Here is an updated version of the FMLA employee handbook policy (Federal and California). Please amend your employee handbooks if you have 50 or more employees. You can get a copy of the updated FMLA poster by clicking here or order an updated all-in-one poster from American Labor Law Company. To read more about the new requirements, go to: http://www.dol.gov/whd/fmla/.

The Department of Fair Employment and Housing recently began enforcing newly revised regulations addressing discrimination based on disability. The final regulations, which took effect on December 30, 2012, primarily update the old regulations. Among other things, the new regulations:

• include several updates to the definition of “disability” to conform to the federal Americans with Disabilities Act Amendments Act of 2008 and the broad definition contained in Government Code section 12926.1;
• provide examples of disabilities including chronic and episodic conditions, and temporary disabilities. The new regulations note a few exclusions from the term “disability,” such as the common cold, mild cuts or abrasions, and the flu;
• clarify that the term “medical condition” may include a “genetic characteristic” (in order to conform to the federal Genetic Information Non-Discrimination Act);
• add guidance regarding the phrase “essential job functions,” and specify that the elements of a discrimination claim now require the employee to establish that he or she can perform the job’s essential functions, with or without accommodation;
• provide more detail regarding the “interactive process” obligations for both employers and employees. Notably, an employee’s exhaustion of California Family Rights Act or Family and Medical Leave Act leave is now considered notice to the employer that the employee may need an accommodation; and
• recognize medical leave as a form of accommodation, but expressly state that employers need not provide “indefinite” leave.

Article courtesy of Thomas Ingrassia of Petit Kohn (www.pettitkohn.com)

The U.S. Department of Labor issued a final rule implementing two important expansions of FMLA protections. The first expansion provides families of eligible veterans with the same job-protected FMLA leave currently available to families of military service members and it also enables more military families to take leave for activities that arise when a service member is deployed.  The second expansion modifies existing rules so that airline personnel and flight crews are better able to make use of the FMLA’s protections.

“Co-creation fundamentally challenges the basic tenet of traditional economic theory: that the firm and the consumers are separate, with distinct, predetermined roles, and, consequently, that supply and demand are [separate] processes.”

–C.K. Prahalad, Co-author, Core Competence of the Corporation

This issue discusses:

• Editor’s Column: Twelve Questions for Growing Companies—and HR Careers
• We Can All Use a Little Hope
• Big Surprise: Effective HR Practices Drive Profits
• Side Job Doesn’t Prevent FMLA Claim
• Federal Court to Starbucks: ‘The Law Says What It Means and Means What It Says’
• Agile Working: How One Company Does It
• Notes About Change Management
• The Nationwide Abuse of Unemployment Benefits

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

Please click here to view the newsletter in PDF.

Editor’s Column: Twelve Questions for Growing Companies—and HR Careers

Good to Great author Jim Collins identifies 12 questions leaders must grapple with if they want to excel. These questions apply to anyone in HR management, as well. Here’s my spin on them:

1. Do you want to build a great company (or HR function) and are you willing to do what it takes?
2. Do you have the right people on the bus and in the key seats? HR must be 100% responsible for making sure that this happens.
3. What are the brutal facts? Where is HR supporting you and where is HR hurting you? For example, has HR allowed you to keep poor players on the bus?
4. What’s your “hedgehog”? The hedgehog is something that you can do best, make a buck, and be passionate about! How does HR support this?
5. What’s the one thing you do that you’re great at? Are you known for hiring the best employees in your industry? For getting them to perform beyond their peers? For having the highest retention rates? For fostering creativity? Where does HR help you to do things better than your competition?
6. What’s your 20-mile mark and are you hitting it? The point is to be goals oriented. Unfortunately, too many people in HR don’t have a plan — and thus, don’t have goals.
7. Where should you place your big bets based on empirical validation? As Jim Collins and any good marketer would tell you, test, test, test — and when you find out what works, blow it up big time. To what degree do you test one way of hiring, hiring tool, or managing performance, etc. to find out what works best?
8. What is your 15 to 20 year Big, Hairy, Audacious Goal? Of course, this means that you might not be there when the goal is met. The real question is, what type of legacy do you plan on leaving?
9. What could kill you, and how can you protect your flanks? For example, could a new, well-funded competitor swipe away your top talent? What is HR doing to prevent this? As stated in recent blog posts, swiping confidential, trade secret, and other proprietary information can harm a company overnight.
10. What should you stop doing to increase your discipline and focus? This is a theme that I preach in time management. Before you can pretend that you’ll do anything new, you must first stop doing something. Otherwise, the result will be burnout, and non-productivity.
11. How can you increase your return on luck? By asking question! Where have you been lucky? Where have you made great hires? Where have you had superstar performers? What can you learn about these people that will help hire more like them?
12. Last, but not least, are you becoming a Level 5 leader building a Level 5 culture? To a large degree, this is about humility. It means playing 40/40, as I discuss in the HR That Works Victims, Villains, and Heroes program. Being humble does not mean that you are weak; it’s an inner strength that empowers others to find their inner strength.

