June 2011

Although more and more establishments are taking advantage of such programs as Groupon and Living Social, many of these firms – and their employees – come to regret the experience. Failure to manage these programs properly can destroy their value. Before you run an online promotion such as Groupon, ask yourself these questions:

• What are the short-term and long-term benefits of this promotion? How does it fit into your overall marketing plan? Are you prepared to lose money on the deal short term to capture a long-term customer?
• How will you staff around the promotion? A few days after the promotion hits, you can expect a mass influx of customers. Bear in mind that business might also peak in the last few days of the promotion as people scramble to cash in their coupons.
• How do you position the promotion to your team? Why should they get on board with it? What’s in it for them? If you’re running a restaurant, how will you prepare employees to deal with more business, and unfamiliar, possibly annoying customers? Will you be helping them with additional staffing and/or paying overtime? Anticipate employees’ potential concerns and resistance before you launch the promotion. Get them involved in ideas that can make it a success.
• What type of training will you provide to make sure the promotion goes according to plan? For example, when a restaurant customer presents a server with a Groupon coupon, will they react with a smile because they see a new customer and the promotion is working, or a frown because they anticipate a poor tip? Train servers to say something like “I’m glad to see that you’ve taken advantage of the Groupon promotion! My name is Amy, and I’m here to give you great service today. Please let me know how I can help. Have you been here before? (The idea is to start getting important information about new customers). Offer customers some type of “cheat sheet” to fill out and then attach to the coupon they hand in. Remember, you want to capture as much data as possible to know if this is truly a first-time customer or just someone taking advantage of the current discount.
• How will you help the customer recognize that the wait staff lives on their tips or salespeople on their commissions? For example, I’ve heard that many Groupon restaurant customers offer lower tips, especially because they base their math on the cost of the coupon. You might want to show a recommended tip on the bill (15% of a normal bill = X. 20% = Y). * So that you’re on top of managing the promotion, plan to get feedback from your staff right away, and be ready to make changes on the fly.
• Know how you’ll end the coupon customer’s experience. At the end of the visit, you might have employees say: “Thanks for visiting us today! You know, if you give us your e-mail address or phone number, we’ll e-mail or text the great specials we offer on a regular basis. If you have a business card, we’ll enter the information into the program or I can give you a card to complete. If you want to discontinue receiving these promotions at any time, just cancel the notifications.” If you’re running a restaurant, put a notice on the menu or bill to the effect that “Many customers love taking advantage of our frequent promotions. If you haven’t signed up for our notifications, please ask your server about this.”

Promotions are great. The right ones can help grow a business quickly – and destroy one quickly, too! Make sure to plan your promotions well and include your entire team in the process.

Workforce planning refers to everything from filling open positions to the inclusion of HR metrics. For our purposes, think in terms of the flow of employees through the company. As with any risk management, begin by assessing the risks involved:

• Access to available talent
• Cost per hire and time for hire
• Retention and turnover
• Productivity and quality
• Layoffs and downsizing
• Retirement and redevelopment
• Compensation structures
• Compliance exposures, including Title VII violations and compensation violations.

For example, if your turnover rate is 15% and the industry rate is 11%, your company might be at greater risk. However, if your higher turnover rate results from strict performance demands, you might end up having the most profitable company in the industry. Be sure to weigh the specific risks in every situation. For example, if a company has to pay overtime because it can’t staff positions quickly enough, it ends up not only paying higher compensation, but burning out the workforce and increasing turnover, thus exacerbating the problem. The company might plan to ameliorate this risk by using a temporary staffing firm to help them with their short-term staffing needs.

Other risks are more difficult to quantify, such as a failure to conduct proper succession planning. Great companies know who’s in the pipeline for all critical positions – sometimes the bench is two or three players deep. Other companies “run bare,” putting themselves at risk if they should lose one of their key employees. One solution: Key Person insurance.

Do you have a plan to manage the workforce planning risks most critical to your organization? HR That Works provides training and strategic tools that can help you deal with many of these risks.

