Business Under Assault: Increased Regulations and Enforcement Proposed

If you are a business owner, business manager and especially a Human Resources Manager you should feel like you have a target plastered on you because you do. It is an unfortunate circumstance of our government today they are compelled to pass more legislation and enact more regulation. Unfortunately this ends up making for more work for the small business owner or for the HR manager if the business is fortunate enough to have one.

The bulk of the increase regulation and rule making is coming from the Department of Labor. They have proposed some 90 new regulatory increases. These include:

• Changes to the FLSA to increase amount of payroll records that have to be kept and also made available to the employee every payday in the name of "transparency."
• Changes to labor laws, also in the name of "transparency", that will require employers to fully inform employees about their rights to unionize the employer. They will also require the employer to divulge all monies spent trying to prevent union formation.
• They will "encourage" employers to offer more retirement options to employees that include annuity payments, much like pension plans. Apparently lump sum payments are not going to be acceptable because people "run out of money."
• They are also proposing changes in the regulations for the Office of Federal Contract Compliance Programs (OFCCP); Occupational Safety and Health Act (OSHA) including hazard communication, recordkeeping; Mine Safey and Health Act (MSHA); and Visas.

To this end the DOL has increased the number of Wage and Hour investigators (News Release) and the number of OSHA inspectors. If you would like to see Secretary Solis' statement then you can view her video here. The full regulartory plan has been published in the Federal Register.

If you read it will see frequent statements about the "middle class." Keeping people in the middle class, getting people to the middle class, "finding a path to the middle class", getting "good jobs for everyone, including vulnerable workers" and more. There is certainly a social agenda in these proposals. Hence the need for more regulations.

The DOL, in conjuction with the IRS, is also going to crack down on Independent Contractor usage by businesses. The DOL estimates that over the next 10 years misclassified workers will cost the US Treasury $7 Billlion. And they want that money. So there will be alot more scrutiny of workers labeled independent contractors. You can read more here from The World at Work Law Blog.

So what do you do to protect yourself from this increase inspection, investigation and scrutiny? Here are my suggestions:

1. Understand the FLSA and make sure you are paying people correctly, have them classified correctly and that your recordkeeping is up to date. And train your managers! And document. As I mentioned in my post The Top 5 HR Mistakes That Small Business Makes documentation is very important.
2. Understand the IRS rules on independent contractors. You can get some help here by reading the guidance provided by the IRS, Independent Contractor (Self-Employed) or Employee?
3. If you are in a Target Industry, make sure you understand ALL of the regulations that apply to you and correct any deficiencies you have.

If you are overwhelmed by the prospect of doing this, then seek help. A good HR consultant can be worth their weight in gold. (BTW, I just happen to know one ). Or seek help from an employment attorney. The rest of the regulations we will have to sort out as they come, so stay tuned to HR Observations by subscibing in a reader, found on this page. I will be covering them as they develop.

And for everyone that thinks this stuff is boring, you try keeping up with this crap. This is where companies can lose big $$$$ and if you are saving it you will be golden.

Top 5 Monday "Reads" for the HR Professional

It is hard to keep up with reading blogs. There are just too many good ones. So to help you out here are 5 that I consider a good way to start off a new week.

1. Ann Bares writes on Mission Critical Skills: The Haves & The Have Nots. She talks about realities of the marketplace today and what skills are necessary for a company's success. She offers insights into the importance of communicating those skills to the employees that don't have.
2. In my opinion business is under assault. One way is in the crackdowns the US government has instituted. One of these is the crackdown on independent contractors. Dennis Westlind of World At Work, talk about this in Federal Government to Crackdown on "Misclassified" Independent Contractors? He talks about the IRS' increased attention and provides a link to a handy guide.
3. My favorite consulting guru Alan Weiss talks about the pursuit of perfection and how useless that can be. Lance Haun, a great HR blogger, echos the same sentiment in The Useless Goal of Perfection. He takes it on a personal level, but it has lessons galore for all of us.
4. One of the primary strategic skills of an HR professional is environmental scanning. The Human Markets blog provides us an opportunity to exercise that skill by discussing Long-Term Unemployment and the implications to our companies and our future recruiting. Exercise some foresight and read this. Food for thought.
5. Paul Herbert, in a Fistful of Talent post, tells us that our core values as an organization do not have to suffer in the name of diversity. His post, called Looking for Diversity? Look for a Difference of Opinion Not Value shows a variety of opinions will introduce productive diversity in your organization.

Well there you have it. Start of your week with a BIG dose of learning in small amount of time.