I’ve greatly enjoyed reading Jim Collins’ books over the years. To see my five-minute video summarizing his insights, click here. Collins recommends that we tackle each of these 12 questions every month. Likewise, I suggest that you focus on a single proactive objective in HR every month. See the Form of the Month, a 2013 HR Game Plan.

We Can All Use a Little Hope

Norman Vincent Peale often talked about the important role hope plays as part of his positive thinking process. Peale taught us that it’s far easier to be hopeful when you embody these characteristics:

• Determination
• Expectation
• Renewal
• Belief
• Enthusiasm
• Persistence
• Vision
• Faith

How would you apply each of those ideas to the hope you have for your career or company? Simply allowing yourself to consider each one of them provides confidence and hope by its very nature!

Big Surprise: Effective HR Practices Drive Profits

The report From Capability to Profitability: Realizing the Value of People Management by the Boston Consulting Group and World Federation of People Management Association found that the highest correlations between economic performance and HR practices were related to:

• Employee retention
• Employer branding
• Leadership development
• Onboarding
• Performance management
• Recruiting

For the life of me, I’m not sure why these companies spent so much money to convince themselves of the blindingly obvious: If you want to grow your business, hire trustworthy employees, get them to perform, and keep them on the bus when they do! HR That Works members are fortunate to have a great number of tools that help support these profit drivers.

Side Job Doesn’t Prevent FMLA Claim

In the California case, Richie v. AutoNation, an employee out on CFRA (FMLA) was fired by his employer when he was found to have been working at a restaurant he owned during his leave period. The company’s leave policy prohibited outside employment during leave. The court ruled in favor of the plaintiff, stating that FMLA/CFRA (the California equivalent) has a process to follow in shortening FMLA leave if you believe that an employee no longer qualifies for it. You cannot create your own rule or process and, in a sense, do an end run around FMLA protections. The court ruled that because job reinstatement is mandatory, the only way to stop leave properly is by following the CFRA process and questioning the medical opinion of the employee’s doctor.

This decision reminds us that ignorance of legal requirements is no excuse. In this case, the company argued that it had a good faith defense because it was not aware of this limitation on managing leave. The court essentially said “So what? It’s a mandatory statutory obligation, which you can’t avoid.” As a different court stated, “A showing that an employee is unable to work in the employee’s current job due to a serious health condition is enough to demonstrate incapacity. The fact that an employee is working for a second employer does not mean that he or she is not incapacitated from working in his or her current job.”

Some additional notes:

1. The decision reminds us that an employer’s policy on secondary employment during FMLA leave must be the same as that for employees who are not on FMLA leave. Otherwise, the policy itself violates the law.
2. Second, the court overturned an arbitration decision in this case which allowed the court’s good faith defense. Although review of arbitration is very limited, the court will step in if the arbitrator misapplied the law.
3. Finally, whether it’s FMLA leave, ADA accommodation leave, use of PTO or sick pay, etc., if you doubt the veracity of any employee’s story (i.e. they were playing soccer or lifting pianos this weekend), you must follow the proper procedures so that you don’t find yourself trapped like AutoNation did in this case.

Federal Court to Starbucks: ‘The Law Says What It Means and Means What It Says’

Here’s a second case about an employer who skirted the law. One of the major questions involving tips is the degree to which management gets a piece of the action. A recent federal District Court decision in Massachusetts (Hernan Matamoras v. Starbucks) has followed the trend of the US Department of Labor and many other states by prohibiting an employer from pooling tips with management-level employees. The giant coffee shop chain ended up having to pay to its baristas a bonus because it had allowed shift supervisors, who acted as baristas roughly 90% of the time, to share in the tip pooling. The court stated, “Stripped of rhetorical flourishes, Starbucks’ position invites us to repudiate both the precise language and the clear intent of the 2004 amendments and to resurrect the primary duty test. We decline the invitation.” Even if the supervisors spent only 10% of their time managing, the fact that they were managers barred them completely from sharing any tips.

