recipies for mitigating hr risks

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RECIPES TO Mitigate HR Compliance Risks

ROME SHRM

Gary Wheeler, SPHR, GPHR, CCP, CBP

1The Virtual HR Director, LLC 2011

ChallengeOrganizations have scaled down HR In some cases, HR has been eliminatedStart-ups and small businesses Can not afford a credible HR person or Choose not to find an HR person to help, orDo not understand the importance and value of HRHR Risks are not accounted for in the financials

The Virtual HR Director, LLC 20112


ChallengeThe Federal Government believes 90% of all small and medium businesses in the U.S. are out of complianceCompliance has become a revenue source for the governmentCompliance will be a bigger issue for small businesses A series of compliance audits can wipe out the annual profits of a businessHR risks must be mitigated like all other risksThe Virtual HR Director, LLC 20113


ObjectivesProvide insight to potential HR business risksShare thoughts on how to mitigate risksThe Virtual HR Director, LLC 20114


TopicsRisksExempt v. Non-exempt Contractor v. EmployeeI-9 & Work AuthorizationsOSHAEEORisksSocial MediaWorking Off The ClockImproper Payroll DeductionsHIPAA/Identity TheftThe Virtual HR Director, LLC 20115


Interesting FactsThe DOL requested $25-million additional dollars in 2011 budget so they could add additional agents to perform inspections to review contractor v. employee and exempt v. non-exempt status at employers

The government collected $50-million dollars in fines from 2009 and 2010 for improperly completed and missing I-9sThe Virtual HR Director, LLC 20116


Exempt v. Non-exempt



Recent RulingsEngineers who repair or manufacture computersAssistant managers when working in conjunction with managers (retail, restaurants, department stores)Loan officersExecutive assistantsRepayment of pre-paid bonuses



Andrew WhalenAndrew Whalen v. Morgan ChaseLoan underwriterAuthority to approve up to 500K in home loans

AwardTBD Supreme Court

RisksOvertime pay and back wages

9

Atlanta Firm CaseExecutive Secretary/EEOC v. Atlanta Firm Terminated for poor performanceWorked past 5:00 on a regular basisKept track of hours

AwardGranted 2-years of overtime

RisksOvertime pay and back wagesThe Virtual HR Director, LLC 201110


ExemptSalary Test$23,600 annual ExecutiveManage business, department, division, groupProfessional Doctors, dentists, professors, scientists, CPA/accountants, outside sales Administrative HR, marketing, office managers, insurance agents



Administrative ExemptOffice or non-manual work, which is:Directly related to management or general business operations of the employer or the employers customers, and

A primary component of which involves the exercise of independent judgment and discretion and

Matters of significance



Exempt V. Non Exempt RecipeReview each exempt positionApply the administrative test Error on the side of non-exempt

New legislation Right to Know



Contractor v. Employee



Robert GardnerRobert Gardner v. Baby Trend, Inc.17-year contractorCompany started making various deductions from commissionsGardner complainedCompany ordered him to attend a mandatory meetingGardner had another obligationBaby Trend fired Gardner for missing meetingAwardJury 8.4 Million RisksDamages, lost earnings, mental suffering, failure to reimburse, waiting time, breach of contract and malice



What is an Independent Contractor?If the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax

The key is what will be done and how it will be doneThe Virtual HR Director, LLC 201116


RisksMitigate RisksOvertime payBack paySocial securityFederal and state taxesBenefitsRetirementPenalties



Contractor RecipeReview each contractor positionUtilize the contractor v. employee checklistError on the side of employee

New legislation Right to Know



Independent Contractor Checklist#Yes or No1Can the worker make a profit or suffer a loss as a result of the work, aside from the money earned from the project?2Does the worker have an investment in the equipment and facilities used to do the work?3Does the person work for more than one company at a time?4Does the worker offer services to the general public?5Do you have the right to give the worker instructions about when, where, and how to work? (control)6Do you train the worker to do the job in a particular way?



Independent Contractor Checklist#Yes or No7Are the workers services so important to your business that they have become a necessary part of the business?8Must the worker provide the services personally, as opposed to delegating tasks to someone else?9Do you hire, supervise, and pay the workers assistants?10Is there an ongoing relationship between the worker and yourself?11Do you set the workers hours?12Must the worker spend all of his or her time on your job?