Networking: An Essential Skill in a Successful HR Career (and every other career too)

I did some networking today. I reached out to Sharlyn Lauby, the HR Bartender, and she was gracious enough to call and chat. (You need to put her on your MUST read list. You will find out why she is on most of, if not all, the lists of the best.) We chatted about our businesses, our blogs, what we are trying to accomplish. (This all developed from a post of hers that talked about being willing to share, even with other consultants. A view I hold as well.) In the course of the conversation we talked about people who "network" with us. I put network in quotes because, in reality, that is not what people are doing. They call us because they are looking for a job and someone told them that we "know everyone." They come looking for job leads or names. We are gracious and help them out and off they go. Often we never hear from them again or sometimes we will get some follow up basically to the tune of "have you found anything for me yet?" Then one day we hear they got a job. So we drop them a note and say congratulations. Some times we get a note back, often we do not. Seldom do we ever get a note saying "I have gone to work. Here is where you can contact me. Thanks for your help. Now what can I do for you." Often we hear "Oh, I am sorry, now that I have gone to work I just don't have time to network." (Is this sounding like a rant?)

Well "I don't have time to network" should be banished from every HR professional's lexicon. Networking is an ESSENTIAL TOOL of the HR professional. One of the goals of a true professional is to be a resource to their organization for which they work. You have to be scanning the environment, you have to understand the legal and legislative landscape, you have to know social trends and compensation trends all so you can support the strategic goal of the organization. That is tough to do all by yourself. But there are people out their that know this stuff. There are people out there that are smarter than you. And it is important for you to know who they are and meet them. And they come in very handy if you are looking for work.

Here are my tips for effective networking:

1. Everytime you ask for help offer some in return. Do NOT be just a Taker. Be a Giver. At the end of a conversation ask the question "How can I help you?" (Hint: Mean it!)
2.  If you are job hunting, be specific. What are you looking for? Don't just say "Do you know of any openings?" My response may be "Well I saw a Now Hiring sign at Panda Express." (True) If you employed and are looking for contacts, suppliers, or information be clear about what you are looking for.
3. Try to meet someone face-to-face. Just because you have connected with them in Linked In, or Facebook or Twitter does not mean you are networking, as I wrote in Networking is More than just adding a contact on social media.
4. Follow up. FOREVER. This does not mean that you have to write every day, or once a month, or even once a quarter. But there needs to be some consistant follow up. Think of it as a "drip marketing" campaign. You can even rank your contacts as A, B or C. The "A" contacts you may want to reach out to quarterly. The "B"s every six months and the "C"s on an annual basis. This is based on the importance to you that you keep in touch with them. And you don't have to write a book. A one line email, a birthday card, a short hand written note or even a voice mail is sufficient just to make contact.
5. Sharlyn and I agree everyone needs to read Keith Ferrazzi's Never Eat Alone and I will add Harvey Mackay's Swim With the Sharks. These too books are required reading.

Well I will bring my rant to an end. There are many more tips and many experts on networking that are availble to you. Find what works for you. But if you have aspirations of the "C" suite, or of consulting or of just being able to find a job when you find yourself on the street then you had better learn to make networking a life long practice.

Tell me what you think. (BTW, one good way to start networking with people is to leave comments on their blogs. Who knows they might even initiate the contact. Unless of course you are Anonymous.)

The Mardi Gras Edition of the Carnival of HR

Michael Krupa, at Infobox, has hosted this weeks version of the Carnival of HR, Mardi Gras! Mardi Gras is a celebration time and this Carnival is a no exception. Hurricanes, beads, masks and more are available. Here the music and dance to the tune of great HR blogs. Learn about networking, HR mistakes, essential tools for change, office politics, time saving social media tools, continuing education, certification and much, much more! So flash on over to see Michael Krupa and let him throw you some beads or serve you a drink and settle down for some great reading in HR.  

Privacy in the Workplace: E-Mail Does Not Equal Texting

Most organizations with good HR professionals will have a written policy that specifically says "..that while at work employees should have no expectation of privacy." This allows the company the freedom to check email and Internet visits if done on a company device. This usually include mobile phone usage as well. Unfortunately a recent ruling by the 9th Circuit Court of Appeals (This is the notorious court in San Francisco) makes it clear that when it comes to texting, employees may have a right of privacy, regardless of who owns the device.

In  Court will rule on privacy of text messages sent on employer-owned devices, a December 15, 2009 article that appeared in the Los Angeles Times, reporter David Savage talks about a case involving the Ontario, CA police department. A few officers were suspected of misuse of their official mobile devices so the department demand from the wireless provider the records and then reviewed them. The officers had been told officially that the devices were for official use, but a supervisor had told them they could be used for personal use as well. The written department policy stated it "...reserves the right to monitor and log all network activity including e-mail and Internet use, with or without notice." However, "...the U.S. 9th Circuit Court of Appeals broke new ground by ruling that the police officers had a "reasonable expectation of privacy" in their text messages. The officers had been led to believe by a supervisor that the devices were also for personal use, the appeals court said."

