My years as a litigation attorney provided me with excellent insight into failed business and employment relationships. Here are a few critical questions business owners, managers, and employees can ask themselves to make sure that their thinking is on the right path:

• Is it in the best interest of the team? There’s no substitute for playing with a win/win attitude. As they say, “A rising tide floats all boats.” Putting the team first does not mean that you have to settle for mediocrity – or that you decide simply on a consensus basis. Putting the team first means that you ask the critical question: “Is this in the best interest of the team (or company, nation, family, etc.)?”
• Will this increase or decrease the level of trust in the environment? I’ve never seen a failed relationship where the parties trusted each other. Trusting partners even dissolve their relationships in an amicable manner. To make a trustworthy decision means that you have the skills or critical thinking necessary to make this decision and that you do so with good intent. That’s what makes anybody trustworthy to me. They have the skills and desires I can trust.
• Is it in alignment with our vision, mission, and goals? Sometimes there can be a true conflict among these outcomes. For example, NASA wanted to launch its shuttles in both a timely and safe manner. When the goal of timeliness overwhelmed the goal of safety, it resulted in an ethical violation – and lost lives. Because it’s very hard to know if you’re in alignment if you haven’t clearly identified your vision, mission, or goals, you might want to throw in values, commitments, and anything else on which you intend to focus.
• How does the approach feel? Often we make poor decisions because we’re running so fast that we can’t feel what’s going on. This is one reason why I often sleep on major decisions, perhaps even for a few days, before making a major decision. If after three or four days it still feels right, I’ll go for it. Unfortunately, when I forget this lesson, I end up paying the price.
• Is it legal? Are you sure or just guessing about it? What further research should you conduct?
• Should I get outside advice? There’s no substitute for professional help when making decisions. People rely on the Worklaw® Network and I try to answer their Hotline calls as part of the HR That Works program. Knock on wood, but from what I can tell, not a single one of these calls has turned out poorly for a client who followed the advice. It’s important to be able to get outside your own head when making critical decisions.

Conclusion: Follow these steps and you’ll avoid a variety of risk management problems.

The IRS Is Targetting 1099's

We’ve been advising HR That Works Members to get their independent contractor act together. This is an exploding risk exposure driven in large part by the need of federal and state agencies to make sure that they collect all their taxes. The IRS estimates that the 1099 misclassification problem, due primarily to poor controls, has led to more than $8 billion in unpaid taxes.

As we advise members, “If it walks like a duck and talks like a duck — it’s a duck, no matter what you call it”. If you have any independent contractors and you’re an HR That Works Member, look at the new Independent Contractor Training Module, which includes a video, IC agreement, analysis worksheet, and a guide to many state and federal resources in this area.

Don’t take this lightly! In November of 2009, the IRS launched an audit of 6,000 companies, essentially to prove the value of hiring more auditors to collect more money. I can tell you what their conclusion will be: That they should hire more auditors because there will be a greater return on investment given the amount of unpaid taxes out there. This exposure is significant, not just from a taxation perspective, but as a liability and risk management issue. Bottom line: It’s far better to pay the additional taxes, workers comp premiums, and medical expenses than to run afoul of the misclassification analysis.

For more information, call us!

We’ll set you up with the Independent Contractor Training Module.

You’ll be able to get your company compliant in under an hour!

Is Washington On The Employers Side?

Although many employers might believe that the Employee Free Choice Act (“EFCA”) is dead, it isn’t. As with many other legislative initiatives, Congress pushed EFCA aside to focus on two other major pieces of legislation: Health care reform and “cap-and-trade.” Although EFCA appears headed for some compromise, it remains organized labor’s top legislative priority and a major objective for the Administration and Congressional Democrats.

EFCA was introduced in the Senate (S. 560) and House of Representatives (H.R. 1409) in March 2009. Since there were more than enough votes to pass it in the House, the focus of debate was in the Senate, where 60 votes are needed for cloture. Last spring and summer, a number of conservative Democrats expressed concern over a union’s ability to organize an employer without a secret ballot election. This is the so-called “card check” provision, which would force an employer to recognize and bargain with a union if a majority of employees in the bargaining unit sign cards supporting it. The opposition to card check by five or six Democratic Senators, together with the focus on health care reform and energy legislation stymied EFCA’s passage, which many commentators had thought would happen by the August recess.

