EBS Consulting Blog

In a recent case in Pennsylvania, an insurance agent was talking on his cell phone while driving in his personal car when he dropped it onto the floor. Bending down to pick it up, he ran a red light and crashed into a motorcycle, killing the operator. The operator’s family sued the insurance firm for contributing to the accident. The firm argued that the accident occurred outside the scope of employment because the accident occurred at 9:30 pm on a Saturday night. Neither the car or the cell phone was owned or provided by the agency. The agency settled the claim for $500,000. CAUTION: If your employees use cell phones for business purposes, be sure to have a policy that requires employees to pull over while talking on the cell phone, or at the least, provide hands free devices!

After a male employee retired, a female employee was promised a promotion and a raise in pay if she assumed some of the retired employees responsibilities.  While she accepted the new responsibilities and performed them satisfactorily, neither the raise or the promotion ever happened.  After she complained, she was put on probation and later fired.  She sued under the Equal Pay Act and was awarded $105,000 by the court which stated that even though she did not have the same job title, she was essentially performing the same or similar duties as the retired employee and therefore was entitled to the same pay.  Caution: While it is not unusual to reassign duties when an employee retires, be sure to evaluate the possibility of possible gender or age bias.  Examine whether employees working under similar conditions are paid equally for jobs requiring the same effort and responsibility.

The recently revised Fair Labor Standards Act (FLSA) now requires overtime pay for previously exempt white collar workers. As a result of these new regulations, HR professionals are confused and lawsuits are increasing. So how do you avoid the problem? Under the new overtime laws, white collar employees who earn less than $455 per week are automatically eligible for overtime pay. Employees who earn more than $100,000 a year and perform at least one of the defined exempt duties are not eligible for overtime. The problem arises for those who fall in between these salaries. You must analyze the job duties to determine if they are exempt from overtime if they fall into one of the 5 exempt categories: executive, administrative, professional, sales or technical. Advise? review job descriptions carefully, job title alone is not a determining factor. For more information regarding the new FLSA rules, contact: www.thehrspecialist.com/whitepapers.

In many cases, it makes sense to require employees to communicate effectively and clearly in English. The EEOC is warning that overly broad policies may violate national origin discrimination law. While it is clear that you can require a bank teller or salesperson to speak fluent English, the same does not apply to construction workers or even computer programmers. Requiring English may only be required for the effective performance of the position. Bottom line: Do not require a greater degree of fluency than necessary for the job. Be sure that you can identify a legitimate business reason such as safety or communication with customers. For EEOC guidelines on English only policies go to www.eeoc.gov/origin.

Advise hiring managers to refrain from writing ANYTHING on applications and resumes. In most states, applications must be retained for a reasonable period of time. Making notes including secret codes or personal rating systems could create a dangerous paper trail that may be difficult to explain later. For example, if the interviewer circles the graduation date from college, it could be evidence of possible age bias. Notes regarding method of transportation, child care arrangements or marital status are definitely opening the door for liability. Suggestion? Train interviewers and supervisors the do’s and don’ts of interviewing applicants. Leave the pens on the desk!

It is generally assumed that an employer is not responsible for employees while they are commuting to and from work. Normally, that is true, but an employee who feels ill or is impaired at work, or suffers an on the job injury and either voluntarily leaves the workplace or is sent home by their supervisor may be the employers responsibility! If the employee is involved in an accident while returning home or en route to seek medical attention the employer could be sued. Case in Point: Bussard v. Minimed Inc., California Appellate court ruled that the company should have foreseen a potential risk and did not stop it when a supervisor sent an employee home who fell ill after being exposed to fumes from a pest control spray at the plant. The supervisor offered to send the employee to the company doctor, but she refused. While driving home she rear-ended another car. She told the police that she felt lightheaded just before the accident. The reason in the other car sued the company for their injuries. CONCLUSION - Pay attention to any illness or injury complaints that could be related to work. Provide transportation to medical care or home. The same applies whenever driving may be impaired such as late night work, when alcohol has been served or suspected. The cab ride will be a bargain compared to the cost of defending a lawsuit.

During a recent job interview, a candidate for a sales manager position, inquired about the possibility of a three year employment contract. The candidate took careful notes of the ensuing conversation with the human resource manager, including descriptions of the salary and employee benefits package. After he accepted the job, he wrote “three year contract” across the notes and handed them to the human resource manager, who signed and returned the notes to the candidate. A year later the employee was fired for poor job performance. He sued, claiming his notes, signed by the HR manager constituted a guarantee of employment for three years. A court later determined that the signed notes did create a legal employment contract.

Even oral promises made by interviewing supervisors can be enforced as legal contract agreements, especially if employees have something in writing to back them up. Managers should NEVER sign anything an applicant or employee hands them without prior review and approval of the Human Resource Department. Hiring managers should NEVER make notes on an employment application or resume. Those notes just may come back to haunt you later!

It isn’t enough to give bonuses, stock options and plush offices to keep senior level key employees.  Employees wnat to be educated!  Companies are responding by creating Corporate Universities.  Unlike management training programs, these universities offer employee choices on skill based leaning such as finance accounting, risk management, human resources, tax planning, engineering, qulaity control and masters degree level instruction.

