January 2011

In a Business Week interview, Vinay Mistry of AON stated that the company’s management team covers more than 370 risks, from nanotechnology through climate change. They have designed and implemented realistic disaster scenarios for the top 20 exposures, from hurricanes to plane crashes and earthquakes.

The emerging risk areas discussed included synthetic biology, digital risk and cybercrime, “space risk,” which is based on the impact the solar cycle has on satellites, as well as the impact of climate change.

What can we learn from this? First, identify the dozens of risk exposures that apply to your company. Work with your insurance broker and legal counsel to make sure you do this the right way. Then focus on the most likely scenarios and have a plan for preventing and dealing with each of them. The risk exposures your company faces are both insurable and non-insurable and include, but are not limited to:

• IT systems and their ability to handle hurricanes, power outages, hacking attempts, etc.
• Employment Practice Liability exposures
• Errors and omissions exposures
• Health and safety exposures
• Work Comp exposures
• Product Liability
• Environmental liabilities
• Rapid loss of clientele
• Poor vendor or supplier relations
• Economic pressures, including diminished markets
• Exposure to competition, including offshore activity
• Financial exposures lacking proper checks and balances
• Lack of available capital
• Cyber-liability and social media exposures
• Turnover and morale problems

This is, of course, a short list that applies to most companies. If you’re an HR That Works member, take comfort in knowing that we can help you with your HR risks!

Have you audited your practices for these common wage and hour exposures?

1. Exempt vs. non-exempt. Have you classified your exempt employees properly or are you risking an overtime exposure?
2. Rest and meal period violations. Is the employee truly relieved from work and are your time-keeping clocks tracking meals accurately?
3. Travel time. Many workers who start from their home and then go to multiple locations fall under “portal-to-portal laws.”
4. 1099 misclassification. As indicated on the blog site, www.1099timebomb.com, this is a significant exposure. The IRS and state agencies are looking to find as many people as they can who are classified as employees.
5. Failure to pay prevailing wage. If you’re working a government or quasi-government project, make sure you’re complying with all wage requirements.

An article in the September/October 2010 Scientific American Mind discussed research that explains why multitasking doesn’t work. When test subjects had to deal with two activities, the brain divided the work between each hemisphere. The study explained this is precisely why people are notoriously poor at doing three or more things at a time. “After two tasks, we run out of hemispheres.”

OSHA conducts an annual evaluation of the 27 approved State Plan States each fiscal year. See how your state stacks up here.

A survey by Men’s Health magazine, asked 20 corporate bosses (including the likes of Mark Cuban, owner of the Dallas Mavericks) to rank which employee time-wasters upset them the most. Number one was “clicking out of a screen just as I walk by” (71.6%). When an employee did this to me, I chose not to confront him because I wanted to trust him. Stooopid! Turns out he was running his own business on my dime and failed to deposit required tax payments, which was part of his job. I should have addressed his actions immediately and placed monitoring software on his computer. Keeping employees honest is even harder when they’re on their iPhone or other smart-phone, rather than your computer. How can you monitor this? In fact, controlling today’s worker is a struggle you can’t and don’t want to “win.” The only alternative is to invite them into the conversation, set reasonable expectations, and create a culture of excellence in which employees police each other. Also, make sure that a third party is double-checking your books!

We’re seeing more teenagers than ever reporting sexual harassment cases. In New York State, a telemarketing company had to pay more than $500,000 in damages and interest to satisfy a claim brought by 13 women, most of whom were teenagers. The managers made numerous sexual jokes and remarks and, on occasion, promised a raise in return for sexual acts.

Because the company was an “affiliate franchise,” the franchisor argued that the affiliate was not part of the company. The Second U.S. Court of Appeals rejected this argument and affirmed the jury verdict, including an award of punitive damages.

Lesson to learn: Have managers and employees trained in sexual harassment issues and make sure they know where and how to complain. You might go one step further and distribute the Employee Compliance Survey.

What’s more, franchisors that traditionally have stayed away from employee relations to avoid “co-employment” liability will have to offer their franchisees HR training. This is both a legal and a competitive issue.

Measuring HR success isn’t easy. You can and should run your HR figures on the HR That Works Cost Calculator, a tool that will probably show the variance in your HR practices to be at least 10% of payroll. So, if you have $1 million in payroll, the variance will be at least $100,000. That’s one way of looking at HR dollars. Another approach is to determine “HR costs per employee.” These costs might include compensation, benefits, recruitment costs, outsourcing costs, as well as office space and equipment. Many companies will look at revenue per employee. Although this is certainly important, it also includes many variables that have nothing to do with HR effectiveness. For example, in a poor economy, revenue per employee will initially go down and then after cost-cutting, layoffs, etc., might well rise past previous levels. Consider what happened during the recent recession. Ultimately, the question remains, what information are you seeking and what will you to do with it? HR That Works members should review the Benchmarking Worksheet to generate some ideas.

In a case brought by the EEOC against the Fairbrook Medical Clinic, the plaintiff, Dr. Deborah Waechter, alleged four years of harassment by the sole owner of the family medical center in Hickory, NC. Apparently, the owner created a hostile work environment by routinely making vulgar and sexually explicit comments, repeatedly showing an X-ray of his torso; discussing his sex life, and telling Dr. Waechter’s patients that they could follow up with her when she “return[ed] from screwing.” There were also stupid comments about her breasts, and other rude behavior.

Interestingly, the company tried to defend itself by claiming that because the doctor was a jerk of a boss to all of his employees he didn’t discriminate against any of them.

However, most courts don’t buy this argument, especially if it involves gender-specific comments. The court held that even though the defendant was the plaintiff’s immediate supervisor and sole owner of the clinic, the HR manager and the office manager should have investigated the alleged misconduct. (In the real world, how can you punish your boss?)

My two cents: It’s important for business owners to understand that no matter the size of their company, they can face discrimination and sexual harassment claims at any time. Protect your business against any possible claim by making sure that you have EPL insurance.

On the other hand, I wonder why this professional woman continued to work in an environment where she was not treated properly for four years. The last time I looked, it was called work, not jail. Did she attempt to send out her resume during this time? Was she afraid that her skill set wasn’t good enough to get a job elsewhere? There’s a responsibility on her part, too.

A man once told me that his boss discriminated racially against him for three years. When I asked if he ever took his resume for a spin, he told me he had not. When I asked why he put up with the discriminatory conduct for as long as he did, he stated that “I didn’t want to leave the company because I loved playing on their softball team.” That’s how ridiculous some of these stories can get.

Click here to read the case.