Here We Go Again...

Recently, the U.S. Supreme Court handed down a decision in the Walmart wage and hour lawsuit that businesses hailed as a great victory…(and it was…just not for what business people think). The Supreme Court ruled on a procedural question related to class-action litigation, (by the way, that was an extremely business friendly decision) but the Court has not changed in any way an employer’s absolute duty to pay its employees the employee’s earned wage.

Moreover, the federal law that applies to most employers, the Fair Labor Standards Act (“FLSA”), is still on the books, still spells out minimum pay rates, overtime and who is exempt from being paid overtime. In addition to the FLSA, there are a number of other federal and state laws and regulations governing the act of paying employees. None of these laws were affected by the Supreme Court decision in the Walmart case.

Despite all the press and publicity, more and more employers are running afoul of these wage laws. In most cases, it is due to a lack of understanding of their legally imposed duty, but in some cases, employers looking for ways to cope with cash-flow problems intentionally evade their duty and cheat their employees out of earned wages.

Adding to the mounting pressure on employers come the statement from Secretary of Labor, Hilda Solis, “We will not rest until the (FLSA) is followed by every employer, and each worker is treated and compensated fairly.” Secretary Solis supported her statement by announce a 33 % increase in the number of investigators auditing for wage and hour violations.

What we know from our experience, virtually every employer can be found to have violated the FLSA in some way. The FLSA is a complex law which literally 100s of pages of regulations and even the biggest of businesses with 100s of HR professionals and lawyer protecting it, can make mistakes. (AT&T is facing a $1 BILLION lawsuit over wage and hour mistakes) Businesses with limited HR resources available to it need help to withstand the promised scrutiny from the U.S. Department of Labor along with state agencies.

The financial impact of evading paying wages is huge. Payroll taxes, Social Security withholdings, unemployment insurance premiums are reduced when wages are shortchanged. Getting caught can be a financial catastrophe for businesses that have to pay all the unpaid taxes along with the unpaid wages and the fines and penalties. Don’t forget after all that, the attorneys’ fees of the counsel representing the business.

So, what are businesses doing wrong? The top issues seem to be:

• Employees wrongly classified as exempt from overtime.
• Hourly employees paid incorrectly (or not at all) for their travel time.
• Failing to retain payroll records for the right amount of time.
• Texting and emailing employees when they are “off the clock”.
• Violating – or being unaware of – the “rounding law”.

Now is the time for businesses to get their houses in order. Find and fix the mistakes before the mistake is found by an investigator, or worse one of the employees’ attorneys.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

The High Cost of not Properly Training Manager Level Decision-makers

On Monday, February 28, 2011, the U.S. Supreme Court handed down a ruling that bloggers, commentators, and naysayers all seem to think is the key to opening more opportunities for employee to sue their employers. In an 8-1 decision, the court expanded the standard for finding discrimination in the workplace. Up until Monday, plaintiffs had to establish that the decision maker for the employer had to acted with discriminatory intent when an adverse employment decision was made with regard to an employee. After Monday’s decision, employers can be liable for the acts of their decision makers when other employee, supervisor or manager, with discriminatory intent influenced the decision.

As Chicken Little said…”the sky is falling, the sky is falling.” Some would have business owners believe that all their employees are just waiting to sue now that the Supreme Court has given them the key to open the litigation flood gates.

I don’t buy it, and neither should business owners. The issue has not changed. The issue for small business owners is the same as for all businesses, regardless of size. The issue is the protection of the most important and expensive resource a business has. Its people!

Businesses expend a lot of effort to identify good solid candidates for employment, then more time and expense to actually hire and orient these new employees, then train the employee on the specifics of their job and every time an employee leaves the cost of replacing that person becomes higher and higher.

The solution as I see it, is too simply invest a little to save a lot. Experienced staff means higher productivity, better customer service and more profits.

Never allow an employee to be terminated or suffer a negative employment action without a systematic review by at least one additional uninvolved manager/supervisor and never take a final action until the decision is supported with appropriate documentation with justification for the employment decision.

The days when terminations and disciplining employees without following a process that protects and minimizes the business from employment lawsuits is over. The Supreme Court did not announce an earth shattering employment law decision last Monday. They did remind employers to be more aware of the valuable resources that each staff member is to the success and profitability of every business. It reminded employers that a little care in designing the discipline/termination procedure can reap great rewards.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

I-9 Compliance and the high cost of mistakes

Now I know that most the people who read the title of this entry are already saying something along the lines of, “tell us something we don’t already know” or “we’re already familiar with the penalties for hiring illegal workers”.

That’s the interesting part. It seems like everyone I talk to assumes that the I-9 form is only checked for whether or not the employee on it is legally allowed to work in the U.S., and they couldn’t be more wrong!

The perfect example of this was publicized toward the end of 2010 – Abercrombie & Fitch was fined over $1 Million for violations of I-9 forms… and Abercrombie & Fitch hires NO illegal workers! The fine was because of paperwork violations. Even more impressive is that this fine wasn’t a result of a companywide audit, rather ICE (Immigration and Customs Enforcement) inspected only A &F’s Michigan stores! (According to their website, Abercrombie has a total of 9 stores in Michigan)

One of the big violations uncovered in the audit was related to technology and issues with their electronic I-9 verifications. It looks like the vendor failed to confirm the system was accurate, or did a poor job of training on the program. Either way, it adds up to a big hit to Abercrombie.

