment, discrimination, etc.)

(e)     (1) A reasonable factor other than age is a non-age factor that is objectively reasonable when viewed from the position of a prudent employer mindful of its responsibilities under the ADEA under like circumstances. Whether a differentiation is based on reasonable factors other than age must be decided on the basis of all the particular facts and circumstances surrounding each individual situation. To establish the RFOA defense, an employer must show that the employment practice was both reasonably designed to further or achieve a legitimate business purpose and administered in a way that reasonably achieves that purpose in light of the particular facts and circumstances that were known, or should have been known, to the employer.

(2) Considerations that are relevant to whether a practice is based on a reasonable factor other than age include, but are not limited to:

(i) The extent to which the factor is related to the employer’s stated business purpose;

(ii) The extent to which the employer defined the factor accurately and applied the factor fairly and accurately, including the extent to which managers and supervisors were given guidance or training about how to apply the factor and avoid discrimination;

(iii) The extent to which the employer limited supervisors’ discretion to assess employees subjectively, particularly where the criteria that the supervisors were asked to evaluate are known to be subject to negative age-based stereotypes;

(iv) The extent to which the employer assessed the adverse impact of its employment practice on older workers; and

(v) The degree of the harm to individuals within the protected age group, in terms of both the extent of injury and the numbers of persons adversely affected, and the extent to which the employer took steps to reduce the harm, in light of the burden of undertaking such steps.

(3) No specific consideration or combination of considerations need be present for a differentiation to be based on reasonable factors other than age. Nor does the presence of one of these considerations automatically establish the defense.

Word to the wise: Make sure you can fit any promotion, termination, or layoff type decision into the guidelines set forth above.

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:

1. The employer validates the criminal conduct exclusion for the position in question under the EEOC Uniform Guidelines on Employee Selection Procedures; or

2. 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.

Conclusion

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.

Article written by attorneys Doug Hass and Mike Warner and provided courtesy of Worklaw® Network firm Franczek Radelet.

In the recent case of Mustafa Rehmani v. Ericsson, Inc., the court introduced the facts as follows:

“Petitioner Rehmani, a Muslim born in Pakistan, worked as a System Test Engineer for Ericsson from February 2007, when Ericsson acquired Rehmani’s prior employer, to November 13, 2009, the day he was terminated. During his tenure at Ericsson he had coworkers from at least 12 different countries, including India, China, and Pakistan. Three of those coworkers — Amit Patel, Aneel Choppa, and Ashit Ghevaria — originally were, along with Ericsson, the objects of the underlying lawsuit in this case.” As the case then explains Rehmani claimed the Indian dudes pretty much treated the Pakistanis, Chinese and other non-Indians as second class citizens. From there the facts are like any other “traditional” discrimination case. I recently reported on a case filed the EEOC against an oil refinery because they hired Hispanics over both African Americans and Whites.

Here’s my point: Discrimination is no longer by the black and white thing. It’s growing as a nationality thing. Many immigrants have different cultural views related to the subject and may have long standing rivalries brought to our shores. The solution: Know your legal obligations, be clear about what you won’t tolerate and realize all of us could use a bit of training!

“If you are not prepared to be wrong you’ll never come up with anything creative.” —Sir Ken Robinson, author and educator

This issue discusses:

• Editor’s Column: Podcast Learning
• I-9 Employer Handbook
• How Companies Get Busted for Independent Contractor Violations
• Questions for Leaders
• Benefits and the Social Contract
• Inviting Employees to Leave
• IRAC – A Lawyer’s Way of Thinking
• EEOC Sues Trucking Company for Improper Pre-Hire Testing

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

Please click here to view the newsletter in PDF.

Editor’s Column: Podcast Learning

I’m a big fan of podcast learning. During the past four years, I’ve educated myself on a wide variety of subjects from business to personal growth, financial matters, and spiritual ones.

I would encourage all businesses to make their managers and employees podcast learners. For starters, your HR person should be listening to our monthly podcast. It’s not as fancy as the big guys’ podcast, but the information is there. I would then make sure all my managers listen to the Harvard Business Review podcasts, which provide an MBA-level education. They’re excellent — and they’re free. I would encourage you to consider TED videos and audios, which are outstanding. Pick out a few you think might apply to your business and encourage your team to watch them. They are 15 minutes long. Start one of your business meetings with one of them (maybe even every business meeting).

I also like the Stanford Entrepreneurial School podcasts. The Stanford graduate network has started more entrepreneurial businesses than anywhere else. Tap into this wisdom, even if you have a 50-year-old business. Podcast learning can stimulate thought and innovation at any company.

I’m most familiar with iTunes. Go there and check out all of their free podcasts. You can hire a high school intern to download about 20 podcasts each into a $50 player, so your employees can listen to them in their cars or at the gym. In the end, they will thank you for it.

