By now you may have heard that the California Supreme Court finally decided the Brinker case, ruling in favor of employers. It concluded that an employer’s obligation is to relieve its employees of all duty, with the employee thereafter at liberty to use their rest or meal period for whatever purpose he or she desires. The employer need not ensure that no work is done. Thankfully for California employers the court ruled that you can treat employees like the adults they are supposed to be! Here’s the bottom line to a decision that took much too long to come to such a commonsense conclusion:

1. You have to offer rest and meal breaks.
2. It’s up to employees to take them.
3. Your managers can’t dissuade employees from taking their breaks.
4. If they can’t take the break, you pay a one-hour penalty.

Much of the case had to do with the class action certification process, which is only of interest to the lawyers. Of course, if it’s to be a class action, the issue is whether common or individual questions predominate and that question often depends on a resolution of issues closely tied to the merits. Here are some quotes from the Brinker decision that apply to rest and meal period:

• “To earn the first ten-minute break, one must be scheduled for a work shift of at least three and one-half hours, while to earn the next ten minutes, one must be scheduled to work four hours plus a major fraction to earn the next ten, eight hours plus a major fraction, and so on.” So, employees are entitled to ten-minute rests for shifts from 3.5-6 hours in length, 20 minutes for shifts of 6 hours up to 10 hours, and 30 minutes for shifts of 10 hours up to 14 hours, and so on.
• “As a general matter, one rest break should fall on either side of the meal break.”
• “The meal period requirement is satisfied if the employee: 1) has at least 30 minutes uninterrupted, 2) is free to leave the premises, and 3) is relieved of all duty for the entire period. Again, the employee must be relieved of any duty or employer control and are free to come and go as they please. It is not the employer’s obligation to ensure that no work is being done.
• “When someone is employed for 5 hours, an employer is put to a choice: 1) it must afford an off-duty meal period; 2) consent to a mutually-agreed upon waiver if one-hour or less will end the shift; or 3) obtain written agreement to an on-duty meal period if circumstances permit. Failure to do one of these will render the employer liable for premium pay. If work does continue, the employer will not be liable for premium paid. At most, it will be liable for straight pay, and then only when it ‘knew or reasonably should have known’ that the worker was working through the authorized meal period.”
• “Proof of an employee’s working through a meal period will not alone subject the employer to liability of premium pay. Employees cannot manipulate the flexibility granted them by employers to use their breaks as they see fit to generate such liability. On the other hand, an employer may not undermine a formal policy providing meal breaks by pressuring employees to perform their duties in ways that omit breaks. For example, common scheduling policies that make taking breaks extremely difficult or creating incentives to forgo or otherwise skipping breaks. “
• “The first meal period must start after no more than five hours. A second meal period is only required after ten hours of work.”

In the case, the plaintiff also contended that Brinker required employees to perform work while clocked out and that meal break records were altered to conceal time working during those periods.

Additional notes: Remember that all meal periods are required to be recorded. Rest periods are not so required. Think about this twist: It can be argued that those employees who worked through their meal breaks and thereby out-produced their peers, are doing so voluntarily with a desire to be promoted. If in fact they are promoted ahead of their peers, their peers can then argue that you basically discouraged them from taking meal breaks and violated the law.

In this California case “consulting service managers” who were primarily engaged in selling recruitment services for Surrex, filed claims for overtime and missed meal periods. The court dismissed their case claiming the fit under the Sales exemption The most important language in the case is as follows:

“We conclude Labor Code section 204.1 sets up two requirements, both of which must be met before a compensation scheme is deemed to constitute ‘commission wages.’ First, the employees must be involved principally in selling a product or service, not making the product or rendering the service. Second, the amount of their compensation must be a percent of the price of the product or service.”  http://www.courtinfo.ca.gov/opinions/documents/D057955.PDF

Note in the CarMax case the court ruled a flat fee commission satisfies the requirement.

The Federal standard for sales exemptions can be found here. There are exemptions for auto sales, retail sales and outside sales. Here’s an advisor on the Outside Sales

Outside Sales Employee section
This section helps you in determining whether a particular employee who is an outside sales person meets the tests for exemption from the minimum wage and overtime pay requirements of the FLSA.
- Review the Fact Sheet
- Start Outside Sales Employee section

A California Appellate Court shut down a class action effort which, in a sense, would have provided employees for a minimum of two hours show up pay for attending weekly team meetings which were not concurrently conducted with their work schedules. For example, when employees show up for an all team meeting on a Saturday morning at 10:00. The court ruled that as long the meeting was a) scheduled, and b) the meeting lasted for at least half the time scheduled, and c) the employees were paid for the time they did attend, the law has been satisfied. However, if it’s not a scheduled meeting and say somebody is pulled into the office for only 15 minutes, then you may be required to pay between two and four hours of show up pay depending on their “normal work schedule.” Reporting time pay is defined in the following manner:

“Each workday an employee is required to report to work and does report, but is not put to work or is furnished less than said employee’s usual or scheduled day’s work, the employee shall be paid for half the scheduled or usual day’s work, but in no event for less than two hours no more than four hours, the employee’s regular rate of pay which shall not be than less than minimum wage.”

