HR That Works Blog

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.

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.

“Being the richest man in the cemetery doesn’t matter to me … Going to bed at night saying we’ve done something wonderful … that’s what matters to me.”  — Steve Jobs (1955-2011)

This issue discusses:

• Editor’s Column: Improving Employee Productivity
• Oklahoma Health Care Workers Get More Than $244,000 in Back Wages
• Sage Advice
• Do You Have a Funny Human Resource Story You’d Like to Share?
• When to Use Experts in Trials
• The Reality of Retirement Planning
• Exclusions from Coverage Under EPLI Policies
• IRS Issues Rules for Employer-Provided Cell Phone

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

Please click here to view the newsletter in PDF.

Editor’s Column: Improving Employee Productivity

Over the years, I’ve written and spoken about performance improvement/ productivity many times. Here’s what I’ve come to notice and believe:

• People can only perform as well as the system within which they work. As Dr. Deming said, “Most employee failures are management failures.”
• People can’t perform beyond their abilities. This “Peter Principle” means we have to be very clear in testing and assessing folks’ natural abilities and desires.
• We need a clear definition of “good performance.” This involves two questions: What are the most important things you do every day? And, how would you know if you were doing them well without having to ask me or without my having to tell you because the benchmarks are clear?
• Create 90-day goals, weekly To-Do lists, and daily task lists. Share your goals, discuss them, support them, and reward them.
• Praise specifically and as often as possible. Instead of saying “You did a good job today” say, “I particularly like how you handled that customer when … “
• Nurture and support your best performers. Unfortunately, because these folks are too busy to generate drama, managers often ignore them to focus on people more interested in being right about things than getting work done.
• Surprise people. Hand them a gift card for dinner, put an article about them in the paper, nominate them for a reward, throw a surprise birthday party for them, etc.
• Don’t hang on to losers or victims. If people aren’t performing after you’ve done your best and they seem more interested in drama than productivity, you must let them go. If you don’t, you’ll undermine your culture and goals in the process. Make sure to deal with poor performance now, and follow the lawyers’ recommendation to document any significant concerns.

Oklahoma Health Care Workers Get More Than $244,000 in Back Wages

Health Management Associates Inc., which operates Midwest Regional Medical Center (Oklahoma City, OK), has paid $244,341 in overtime back wages to 1,064 registered and licensed practical nurses and certified medical assistants. Wage and Hour Division investigators found violations of the Fair Labor Standards Act, including deductions that were made for lunch breaks when employees were not taking an uninterrupted lunch and failure to maintain required record keeping. The company cooperated with the investigation, and agreed to pay back wages and comply with the FLSA in the future. For more information, read the News Release.

Sage Advice

A recent issue of Volleyball USA shared wise advice from 12 of the top volleyball minds in the nation. As someone who not only has coached kids’ teams, but also many executives, I found valuable pearls of advice in the article that can help all of us to be better managers and leaders:

