California Employers Beware

Recent news on the central coast involved a well known business owner who is facing over $100,000 in wage violations and penalties. Over the past year, there have been other publicized cases against businesses for substantial claims. Do you think this would never be you? Thing again!

With more than 20 years doing HR management for businesses, I know there are many more that are exposed to these kinds of claims. We routinely find businesses who did not understand or, worse, ignored overtime, meal period, travel time, prevailing wage requirements, and other wage & hour or employment regulations. Those liabilities can mount very rapidly, and with penalties of up to 30 days wages for each employee (that's days, not just a months' salary), you can be upside down very quickly.

It would be a mistake to think that California's budget crisis means it's easier to evade this liability. The economic recession leads laid off employees to look for income sources and you could be who they pursue.

In addition, we can expect heightened enforcement by OSHA and the EEOC. OSHA's 2010 budget funded 100 new OSHA inspectors, with the 2011 budget anticipated to hire another 25 and move 35 from compliance assistance to enforcement. The DOL's wage & hour division is seeking funding for 90 new investigators, and the EEOC also seeking increases to fund enforcement. While these are federal agencies, they influence enforcement at the state level.

Like most things in business an ounce of prevention is worth a pound of cure and that is certainly true here. Audit your processes and make sure that you resolve any violations before the examiner knocks on your door, not after. Wage and hour rules in California are complex and nuanced with many conflicting rules so make sure that you use a highly skilled person for this review. It is much cheaper to find and fix than it is to learn the rules from an employment agency examiner. Saving a few pennies here can be like borrowing money from the IRS, nice concept but a bad business practice - think interest and penalties.

Healthcare Passed - Now What?

For the last year the healthcare bill has been working its way through the law making process. Regardless of your political position on this law, it is a law and as businesses we now need to figure out what to do with this reality. So what's next?

Gather the Troops
The first step that should be going on right now is the assembly of your team to guide your business through the changes that will need to be designed and implemented as the law takes effect. Within this team as a minimum you want representation from Executive Management, Finance, Human Resources, and your Insurance/Benefits Broker or Agent. You probably also want representation of every substantial employee group within the business. It is going to be important that this core group can communicate across the entire company. People are going to be nervous that the changes are going to hurt them or that their issues will not be considered, so open communication is going to be key during this time.

Assess when and how the changes will impact the business
The law passed is nothing if not complex and nuanced, so one of the first tasks is going to be to map out when the changes will impact your business. Working back from those dates you should be able to identify the tasks that need to be completed and key deadlines. Like any time period with lots of change, there are many tradeoffs that will have to be made to rebuild the employee benefit package. Early evaluation of the bill shows that how it impacts business will depend on the size of the business, wage levels of the employee groups, ages of the workforce, and many other variables. This bill has both carrots and sticks so careful review is critical.


Start the Communication Process and do not stop!
If the last year has taught us nothing else, it has taught us that the media is biased with both the right and left putting very different spins on what the provisions actually mean. There is very little doubt that this process will continue and employees will be coming to work with many inaccurate factoids that will strain the communications. A well thought out system will allow you to navigate this sea of questions without impacting your productivity.

Not All Change Is Bad
Change always seems to get people excited and it is often negative in nature even if the change is positive. Again, it all comes back to communications and here is where you need to lean on your HR professionals to keep the channels to all areas to the company open and flowing with how change really impacts your business. This bill is not going to impact everyone the same, and a well developed plan can make sure that your business is one of the winners in this process.

What do we know now that may impact you first? Here's a summary of business-related changes that will become effective for plan years renewing 6 months after enactment:

• Small Business Subsidy Phase I: Tax credit of up to 35% of employer's contribution toward the employee's premium if employer contributes at least 50% of the total premium or 50% of a benchmark premium. Full credit to employers with 10 or fewer employees and annual wages of less than $25,000.
• Pre-existing Condition Exclusions: On dependent children under age 19 will be prohibited.
• Policy Rescissions: Rescissions or cancellations will be prohibited unless fraud or misrepresentation by the insured.
• Dependent Coverage: Up to age 26, coverage is mandated (note that there are varying opinions so far on who will qualify as a dependent.)
• Lifetime/Annual Maximums: Health plans will not be able to impose lifetime caps on the value of benefits; restricted annual caps will be permitted until 2014.
• Appeals: Plans must develop effective appeal processes and continue coverage during appeals
• Temporary National Health Risk Pool: Effective 90 days after enactment, guarantee issue for individuals who have been uninsured for 6 months due to health status or a pre-existing condition.
• This summary is based on today's knowledge, and subject to change as more information and assessment of the massive bill is available.