Independent Contractor Checklist#Yes or No13Must the individual work on your premises, or do you control the route or location where the work must be performed?14Do you have the right to determine the order in which services are performed?

You have to look at each job, there isnt a magic number of points



I-9s & Work Authorizations



AramarkAramark Concessions Fenway Park v. U.S. ImmigrationImmigration found undocumented workers, and Incomplete I-9s in November 2010

Penalty$50K Fines against Aramark

Risk $110 to $1,100 fines if inaccurate or incomplete$375 to $3,200 fines for knowingly hiring illegal workerNote: per occurrence



I-9s Immigration Reform and Act of 1986Required employers to attest to their employees' immigration status.Made it illegal to knowingly hire or recruit unauthorized immigrantsGranted amnesty to certain seasonal agricultural illegal immigrantsGranted amnesty to illegal immigrants who entered the United States before January 1, 1982 and had resided there continuously



Employer ObligationProhibits employment discrimination against persons legally permitted to work in the United StatesRequires employers to document (I-9 form) eligibility for employmentProvides penalties for knowing employment of illegal workersThe Virtual HR Director, LLC 201125


Compliance RecipeI-9 must be 100% complete in ink (no exceptions)Completed on the first day of employment or just before start date Must be signed and dated by the employee and employer representativeDates must be accurateMust verify the appropriate non-expired documentsNeed a tickler file if temporary employment status expiresMust recertify on or before documents expire



Georgia Immigration Law



Georgia Immigration Law 2011All public employers and government contractors must use E-VerifyRequires private employers to participate in E-VerifyJanuary 1, 2012: Employers with 500 or more employees must complyJuly 1, 2012: Employers with 100 499 employees must complyJuly 1, 2013: Employers with 11-99 employees must complyMust prove status to receive state benefitsPenalties up to $250K and 15-years of prison for identity fraud



E-Verify

E-Verify is an Internet-based system that compares information from an employee's Form I-9, Employment Eligibility Verification, to data from U.S Department of Homeland Security and Social Security Administration records to confirm employment eligibility.



E-Verify ParticipationCurrently over 225,000 employers signed upOver 1,000 new businesses sign up each weekMandatory for government contractorsThe Virtual HR Director, LLC 201130


Georgia New Hire ReportingGeorgia Statute 19-11-9.2 and the Personal Responsibility and the Federal Work Opportunity Reconciliation Act (PRWORA) of 1996, 42 U.S.C. 653A, requires all employers to report newly hired and re-hired employees to a state directory within 10 days of their hire date



Georgia New Hire Reporting cont.Required by law in all 50 statesMandatory since October, 1998States have the option of imposing civil monetary penalties on employers who fail to report new hires$25 per newly hired employeeAnd if there is a conspiracy between the employer and employee not to report, the penalty can be up to $500 per newly hired employee



OSHA







Top 10 of Fines 20101. BP Products North America, Inc. (TX) - $87 million2. Whitesell Corp. (AL) - $3.07 million3. BP-Husky Refinery (OH) - $3.04 million 4. E. N. Range, Inc. (FL) - $2.1 million5. South Dakota Wheat Growers ((SD) - $1.6 million6. Tempel Grain Elevators, LLC (CO) - $$1.59 million7. CES Environmental Services, Inc. (TX) $1.4 million8. Goodman Mfg. Co. (TX) - $1.215 million9. A-1 Excavating (WI) - $861,00010. WRR Environmental Services (WI) - $787,000The Virtual HR Director, LLC 201136


Average Cost of OSHA Fine Compliance Area Average Per FineHazardous Communication & Right to Know$281Employee Training$447Training Requirements (safety mtgs, evac drills, etc.)$465Head Protection$511Wiring Design and Protection$542Ladders$698Aerial Lifts$961Fall Protection$1,160Evacuation Plans$2,110General Requirements$2,182



OSHAOccupational Safety and Health Act 1970Occupational Safety and Health AdministrationGoal is to ensure that employers provide employees with an environment free from recognized hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, or unsafe and unsanitary conditionsThe Virtual HR Director, LLC 201138


Compliance RecipeEnsure compliance in:Hazardous Communication Right to KnowPosterAnnual trainingDocumentationMSDS SheetsAll chemicals in the facility on fileEmployees have accessEmergency Evacuation Written evacuation planConduct an annual drillThe Virtual HR Director, LLC 201139