What the average business owner should take away from this is simple: Get your house in order! Just because you don’t think you hire illegal workers doesn’t mean you’re immune from ICE audits. If you utilize electronic I-9 systems, are you sure that the system is complaint? Do you know who is responsible for checking that your I-9’s are correct and have been checked? Just because you have a 3^rd party “taking care” of your I-9’s doesn’t mean that you’re off the hook.

Now more than ever, it’s in a business owner’s best interest to keep a close eye on the I-9 process they use. The new policy at ICE means that not only are businesses getting audited and investigated long before the business is ever notified, but that issues uncovered during audits are being used as the base for CRIMINAL penalties in addition to civil.

Don’t let this happen to you. The easiest way to prevent this is to have someone take a look at your I-9’s with a fresh pair of eyes. The cost incurred to have a consultant audit your company will save you money, headaches and quite possibly criminal charges.

Joshua Brown is the Co-Founder and a Managing Principal of the Kansas City based HR consulting firm, G & J Consultants, LLC. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

Every Employee’s “Section 7” rights in the workplace PART 2

In last week’s article, employee Section 7 rights were discussed with some examples of what can happen to any employer who does not understand that the National Labor Relations Act applies to non-union businesses.

This week another employee Section 7 right is being looked at.

As a result of a situation in the workplace and complaint by one of your employees, you being to investigate the situation and start to interview employees one by one. The third employee to interview comes into your office and says that she wants a co-worker to sit in the interview also. This is a problem because you are trying to maintain a level of confidentiality about the process and don’t want people to know what is going on until you complete the investigation.

Can you deny the request?

Up until 2000 the answer was yes, as long as the employee was not a union member. The rule was that union employees had the right to have union stewards present during investigative interviews. NLRB v. Weingarten, Inc., 420 US 251 (1975). These rights were known as “Weingarten rights,” named after the 1975 Supreme Court decision. In the 25 years between 1975 and 2000, the rights have applied only to union-represented employees.

However, in July 2000, the National Labor Relations Board reversed its long-standing rule and held that employers must grant employee requests to have a coworker present during an investigatory interview even when they are made by employees who are not represented by a union. A non-union, non-supervisory employee who makes the request may be accompanied by a coworker of his/her choice during any meeting or investigatory interview which the employee “reasonably believes” may result in disciplinary action. Epilepsy Foundation of Northeast Ohio, 331 NLRB No. 92 (2000).

The NLRB decision was affirmed on appeal by the United States Circuit Court of Appeals for the District of Columbia. Epilepsy Foundation v. NLRB, 268 F3d 1095 (DC Cir 2001), petition for certiorari filed (March 4, 2002) (No. 01-1292). The DC Circuit concluded that “the presence of a coworker gives an employee a potential witness, advisor, and advocate in an adversarial situation, and, ideally, militates against the imposition of unjust discipline by the employer.

The Board’s determination that an employee’s request for a coworker’s presence at an investigatory interview is concerted action for mutual aid and protection and thus is within the realm of Section 7.

Given the change in status of the Board and challenges to this decision being raised in court, you should check with competent professionals to determine the validity of an employees’ Weingarten rights in your specific situation.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

Every Employee’s “Section 7” rights in the workplace

Stan, a supervisor on the manufacturing floor overhears two employee’s discussing the “small” raises they were getting when the company profits looked like they were growing. The employees discussed the fact that they were getting paid less than the employees at the shop down the street. Stan goes into the owner’s office and reports the conversation he overheard. The business owner tells Stan to fire the two trouble makers, and make sure that the message to the other 9 employees is clear. Discussion about compensation among the employees is prohibited and any employee caught doing so will be terminated.

The business owner, still mad, goes to lunch with a friend and retells the events of the morning calling his “former” employees ungrateful and troublemakers. The owner tells his friend that he wished that he could sue “those guys” to teach employees that their compensation is private and not a topic of discussion in the workplace.

His friend says “you should hope they don’t sue you.” The owner says “how, I didn’t violate anything, they did!” Imagine the owner’s surprise when he finds out that the National Labor Relations Board (NLRB) has accepted a complaint on the above issue. The owner goes to an attorney and asks “how can they do that? I am not a union shop. In fact, a few years ago the employees determined that they did not want a union.”

The attorney then teaches the business owner a lesson every (and I do mean EVERY) employer should learn. Section 7 of the National Labor Relations Act (NLRA) applies to all employees, whether there is a union or not. Violating an employee’s Section 7 rights is a serious mistake. Some examples:

· An employer fired a salesman for being an “outspoken critic” against special two-hour meetings which sales personnel were required to attend without compensation before the store opened. The employee was awarded reinstatement with full back pay plus interest. NLRB v. Henry Colder Co., 907 F2d 765 (7th Cir 1990).