• Control the controllable. Don’t spend time dwelling on the last play – good or bad. This holds true of the workplace. What was not controllable is what Dr. Deming would call a general variation. Eliminating general variations is the responsibility of management. Trying to control uncontrollable or special variations is extremely difficult and tends to be a waste of time. Don’t dwell on mistakes made. Correct the problem and move on.
• Pursue perfection. It’s unattainable, but striving for it will bring out the best in your players. Again, Dr. Deming would say “Amen.” He taught Japanese industry to manufacture toward perfection, not toward a tolerance. This is one reason why the Lexus brand is “the relentless pursuit of perfection.” Do your best to generate perfect hiring, retention, performance, motivation, teambuilding, and compliance practices. Settling for anything less is a mistake.
• Have fun! The team has to be able to laugh, and sometimes it’s at the coach’s expense. Life is too short to not have fun managing and working with employees. Having fun is a choice. So is being a fun boss – or employee.
• When under stress, call a timeout. I’ll often call a timeout and gather my work team to do a head check, outside of our “normal schedule.” Owners and coaches have to be sensitive to when it’s time for a timeout.
• Coaching and functional teams are about relationships of trust. If you want to develop trust in your team, you have to prove yourself to be trustworthy. I believe that trust is the single most important factor in the workplace. People who trust each other perform better. People who trust each other don’t sue each other. The basis for trust lies in both the ability and the desire to perform. That’s true of you and anyone you manage. One of the best ways to know that you can trust somebody is to test their skills and assess their character.
• Talent isn’t rare. What’s rare is a talented athlete who has the work ethic to become the player they’re capable of becoming. We’ve all seen “talented” employees underperform just because they’re not driven toward excellence. In a sense, they’re wasting their talent. There are also times when management can dampen the desire to perform, especially when most of the energy focuses on pointing out mistakes rather than acknowledging victories.
• Championship teams find ways to win when it’s difficult to do so. Things aren’t going to be rosy all the time – just ask anyone who’s been in business for the past three years. However, even in a recession many companies have survived and thrived. As the saying goes, “when the going gets tough, the tough get going!”
• Although coaches are change agents, they need to buy in before there can be any significant change. Bosses are change agents, too! How well are you selling your vision and getting buy-in? How can you make the notion of change something that people embrace rather than try to protect themselves against?
• Design your offensive and defensive system around your athletes, not your athletes around your system. Determine the strengths and weaknesses of your employees and design a system that plays to their strengths. Again, there’s a consistent theme of being clear about employee skill sets and affinities. None of us are good enough to guess at these things – that’s the value of using testing and assessment tools. Ultimately, you need to put a square peg into a square hole.
• Winning is a by-product of taking care of your players. Focus on helping them become better people and they will become better players. I’m always amazed how many employers don’t understand this. Very few employers are willing to invest in their employees and prefer to squeeze what they can out of them. If you’re not engaging in education, teambuilding, and other ways of growing your people, there’s no way you’ll be a long-term winner.
• The worst mistake you can make is being afraid to make mistakes. Amen! In fact, we have to make mistakes faster than our competition. We try to mitigate against the potential of making a mistake. See the Webinar I did on “Stop Making Mistakes!”
• As a coach, you get what you tolerate, whether errors, technique, or behavior. As the Buddha said, “What comes to you comes from you.” What are you tolerating in yourself or others? Are you the type of coach/boss who settles for mediocrity because demanding excellence might require a different quality of effort on your part?
• The “we” is greater than the “me.” Business is a team sport. As they say, there’s no “I” in team. Are you focused on providing incentives for the team first or individuals first? Remember, a rising tide floats all boats. Check out the five-minute video I did on a powerful team-building technique.
• Don’t allow your people into the game until they’re ready to play. Do your employees come to work ready to perform? How many employees prefer to begin the workday by gossiping? As one of the coaches stated, “Once they walk in, it’s time to go to work.” They should do their talking, texting, and lounging elsewhere.
• Get the best athletes who qualify for your program. There’s no substitute for getting the right person in every seat on the bus. Great coaches know this – and so do great business leaders. The book Good to Greatmakes this point loud and clear.
• If players have excellent results using their own style, do not change their technique. This is always a Catch-22, especially in the sales arena. For example, you might want your salespeople to sell a certain way that goes against the grain of how a very successful person is selling currently. Remember, what matters most is producing results.
• Select the skills to teach by identifying the most athletic movements, and copying the great players. This idea of “modeling” applies to successful people and companies. What’s the most important activity or function that your most productive employees perform? What is it about the “how” of their performance that all people who perform this function should consider a “best practice” (bearing in mind the advice about letting top performers stick to their own style)?
• Enter the gym with the beginner’s mind. Every day offers an opportunity to improve, as long as players remain open to learning. The same thing holds true for coaches and bosses. Do you come to work every day with a “beginner’s mind”? Conversely, do you think you’ve figured it all out already? A great question to ask yourself is: “What can I learn today?”

To what degree are the owners, managers, and supervisors at your company following these well-tested bits of coaching wisdom?

