October 2008

Use this chart to make sure you get the process right. If you have any questions, please contact the HR That Works Hotline.

America is in a financial mess that includes many, if not most, of your employees. According to research published by the Employee Benefit Research Institute (EBRI), the AARP, and Schwab, here’s the shape we’re in:

• Nearly one in five surveyed workers (18%) was very confident in 2008 about having enough money for a comfortable retirement. This compares to 27% in 2007.
• One third (33%) of surveyed workers said they were very confident or somewhat confident about having enough money for a comfortable retirement — despite having saved nothing.
• Nearly half (47%) of surveyed workers in 2008 said they have done some sort of calculation of their retirement needs; 44% of households have changed their savings and spending behavior after performing such a calculation.
• Seven in ten pre-retirees surveyed (71%) said they want to work in retirement — regardless of whether they need to financially.
• Two in five of those surveyed (40%) worry that they’ll have to contribute to their parents’ finances; more than one in four (26%) worry that they’ll have to support a sibling.
• Seven in ten of Americans surveyed (70%) would like their employer to provide professional advice on saving and investing.
• Parents themselves acknowledge they aren’t passing down lessons on financial education, giving themselves a D+ grade for talking to their own kids about managing money.
• Older Americans surveyed say the most important lessons parents can teach their children about saving and investing are:
  • Live within your means (69%)
  • Begin saving at an early age (65%)
• Only one in four Americans surveyed (25%) say they clearly understand how Social Security works, and only 11% say they understand Medicare.

Here’s the point: Your employees are stressed and need financial education. We encourage HR That Works users to do a “lunch and learn” session using the June 2008 webinar with Dave Ramsey’s business trainer, George W. “Coach” Campbell, OVEREXTENDED – A Special Program on How the Personal Financial Stress of Your Employees is Impacting Your Business.

According to former America’s Cup Captain and Oxbow Corp President Bill Koch, “The problem of competition is primarily a management problem.” According to Koch, these guidelines provide steadfast reminders of the dynamic impact of the relationship among teamwork, technology, and talent:

• Develop team players according to the 80/20 rule: 80% attitude, 20 % talent.
• Management’s job is to keep the team focused, not perform subordinates’ jobs.
• It’s the team that wins. Management must be part of the team, together with customers and suppliers. Team members must have compatible goals and agendas.
• Everyone is equally important. The only ego that counts is the ego of the team.
• Together with teamwork, technology offers the most effective tool to achieve your organization’s goals. Technology can be especially effective when used in areas in which others are convinced that it doesn’t apply. This is one way to make tremendous gains over your competitors.
• Always improve. Mistakes are fine as long as you learn from them, and you “don’t bet the farm.”

That’s timeless wisdom for any team.

In a recent California Court of Appeals case, Brinker Restaurant Corporation v. Superior Court, the court discussed what it means to “provide” meal and rest periods. The decision made some significant conclusions:

• “While employers cannot impede, discourage or dissuade employees from taking meal or rest periods, they need only provide them, and not ensure they are taken;”
• “Employers need only authorize and permit rest periods every four hours or major fraction thereof and they need not, where impracticable, be in the middle of each work period;”
• “Employers are not required to provide any meal period for every five consecutive hours worked;” and
• “While employers cannot coerce, require or compel employees to work off the clock, they can only be held liable for employees working off the clock if they knew or should have known they were doing so.”

In other words, the court made it clear that although the employer must make meal and rest periods available, it does not have to force an employee to take such a break.

The decision also provided examples of how an employer would be non-compliant; for example, when an employer did not schedule meal periods, did not have a policy authorizing meal periods, or pressured employees to skip meals. The court further noted that if an employer knew that employees were working while eating, and did not take steps to address the situation, the employer would be depriving employees of such breaks and, thus, would have failed to provide meal periods.

This decision provides California employers with a new level of flexibility in scheduling and permitting employees to take their meal and rest periods. The decision also highlights the importance of employer wage-and-hour practices and policies, and reminds them to review employee handbooks and other policies to ensure compliance with the clarified meal and rest period laws.

Courtesy of Pettit Kohn Ingrassia and Lutz (San Diego, CA).

The FMLA, although still a source of frustration for employers in regard to its administration, is a common sight in employer handbooks. Federal law requires all employers covered by the FMLA to have an appropriate FMLA policy in any handbook or compilation of written work rules and policies. Employers can certainly offer more generous FMLA-type leave benefits if they so choose. On the other hand, inadvertent exclusion of FMLA eligibility requirements from an employee handbook might subject employers to unintended liability based on implied contract theories.

For example, in Peters v. Gilead Sciences, Inc., when an employee suffered a shoulder injury and underwent corrective surgery, he took what he thought was FMLA leave, as outlined in the employer’s handbook and as further explained to him in letters from the employer outlining his rights under the FMLA. Although the handbook and letters recited the 12-month, 1,250-hour prerequisites for FMLA eligibility, they listed no further requirements or exceptions. In fact, the handbook and letters stated that family and medical leave would be provided to “all employees” who were employed for at least 12 months with a minimum of 1,250 hours worked during the prior 12 months. The other key statutory eligibility requirement, not mentioned in either the handbook or the letters, was that the employee be working at a worksite with at least 50 employees within a 75-mile radius. Because the employer did not, in fact, have 50 employees within 75 miles, technically, the employee was not eligible for FMLA leave under the federal law.