So, for example, if they normally work an 8-hour day, and they’re sent home, they have to be paid for four hours. If they normally work a 3-hour day and are sent home, they must be paid for at least 2 hours. In this case, the battle was over employees showing up for weekly meetings when they did not go to work immediately thereafter.

Bottom line: Identify how long the meeting will be, spend at least 50% of the scheduled time, and make sure they record their time.

As a farewell to 2011, the California Supreme Court went to great lengths to spell out the parameters of the administrative overtime exemption. This is the exemption from overtime laws that seems to get employers into trouble more than any other. If you are a human resource executive in California you must read this case. Yes, there is a lot of legal mumbo jumbo…but it’s something you must understand or you will unnecessarily expose your company to overtime claims. Perhaps as here on a class action basis.

In Harris v. Liberty Mutual Insurance, the court provided much guidance. Here is some of the instructive language:

[W]ork qualifies as administrative when it is directly related to management policies or general business operations. Work qualifies as directly related if it satisfies two components. First, it must be qualitatively administrative. Second, quantitatively, it must be of substantial importance to the management or operations of the business. Both components must be satisfied before work can be considered directly related‖ to management policies or general business operations in order to meet the test of the exemption. (Fed. Regs. § 541.205(a) (2000).)….

[T]he administrative/production worker dichotomy distinguishes between administrative employees who are primarily engaged in administering the business affairs of the enterprise and production-level employees whose primary duty is producing the commodity or commodities, whether goods or services, that the enterprise exists to produce and market.

The Court understands that:
[B]ecause the dichotomy suggests a distinction between the administration of a business on the one hand, and the production end on the other, courts often strain to fit the operations of modern-day post-industrial service-oriented businesses into the analytical framework formulated in the industrial climate of the late 1940‘s.

Bottom line: The administrative exemption causes the vast majority of mis-classification headaches. According to this decision even the judges and the DIR have a hard time getting it right. Read this case. Make sure your workers are not mis-classified. If they are, take a look at the report on HR That Works So You Have a Wage Claim Exposure–What Do You Do About It?

Inc. Magazine did an excellent article on the history of the workplace you can read by clicking here.

The U.S. Department of Labor’s Wage and Hour Division will host a free online conference for federal, state and local contracting officials to provide information on federal rules concerning prevailing wages and other labor law requirements. The conference will be webcast live from 10 a.m. — 3 p.m. EDT on both Tuesday, Oct. 4, and Wednesday, Oct. 5.

Wage and Hour Division staff and federal partners will cover Davis-Bacon Act and McNamara-O’Hara Service Contract Act compliance principles; the process of obtaining wage determinations and adding classifications; compliance and enforcement processes; and the process for appealing wage rates, coverage and compliance determinations. The Oct. 4 session will focus on Davis-Bacon, and the Oct. 5 session will focus on the SCA.

To participate in the online conference, contracting officials should send the following information to whdpwc@dol.gov: name, title, organization, session(s) of choice and email address.

For more information on the federal prevailing wage statutes and other laws administered by the Wage and Hour Division, call its toll-free helpline at 866-4US-WAGE (487-9243) or visit its Web pages at http://www.dol.gov/whd/. The section available by clicking “ARRA Information,” which features information related to the American Recovery and Reinvestment Act, offers many of the division’s most recently developed compliance assistance materials.

Two La Nopalera restaurants in Jacksonville, Florida, and their owners have been ordered to pay 30 employees $934,425 in back wages and liquidated damages under the terms of consent judgments issued by the U.S. District Court for the Middle District of Florida. The agreements resolve a lawsuit based on an investigation by the Wage and Hour Division that alleged violations of the Fair Labor Standards Act. “All workers deserve to be paid fairly, and the Labor Department will hold accountable employers that take advantage of their employees,” said Secretary Solis. “We want workers to know we will defend their rights to compensation for all hours worked, and we want companies that play by the rules to know we will take action against those that use illegal tactics to gain a competitive advantage.” Read the News Release

“There is magic in doing.”  – George Gurdjieff

This issue discusses:

• Editor’s Column: The Three Ways to Manage Your Employees
• Understanding the Value of Great HR
• What Wal-Mart v. Dukes Means for Wage & Hour Law, and Employers
• Employer Responsible for Worker Who Trips on Dog While Working at Home
• Setting Up a Sales Compensation Plan
• Recent DOL Disability Violation Enforcement Activities: Employers, Beware!
• Tough Days Ahead for Managers Who Don’t Want to Be Learners

Please click here to view the newsletter in PDF.