The U.S. Supreme Court has taken this case on its schedule and a decision is due in June 2010. Their decision may significantly alter privacy in the workplace as it relates to computers, the Internet, E-mail and mobile devices, with which, up to this time, companies have been allowed to tell employees they should have expectation of privacy.

In the meantime your policies that deal with workplace privacy and the use of company or organization devices should be changed to include texting. An explicit statement should include email, Internet, phone records and texting records for company owned devices as areas where employees should have NO expectation of privacy. And supervisors should be CLEAR on what the policy is and not deviate from it. That was a major part of the problem in this case.

We will see in June if we have to change the policy again. Let's hope the Supremes have more sense than the 9th Circuit.

Performance Evaluations, Proper Metrics and Fairness

In my "home town" of Atlanta there is a big controversy regarding potential cheating on standardized tests in the Atlanta School System. The cheating does not involve the students. It involves teachers and administrators. Late last year a principal, and several others were convicted of erasing answers and "correcting" the tests in order to inflate the scores from their school. Now several other schools are showing similar patterns of erasures and answer changing. So an investigation is underway.

The underlying problem is not student cheating, but student performance. Principals and teachers are measured on the success, or lack thereof, of their students on standardized tests. Now there is alot that goes into a student being successful beyond just the teacher. These include parent involvement, home environment, peer pressure, cultural considerations, outside influences and more. I am not here to discuss these issues, rather I want to focus on the subject of performance evaluation.

The key to effective performance evaluation is having the right metrics. That is why an "off the shelf" evaluation form is not worth the paper it is printed on. To my way of thinking here are the key components:

1. You have to understand the job,
2. You have to know what needs to be measured,
3. You have to explain it to the employee,
4. You have to get their agreement that those measures are important,
5. You have to course correct as appropriate through the evaluation period (after all, you can't continue to measure sales of a product that is no longer made 6 months in),
6. You have to define the behaviors that are important to the organization (such as NO cheating or erasures),
7. You have to show the employee that they met the standard or did not,
8. You have to administer the system with even handed fairness, and
9. Finally, you have to take action based upon these results. Reward, or don't. Correct or terminate.

In my 20 years of consulting with small business I have found few managers who are willing to put the time or effort into developing an evaluation system like this. I suspect the same may be true of bigger businesses as well. In the school system issue I am not sure if they have the right metrics or not, or the right measure of student success. I will leave that to "the" experts. But it is clear they have not reinforced the no cheating aspect of performance. The consequences of that remain to be seen.

Performance evaluation seems to be a hot topic today. Wally Bock, of Three Star Leadership, addresses this in terms of Presidents day in President's Day and Performance and Tim Sackett of Fistful of Talent  discusses Forced Rankings Are for Winners. Both are excellent discussions of aspects of performance and are well worth the short time it will take to read them.

How have you address the issue of effective performance evaluation in your organization? Educate us with a comment.

HR's Primary Role and How To Fulfill It

As I was reading Twitter posts today I came across one posted by a favorite of mine. Sharlyn Lauby, the HR Bartender, conducted an Interview with Libby Sartain. She is an author and speaker, the former board chair for SHRM and is famous as the proactive, forward-thinking Chief Human Resources Officer for both Southwest Airlines and Yahoo. She is, as Sharlyn calls her, "...the real deal – business savvy, HR smart, and volunteer leader." She is certainly a model for up-and-coming HR pros to follow.

In the interview she made a statement that made me say "Yes, she has it! What a perfect summary!" Her quote was:

"The primary role for HR is to ensure that the business succeeds by having

the right workforce in the right place at the right time.

There is so much more involved including strategic workforce planning and talent management,

the right rewards and recognition, flexibility to add and delete workers according to

business requirements. And, ensuring a culture that inspires and leads to a higher performance than the competition."

