“We are a small company, we don’t need HR help.”

One often hears small business owners say, “Well, we have a small tight nit group of employees. My accounting person can handle all the HR issues that can come up.” Despite the continuing assault on Employer rights and the tidal wave of employee friendly laws and judicial decisions, small business owners continue to believe that they are immune from expensive litigation and employee unrest.

One does not have to be a large employer to need professional and experience HR guidance. Take the example of a small construction company in St. Louis, Missouri. A&A Contracting was recently targeted by the EEOC and sued by that agency for discriminating against one of the Contractor’s permanent full time employees. Apparently, this employee had a history of liver and kidney problems. The employee’s health problems also included cancer. The employee’s doctor has cleared the employee to go back to full employment with no restrictions.

The Contractor found out about the employee’s health condition when the employee applied for company health insurance. After the company found out about the employee’s conditions, it terminated the employee. As a result, the company settled the lawsuit for $17,000 in lost wages and compensatory damages.

The lesson here is well stated by James R. Neely, District Director of the EEOC’s St. Louis District Office. Mr. Neely said, “Even small employers need to keep themselves educated and informed of the law’s requirements. At the time the employee was fired, A&A Contracting had approximately 20-25 employees. Any business with that size work force needs to make sure that they have clear, effective anti-discrimination policies and that they provide thorough, comprehensive anti-discrimination training to its managers and employees on a regular basis.”

The EEOC also strongly suggested that the employer needed to engage a HR professional with whom it could consult and have participate in HR related matters.

It is often the experience that prevention of employment related lawsuits is much less costly than settling a lawsuit or even worse, being hit with a judgment and attorney’s fees.

As a small business can you afford not to seek and engage competent and professional HR assistance?

G & J Consultants is a Kansas City based HR consulting firm specializing in assisting small and medium sized businesses in managing HR and employment law issues. The firm is staffed with experienced certified HR professionals and employment/labor attorneys to provide full service HR solutions.

The EEOC published a press release a few days ago about the distribution of a $6.2 million settlement it had reached with Sears, Roebuck & Co. The lawsuit had been filed in November 2004 in federal court in Chicago. The consent decree was entered and publicized on September 29, 2009 as the largest ADA settlement in a single case in EEOC history. The EEOC Regional Attorney handling the case stated:

The era of employers being able to inflexibly and universally apply a leave limits policy without seriously considering the reasonable accommodation requirements of the ADA are over. Just as it is a truism that never having to come to work is manifestly not a reasonable accommodation, it is also true that inflexible leave policies which ignore reasonable accommodations making it possible to get employees back on the job cannot survive under federal law. Today's consent decree is a bright line marker of that reality.

The EEOC had complained that “Sears maintained an inflexible workers’ compensation leave exhaustion policy and terminated employees instead of providing them with reasonable accommodations for their disabilities, in violation of the ADA.” The settlement resulted in payments averaging $26,300 to 235 former Sears employees.

This is not the only such case pursued by the EEOC. The EEOC filed a class action lawsuit suit against UPS in Chicago on August 27, 2009. According to the EEOC press release, the case was initially prompted by an investigation into a complaint that UPS had fired an employee with multiple sclerosis after she exhausted the twelve months off to which she was entitled under the UPS leave of absence policy. She had asked for 2 more weeks of leave so that her medications could be adjusted, but UPS allegedly refused to provide it.

In November 2009, the EEOC reached a settlement with JPMorgan Chase & Co. in a class action based on similar allegations. The EEOC alleged that Bank One, which later merged with Chase, had terminated some employees after they exhausted six-month medical leaves without first investigating on a case-by-case basis whether it was possible to accommodate their limitations so that they could return to work. As a result of the settlement, $2.2 million was to be distributed among 222 individuals who had taken long-term-disability leave and were then terminated.

Big companies that have leave policies, no matter how generous, that call for automatic termination of employees who exhaust the specified period of available time off, are prime targets for EEOC class action suits. Many courts have upheld claims by employees that their former employers violated their rights under the Americans with Disabilities Act by refusing to even consider extending their leaves of absence or providing other forms of reasonable accommodation.

Employers of all sizes should rely on competent professionals assistance to examine their long-term and short-term disability and medical leave policies to ensure that they comply with the ADA’s mandate that employers attempt, on an individualized basis, to accommodate employees’ disabilities before terminating their employment.

Why Technology can be a Double-Edged Sword

Recently I was reviewing an article about technology in the workplace and how productive laptops and “Blackberrys” made workers. The article was aimed at warning employers that when those technological tools are used could have a significant impact on wage and hour issues. (That is of course a very real issue and one I will comment on at a different time.)

I actually began to think about the danger to an employer such tools can have, when employers permit access to their systems. Traditionally, when the employer assigned a laptop or cell phone to an employee, a policy on appropriate use of device along with notice that the employer could and will monitor use and improper use of the device could lead to discipline.