Do You Have a Funny Human Resource Story You’d Like to Share?

Human resources can tend to be a “heavy” subject. It’s seldom about fun and games; However, I’ve also experienced the humor in HR over the years. Please share with us any fun anecdotes/stories about the human resource process, including those in these areas:

• What bosses and others have said to you about human resources in general, or the fact you’re in HR in particular.
• The hiring experience.
• Employee performance or nonperformance.
• Compliance concerns (believe it or not, there are some funny stories).
• The termination process.
• Any other wacky HR/personnel-related stories.

In an effort to keep us all sane, I’ll combine and publish the best of these stories and share them with our HR That Works members. Remember, if you provide us with a story, you also give us permission to use that story.

When to Use Experts in Trials

A recent article in the California Labor Employment Law Review discussed the dos and don’ts of using HR experts in trial. Here’s a list of “appropriate” uses:

• Common techniques of employee screening and selection.
• Methods of employee evaluation.
• Techniques for selection of employees for promotions.
• Operation of seniority rules in a unionized workforce.
• Processes for employee discipline.
• Adequacy of policies prohibiting harassment and procedures for reporting it.
• The “interactive process” of accommodating an employee with a disability.
• The reasonableness of a proposed accommodation in a specific business context.
• Adequacy of investigations into workplace misconduct or “whistleblower” complaints.
• Management of employees with work-related illnesses or injuries.
• Design and application of employee compensation and benefit plans.
• Design and application of ethics codes.

What you are doing to bring this level of expert knowledge into your company proactively – thus avoiding the need for an expert at trial?

The Reality of Retirement Planning

In August 2011, CNNMoney.com polled more than 8,000 individuals asking whether their retirement plans are on track. More than half (51%) said “Yes,” 29% said “Not quite but we’ve got a plan,” 12% said “Retire? I’ll be working forever,” and 8% said “Haven’t got a clue.” This is consistent with other polls I’ve seen about how people manage their finances. For example, roughly half of Americans have a personal budget and the other half don’t. Chances are that the half with budgets has their retirement plans on track. Many employees will be working much longer than expected, in large part, due to their financial ignorance.

What implication does this have for employers? Consider this:

• More than one in three workers (36%) say they expect to retire after 65, and one in four workers (25%) actually do so. How do you expect to manage this fact? How will it affect any succession planning? What will be its impact on productivity and customer relations? If you’re an HR That Works user, please watch our Webinar, Rehirement vs. Retirement! Understanding, Attracting and Retaining the Mature Workforce, presented by Gail Geary.
• Don’t underestimate the importance of financial education. Two years ago, we did a Webinar that remains relevant today with Dave Ramsey’s business coach, George Campbell. This Webinar explained how the financial stress of individual employees compounds to affect a company as a whole. We’ve also brought in the nation’s top teachers of accounting to do a Webinar on The Accounting Game. We’re currently setting up a Webinar with the Certified Financial Planner Organization to teach basic financial planning on the home front.

As employers, we have to acknowledge that if we don’t address the two greatest concerns of our employees – how they handle their health and how they handle their money – the impacts of those challenges will fall on our organizations. Please make sure to attend the Webinar on Financial Planning.

Exclusions from Coverage Under EPLI Policies

In addition to General Liability, Errors and Omissions (E&O), and Directors and Officers (D&O) policies, some employers also buy Employment Practices Liability Insurance (EPLI). An EPLI policy usually covers claims by employees and former employees under federal, state, and local discrimination laws, including Title VII, the Americans with Disabilities Act (ADA), etc. EPLI policies usually exclude claims arising under the National Labor Relations Act (NLRA), the Employee Retirement Income Security Act (ERISA), and sometimes the Fair Labor Standards Act (FLSA).

A recent federal district court ruling, that an EPLI policy did not cover a lawsuit brought by the Equal Employment Opportunity Commission (EEOC), reinforces the need for employers to do a careful review of possible exclusions in their EPLI policies.