For more information on tipping, see the FLSA memo and position paper, as well as guidelines from the California Department of Industrial Relations

• http://www.dol.gov/whd/regs/compliance/whdfs15.pdf
• http://www.dol.gov/whd/FieldBulletins/fab2012_2.htm#.ULqQyYbNnsk
• http://www.dir.ca.gov/dlse/FAQ_tipsandgratuities.htm

Please refer to the BNA state law summary for your state on HR in the compensation area of HR That Works.

Agile Working: How One Company Does It

Technology keeps reducing the need for employees to come into the workplace. An interesting article in Human Resource Executive magazine spotlights Unilever’s program for co-mingling home and work activities. Unilever has taken a number of steps that you might consider as part of your telecommuting program:

1. Create “plug and play workstations” so that telecommuters can come in and work on a project with their team or find some quiet time to themselves. These work areas have a clean desk policy — employees are expected to clean them up when they leave.
2. Understand the difficulty of monitoring time and attendance. Although this is not an issue with exempt employees, non-exempt employees can find themselves working all hours of the day. We did a Results Only Work Environment (ROWE) webinar which focused on results produced, rather than hours worked. However, this approach can create wage and hour headaches.
3. Consider security issues. Remember that the telecommuter’s home office has become an extension of your company. You’ll need to make sure that data is secure, workplace safety and company ergonomic standards are in place, and that you have the proper insurance coverages.
4. Provide employees with access to an environment that’s conducive to work.

The Unilever story has been a success, with about 95% support from workers. As one employee stated, “We work at home and the real reason we come to work is collaboration.”

For more information, HR That Works members should take a look at our Telecommuting report, checklist, and policy.

Notes About Change Management

A survey of 650 change management team leaders by Prosci, Inc. found these obstacles to the process:

• Ineffective sponsorship from senior leaders
• Insufficient resources
• Employee resistance
• Middle manager resistance
• Poor communication

Due to these factors, only 43% of 604 organizations surveyed by Tower Watson in 2011 achieved their change goals. I can tell you that the No. 1 response to change is frustration — largely due to the obstacles cited above. The Towers Watson Web site has many excellent articles on Change Management (www.change-management.com/tutorials.htm).

To join me in my upcoming Webinar on Managing Change at Your Company, click here.

The Nationwide Abuse of Unemployment Benefits

Fraudulent payment of unemployment insurance benefits is a nationwide problem, accounting for as much as 14% of total payments in some states. The chart shows that most states are paying anywhere from 8%-12% extra in claims. When you consider that the payment period for many claims has been extended during the Obama Administration, that’s a lot of wasted dollars!

http://www.dol.gov/dol/maps/map-ipia.htm#.ULqTLobNnsk

Most employers give up on fighting unemployment claims because they find it very difficult to win them. Lawyers are too expensive to hire, and employers have too little expertise — that’s why unemployment benefits consultants have set up a niche practice of defending employers.

In general, unemployment insurance is available to employees who lose their jobs “through no fault of their own,” as determined by state law. Although federal law sets some guidelines, each state administers its own unemployment insurance program. All but three states fund their programs from a tax imposed solely on employers. Employees generally receive payments for maximum of 26 weeks in most states, unless the period is extended in times of high unemployment. Employees are required to look for other work and prohibited from receiving benefits once they obtain it (this is where much of the fraud comes in).

In most states, an employee fired for misconduct can be denied unemployment benefits. The question is, how do you define “misconduct”? Essentially, it has to be a willful act, such as insubordination, excessive absenteeism, insubordination, dishonesty, or drug or alcohol use that damages the company in some way. However, fired employees who simply don’t do their job properly or in a timely fashion will be eligible for unemployment benefits.
For example, the California Unemployment Code § 1256 states:

“An individual is disqualified from unemployment compensation benefits if … he or she has been discharged for misconduct connected with his or her most recent work.” Misconduct is limited to conduct evidencing such willful or wanton disregard of an employer’s interests as is found in deliberate violations or disregard of standards of behavior, which the employer has the right to expect of his employee, or in carelessness or negligence of such degree or recurrence as to manifest equal culpability wrongful intention or evil design, or to show an intentional and substantial disregard of the employer’s interest or the employee’s duties and obligations to his employer. On the other hand, mere inefficiency or unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not deemed “misconduct” within the meaning of the statute.”