Last night as I watched a commercial for one of the cell phone companies touting a Blackberry for $99, it occurred to me that more and more employees are buying their own laptop and smartphone and then getting access to the employer’s system. Many employers embrace this because their employees are more productive and accessible and the employer does not have to purchase or provide the asset. It also makes working remotely cost effective and viable.

Then, I heard about the lawsuit!! The wife of a male employee sued her husband’s employer after her husband using his own laptop had posted pictures of their young daughter on a kid porn website through the husband’s employer’s internet connection. The woman sued arguing that the employer had a duty to monitor the usage of its internet connection and its failure to do so damaged their family. (The case is still ongoing, and how it will turn out is anyone’s guess, but you don’t want to be the company who foots the legal bill to defend such a case…particularly when the solution is easy and cost effective.)

If an employer chooses to allow its employees to access its resources and assets, it must establish policies for permissible use and make sure that every employee is aware of the policy and the consequences of ignoring the policy. Then, the employer must actually monitor its employees’ use of the company assets including email and internet use and strongly enforce its established policy.

Allowing employee access to the company’s computer files also raise other privacy questions and hinders the security of your electronic information and trade secrets. Accessing data from an offsite location or an employee’s private electronic computers is risky without adequate measures to control how and when your assets are being used.

Getting increased employee productivity is an admirable goal, but it can come at a significant price if you don’t make sure that you protect your assets, and prevent employee misuse. If you don’t have a policy that clearly spells out your expectations and what is allowed and prohibited, write one, publish it to your workforce and closely monitor who gets access to your email and internet systems and how they use it. HR professionals (such as G & J Consultants) can assist you in reviewing your current equipment/internet usage policies and even draft a new comprehensive policy should you need one. The investment and the protection a well crafted and enforced policy provides is worth it!

Discharging an Employee and Save Unemployment Costs

During this time of employee contraction, (U.S. Gov’t report that job losses have SLOWED not stopped.) employers tend to focus on the unpleasant task of actually terminating employees when the employee does something wrong. However, often the needs of the business demand that positions be cut and employees be terminated. When a reduction in force is required, employees file for and get unemployment costs. The employer is required to pay into the unemployment system, and the amount of the annual assessment is based on the amount of unemployment paid out to the employer’s terminated personnel.

These costs are totally controllable and when an employee is terminated for cause, unemployment funds are not paid to the former employee and the employer is not charged.

When I directed the HR department for a heath care company, I advised managers to use a procedure that not only made the termination process easier and less emotional, (for both parties) but also set up the employer to be in a win/win situation.

Let’s face it, after the time and expense of training an individual to be productive and fit into the business and pull their own weight, if you could maintain the individual the replacement costs (e.g. recruiting and training) would be saved and not paying unemployment would positively affect the business financial health.

How to do it? Use a process of discipline that includes a short suspension to give the employee an opportunity to turn around and become a productive member of the team. In the health care company, when an employee’s performance suffered to the extent that termination was being considered, I would ask the manager what level of performance the employee would need to meet to be retained. Past performance would be reviewed and a level of performance would be spelled out in a memo of expectations. The employee would meet with their manager and be informed that their job was in jeopardy, and that the employee was being suspended for 1 to 2 days to consider their position in the company and the level of performance that was expected of that person while in that position. The employee was asked to come back to a meeting with a signed document that stated if they would meet the performance and timeline expected by the employer. Failure to bring the document or show for the meeting was considered a voluntary termination.

Voluntary terminations are not eligible for unemployment benefits. If the employee did come back and did not perform to the company’s expectation, then “good cause” for the termination was established. If the employee did not return for the meeting or failed to bring the required document, that was grounds for termination based on insubordination.

What we found after instituting this policy and training managers on how to implement it, 66% of the employees returned to work as productive members of the team. Those employees, who failed to come back or never met the requirements for the job and were terminated, did not obtain unemployment benefits.

Take control of an easily controlled cost. Don’t keep paying out large unemployment premiums. G & J Consultants show you how to reduce your unemployment premiums and employee replacement costs while retaining those employees you want to keep.

Glenn Brown is the CEO of G & J Consultants, LLC. In addition to having directed the HR Department of a health care services company, Glenn is a licensed 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.

