A series of high-profile employers were quick to terminate or force big-name employees out the door in situations involving clear wrongdoing (Charlie Rose, Matt Lauer, Mark Halperin, Peter Martins etc.). The list is still growing, with the downfall of Las Vegas casino mogul Steve Wynn only the latest example, and seems bigger than some small Midwestern towns.
While many of the cases were fairly black and white, it was inevitable that shades of gray would arise in situations where the power dynamic, and the facts, were a bit less clear-cut. Some recent stories serve to illustrate the point.
Lizza also worked as a political commentator for CNN, which promptly pulled him off the air pending an investigation. Well you may have missed it but following a six-week investigation, CNN reinstated Lizza. In a statement, the cable network said, “Based on the information provided and the findings of the investigation, CNN has found no reason to continue to keep Mr. Lizza off the air.”
Unlike many other superstar sexual harassment claims in recent months in which the accused either issued apologies or said “They didn’t recall the conduct in question,” Lizza contested every aspect of the allegations, which he said involved a consensual relationship. He called the New Yorker’s decision to fire him “a terrible mistake,” which was made hastily and without a full investigation of the relevant facts.
Obviously there are two sides to the story. And his accuser’s attorney, Douglas H. Wigdor said, “In no way did Mr. Lizza’s misconduct constitute a ‘respectful relationship’ as he has now tried to characterize it.” So it remains to be seen where the truth lies.
But Lizza’s CNN suspension and subsequent reinstatement shows the importance for employers of conducting full and impartial investigations into sexual harassment claims.
Meanwhile, the recent situation involving New York Times reporter Glenn Thrush raises the question of how to decide when sexual misconduct merits termination or some sort of discipline short of that. At least four female colleagues from Thrush’s former job at Politico accused him of inappropriate behavior, including unwanted kissing and touching.
The 50-year-old Thrush did not supervise any of the women nor was there any apparent evidence of quid pro quo, but all were significantly younger than him. And as a star White House correspondent, he was in a position to have influence.
The Times suspended Thrush without pay while it conducted a full-scale investigation, which reportedly included interviews with more than 30 people. Alcohol played a part in the incidents, and Thrush voluntarily underwent substance abuse rehabilitation in the aftermath.
Ultimately, the Times decided to reinstate Thrush but not to his high-profile position covering the White House.
Executive Editor Dean Baquet, who made the final call, said, “While we believe that Glenn has acted offensively, we have decided that he does not deserve to be fired.” Baquet further noted in a statement that each case has to be evaluated on individual circumstances. But Hillary Clinton weighed in to chide The Times for going “too easy on Thrush.”
With many other nonmedia employers grappling with similar sexual harassment allegations, HR is sure to play a central role in the process.
And Now for Something Completely Different…
Predictive scheduling continues to be one of the more notable trends affecting the workplace. New York City is the latest big city to pass a law that will soon allow employees to temporarily change their work schedules to attend to certain personal events.
Effective July 18, Big Apple employers will be required to grant employees’ requests for a temporary change to their work schedule at least twice per calendar year for up to one business day per request. A temporary change means a limited change in time or location including but not limited to:
From an employer’s standpoint, the new law — which takes effect July 1, 2018 — provides a number of safeguards for employers. For instance, the law explicitly states that it does not prevent employers from banning marijuana use in the workplace, nor does it require them to accommodate marijuana use. In addition, it does not permit fired employees to sue their employer if they were terminated for violating a policy prohibiting marijuana use by employees.
The list of states to legalize recreational marijuana is highly likely (no pun intended) to hit double digits in 2018. Newly elected New Jersey Governor Phil Murphy has made legalization one of his legislative priorities. Interestingly, though, two large New Jersey counties have voted to formally oppose marijuana legalization.
Several other states are at least considering legalization laws, including:
All of the states to have legalized marijuana thus far make clear that employers remain free to maintain a 100% drug-free workplace. Effective February 1, however, Maine now protects job applicants and employees from being discriminated against or otherwise penalized solely for consuming marijuana away from the workplace.
But there were court rulings in 2017 in a number of states that expanded employee rights when it comes to medical marijuana. For instance, the Massachusetts Supreme Judicial Court held that a newly-hired employee terminated because she tested positive for marijuana use can sue her former employer for handicap discrimination.
And in a first-of-its-kind ruling, a federal court held that the federal marijuana ban did not preempt a Connecticut law protecting job applicants and employees from employment discrimination based on their medical marijuana use.
From the Big Brother Is Watching Department…
A pair of new Amazon patents for tracking wristbands are raising some alarm about workplace surveillance. Amazon warehouse workers have complained about the company’s working conditions for years, and it doesn’t sound like this newest technology is likely to improve their morale.
The Amazon wearables could potentially gather information about an employee’s every move, including how fast they work, how long they take breaks and when they go to the bathroom.
The company claims the tracking wearables are designed as a way to collect data about inventory rather than individual employees. And, it suggests the technology will help workers rather than harm them.
But workplace advocates aren’t so sure. Workplace Fairness senior advisor Paula Brantner told CNN, “At this point in time, I have more questions than answers about how it will be used.”
It’s worth noting that Amazon, and other employers considering similar technology, must tread cautiously as making any sort of employment decision based on collected biometric data could violate the Genetic Information Nondiscrimination Act.