Editor’s Column: The Three Ways to Manage Your Employees

I recently went through an excellent session using the ZeroRisk HR assessment to help me become a better manager of my own employees. One of the most insightful things I learned was to distinguish when to direct employees, when to coach them, or when to delegate to them. This is a major distinction.

Directing – When you have an employee new to a job function or business in general, you might have to direct their activities until they meet the necessary learning curve. This is, of course, a control-based approach to management that makes sense at times, especially if you’re a control freak or you’re managing people who have control issues. For example, Bob Hurley, the well-known coach of the St. Anthony’s High School basketball team in Jersey City, NJ, focuses on directing his young men, not just on the basketball court, but in their lifestyle in general. As a result, he has a 100% graduation rate – practically unheard of for an inner-city basketball team. The idea of directing employee behavior was the basic principle of Scientific Management made famous by Frederick Winslow Taylor in the early 1900s. Because most jobs at that time were manual in nature and easy to perform, this approach used time and motion studies to analyze job tasks, and then told workers the best way to stack the bricks, shovel the coal, or pull the loom. Managers didn’t want employees to think for themselves. The Catch-22 today is that the person you can control you generally don’t want working for you – and the less you control, the more you accomplish! So use control as a management style only when absolutely necessary.

Coaching – This is more about empowerment than micromanagement. The best coaches ask questions and allow employees to discover the answers for themselves. When they attempt to frame the employees’ efforts, they do so from “their side of the line,” providing insight as opposed to control. This is akin to teaching people how to fish. The best coaches expect and foster taking action and moving past blockages. They know when to push or to back off. Remember this: If your coaching feels too much like control to employees, you’ll generate a flight or fight response – even if everything you are trying to say is completely logical.

Delegating – Over the years, I’ve learned to delegate effectively. This is one of the most important skill sets for a manager. Of course, the danger of delegation is that the employee will make a mistake and suffer the consequences. I try to mitigate the possibility of mistakes by delegating through writing, otherwise known as a standard operating procedure (SOP). I won’t just write down what I do, but my best practice on how to do it. I then make sure that the employee understands the SOP and see if they have any questions. I’ll also provide them with any time and training necessary. When I delegate, I have a “one-mistake rule.” Because I learned my skills by making mistakes, I realize that my employees will have to do the same. However, there’s absolutely no reason to make the same mistake twice. Allowing employees to do so is a management failure.

The work we did with ZeroRisk coaching went into these areas far more deeply and challenged us in other areas as well. This process produced some of the most effective communication with employees I’ve worked side-by-side with for many years. To learn more about the ZeroRisk HR program, contact Mike Poskey (Mike.P@zeroriskhr.com) or call him at (800) 827-5991.

Understanding the Value of Great HR

One of the career challenges HR executives face is being able to articulate the bottom line difference they can make. In part, this is because very few of them focus on making those types of distinctions as their activities are non-strategic in nature. I recently became engaged to help hire a high-end HR executive who will make at least $150,000 per year. The reality is out of the 3,000 small to midsized companies that use our program, I’d be surprised if as many as five HR executives earn that type of income. Larger organizations justify the expense because they can spread it over a greater number of employees. Actually, the larger the organization, the lower the HR expense ratio per employee. According to Berntson and Associates, HR costs the average employer $1,000 to $1,500 per year. In a sense, if you have 50 employees, you have a $65,000 HR executive.

So here’s the challenge: Even if you’re a small to midsized company that doesn’t have $150,000 per year to pay an HR executive, you still need strategic HR initiatives! Otherwise, internal pressures will undermine your sales and marketing efforts.

If you doubt the return on investment of good HR practices, run your numbers on the HR That Works Cost Calculator. Even a conservative analysis will show the incredible opportunity available. However, you’ll need to make a commitment of both time and money to make it happen. Think of it this way: Suppose you remain “nonstrategic” in your HR practices. So what if you have poorly trained managers, below average employees, high claims, low productivity, and a ton of drama? Perhaps you’re familiar with this situation. In any case, there’s no reason not to “get” the importance of working on HR instead of just being in HR. Whether you have 10, 100 or 1,000 employees the need remains the same.

There are only three solutions:

1. Use a program such as HR That Works and commit to a schedule to implement it.
2. Hire a coach to help you implement a program such as HR That Works.
3. Have third parties come in and do things for you (otherwise known as “fractional” HR).

What will be your next strategic HR objective – and how will you achieve it?

What Wal-Mart v. Dukes Means for Wage & Hour Law, and Employers

By now, most of you who follow employment law have heard about and possibly read the U.S. Supreme Court’s decision in Wal-Mart v. Dukes, which overturned certification of a class action sex discrimination case brought on behalf of 1.5 million current and former female Wal-Mart employees. (If not, this recent FR Alert on this case will bring you up to speed.) Although Dukes is a sex discrimination case, it will probably have a major impact on class actions in other areas of the law, including wage and hour lawsuits.