Employers Beware: The Department of Labor hires 250 more investigators

I have been saying for the last few months, employers need to wake up and take notice! The Obama administration is serious about compliance with wage and hour laws. The DOL is taking actions to identify violators and any company caught violating of wage and hour laws can be sure that stiff financial penalties will follow.
The decision to add to the staff of investigators seems to signal that the government thinks the information published in a recent study by the Center for Urban Economic Development at the University of Illinois at Chicago, The National Employment Law Project and the UCLA Institute for Research on Labor and Employment is accurate and represents real problems.
The study indicates that:
· 76% of employees who worked overtime were NOT paid time-and-a-half for the overtime hours
· 26% of employee are paid less than minimum wage
· 69% of employees entitled to meal breaks either were no given any breaks, had their breaks interrupted by management or worked through their break.
Given the nation’s current economic crunch, employers are leaving themselves exposed to increased risk of government audits and lawsuits by overlooking their duties under wage and hour laws in order to survive, using fewer employees to do the same amount of work regularly done by a large staff. Now, with the government cracking down and actively searching for violators of wage and hour laws with the addition of more investigators, the chances of an employer continuing to violate employee pay rights are becoming less and less.
Any employer who does not take this issue seriously runs the real probability that they will be found out, and if wage and hour laws have been ignored, their businesses can be in jeopardy. This is the time to conduct a HR audit to ensure that wage and hour laws are being complied with, that all the paperwork and documentation will withstand any investigator’s scrutiny.
Showing investigators, government agencies and courts that the employer made a legitimate effort to comply with the FLSA and Wage laws, and are actively working to meet all of their duties to their employees, may be the difference between fines & penalties that break the employer’s financial “back” and company survival with minimal fines.
All the press that wage and hour violations have gotten recently, along with this increase in government investigators should clearly establish that this issue is not be taken lightly or dismissed out of hand. Take action before it is too late and your business is targeted.

Exempt vs. Non-Exempt Status

I am always amazed by the number of managers who continually make the mistake of assigning exempt status to anyone in the company who has management-related duties... or my favorite, equating “salary” with “exempt”!

Just because the employee is paid by salary or is called a "manager" does not make the employee exempt! It seems that the mistake made most often is calling an employee a manager in order to avoid paying overtime. In order to ensure you properly classify an employee as a manager, you need to evaluate whether the employee’s management-related duties actually fit into one of the exempt classification tests under the federal Fair Labor Standards Act (FLSA). Incorrectly classified managers could lead to class action lawsuits to back overtime pay.
For example if your managers spend almost no time performing managerial tasks; instead, perform customer service, cleaning, and sales duties you may have a real problem meeting the exemption classification. If your “managers” lack real authority over their departments and employees, and are required to confer with their district managers before making management decisions then they may not be exempt. The main question is, what is the employee’s main duty?

Time alone is not the only test for determining an employee's "primary duty," especially when, as in this case, the performance of managerial and non-managerial duties overlap. Courts have determined that when managerial duties are more critical to the success of the business than non-managerial duties they are most likely exempt.
So what are the tests? Managers do not need to be an ultimate decision-maker in order to be considered exempt employees. Additionally, a managers' exempt status is not jeopardized just because there is someone else higher up on the corporate ladder that has the final say in hiring, firing, and other employment decisions.

The Department of Labor (DOL) has stated that a manager meets the executive exemption test "even if a higher-level manager's recommendation has more importance and even if the employee does not have authority to make the ultimate decision as to the employee's change in status." The DOL looks at whether it is part of the manager's job duties to make such recommendations, and the frequency with which such recommendations are made, requested, and relied upon. Alternatively, to meet the administrative exemption test, a manager must exercise discretion and independent judgment. The fact that a higher-up may review and revise or reverse a manager's decisions does not mean that the manager is not exercising discretion and independent judgment.

When making a determination the DOL will evaluate the manager’s duties to evaluate if the manager:
· has authority to formulate, affect, interpret, or implement management policies or operating practices;
· carries out major assignments in conducting the operations of the business;
· performs work that affects business operations to a substantial degree;
· has authority to commit the employer in matters that have significant financial impact; or
· has authority to waive or deviate from established policies and procedures without prior approval.

Be sure to seek assistance from qualified advisors in order to evaluate all employees that are classified as exempt, to guard against paying back overtime wages which can run into the millions of dollars. In this case, a penny spent can save your entire business from financial disaster.

Recruiters & EEOC changes on referral policy

Sometime in the future, the economy will spring back and businesses will start hiring again. How will they find the employees to replace the employees laid off during the economic hard times? Many businesses will ask their current employees to recommend people that they know. Often businesses believe that by have employee referral programs, the business’ corporate culture is improved because employees will enjoy working with “friends” and people that they know.

Often, businesses pay a fee to the employee who refers someone who is hired by the business. The prevailing thought is that paying an employee for a referral is much less expensive than paying 10% or 15% to a recruiter, or pay for a recruiting job board such as CareerBuilder.

However, prior to making that decision, employers must be mindful that the EEOC has looked upon employee referral programs as potentially creating homogeneous working environments reducing the diversity of the work place. The EEOC suggested that people tend to refer people like themselves and those businesses that are not careful could find their employee population reflects a racially unbalanced workforce.

So what? The EEOC has successfully sued a company that did not carefully monitor their recruiting programs, and relied on employee referrals and created a less than diverse workforce. Cost to the company? $2,200,000!

What is the lesson? Recruiting programs should be developed to seek employee candidates from as diverse a group of qualified candidates as possible. Relying on only one or two methods to identify candidates is dangerous. It is best to develop programs that recruit candidates from a wide variety of sources. It is also a good idea to use a reliable recruiting service in addition to other recruiting sources to establish that the company is not limiting candidates based on race.

In the end, it seems to me that businesses are better served by expanding their recruiting sources because the opportunity to uncover talented individuals who will be able to make significant contributions to the employer. During the period of recovery, this will be important to growing the business and getting back to normal.