What’s your biggest concern about wearable technology in the workplace? Let us know by leaving a comment below.
With Valentine’s Day upon us, love is in the air and very much in the workplace. In today’s society, it seems rather natural for individuals to meet at work and form close friendships as well as romantic relationships.
However, when it comes to workplace romance it is essential for employers to set the ground rules and properly monitor and manage personal relationships. This is particularly true in the age of #metoo harassment when a spotlight has been shined on the issue of sexual harassment and the line between proper and improper workplace conduct is more blurred than ever. Thus, employers and HR need to take an active role in developing, implementing and enforcing policies and procedures that protect employers as well as employees.
It is critical for employers to recognize the risks that workplace romance can cause and the potential damage to employee productivity, efficiency and morale. Couples in a relationship at work may engage in inappropriate and unprofessional behavior that makes co-workers feel uncomfortable. And that’s if the relationship is moving forward. A workplace romance gone bad can create much more trouble for an employer.
After a relationship ends, an employer may face a sexual harassment or discrimination lawsuit because conduct that once may have been welcomed, now is decidedly not. The employer is especially at risk in situations where the relationship involved a supervisor and a subordinate. During the relationship, the employer may face claims of favoritism, preferential treatment or discrimination by co-workers.
And the employer may be liable for any supervisory harassment or retaliation after the relationship ends, even if it did not know about the harassment or was not in any way at fault or negligent. The recent spike in sexual harassment claims has brought renewed interest and scrutiny to already-complicated workplace relationships.
Failing to Have the Appropriate Policies in Place
An employer needs to adequately prepare by establishing policies that will protect its interests and minimize the risk of liability. This includes policies on workplace romance and dating as well as harassment and conflicts of interest. The workplace romance policy should:
• State whether the employer will permit workplace relationships;
• State whether employees will be required to report such relationships;
• Confirm the employer’s right to make employment decisions such as scheduling or shifts or reporting to accommodate relationships;
• Provide guidelines for appropriate and inappropriate workplace conduct during work time and off duty, including public displays of affection.
Further, the employer should closely tie the workplace romance policy to its policy regarding harassment. The harassment policy should:
• Define proper workplace conduct by providing clear examples;
• Provide a broad definition of harassment to include verbal, written and physical conduct as well as conduct via social media and the internet;
• Establish a multichannel complaint procedure allowing employees to bring complaints to various members of management; and
• Set forth that the employer will take all complaints seriously and follow up with an investigation and discipline if needed.
Lastly, the employer should implement a conflicts of interest policy obligating employees to disclose any actual or potential conflict of interest that would adversely affect their judgment, objectivity or loyalty to the employer or to their work.
Failing to Take Harassment Claims Seriously
In the era of #metoo harassment, it is important for employers to take all claims of harassment seriously. Once on notice of a harassment complaint, the employer should immediately document the steps it takes to address it by creating detailed notes and a comprehensive record.
The employer should initiate an investigation using a neutral investigator and make sure to interview the victim, the alleged harasser and any witnesses. During the course of the investigation, the employer should not hesitate to impose interim measures such as separating the two individuals or changing the lines of reporting.
It’s also important to keep all information confidential regarding the harassment complaint and only reveal it on a need to know basis. For those who violate the policy, the employer should not hesitate to impose discipline up to and including termination.
Most importantly, it is essential to hold all individuals in the organization to the same standards of conduct and make sure that no one — not a manager, supervisor or owner — is provided with special treatment and that the employer maintains a zero tolerance policy for harassment.
Failing to Monitor Relationships
If an employer is aware of a relationship between two employees, or a supervisor and a subordinate, it is incumbent upon the employer to protect itself. The employer must closely monitor the relationship, evaluate whether it is having an adverse impact on the workplace, and ensure that it is voluntary and consensual.
This may include taking measures at work such as transferring individuals, or changing shifts or the lines of reporting. Steps such as these may help if the relationship is having a detrimental impact on the workplace and such actions may prevent discriminatory treatment and favoritism from occurring. In doing so, the employer must be careful not to take any action that will adversely affect the subordinate employee.
An employer should also be on the lookout for any unprofessional behavior or public displays of affection that adversely impact the workplace.
Lastly, an employer want to consider requiring two employees who are dating to enter a love contract indicating the following:
• The employees are voluntarily engaged in a romantic relationship;
• The relationship will not affect the workplace; and
• The participants are aware of the employer’s sexual harassment policies and rules regarding appropriate workplace conduct.
This contract will memorialize the consensual nature of the relationship and protect the employer from future harassment claims in the event that the romantic relationship ends.
2018 seems to be the year in which HR gets serious about blockchain applications in the workplace. In fact, four of the first five emails I opened today had some mention of blockchain, including a range of communications from tech industry blogs to established, white-shoe law firms promoting a new practice area.
Blockchain is a decentralized, worldwide digital ledger of transactions. Decentralized applications (Dapps) through blockchain differ from traditional, centralized servers. The applications run through open source, distributed ledger platforms that are linked through cryptography. Because of the decentralized nature of the platform, any transaction may be independently verified by various sources.
In addition, a transaction, once forming a part of the chain as a block, may not be undone, and any changes to the contents of a block is highly impracticable. This is because the process to add and vet the block is extremely rigorous.
Blockchain’s benefits could affect various industries, from public entities to banking to healthcare.
