Recipies for Mitigating HR Risks


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Gary Wheeler presented "Recipes to Mitigate HR Compliance Risks" to the Rome SHRM group. Check it out for yourself.

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Recipies for Mitigating HR Risks

  2. 2. The Virtual HR Director, LLC 2011 2Challenge• Organizations have scaled down HR• In some cases, HR has been eliminated• Start-ups and small businesses • Can not afford a credible HR person or • Choose not to find an HR person to help, or • Do not understand the importance and value of HR• HR Risks are not accounted for in the financials
  3. 3. The Virtual HR Director, LLC 2011 3Challenge• The Federal Government believes 90% of all small and medium businesses in the U.S. are out of compliance• Compliance has become a revenue source for the government• Compliance will be a bigger issue for small businesses• A series of compliance audits can wipe out the annual profits of a business• HR risks must be mitigated like all other risks
  4. 4. The Virtual HR Director, LLC 2011 4Objectives• Provide insight to potential HR business risks• Share thoughts on how to mitigate risks
  5. 5. The Virtual HR Director, LLC 2011 5 Topics Risks RisksExempt v. Non-exempt Social MediaContractor v. Employee Working Off The ClockI-9 & Work Authorizations Improper PayrollOSHA DeductionsEEO HIPAA/Identity Theft
  6. 6. The Virtual HR Director, LLC 2011 6Interesting Facts• The 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-9‟s
  7. 7. The Virtual HR Director, LLC 2011 7Exempt v. Non-exempt
  8. 8. The Virtual HR Director, LLC 2011 8Recent Rulings• Engineers who repair or manufacture computers• Assistant managers when working in conjunction with managers (retail, restaurants, department stores)• Loan officers• Executive assistants• Repayment of pre-paid bonuses
  9. 9. Andrew Whalen• Andrew Whalen v. Morgan Chase • Loan underwriter • Authority to approve up to 500K in home loans• Award • TBD – Supreme Court• Risks • Overtime pay and back wages
  10. 10. The Virtual HR Director, LLC 2011 10Atlanta Firm Case• Executive Secretary/EEOC v. Atlanta Firm • Terminated for poor performance • Worked past 5:00 on a regular basis • Kept track of hours• Award • Granted 2-years of overtime• Risks • Overtime pay and back wages
  11. 11. The Virtual HR Director, LLC 2011 11Exempt• Salary Test • $23,600 annual• Executive • Manage business, department, division, group• Professional • Doctors, dentists, professors, scientists, CPA/accountants, outside sales• Administrative • HR, marketing, office managers, insurance agents
  12. 12. The Virtual HR Director, LLC 2011 12Administrative Exempt• Office or non-manual work, which is: • Directly related to management or general business operations of the employer or the employer‟s customers, and • A primary component of which involves the exercise of independent judgment and discretion and • Matters of significance
  13. 13. The Virtual HR Director, LLC 2011 13Exempt V. Non Exempt Recipe• Review each exempt position• Apply the administrative test• Error on the side of non-exempt• New legislation – Right to Know
  14. 14. The Virtual HR Director, LLC 2011 14Contractor v. Employee
  15. 15. The Virtual HR Director, LLC 2011 15Robert Gardner• Robert Gardner v. Baby Trend, Inc. • 17-year contractor • Company started making various deductions from commissions • Gardner complained • Company ordered him to attend a mandatory meeting • Gardner had another obligation • Baby Trend fired Gardner for missing meeting• Award • Jury 8.4 Million• Risks • Damages, lost earnings, mental suffering, failure to reimburse, waiting time, breach of contract and malice
  16. 16. The Virtual HR Director, LLC 2011 16What 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 done
  17. 17. The Virtual HR Director, LLC 2011 17Risks• Mitigate Risks • Overtime pay • Back pay • Social security • Federal and state taxes • Benefits • Retirement • Penalties
  18. 18. The Virtual HR Director, LLC 2011 18Contractor Recipe• Review each contractor position• Utilize the contractor v. employee checklist• Error on the side of employee• New legislation – Right to Know
  19. 19. The Virtual HR Director, LLC 2011 19Independent Contractor Checklist # Yes or No1 Can the worker make a profit or suffer a loss as a result of the work, aside from the money earned from the project?2 Does the worker have an investment in the equipment and facilities used to do the work?3 Does the person work for more than one company at a time?4 Does the worker offer services to the general public?5 Do you have the right to give the worker instructions about when, where, and how to work? (control)6 Do you train the worker to do the job in a particular way?