Here are the links to the podcasts:

• HBR
• TED
• Stanford
• HR That Works

P.S. You can also develop a comprehensive leadership training program by taking advantage of the more than a dozen leadership webinars and podcasts stored on HR That Works. If you haven’t checked these out yet, do yourself a favor.

I-9 Employer Handbook

The government has an excellent publication covering everything about I-9s that all employers should know about. Here’s what it covers:

• Obtaining Forms and Updates
• Part One — Why Employers Must Verify Employment Authorization and Identity of New Employees
• Part Two — Completing Form I-9
• Part Four — Unlawful Discrimination and Penalties for Prohibited Practices=
• Part Five — Instructions for Recruiters and Referrers for a Fee
• Part Six — E-Verify: The Web-based Verification Companion to Form I-9
• Part Seven — Some Questions You May Have About Form I-9

Click here to access the handbook.

How Companies Get Busted for Independent Contractor Violations

Business owners love the idea of independent contractors. They afford flexibility, expertise, outside perspective, and of course, reduced insurance, benefit and tax burdens. Unfortunately, for these same owners, the Federal and state authorities are coming down big time on what they claim are independent contractor misclassification schemes. They don’t like the idea of you not collecting payroll taxes and not providing employees with Workers Comp, healthcare, and other benefits they might otherwise enjoy. Here are four of the more common ways employers get into trouble when they misclassify employees:

1. They get hurt on the job– Guess what? Since these people are not considered employees, your Workers Comp policy doesn’t cover them; which means they can sue you directly for negligence, expanding their recovery potential dramatically. What’s more, you might face a fine for not treating them as employees and providing them with Work Comp coverage.
2. They file for unemployment– A number of HR That Works Members have told us that because one person filed for unemployment, the authorities are trying to attack their independent contractor relationship with dozens of people. If a company in this situation comes out on the wrong side of a misclassification judgment, it could go out of business. Part of the thinking involved is that you can somehow “control” employees, but not independent contractors. For example, when I hire an independent contractor to paint my house, I pay them to get the job done and I don’t tell them how to apply the paint.
3. They didn’t pay self-employment taxes– When the IRS comes knocking on an independent contractor’s door and asks them about their tax payments and the work they did, they tend to conclude that they were an employee and you should have been withholding that 14% annually. If they can’t collect this from the independent contractor, they’ll try to collect it from you — not to mention fines and penalties. Some states, such as California, have kicked this up a notch and are making it a criminal offense to engage in intentional misclassification. Unsurprisingly, these bills are introduced into the legislature by the plaintiffs’ bar, which makes sure that the legislation includes handsome attorneys’ fees for enforcement.
4. Finally, the NLRB is getting interested too — Independent contractors don’t have the ability to organize the workplace, only employees do. This means that the National Labor Relations Board, which is very pro-union, doesn’t like it when you classify folks as independent contractors. Recently, because of one or two disgruntled employees, they ruled that independent contractors from a small orchestra were really employees, which will probably end up shutting down that business. I wrote an article about this called “The Day the Music Died.”

The bottom line: This fight is not about common sense or economics. It’s about political power, plain and simple. The pendulum has swung and employers have been pushed up against a wall. The problem is that they’re powerless to do anything about this situation and have to change the way they do business, even when they don’t think it makes sense to do so. That’s the beauty of living in a democracy.

Questions for Leaders

The quality of our lives and of our companies depends on the questions we ask and the challenges we set for ourselves. For example, you might ask yourself “Do I dare to be great?” That’s a good question. You can also ask yourself what kind of nonsense would get in the way of believing that you can be great. That’s a good question, too! With this spirit in mind, here are questions that could open you up to higher thoughts.

1. How clear is the vision for your company? Does everyone at the company know what it is? Have you branded it in your employee literature, on your intranet, on your walls, and so on? Would I know it simply by walking into your place or visiting your website?
2. Is your vision for your company a big, hairy, audacious one? It’s better to really go for it and succeed at 50% than to shoot for average — and end up average.
3. Have you played the movie forward to the end? If you got everything you had hoped for, what would it look like? How would it feel? How would your life be different?
4. What personal sacrifices are you willing to make to create a great company or career?
5. What personal sacrifices are you willing to ask others to make to build a great company or career?
6. What effort have you made to guarantee you bring the right people on every seat of the bus?
7. How do you stimulate your workforce to think for itself?
8. How do you create an employee suggestion system that works?
9. What have you done to eliminate the possibility of people making unnecessary mistakes?
10. What “one big thing” could wipe out your business tomorrow?
11. How could your business die from a series of 1,000 cuts?
12. Do you really want to do this anymore? If not, what would you rather be doing instead?
13. How could you stay in your business/career and reinvent how you work in it?