Given the wage and hour litigation that misclassification claims generate, I wonder why companies pay anyone but their top executives on a salary-exempt basis. The so-called “prestige” and extra effort from employees that a company gains by offering the exempt status does not offset the potential loss of time, money, and resources arising from litigation. To minimize unnecessary wage and hour claims, the HR That Works Compliance Audit recommends some of these guidelines.

• Audit your exempt status employees. Do they truly fit under a professional, managerial, administrative, computer or other exemption? If you determine that they don’t, see the White Paper: So You Have a Wage Claim Exposure – What Do You Do About It? Consider having attorneys conduct or manage these audits.
• Make sure to have time records recorded and maintained accurately. Perhaps the biggest challenge in the area involves employees having time for rest and meal periods deducted automatically when, in fact, they didn’t take those breaks at the specified time. Teleworkers, remote workers, and portal-to-portal issues come up in many suits. Many smaller companies don’t have time clock mechanisms and rely on either manual entries or word of mouth. If such a company faces an audit, they’d find it hard to disprove an employee’s allegation of overtime. Make sure your managers and employees receive proper training on time-keeping protocols.
• Have employees certify that their time records are accurate. This newsletter offers a form to help with this.
• Consider using sophisticated methods to tie-in time clocks with time on the computer, at the register, clocking in and out of buildings, and so on.
• Store your personnel, time and wage records for at least four years.
• If you require employees to drive in company vehicles to and from a job site, or to transport heavy equipment to and from work, make sure that they receive proper pay for this time.
• Provide adequate rest periods, including at least 30 minutes for lunch.
• Be sure that salaried, non-exempt employees receive overtime pay, even without authorization.
• Provide supervisors with overtime authorization forms (including the client or work project, work to be done and expected amount of overtime), which they must sign before an employee works overtime.
• Make sure that your sales compensation program clearly defines when employees “earn” commissions, and what happens to uncollected commissions after the employee leaves the job.
• Provide a cap on accruals in your PTO and vacation policies.
• Comply with labor enforcement standards for the employment of minors (obtain work permits, etc.).

A recent article in Corporate Counsel Magazine discussed the reality that “employees are suing like never before.” For example, “skycaps, bank loan officers, bartenders, phone company engineers, financial research associates, exotic dancers, drug store assistant managers, computer technicians, janitors, paramedics, delivery truck drivers, exterminators, waiters, cable TV repair workers, and chicken processors all sued their employers over pay issues in 2010.” Defense counsel claims that the employment law arena is like “the new slip and fall cases for plaintiffs’ attorneys.” Of course, the recession, layoffs, high unemployment, and an administration that encourages victimization have a lot to do with it.

Companies today face constant challenges from new regulatory requirements. Under the Obama Administration we’ve had updates to the FMLA and ADA, an expansion of the NLRB and EEOC agenda, more wage and hour and discrimination claims filed than ever, and a continuing class-action frenzy. Not surprisingly, many of these cases lack merit. Just as plaintiffs’ counsel will file large class action claims, knowing that they will probably force a company to settle rather than litigate, many individual claims also lack merit. The EEOC settles approximately 80% of claims without any finding of discrimination.

Wage and hour class action claims remain the biggest concern for large companies, Most of the companies of the size that use HR That Works (with an average of 15 to 500 employees) are too small to create a class large enough for most plaintiffs’ lawyers. However, companies remain subject to individual wage and hour claims, as well as allegations of discrimination.

Finally, there’s a widespread fear of discrimination litigation. According to the EEOC, these cases involved: Race (35.9%), sex (29.1%), disability (25.2%), and age (23.3%). Interestingly, the largest category of claims filed involved retaliation (36.3%), most of them based on Title VII complaints. Other categories of claims involved national origin (11.3%), religion (3.8%), the Equal Pay Act (1%), and GINA (.02%). As far as I can see, there’s no end in sight. We’re only beginning to deal with an activist NLRB. The EEOC wants to extend its reach, especially in background checks and compliance concerns related to government contractors. The commission has been on a hunt after 1099 misclassification cases, and 22 states have introduced legislation to outlaw bullying in the workplace.

The article concludes by noting that the U.S. Supreme Court will be ruling on three large class action cases, including Duke v. Walmart. How the court decides these cases will have a huge impact on large companies and a lesser effect on small to medium-sized firms.

