Minimize Risk of losing valuable assets by not protecting or managing them because it seems too expensive or too much work
Maximize Value: financial gain through investment, corporate deals, licensing, product development, and improved market position
Risk #6: Company Managers
Many times, managers are placed into management positions without any HR or management training. They may have been a great individual contributor and promoted because of those skills and then they are suddenly placed in a leadership role. As a result, they may pick up things along the way that may be outdated or not understand the full picture and as a result, unintentionally put the company at risk.
Managers have incredible influence over employee workplace satisfaction, productivity, attracting great candidates and retaining the best employees. Yet many managers have not received training on the basics such as hiring, performance management, employee coaching and are tasked with executing on these areas well. Investing in your managers by providing them with tools on basic management skills, ensuring they understand your company’s philosophies around the hiring process and disciplinary action is really important. It’s an important risk reduction step.
Once the managers have the basics down continuing to invest in their development is imperative. Making them great leaders will help them get the best out of their teams leading to a more satisfied and productive workforce.
Risk #7: Employee Status Misclassification
There are complex legal standards used to determine employee status as exempt, non-exempt and independent contractor status.
The Fair Labor Standards Act and a number of state laws like it provide protection for employees regarding compensation for all time worked by an employee. Additionally, an employee may receive a premium for overtime work if not exempt from overtime protections.
Incorrectly classifying employees as exempt, when they should really be non-exempt thus eligible for overtime pay, among other things, can be a major problem for employers. These types of misclassifications can result in inaccurate payment of wages and can result in costly wage and hour claims.
Some states will go back as far as three years to calculate overtime due. Fines and penalties may also be assessed. Many times, employees were misclassified because they told the company that they were exempt at their last company, or the company may not want to pay OT. Other times the convenience of a set salary and not needing to track hours determines the decision to classify the employee as exempt or the employee may even request to be exempt because they may see it as a status symbol. At times, the title that an employee holds seems to influence the decision to classify the employee as exempt. An example of this occurred at Staples. In the Staples case the Company agreed to pay $42 million to resolve the allegations and end the litigation that had been ongoing for three years that involved the alleged misclassification of its assistant store managers as exempt and sought overtime pay for hours worked in excess of 40 hours per week. Just because the title included the word “manager” did not mean that the employees were exempt.
Misclassification of employees as independent contractors can be another major problem for employers. The IRS and many other agencies, both state and federal, have very specific tests for determining what constitutes an independent contractor. Failure to correctly classify and manage independent contractors can result in awards of back wages, benefits, fines and penalties against the company. Sometimes decisions are made based on request by the employee. For example, we have seen cases where a former ee agreed to assist the company until they get additional help. The former employee now works one day/week at the office and remotely the rest of the week and was labeled as an independent contractor. The fact that this was a former employee and the combination of a reduced work schedule plus flexible work arrangement did not meet the definitions of what is considered an independent contractor. Also, be aware that because someone was a independent contractor before, may not make them an IC for you. You as the employer own the risk of mis-classified employees. I knew someone that had an ee classified as an IC working for them doing by the job work. So a job came in and they were paid a specific rate for the job, sounds easy enough, but then as the onion peeled back it came out the company was requiring this IC to be at employee meetings, work on specific days and everything there was provided for them. The questions became more and more specific and it came to a place where they decided to review this position after getting one of the tests off the Department of Labor website.
The U.S. Department of Labor filed several lawsuits in 2013, under provisions of the Fair Labor Standards Act and this has been a trend that has seen an increase. Under federal law, an employee's status is determined by the degree of an employer’s control over the manner and means of work, not any written agreement. The DOL says that since 2012, it has collected $18.2 million in penalties linked to misclassification of more than 19,000 workers in the U.S. Another issue is that government regulators see misclassification not only as a labor issue but a tax issue, because companies don’t withhold taxes on contractors, making it much more difficult for the IRS to collect such taxes.
Because the risk of misclassification is significant and costly liability, TriNet recommends that you seek legal counsel with experience in employment law to assist you in making final determinations on exempt/non-exempt classification and independent contractor status.
Although documentation is not a new 2014 HR trend. You certainly have heard HR practitioners explain the importance of documenting performance and behavioral issues previously. Documenting continues to be one the most import risk management steps a manager can take yet it remains a step f
frequently not taken. Managers are busy and therefore difficult conversations and also documentation of those conversations don’t always occur.
Termination is not the goal of counseling. The ideal purposes behind counseling include:
To clearly communicate expectations and feedback
Help employee succeed and get back on track
Give employee opportunity to correct behavior/performance as part of employer due diligence
To document substandard performance in event performance is not brought back on track
Habit to consult with HCC because every situation is different. As HR Professionals we consult with each other on a regular basis. There are many times that we see a turnaround so remember the goal is not termination.
Document your hard work with the ee.
Creating job descriptions is a universally disliked task and keeping job descriptions updated rarely makes it to the top of anyone’s project list but, t
We know that in growing companies, prioritizes and responsibilities are moving targets and that creates a reluctancy to create job descriptions. “Other duties as assigned” Annual review process which includes ee involvement, give them a questionnaire since they have the day to day knowledge of tasks and responsibilities.
Risk #10: Failure to Properly Handle Leaves of Absences
An employee requesting time off for their own medical care or to care for an ill family member is a common occurrence. The list of leave laws employers need to be aware of is growing. The Family Medical Leave Act (FMLA) plus state laws such as the California Family Rights Act and local laws such as San Francisco’s Family Friendly Workplace Ordinance for employers with employees in San Francisco are all laws an employer would need to understand if they were working with an employee based in San Francisco plus the Americans with Disability Act (ADA) is an incredibly important law to be mindful of when working with an employee on their requested leave.
EEOC Claims for ADA discrimination and retaliation are increasing year over year.
In addition to medical leave of absences, there are more laws being considered that focus on workplace flexibility. For example the Healthy Family Act is being reviewed by Congress. As employees find ways balance caring for sick kids and elderly parents, and themselves the laws are attempting to catch up and provide workplace protection and even compensation in some situations. We will continue to watch for new legislation on workplace flexibility.
Leaves and the applicable laws connected to them can be complex. An absence from work, depending on the length of time off may impact an employee’s compensation and their health insurance eligibility. Please reach out to TriNet for HR guidance in order to compare the employee's request with your company’s polices, federal, state and local laws since this can be very tricky to navigate alone. Once a leave request is approved, please be sure to put the employee on leave of absence status in order to ensure that the leave is tracked appropriately and the proper steps are taken.
Training on how to handle leave of absence requests are also essential for supervisors and managers not only so that they understand and communicate the leave process correctly to employees but in addition to make them aware of what they can and can’t ask of employees especially during a medical leave situation. For example, it is never a good idea to discuss an employees medical diagnosis or specifics of their medical condition.
Like with many other areas of human resources, consistency is key. However, with leave of absences, companies need to be aware that each leave request can be different and different leave laws may apply. Leave of absence requests need to be reviewed on a case to case basis so consulting with TriNet can be beneficial in the review.