  20. 20. The Virtual HR Director, LLC 2011 20Independent Contractor Checklist # Yes or No7 Are the worker‟s services so important to your business that they have become a necessary part of the business?8 Must the worker provide the services personally, as opposed to delegating tasks to someone else?9 Do you hire, supervise, and pay the worker‟s assistants?10 Is there an ongoing relationship between the worker and yourself?11 Do you set the worker‟s hours?12 Must the worker spend all of his or her time on your job?
  21. 21. The Virtual HR Director, LLC 2011 21Independent Contractor Checklist # Yes or No13 Must the individual work on your premises, or do you control the route or location where the work must be performed?14 Do you have the right to determine the order in which services are performed? • You have to look at each job, there isn‟t a magic number of points
  22. 22. The Virtual HR Director, LLC 2011 22I-9‟s & Work Authorizations
  23. 23. The Virtual HR Director, LLC 2011 23Aramark• Aramark Concessions Fenway Park v. U.S. Immigration • Immigration found undocumented workers, and • Incomplete I-9‟s 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 worker • Note: per occurrence
  24. 24. The Virtual HR Director, LLC 2011 24I-9‟s• Immigration Reform and Act of 1986 • Required employers to attest to their employees immigration status. • Made it illegal to knowingly hire or recruit unauthorized immigrants • Granted amnesty to certain seasonal agricultural illegal immigrants • Granted amnesty to illegal immigrants who entered the United States before January 1, 1982 and had resided there continuously
  25. 25. The Virtual HR Director, LLC 2011 25Employer Obligation• Prohibits employment discrimination against persons legally permitted to work in the United States• Requires employers to document (I-9 form) eligibility for employment• Provides penalties for knowing employment of illegal workers
  26. 26. The Virtual HR Director, LLC 2011 26Compliance Recipe• I-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 representative• Dates must be accurate• Must verify the appropriate non-expired documents• Need a tickler file if temporary employment status expires• Must recertify on or before documents expire
  27. 27. The Virtual HR Director, LLC 2011 27Georgia Immigration Law
  28. 28. The Virtual HR Director, LLC 2011 28Georgia Immigration Law 2011• All public employers and government contractors must use E-Verify• Requires private employers to participate in E-Verify • January 1, 2012: Employers with 500 or more employees must comply • July 1, 2012: Employers with 100 – 499 employees must comply • July 1, 2013: Employers with 11-99 employees must comply• Must prove status to receive state benefits• Penalties up to $250K and 15-years of prison for identity fraud
  29. 29. The Virtual HR Director, LLC 2011 29E-Verify• E-Verify is an Internet-based system that compares information from an employees Form I-9, Employment Eligibility Verification, to data from U.S Department of Homeland Security and Social Security Administration records to confirm employment eligibility.
  30. 30. The Virtual HR Director, LLC 2011 30E-Verify Participation• Currently over 225,000 employers signed up• Over 1,000 new businesses sign up each week• Mandatory for government contractors
  31. 31. The Virtual HR Director, LLC 2011 31Georgia New Hire Reporting• Georgia 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
  32. 32. The Virtual HR Director, LLC 2011 32Georgia New Hire Reporting cont.• Required by law in all 50 states• Mandatory since October, 1998• States have the option of imposing civil monetary penalties on employers who fail to report new hires• $25 per newly hired employee• And if there is a conspiracy between the employer and employee not to report, the penalty can be up to $500 per newly hired employee
  33. 33. The Virtual HR Director, LLC 2011 33OSHA
  34. 34. The Virtual HR Director, LLC 2011 34
  35. 35. The Virtual HR Director, LLC 2011 35
  36. 36. The Virtual HR Director, LLC 2011 36Top 10 of Fines 20101. BP Products North America, Inc. (TX) - $87 million2. Whitesell Corp. (AL) - $3.07 million3. BP-Husky Refinery (OH) - $3.04 million4. 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) - $787,000
  37. 37. The Virtual HR Director, LLC 2011 37Average 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
  38. 38. The Virtual HR Director, LLC 2011 38OSHA• Occupational Safety and Health Act 1970• Occupational Safety and Health Administration • Goal 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 conditions
  39. 39. The Virtual HR Director, LLC 2011 39Compliance Recipe• Ensure compliance in:• Hazardous Communication Right to Know • Poster • Annual training • Documentation• MSDS Sheets • All chemicals in the facility on file • Employees have access• Emergency Evacuation • Written evacuation plan • Conduct an annual drill