It is a win win situation for employers.  They fortify their position for recruiting talent and increase profit margins by improving retention of key talent.  There is stroing evidence that if you have a well designed and managemed learing program, it will increase customer satisfaction and employee retention creating a competetive advantage.  With the advent of online learning, such programs are more convenient and cost effective than ever before.

Companies have found that in house programs are much more effective than tuition reimbursement programs.  Less than 10% of those eligible for reimbursement programs utilize the benefit.  Surveys have found that after work programs fail because of the demands of family responsibilities and such programs are too restrictive.  Research also suggests that increased spending on training means more revenue on the bottom line.  Companies in the top quartile, spend an average of $1,595 per year for employee training.  Companies who invest in employee training experience lower turnover, higher perfomrance and higher job satisfaction, surveys show.

Recruiting the best - BE CREATIVE!  Be sure ti balance the cost of attracting the best talent with your market.  You may want to consider paying 15 - 20% higher than the market for hard to find employees with high demnand skills, and pay 15 - 20% below market rates for employees if there is an abundance of of workers and if your job openings require low skilled workers.  The secret is to advance them quicky as their productivity rises.  Depending on the economy, type of industry and competition for workes pay only at the going rates.

Another recruiting tool may be bonuses based on skill and productivity acheivement, sign-on bonuses if a new employee stays on the job for a set period, i.e. 3 - 6 months.  At the same time it is a good ides to consider increasing the existing workforce by a reasonable percentage to retain currrent employees who alrweady posses the requisite skills.

Another strategy is to reward mamangers by their recruitment and retention success.  Spot bonuses can incent mamangers to develop strtegies to get new hires up to speed quicker.  As productivity increases, you can adjust managers base pay and increase their valiable pay as a reward.  As a general rule, senior management compensation packages should be about 45 -50% base salary and the balance consisting of bonus, benefits and other perks and deferred compensation.

 Retaining Key Employees - Rethink automatic pay increases

Rather than giving employees annual or cost of living pay increases, consider performance based compensation systems or skills based pay systems. Reward employees on how successful the are at acheiving specific goals and objectives through a performance management system.  MAke sure the plan is reviwed and updated on at least an annual basis in order to compensate for uncontrollable factors, changes in business plan and economic environment.

Carefully define pay ranges and advancement opportunities.  When employees reach the top of their pay range consider annual lump sum bonuses, switching them to performance based pay, or transfering them to other jobs with a higher pay scale.  Another idea is ti make them a mentor to new employees and compensating them baed on new hire acheivement and retention.

Adjust wages for new hires based on labor market demand.  If the market for highly skilled employees is competetive, consider LOWERING base compensation by 10 - 15% but add new low cost, but highly desirable benefits like extended vacation time, or flex-time or floating holidays.

The days of employee loyalty are long gone.  Employees today are more focused on personnal needs and career track than they are company allegiance.  Think of your employees as free agents and be creating on how to keep them on the job and productive.

One of my clients called today to ask if they were required to give a pregnant female employee a promotion, stating that her pregnancy would interfere with her performance of her duties.  He further stated that “The promotion entails too much traveling for a married mother.”

Another employer called earlier about a male employee who told his boss that his wife had health problems since their baby was born. Therefore, he needs time off to care for them, as permitted under his state’s “primary caregiver” law. The boss refused, telling him “Women were made to have babies, there’s no way you can be a primary caregiver.” and denied his request.

 These are two clear examples of a violation of the Family Medical Leave Act.  This comes from treating those with family responsibilities differently from other employees, or stereotyping employees because of their gender or family situation.

Courts take these matters seriously. Such cases have increased by 400 percent in the last decade. What’s more, when FRD plaintiffs sue, they win more often than in other employment law cases, and sometimes win big. One man terminated over an FRD issue received $750,000 in compensatory damages and $10 million in punitive. His supervisors were also found personally liable. Each was ordered to pay him an additional $450,000.

The Equal Employment Opportunity Commission (EEOC) has issued new guidance recently published. While noting that family caregivers are not a new protected class, they are covered, says EEOC, under Title VII if the Civil Rights Act, provisions of the Americans with Disabilities Act concerning the rights of those associated with persons with disabilities, and other federal and state law. To avoid the consequences of violations and costly lawsuits employers should:

–Review policies and procedures on hiring, promotion, and termination decisions.

–Train managers to not ask their employees about childcare, eldercare, and other caregiving responsibilities.

–Monitor performance appraisals carefully to be sure that downgrades are “not arbitrarily linked to the assumption of caregiving responsibilities.”

–Avoid “benevolent stereotyping” such as assuming a worker would not want a transfer to another relocation because his/her children are established in school locally.

In my two cases described above, we were successful in “reversing” the poor decision of the supervisors involved and developed a Human Resource Policy and Procedure to review all requests for FMLA leave.  We also implemented an annual, mandatory Management Training Course for all supervisory positions on FMLA compliance and how to avoid Employment Discrimination Claims.