Have fun with the answers!

Benefits and the Social Contract

In his book Predictably Irrational, Dan Ariely provided two interesting observations related to employee benefits. First, he pointed out that benefits are more of a social contract than an economic one. The distinction between the two is very powerful. For example, if you have a department with 15 employees and someone walks in with a tray of 15 cookies and says that she baked cookies for the department today, under a social contract analysis, most employees would realize quickly that they should take one cookie each. However, if that was now turned into an economic arrangement in which the person stated that those cookies were baked for her child’s fundraiser, there would be no guilt or judgment associated with someone who proceeded to gobble up half the tray. Ariely reminds us that social contracts are much more powerful than economic ones.

Second, Ariely argues that asking employees to chip in for the payment of benefits or providing total compensation statements (something that we’ve recommended for years) diminishes the cohesiveness of the social contract.

These are provocative thoughts — and surveys about employee motivators mirror them to a certain degree. Although book after book after book talks about the “work experience,” in reality, most people go to work to be paid. The other motivational factors kick only after they feel they’re being paid a fair days’ wage. In today’s economy, employees rank benefits over compensation as their top concern. Benefits fulfill a security need more than does straight compensation. In a sense, the workforce is telling us that a dollar spent on benefits (which is a tax-free payment) is worth more than a dollar spent on straight compensation. Consider this if you’re considering a cut in benefits.

Inviting Employees to Leave

During the past year, I’ve read at least a dozen articles citing statistics that anywhere from a quarter to 42% of employees intend to look for new jobs once the economy recovers. My reaction to these articles: Seriously? Where are these folks going to go? To the companies where one-third of their employees are leaving? I wonder how much energy employees who plan on leaving are putting into their current job. My bet is that if they took the energy they’re using to think about employment elsewhere and applied it in their current job, they wouldn’t need to go anywhere!

Management should take these surveys as a sign of dissatisfaction — which shouldn’t come as a surprise. By definition, half of your employees are always happier in their jobs than the other half. The solution: Try to limit your hiring to these happy folks and to do everything possible to keep them that way.

Suppose you were bold enough to invite your dissatisfied employees to quit? Zappos does this with its new trainees. After they complete training, the company offers them a $3,000 bonus if they decide to quit. Zappos CEO Tony Hsieh believes that he’s better off giving an employee who has only one foot in the door $3,000 to leave, rather than keeping them. Even if these dissatisfied workers were only 10% less productive than the other Zappos’ employees, this loss of productivity would cost the company far more than the $3,000 “quitting bonus,” over the long run.

Invite your employees to one-on-one conversations about job satisfaction. Chances are, if an employee believes something feels “unfair” in the relationship, you can deal with the situation like two adults who don’t need unnecessary dramas. If the employee would feel better leaving, that’s their choice. However, if they’d like to feel better about their job, and you want them to stay, make it clear that you’re willing to work with them.

As I discuss in the Victims, Villains and Heroes book, even though there are few real workplace victims today, there’s a growing victim mentality. Anyone who wishes to educate themselves and work hard can enjoy employment opportunities; your job is to keep only the best on the bus.

IRAC – A Lawyer’s Way of Thinking

At the beginning of law school, every student learns “the method” used to help clients solve problems. IRAC stands for Issue, Rule, Analysis, and Conclusion.

• Issue: Issue spotting is a lawyer’s tool in trade. Never assume you know what the issues are without changing viewpoints or getting outside input. For example, HR executives not highly experienced in the law might assume the issue might relate to a Workers Comp return-to-work situation when in fact it’s also related to both the ADA and the FMLA. They might assume that the issue is getting rid of a poor performing employee when the real issue is what the manager did to create this poor performance. One reason that appellate tribunals consist of multiple judges is so that there can be a variety of viewpoints, especially when establishing the true issue. The ability to spot issues is one reason you should have a lawyer check your head when you have a serious problem.
• Rule: Rules come in many forms. There are hard and fast rules, such as those promulgated by legislatures and the court system. Then there are softer ones, such as those that relate to culture or values. In many cases, a whole host of rules can apply to a situation. You might have a contract, policy, procedure, habit, government requirement, vendor requirement, or some other rule that applies.
• Analysis: Now that you know what the issues are, as well as the rules, it’s time to do your analysis. As lawyers know, tough facts make for tough cases. There are times when applying a rule is not in your best interest. For example, the normal rule of the road is that you walk facing traffic; however, there might be a situation in which it’s safer to walk with traffic. In this case, complying with the law would generate an unsafe outcome. Experts make their money by knowing how to judge a situation for what it is, and not for what you’d like it to be. Their detached analysis is your best friend.
• Conclusion: Last, but not least, you need to make a decision. Of course, doing nothing is a decision in itself (sometimes this is the best course of action). In other cases, you need to take swift and immediate action. One of the main questions in deciding what path to take is to ask “Is there a way to get to the outcome we’re seeking that benefits all parties?” When we come to a conclusion, we must consider all stakeholders to a situation.