If you intend to contest an unemployment claim, make sure that you have documentary support (such as a statement under oath signed by the claimant’s manager or fellow employees, a photo, or a warning notice). Of course, fighting a claim will up the ante with the employee, who might respond by contacting an attorney and filing additional claims. Always something to consider!

Finally, many companies suffer from high unemployment claims because they have unnecessarily high turnover rates. If this is the case, ask what you can do to prevent unwanted turnover. You should also question why you hired the terminated employees in the first place.

Form of the Month

2013 HR Game Plan (PDF) – In case you missed our Webinar, here’s a sample HR Game Plan for 2013, which you can tailor to the needs of your business.

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.

Podcast: Play in new window | Download

I recently answered a common question about FMLA and flex time. Here’s my response:

Q: I’ve run into more FMLA tracking problems in the last month than I ever thought that I would have. I’ve solved most of the problems so far, but they just keep popping up! My current question is this:

Our two-week pay period ends with a “flex” Friday. Supervisors determine whether employees are required to work or not based on the workload of the department or even the individual. If an employee is out on continual FMLA leave, do I count these flex Fridays as FMLA time?

A: The place to begin is with the CFRs. That’s where they get to the details. Here’s the link to that. The answer to your question is spelled out below:

825.205   Increments of FMLA leave for intermittent or reduced schedule leave (b) Calculation of leave.

(1) When an employee takes leave on an intermittent or reduced leave schedule, only the amount of leave actually taken may be counted toward the employee’s leave entitlement. The actual workweek is the basis of leave entitlement. Therefore, if an employee who would otherwise work 40 hours a week takes off 8 hours, the employee would use 1/5 of a week of FMLA leave. Similarly, if a full-time employee who would otherwise work 8-hour days works 4-hour days under a reduced leave schedule, the employee would use 1/2 week of FMLA leave. Where an employee works a part-time schedule or variable hours, the amount of FMLA leave that an employee uses is determined on a pro rata or proportional basis. For example, if an employee who would otherwise work 30 hours per week, but works only 20 hours a week under a reduced leave schedule, the employee’s ten hours of leave would constitute one-third (1/3) of a week of FMLA leave for each week the employee works the reduced leave schedule. An employer may convert these fractions to their hourly equivalent so long as the conversion equitably reflects the employee’s total normally scheduled hours.

(2) If an employer has made a permanent or long-term change in the employee’s schedule (for reasons other than FMLA, and prior to the notice of need for FMLA leave), the hours worked under the new schedule are to be used for making this calculation.

(3) If an employee’s schedule varies from week to week to such an extent that an employer is unable to determine with any certainty how many hours the employee would otherwise have worked (but for the taking of FMLA leave), a weekly average of the hours scheduled over the 12 months prior to the beginning of the leave period (including any hours for which the employee took leave of any type) would be used for calculating the employee’s leave entitlement.

In the case of Gates v. United States Postal Service, the U.S. Court of Appeals for the Sixth Circuit held that an employee’s FMLA interference claim failed where the evidence showed that he would have been terminated for his excessive absenteeism even if he had not taken FMLA leave.

For the facts of the case, the court’s ruling, and practical impact, click here.

In this short video, Don Phin goes over the The Bermuda Triangle of Employment for Human Resources Departments around the country.

“It is the duty of the executive to remove ruthlessly anyone — and especially any manager who consistently fails to perform with high distinction. To let such a man stay on is to disrupt the others. It is grossly unfair to the whole organization” —Peter Drucker

This issue discusses:

• Editor’s Column: Three Major Gaps
• Keeping Cool in the Summer Heat
• What’s Important to HR Pros
• The NLRB: A Political Football
• Challenges with Intermittent FMLA Leave
• It Pays to Provide Healthy Snacks
• HR: You Versus the Competition
• Using Outsourced Workers
• HR and Risk Management
• Oh No! Where Did Our Information Go?

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

Please click here to view the newsletter in PDF.

Editor’s Column: Three Major Gaps

In a recent Webinar, I reviewed 15 forms and tools on HR That Works that can have a direct impact on a company’s bottom line. If you haven’t yet watched this Webinar, I encourage you to do so by clicking on this link.