Recipe cont.All Injuries are documented and on fileOSHA 301 Injury ReportOSHA 300 Monthly LogOSHA 300A Annual Summary

Risks$1K for each missing 301 Injury Report$1k for each year for missing 300 Log



EEOFair Treatment & DisciplineInterviewingFMLAADASexual HarassmentPregnancy ActThe Virtual HR Director, LLC 201141


EEO LitigationEqual Employment Opportunity Commission 1965 Enforce Title VII of the Civil Rights Act

According to statistics released on January 11, 2011, the Equal Employment Opportunity Commission (EEOC) received record-shattering charges last year: the Agency reported the filing of the highest number of discrimination charges in 2010 since the Agencys founding in 1965.

The total number of charges filed with the EEOC in 2010 was 99,922, a 7.1% increase over 2009The Virtual HR Director, LLC 201142


Recipe EEO RisksCommunicateDocumentTrain and retrainIf discipline is not written, it doesnt existIf document isnt signed, it doesnt existBe professionalDont avoid conflictOpen straight forward honest communication



Employment Interviews



Banafa Halla Banafa/EEOC v. Abercrombie & FitchApply stock room clerk, 18 years of age, wore a scarfMgr. asked are you a Muslim and are you going to wear that scarf all of the time?Wrote on application, not the Abercrombie look

AwardBack payCompensatory damagesPunitive damage

RisksBack payReputation



Interview DontsAge unless (under 18 or 21) job relatedDate of birth, birthplaceMarital status, childrenCitizenship, race, color, ancestry or national originReligious affiliationType of military dischargeArrestsWhat spouse does for a livingWho lives in your householdCredit rating, charge accountsCar (unless job related)



Interview DosQuestions on experience, education, accomplishmentsQuestions on challenges, performance, problems encountered on the jobGoals, aspirations, strengths, weaknessesBehavior questions, scenario questions, situation questionsProblem solving techniques, skillsReasons for leaving, reasons to work herePrior conflict, pay, policies, procedures, expectations



Compliance RecipeCertify all interviewers on dos and don'tsUse standard interview formatImplement behavior interview processSelect candidates on qualificationsNever write notes on an application



FMLANew FMLA interpretations released 2009The Virtual HR Director, LLC 201149


Melissa Brown Melissa Brown v. Nutrition Management ServiceHired by Plymouth House in 2002 Dir. Food ServiceOutsourced food service to Nutrition Management August 2004Nutrition Management hired BrownBrown informed company she was pregnant in October 2004NM fired Brown resulted in lawsuit under FMLA

Award Jury $74K in back pay and damages

RisksBack payDamagesReputation



Brown v. NM cont.Jury Award $74K in back pay and damages

RisksBack payDamagesReputation



FMLAFamily Medical Leave ActRequirements50 or more employeesWorked for 12-months at the companyWorked 1,250 hours (avg. 24-hours per week)Employee Entitled Up to 12 consecutive weeksUnpaid leavePersonal illness, birth of a child, adoption, foster careIntermittent leave (hourly, daily or weekly)Reduced schedule to care for loved one Care for spouse, child under 18, parentThe Virtual HR Director, LLC 201152


FMLA RecipeFollow FMLA guidelinesTrain managers on guidelinesSet up a review panel to review cases that are not clearError on the side of the employee The Virtual HR Director, LLC 201153


ADA



ADAAmericans With Disabilities Act 1990Prohibits discrimination against qualified employees with disabilitiesCovers employers with 15 or more employeesAmericans with Disabilities Amendment Act 2008Expands the definition of disabilitiesIncludes customers?



What is a DisabilityPhysical or mental impairmentSubstantially limits one or more major life activitiesA record of having such impairment-being regarded as having such impairment Reasonable accommodation to the individual to enable them to perform the essential responsibilities of the job

What is reasonable accommodation?Does not present undue hardship on the employer



Old v. New1990Higher standard for proving disabilityMitigating measures = not disabledLow duty to accommodate

2008Lowers standard for employees burden to prove disability Excludes consideration of mitigating measuresMore employees will be considered disabledDuty to accommodate heightenedis employee qualified?does accommodation put undue hardship on employer?