So, when the employer miscalculated the employee’s return-to-work date and replaced him with another employee based on the improper date, the employee sued in federal court alleging violations of the FMLA and a state-law claim for promissory estoppel based on his reliance on the employer’s representations regarding his entitlement to medical leave. Although the FMLA claims were dismissed on summary judgment, the court found that, based on the employee handbook and letters to the employee, the employee could bring a state-law claim for promissory estoppel because of the employee’s detrimental reliance on the letters and handbook. Because the handbook excluded from the entitlement to 12 weeks of leave only those who did not meet the prerequisites of 12 months’ employment and 1,250 hours of work in the preceding 12 months, the court concluded that the employer offered “FMLA-like” leave benefits, using eligibility requirements less restrictive than those in the FMLA (and had offered FMLA-like leave to employees who worked at a worksite that did not have at least 50 employees within a 75-mile radius).

Although employers are entitled to offer benefits more generous than permitted under the FMLA, those employers who don’t intend to do so should ensure that their FMLA policies and related documents reflect exactly the leave that the employer seeks to grant. So if you want to provide only that required by the FMLA, your policies must include all statutory eligibility requirements. HR That Works users should consider using the Sample FMLA Policy.

Courtesy of Shawe Rosenthal, a Worklaw® Network member in Maryland.

I love the notion of trusting relationships. I’ve also come to learn that you can’t trust blindly. That’s a game that fools play and then wonder why they get burnt. I know because I’ve been there.

You can’t trust employees blindly. Employees are there to perform work that produces a profit or other defined value-producing outcome. Anything short of this is unacceptable and the cause of eventual business failure. Here are some ways I’ve seen well-intended employers get burnt:

1. They’ll steal your money. You must have checks and balances around any money, anywhere. Is your CPA checking the work of your bookkeeper? Do all P&Ls and banker reconciliations have to be signed off by more than one person? Do you have specific rules about handling cash? Have you considered video surveillance anywhere cash or money is handled? The point is: Don’t conduct social experiments! You might be doing OK financially, but there are people out there who are not. The temptation can be overwhelming when panic is at their doorstep.

2. They’ll steal your merchandise. Employee pilferage in the retail industry is alarming. But guess what? It’s the same in every industry! Employees are stealing everything from office supplies to equipment, tools, furniture, food, employee valuables, you name it. If you run a retail operation without surveillance, you’re conducting a social experiment. If you have equipment that hasn’t been stamped and bar-coded, you’re conducting a social experiment. If your security guard isn’t watching your employees as well as your customers, you’re allowing people to think they can get away with it (which is the reason that most people steal). Your job is to remove that thought.

3. They’ll steal your time. I’m always amazed when I go into stores or other offices and observe the amount of time that employees waste. We’ve all had the experience of waiting in a customer line while somebody is finishing a personal conversation. If the business owner saw this, they’d have a heart attack. Add cell phones, online shopping, MySpace, texting, and instant messaging and you begin to see the many ways in which employees become distracted. Dan Kennedy, in his excellent book, Ruthless Management, recommends that companies set up separate areas for employees to engage in private communications during their breaks. Outside of an emergency, no private communications are allowed while they’re supposed to be doing work. Great idea!

4. Your managers would rather be liked than be effective. Nobody likes to be “villainized” and bosses have been cast squarely in the villain role. As a result, they’ll often focus on being liked, as opposed to being effective. The result is that poor performers are kept on the bus much longer than they should be and their department never makes the profit it should. Have your managers generated crystal clear performance objectives, goals, and benchmarks for both themselves and every one of their employees? If not, then what are they managing? If not, how can you trust them? It’s also important not to assume that just because somebody is in a management position that their primary motivation is to help you make a profit. They have lives of their own and, quite frankly, their conversation with their kid, their online shopping, and their fantasy football league might be far more important to them than enhancing the bottom line.

5. They’ll abuse sick pay leave and other attendance related policies. Every company has employees who seem to be sick more often on Monday mornings or Fridays before a holiday. Be very clear about your attendance policies; put them in writing. Make sure employees take their lunch and rest breaks and show up and leave on time. Taking 20 minutes for a smoke break is unacceptable if the break period is 10 minutes. If an employee is out for more than a few days, or if they claim family and medical leave or some other leave, then be sure to get proper medical certifications. According to annual surveys by the publishing giant CCH, more than two-thirds of sick time is used by employees who are not sick! Whether it’s to see their kid’s soccer game or entertain in-laws who are in town, the fact is that you’ve set up a system which encourages people to lie two-thirds of the time. This why we encourage employers to collapse vacation and sick days because the bottom line to you is they’re not there to help you service the client or customer. Here’s how it works: If you offer two weeks of vacation and offer five days of personal leave, simply collapse them into three weeks of vacation. Remember, before terminating an employee for violating your time and attendance policy, make sure that their actions aren’t due to a disability (protected by the ADA where there are more than 15 employees) or related to a serious medical condition or other condition covered by the Family Medical Leave Act (50 or more employees).

6. They’ll sabotage your relationships. Many employees have little regard for themselves — never mind you. These same folks will talk behind management’s back, poisoning the well with co-workers, clients, customers, and vendors. Employers who look up their company name on a Google search (this can be done automatically) will probably be amazed by what disgruntled employees say in chat rooms, blogs, etc.

7. Finally, they’ll file frivolous claims knowing that dragging you through the drill is an expensive and emotional waste of time. For example, I recently had a client who was hit with a completely frivolous EEO claim and an OSHA contact about “unsafe” working conditions — despite the fact that this is one of the best intended employers and safest workplaces I know of. The best way to pull this rug out from under the feet of litigious employees is by using the Employee Compliance Survey.