The allure of blockchain’s secure reporting capabilities – “unhackability”, if you will – has been recognized by local governments and public entities as a key differentiator. South Burlington, Vermont, is participating in a pilot program using the technology for recording and storing information regarding property sales.
The technology has also been used for “smart contracts,” such as nondisclosure agreements, in which the parties submit the contents of the contract to a blockchain. When certain conditions are met in the contracting process, cryptocurrencies automatically exchange “hands.” This process promotes trust and reliability in the bargaining process, whether between employers and employees or between businesses.
However, cryptocurrencies such as bitcoin have been subject to volatile fluctuations (perhaps making the “Winklevii” millionaires for a time instead of billionaires). Yet the unleashed potential of these currencies continue to keep the Winklevii and other investors engaged and willing to forge into the crypto waters.
Meanwhile, blockchain’s applicability and value-add in the workplace continues to grow.
Because blockchain makes possible Dapps that may resolve the questions of employee classification, a business may hire a contractor with confidence. This is of great importance for the gig economy, in which companies are hiring gig workers in record numbers. Without an intermediary, the worker (e.g., a driver) and the consumer (e.g., a passenger) may interface directly over a Dapp, with a cryptocurrency exchange to seal the deal.
With such plain dealing on the part of independent contractors, it may become much more difficult to make a wage-and-hour case stick.
Payment of Wages
Just as the payment of wages has developed from a cash-or-check exchange to an online banking interface since the 90s, a reliance on cryptocurrency could be the next phase of payroll evolution. Blockchain technology – as the backer of Bitcoin – has allowed for currency exchanges to simplify payroll transactions by providing an equalizing currency that can then be converted in any employee’s local market. The efficiencies of eliminating processors and intermediaries, as well as diminishing time-zone effects on transactions, make this particularly palatable to those tasked with international payroll processing.
Keeping track of an employee’s growing credentials and learnings could become much more efficient by the use of a Dapp that tracks completed training programs. As the network of users grows, it will be much more efficient to confirm each employee’s training, certificates and other credentials. HR may no longer have to independently verify certifications with an institution of higher learning or a training provider since blockchain has eliminated the need for any middleman.
The ability to verify information by eliminating an intermediary is also highly desirable to those in recruiting and hiring (for verifying an individual’s qualifications and job experience), as well as to others in the organization, such as internal investigators, auditors and mergers and acquisitions attorneys.
In addition to tracking an employee’s training journey, blockchain technology can be integrated into learning and development programs in other ways to enhance employee motivation. For example, an employer may incentivize employees to expand current knowledge, skills and abilities by engaging in training in an emerging field. Then, an employer may offer a financial incentive, paid in cryptocurrency, upon the program’s completion.
Just imagine: your Gen Z employees getting rewarded in cryptocurrency and then using a cash app like Square to make further purchases? Talk about cutting-edge perks.
As with any technological workplace solution, there may be challenges with integration. Transactions may be on different platforms, and some harmonization could be required. As with any emerging technology, entrepreneurial vendors may not have solidified their reputations in the industry, so investment with an unknown firm may be viewed as risky.
Because of these variables, and as with any implementation of a new process or vendor contract, HR should measure the ROI of a proposed initiative. For some inherently complex processes, such as international payroll processing, blockchain’s promises of security and efficiencies may eventually prove to be well worth the investment.
In the meantime, we in HR should all continue to track possible blockchain applications and communicate with one another on what may or may not work in the workplace of tomorrow.
What do you think about blockchain’s potential to enhance HR systems? Let us know by leaving a comment below.
After the Department of Labor’s rule raising the minimum annual salary for most overtime-exempt employees from $23,660 to $47,476 was invalidated by a federal court last year, it appears some states may step in to finish the job started by the Obama administration.
Currently, eight states have minimum compensation thresholds for overtime exemptions that are higher, or will eventually be higher, than then federal minimum of $23,660 per year:
In Pennsylvania, the state labor department is expected to propose rules next month that would raise the minimum salary for white-collar employees to $47,892 by 2022, and then adjust it for inflation every three years thereafter.
The current minimum salaries for overtime-exempt workers in Pennsylvania were established in 1977, and range between $8,060 and $13,000. As a result, these workers must be paid the federal minimum $23,660 except in rare cases in which an employer is not covered by the Fair Labor Standards Act. “Four decades is far too long for Pennsylvania’s overtime regulations to remain stagnant,” the state’s Acting Labor & Industry Secretary Jerry Oleksiak said. “Updating the overtime rules to keep pace with our 21st century economy is the right thing to do for the hardworking men and women of the commonwealth.”
Similar legislation has been introduced in other states, as follows.
In Arizona, HB 2436 and SB 1193 would require overtime-exempt executive, administrative and professional employees to be compensated on a salary basis at a rate equal to the 40th percentile of weekly earnings for full-time non-hourly workers in the lowest-wage Census region for the second quarter of the year preceding the effective date of the bill. This rate would be re-adjusted on January 1, 2021, and every three years thereafter. (This mirrors the methodology by which the US Department of Labor would have calculated minimum salary thresholds under its invalidated rule.)
In Hawaii, HB 935 and SB 1117, bills carried over from the 2017 session, would increase the minimum monthly salary for highly compensated employees (who do not need to satisfy any duties tests) from $2,000 to an amount equal to the state’s minimum wage multiplied by 292 (or $2,949.20, the current minimum wage of $10.10 multiplied by 292).