Unfortunately for employers, it would appear that EFCA has been waylaid, but not forgotten. Although unions still are pushing for a bill which includes card check, a group of Senators, including Senators Brown (D-Ohio), Carper (D-Delaware), Harken (D-Iowa), Prior (D-Ark.), Schumer (D-N.Y.) and Specter (D-Pa.), have been working on a compromise, which they reportedly “think will bring 60 votes for cloture.” Indeed, Senator Specter reported the existence of such a compromise to AFL-CIO convention delegates in September.

Although the details are still sketchy, what appears to be emerging is a bill that would replace “card check” with a “quickie” election. Employers now normally have 42 days from the date a petition is filed with the NLRB to the date of the election to run a campaign. This period reportedly would be changed to just seven days under the compromise, which in most instances won’t be enough time to run an effective campaign. For sake of comparison, unions usually win a little over 50% of the elections in the U.S. (but only about 30% where the employer mounts a strong campaign opposing the union), compared with a win rate of more than 70% in the Canadian Provinces of Ontario and British Columbia, which require elections within five to 10 days. The EFCA compromise also reportedly includes a provision permitting union access to the employer’s premises during the campaign under certain circumstances, which currently is prohibited.

Perhaps even worse, the compromise in the works continues to require binding arbitration for a first contract. This means that if there were no contract agreement within 120 days, an arbitrator would impose a contract of two years duration. This is a huge change from current law, under which neither party can be forced to agree to any contract provision, and would prevent an employer from even attempting to remove a union until after the contract has expired. Under current law, if there’s no contract, a union can be removed one year after its certification as a bargaining representative.

Thus, while employers might have dodged the card check bullet, something almost as bad appears to be on the horizon. This means that employers desiring to remain union-free need to implement such measures as: (1) Effective group and individual communications mechanisms; (2) understandable and consistent personnel policies and procedures; (3) supervisory training on how to manage employees and avoid unionization; and (4) confidential employee surveys designed to measure objectively the effectiveness of an employer’s human relations program and uncover issues that could lead to unionization. Although you now have the ability to uncover and correct such issues, the law severely restricts your ability to do so once union organizing activity begins.

Article courtesy of Worklaw® Network firm Millisor Nobil (www.millisor.com).

During my recent workshops, a number of employers have asked me, “How do I keep my folks motivated?” What they really mean is “How do I keep them focused on growing the bottom line?”

1. Survival – This is the greatest need of many employees and many companies given today’s economic stress. This stress is largely self-induced, due to poor financial acumen and practices. Having said this, the most important question becomes “What money am I earning today?” That’s what it means for an individual or company to be in survival mode.Smart companies such as In and Out Hamburger (an incredible California-based private business) and Costco realized the value of paying entry-level employees at a rate above their competition. Consider how paying a few dollars above your competition will affect who you attract, how hard they work for you, and how long you retain them.
2. Security – Unfortunately, many folks still believe that the only form of job security is a union. Just ask the people at United, Delta, American, GM, Chrysler, and Ford. In fact, there’s only one form of job security: Doing a positive job, in a positive manner, where there’s a positive cash flow. Our responsibility, as leaders, is to make sure that our employees understand this by opening up the books and sharing the numbers. I encourage you to watch the Webinar we did with one of Jack Stack’s trainers on the Great Game of Business.
3. Belonging – You might as well substitute the words “company culture” here. Are you trying to maintain a positive attitude in tough times? Are you trying to make the work fun? Are you taking the time to brand your company to your employees? One low-cost way to do this is through company uniforms — whether work clothes, sports teams, or recreational clothing. If I walked into your company today, would I be able to define your company culture just by walking around? If not, why not?
4. Ego Gratification – The biggest mistake I see employers making here is ignoring the ego need, especially those of their superstar employees. Here’s an example: “Bob brings $200,000 to the bottom line every year and causes me no drama. I am so glad I don’t have to worry about him.” What an incredible mistake! Unfortunately, most organizations spend 80% of their time on the 20% of employees who don’t bring it every day and ignore the breadwinners; when in fact they should be doing just the opposite. The ego needs stroking. Give these folks awards, get them in the Business Journal or other industry publications, highlight them on your Web site, upgrade their titles, and so on.
5. Self-Actualization – Although I realize that it’s hard to worry about being self-actualized when you’re in a survival or security mode, this need still remains. I believe that self-actualization has to do with knowing that “you make a difference.” Do this by engaging your clients or customers in the conversation. How do you make or break their day? How does it affect them when they receive good or bad service? Have you brought some of your clients and customers and perhaps even prospects in for a focus group with your employees? Do your employees understand the “precessional” impact of their daily work?