In conclusion, the healthcare bill will be rolling out in phases from now until 2018 resulting in a need to constantly tweak your benefit investment decisions. We are going through this with a number of clients and we expect that will continue to increase. If you are a California Employer that needs more discussion in this area give us a call and let's talk.

Employee Health Insurance Programs

Anthem/Blue Cross recently announced a 39% rate increase on individual policies, which they put on hold after the significant negative firestorm they created. Blue Shield has imposed increases on HSA plans of 20-67% in the last year. Mid-size and large group plans are faring better; however, "better" is somewhat relative when it's still in the 13-15% range year after year. Maintaining a health insurance plan for your employees is becoming more challenging every year.

I have spent a large part of the past 20 years managing the benefit plans for YPP and it's become more difficult each year to find that balance between affordable rates and quality of coverage. No one wants to provide a plan that employees don't believe gives them adequate insurance benefits, but doing so has become much more difficult.

YPP's HR Managers have spent a lot of time in recent years helping clients evaluate their benefit offerings and identify ways to manage costs. This assessment is different for each business, since it can include any of the following:

• What is the goal of providing benefits? Retention is normally the answer, but has it really helped retention and do other companies you compete for candidates with offer them?
  
  
  
• What classes of employees should you identify and provide benefits for? If you establish these correctly, you do not have to provide the same level of benefits for each class.
  
  
  
• What contribution level should you provide, balancing the need to meet the carriers' contribution and participation requirements with premium costs.
  

In this challenging economic environment with all signs pointing to staggering benefits cost increases your HR staff needs to take a proactive approach. It isn't good enough to just passively shrug off the annual cost increase. Challenge your HR staff to give you a complete picture of the competitive landscape and the internal organizational dynamics driving your benefit structure. Some well spent HR creativity can minimize your benefits cash outlay and maximize your return.

Lone Eagles Soaring in the Clouds

"Lone eagles, soaring in the clouds, fly with silent, peaceful poise, While turkeys, in their earth-bound crowds, fill the atmosphere with noise."

Those words of scholar William Arthur Ward succinctly capture the different characteristics of two kinds of birds. But Ward is talking about more than just birds. He is telling us that we should admire and emulate the eagle, and that too many of us fit in too well among the "earth-bound crowds."

Nothing against turkeys, but Ward has a point. Yes, turkeys are the icons of a well-set Holiday table, but consider what that means: They get eaten, especially this time of year. So why not soar with the eagles? That's a good goal for both individuals and organizations, and it fits well with recognizing incompetence on the managerial team and doing something about it.

If you know you have some work to do with your Managers, here are some ideas for proceeding:

• Before you make your next managerial hire or promotion, make sure the person you are considering for a position of responsibility is management material. Some people can grow into the role, and some cannot. Scientific assessments such as ProfileXT and Profiles Performance Indicator provide insight that helps improve selection and team performance. Our clients have used one or both tools successfully, depending on their needs. Either way, these assessments work. They offer more validity than just guessing or following your instincts.

• If you already know you have managers who are not performing to your standards, take action sooner rather than later. Planning a course of action is good, but only if you execute the plan in a timely manner. If the person in charge of execution puts off corrective action week after week because he or the plan "is not ready," you have just discovered another ineffective leader in your organization. Leading often means going outside one's comfort zone to do what needs doing, and some managers need training to do this. Demonstrate to subordinates what action looks like. Show them that taking action is essential. Letting a poorly performing manager squeak by for an extended period can damage your organization.

• If you determine a manager cannot fit the role of leading others, you owe it to him or her, and to yourself, to find out how he can best serve. Look at what he was doing before management. What aspects of his previous performance prompted his promotion? Was he a strong salesman? An expert technician? Superb at customer service? If he showed strength in a prior position, your next step is to move him to the place he performs best with the message that you want both him and the company to succeed. If this employee adds value to the organization, you do not want to imply that he failed. Some people are just not management material, and chances are that your worker knows that as well as you do.