In Cracker Barrel Old County Store, Inc. v. Cincinnati Insurance Co., the EEOC sued the employer alleging systemic sexual and racial harassment based on ten EEOC charges. The employer settled the lawsuit and signed a consent agreement with the EEOC to pay $2 million. The company had an EPLI policy and submitted the claim to its insurer. However, the insurer refused to cover the costs of the settlement, arguing that a suit filed by the EEOC was not a “claim” against the employer under the EPLI policy, which defines “claim” as “a civil, administrative, or arbitration proceeding commenced by the service of a complaint or charge, which is brought by any past, present or prospective employee(s).” The employer sued the insurer for indemnification. The trial court dismissed the company’s suit, holding that because the EEOC, rather than an employee, filed the suit, the EPLI policy did not cover the claim.

This case highlights the potential cost when an employer does not understand the scope of insurance coverages. Employers should review their policies to ensure that they have a complete understanding of what their EPLI policies will and will not cover. Although this review should occur when the policy is purchased, at a minimum, the employer should review its coverage with the insurer after a lawsuit so that it has a full understanding of what will be covered.

Article courtesy of Worklaw® Network firm of Shawe Rosenthal.

IRS Issues Rules for Employer-Provided Cell Phones

The Internal Revenue Service has issued guidelines to clarify the tax treatment of employer-provided cell phones. The guidance relates to a provision in the Small Business Jobs Act of 2010, which removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.

The Notice provides guidance on the treatment of employer-provided cell phones as an excludible fringe benefit. According to the Notice, when an employer provides an employee with a cell phone primarily for non-compensatory business reasons, the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require recordkeeping of business use in order to receive this tax-free treatment.

Simultaneously, an IRS memo to its examiners announced a similar administrative approach that applies to arrangements common to small businesses that provide cash allowances and reimbursements for work-related use of personally owned cell phones. Under this approach, employers that require employees, primarily for non-compensatory business reasons, to use their personal cell phones for business purposes may treat reimbursements of the employees’ expenses for reasonable cell phone coverage as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee’s regular wages.

Under the guidelines, when employers provide cell phones to their employees or reimburse employees for business use of their personal cell phones, tax-free treatment is available without burdensome recordkeeping requirements. The guidance does not apply to the provision of cell phones or reimbursement for cell-phone use that is not primarily business related, because such arrangements are generally taxable.

Details are in the memo and in Notice 2011-72, posted on IRS.gov.

Form of the Month

Guidelines for the Secure Use of Social Media (PDF) – Use these legal recommendations to develop your social media usage policy.

Podcast

Click here to to listen to this month’s newsletter podcast.

A number of bills which may impact California employers and employees were signed into law by Governor Arnold Schwarzenegger. These new laws include:

SB 1304 (DeSaulnier): A new paid leave requirement for California employers with 15 or more employees will go into effect on January 1, 2011. Codified by Labor Code section 1508 et seq., employees who meet the eligibility requirements will be entitled to up to 30 days’ paid leave in any one-year period for organ donation and up to five days’ paid leave for bone marrow donation. To qualify for this new leave, an employee must provide the employer with written verification of his or her status as an organ or bone marrow donor and the medical necessity for the donation. Leaves may be taken in one or more periods, and during any period of leave, employers must maintain and pay for coverage under a group health plan. Leave taken cannot be considered a break in the employee’s continuous service for the purpose of salary adjustments, sick and vacation pay accrual, annual leave or seniority. However, unless otherwise provided by a collective bargaining agreement, an employer may require employees to use up to five days of accrued sick or vacation time for bone marrow donation leave and up to two weeks of accrued sick or vacation time for organ donation leave. Upon return from such leave, an employee must be restored to the same position or to a position with equivalent status, pay and benefits.

Importantly, this leave does not run concurrently with any leave taken pursuant to the Family and Medical Leave Act (“FMLA”) or the California Family Rights Act (“CFRA”), which means that employees will be entitled to this leave in addition to any FMLA or CFRA leave. The law also protects employees from retaliation for exercising their leave rights and prohibits employers from interfering with their efforts to take such leave.