In Rhode Island, SB 2103 and HB 7428 would, effective January 1, 2021, raise the minimum salary for overtime-exempt executive, administrative and professional employees from $200 to $1,036 per week. Every year thereafter, the minimum salary would be adjusted to be no less than the 40th percentile of weekly earnings for full-time nonhourly workers in the Northeast Census Region in the second quarter of the preceding year.
Meanwhile, in Maine, the bill LD 1769 would, if passed, actually lower the minimum salary for overtime-exempt executive, administrative and professional employees from a rate equal to the state minimum wage multiplied by 3,000 ($30,000, currently, and scheduled to increase to $33,000 on January 1, 2019) to the federal minimum of $23,660.
XpertHR will continue to track these bills and any other legislation that is introduced.
How do we get our employees engaged so they help achieve the goals and objectives in our strategic plan? It’s a common management conundrum, not just for HR leaders, but for others as well. After all, when employees aren’t engaged with their work, the impact on organizations is significant.
Positive employee relations has long been top-of-mind for the HR profession. Senior executives are beginning to notice too. In fact, an in-depth survey from Harvard Business Review Analytic Services of 568 business leaders from organizations with 500 or more employees revealed that, when asked about the factors most likely to bring success to their organizations, 71 percent said “high level of employee engagement.”
Unfortunately, it appears they still have a ways to go to make this a reality. The Harvard survey reveals that only 24 percent of the business leaders said they would consider their employees highly engaged.
There are a wide range of things that impact employee engagement levels. One critical factor is the opportunity for input and the confidence that the work they do actually matters.
Can involvement in the strategic planning process make a difference? Richard Axelrod, the author of Terms of Engagement: New Ways of Leading and Changing Organizations, thinks so. Far too often, Axelrod points out, “the few decide for the many.” It’s not surprising to note that, when this is the process that occurs, most employees aren’t likely to be engaged.
Matt Dubin agrees. Dubin heads a culture and leadership development firm focused on how leaders can increase engagement among millennial employees. “To quote the musical ‘Hamilton,’ make sure your staff is in ‘the room where it happens’ during the development process,” recommends Dubin. “Include them in meetings and emails from the beginning stages so they know they are truly a valued, contributing member of the planning committee.” In addition, he says, be aware that some staff members may be hesitant to speak up in meetings. “Make sure you’re taking additional steps to ask them directly for input in some other forum that is more comfortable to them.”
Getting Employees Interested
While managers choosing not to involve employees in the planning process is one key barrier that can lead to poor engagement, another is employees simply not being interested!
Dubin says, “When we think of strategic planning, we naturally think of ‘big picture’ thinking and bold ideas. That can be intimidating to some staff members.
But, he adds, “Creating a strategic plan also requires a high level of detail, so make sure you are putting each staff member in position to succeed, whether they are more detail-oriented or big-picture minded. Assign tasks based on what you know your people will excel at.”
Getting employees interested in planning efforts may be less difficult than you think. In fact, the Gallup organization’s research has led it to identify 12 factors that most impact employee satisfaction, or engagement. Among them:
At work, do your opinions seem to count?
Does the mission/vision of your company make you feel your job is important?
In the last year, have you had opportunities to learn and grow?
To help organizations improve, Richard Axelrod offers five tips for effectively engaging staff:
Create psychological safety. People need to feel free to speak their minds. Listening for understanding during this process, rather than trying to change people’s minds, is a good best practice.
Involve people impacted by change in designing change from the very beginning, Axelrod recommends. “People support what they help to create. Involving people early in the change process avoids the need to ‘sell it’ later.” That makes engagement during the strategic planning process a very powerful approach to help ensure that the plan will actually be put into action and that results will be achieved.
Provide autonomy. “When people know their voice counts they become engaged.”
Support meaning making. “This means discussing questions such as: ‘What needs changing and why?,’ ‘What do you want to be different for you, for your co-workers and the organization?’” Energy is created when people find meaning in their work, he says.
Challenge participants. Establish opportunities for participants to learn something new, to work with people they didn’t think they could work with or to “create greatness in their organization by achieving something they didn’t think was possible,” Axelrod suggests.
Don’t assume that your employees don’t want to be involved in planning—they likely do. While that doesn’t mean they need to attend every planning meeting or session, at a minimum they should be asked for input and kept informed along the way. After all, who, ultimately, will be required to do the work that will drive the ability to achieve the plan’s outcomes?
With Super Bowl Sunday this weekend, many employees are busy making plans to watch the big game. But that’s not all they are planning as seminal sporting events like the Super Bowl and the NCAA’s March Madness give rise to the ever present workplace betting pools.
An employer may even decide to sponsor a workplace pool, Super Bowl party or a happy hour out watching the games to build office camaraderie.
While this may have a positive effect on employee morale and engagement, employers should be aware of the potential risks of such activities as well. Here are some tips and strategies for an employer to consider and make sure it has its head in the game:
Develop and Implement a Workplace Gambling Policy
It is important for employers to develop, implement and enforce a policy regarding workplace gambling, not only for big events like the Super Bowl but also to address the rapid growth of fantasy sports pools. This policy should be provided to all employees and supervisors and be part of the employee handbook.
