July 2013

In our hypercompetitive and stressed work environment, there’s no substitute for employees understanding how they bring value to your business. Smart companies will help identify the benchmarks supporting any one of these value propositions..

How would you design a compensation package for a self-directed work team in an office setting?

My thoughts:

1. Understand what you would have to pay to hire these folks today. The market determines their going rate, not you.
2. Pay up to 15% above market grade in total compensation to attract top 10% employees. I find that paying more returns little value.
3. Reward what you want to incentivize…team play. Offer a bonus of 10% to 15% based on the team’s productivity. Let them own the benchmarks where possible. Publish progress reports where everyone can see it.
4. When employees or the entire team go the extra mile, give them “spot rewards:” tickets, cash, an afternoon off, etc. Surprise them and you will motivate them.
5. Give rewards for new ideas generated at monthly suggestion meetings.

Do this, and you’ll be far ahead of most. I don’t like making things complicated –the above suggestions are about as simple and straightforward as possible.

Is there anything you would add to this list? Please e-mail your answer to don@hrthatworks.com

Sanchez v. Swissport, Ms. Anna Sanchez was employed by Swissport from August 2007 until July 14, 2009 as a cleaning agent. Around February 27, 2009 she was diagnosed with a high-risk pregnancy that would require bed rest. To help, Swissport provided her 19 weeks of leave, consisting of accrued vacation time, in addition to the time allowed by the California Family Rights Act (FMLA equivalent) and the California Pregnancy Disability Leave Law (which offers four months of leave). Essentially, Sanchez told the company that she would be able to come back to work after delivering her baby on October 19. Instead, the company terminated her on July 14, claiming that it had exhausted all its legal obligations.

The question in the case is whether The Fair Employment and Housing Act (the ADA equivalent) applies even after the plaintiff had exhausted all of her leave and – big surprise – the answer is yes. Essentially, Swissport had to show that keeping her job open for another 12 weeks or so would have been an undue burden. Unfortunately, because the company never entered into an accommodation dialogue with Sanchez, the case was allowed to continue to trial.

The lesson for employers is clear: No matter the state you are in, you must continue the accommodation dialogue. If an extended absence would pose an undue burden, you had better be able to prove this – guessing will only get you in trouble.

In Gonzales v. Downtown LA Motors, a California appeals court ruled that the employer’s method of compensation violated minimum wage law because state law prohibits an employer from paying employees for all hours worked by averaging total compensation over total hours worked in any period. The court ordered the auto dealer to pay minimum wage for the waiting time of repair mechanics.

Most auto repair facilities pay mechanics a flat rate for a repair job based on its “book value.” This piecework approach satisfies minimum wage obligations if the total compensation paid over the pay period averages at least minimum wage both for repair and waiting time. However, the California statute differs from federal law because it requires paying minimum wage for “each and every separate hour worked.”

The court noted that this requirement is distinct from the federal statute, which “requires payment of minimum wage to employees who in any workweek are engaged in commerce.”

You can imagine the potential exposure to similar claims for auto repair facilities in California. For example, in this case, the trial court indicated that the plaintiffs lost $553,653 in uncompensated time – and that the value of the waiting time, including interest was $1,555,078. The ruling also awarded penalties of $237,840 for the willful failure to pay all wages owed at the time the employees were terminated.

The Gonzalez case included amici curie briefs filed by the California Employment Lawyers Association, the National Automobile Dealers Association, the California Automotive Business Coalition, the California New Car Dealers Association, and the Alliance of Automobile Manufacturers. This decision will remain the law unless the California Supreme Court overturns it (which is unlikely), or the state legislature changes the existing rule. Either way, it represents an enormous windfall for auto repair workers in the state and their attorneys.

Here’s the answer to this question by more than 200 companies in the 2013 HR That Works Member Survey.

This is one of my favorite questions because helps clarify what is really most important to companies about HR. (Unlike a competitive program, which claims that the No. 1 job of HR is preventing lawsuits!) Interestingly, retention squeaked back into second place for the first time since 2008, which means that the economy is improving and employers are concerned about turnover as jobs begin to open up. As in past years, employers are highly concerned about training. HR That Works has more than 130 training titles, as well as a Learning Management System (LMS).

Of course, employers remain concerned about getting poor performers off the bus and dealing with the Affordable Care Act. Again, HR That Works offers tools, webinars, etc. and other programs to help with these concerns.

P.S. Although legal exposures tend to get all the press, preventing lawsuits came within All Other Responses. This is just one reason why HR That Works is unique – we encourage practices that help grow companies, not just protect them!

Many an employer has engaged in litigation with current or former salespeople who claimed that they were not paid commissions earned. Some states, such as California, require companies to put commission agreements in writing, which is a good idea, whether or not it’s mandatory. Here are provisions that should be found in most all commission agreements.

1. The date of earning commissions. Is it the time the sale was made, the money was collected, etc.?
2. The date of paying commissions. This is usually the next available pay period.
3. The management of draws against commissions. How long does the draw last? What if commissions never exceed the draw?
4. Dealing with commissions when employment is terminated.
5. The treatment of commission reductions when a customer fails to pay or returns an item.
6. The commission split if the sale involves more than one person.
7. The level of profitability required for a sale to earn a commission.
8. The period of commission payments if the sale involve ongoing payments (i.e. a service contract) For example, a salesperson might receive commissions for six months, after which the item becomes a house account).

