HR Policy and Compliance skeletons in the closet
Posted: 23 July 2008 01:44 PM   [ Ignore ]
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I’m interested in opinions on the subject of human resources and federal/ state compliance in the typical workplace (if there is such a place). 

Today, it’s fair to say there are thousands of employers out there who fall short on implementing legal compliance and other seemingly prudent HR policies or procedures.  What absent or poorly constructed HR policies, in your opinions, tend to cause the most friction in the workplace? 

On compliance, consider how some employers will attempt to make a weak argument they don’t know which regulations apply to them and which ones do not.  There may also be those owners and managers who intentionally “fly under the compliance radar” on issues they choose not to comply with while facing unknown outcomes if they are “caught” in the act of failing to comply.

So upon gazing into these worksites, what represents the most COMMON compliance and HR policies owners or managers are found to have either intentionally or unintentionally failed to implement or comply with and furthermore, what would you presume their reasoning for such failure to take action ?

Thanks,
Brian Phillips

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Brian Phillips -  Harvis Inc

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Posted: 24 July 2008 09:14 AM   [ Ignore ]   [ # 1 ]
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Looking at all employers, both large and small, I think the biggest compliance issue is (and has always been) properly categorizing employees as exempt or non-exempt under the FLSA.  After that, it might be improperly handling FMLA requests and requests for reasonable accomodation.

My $.02.

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Posted: 24 July 2008 02:22 PM   [ Ignore ]   [ # 2 ]
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1. there is no typical workplace.

2. it’s almost impossible for any employer (even with abundant resources) to avoid compliance errors. wal-mart cases alone could fill a law school textbook. do you think wal-mart, microsoft (“permatempts”) or allstate (ICs, age discrim) or bank of america (nonexempt bankers) get bit by employment law claims because they’re not trying to comply?

3. pre-Internet, the only way you could hope to get compliance info was by folklore (talking to a mentor or some other experienced HR professional). the law libraries were seldom up to date; the agency regulations were largely unavailable; how the hell were you supposed to comply with laws and regulations you couldn’t even discover? (even today it’s tough figuring how to comply with the gov’t; e.g., do you know why you’re not supposed to use the I-9 form revised this year 6/16/08 issued by the USCIS, but you are supposed to use the one revised last year 6/05/07?? see: http://www.elinfonet.com/newscount.php?popID=7143 for the official instructions to do so, but why?? and why wasn’t there any official announcement???)

4. “what represents the most COMMON compliance [problem] either intentionally or unintentionally ...?” I’d guess the sheer volume of off-the-clock minutes worked without pay (and the resultant minimum wage, overtime, recordkeeping, pay reporting and tax withholding, etc., errors) due to preliminary & postliminary activities such as donning & doffing, skipped breaks, and time-card fiction writing (“we always put 8 hours down”) would qualify.

5. of course, for MOST dollar value over the last decade, you’d have to vote for class action exempt/nonexempt claims. more recently, unpaid break class actions are on the increase.

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Posted: 01 August 2008 05:59 PM   [ Ignore ]   [ # 3 ]
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I believe that most compliance issues are unintentional.  While there may be some employers how knowingly risk noncompliance as a business decision, I think that in most instances—particularly those that you hear about—result from misunderstandings of what the law requires or failures by managers and H.R. personnel to enforce and follow through with established policies and guidelines. 

It is easy for H.R. directors, corporate counsel, and even outside counsel (such as myself) to promulgate and issue policy after policy from the comfort of our offices, wholly detached from the places where the policies must actually be performed.  Compliance, for the most part, comes down to finding and establishing a first-line management team that understands the policies, the purpose behind the policies, and the importance of implementing and enforcing the policies.  Upper management, on the other hand, needs to recognize that certain benchmarks and productivity goals may suffer as a result of hard and fast compliance enforcement.  It is the first-line manager that attempts to inflate numbers and productivity to the detriment of H.R. compliance (in order to impress his or her managers) and the upper level management that turns a blind eye to noncompliance (often for the same reasons as the first-line manager: approval from superiors, the bottom line, pressures within the organization, etc.) that creates the environment for numerous compliance related issues.  Add in a few highly technical and difficult to understand (and more difficult to apply) federal and state laws and the cost of compliance can quickly escalate.

Ultimately, I believe the answer to your question is that the cost and the amount of time it takes to “fully comply” with existing laws and regulations are the cause of of inaction by owners and managers.  Such noncompliance is not intentional.  It simply costs to much and takes too much time to fully understand, implement, and enforce all the requirements imposed on employers.  This is not meant to excuse employers; it is merely an attempt to explain how and why companies like Wal-Mart, UPS, Target, and FedEx can have so many compliance issues.  For better or for worse, compliance detracts from productivity and many owners and managers will lean in favor of productivity over compliance.

All that said, issues related to the FLSA and its state law iterations are the most problematic.  Whether it is wage and hour, fraternization, meal and rest breaks, overtime, or worker classification, it is the FLSA that creates the most compliance issues.  It is somewhat ironic that the objective criteria of the FLSA is often more difficult to follow than the more subjective requirements of Title VII, the FMLA, and the ADA.

My $0.02.

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Posted: 14 August 2008 08:07 PM   [ Ignore ]   [ # 4 ]
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Most companies just don’t know. We work with small to medium sized companies and none of the clients had correct I-9 forms when we first went in to look at them.

The second is FLSA - exempt/non-exempt or a statement in the handbook that unauthorized overtime will not be paid.  USERRA is another, FMLA a total and complete disconnect as to the requirements.  Just signed up a new client with 8 employees with a copied handbook that had FMLA in it.  Many over comply.  Others are so scared of compliance issues, but don’t get the help they need.