• Dukes will likely make it more difficult for plaintiffs to argue that large classes should be certified absent concrete evidence of a common corporate policy or practice tying the claims of class-members together. This will be particularly important in cases where the actions of individual managers are at issue, such as plaintiff allegations that employees were required to work “off the clock” contrary to established policies.
• It’s unsure how the courts will apply Dukes to collective actions under the Fair Labor Standards Act. The Dukes decision dealt with a class action certified under Federal Rule of Civil Procedure 23, which governs most class actions in federal court. In contrast, FLSA collective actions proceed under a different set of rules specific to the FLSA. The standards for certifying a class or collective action are similar – Rule 23(a)(2) requires questions of law or fact common among the class members, while a collective action under 29 U.S.C. § 216(b) requires class members to be “similarly situated.” However, there are subtle but potentially important differences, and the standard for preliminary certification of a collective action is generally a lower bar than for certification of a Rule 23 class action. That being said, although Dukes might not apply directly to FLSA collective actions, it will probably exert a significant influence over courts’ analysis of such cases.
• One likely effect of Dukes will be to push more wage and hour class action lawsuits into state court. Because Dukes governs class certification in federal courts, plaintiffs’ attorneys in states with more liberal class certification rules now have a strong incentive to file their cases in state court under state minimum wage and overtime laws, without reference to the FLSA and federal law. Although the impact of this shift will vary from state to state, federal courts are frequently regarded as a more favorable jurisdiction for employers than their state counterparts. Thus, while Dukes is a victory for employers, it might simply shift the wage and hour fight to less favorable ground.

Insights for Employers:

Although the esoteric procedural issues raised in Dukes will be of great interest to wage and hour litigators, what, if any, practical implications does the decision have for employers? Although the ruling does not usher in any sweeping changes for how employers conduct their day-to-day compliance activities, it does emphasize the importance of organization-wide policies and practices as both a tool for defending against wage and hour claims and a potential source of vulnerability.

Dukes strengthens the case for employers to adopt and effectively implement strong policies prohibiting wage and hour violations. For example, a company policy that strictly prohibits off-the-clock work and requires accurate recording of work hours, combined with an effective training and compliance program, might go a long way toward heading off class or collective action claims alleging that individual managers violated the policy by requiring or permitting off-the-clock work.

At the same time, Dukes might place an even brighter spotlight on cases based on a widespread company policy or practice. For example, claims alleging that an employer systematically misclassified specific job titles as exempt might have the necessary element of commonality among members of the class that the Supreme Court found lacking in Dukes.

The bottom line: Be sure to review and update your wage and hour policies, regularly, train supervisors, and audit compliance.

Article courtesy of Worklaw® Network firm Franczek Radelet.

Employer Responsible for Worker Who Trips on Dog While Working at Home

In the recent case of In Re: the Compensation of Mary S. Sandberg, an Oregon court overruled the Workers Comp Board and held that a JC Penney decorator, who was allowed to work from home, was covered by her Workers Comp policy when she tripped over her dog unloading a van.

Because she could not safely store all of the items in the vehicle at one time, she stored the excess items in her home garage. Her employer instructed Sandberg not to store these excess products at the studio, but to keep them at her home or any other place where they would be safe and dry. Thus, she used her home garage to store samples that from time to time she would need to exchange with other samples and materials that she kept in her van.

On the Saturday before the date of injury, a sale collection had ended, with a new collection beginning the next day. Because of the fabric sale change, Sandberg needed to remove the “old” fabrics from her van and replace them with fabrics for the new sale that were being stored in her garage. She was walking out her back door toward the garage to change the fabrics when her foot came down and she “felt something move.” Noticing that her dog was underfoot, she shifted to her other foot, lost her balance, and fell, sustaining a right distal radius fracture.”
Sandberg also regularly performed some work tasks, such as preparing bids and other paperwork, in her home. The employer denied her claim for compensation for the injury, a decision approved by the administrative law judge (ALJ) affirmed the denial, as did the Workers Compensation board.

When Sandberg appealed this decision, the court ruled that:

“In order to be compensable under Oregon law, an injury must ‘aris[e] out of’ and occur ‘in the course of’ a claimant’s employment; ORS 656.005(7)(a). Because the board did not determine whether claimant’s injury occurred in the course of her employment, that issue is not before us. The only issue on review is whether claimant’s injury arose out of her employment. Thus, our focus is on whether claimant established a causal connection between her injury and her employment, that is, whether claimant’s injury resulted from a risk connected to either the nature of her work or her work environment. ….

“[O]nce it is established that the home premises are also the work premises * * *, it follows that the hazards of home premises encountered in connection with the performance of the work are also hazards of the employment. [Editors Note: such as a dog lying around.]

” * * * That the employee is a telecommuter or other home-based worker should not, in and of itself, make any difference. Was the risk of injury a risk of this employment? So long as the employment subjects the employee to the actual risk of injury, the argument follows that the injury should be compensable.