During the Webinar, I asked three polling questions. How would you respond to each one of these?

1. Do you have a social media policy?
   Amazingly, less than half of respondents have such a policy — they’re sticking their heads in the sand. Don’t ignore this significant risk exposure. The best way to create a policy is by coordinating with your HR, marketing, and IT departments, as well as a representative team of employees. This can’t be a top-down document — it just won’t work. You need to create your policy by consensus so that everyone at the company will buy into it. A good way to start is by taking advantage of the Social Media Training Module and Sample Policy on HR That Works.
2. Do you have a written hiring process?
   Once again, less than half of respondents do. This is amazing when you consider that the single most important thing you can do for your company is hire the right people. Don’t take my word for it; rely on the research of best-selling author Jim Collins (Built to Last, Good to Great, etc.) who argues that the main factor in creating great companies is hiring great people. How can you possibly do this on a consistent basis without an effective hiring process? Answer: You can’t!
3. Does your employee handbook tell employees how to be a good employee?
   Believe it or not, two-thirds of respondents said that their handbook doesn’t.The reason: Lawyers, who have taken over writing employee handbooks, focus on protecting your business, rather than helping you to grow it.Remember, as Norman Vincent Peale preached, you get what you focus on. Your handbook should definitely include the How to Be an Excellent Employee and sample Team Rules provision from HR That Works.

Keeping Cool in the Summer Heat

When it comes to outdoor workers, “water, rest and shade” can literally make the difference between life and death. Every year, thousands of workers nationwide suffer from serious heat-related illnesses. If not addressed quickly, heat exhaustion can become heat stroke, which has killed — on average — more than 30 workers annually since 2003. Labor-intensive activities in hot weather can raise body temperatures beyond the level that normally can be cooled by sweating. Heat illness might first manifest itself as heat rash or heat cramps, but can quickly turn into heat exhaustion, and then heat stroke, unless workers follow basic preventive measures.

“It’s essential for workers and employers to take proactive steps to stay safe in extreme heat, and become aware of symptoms of heat exhaustion before they get worse,” says Dr. David Michaels, Assistant Secretary of Labor for Occupational Safety and Health. “Agriculture workers; building, road and other construction workers; utility workers; baggage handlers; roofers; landscapers; and others who work outside are all at risk. Drinking plenty of water and taking frequent breaks in cool, shaded areas are incredibly important in the hot summer months.”

In preparation for summer, OSHA has developed heat illness educational materials in English and Spanish, as well as a curriculum for workplace training. Additionally, a Web page provides information and resources on heat illness — including how to prevent it and what to do in case of an emergency — for workers and employers. The page is available here.

OSHA also has released a free application for mobile devices (both Android-based platforms and the iPhone) in English and Spanish that workers and supervisors can use to monitor the “heat index” at their work sites. This app displays a risk level for workers based on the index, as well as reminders about protective measures to take at that risk level. You can download the app here.

NOAA also includes pertinent worker safety information on its heat watch Web page.

What’s Important to HR Pros

SHRM surveyed 504 HR professionals on their degree of satisfaction with 26 different job attributes. The respondents’ top five concerns, in order, were:

1. Opportunities to use skills and abilities — Exactly what skills and attributes are you interested in using? Does management even know that you have this ability or desire or are you keeping it to yourself? For example, if you’ve recently completed a course of self-study, does management know this?
2. Relationship with immediate supervisor — This holds true for all employees, not just HR executives. What, if anything, feels “unfair” about this relationship? Have you been given time to discuss your agenda for the company and your career? Has your boss pooh-poohed some of your ideas? Does your immediate supervisor even know what’s most important to you in the relationship or are you hoping that he or she can guess at it?
3. Communication between employees and senior management — It’s highly frustrating to be stuck in the middle when there’s a poor relationship between manager and employees. (Guess what? It’s your job to help improve this communication!)
4. The work itself — If you find yourself doing under-valued work, whose fault is this? Have you made the case for ditching your $10-$20 per hour work so you can focus on higher value work? Can you show management the ROI on your moving up the ladder?
5. Autonomy and independence — You want to do your own thing like everybody else. Have you earned the trust necessary to have this independence? What level of authority do you have?