• Use your high performers as models for both current and future employees. Smart recruiters use PXT on the front end to make sure they are hiring people that look like the organization's top-performers. Creative workplaces find methods of spreading high performance around. Leaders put their high performers in teams to train others. They give them the responsibility of an important project and let them detail to the rest of the organization how they executed it. Show off anyone who does the job the right way. Remember: Praise in public, correct in private. Get to the point where you praise more than correct, and your job will be more enjoyable and certainly easier.

These ideas will put your organization on the flight path of soaring eagles. May their numbers increase.

Article written by: Profiles International, published with permission.

HR Recession Lessons

2009 will go down as a year to remember but for many businesses the memories may be painful ones. As we move from depths of the recession into the glimmer of a recovery we have an opportunity to reflect on valuable HR lessons learned and use those lessons to become more resilient, to survive and thrive despite the inevitable ups and downs of a complex global economy.

The most recent economic downturn is still too fresh for us to have the full benefit of 20/20 hindsight but this is the perfect moment to start to analyze what worked, what got us into trouble and how we can more effectively manage, train and deploy our human capital resources.

Some companies gain market share during a recession and even during the Great Depression Kellog, Proctor & Gamble and Chevrolet all managed to grow. Google and Amazon showed it could happen during the 2000-2001 recession and continue to be resilient and successful even in the current troubled economy. These large companies are not alone. Many small and midsize businesses also have demonstrated a winning business strategy can work even in the midst of a raging economic storm and a major key to success is a focused, efficient and engaged workforce

So what are some of the "first glance" HR lessons from the current recession?

• Head in the sand is not a winning strategy. Employees have powerful antennae that tell them when there is trouble in the company so don't let the elephant in the room go unacknowledged.


• Rumors and fear are costly distractions and will eat time and resources if not addressed. The truth is seldom as awful as the collective imaginations of your employees who hear doom and gloom on the nightly news and project it into the workplace.


• Cutting your payroll too deeply can leave you without the talent necessary to respond to changing market conditions. If cuts are inevitable make them as strategically as possible because talent is expensive to acquire and train.


• Outsourcing can maintain the key HR functions while controlling costs and minimizing risks. HR related complaints and lawsuits rise in seemingly direct correlation to worsening economic conditions.


• Even in a tight job market talented employees have other options. If you cannot offer raises or other incentives to your superstars get creative about what you can offer. Your human capital investment may be your most valuable business asset when times are tough.


• Focus on the positive and encourage innovation. Everyone wants to be part of a winning team and your talent in the trenches may have the fresh ideas or vision your company needs to succeed in challenging economic times.


• The job market will improve sooner or later and employees will remember how they were treated during the difficult times. In many companies cutbacks were so extreme that the survivors are exhausted and unhappy. If your employees have been pushed to the breaking point and are poised to bolt at the first opportunity now is the time to begin rebuilding relationships.


• Employees will want to be rewarded for their efforts as the economy gets better. Employers should plan to evaluate compensation and benefits as the economy improves in order to remain competitive when the job market opens up again but not at the expense of rebuilding capital reserves.


• HR expertise is invaluable when addressing a complex and challenging employment landscape and bringing HR into the strategic process early can help avoid costly mistakes.
  
  HR will play a vital role in the transition from recession to recovery, especially in companies where the economic crisis has been severe and survival mode has meant putting out HR fires but left little time or attention to strategic HR. A good look back gives us an opportunity to assess and reevaluate as we formulate new strategies that incorporate the lessons learned.
  
  
  

Business Pandemic Planning

Imagine tomorrow morning you discover that 40% of your staff is out sick and the missing people are in clusters wiping out entire critical functions within your business for the NEXT 10 DAYS! How would you make sure that your business survives this very real situation? What would you do and who would you do it with? A well written policy can help your business survive.

In drafting that policy, it's important to keep in mind guidance just issued by the EEOC. That's right - as you develop your policy you have to keep in mind the ADA and other employment regulations.