What is the skill set needed for this level of performance for HR? Here is my list:

1. Knowledge of the business your business is in. How can you know if you are finding the right people if you don't know what is needed. So you need to know your industry and your competition. And that means more than just the names.
2. You need to be a futurist. You need to know what is happening and what may happen. How are things like demographics, technology, social trends and legal developments going to impact your business. This is the proactive stuff. If you don't foresee it you are doomed to react to it.
3. You need to understand how your business operates, how it makes its money. If you don't you will  be adding or deleting people without understanding why. You can help upper management make reasoned decisions rather than just reacting to their perceived need to cut costs.
4. You need to know compensation and motivation. Remember her statement was "the right rewards".
5. You need to know the laws of the land. There are many "legal landmines" that can thwart your best efforts to run a good HR show. So know your stuff.
6. You need to have a "very good presence." All leaders (and that is what HR should be) at some point have to make a presentation, make a speech in front of a group of employees or an executive board, or represent the company in a public setting. Learn how to speak and to do so effectively. Get over that fear by going to a Toastmasters program or a Dale Carnegie class or even get a private coach.

Those are my thoughts on required skills. What would you add to it?

Thanks to Sharlyn Lauby and Libby Sartain for this stimulation! If you do not follow them both you should, you will learn a tremendous amount on a weekly basis. And I see Libby's most recent book, Brand for Talent: Eight Essentials to Make Your Talent As Famous As Your Brand, making its way to my bookshelf in the very near future.

An Important Step in the ADAA: The Interactive Process

This post may be a bit "HR geeky", but supposedly I am the "HR technician." I am not really sure about that but if I save someone's fanny from a lawsuit I will be happy. (BTW, nothing I say on this post should be construed to be legal advice. I am NOT an attorney! If I were I would probably have a lot more money than I do. Assuming of course I was a good one.) I did however go and and listen to several attorneys from Freeman, Mathis & Gary in a law update they presented this morning. I paid close attention as they discussed the interactive process required in the ADA Amendments Act when someone is asking for a reasonable accommodation. They mentioned that they are finding this is an area many of their clients are not doing well, and I imagine if that is true for their clients it is probably more widespread.

The key point about the interactive process is that it needs to be truly interactive. A series of emails is probably not going to be sufficient. You need to have a conversation, preferably face-to-face. And because the HR representative holding this discussion is probably not really aware of the job being discussed you need to have someone who knows the job involved with the discussion as well. You need to look at job functions, the job description, and current medical documentation of the employee's condition. The current condition is important because time may have passed from the original situation and physical changes may have occurred (for better or worse.)

The second key point about the interactive process is that it needs to be well documented. You need to have:

• Dates and times communication is attempted.
• Dates and times conversations actually occured and who was involved.
• What options were considered and what was rejected and the reasons why those rejections were made.
• When the employee was notified of the decision and any ensuing discussions that took place.

Once you have done all of that you are not done. The law allows the employee to appeal that decision and to ask you to reconsider your decision and to explore other options. Again this needs to be interactive. You have to show that you were listening and considering. Off-handed rejections or refusal to participate in the interactive process will most likely land you in court.

So for those of you who have not revised your process you need to take a look at your policy, your procedures, and your documentation processes to make sure you are prepared to handle the new demands of the interactive process. This law makes it much easier for people to claim a disability. So good preparatin is important. Good luck.

Top 5 HR Mistakes That Small Businesses Make

I am giving a presentation today to a small business association. As all of you know, HR mistakes for any company can be disruptive or even destructive, regardless of the size of the company. For small companies HR mistakes can be amplified and have a significant effect on the potential survival of the company. As I was preparing for the presentation I thought this would make a good blog post as well. So here goes.

1. Not Hiring the Right Person. Many small business owners hire someone just because they know them, they are a family member or they feel sorry for them. They do not have a clear definition of the job skills needed for the job or if the individual possess those skills. And because they often know the person, or think they know them, they do not conduct a background check on them. Often them may miss a "skeleton in the closet" (click the phrase to see a meaning.)
2. Ignoring Government Regulations. Many small companies are mostly or totally unfamiliar with the majority of laws that govern the workplace. Given that most federal laws cover companies as small as 15 employees there are very few things that do not apply to them. They need knowledge, but they don't know it. (Which is why I am in the HR consulting business, btw.) Some choose to ignore regulations because they have had no trouble up to now. Well as the old AAMCO commercials used to say "You can pay me now or you can pay me later."
3. Misclassifying Employees. One of those laws that applies to almost all companies, regardless of size, is the Fair Labor Standards Act. Small business SCREWS THIS UP ALL THE TIME. I spend ALOT of time explaining that Salary does not equal Exempt and just because you call someone an independent contractor does not make them so.
4. Poor Documentation. Documentation in many companies is an afterthought. In many small businesses it is non-existant. The hiring process does not get documented correctly, as in incomplete I-9s. And discipline records are almost never there or are done after the fact. Terminations are generally not supported and often result in unemployment cases being lost or discrimination suits either lost or settled.
5. Not Rewarding Employees. Rewards are not always measured in $$$$. A good evaluation, training and communication are also rewards. In these recessionary times many small companies have taken the tack that since they cannot afford to give any raises there is no need to do a performance evaluation. In reality now is the most important time to do them. People who are afraid that they might lose their job at any time would like to know from their boss that they are doing a good job. Employees are feeling under-appreciated these days and as a result you read figures as high as 1 in every 2 employees is considering changing jobs in the next recovery. In a small company that kind of loss would be devastating.