While gambling is illegal in most states, many carve out an exception for gambling that occurs in a social context and is not commercialized. Thus, most workplace pools that are small and voluntary are permitted under these state laws.
However, an employer should be aware of the gambling laws in the jurisdiction in which it is operating. The policy should define gambling, provide guidelines on what types of activities will and will not be allowed on the employer’s premises and assist employers in identifying and responding to employees who have a serious gambling problem.
With events like the Super Bowl and Final Four, employers should establish clear parameters for any workplace pools such as the maximum amount of the bet and that participation in any workplace pool should not interfere with an employee’s work-related duties and responsibilities. They also should ensure that all workplace pools remain a casual bet between co-workers and make sure they are not used by an employee or supervisor to profit at the expense of others.
Monitor Workplace Betting and Gambling
Employers should be vigilant and make sure to properly monitor any workplace gambling or betting pool, especially if any of the employees involved are tasked with handling money or valuable property or are known to have a chronic gambling problem.
They also may want to advise employees of how to handle any complaints regarding the workplace pool, and to whom they should voice any concerns. It will be important to address any issues or disputes before they escalate and negatively affect the workplace.
It’s also worth noting that labor laws may be implicated because if an employer permits employees to solicit each other to participate in a workplace pool during working time, that may also open the door to other types of solicitation for charitable or union-related causes.
An employer should also carefully consider whether it will permit employees to use the employer’s computer systems, email, equipment and other electronic resources in order to engage in gambling activities. Further, if the employer itself is sponsoring the pool, it should not collect a fee from employees, and it should make it clear that participating in the pool is completely voluntary and that employees who choose not to participate will not face any adverse consequences.
Closely Observe Alcohol Intake
If the employer sponsors any work-related happy hours or events to watch the Super Bowl or other big games, it should be careful to monitor alcohol intake and curb excessive drinking and other substance abuse as this could create significant liability for the employer. Safety issues are paramount especially if driving after the event is involved.
If an employee is drinking during working hours or at an employer-sponsored event, and has a subsequent drunk driving accident, injuring himself, co-workers or third parties, the employer may be liable. Thus, it is critical to advise employees of the employer’s policies on drugs and alcohol well in advance. In addition, it may be a good idea to designate a management employee to monitor employee alcohol intake and closely monitor behavior. Employees who have had prior issues with drugs and alcohol should be closely watched.
Attempt to Curb Lost Productivity
Late nights up socializing and watching the Super Bowl can make for a very tired workforce the next day and lead to many employees calling in sick or coming late to work. Therefore, it is a good idea for an employer to remind employees of its policies regarding attendance and tardiness as well as paid time off.
Employers also may want to allow employees to work a more flexible day on the Monday following a big event by staggering an employee’s work hours or permitting them to work remotely. Additionally, an employer should make sure that the employees who do come to work the next day are sober and ready to work so as not to jeopardize the health and safety of others in the workplace.
The monetary value of the top workplace class action settlements rose dramatically in 2017, according to an annual report by Seyfarth Shaw that tracks and analyzes class action litigation data. The report, issued January 10, reviewed significant class action rulings involving employment discrimination, wage and hour law, the Employee Retirement Income Security Act and government enforcement.
However, the report also included good news for employers.
Trends in 2017
An overview of workplace class action litigation developments in 2017 revealed several key trends, said Gerald Maatman Jr., a partner in Seyfarth Shaw’s Chicago office who authored the report. The first was that the amount of government lawsuits rose, and the number of settlements went up even more. That was not surprising, according to Maatman. “Given the #MeToo movement and the Trump administration, these issues are crystalizing and on the radar of a lot of people,” he said.
The report shows that overall settlement numbers increased exponentially in 2017 over the previous year, as measured by the top 10 largest case resolutions in various workplace class action categories. Considering all types of workplace class actions, settlement values in 2017 totaled $2.72 billion, a 55% increase over 2016 when such settlements totaled $1.75 billion. The 2017 figure also surpassed the settlement numbers of 2015, which were at the then-all-time high of $2.48 billion.
Another finding was that government enforcement litigation data in 2017 did not reflect the expected pivot from the Obama Administration’s pro-worker outlook to the expected pro-business, less regulation and litigation viewpoint of the Trump Administration. Although the Trump Administration may want to change those dynamics, Maatman noted, its agency appointees either were not nominated in time to influence their respective agencies or were not put into place until the third quarter of 2017. As a result, changes to agency policies and priorities were delayed and government-initiated litigation continued and even increased in some areas.
For example, the US Equal Employment Opportunity Commission (EEOC) filed over 100% more merit lawsuits in 2017 than in 2016. In fact, the EEOC filed more lawsuits in the month of September 2017 than it did in all of the months of 2016 combined. Many of the EEOC’s high-level investigations that started in the last three years mushroomed into the institution of EEOC pattern or practice lawsuits in 2017, showing that such lawsuits remained an agency-wide priority.
But the US Department of Labor (DOL) outdistanced the EEOC results handily. Without a Trump-appointed leadership team in place at the DOL’s Wage & Hour Division (WHD), the enforcement program continued using the Obama Administration strategy and pursued aggressive enforcement activities over the past year, scoring increases in settlements both in court actions and through the administrative investigation process. Notably, the WHD recovered more than $270 million in back pay wages for more than 240,000 workers in 2017 – a solid increase over back pay recovered the previous year.