For example, when I finally realized the precessional impact of my litigation career, I had no choice but to quit. Now I know that the work I do makes a positive difference.

This is what it takes to motivate employees. This probably won’t be the last time I mention Maslow. Within each of these categories, we have to be careful about how we spend our money. The next article will address this issue.

Getting the Biggest Bang for Your Motivational Buck

Much of what I share with HR That Works Members comes from my study of marketing. Take any marketing book, replace the words “client” or “customer,” with “employee” and you’ll learn a lot about improving the HR function. Consider the time-tested marketing formula: Cost, ease, and impact (which you’ll find in the Form of the Month spreadsheet) and ask yourself, “What’s the cost of this item, how easy is it to implement, and what’s the bottom line impact?”

For example, a hand-written thank-you note provides a low-cost, easy to implement, high impact motivational tool. In Harvey Mackey’s “Swim with the Sharks,” he shares how he built his business from thank-you notes. This raises two questions: (1) How many thank-you notes to your employees have you written lately? and (2) Have you mailed these notes to their homes – which shows the employees’ families that you acknowledge the contributions they make at work?

The Retention Program Possibilities (Form of the Month) document offers dozens of ways to show your employees that you care. How you do this is secondary. A final bit of advice: The greatest benefit is the one that’s least remembered. It’s usually the frequency of showing you care that matters the most.

As part of our commitment to helping you manage your business and your total cost of risk, we are delighted to invite you to join us at the next webinar.

Retaliation claims are the fastest growing category of EPL claims. According to the EEOC, 93,277 claims were filed in 2009! In this Webinar, attorney Donald Cayea will review the traps and pitfalls that cause employers to turn marginal underlying claims into great retaliation ones.

Attendees will gain an understanding of:

• The laws surrounding retaliation claims.
• How to prevent an employee complaint from turning into an excuse for poor performance.
• How to document performance in a way that prevents claims.
• When a transfer or change in work responsibilities can be interpreted as retalition.
• When an employee can use an employer’s refusal to invite the employee to functions as grounds for retaliation.

This is a webinar not to be missed!

Title: Five Things to Do to Prevent Retaliation Claims Date: 3/11/2010 Time: 02:00 PM (EDT) Registration Link: https://www1.gotomeeting.com/register/878165928 After registering you will receive a confirmation email containing information about joining the Webinar. System Requirements PC-based attendees Required: Windows® 2000, XP Home, XP Pro, 2003 Server, Vista Macintosh®-based attendees Required: Mac OS® X 10.4 (Tiger®) or newer Space is limited. Reserve your Webinar seat now at: https://www1.gotomeeting.com/register/878165928

Simple Arithmetic

This week we put out our annual benchmark survey of employer health coverage and costs. Two numbers jumped off the pages.

The first number was the average cost of a family health insurance policy in 2009: $13,375. To put that number in context, if you are an employer, you can hire an employee at the minimum wage for about $15,000 per year. If you are a consumer, you can rent an average two-bedroom apartment nationwide for $11,136 per year (though it is quite a bit more here in Menlo Park, California where our Foundation is based). You can also buy a new Chevy Aveo for $12,000, and it gets 35 miles per gallon on the highway.

The other result that jumped off the page was the stark contrast between increases in health insurance premiums and overall inflation in the general economy. Premiums went up 5% and prices overall fell 0.7% (mainly driven by a big drop-off in energy prices).

The 5% increase we found in premiums is moderate by long-term historical standards. For example, two different times during the last decade premiums increased by 13% a year, in 2002 and 2003. This year’s increase continues a multi-year period of relative moderation in premium increases. Still, over the last ten years premiums have increased by 131%, while wages have grown 38% and inflation has grown 28%. Consider this: If people (and businesses) are as concerned as they are now about rising health care costs in a period when they are actually moderating, how much more concerned will they be when rates of increase return to historic averages?