Interestingly, compensation and pay came in at seventeenth place! As I kid in my workshops with HR executives, “They know this about you.” In my survey of HR executives, most of them tell me that what they want more than anything else is to make a difference — which is great. Just don’t underestimate the importance of getting paid well to do it!

The NLRB: A Political Football

Many employers have expressed their frustration about the National Labor Relations Board’s agenda. Are they really surprised or just annoyed? The NRLB, like OSHA, the EEOC, DOL, etc. are administrative branches under the control of the President, who is currently backed by unions. As you can see from the graph, the figures in yellow show how NLRB enforcement declined once the Bush administration came into office, and has been back on the rise since the Obama administration came in (in pink). No surprise here. Unfortunately for the NLRB, state legislatures and courts have begun to rein in the NLRB agenda, which arguably goes beyond any authority found under the Act. Take, for example, the demise of the Employee Free Choice Act, problems with the NLRB Poster, and most recently the new election regulations.

My advice: Make sure that someone at your company stays on top of the NLRB agenda. Check out the HR That Works Blog posts, as well as the www.nlrb.gov website and our recent Webinar on managing recent NLRB requirements.

Challenges with Intermittent FMLA Leave

Few things drive HR executives nuts more than dealing with intermittent FMLA leave. When faced with this situation, bear these facts in mind:

1. Employees must comply with reasonable call-in procedures and no-call/no-show policies affected by intermittent leave.
2. Employers are allowed to get recertification under appropriate circumstances. They can also put employees in an accommodated position that might reduce the need for the intermittent leave.

HR That Works has an excellent series of podcasts produced by the Franczek firm discussing FMLA leave.

It Pays to Provide Healthy Snacks

Smart employers realize that they should make healthy energetic foods available to their employees. After all, what’s the cost of a few healthy snacks when you’re paying a worker $50,000 a year to produce? I encourage all employers to provide rice cakes, fresh apples, lemons, fresh water, sparkling water, oranges, carrot sticks, almonds, broccoli, etc. You can often go to the local supermarket and buy a tray which already has many of these fruits and vegetables. The point: Make it easy for your people to eat healthy food — and they’ll become far more alert and productive. Even better, work with a local farmer or health food store to set up a regular delivery schedule.

HR: You Versus the Competition

HR operates in a highly competitive landscape. For example, your ability to attract and retain employees more effectively than your competitors will benefit your bottom line. HR can play a key role in this process. How would your company compare to the competition in these elements of employee compensation?

• Salaries and wages
• Benefits and other rewards
• Training
• Career growth opportunities
• Flexible work arrangements
• Retirement benefits

If you’re not clear about how you stack up, you have some serious homework to do. Many industry groups or local employer groups can help you obtain data related to your industry. Contacting a recruiter in your field can also help supply you with this information. Remember that these factors can have a significant effect on your ability to attract employees, get them engaged, retain them, avoid unionization efforts, and improve your brand and customer relations.

Using Outsourced Workers

HR That Works has an extensive report and checklist about what’s known as the “contingent workforce.” This includes temporary employees, leased employees, and more. Here are some questions to consider in these relationships:

• Who is responsible for what? — As with any arrangement, it’s important to study the contract. For example, if an employee isn’t working out, who should be responsible for firing them? Consider every aspect of managing personnel from hiring through performance management and retention to termination.
• How much are you paying to outsource various HR functions? — Whether you’re outsourcing because you don’t have the time, expertise, or desire to do the job in house, you’ll have to pay for someone else to do it for you. What’s the competitive rate? What about the provider’s experience and results? Do your homework and interview at least a couple of providers and their clients before you choose one.
• What is the provider’s hiring process? — They should be able to show it to you in writing. If they can’t, pick someone else. Make sure that the provider does proper skill testing, character assessments, background checks, extensive interviews, immigration checks, and pre-hire physicals.
• What references can the provider offer? — Don’t just ask for references, get the names of companies who have used the vendor during the past year. See if the vendor is willing to share this information and allow you to interview those companies. Ask “What will these companies tell us?” Then do Google research to see what comments you can find online.
• What’s the knowledge on board at the vendor? — How long has the person who does the hiring and staffing been doing their job? What are their credentials? Is there expertise on board to help you with any compliance concerns?
• Does the agent carry the right insurance? — Depending on whose payroll is involved, the law requires employers to provide Workers Compensation benefits, as well as withholding unemployment and Social Security taxes, and more. If the temp or leasing agency treats their workers as independent contractors you could end up being in a heap of trouble.
• Does the agency provide employees benefits? — Remember, if a worker walks and talks like your employee, they’re probably going to be considered your employee, whether they’re a sole employee or in a joint employer relationship. If an employee receives no benefits from the provider, you can easily face a hefty benefits claim down the road.
• What about union activities? – To what extent has the agency been faced with unionization efforts? Your temporary workforce might be considered part of an existing bargaining unit and thus covered by your union contract.