Given the Trump Administration’s focus on policy changes, employers can expect that many of these enforcement strategies will get a closer look as the new agency leadership teams come into place in 2018, Maatman said.
Good News for Employers
Despite these intimidating numbers, the report included some good news for employers. In 2017, employers did better on decertification of class actions, and a key ruling by the US Supreme Court makes it harder for plaintiff attorneys to “shop” for a friendly court to file a class action lawsuit.
According to the report, the trend over the last three years in the wage and hour space reflects a steady success rate for class certification that ranged from a low of 70% to a high of 76% (with 2017 right in the middle at 73%). Yet, the key statistic in 2017 for employers was that the odds of successful decertification of wage and hour cases increased to 63%, as compared to 45% in 2016 and 36% in 2015.
Maatman attributes this success to employers putting into place more robust compliance programs, which have paid dividends in fracturing and splintering off plaintiffs in class actions. The focus last year on overtime issues may also have caused corporations to spend a lot of time and resources on compliance, and it paid off.
Finally, Maatman said, class action litigation increasingly has been shaped and influenced by recent Supreme Court rulings, and 2017 was no different. In particular, the Court’s ruling in Bristol-Myers Squibb Co. v. Superior Court of California gave employers cause to breathe a brief sigh of relief.
The ruling supports the view that plaintiffs cannot simply “forum shop” in large class actions, Maatman explains. Instead, plaintiffs must sue where the employer has significant ties for purposes of general jurisdiction or limit the class definition to residents of the state where the lawsuit is filed.
How HR Can Help
Maatman said he can tell when an organization fundamentally has a good HR function – there should be a high number of internal complaints and resolutions and a low number of outside complaints. A forward-looking HR function can detect and fix problems before they go outside to attorneys or government agencies, he said, and that pays big dividends to the employer.
Maatman offered the following advice to HR departments: Don’t rest on your laurels on compliance. He pointed out that since plaintiff attorneys are continually testing new theories and strategies and there is lots of money involved, class actions are not going away. “Always be thinking about how to make the company better on compliance,” Maatman said. “It’s better to spend $1 on risk management than $10 having to defend yourself in a big lawsuit and in case settlements.”
The quote “You never get a second chance to make a first impression,” rings true for employers looking to retain their new hires. New employees will likely form their opinions about an employer based upon first impressions received during the onboarding and orientation process. While an employer may overcome a negative first impression, it is easier to retain an employee with a positive one.
After an employer takes the time and effort to recruit and hire the perfect candidate for a position, it needs to also make the effort to ensure that the individual has a long future with the organization. A sloppy or inefficient onboarding process reflects badly on the employer and these initial interactions between the employer and the new hire may alter the new hire’s opinion of the organization, leading to a quick departure. Such turnover requires an employer to engage in the hiring process all over again and spend unwanted time and resources looking for a replacement, which adversely affects an organization’s productivity.
So what should an employer do? Below are six simple steps an employer should follow when engaging in the orientation and onboarding process:
1. Be Prepared Before an Employee’s First Day
Before a new hire arrives, HR should perform various tasks in preparation of the new employee’s first day. This will give an employee the impression that the organization is well prepared. To accomplish this, an employer should make the following arrangements to ensure that a welcoming and structured environment awaits the new employee:
Announce the hiring to the organization;
Provide a general description of the individual’s background and position;
Coordinate job responsibilities and assignments with the new employee’s supervisor;
Ensure that the supervisor will be present on the first day;
Create an agenda with meetings, training sessions and scheduled luncheons;
Order breakfast treats;
Arrange for all necessary equipment and supplies to be set up and/or available;
Prepare identification and security cards; and
Have new hire paperwork ready.
Additionally, an employer should have an orientation checklist in place to ensure that it does not overlook or skip anything.
2. Have a Structured Orientation Process
When new hires arrive for their first day, orientation should not consist of sitting in a room filling out paperwork and watching training videos in isolation for eight hours. While new hire paperwork and training are necessary, they should not be the only thing a new employee does on the first day.
HR should have a conversation with new employees about the company’s policies, procedures and benefits. The employer should also give new hires a tour of the workplace, make introductions to other coworkers and provide them with an organizational chart and an overview of the entire organization. To make orientation more interactive, consider giving new employees a chart and have them check off everyone they meet that day.
Take a new employee out to lunch with individuals who the employee will be working with. This is a way to get to know the employee in a more casual atmosphere.
In addition, a meeting should take place on the first day between new employees and their supervisors where the supervisors review responsibilities and performance expectations. There should be an open dialogue between the supervisors and the new employees so that they understand what is discussed and are equipped to meet the expectations of their new employers.
3. Educate New Employees About the Organization
Employers should also be prepared to educate a new hire about the business and the new hire’s role in the overall structure of the organization. Having the leaders of the organization meet a new hire will also better inform the new hire about the organization’s mission, goals, values and vision. Providing a new employee with all the information necessary to succeed in a new position will serve as a good foundation for developing loyalty toward the employer.
4. Help New Employees Integrate into the Workplace
In order to help ensure that an employee feels accepted, the onboarding process should incorporate assigning the new hire a mentor who will help the new hire transition into the new role and provide guidance on the company’s culture. An employer should ensure that the assigned mentor is meeting regularly with the new employee and providing the feedback requested during the mentoring sessions.