HR That Works has an extensive Employment Agreement which includes commission provisions.

This case reminds me of the Bronx neighborhood where I grew up, except that it happened in upstate New York. The employer was a door-to-door transport company for the elderly and disabled. Apparently the Italian-American managers and workers gave their Black and Puerto Rican workers a hard time. The question in the case was whether their conduct, as boorish and bullying as it was, constituted racial harassment.

The court decided that there was enough evidence of racial hostility to take the case to trial. Rivera v. Rochester Genessee Regional Transportation Authority.

Comment: One has to believe that management had a good idea that this conduct was going on and chose to look the other way. It could be Christians abusing Muslims, men harassing women, or straights hassling gays. The point: Whenever you have a mix of cultures, races, genders, or sexual orientations in the workplace you have the potential for poor conduct. Smart employers will recognize this challenge and meet it head on by banning abusive behavior. I encourage HR That Works Members to review the Diversity and Discrimination Training Module and related materials.

The jury is still out on whether wellness programs generate a significant return on investment. The fact is that getting people to change their behavior is difficult – which reminds me of an old joke I’ve changed for these circumstances:

Question: How many wellness coaches does it take to change a light bulb?

Answer: Only one, but the light bulb really has to want to change!

Those who promote wellness programs claim that they’re the be-all and the end-all of health care problems. This is clearly an overstatement: there has been little evidence of these programs dramatically reducing the costs of health care (See the Rand Report). Of course, there are other reasons for businesses to encourage wellness programs for their workers – reduced absenteeism or “presenteeism”, higher productivity, less use of sick pay, etc.

In light of a 2012 study of client outcomes by Wellness Coaches of USA, which paints a much rosier picture than does the Rand report, health care cost expert Wendy Lynch recommends that businesses ask these questions in evaluating the effectiveness of wellness programs:

1. How much money did the program spend on people who didn’t change?
2. How many people gained weight or increased their health risk?
3. To what extent were any improvements in health sustained?
4. What was the control group or company used to compare results? Would the impact have been any different without the program?
5. Which risk factors changed (i.e. did employees have more servings of vegetables?)
6. What was the cost per risk change?

As Wendy reminds us, every dollar spent on benefits (and wellness programs) comes from the employees’ pocket – which means that you’re substituting these programs for better wages, training, bonuses, or new equipment/technology. Ask yourself if investing in these areas will be more cost-effective in helping employees do their jobs than offering them wellness programs.

Although I’m a great believer in wellness, I believe that people are primarily self-motivated. I live a healthy life because I am personally motivated to do so – but most people don’t have the same motivation. As Wendy Lynch will tell you, factors such as management of sick leave, compensation plans, and return-to-work programs play a far greater role than wellness programs in curbing employer health care costs.

Wendy also noted that the Wellness Coaches study compares 2012 client outcomes to those of 2009. We all remember 2009 as one of the most stressful years in recent memory, which had a significant effect on the health, exercise level, and general disposition of employees. It’s like saying that a company made more money in 2012 than in 2009, while ignoring the impact of the recession. ” Sometimes variables completely outside of your control have a greater impact than those you can manage.

Join us on August 1st at 2PM EST for a webinar Winning the Race to Optimal Performance: Best Practices in Policy Alignment & Transparency. Register here: https://www1.gotomeeting.com/register/182719104.

According to the California Department of Industrial Relations, Division of Workers Compensation, employers can and should try to prevent these unwanted exposures. Here’s what they recommend… which just so happens to be good management practices, period:

For victims of traumatic, violent or frightening events, critical incident debriefings and trainings are appropriate as soon as possible after the incident. Post-trauma support groups and individual counseling might also be helpful.

Employers can reduce stress from changes in the workplace by ensuring effective communication with employees by:

• Using newsletters, staff meetings, and individual contact between managers and workers.
• Establishing internal complaint procedures and informal dispute resolution systems as outlets for employees to have their concerns heard and addressed.
• Soliciting formal and informal input from employees about ways to make the work environment more productive and less stressful.

Managers can also improve the management of job-related injury cases so that physical injuries don’t lead to psychiatric stress injuries. The same principle applies to dealing with employees who have pre-existing mental problems or stress issues that might be subject to complications in the workplace.

In addition to considering modified duty adjustments and rehabilitation needs for injured workers, supervisors can help resolve problems or personal issues that don’t relate directly to the injury, but can impact employees’ readiness to return to work.

Firms should implement confidential employee assistance programs that acknowledge the interrelationship between personal and work problems and encourage stressed employees to seek help.

Be sure to provide managers and supervisors with training on the basics of effective supervision. Here are some helpful tips:

• Set realistic goals for workers.
• Make sure that workers have the resources and authority to meet assigned responsibilities.
• Give individuals an opportunity to offer input on actions that affect their jobs.
• Monitor and document worker performance.
• Let workers know how they’re doing and what are the expectations for improvement.
• Reinforce and reward good job performance.
• Learn how to cooperate with resolution efforts.
• Maintain confidentiality.
• Learn constructive confrontation with troubled employees.
• Identify behavior patterns that might indicate problems requiring professional assistance.
• Make effective referrals to employee assistance programs.
• Comply with legal restrictions against any form of sexual harassment or discrimination.

Sounds like common sense to me.