HR101-LAW (Part 2)

In the first part of this HR and the Law blog post, I promised that I would talk about some employment laws, and why compliance should be a natural part of your HR philosophy because you can use it to leverage your organization’s mission. The reason you should comply with these laws is NOT because the government told you to, but because compliance is good business. For the sake of relevance to all readers (and remembering that the target of HR 101 is the small to medium sized business) I have chosen to look only at federal law, with one exception.



WORKER’S COMP


Worker’s compensation laws are the oldest employment-based laws on the books. Many HR professionals don’t think in terms of compliance when it comes to worker’s comp, because someone else usually manages this process for the company. Insurance is the essence of worker’s comp law: the company pays for any work-related injury (usually through insurance) in exchange for freedom from tort liability for the worker’s injury.


Even though most HR pros don’t have much to do with the purchase of insurance, many ARE responsible for safety, and that is where I suggest you can use this law to benefit both the employee and the company. The reasons why an HR pro should be involved in maintaining a workforce free from on-the job injury are obvious: you can’t maximize your human capital if it is injured.


Also, what HR pros may not know is how a reduction in workforce injury results in a savings on worker’s comp insurance premiums. The experience modification factor (E-mod, Experience mod, X-mod, etc.) is that part of a company’s insurance premium that is based on the specific company’s fault, as measured by worker’s comp claims. If a company has more claims than the average company of a similar type and size, the insurance premium increases. If a company has fewer claims than the average, the rate decreases. Another way to put it: a company is penalized if their worker’s comp claims are higher than the general experience, and credited if they are lower. What do you think the CEO/Owner/Executive at YOUR company would like to see?


A stable, non-injured workforce saves the company money in productivity costs and in reduced worker’s comp premiums. Wouldn’t you, as an HR pro, like to take credit for that cost-savings? Start auditing your company’s safety record, fix any issues, and start reaping the benefits.


FAIR LABOR STANDARDS ACT (FLSA)


I hesitated including this law in this post because my gracious host already covered why it’s easy and desirable to comply with the FLSA. It’s here, though, because this is one of the most frequently litigated employment laws on the books, and the federal government has vowed to step up enforcement efforts under the current administration. Compliance with this law is basically simple:


  1. Pay everyone at least the prevailing minimum for all hours worked. Pay all non-exempt employees overtime for more than 40 hours worked per week, even if you have a bi-weekly or monthly payroll.
  2. Don’t classify employees as independent contractors to avoid this law. Independent contractors are the people that fix your roof or clean your carpets.
  3. Don’t exempt employees from overtime unless they really meet the standards. When in doubt, make them non-exempt.



Why do employers frequently violate these simple rules? They are trying to save money with short-cuts. This tactic may save money in the short term, but it is bad business in the long term, leading to disengagement, disloyalty, and distrust from the employees, not to mention the costly potential for lawsuits by the state or federal government. As an HR pro, show your executive how compliance with these rules will help the business be a better corporate citizen, increase worker productivity, and can help the business save money over the long term.



NATIONAL LABOR RELATIONS ACT (WAGNER ACT)


Have you ever had a boss instruct you to tell a worker: “Tell him/her not to talk about it”? If you have ever asked an employee not to talk with another worker about something having to do with their job, then you are violating the section of the NLRA that says that all employees have the right “to engage in concerted activity for the purpose of . . . mutual action and protection.”


  1. All Employees: Many HR pros tend to overlook the NLRA if their workforce is not unionized, but it applies to all employees regardless of union status.
  2. Concerted Activity: This means that employees have the right to talk with each other about anything work related, including how much money they make, what their supervisor said (or didn’t say) to them, and whether they got a bonus or incentive.



The next time you, or your boss, think it is wise to ask an employee not to spread something around, stop and ask yourself instead: “WHY?” Why do you want the employee to keep quiet? You will find that there is a problem that you need to address and solve, and it asking the employee to shut up only compounds the problem. Is Employee A getting a raise, and not her co-workers? Don’t ask Employee A not to tell her co-workers. Instead, have your reasons and justifications documented, and communicate those to everyone. Find and fix your problems; don’t ask the employees to shut up about them.



ANTI-DISCRIMINATION LAWS


I’m going to have to dodge some incoming for this one. Yes, there are lots of anti-discrimination laws (Civil Rights Act/Title VII, ADA, and the ADEA being the most used), and keeping them all straight and following the reporting requirements is a pain in the butt sometimes. Compliance with all of these laws, though, is really pretty simple if you follow just one rule: don’t act adversely against an employee, or a potential employee, unless you can show why and how (1) they aren’t helping you make money, or, (2) they won’t help you make money in the future.


Example #1: I once fired an employee who was well over 40 years old and had been with the company around 15 years. He had been hired as a skilled laborer but the business focus had changed during his tenure and his skills were no longer used or needed. He was doing semi-skilled work at skilled labor wages. Age discrimination? Not at all. I didn’t discriminate against him because of his age – he was costing the company money and I no longer had the right job fit. He couldn’t find an attorney to take his case – because he didn’t have one.


Example #2: I needed to hire a new accounts payable clerk. After the entire application/interview process, I was in favor of a candidate who was openly gay. The supervisor didn’t want her – for the same reason. There is no federal law that says a company can’t discriminate because of sexual orientation but who cares? I convinced the supervisor that her sexual orientation was not relevant, and we hired her because she was the best candidate to help the company make money.


You will comply with all anti-discrimination laws, and use those laws to your company advantage, if you insist that all adverse decisions regarding hiring, discipline, and termination be consistently based on articulable economic reasons that you have documented.