Another way to get a new hire acclimated quickly to a company’s culture is to implement an internal discussion group site so that new hires can engage with their colleagues. This way, new employees will feel connected to their co-workers and involved in the company culture from the very first day.
5. Continue to Nurture the Employment Relationship
Employers need to ensure that they regularly engage and connect with new employees to find out how they are transitioning into their new jobs and to assist with any questions or issues that may arise. One way to accomplish this is by encouraging the direct supervisors of new employees to take the time necessary to regularly meet with new hires to ensure that they fully understand the expectations of the position and specific projects they have been assigned. Having this dialogue will help maximize an employee’s productivity. After 30 days, an employer should meet with a new employee’s direct supervisor to discuss whether the employee is fulfilling the expectations of the position in a satisfactory manner.
6. Don’t Overlook the Benefits of an Onboarding Survey
An employer should obtain feedback on its orientation and onboarding process. One way to receive this feedback is to provide new hires an onboarding survey approximately three months into their job to obtain their input. The onboarding survey results can provide an employer valuable insights as to the organization’s onboarding process. This will help identify an organization’s strengths and potential areas of improvement, which will help adjust and enhance its hiring process.
Evolving corporate tax realities are providing corporate America much food for thought in 2018. Companies may be reconsidering executive compensation programs that reward pay for performance in favor of higher salaries that are freed from any performance tether.
Although multimillion-dollar equity-based bonuses have been a mainstay of executive compensation planning and design for some time, a provision in the federal tax reform law is affecting the deductibility of these bonuses, and, as a result, whether these performance bonuses are offered at all when designing executive compensation.
But corporate considerations shouldn’t stop at tax rates when redesigning executive compensation: there are other factors that a company should consider before rethinking pay-for-performance initiatives.
Increased Tax Bill on Executive Bonuses
The federal tax reform law passed in late 2017 contains new compensation deductions limits.
The law repeals the Clinton-era exceptions to the $1 million deduction limitation for commissions and qualified performance-based compensation under the tax code. Effective January 1, 2018, any performance-based compensation or commission paid to an employee covered under the law that exceeds $1 million is not deductible.
The tax reform law also expands Securities and Exchange Commission (SEC) reporting requirements. Employees now covered include a corporation’s Chief Financial Officer (in addition to the CEO and the other three highest-paid employees). The law also extends the applicability to corporations that are required to file reports under the Securities Exchange Act of 1934, even if their stock is not publicly traded (e.g., a foreign company publicly traded in the US in the form of American depositary receipts).
The Clinton-era exceptions were enacted, in part, to stem the growing tide of multimillion-dollar compensation packages for executives, which were viewed (particularly by the Clinton Administration) as excessive. At that time, tying pay to performance was meant to counteract any disproportionate executive pay.
Instead, the opposite has occurred over the past 20 or so years. Corporations supplanted all-cash compensation in favor of performance-based bonus packages, and executive compensation continued its rise. Compensation planning relied on stock-based instruments, with studies showing that “from 2009-2016, performance share prevalence increased from 50% to 88%, stock options decreased from 70% to 59%, and restricted stock increased from 46% to 59%.”
With the new limitation on compensation deductions, however, corporate boards are considering whether to simply raise salaries of top executives and eliminate any program that ties executive pay to company performance.
Case in Point
Companies may be able to offset an all-cash compensation expense with the tax reform’s accompanying decrease in the overall corporate tax rate. The accompanying tax relief to the decreased compensation deduction may allow companies to simply walk away from performance-based pay for executives.
Before ringing in 2018, Netflix took swift action and eliminated its stock-based bonus structure in favor of multimillion-dollar raises to executives’ base salaries. The cash compensation is not tied to performance metrics.
But would any compensation planning change at the top require a corresponding change in the organization’s overall compensation design and pay-for-performance philosophy? Would redesigning an executive’s compensation affect an organization’s culture of accountability – one that links remuneration to goal achievement?
Any rethinking of pay-for-performance compensation policies (whether executive or company-wide) undertaken by a corporation will have consequences.
As one columnist put it, Netflix raising executive salaries and rescinding its short-lived tier pay-for-performance program proves that performance-based pay “was always a sham, anyway.” Skeptics saw performance-based bonuses as a mere work-around to the deduction exception in the pre-reform tax code, with the understanding that an executive’s performance expectations would always be met.
Doug Chia, Executive Director of the Governance Center for The Conference Board, a global, independent business membership and research association, agrees that there will be certain companies that play “into the narrative of critics that boards and executives are just in it for the money.”
And executive compensation is scrutinized from many angles. Among those voicing opinions on C-suite pay are:
Labor organizations; and
The SEC-required Compensation Discussion and Analysis (CD&A) disclosures in proxy statements, shareholder advisory votes on executive compensation (say-on-pay votes) and the upcoming CEO pay ratio disclosure requirements (potentially showing eye-popping pay discrepancies between CEOs and employees) all shine a light on executive compensation levels, policies and practices.
Because many corporations have been focused on tying increased executive compensation to performance metrics, a swift, stark change would merit some explanation to stakeholders. Chia warns that “investors are watching.”