  40. 40. The Virtual HR Director, LLC 2011 40Recipe cont.• All Injuries are documented and on file • OSHA 301 Injury Report • OSHA 300 Monthly Log • OSHA 300A Annual Summary• Risks • $1K for each missing 301 Injury Report • $1k for each year for missing 300 Log
  41. 41. The Virtual HR Director, LLC 2011 41EEO• Fair Treatment & Discipline• Interviewing• FMLA• ADA• Sexual Harassment• Pregnancy Act
  42. 42. The Virtual HR Director, LLC 2011 42EEO Litigation• Equal 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 Agency’s founding in 1965.• The total number of charges filed with the EEOC in 2010 was 99,922, a 7.1% increase over 2009
  43. 43. The Virtual HR Director, LLC 2011 43Recipe EEO Risks• Communicate• Document• Train and retrain• If discipline is not written, it doesn‟t exist• If document isn‟t signed, it doesn‟t exist• Be professional• Don‟t avoid conflict• Open straight forward honest communication
  44. 44. The Virtual HR Director, LLC 2011 44Employment Interviews
  45. 45. The Virtual HR Director, LLC 2011 45Banafa• Halla Banafa/EEOC v. Abercrombie & Fitch • Apply stock room clerk, 18 years of age, wore a scarf • Mgr. asked “are you a Muslim and are you going to wear that scarf all of the time?” • Wrote on application, “not the Abercrombie look”• Award • Back pay • Compensatory damages • Punitive damage• Risks • Back pay • Reputation
  46. 46. The Virtual HR Director, LLC 2011 46Interview Don‟ts• Age unless (under 18 or 21) job related• Date of birth, birthplace• Marital status, children• Citizenship, race, color, ancestry or national origin• Religious affiliation• Type of military discharge• Arrests• What spouse does for a living• Who lives in your household• Credit rating, charge accounts• Car (unless job related)
  47. 47. The Virtual HR Director, LLC 2011 47Interview Do‟s• Questions on experience, education, accomplishments• Questions on challenges, performance, problems encountered on the job• Goals, aspirations, strengths, weaknesses• Behavior questions, scenario questions, situation questions• Problem solving techniques, skills• Reasons for leaving, reasons to work here• Prior conflict, pay, policies, procedures, expectations
  48. 48. The Virtual HR Director, LLC 2011 48Compliance Recipe• Certify all interviewers on do‟s and donts• Use standard interview format• Implement behavior interview process• Select candidates on qualifications• Never write notes on an application
  49. 49. The Virtual HR Director, LLC 2011 49FMLA• New FMLA interpretations released 2009
  50. 50. The Virtual HR Director, LLC 2011 50Melissa Brown• Melissa Brown v. Nutrition Management Service • Hired by Plymouth House in 2002 Dir. Food Service • Outsourced food service to Nutrition Management August 2004 • Nutrition Management hired Brown • Brown informed company she was pregnant in October 2004 • NM fired Brown – resulted in lawsuit under FMLA • Award • Jury $74K in back pay and damages • Risks • Back pay • Damages • Reputation
  51. 51. The Virtual HR Director, LLC 2011 51Brown v. NM cont.• Jury Award $74K in back pay and damages• Risks • Back pay • Damages • Reputation
  52. 52. The Virtual HR Director, LLC 2011 52FMLA• Family Medical Leave Act • Requirements • 50 or more employees • Worked for 12-months at the company • Worked 1,250 hours (avg. 24-hours per week) • Employee Entitled • Up to 12 consecutive weeks • Unpaid leave • Personal illness, birth of a child, adoption, foster care • Intermittent leave (hourly, daily or weekly) • Reduced schedule to care for loved one • Care for spouse, child under 18, parent
  53. 53. The Virtual HR Director, LLC 2011 53FMLA Recipe• Follow FMLA guidelines• Train managers on guidelines• Set up a review panel to review cases that are not clear• Error on the side of the employee
  54. 54. The Virtual HR Director, LLC 2011 54ADA
  55. 55. The Virtual HR Director, LLC 2011 55ADA• Americans With Disabilities Act 1990 • Prohibits discrimination against qualified employees with disabilities • Covers employers with 15 or more employees• Americans with Disabilities Amendment Act 2008 • Expands the definition of disabilities• Includes customers?
  56. 56. The Virtual HR Director, LLC 2011 56What is a Disability• Physical or mental impairment• Substantially limits one or more major life activities• A 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
  57. 57. The Virtual HR Director, LLC 2011 57Old v. New 1990 2008• Higher standard for proving • Lowers standard for disability employees‟ burden to prove• Mitigating measures = not disability disabled • Excludes consideration of mitigating measures• Low duty to accommodate • More employees will be considered “disabled” • Duty to accommodate heightened • is employee qualified? • does accommodation put undue hardship on employer?