Maurizio Antoninetti Maurizio Antoninetti v. Chipotle Mexican Grill, Inc.Wheel chair and unable to view productsStaff would hold up product with serving spoonsCourt ruled insufficient process to present productChipotle mitigated risk prior to trialAward5K in damages to Antoninetti136K granted to cover plaintiff attorney feesRiskCompensatory damagesReputation



ADA Recipe

Establish job descriptions and essential functions of the jobReview customer considerationsEnsure managers understand processWhen in doubt consult a professional



Sexual Harassment



Freeman v. Whirlpool, Inc.NASHVILLE, Tenn. The U.S. Equal Employment Opportunity Commission (EEOC) today announced a final court judgment of $1,073,261 against Whirlpool Corporation in a race and sex discrimination lawsuit on behalf of Carlota Freeman, an African American former employee at the companys LeVergne, Tenn.-based facility.

The EEOC alleged in its lawsuit that the appliance manufacturing giant failed to protect Freeman from persistent harassment by a white male coworker, which ultimately resulted in her being physically assaulted by him. 12/29/09The Virtual HR Director, LLC 201161


SH RecipeHave a policyEEO & SH policy in the front of employee handbookCommunicate/train the policyEmployees sign off on policy annuallyEnforce the policy as it is writtenInvestigate all complaintsResolve complaints promptly

RisksBack payPunitive damagesReputation



Pregnancy Act 1978



Myesha Kerr/EEOCMyesha Kerr/EEOC v. Frankston Assisted Living Ctr., Inc.HousekeeperWorked about 3-months announced she is pregnantSupervisor fired herTold EEOC he did not want to see her injuredI wouldnt have hired her if I had known she was pregnant AwardSettlement agreement 30K back pay3-year consent decreeTrain managers on EEO policiesThe Virtual HR Director, LLC 201164


Social MediaSocial media has become a part of an organizations marketing strategy

What is marketing?The Virtual HR Director, LLC 201165


AdvertisingThe Circus is coming to Rome, Georgia September 15th through September 30th11:00 am to 10:00 pm daily$15.00 Adults$10.00 Seniors$8.00 Children under 12



Promotion

Circus is comingTo townRome, GA.Aug 15th -30th The Virtual HR Director, LLC 201167


Publicity

Circus is comingTo Rome, GA. Rome Mayor Flower GardenThe Virtual HR Director, LLC 201168


Public Relations

Circus is comingTo Rome, GA. Mayor & wife laugh about it!



SALES

People from all over come to the elephant and the circus and purchase tickets to see the circus.



Branding

People tell their friends about what a great time they had. This is branding. A PROMISE



MarketingWhen you develop a plan which includes advertising, promotions, publicity, public relations, sales and branding, you have created a marketing strategy

Social Media is used to enhance publicity, public relations and brand communicationThe Virtual HR Director, LLC 201172


Souza/NLRB v. AMR of CTDawn Marie Souza & NLRB v. American Medical Response of ConnecticutTerminated for comments about company and manager on FacebookCompany terminated SouzaNLRB sided with Souza and representedPolicy was too stringent Back pay & reinstatement

Risk Back payReputationThe Virtual HR Director, LLC 201173


Social Media RecipeCreate a social media policySocial media policy should be aligned with intellectual property policySet realistic expectationsStaff sign policyPlace in fileThe Virtual HR Director, LLC 201174


Other Risks



Working Off the ClockSlaughter-Cabbell, et al v. Ryla Teleservices, Inc.Kennesaw, GeorgiaTerri Slaughter-Cabbell & Lana HooksFiled January 2011Class action law suit(Georgia, Alabama, Indiana, California, Colorado)Required to boot up computers, initialize software, set up call backs, review emails prior to paid startRisksBack pay and overtimeReputation The Virtual HR Director, LLC 201176


Improper Payroll DeductionsChallengeCash flow & accountability issuesCaseJames D. Hodgson/Secretary of Labor v. Mahues Liquor StoresEmployment agreement authorized to deduct cash register shortages from paycheckImpact on hourly rateRisksViolation of Fair Labor Standards ActPenaltiesEmployee trust & company credibility The Virtual HR Director, LLC 201177


HIPAA /Identity TheftCVS v. Health & Human Services & Federal Trade ComCVS employees discarding documents in trash v. shredCustomer personal informationInsurance informationCredit card slipsPayroll informationEmployment applicationsPill bottles

Fined$2.25 million



Additional QuestionsIf you have questions on any HR related topic or would like to receive a complimentary HR risk audit contact:

Gary WheelerThe Virtual HR Director, LLC

http://[email protected]



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