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Monthly Archives

June 2011


By Risk Management Bulletin | No Comments

The disastrous Japanese earthquake/tsunami of March 11 drowned thousands of people – but the toll would have been far higher without the nation’s comprehensive emergency notification system. Thanks to radio broadcasts, text messages, sirens, firefighters’ door-to-door calls, and just plain instinct honed by years of disaster drills at school, people from towns and villages along the coast saved themselves by fleeing immediately to higher ground.

Every business needs an effective emergency communications notification system. This analysis should provide a good start on evaluating and selecting the most appropriate system.

Low-tech emergency notification systems, such as alarms, sirens, intercom systems, telephone calling trees, etc. all have serious limitations. Although calling trees are valuable for mass communications, they’re slow, subject to message error, and even complete breakdown from “missing links” or the failure of general voice communication systems. Alarms and sirens (used to communicate a facility evacuation or an emergency lockdown) are fast and can alert everyone who’s in a dangerous area; however, they’re poor in providing detailed information and ineffective outside of their audible range. Intercom systems are reasonably fast and can communicate detailed information, but are generally limited when providing information to people in multiple buildings. Nearly all low-tech systems send outbound messages, with a limited or non-existent ability to receive inbound calls (“two-way communications”).

High-tech emergency notification systems provide automated mass notification of detailed messages rapidly and accurately to a wide range of communication devices, including phones (landline, cell, and satellite), computers (e-mail and instant messaging), PDAs, Blackberries, and others. These systems combine speed, coverage, and detail far more effectively than low-tech systems. During emergency events, individual communication infrastructures often fail. The ability of high-tech systems to use multiple communication infrastructures offers another important advantage over their low-tech counterparts. High-tech systems can also target special messages to individual groups, such as first responders only. Some of them can receive inbound calls – a vital feature to confirm that key initial responders have received the message.

However, high-tech emergency notification systems do not offer a panacea. For one thing, cell phones (the most common method of notification) might be turned off. Although communication with cell phones is available by voice mail or text messaging, the system is vulnerable to a breakdown of the general voice communication infrastructure. Particularly for larger businesses, the “call capacity” – essentially the overall speed of the system – might be a serious limitation. To be effective, a system must communicate emergency information. Some of the more basic systems utilize only voice communications. Other important factors include ease-of-use and system cost

Although there’s no such thing as a perfect system, the best system should blend high-tech and low-tech systems. A good high-tech system, combined with adequate alarms and sirens appears to provide effective communications for all types of emergency events.


By Your Employee Matters | No Comments

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.


By Your Employee Matters | No Comments

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.


By Your Employee Matters | No Comments

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.).


By Your Employee Matters | No Comments

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.


By Your Employee Matters | No Comments

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.


By Your Employee Matters | No Comments

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

  • 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.


By Life and Health | No Comments

Life insurance is one of the best sources of financial security for loved ones left behind after a death. One of the most important details of any Life insurance policy is naming the beneficiary/beneficiaries for the policy. The beneficiary is the person(s) you wish to receive the proceeds from the policy upon your death. Believe it or not, there are some people that purchase their Life insurance policy and neglect to select a beneficiary or never revisit the policy as life changes.

You can save your loved ones a lot of time, money, and trouble by carefully selecting a beneficiary for your Life insurance policy and making sure that information is kept applicable to your present situation. Most people don’t like to have conversations about anything involving death, but a possibly awkward conversation now can save your beneficiary the frustration and time of hunting down the information during what will already be a very difficult time for them.

Here are three things you can do to avoid some of the most common and costly beneficiary mistakes:

1. Do Revisit the Policy. Life is constantly in motion. Sometimes this motion doesn’t affect the relationships a person has, but more often than not it does. If relationship changes have an impact on the beneficiary you’ve selected, then the Life insurance must be updated accordingly. And, we aren’t just talking about obvious deaths, divorces, births, or marriages. For example, if your children were underage when you first obtained your Life insurance policy, then you might have established a guardian or trust. Once the children reach adulthood, it might make better sense to name them directly as beneficiaries. Another example would be if a beneficiary is now elderly or no longer mentally competent. In such cases, it might make better sense to name an alternative beneficiary and make the appropriate provisions in your will to care for the previous beneficiary.

2. Do Be Specific. Being vague in an attempt to avoid a hard decision, conflict, or the need to revisit the policy can result in confusion and legal challenges that can tie up the money or cause the omission of someone you wanted included. You want to be specific when naming a beneficiary. So, use the given name and not generic terms like child, parent, wife, or sibling.

3. Do Be Cautious. Some people name themselves or their estate as the beneficiary. This means that the Life insurance benefit will go directly to their estate. However, naming yourself or your estate can leave the benefit subject to taxation and enable creditors to seize it for unpaid bills. Remember, if you have any questions, concerns, or doubts about your beneficiary designation, then you can always consult your tax advisor or attorney.