That is a good way to sum up what should be the mantra of any HR pro seeking to improve the bottom line and use the law in their company’s strategy:


  • Consistent application
  • Articulate economic reasons
  • Document your decisions


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HR101-LAW (Part 2)

In the first part of this HR and the Law blog post, I promised that I would talk about some employment laws, and why compliance should be a natural part of your HR philosophy because you can use it to leverage your organization’s mission. The reason you should comply with these laws is NOT because the government told you to, but because compliance is good business. For the sake of relevance to all readers (and remembering that the target of HR 101 is the small to medium sized business) I have chosen to look only at federal law, with one exception.



WORKER’S COMP


Worker’s compensation laws are the oldest employment-based laws on the books. Many HR professionals don’t think in terms of compliance when it comes to worker’s comp, because someone else usually manages this process for the company. Insurance is the essence of worker’s comp law: the company pays for any work-related injury (usually through insurance) in exchange for freedom from tort liability for the worker’s injury.


Even though most HR pros don’t have much to do with the purchase of insurance, many ARE responsible for safety, and that is where I suggest you can use this law to benefit both the employee and the company. The reasons why an HR pro should be involved in maintaining a workforce free from on-the job injury are obvious: you can’t maximize your human capital if it is injured.


Also, what HR pros may not know is how a reduction in workforce injury results in a savings on worker’s comp insurance premiums. The experience modification factor (E-mod, Experience mod, X-mod, etc.) is that part of a company’s insurance premium that is based on the specific company’s fault, as measured by worker’s comp claims. If a company has more claims than the average company of a similar type and size, the insurance premium increases. If a company has fewer claims than the average, the rate decreases. Another way to put it: a company is penalized if their worker’s comp claims are higher than the general experience, and credited if they are lower. What do you think the CEO/Owner/Executive at YOUR company would like to see?


A stable, non-injured workforce saves the company money in productivity costs and in reduced worker’s comp premiums. Wouldn’t you, as an HR pro, like to take credit for that cost-savings? Start auditing your company’s safety record, fix any issues, and start reaping the benefits.


FAIR LABOR STANDARDS ACT (FLSA)


I hesitated including this law in this post because my gracious host already covered why it’s easy and desirable to comply with the FLSA. It’s here, though, because this is one of the most frequently litigated employment laws on the books, and the federal government has vowed to step up enforcement efforts under the current administration. Compliance with this law is basically simple:


  1. Pay everyone at least the prevailing minimum for all hours worked. Pay all non-exempt employees overtime for more than 40 hours worked per week, even if you have a bi-weekly or monthly payroll.
  2. Don’t classify employees as independent contractors to avoid this law. Independent contractors are the people that fix your roof or clean your carpets.
  3. Don’t exempt employees from overtime unless they really meet the standards. When in doubt, make them non-exempt.


Why do employers frequently violate these simple rules? They are trying to save money with short-cuts. This tactic may save money in the short term, but it is bad business in the long term, leading to disengagement, disloyalty, and distrust from the employees, not to mention the costly potential for lawsuits by the state or federal government. As an HR pro, show your executive how compliance with these rules will help the business be a better corporate citizen, increase worker productivity, and can help the business save money over the long term.



NATIONAL LABOR RELATIONS ACT (WAGNER ACT)


Have you ever had a boss instruct you to tell a worker: “Tell him/her not to talk about it”? If you have ever asked an employee not to talk with another worker about something having to do with their job, then you are violating the section of the NLRA that says that all employees have the right “to engage in concerted activity for the purpose of . . . mutual action and protection.”


  1. All Employees: Many HR pros tend to overlook the NLRA if their workforce is not unionized, but it applies to all employees regardless of union status.
  2. Concerted Activity: This means that employees have the right to talk with each other about anything work related, including how much money they make, what their supervisor said (or didn’t say) to them, and whether they got a bonus or incentive.


The next time you, or your boss, think it is wise to ask an employee not to spread something around, stop and ask yourself instead: “WHY?” Why do you want the employee to keep quiet? You will find that there is a problem that you need to address and solve, and it asking the employee to shut up only compounds the problem. Is Employee A getting a raise, and not her co-workers? Don’t ask Employee A not to tell her co-workers. Instead, have your reasons and justifications documented, and communicate those to everyone. Find and fix your problems; don’t ask the employees to shut up about them.


ANTI-DISCRIMINATION LAWS


I’m going to have to dodge some incoming for this one. Yes, there are lots of anti-discrimination laws (Civil Rights Act/Title VII, ADA, and the ADEA being the most used), and keeping them all straight and following the reporting requirements is a pain in the butt sometimes. Compliance with all of these laws, though, is really pretty simple if you follow just one rule: don’t act adversely against an employee, or a potential employee, unless you can show why and how (1) they aren’t helping you make money, or, (2) they won’t help you make money in the future.


Example #1: I once fired an employee who was well over 40 years old and had been with the company around 15 years. He had been hired as a skilled laborer but the business focus had changed during his tenure and his skills were no longer used or needed. He was doing semi-skilled work at skilled labor wages. Age discrimination? Not at all. I didn’t discriminate against him because of his age – he was costing the company money and I no longer had the right job fit. He couldn’t find an attorney to take his case – because he didn’t have one.


Example #2: I needed to hire a new accounts payable clerk. After the entire application/interview process, I was in favor of a candidate who was openly gay. The supervisor didn’t want her – for the same reason. There is no federal law that says a company can’t discriminate because of sexual orientation but who cares? I convinced the supervisor that her sexual orientation was not relevant, and we hired her because she was the best candidate to help the company make money.


You will comply with all anti-discrimination laws, and use those laws to your company advantage, if you insist that all adverse decisions regarding hiring, discipline, and termination be consistently based on articulable economic reasons that you have documented.



That is a good way to sum up what should be the mantra of any HR pro seeking to improve the bottom line and use the law in their company’s strategy:


  • Consistent application
  • Articulate economic reasons
  • Document your decisions


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