Those are the Top 5 Mistakes that I will talk about. But there is one other thing I will tell my audience. They need to be vigilent. There are 14 or more pieces of legislation on the federal level, and who knows what is happening on the state level, that will affect business, small and large, in the employment and labor arena. All of them could have a potentially detrimental effect. To avoid this, and to have input in the legislative process, active involvement is needed.

So there you go. I would like your feedback so I can fine tune this presentation for future opportunities. Tell me what you think.

Super Bowl Edition of the Carnival of HR

The Carnival of HR, the Super Bowl edition is posted over at Steve Boese's HR Technology. This edition has some of the best HR blog posts from the last two weeks. The topics include professional development, personal development, leadership, unhappy workers, turning around your HR department, profit center development and much, much more. So improve your HR reading by taking a look at this Super Bowl edition.

On a side note I am happy to say that the Fistful of Talent blog rankings came out today and HR Observations was tied for 7th out of 160 blogs considered. We are proud of this ranking and proud to be among this fine group of bloggers. Check out the entire list at Fistful of Talent.

OOPS Can't Ask That: The Impact of GINA At Work

When the Genetic Information Nondiscrimination Act (GINA), which went into effect last November, was first passed many HR types scratched their heads and said that they thought it was not really anything that would have day to day application to them. Indeed I was one of them. However, an article that appeared in both the print and online versions of the Wall Street Journal on February 2, 2010 pointed out some of the impact that GINA is having in the workplace. The article, written by Cari Tuna and entitled Wellness Efforts Face Hurdle, points out that company wellness programs may run afoul of the new law. Tuna, writes that many companies, in trying to improve their bottom-line, try to get workers to participate in wellness programs. Often these wellness programs start off with detailed health questionnaires that may include family historys. To increase participation a company may offer a cash incentive or an insurance premium reduction. A WIN-WIN for everyone you would think. The employee gets some cash and gets exposed to a wellness program that may improve their health or prepares them for future issues. The company gets a win by having healthier employees and thus reducing their costs in insurance and lost productivity due to ailing employees.

Unfortunately GINA takes the WIN out of that situation. According to a very fine publication of  Seyfarth Shaw, entitled GINA Restricts Acquisition and Use of Genetic Information by Employers and Group Health Plans, these actions fly in the face of the law. According to the article "...under the new regulations, a plan may not offer participants a different deductible, premium or contribution amount in return for completing a health risk assessment or participating in a wellness program that collects genetic information." However, the article also points out "...the regulations make it clear that a plan may offer a reward for completing an HRA (after and unrelated to enrollment) that does not ask about family medical history or genetic tests or services received by the individual or the individual’s family. The health plan may also request that the individual complete an HRA that inquires about family medical history and/or individual genetic test results, provided that completion of the HRA is wholly voluntary and is not tied to any financial incentive or disincentive."  So the result of this is that if you are currently using health risk assessments you need to familiarize yourself with this law.

The law also controls how health insurance companies deal with this information. Insurers are prohibited from conditioning "the availability of a disease management program or other benefits on an individual’s answers to HRA questions about individual or family medical history."  The article suggests that all employers review their agreements with their insurers to make certain they are in compliance with GINA. Failure to do so may result in HIPAA violations.

The Seyfarth Shaw article also points out steps that employers need to take to insure they are in compliance. These include: "...omitting genetic information from post-offer, pre-employment health history examinations and/or questionnaires; updating policies to prohibit discrimination based on genetic information; adding claims of “genetic discrimination” to waivers and releases where appropriate; and segregating lawfully-acquired genetic information from personnel files. Employers also must post information regarding GINA’s protections, which is contained in EEOC’s revised “Equal Employment Opportunity is the Law” poster..."  If you want more information follow the link provided above.

Tuna's article, the online version, reports that there have been some situations in which an employer has been accused of misusing genetic information and it cost them, to the tune of $2.2 million. They were investigated by the EEOC.

Because this law is still pretty new many people are not yet sure what they should do. The EEOC has promised that they will publish guidance for employers later this year and the Department of Labor is working on guidance for insurers. Part of the "great unknown" is in the area of "casual" disclosure. So stay tuned. In the meantime follow the advice in Seyfarth Shaw's article.