The Society for Human Resource Management offers a number of practical tips to keep your business on track during this swine flu pandemic:

• Don't discriminate against people who might have H1N1 flu or have been exposed to the virus.
• Know your company's leave policies so that you can explain them to your employees. Apply them consistently to all of your employees.
• Identify critical functions and the skills needed to complete them.
• Inventory your employees' skills. Who has the skills to complete critical functions?
• Cross-train workers so more employees can complete more critical functions.
• Identify which workers can serve as substitutes for others.
• Keep an eye on absentee rates. If they appear to be rising, get ready to move your employees into their cross-trained roles. If any of those roles require certification or other preparation, make sure the cross-trained employees are up-to-date before moving into their new roles.
• Consider virtual meetings instead of face-to-face gatherings. Try to limit contact among employees to halt the spread of the virus.
• If possible, allow employees to work staggered shifts to reduce the number of people in the workplace. Allowing workers to commute outside of rush hour can also help reduce contact with potentially ill people on mass transit.
• Find out if you are authorized to make decisions about activating emergency plans.

If you have questions about your planning strategy and compliance YPP's HR professionals are available to assist.

The Holiday Office Party

Last year we joked about the grumpy HR Grinch, ready to shut down your rollicking good time this holiday season. You know, the anything goes office party where your employees leave their inhibitions at the door. The celebratory occasion that provides months of post party gossip.

This year, more employers are evaluating whether to even have that party and associated expense. We recommend that you reinvent the office party concept and try something new like a lunch event, group outing to an amusement park or volunteer activity with a local charity.

And the formal party isn't always what employees enjoy the most. At YPP, the CEO's have cooked lunch for our employees for the last several years, and that's been just as much fun as when we did more elaborate evening parties -and far less risky since we don't serve alcohol. We also treat everyone to the holiday show at our local theater, PCPA.

However you choose to celebrate the holidays with your employees this year, we want you to have a bright and "HR Safe" holiday season. We have a few tips to help our employers avoid the biggest holiday party danger zones, alcohol and sexual harassment.

The following tips were prepared by the U.S. Department of Labor, Working Partners for an Alcohol and Drug Free Workplace in an attempt to assist employers in minimizing negative consequences of alcohol consumption at their holiday parties.

Be honest with employees. Make sure your employees know your workplace substance abuse policy and that the policy addresses the use of alcoholic beverages in any work-related situation and office social function.

Post the policy. Use every communication vehicle to make sure your employees know the policy. Prior to an office party, use break room bulletin boards, office e-mail and paycheck envelopes to communicate your policy and concerns.

Make sure employees know when to say when. If you do serve alcohol at an office event, make sure all employees know that they are welcome to attend and have a good time, but they are expected to act responsibly.

Make it the office party of choice. Make sure there are plenty of non-alcoholic beverages available.

Eat...and be merry! Avoid serving lots of salty, greasy or sweet foods which tend to make people thirsty. Serve foods rich in starch and protein which stay in the stomach longer and slow down the absorption of alcohol in the bloodstream.

Designate party managers. Remind managers that even at the office party, they may need to implement the company's alcohol and substance abuse policy.

Arrange alternative transportation. Anticipate the need for alternative transportation for all party goers and make special transportation arrangements in advance of the party. Encourage all employees to make use of the alternative transportation if they consume any alcohol.

Serve none for the road. Stop serving alcohol before the party officially ends. Employers are encouraged to review their company policies regarding alcohol consumption and furthermore, to enforce their policies at all company celebrations.

Sexual Harassment
With or without too much alcohol a holiday party can become the opportunity for sexual harassment claims. As a California employer you must know that State law forbids sexual harassment under FEHA and Government Code section 12940.
The California Fair Employment and Housing Commission (FEHC) enforces FEHA law and has found sexual harassment to include:

Verbal harassment, such as epithets, derogatory comments, or slurs;

Physical harassment, such as assault or physical interference with movement or work; and

Visual harassment, such as derogatory cartoons, drawings, or posters.
As an employer what can you do to help minimize the risk? The following tips can help you avoid holiday party harassment liability:

Remind employees beforehand that their liability for sexual harassment applies at all times, including during the party.

Make sure your supervisors' sexual harassment training is up to date, and you may want to redistribute the company's sexual harassment and substance abuse policies to everyone a week or so before the party.

If you know or suspect someone in your organization is putting you at risk for a sexual harassment claim take steps now to address it now, don't wait until it is too late.

YPP HR Managers can help you in planning an "HR Safe" holiday celebration. We want you to enjoy the season knowing you have done everything possible to avoid a post holiday legal hangover.