“Here, claimant was walking to her garage for the sole purpose of performing a work task. She fell while moving about an area in which she had to move about in order to perform the work task, given the conditions of her employment. Therefore, we conclude that claimant’s injury resulted from a risk of her work environment. As such, it arose out of her employment.”

The bottom line for employers: make sure that telecommuting employees have safe workplaces and proper insurance coverages. HR That Works Members should use the Home Based Worker Checklist.

Setting Up a Sales Compensation Plan

Sales compensation can be a tricky affair to master. Any plan should answer these basic questions:

• What is your overall goal?
• What is working and not working about the current plan?
• What do you need to eliminate or improve and what should you exploit further?
• Who is involved in designing the plan? Who can impact the plan and how will they be treated?
• What math will you use to establish a base salary, commission, bonus, any caps on income, frequency requirements, etc. – a percentage of what, when, how, where, etc.?
• How can you test the plan before you roll it out?
• Where can the plan be manipulated or even sabotaged?
• How does your plan compare to that of the competition?
• Who can review or provide a second look at your plan?

Recent DOL Disability Violation Enforcement Activities: Employers, Beware!

Here are four recent cases in which the Department of Labor went after companies for ADA violations. These settlements are far lower than if private counsel were litigating the suits and interested in a big jury verdict (which average more than $200,000):

1. EEOC Sues Tideland EMC for Disability Discrimination
   The U.S. Equal Employment Opportunity Commission (EEOC) filed a disability discrimination lawsuit against the Tideland Electric Membership Corporation for not accommodating an employee, and then firing him because of his disability. The employee takes a legally prescribed narcotic medication to manage a chronic pain condition. After learning about this, Tideland EMC terminated the employee, without giving him time to change his medication regimen to keep his employment. The Americans with Disabilities Act outlaws discrimination against an employee based on a disability.
2. ENGlobal to Pay $100,000 to Settle EEOC Disability Discrimination Suit
   ENGlobal Engineering, Inc., a Texas-based engineering firm, will pay $100,000 and additional remedial relief to settle a disability discrimination lawsuit by the EEOC. ENGlobal unlawfully fired an employee because it mistakenly assumed that his multiple sclerosis would limit his ability to work.
3. Retailer Finish Line Settles EEOC Disability Discrimination Lawsuit
   Indiana-based retailer Finish Line, Inc. agreed to settle a disability discrimination lawsuit by the EEOC. Finish Line refused to grant an employee with a physical impairment a transfer to an available CSR position as a reasonable accommodation. The Americans with Disabilities Act requires employers to accommodate employees reasonably with disabilities, as long as the accommodation doesn’t cause an undue hardship.
4. Surveying Company to Pay $77,000 to Settle EEOC Disability Discrimination Lawsuit
   Fisher, Collins & Carter, Inc. (Ellicott City, MD) will pay $77,000 and other remedial relief to settle a disability discrimination lawsuit filed by the EEOC. The company illegally discriminated against and fired an employee of 15 years after finding out that the employee had diabetes and high blood pressure.

The first thing to notice about these cases is the breadth of claims: A change in medication, a perceived MS disability, a shoulder injury, and diabetes. What’s more, the courts rejected the employers’ argument that many of the workers involved were “poor performers.”

Bottom Line: Learn how to manage poor performers who might have a disability, in a way that doesn’t land you in court!

Tough Days Ahead for Managers Who Don’t Want to Be Learners

Today’s “squeeze economy,” in which we’re trying to get more out of everybody and everything, without having to pay for it, put managers under overwhelming pressure to perform. What can you do about it?

• Keep growing and pushing yourself to work on your “highest and best use.” Focus on those “A activities” that produce bottom-line results. Next, delegate or outsource the B level activities (administrative functions) to the extent possible. Finally, ditch the C activities, which are simply time-wasters. Be a freak about doing this if you want to survive without burning out.
• Become a great communicator. Whether you’re passing along the leadership vision, mission, goals, and values of your organization; working on an individual employee’s performance; or trying to learn more about what motivates employees, train yourself in communication. To be great at managing conflict, change, performance, engagement, career paths, strategic planning, and so forth without studying these disciplines, you’ll need more than experience or osmosis. So turn off your TV or computer game, ditch that fantasy league or online gossip, and pick up a book or program that will help you learn in these areas. Of course if you have access to the HR That Works program, the special reports, training modules and webinars would be a good place to start.
• Learn what employees want from you:
  • Be clear with them
  • Don’t play favorites
  • Do what you say you’re going to do, when you said you’ll do it
  • Provide feedback on a regular basis
  • Help define their career path
  • Keep yourself emotionally balanced

Remember, a poor relationship with managers is one of the top three reasons for employee turnover. Managers also influence the other two reasons (hiring a misfit, or failing to provide career growth and opportunity).

A word to the wise …

Form of the Month

The Seven Commandments of Social Media Use (PDF) – Use this tool as a starting point for defining your basic commandments. Once it’s done, go down to Kinko’s, blow it up, and place it where everyone can see it!