AB 569 (Emerson): This new law, codified by Labor Code section 512, will take effect January 1, 2011. It exempts construction employees, security services industry officers, commercial truck drivers, and employees of electrical and gas corporations and local publicly owned electric utilities from California’s meal period requirements if the employees are covered by a valid collective bargaining agreement containing meal period provisions. The new law contains more specific definitions of the occupations exempted from meal period requirements.

AB 2364 (Nava): This new law, which will be codified by various sections of the Unemployment Insurance Code, slightly broadens eligibility for unemployment compensation by providing that employees who leave employment to protect their family from domestic violence are eligible for unemployment benefits. This law will become effective on January 1, 2011.

Summary provided by Worklaw Network firm Pettit Kohn Ingrassia & Lutz (www.pettitkohn.com).

In a continued effort to crack down on 1099 misclassification schemes, the PA legislature has passed a bill that defines the issue. You can see the bills history at http://www.legis.state.pa.us/cfdocs/billinfo/billinfo.cfm?syear=2009&sind=0&body=H&type=B&bn=0400 below is the most important language in that bill. MY highlights in bold.

(a) General rule.–For purposes of workers’ compensation, unemployment compensation and improper classification of employees provided herein, an individual who performs services in the construction industry for remuneration is an independent contractor only if:

(1) The individual has a written contract to perform such services.

(2) The individual is free from control or direction over performance of such services both under the contract of service and in fact.

(3) As to such services, the individual is customarily engaged in an independently established trade, occupation, profession or business.

(b) Criteria.–An individual is customarily engaged in an independently established trade, occupation, profession or business with respect to services the individual performs in the commercial or residential building construction industry only if:

(1) The individual possesses the essential tools, equipment and other assets necessary to perform the services independent of the person for whom the services are performed.

(2) The individual’s arrangement with the person for whom the services are performed is such that the individual shall realize a profit or suffer a loss as a result of performing the services.

(3) The individual performs the services through a business in which the individual has a proprietary interest.

(4) The individual maintains a business location that is separate from the location of the person for whom the services are being performed.

(5) The individual:

(i) previously performed the same or similar services for another person in accordance with paragraphs

(1), (2), (3) and (4) and while free from direction or control over performance of the services, both under the contract of service and in fact; or

(ii) holds himself out to other persons as available and able, and in fact is available and able, to perform the same or similar services in accordance with paragraphs (1), (2), (3) and (4) while free from direction or control over performance of the services.

(6) The individual maintains liability insurance during the term of this contract of at least $50,000.

(c) Factors not to be considered.–The failure to withhold Federal or State income taxes or pay unemployment compensation contributions or workers’ compensation premiums with respect to an individual’s remuneration shall not be considered in determining whether the individual is an independent contractor for purposes of the Workers’ Compensation Act or the Unemployment Compensation Law.

(d) Workers’ compensation.–

(1) An individual who is an independent contractor as determined under section 3 is not an employee for purposes of the Workers’ Compensation Act. For purposes of this section, each employment relationship shall be considered separately.

The DOL has an agenda and as an employer you ought to know about it. On this page http://www.dol.gov/regulations/ you can find out what their agenda is today and how you can subscribe to the DOL updates (which I highly recommend).

One of our Worklaw Partners, Lehr, Middlebrooks and Vreeland (www.lehrmiddlebrooks.com) produces an excellent newsletter. March’s newsletter discusses the recent Obama appointments to the NLRB. This is an important read for all employers, not just those already unionized. One more reason to attend the Webinar: Union Organizing and the New National Labor Relations Board: What You Need to Know to Be Prepared on May 11th at 2:00PM EST (11:00AM PST) with ­­­­­­­­­­­­­­­­­­­­­­­­­­John Simmons of Kiesewetter Wise (another www.Worklaw.com firm).