After answering questions from professors and law school exams for three straight years, IRAC becomes part of who lawyers are. There are many ways to “frame” a situation; IRAC adds one more arrow in your problem-solving quiver. May you use it well!

EEOC Sues Trucking Company for Improper Pre-Hire Testing

According to the EEOC’s suit, Celadon, a trucking company headquartered in Indianapolis, performed medical examinations on applicants for driving positions before making conditional offers of employment to them. The agency alleged that Celadon conducted these examinations in a manner inconsistent with the standards set by the U.S. Department of Transportation / Federal Motor Carriers Administration, and then used the results of those non-compliant examinations to reject qualified applicants Celadon thought were disabled.

Such alleged conduct violates the ADA, which prohibits employers from subjecting applicants to medical examinations before making a conditional offer of employment, and also prohibits discrimination based on disability or perceived disability. The EEOC filed suit (EEOC v. Celadon Trucking Services, Inc., Cause No. 1:12-cv-0275-SEB-TAB) in U.S. District Court for the Southern District of Indiana, Indianapolis Division, after first attempting to reach a pre-litigation settlement through its conciliation process.

“Celadon and all motor carriers must conduct medical examinations in accordance with the ADA,” said Laurie Young, regional attorney for the Indianapolis District Office of the EEOC. “Under the ADA, an employer cannot conduct a medical examination of a job applicant until the employer has given the applicant a job offer conditioned upon the applicant passing the examination. The EEOC will enforce these obligations.”

The EEOC is seeking compensatory and punitive damages against the company, as well as other relief, including a permanent injunction to prevent Celadon from engaging in any further employment practice that violates the ADA.

Lesson to employers: If you’re going to do pre-hire physicals make sure to do so only after you make a conditional job offer. See the report and forms in HR That Works.

Form of the Month

Sage Advice for Managers and Leaders (PDF) – An issue of Volleyball USA shared sage advice from 12 of the top volleyball minds in the nation. As someone who has coached not only kids’ teams, but also many executives, I found valuable guidelines in this article that have helped me be a better manager and leader.

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The EEOC is proud of its lawsuits. I used to be proud of mine too…until I realized thy cause more damage than good…even where there was bad conduct. According to the EEOC’s press release page these are the claims from just one week:

EEOC Sues Owner of Golden LivingCenter – Dartmouth for Disability Discrimination 3/19/12

Agricultural Supplier Olam Settles EEOC Pregnancy Discrimination Suit for $140,000 in Fresno 3/15/12

Warren Tricomi to Pay $30,000 to Settle EEOC Pregnancy Discrimination Suit 3/15/12

Hal Leonard to Pay $150,000 to Settle EEOC Sexual Harassment Charge 3/14/12

Family Video to Pay $70,000 to Settle EEOC Disability Discrimination Suit 3/14/12

Sterling and Sterling to Pay $120,000 to Settle EEOC Suit for Retaliation 3/14/12

EEOC Sues GGNSC Administrative Services For Disability Discrimination 3/13/12

Menorah House Settles EEOC Religious Discrimination Lawsuits 3/12/12

As you can see from the titles, disability and pregnancy leave have been major targets. Employers must do two things to better manage these claims: First, take disability requests and harassment complaints seriously. If you don’t know what to do, then get help. Secondly, get Employment Practices Liability Insurance. See the checklist on HR That Works. I bet every one of the companies sued that didn’t purchase it wishes it had.  Also understand this – these settlements and verdicts are LESS than they would be if brought by private attorneys in state courts.

The U.S. Equal Employment Opportunity Commission (EEOC) has issued a revised publication addressing veterans with disabilities and the Americans with Disabilities Act (ADA). The revised guide reflects changes to the law stemming from the ADA Amendments Act of 2008, which make it easier for veterans with a wide range of impairments – including those that are often not well understood — such as traumatic brain injuries (TBI) and post-traumatic stress disorder (PTSD), to get needed reasonable accommodations that will enable them to work successfully.  [Prior to the ADA Amendments Act, the ADA’s definition of the term “disability” had been construed narrowly, significantly limiting the law’s protections.] 

As large numbers of veterans return from service in Iraq and Afghanistan it is important for employers to be prepared.

The Guide for Employers explains how protections for veterans with service-connected disabilities differ under the Americans with Disabilities Act (ADA) and the Uniformed Services Employment and Reemployment Rights Act (USERRA), and how employers can prevent disability-based discrimination and provide reasonable accommodations.