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:

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

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This case addressed the applicability of California wage and hour law to nonresident employees who work in California. The court ruled California law governs their pay, even if the state they reside in also governs their pay. “California’s overtime laws apply by their terms to all employment in the state, without reference to the employee’s place of residence. http://www.courtinfo.ca.gov/opinions/documents/S170577.PDF

The court reminded employers: “The Legislature has… exempted certain out-of-state employers who temporarily send employees into California from the obligation to comply with the workers‟ compensation law (Lab. Code, § 3200 et seq.), on the conditions of compliance with the home state’s compensation laws and interstate reciprocity (see id., § 3600.5, subd. (b)). In contrast, the Legislature has not chosen to authorize an exemption from the overtime law on the basis of an employee’s residence, even though it has authorized exemptions on a variety of other bases.”

Further: “California law…might follow California resident employees of California employers who leave the state “temporarily . . . during the course of the normal workday” (id., at p. 578), and California law might not apply to nonresident employees of out-of-state businesses who “enter California temporarily during the course of the workday” (ibid., italics added). In contrast, plaintiffs here claim overtime only for entire days and weeks worked in California, in accordance with the statutory definition of overtime. (See Lab. Code, § 510.) Nothing … suggests a nonresident employee, especially a nonresident employee of a California employer such as Oracle, can enter the state for entire days or weeks without the protection of California law.”

Note: the court did not have to decide the case on the fact of an out of state employer as Oracle is CA based.

“Punishing honest mistakes stifles creativity. I want people moving and shaking the earth, and they’re going to make mistakes.”  —Ross Perot

This issue discusses:

• Editor’s Column: The Two Views of Human Resources
• Dealing with Body Odor and Other Hygiene Problems
• The Lawsuits are Coming! The Lawsuits are Coming!
• Auditing Your Wage and Hour Practices
• Are Your Employees Grumpy About Groupon?
• Workforce Planning Risks

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

Please click here to view the newsletter in PDF.

The Two Views of Human Resources

Here’s what HR professionals are told to worry about most:

• FMLA, ADA, EEOC, DOL, OSHA, NLRB, FLSA, OFCCP, GINA, HIPAA, COBRA, Title VII, etc.
• Discipline, termination, layoffs, bullies, violence, EPLI, etc.
• Protecting ourselves from all the above.

Here’s what should concern them most:

• Hiring, orientation, training, performance, teamwork, leadership, time management, systems, strategy, branding, communication, quality, customer service and marketing.
• Creating a constant improvement process in each of these areas because they help to grow the company.

Of course, you can’t ignore compliance concerns as the article below points out. However, the legalistic concerns can overwhelm and distract us to the point that they blind us to what really matters. Here’s my challenge to HR professionals – whether you’re part or full-time; young or old; experienced or inexperienced, and no matter the size of your company. Carve out time to help your company improve in these strategic growth areas. Make yourself relevant to the bottom line. HR That Works offers a variety of excellent tools to help you do exactly that.

Dealing with Body Odor and Other Hygiene Problems

HR folks have to deal with some unpleasant subjects, and this is certainly one of them. Body odor can present a real workplace challenge. Just ask any space shuttle astronaut or submarine officer. People can have offensive odors for a number of reasons:

• Soiled clothing or shoes
• Lack of bathing
• Bad breath
• Incontinence
• Menstruation
• Liver and other organ problems
• Diet
• Bad perfume
• Too much perfume
• Smoking
• A problem with sweating
• Disability

Employers can try to prevent this problem in general by providing effective air circulation systems, odor eaters, employee uniforms, employee flexibility – and, if necessary, a human resource policy.

To deal with body odor, follow these steps:

• First, verify all complaints personally to make sure there’s no teasing, bullying, etc. Then verify the complaint personally.
• If the employee has body odor, have a direct conversation – don’t beat around the bush. Often, employees won’t realize they have a problem until you tell them. Say, “We’ve had complaints from a number of co-workers about offensive body odor and I have had those complaints verified. (If appropriate: I can understand their concern). Are you aware that you have this problem?
• At this point, an employee can deny knowing about the problem (honestly or otherwise) or, they can admit knowing about it. They can say either that they’ll try to take care of the problem or that they don’t care what other people think about it. They might also claim that they’ve tried to do all they can, but they have a physical disability that prevents them from doing any better.
• If an employee does not claim to have a medical problem and won’t do anything to improve their condition, you have the right to terminate them, or perhaps even better, give them unpaid time off to think about whether they want to come back to work a “fresher” person. If they claim there’s a medical basis, you need to have an accommodation discussion (more on that later). Either way, ask the employee to take care of the problem and ask if there’s any way you can help them. This is a matter of common decency, whether required by the ADA or not.
• Watch out for any potential discrimination or national origin claims that the employee might make based on what you say or by what managers or co-workers have said. Go back to these employees and let them know you’re taking care of the problem and that they should not tease or discuss it with the employee.
• Consider holding accommodation discussions. If the employee claims the problem arises from a disability and you’re subject to the ADA (15 or more employees) or FEHA (five or more in California), you’re required to have an accommodation dialogue. Begin by starting a paper trail and have the employee get their physician to identify the nature of their disability, the limitations, and ways to mitigate its effects. Use the forms on HR That Works. Accommodations might include working from home, allowing the employee to obtain the appropriate treatment, moving their working location, or perhaps reassigning them to another job.

