May 2010

The EEOC has announced that Outback Steakhouse will pay $19 million to settle a nationwide class action suit alleging that the company maintained a glass ceiling to keep women from obtaining management positions. Outback required kitchen management experience as a pre-condition to advancement, but in a Catch-22, failed to hire women into these positions. See the EEOC’s News Release here.

In the Ninth Circuit Nevada-based court case of Boucher vs. Shaw, three former employees of The Castaways Hotel Casino and Bowling Center, as well as their local union, sued individual managers for unpaid wages under the Fair Labor Standards Act. The court ruled that the chairman, CFO, CEO, and HR head two of whom were also owners could also be considered employees under the FLSA and thus be held personally liable for the damages. (572 F.3d 1087) (9th Circuit 2009)

In Stewart v. RadioShack Corp., (US District Court Northern District 07-4499) the court held that an employee’s expense reimbursement rights can’t be waived because they failed to follow internal company procedures for requesting reimbursement. According to the court, as long as an employer knows, or should know, that employees are incurring work-related expenses, the employer has a duty to ensure that employees are being reimbursed for their expenses. This right to reimbursement does not expire until the statute of limitations for filing a lawsuit.

Bottom line: Instead of refusing late expense reimbursement requests, encourage employees to get their expenses in, and have documentation in which the employee acknowledges that all expenses have been reimbursed.

If you’re responsible for the HR functions at your company, you face a variety of challenges. To get the job done, follow these guidelines:

1. Keep job descriptions up to date. Job descriptions often come up in litigation whether discussing disability accommodation, quality of job performance, essential job functions, and so on. The best starting place is O*NET. Look for the relevant job and then cut and paste those provisions that relate to the position at your company. Have both the manager and the employee review the description for accuracy.
2. Stay on top of wage and hour issues. Make sure that everybody gets paid properly and takes their vacation and sick days. Manage time and attendance, overtime obligations, exempt classifications, and perhaps sales commissions as well.
3. Update policies and procedures. This involves not only legal compliance issues, but keeping up with the times. For example, yesterday’s performance evaluations just don’t work in today’s responsibility-based environments. Update such tools as leave notices, FMLA, ADA, hiring forms, and the like. One of the great things about being an HR That Works member is that we do much of this work for you.
4. Develop training plans. Make sure your managers are getting proper training in such areas as sexual harassment, hiring, motivation, discipline, workplace injuries, and termination– as well as requests for disability accommodations, family, and medical leave.
5. Maintain proper records. Retain personnel records for the time required and then no longer. Remember the importance of electronic storage as well.
6. Get feedback. Ask your fellow managers and the rest of the workforce how you can help improve HR practices. Use the HR Department Survey in HR That Works.
7. Put out fires. By definition, HR folks deal with a lot of employee drama. This means that you must be a good communicator; know when to solve problems yourself or when to speak to upper-level management or seek professional advice. If you’re unsure, call our Hotline for advice.
8. Finally, align your HR practices with the company’s strategic objectives. Are you clear about what strategic objectives the ownership would like from HR? If they haven’t told you, ask! Are you focused on meeting these objectives like a laser beam?

According to SHRM, turnover rates have dropped in half since 2007, from 16% to 8%, with voluntary turnover dropping from 10% to 9%. To avoid the loss of top talent, companies are offering valued employees salary increases (49%), cash retention awards (32%), stock retention awards (26%), and higher bonus payouts (25%).

However, what do you do if your company doesn’t have the money to fund these types of efforts? There is only one answer brutal honesty. Open your books, let employees know what the real deal is, what your plans are for moving forward, and how they can profit from contributing to this growth. I believe that instead of throwing money at the situation, businesses should give employees the opportunity to produce outstanding results and get paid for their efforts. Here’s a formula that makes sense:

1. Pay at least the average wage rate.
2. Give employees incentives with team bonuses. Remember, a rising tide floats all boats.
3. Create individual incentives. Remember the importance of frequency and high touch.

To learn more about compensation strategies, watch the Webinar we did on Straight Talk About Employee Pay with Chuck Czismar.

DeRosa v. National Envelope Corporation (US Court of Appeals for the 2nd Circuit 08-2562-cv)

DeRosa became an employee of National Envelope in 1988 working as a customer service representative. In 2002, he suffered a traumatic injury to his right leg, which resulted in swelling, ulcers, and infections. DeRosa’s physician instructed him to limit the dependency on his right leg and, if possible, work from home. National Envelope agreed to this accommodation; however, in 2004 a new CEO decided to rescind this accommodation.

DeRosa, believing that his medical condition could not permit this change, informed his supervisor that he could not work on site. He was then terminated. DeRosa alleged that his employer encouraged him to file for Social Security Disability payments. There was a conflict on whether he had satisfactorily performed his job duties from home before his discharge. When DeRosa applied for SSDI, he stated that he “became unable to work because of my disabling condition and I am still disabled.� After DeRosa filed for ADA discrimination, the employer tried to argue that he was “stopped”� from doing so because of his statement on the SSDI application. The court disagreed.

This is a scary decision for employers. In this case, the plaintiff filed for Social Security Disability benefits and was then terminated because his employer believed that the employee’s claim that he was disabled from doing his job meant that there was no ADA concern. DeRosa obviously disagreed, claiming that there was an accommodation obligation in any event. The court pointed out that in a previous case, a sworn assertion that an SSDI applicant was “unable to work” could negate an element of an ADA claim unless the plaintiff offers a sufficient explanation for the apparent contradiction.