  58. 58. The Virtual HR Director, LLC 2011 58Maurizio Antoninetti• Maurizio Antoninetti v. Chipotle Mexican Grill, Inc. • Wheel chair and unable to view products • Staff would hold up product with serving spoons • Court ruled insufficient process to present product • Chipotle mitigated risk prior to trial• Award • 5K in damages to Antoninetti • 136K granted to cover plaintiff attorney fees• Risk • Compensatory damages • Reputation
  59. 59. The Virtual HR Director, LLC 2011 59ADA Recipe• Establish job descriptions and essential functions of the job• Review customer considerations• Ensure managers understand process• When in doubt consult a professional
  60. 60. The Virtual HR Director, LLC 2011 60Sexual Harassment
  61. 61. The Virtual HR Director, LLC 2011 61Freeman 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 company’s 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. • 12/29/09
  62. 62. The Virtual HR Director, LLC 2011 62SH Recipe• Have a policy• EEO & SH policy in the front of employee handbook• Communicate/train the policy• Employees sign off on policy annually• Enforce the policy as it is written• Investigate all complaints• Resolve complaints promptly• Risks • Back pay • Punitive damages • Reputation
  63. 63. The Virtual HR Director, LLC 2011 63Pregnancy Act 1978
  64. 64. The Virtual HR Director, LLC 2011 64Myesha Kerr/EEOC• Myesha Kerr/EEOC v. Frankston Assisted Living Ctr., Inc. • Housekeeper • Worked about 3-months announced she is pregnant • Supervisor fired her • “Told EEOC he did not want to see her injured” • “I wouldn‟t have hired her if I had known she was pregnant• Award • Settlement agreement 30K back pay • 3-year consent decree • Train managers on EEO policies
  65. 65. The Virtual HR Director, LLC 2011 65Social Media• Social media has become a part of an organization‟s marketing strategy• What is marketing?
  66. 66. The Virtual HR Director, LLC 2011 66Advertising The Circus is coming to Rome, Georgia September 15th through September 30th 11:00 am to 10:00 pm daily $15.00 Adults $10.00 Seniors $8.00 Children under 12
  67. 67. The Virtual HR Director, LLC 2011 67Promotion Circus is coming To town Rome, GA. Aug 15th -30th
  68. 68. The Virtual HR Director, LLC 2011 68 PublicityRome MayorFlower Garden Circus is coming To Rome, GA.
  69. 69. The Virtual HR Director, LLC 2011 69Public Relations Mayor & wifelaugh about it! Circus is coming To Rome, GA.
  70. 70. The Virtual HR Director, LLC 2011 70SALES People from all over come to the elephant and the circus and purchase tickets to see the circus.
  71. 71. The Virtual HR Director, LLC 2011 71Branding People tell their friends about what a great time they had. This is branding. A PROMISE
  72. 72. The Virtual HR Director, LLC 2011 72Marketing• When 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 communication
  73. 73. The Virtual HR Director, LLC 2011 73Souza/NLRB v. AMR of CT• Dawn Marie Souza & NLRB v. American Medical Response of Connecticut • Terminated for comments about company and manager on Facebook • Company terminated Souza • NLRB sided with Souza and represented • Policy was too stringent • Back pay & reinstatement• Risk • Back pay • Reputation
  74. 74. The Virtual HR Director, LLC 2011 74Social Media Recipe• Create a social media policy • Social media policy should be aligned with intellectual property policy • Set realistic expectations • Staff sign policy • Place in file
  75. 75. The Virtual HR Director, LLC 2011 75Other Risks
  76. 76. The Virtual HR Director, LLC 2011 76Working Off the Clock• Slaughter-Cabbell, et al v. Ryla Teleservices, Inc. • Kennesaw, Georgia • Terri Slaughter-Cabbell & Lana Hooks • Filed January 2011 • Class action law suit • (Georgia, Alabama, Indiana, California, Colorado) • Required to boot up computers, initialize software, set up call backs, review emails prior to paid start• Risks • Back pay and overtime • Reputation
  77. 77. The Virtual HR Director, LLC 2011 77Improper Payroll Deductions• Challenge • Cash flow & accountability issues• Case • James D. Hodgson/Secretary of Labor v. Mahue‟s Liquor Stores • Employment agreement authorized to deduct cash register shortages from paycheck • Impact on hourly rate• Risks • Violation of Fair Labor Standards Act • Penalties • Employee trust & company credibility
  78. 78. The Virtual HR Director, LLC 2011 78HIPAA /Identity Theft• CVS v. Health & Human Services & Federal Trade Com• CVS employees discarding documents in trash v. shred • Customer personal information • Insurance information • Credit card slips • Payroll information • Employment applications • Pill bottles • Fined • $2.25 million
  79. 79. The Virtual HR Director, LLC 2011 79Additional Questions• If you have questions on any HR related topic or would like to receive a complimentary HR risk audit contact:• Gary Wheeler• The Virtual HR Director, LLC••