Ultimately, if there’s no “reasonable” accommodation because anything you can do would cause an undue burden on the company, you do not have to accommodate that employee. For further accommodation information, check out the HR That Works ADA Training Module. Also, consider looking at the Job Accommodation Network’s Web site at www.askjan.org.

The Lawsuits are Coming! The Lawsuits are Coming!

A recent article in Corporate Counsel Magazine discussed the reality that “employees are suing like never before.” For example, “skycaps, bank loan officers, bartenders, phone company engineers, financial research associates, exotic dancers, drug store assistant managers, computer technicians, janitors, paramedics, delivery truck drivers, exterminators, waiters, cable TV repair workers, and chicken processors all sued their employers over pay issues in 2010.” Defense counsel claims that the employment law arena is like “the new slip and fall cases for plaintiffs’ attorneys.” Of course, the recession, layoffs, high unemployment, and an administration that encourages victimization have a lot to do with it.

Companies today face constant challenges from new regulatory requirements. Under the Obama Administration we’ve had updates to the FMLA and ADA, an expansion of the NLRB and EEOC agenda, more wage and hour and discrimination claims filed than ever, and a continuing class-action frenzy. Not surprisingly, many of these cases lack merit. Just as plaintiffs’ counsel will file large class action claims, knowing that they will probably force a company to settle rather than litigate, many individual claims also lack merit. The EEOC settles approximately 80% of claims without any finding of discrimination.

Wage and hour class action claims remain the biggest concern for large companies, Most of the companies of the size that use HR That Works (with an average of 15 to 500 employees) are too small to create a class large enough for most plaintiffs’ lawyers. However, companies remain subject to individual wage and hour claims, as well as allegations of discrimination.

Finally, there’s a widespread fear of discrimination litigation. According to the EEOC, these cases involved: Race (35.9%), sex (29.1%), disability (25.2%), and age (23.3%). Interestingly, the largest category of claims filed involved retaliation (36.3%), most of them based on Title VII complaints. Other categories of claims involved national origin (11.3%), religion (3.8%), the Equal Pay Act (1%), and GINA (.02%). As far as I can see, there’s no end in sight. We’re only beginning to deal with an activist NLRB. The EEOC wants to extend its reach, especially in background checks and compliance concerns related to government contractors. The commission has been on a hunt after 1099 misclassification cases, and 22 states have introduced legislation to outlaw bullying in the workplace.

The article concludes by noting that the U.S. Supreme Court will be ruling on three large class action cases, including Duke v. Walmart. How the court decides these cases will have a huge impact on large companies and a lesser effect on small to medium-sized firms.

Here’s the lesson in all of this: Although you might be small enough to avoid the notice of the plaintiffs’ employment bar for the moment, the odds will catch up with every employer eventually. Sound risk management requires you to have comprehensive Employment Practices Liability Insurance (EPLI), together with the necessary policies, procedures, and training. Once an employee lodges a complaint, investigate it promptly and thoroughly, usually with the help of counsel.

Auditing Your Wage and Hour Practices

Given the wage and hour litigation that misclassification claims generate, I wonder why companies pay anyone but their top executives on a salary-exempt basis. The so-called “prestige” and extra effort from employees that a company gains by offering the exempt status does not offset the potential loss of time, money, and resources arising from litigation. To minimize unnecessary wage and hour claims, the HR That Works Compliance Audit recommends some of these guidelines.

• Audit your exempt status employees. Do they truly fit under a professional, managerial, administrative, computer or other exemption? If you determine that they don’t, see the White Paper: So You Have a Wage Claim Exposure – What Do You Do About It?Consider having attorneys conduct or manage these audits.
• Make sure to have time records recorded and maintained accurately. Perhaps the biggest challenge in the area involves employees having time for rest and meal periods deducted automatically when, in fact, they didn’t take those breaks at the specified time. Teleworkers, remote workers, and portal-to-portal issues come up in many suits. Many smaller companies don’t have time clock mechanisms and rely on either manual entries or word of mouth. If such a company faces an audit, they’d find it hard to disprove an employee’s allegation of overtime. Make sure your managers and employees receive proper training on time-keeping protocols.
• Have employees certify that their time records are accurate. This newsletter offers a form to help with this.
• Consider using sophisticated methods to tie-in time clocks with time on the computer, at the register, clocking in and out of buildings, and so on.
• Store your personnel, time and wage records for at least four years.
• If you require employees to drive in company vehicles to and from a job site, or to transport heavy equipment to and from work, make sure that they receive proper pay for this time.
• Provide adequate rest periods, including at least 30 minutes for lunch.
• Be sure that salaried, non-exempt employees receive overtime pay, even without authorization.
• Provide supervisors with overtime authorization forms (including the client or work project, work to be done and expected amount of overtime), which they must sign before an employee works overtime.
• Make sure that your sales compensation program clearly defines when employees “earn” commissions, and what happens to uncollected commissions after the employee leaves the job.
• Provide a cap on accruals in your PTO and vacation policies.
• Comply with labor enforcement standards for the employment of minors (obtain work permits, etc.).