Very frustrating for us to know they need help.

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Posted: 15 August 2008 07:13 AM   [ Ignore ]   [ # 5 ]
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I think the toughest is FMLA, ADA, Workers Comp and disability and where they all cross.

Employers can’t keep up with the changes between the feds and the state.  You can talk w/3 different attorneys or consultants and get 3 different answers.  Much is up to interpretation.  Additionally, most small companies (under 100) don’t have a dedicated HR person.  It may be the owner, the office manager or some one else who has a myriad of other duties outside of HR to perform.  We have 1117 ees here and I am the only HR person—I not only handle the staffing, but also the group benefits, retirement benefits, and safety—all of which requires me to be an “expert” on employment law, ERISA, defined contribution plans, and OSHA.

I don’t think most employers/owners intentionnaly circumvent the laws.  Many just aren’t aware and are busy trying to keep their workers employed under intense global comeptition.  All in all, we do the best we can with good intentions and hope for the best.

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Posted: 17 September 2008 09:40 PM   [ Ignore ]   [ # 6 ]
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I’m surprised that no one mentioned COBRA. I don’t know the percentage of company’s over-all that violate this employment law but when talking with business owners this is the one that I see violated most frequently. Most of the time when COBRA is mentioned they don’t know what it is or they think that it doesn’t apply to there company because of there employee count. Recently I met with a company with 49 employees and they said that it didn’t apply to them because they didn’t have 50 or more employees (confused with FMLA). Also, in the state of Ohio employers must offer state continuation at 1 employee, I’ve yet to meet with an employer who knew this law existed.

I meet with small to mid-size business owners on a regular basis regarding there current HR structure and employment law usually becomes the primary topic of our conversation.  Either because the company is concerned with the potential impact to there business for not being in compliance or because they indicate to me that they understand that there are state/ fed laws that they should comply with but they don’t know which ones. Although these business owners know there are regulations that exist, and some of them know non-compliance can have a significant impact on there business, most of the time it is not a big concern because they have not had any problems.

For large businesses the financial burden of non-compliance is typically just that, a burden. But for a lot of the business owners I meet with the result of non-compliance could mean the demise of there business. I think someone said that “even the most aware employer can easily violate an employment law,” I completely agree with this statement. With the number of laws and the variance of compliance requirements based on the companies size, if you do not have someone who is consistently focused on maintaining compliance, compliance can become impossible.  All of the “major” employment laws, most of which I think where mentioned somewhere within this tread, carry heavy fines and it really is amazing how many companies are re-active rather than pro-active when building a strong HR infrastructure.

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Brooke McDonnell, HR Sales ConsultantPaychex, Inc.
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Posted: 18 September 2008 12:33 PM   [ Ignore ]   [ # 7 ]
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I agree that there is no “typical” workplace.  A workplace is either in compliance with the law or it is not, and there are a whole host of reasons why an employer might not be in compliance.  As a management-side employment lawyer, I see many of the same issues over and over again, while other issues arise less frequently.  By far the most frequent problem is accurately classifying employees as exempt or non-exempt for purposes of being eligible for overtime pay.  The profoudly incorrect view that a “salaried employee” is exempt from overtime still predominates many workplaces.  In truth, the employee’s job duties (not how they are paid) determines whether they are eligible for overtime.

A close second is the mistaken belief that a company can easily hire people as “contractors” and not “employees.”  (The benefit, of course, is that you don’t provide benefits for independent contractors.)  You often hear the term “consultant” or “1099” employee—neither of these terms has any legal meaning or significance in the area of Labor & Employment law.  An individual is either an “independent contractor” or an “employee;” there is nothing inbetween.  Furthermore, the law does not permit the parties to voluntarily determine the nature of their relationship—i.e., the employee cannot agree to be a contractor, as opposed to an employee.  In a nutshell, the degree of control the employer exercises over the individual’s work and routine determines whether the individual is an “independent contractor” or an “employee.”

The third most common problem I deal with is that employers know the federal law, but not the applicable state or local law.  For example, most employers don’t know whether their state has a minimum wage that is higher or lower than the federal, or whether their local jurisdiction (like Chicago, for example) has a “living wage” that might affect their employees rates of pay.  Save for the FMLA and the FLSA revisions a few years back, there has been no significant statutory developments in the federal arena in quite some time.  States and cities have therfore taken the initiative to craft Labor & Employment laws that apply to their jurisdictions.  Remember employers:  federal law is generally a floor beneath which you cannot go below; it generally does not prevent states, county, cities, and towns from imposing higher burdens on employers.

When in doubt….call your Employment counsel…it is much cheaper to deal with these issues before you are faced with an EEOC charge, the DOL investigation, or a federal court lawsuit.

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Posted: 18 September 2008 01:02 PM   [ Ignore ]   [ # 8 ]
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To break down the common FLSA non-compliance issue, one of the more common “mistakes” is treating all employees who have a “salary” as overtime exempt.  The assumption is that anyone whose wages are expressed in a weekly amount (rather than hourly) are automatically exempt.  management then ignores (chooses not to inform itself) of the real rules, and racks up tons of unpaid overtime hours.

Next up on the FLSA train is record-keeping.  Under many state laws, employers are required to keep time records, but they don’t bother.

Also on the list—failure to track vacations and time off, and to properly pay them out upon termination (when required)

Also add—improper calculation of wages for commissioned sales people and tipped employees.

. . . and don’t even get started on SOX. . . .

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