Here’s the lesson in all of this: Although you might be small enough to avoid the notice of the plaintiffs’ employment bar for the moment, the odds will catch up with every employer eventually. Sound risk management requires you to have comprehensive Employment Practices Liability Insurance (EPLI), together with the necessary policies, procedures, and training. Once an employee lodges a complaint, investigate it promptly and thoroughly, usually with the help of counsel.

HR folks have to deal with some unpleasant subjects, and this is certainly one of them. Body odor can present a real workplace challenge. Just ask any space shuttle astronaut or submarine officer. People can have offensive odors for a number of reasons:

• Soiled clothing or shoes
• Lack of bathing
• Bad breath
• Incontinence
• Menstruation
• Liver and other organ problems
• Diet * Bad perfume
• Too much perfume
• Smoking
• A problem with sweating
• Disability

Employers can try to prevent this problem in general by providing effective air circulation systems, odor eaters, employee uniforms, employee flexibility – and, if necessary, a human resource policy.

To deal with body odor, follow these steps:

• First, verify all complaints personally to make sure there’s no teasing, bullying, etc. Then verify the complaint personally.
• If the employee has body odor, have a direct conversation – don’t beat around the bush. Often, employees won’t realize they have a problem until you tell them. Say, “We’ve had complaints from a number of co-workers about offensive body odor and I have had those complaints verified. (If appropriate: I can understand their concern). Are you aware that you have this problem?
• At this point, an employee can deny knowing about the problem (honestly or otherwise) or, they can admit knowing about it. They can say either that they’ll try to take care of the problem or that they don’t care what other people think about it. They might also claim that they’ve tried to do all they can, but they have a physical disability that prevents them from doing any better.
• If an employee does not claim to have a medical problem and won’t do anything to improve their condition, you have the right to terminate them, or perhaps even better, give them unpaid time off to think about whether they want to come back to work a “fresher” person. If they claim there’s a medical basis, you need to have an accommodation discussion (more on that later). Either way, ask the employee to take care of the problem and ask if there’s any way you can help them. This is a matter of common decency, whether required by the ADA or not.
• Watch out for any potential discrimination or national origin claims that the employee might make based on what you say or by what managers or co-workers have said. Go back to these employees and let them know you’re taking care of the problem and that they should not tease or discuss it with the employee.
• Consider holding accommodation discussions. If the employee claims the problem arises from a disability and you’re subject to the ADA (15 or more employees) or FEHA (five or more in California), you’re required to have an accommodation dialogue. Begin by starting a paper trail and have the employee get their physician to identify the nature of their disability, the limitations, and ways to mitigate its effects. Use the forms on HR That Works. Accommodations might include working from home, allowing the employee to obtain the appropriate treatment, moving their working location, or perhaps reassigning them to another job.

Ultimately, if there’s no “reasonable” accommodation because anything you can do would cause an undue burden on the company, you do not have to accommodate that employee. For further accommodation information, check out the HR That Works ADA Training Module. Also, consider looking at the Job Accommodation Network’s Web site at www.askjan.org.

Here’s what HR professionals are told to worry about most:

• FMLA, ADA, EEOC, DOL, OSHA, NLRB, FLSA, OFCCP, GINA, HIPAA, COBRA, Title VII, etc.
• Discipline, termination, layoffs, bullies, violence, EPLI, etc.
• Protecting ourselves from all the above.

Here’s what should concern them most:

• Hiring, orientation, training, performance, teamwork, leadership, time management, systems, strategy, branding, communication, quality, customer service and marketing.
• Creating a constant improvement process in each of these areas because they help to grow the company.

Of course, you can’t ignore compliance concerns as the article below points out. However, the legalistic concerns can overwhelm and distract us to the point that they blind us to what really matters. Here’s my challenge to HR professionals – whether you’re part or full-time; young or old; experienced or inexperienced, and no matter the size of your company. Carve out time to help your company improve in these strategic growth areas. Make yourself relevant to the bottom line. HR That Works offers a variety of excellent tools to help you do exactly that.