Where to Go from Here
Because corporations have many options with respect to compensation design, Chia explains that “it’s hard to predict what changes are going to be made. Companies are trying to figure it out.” But even if these deduction limits don’t decrease executive compensation to a level that satisfies critics, Chia notes that “moving away from equity compensation is a good thing overall; too much of executive compensation is tied to equity-linked instruments.”
Chia clarifies that an overreliance on non-cash stock-based compensation may lead to an “obsession with stock-price,” and to a corporation that is “hyper-focused” on making decisions that make sense in the shorter term. A balanced approach to compensation planning that includes a move away from stock options and restricted stock may result in corporations “investing for the long term,” Chia states.
In addition to an increased emphasis on taking the long view, Chia has confidence that corporations will make informed, “enlightened” choices. He says companies often “do what’s best” from a corporate governance perspective, taking into account investor feedback and compliance requirements.
After “trying out different things,” Chia predicts that there will be “some kind of shift to conform,” signaling a new normal for executive compensation.
But for the time being, debates will no doubt continue regarding the effectiveness of pay-for-performance incentives, the fairness of CEO pay and the optimal design for executive compensation plans.
As a result, the NLRB began the dismantling of what some had categorized as over-reaching and activist decisions aimed at restricting employers and bolstering employee rights. And with the recent nomination of management-side attorney John Ring to fill an open seat on the board, we can expect the NLRB to continue to overturn policies and decisions criticized by the business community during the Obama administration.
Among the recent NLRB rulings, the Hy-Brand Industrial Contractors Ltd. and the Boeing Co. decisions sent the most shockwaves across workplaces. Jackson Lewis labor and employment law principal Howard M. Bloom provides valuable insight on what these rulings mean for HR.
Review Your Workplace Rules and Policies
In a decision that brought welcome news to employers, the NLRB issued a new test for evaluating whether a workplace rule or policy is lawful under the National Labor Relations Act.
In Boeing, Co., the NLRB overruled the previous test which would have found a rule unlawful if it could be reasonably understood by employees to prohibit their NLRA rights and replaced it with a balancing test that takes both the employees’ rights under the NLRA and the employer’s justification for implementing the rule into account.
Under the new test, the NLRB will now evaluate (1) “the nature and extent of the potential impact on NLRA rights,” and (2) “legitimate justifications associated with the rule.”
This new test aids employers since the NLRB will now consider an employer’s justification for implementing a certain rule, policy or handbook provision. In doing so, the NLRB will determine whether any adverse impact on NLRA-protected conduct is outweighed by the employer’s legitimate reason for the rule.
The Boeing test will apply to any standard, rule or policy that affects employees in the workplace, especially those relating to discipline and termination. But before employers start celebrating too much, Howard Bloom sounds this cautionary note, “HR needs to know that the case dealt with maintenance of rules and not application of them. It is still unlawful to apply a lawful rule discriminatorily — for example, against a union supporter only.”
Also, it seems that the NLRB’s analysis of a rule will depend on the nature/industry of the employer. For example, in Boeing, the employer’s no-camera rule was found lawful because the business reason for protecting property and national security interests outweighed any potential infringement on its employee’s rights.
In light of this new balancing test, Bloom advises HR to conduct a thorough review of its workplace rules and policies with labor and employment counsel to ensure they address specific organizational needs effectively.
Beware of Exercising Control of “Shared” Employees
In another notable shift, the NLRB overruled the controversial Browning-Ferris decision and reinstated the traditional joint employer test. The Browning-Ferris case had dealt a harsh blow to employers, because as Bloom explains, “Joint employer status could be found under Browning-Ferris in any number of ways – if the potential joint employer had direct control or indirect control, or even a reserved right to control (of the subcontractor’s or franchisee’s employees), regardless of whether that right was ever exercised.”
In Hy-Brand Industrial Contractors, the NLRB held that it would again find liability as a joint employer based on the actual conduct of the employer rather than evaluating its “potential” to exercise such control. Essentially, the NLRB will now require proof that
The alleged joint employer exercised shared or joint control over essential terms and conditions of employment;
The control is “immediate and direct;” and
The control is not “limited and routine.”
Bloom says, “[t]he Hy-Brand test is a much easier standard to analyze for HR because it eliminates the “indirect” and “reserved” control parts of the Browning-Ferris joint employer test. Now, joint employer status will be found only where two or more entities actually share or codetermine, for example, hiring, firing, discipline, supervision, and direction, and where the kind or degree of ‘control’ is direct and immediate, and not limited or routine in nature.”
The NLRB’s Hy-Brand decision is good news for franchisors, such as McDonald’s, which the NLRB had argued was the joint employer of franchise employees across the country. In stating that its Hy-Brand ruling applies to all current and pending cases, the NLRB’s cases against franchisors (as well as staffing and contracting agencies) may now be on shaky ground as the NLRB needs to determine whether to pursue litigation under the narrower joint employer standard.
HR can be instrumental in helping its organization avoid joint employer status, Bloom suggests, by conducting an audit to determine whether HR “is sharing or co-determining hiring, firing, discipline, supervision and direction and directly and immediately controlling a subcontractor’s employees.” He recommends eliminating that control where appropriate or necessary to avoid liability.
Significantly, Bloom notes that the Hy-Brand decision did not change the joint employer standards of the Equal Employment Opportunity Commission, the Department of Labor and other agencies so HR should still be careful to comply with parameters of those respective tests.