· An employer who fired two employees who composed a letter protesting change in the method of compensation committed unfair labor practice. The employees were awarded back pay with interest, plus reinstatement. Westmont Plaza, 298 NLRB 401 (1990).

· An employer who fired employees who mailed a letter to the employer’s parent company complaining of working conditions and bonuses, due in part to the employer’s president requiring employees to spend large amounts of time on the president’s personal projects committed an unfair labor practice. The employees were entitled to reinstatement, and back pay plus interest. NLRB v. Oakes Machine Corp., 897 F2d 84 (2nd Cir 1990).

· Discharging employees who gave affidavits to a sheriff stating that the employer’s vice-president had embezzled funds from the employer was a violation of the NLRA. The employees were engaged in protected activity and awarded reinstatement and back pay with interest. Squier Distributing v. Teamsters Local 7, 801 F2d 238 (6th Cir 1986).

· An employee who objected at an employee meeting to the supervisor’s lecture about the volume of radio headsets and received a written warning was engaged in protected activity; her discharge was an unfair labor practice. The employee was awarded reinstatement, plus back pay with interest. Rockwell International v. NLRB, 814 F2d 1530 (11th Cir 1987).

· A restaurant owner/manager’s termination of an employee who complained about the employer’s tip pool system violated the NLRA. The employee was awarded reinstatement, and back pay plus interest. Showcase, Inc., 277 NLRB 1444 (1986).

· The employer committed an unfair labor practice when it discharged an employee after she and another employee told a third employee of their perception that the employer’s refusal to hire that employee’s daughter was unlawful race discrimination. The employee was engaged in protected activity and was awarded back pay with interest, and reinstatement with no loss of seniority or benefits. Dearborn Big Boy No. 3, 328 NLRB No. 92 (1999).

How do you know when you might be interfering in your employees’ protected rights? Look at these questions

1. Is there concerted activity? Were two or more employees acting together; or was one employee acting on the authority of other employees.

2. Is the activity protected—i.e., engaged in for employees’ “mutual aid or protection?”

3. Is the employer’s adverse employment action motivated by the employees protected concerted activity? Did the employer know of the activity? Was employer motivated to act by it?

If you answer yes to any question, then you may become liable under the NLRA.

For more information on this subject contact a professional who can review your issues and protect you from become an example like those above.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

Good HR policies are not just good business, they can save lives.

On February 1, 2011, Kansas City and the Midwest got hit with a huge snowstorm. As one forecaster said, he had not seen a storm this big in the 22 years of forecasting. The good news was that due to the weather technology available today, everyone in Kansas City knew what to expect. We were not disappointed. With snow fall ranging from 8” to 22” across the region, employees of all types of businesses wondered “do I go to work, or stay home?”

As an employer, we deal with competing needs and desires. If your business is very local and your clients or customers come to you, then shutting down operations is generally less of an impact. If your employees can't get to work, then your customers are most likely not going to come to your door either. However, if you have customers across the nation, use phone, internet or other means of communicating with you, not having employees in your place of business could be costly.

Then of course, if one of your employees gets hurt while driving into work in a blizzard, you might lose an employee, face work comp expenses, and lose respect and loyalty of other employees. If you are lucky, the worst that happens is your employee gets stuck in the snow and has to dig out.

The employers, who fared the best on February 1, had thought about the issue well before the forecast models were broadcast all over the news. The employers who thought about how they would handle the situation were able to calmly make a decision and implement a policy that made the most sense, (business and safety), and protected not only client loyalty, but preserved and enhanced employee loyalty. These forward thinking employers took the time to think about their business and it needs and then crafted a policy that met those needs and allowed the employees to be grateful for the care shown them.

For example, one forward thinking company determined which positions and employees would be essential to continued operations in the event of a severe snowstorm. They continued to review the list until they were sure that only the ESSENTIAL positions were identified. The employees in the so identified positions were notified that in the event of a severe snowstorm (or other catastrophe) they were required to go to work. Depending on the timing, they would be provided a room in a nearby hotel (within walking distance) and provided with laptops and cell phones by which they could communication with management.

All other employees who were deemed non-essential were provided with a number to call for advisories on coming into work. The final call on whether to close the office was made by the president with advice of operations and the HR person. These three individuals simply executed a policy that was well thought out and created well in advance so that the potential issues that other employers faced on February 1, were minimized.

The intangible benefit of this for the employer was the message sent to employees and customers was that the company handle this situation well, so they would handle other issues equally well, based on well thought out plans and procedures.

What about you? What message do you send your employees? Too often, we react to fires and make things worse rather than follow a trusted plan that achieves our objectives with a minimum of fuss, confusion and worry.

Are your plans, policies and procedures up to date?

Have you tested your policies recently to make sure that they still work?

Have you evaluated changes in operations, employees, facilities which could change the outcome of an old, outdated plan?

It may be time for a tune up of your policies and procedures before the next big snow (or other) storm.

Glenn Brown is the Co-Founder and Principal of the Kansas City based HR consultant firm, G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is an attorney with 15 years experience assisting businesses of all sizes and industries in complying with employment and labor legal issues. G & J Consultants specializes in providing small and medium sized businesses with traditional HR services as well as compliance with employment laws and regulations.

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