Let’s do some very simple arithmetic. Start with a fairly conservative assumption: If we assume that premium increases over the next ten years will average what they did over the last five (about 6.1% per year), the average premium for a family policy in 2019 will be $24,180. That’s a big number. On the other hand, if we assume increases revert to the average of the last ten years—an average annual increase of about 8.7% and a very plausible scenario—premiums in 2019 will average a whopping $30,803, a very scary number (See Image Below).

Health insurance premiums will continue to rise, causing serious problems ahead

One obvious implication is that we need to get more serious about reaching agreement on ways to slow the rate of increase in health care costs.  But consensus on measures that would put a real dent in the health cost trajectory has been hard to achieve. Even simple first steps, such as comparative effectiveness research to collect data on what works and what does not in medical practice, have proven controversial, requiring language in draft legislation disavowing that they will ever be linked to payment. And when the public can be so readily scared that these efforts will lead to rationing, it’s a signal that the obstacles to reining in health costs are more fundamental than interest group opposition and health reform politics. Our polls show that we are far from the level of public understanding needed to meaningfully take on health care costs.

Even under the most optimistic scenarios, reducing the rate of increase in health costs will take time. This is why decisions about who gets subsidies and how generous subsidies will be in the health reform legislation now being drafted on Capitol Hill are so important. These decisions will determine how many people get help with their health care costs as insurance premiums and cost sharing become ever more unaffordable for average Americans. Projecting a family premium of more than $30,000 in ten years is simple arithmetic, but the implications for people and employers are real. Low and moderate income people are going to need some help paying for health care and health insurance as we learn which delivery and payment reforms work best and cost containment efforts ramp up.

You can see the original article here
http://www.kff.org/pullingittogether/091509_altman.cfm

**** Note: Health insurance premiums projected for 2010-2019 assuming (1) that the average growth in premiums between 1999 and 2009 (8.7%) continues or (2) that the average growth in premiums between 2004 and 2009 (6.1%) continues. Source: Kaiser Family Foundations projections based on data from Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2009.

Don Phinn, Our Employement Law Expert, creator of HR That Works

There is nothing nobler than being of service to someone who needs help. Many employers will proactively seek out disabled job candidates, knowing that they tend to be loyal and dedicated workers – and that there are federal, state, and other funds available to help hire them. As the saying goes, “no good deed gets left unpunished.” Employers who hire disabled employees must make sure that:

1. They don’t create some form of unique hiring process which actually discriminates against those who are not disabled.
2. They understand the “risk” associated with hiring people with disabilities, including any propensities to be violent, injury prone, safety or security factors, and the source of discrimination or ridicule. As Worklaw® Network attorney Ken Stettner from Denver wrote, “I applaud these employers, but must also admonish that they must be 180% ready to handle all aspects of this challenge.”

As always, if you have any questions in this area, feel free to contact a member of the Worklaw® Network (www.worklaw.com) or the Job Accommodation Network (www.jan.wvu.edu). To see an excellent resource on the myths and facts of hiring disabled workers, click here.

Don Phinn, Employment Lawyer, Founder of HR That Works,

In Dotson vs. Pfizer, decided by the Fourth Circuit Court of Appeals, a company was found to have violated the FMLA when they fired an employee who was, at the time, on intermittent leave for an adoption. The court acknowledged that under the FMLA an employee cannot take intermittent leave for adoption unless the employer agrees. However, if the employer, as in this case, allowed the employee to take intermittent leave without objection, this is all the agreement that’s needed. Pfizer claimed that the employee was fired for malfeasance discovered while he was on leave.

This case offers two valuable lessons:

1. If you don’t follow FMLA procedures, you can’t argue that FMLA leave is unwarranted. We encourage you to get proper medical certifications and other documentation before granting any leave. The courts have made it difficult for employers to change their minds afterward – a legal doctrine that’s known as “estoppel.”
2. Many employers only “discover” just how bad an employee is during their leave. This presents a dangerous trap. Sound management practices should identify employee shortcomings without the person having to go on leave for them to surface. The company would have done better to warn Dotson about his malfeasance, put him on a performance plan, and allowed him to finish his leave.

Click here to read the case.