By Life and Health | No Comments

It’s nothing that your parents haven’t told you a million times, and if you’re a parent, that you haven’t told your own kids: Eat your veggies. It might sound like a broken record at times, but the simple fact is that you decrease your susceptibility to almost every major disease when you incorporate veggies into your daily diet.

Of course, given that you don’t load them down with dips, butter, and sauces, vegetables are low in both fat and calories. However, one of the most important benefits is from the antioxidant properties of vegetables. Antioxidants are substances that have been found to protect your cells against the damaging and disease-contributing effects of free radicals.

If you think veggies are boring, that you don’t like them, or just don’t know what to do with them, then try these tips:

  • Start gradually – you might set a goal for how many servings of veggies you’ll eat each day. One or two servings per day is a good place to start.
  • One new veggie each week – incorporate a variety of veggies into your diet. Don’t be afraid to branch out. It can be a fun project to discover the best way to cook new veggies. You might even find some unique substitutions to make, such as spaghetti squash for pasta.
  • Liquid veggies – drinking your freshly juiced or stocked veggies is one of the easiest ways to squeeze in your veggies. You can always mix and match fruits and veggies, such as carrot and mango juice, for a little added natural sweetness.
  • Do a green lunch – the greener the leaf, the more antioxidants. Try a kale, mixed lettuces, and spinach lunch salad.
  • Have a rainbow in your plate – colorful red, yellow, orange, and purple veggies fight heart disease.
  • Starchy veggies aren’t the enemy – healthy carbohydrates, such as russet potatoes, sweet potatoes, yams, corn and peas, are healthy inclusions.
  • Bad breath, good health – freshly chopped garlic and onion make great seasonings for your veggies. Plus, they’re full of phytochemicals.
  • Go raw – with the exception of a few veggies, such as cooked carrots, raw veggies that haven’t had their nutrients destroyed with heat, water, and air exposure are the most healthy. Grilling, steaming, stir frying, and even short periods of microwaving are better cooking methods than boiling and baking.
  • Be creative – if you just don’t like the taste of some veggies, you can always sneak them into the foods you do like; veggie pizza or veggie stew, for example.

Like a car, your body needs fuel to keep going. Think of veggies like the premium grade of fuel, and your body will certainly love you for it.


By Life and Health | No Comments

Although some insurance companies have a few company-specific guidelines for underwriting Disability insurance policies, all insurers will use the same key factors in determining your eligibility, rate, and amount and type of coverage. Understanding what an insurer looks at during the underwriting process can help you get the disability coverage you need.

1. Gender and Age. Male applicants usually pay less for their policy than females because males tend to file fewer claims than females. Older applicants typically pay more for their policy than their younger counterparts.

2. Occupation. Since certain occupations present a greater risk of injury or death than others, insurers will examine both your job duties and title as they decide the type and cost of the coverage they offer. Insurers group different occupations into rating classes that are represented by a number or letter. The rating is based on the level of risk the occupations typically hold, the amount and types of claims common to the occupations, and the income level of those employed in the occupations.

3. Lifestyle. Your lifestyle, in particular any activity that you participate in that could increase your probability of suffering a disabling accident, will be questioned. The insurer will directly ask you about your activities, but be careful to be honest since they may also collect information about your lifestyle from credit bureaus, internet databases, and even your family or friends.

4. Income. Your income will be instrumental in determining what type of coverage you’re eligible to receive, the rate, and the monthly benefit amount. The insurer will ask you to provide proof of income, such as a W2 or income tax form. The insurer will put your salary information into a table and decide the amount of monthly benefit you’ll be eligible to receive. The amount is usually between 50% and 70% of your pretax income, with higher percentages accompanying lower incomes and lower percentages accompanying higher incomes. Additionally, your income amount will affect what type of coverage the insurer offers you. Those with higher income levels are usually offered a policy with more comprehensive coverage and a much broader definition of disability.

5. Medical. Insurers not only look at your current state of health, but also at your past health history. The insurer may even look at your familial medical history to see if you have a predisposition for developing costly medical conditions like cancer, diabetes, or heart disease as they determine your eligibility. Again, it’s important to be honest on the questionnaire since you will be asked to undergo either a full physical examination or a paramedical examination by a medical professional.

Once the insurer has collected all the above information, a home office underwriter will review it and either issue you immediate coverage or ask you to submit some additional information to assess if you’re an acceptable risk for them. The insurer will assign you to one of the following risk categories:

  • Substandard/special risk – if you’re assigned into this category, then the insurer has determined that there’s a high probability of you making a future claim. If the insurer extends you coverage, then you’ll be charged higher rates and your policy will have a shorter benefit period, a longer elimination period, and contain an amendment to either exclude certain medical conditions for a set period of time or fully exclude them indefinitely.
  • Standard risk – most disability coverage applicants fall into the standard risk category, meaning they are no less or more likely to file a claim than any other insured individual.
  • Preferred risk – the insurer has determined that you’re less likely to file a claim than other insured individuals. You will pay the least amount for preferred risk coverage.