Lesson learned: A company always runs a risk when it does not engage in accommodation dialogue with any employee on leave for any reason at any time. I’m not sure why the CEO rescinded the work at home accommodation; my guess is that he felt this created a bad precedent or that DeRosa wasn’t performing well. If this is the case, the company should be able to defend itself against the ADA claim. This defense would be stronger if the company can document that it issued warnings and created performance plans for DeRosa before rescinding his accommodation.

The 11th Circuit court case out of Alabama, Harrison v. Benchmark Electronics, involved an employee who was tested before hiring and found to be positive for barbiturates. The court held that although testing for illegal drug use is not a medical inquiry, obtaining information that might have a medical explanation crosses the line. Citing an EEOC Enforcement Guidance regulation, the court stated: “If an applicant tests positive for illegal drug use … the employer may validate the test results by asking about lawful drug use or possible explanations for positive test results other than illegal use of drugs.” However, the regulations, together with the EEOC guidelines, prohibit asking disability-related questions.

So, although employers may conduct follow-up questions based on a positive drug test, this type of questioning has limits. In this case, whether or not the manager who chose not to hire the plaintiff knew about his epilepsy before he decided not to hire him was left for a jury to decide.

Lors v. The South Dakota Attorney General (US Court of Appeals for the 8th Circuit #09-1382)

In this typical case, the plaintiff claimed that his diabetes led to his termination, while the employer argued that the cause was his poor performance as a team leader. In an interesting twist, after the employee was demoted from being a team leader, he claimed that because the stress of his new position worsened his diabetic problem, a reasonable accommodation would be to promote him back to his team leader position. This is a novel approach, if I’ve ever heard one! The court, wisely, stated: “Even if, as Lors contends, he could better control his diabetes as a team leader, we have previously explained that the ADA is not an affirmative action statute.” The company was not required to employ him as a team leader simply because this would allow him to maintain better control of his diabetes.

Surveys are a great way to start a dialogue with employees. When creating your survey, consider asking these questions:

1. Why are we taking the survey in the first place? Have a specific goal in mind. Is it to get ideas? Improve the employee experience? Improve customer service? What?
2. Who will take the survey? All employees? A representative group? Begin by having a handful of employees take the final draft of the survey and then give you feedback on the questions. After making adjustments, these people can become spokespersons for the completed version.
3. What type of survey will you construct? Will it be anonymous? (We’re usually against this approach.) Will it be numerically based (1 = poor, 5 = excellent)? Or will it be open-ended?
4. What will you do with the results? Make sure employees know that, although you can’t act on each and every suggestion, you’ll consider and rank all input and provide feedback on which initiatives you will follow.
5. Who’s involved in solutions? Will you form separate committees? Will it be a top-down effort? Will you hire consultants?
6. How will you test, obtain feedback, and improve? What have you learned from this experience and what can you do better or differently next time? After these insights or strategies have been implemented, what will you ask about in your next survey?

A recent article in HR Magazine on the forensic investigation of a data thief identified a checklist of information sources that employers should consider when engaging in any type of investigation:

1. The employee’s computer, cell phones, and other company-provided devices
2. Parking garage access records
3. Building surveillance footage
4. Office access logs
5. Office telephone logs
6. Cellular telephone bills
7. E-mails
8. SIM and memory cards
9. Any documents or witnesses

Each of these data sources can provide important, confidential, and trade secret records to an unscrupulous competitor or employee. The SHRM article offers sound advice: When your data has been breached, get professional assistance and involve a forensic investigator.

I was listening recently to an interesting Nova Science Now podcast which noted that scientists can’t account for the vast majority of the matter and energy in our universe. For lack of a better term, we call this unknown “dark matter”� or “dark energy.” I began asking: “How much dark matter or energy exists in our businesses, especially when it comes to managing the workforce?”� We’re certainly aware of “what’s there,”� but what effort have we made to tap into the unknown or unrecognized. As Einstein so eloquently reminded us, matter is a subset of energy. In fact, pretty much everything is. So, where’s the hidden, untapped, and potentially lucrative energy that exists in your business? How would we even find out?

These thoughts come to mind:

1. Start with something as basic as an employee survey. Have you done one lately? By asking questions, we can begin to get information. Unfortunately, many companies don’t take this first step because they’re either worried about this being a waste of time and money, or they might get answers that they don’t really want to deal with. Neither objection makes sense. If you’e not willing to survey all of your employees, then survey a representative group and see if the time and money was worth the insight gathered. Draw from the surveys found on HR That Works and see the article below.
2. Create mandatory suggestion systems. The Total Quality Management process requires feedback loops. For example, Dr. Deming encouraged managers to engage in kaizen, otherwise known as total quality circles; or as I might say, a good suggestion system. This was mandated on a regular basis. Encouraging engineers and others to think about how they could do their jobs more effectively led to continual improvement in quality.
3. Have deep one-on-one discussions. Managers and leaders often shy away from real dialogue. For example, how many managers do you know who will ask employees how they can manage better? Spending only five minutes with an employee can reveal a great deal of hidden information.
4. Bring in an outsider; outsiders can see things about your company that you can’t see for yourself. This holds true whether the outsider is a consultant, new employee, client, customer, or vendor. Ask them to tell you what they see about your company that you might not be able to see for yourself.