HR That Works members should view the extensive Contingent Worker Report and Checklist.

HR and Risk Management

We usually think of HR helping to avoid employment practice risks. We want to make sure not to be trapped in wage and hour claims, discrimination and harassment litigation, and wrongful termination lawsuits. Then there’s leave management, including ADA and FMLA. Although these are the major issues in HR risk management, HR is also instrumental in helping with other aspects of managing risk, such as:

• Workers Compensation — Insurance companies don’t pay claims, they finance them. When you suffer a Comp claim, your experience modifier (“MOD”) increases to repay the claim during a three-year period at a high interest rate. This can be the most expensive money that your company borrows. That’s one reason we recommend that employers do everything possible to get employees returned to work. Has your HR person helped develop a comprehensive return-to-work program?
• Cyber Liability — To what extent are poor employee practices leaving your information systems vulnerable? To what degree is HR working with IT and security to make sure that new employees receive proper orientation and terminated employees are managed effectively from a security standpoint? For example, what precautions have you taken to have mobile devices returned, passwords retrieved, trade secrets protected, etc.? To what degree does HR make sure that telecommuting employees don’t expose the company to cyber risks?
• Social media — One element of cyber liability, risk from social media, is expanding every day. Has HR made it clear who owns the company Twitter account? Have they set social media guidelines? Do they know how to respond to any perceived risks, such as negative employee postings?
• Privacy exposures — Whether it’s medical records (HIPAA), Social Security information, financial information, etc., employees can both generate exposures and be subject to them.
• Disaster planning — One disaster can wipe out your company overnight. Whether it’s a tornado, hurricane, earthquake, flood, or a brutal snowstorm, the news is replete with the devastating impact of such events. To what degree has HR helped generate a plan to protect the company in the aftermath of a disaster?
• Employee Benefits — With a growing number of ERISA claims and a rapidly changing benefits landscape, HR is thick in the mix. Who is responsible for staying on top of the emerging benefit trends?

Perhaps the greatest risk that HR can help with is growing the business: Providing strategic advice about what your company needs for growth and how to move in this direction. At smaller companies, it’s difficult for the HR executive to wear all these hats. In this situation, many businesses have partnered with their insurance agency or other professional providers of risk management services.

Oh No! Where Did Our Information Go?

During recent months I’ve been reading a large number of lawsuits related to industrial espionage, sabotage, misappropriation, and theft. Most of these cases involve a current or former employee or some third party stealing valuable financial or other information. In several recent decisions, courts have ruled that they lack criminal jurisdiction over theft of information by an employee who had access to a company’s database. The courts essentially held that the misappropriation in question did not violate the National Stolen Property Act, the Economic Espionage Act, or the Computer Fraud and Abuse Act (CFAA). In the case of US v. Nosal, Judge Kozinski, known for his left-of-center opinions, engaged in a display of semantic gymnastics to rule that the Computer Fraud and Abuse Act was nothing more than an anti-hacking statute and doesn’t apply to misappropriation. Essentially, he argued that employees who wasted time on Farmville, Facebook, New York Times, daily Sudoku, etc. would be in violation of the Act, which is too broad for the government to enforce. If you want to see some feathers fly in a scorching dissent, read the case.

Bottom line: Make sure to buy Cyber Liability insurance; it looks like you’re going to have a hard time getting protection from the courts, especially if you happen to be in the Ninth Circuit.

Form of the Month

Factors Affecting HR (PDF) – Check out this comprehensive list of the internal and external factors that have a significant impact on your HR activities.

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:

©2012 Reprinted with permission from HRThatWorks.com, a powerful program designed to inspire great HR practices.

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In this 5-minute video HR That Works president, Don Phin, discusses the reason why HR is high risk. To download the 149 Things to Worry About in HR PDF, please click here.

“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.

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:

©2012 Reprinted with permission from HRThatWorks.com, a powerful program designed to inspire great HR practices.

Podcast: Play in new window | Download