Are Your Employees Grumpy About Groupon?

Although more and more establishments are taking advantage of such programs as Groupon and Living Social, many of these firms – and their employees – come to regret the experience. Failure to manage these programs properly can destroy their value. Before you run an online promotion such as Groupon, ask yourself these questions:

• What are the short-term and long-term benefits of this promotion? How does it fit into your overall marketing plan? Are you prepared to lose money on the deal short term to capture a long-term customer?
• How will you staff around the promotion? A few days after the promotion hits, you can expect a mass influx of customers. Bear in mind that business might also peak in the last few days of the promotion as people scramble to cash in their coupons.
• How do you position the promotion to your team? Why should they get on board with it? What’s in it for them? If you’re running a restaurant, how will you prepare employees to deal with more business, and unfamiliar, possibly annoying customers? Will you be helping them with additional staffing and/or paying overtime? Anticipate employees’ potential concerns and resistance before you launch the promotion. Get them involved in ideas that can make it a success.
• What type of training will you provide to make sure the promotion goes according to plan? For example, when a restaurant customer presents a server with a Groupon coupon, will they react with a smile because they see a new customer and the promotion is working, or a frown because they anticipate a poor tip? Train servers to say something like “I’m glad to see that you’ve taken advantage of the Groupon promotion! My name is Amy, and I’m here to give you great service today. Please let me know how I can help. Have you been here before? (The idea is to start getting important information about new customers). Offer customers some type of “cheat sheet” to fill out and then attach to the coupon they hand in. Remember, you want to capture as much data as possible to know if this is truly a first-time customer or just someone taking advantage of the current discount.
• How will you help the customer recognize that the wait staff lives on their tips or salespeople on their commissions? For example, I’ve heard that many Groupon restaurant customers offer lower tips, especially because they base their math on the cost of the coupon. You might want to show a recommended tip on the bill (15% of a normal bill = X. 20% = Y).
• So that you’re on top of managing the promotion, plan to get feedback from your staff right away, and be ready to make changes on the fly.
• Know how you’ll end the coupon customer’s experience. At the end of the visit, you might have employees say: “Thanks for visiting us today! You know, if you give us your e-mail address or phone number, we’ll e-mail or text the great specials we offer on a regular basis. If you have a business card, we’ll enter the information into the program or I can give you a card to complete. If you want to discontinue receiving these promotions at any time, just cancel the notifications.” If you’re running a restaurant, put a notice on the menu or bill to the effect that “Many customers love taking advantage of our frequent promotions. If you haven’t signed up for our notifications, please ask your server about this.”

Promotions are great. The right ones can help grow a business quickly – and destroy one quickly, too! Make sure to plan your promotions well and include your entire team in the process.

Workforce Planning Risks

Workforce planning refers to everything from filling open positions to the inclusion of HR metrics. For our purposes, think in terms of the flow of employees through the company. As with any risk management, begin by assessing the risks involved:

• Access to available talent
• Cost per hire and time for hire
• Retention and turnover
• Productivity and quality
• Layoffs and downsizing
• Retirement and redevelopment
• Compensation structures
• Compliance exposures, including Title VII violations and compensation violations.

For example, if your turnover rate is 15% and the industry rate is 11%, your company might be at greater risk. However, if your higher turnover rate results from strict performance demands, you might end up having the most profitable company in the industry. Be sure to weigh the specific risks in every situation. For example, if a company has to pay overtime because it can’t staff positions quickly enough, it ends up not only paying higher compensation, but burning out the workforce and increasing turnover, thus exacerbating the problem. The company might plan to ameliorate this risk by using a temporary staffing firm to help them with their short-term staffing needs.

Other risks are more difficult to quantify, such as a failure to conduct proper succession planning. Great companies know who’s in the pipeline for all critical positions – sometimes the bench is two or three players deep. Other companies “run bare,” putting themselves at risk if they should lose one of their key employees. One solution: Key Person insurance.

Do you have a plan to manage the workforce planning risks most critical to your organization? HR That Works provides training and strategic tools that can help you deal with many of these risks.

Form of the Month

Time Sheet Certification Form (PDF) – Use this form to make sure that employees report their work hours accurately.

(HR That Works Users can access this form in Word format by logging on to the site).

Podcast

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