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

1. RECIPES TO MITIGATE HR
COMPLIANCE RISKS
ROME SHRM
Gary Wheeler, SPHR, GPHR, CCP, CBP

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Challenge
• 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

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Challenge
• 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

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Objectives
• Provide insight to potential HR business risks
• Share thoughts on how to mitigate risks

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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

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Interesting 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

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Exempt v. Non-exempt

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Recent 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. 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

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Atlanta 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

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Exempt
• 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

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Administrative 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

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Exempt V. Non Exempt Recipe
• Review each exempt position
• Apply the administrative test
• Error on the side of non-exempt
• New legislation – Right to Know

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Contractor v. Employee

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Robert 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

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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 done

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Risks
• Mitigate Risks
• Overtime pay
• Back pay
• Social security
• Federal and state taxes
• Benefits
• Retirement
• Penalties

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Contractor Recipe
• Review each contractor position
• Utilize the contractor v. employee checklist
• Error on the side of employee
• New legislation – Right to Know

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Independent Contractor Checklist
# Yes or
No
1 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?

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Independent Contractor Checklist
# Yes or
No
7 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?

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Independent Contractor Checklist
# Yes or
No
13 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

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I-9‟s & Work Authorizations

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Aramark
• 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

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I-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

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Employer 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

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Compliance 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

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Georgia Immigration Law

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Georgia 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

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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.

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E-Verify Participation
• Currently over 225,000 employers signed up
• Over 1,000 new businesses sign up each week
• Mandatory for government contractors

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Georgia 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

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Georgia 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

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OSHA

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Top 10 of Fines 2010
1. BP Products North America, Inc. (TX) - $87 million
2. Whitesell Corp. (AL) - $3.07 million
3. BP-Husky Refinery (OH) - $3.04 million
4. E. N. Range, Inc. (FL) - $2.1 million
5. South Dakota Wheat Growers ((SD) - $1.6 million
6. Tempel Grain Elevators, LLC (CO) - $$1.59 million
7. CES Environmental Services, Inc. (TX) – $1.4 million
8. Goodman Mfg. Co. (TX) - $1.215 million
9. A-1 Excavating (WI) - $861,000
10. WRR Environmental Services (WI) - $787,000

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

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OSHA
• 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

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Compliance 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

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Recipe 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

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EEO
• Fair Treatment & Discipline
• Interviewing
• FMLA
• ADA
• Sexual Harassment
• Pregnancy Act

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EEO 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

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Recipe 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

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Employment Interviews

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Banafa
• 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

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Interview 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)

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Interview 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

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Compliance Recipe
• Certify all interviewers on do‟s and don'ts
• Use standard interview format
• Implement behavior interview process
• Select candidates on qualifications
• Never write notes on an application

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FMLA
• New FMLA interpretations released 2009

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Melissa 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

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Brown v. NM cont.
• Jury Award $74K in back pay and damages
• Risks
• Back pay
• Damages
• Reputation

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FMLA
• 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

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FMLA 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

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ADA

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ADA
• 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?

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What 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

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Old 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?

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Maurizio 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

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ADA Recipe
• Establish job descriptions and essential functions of the
job
• Review customer considerations
• Ensure managers understand process
• When in doubt consult a professional

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Sexual Harassment

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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 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

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SH 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

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Pregnancy Act 1978

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Myesha 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

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Social Media
• Social media has become a part of an organization‟s
marketing strategy
• What is marketing?

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Advertising
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

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Promotion
Circus is
coming
To town
Rome, GA.
Aug 15th -30th

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Publicity
Rome Mayor
Flower Garden
Circus is coming
To Rome, GA.

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Public Relations
Mayor & wife
laugh about it!
Circus is coming
To Rome, GA.

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

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

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Marketing
• 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

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Souza/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

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Social 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

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Other Risks

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Working 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

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Improper 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

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HIPAA /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

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Additional 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
• http://www.thevirtualhrdirector.com
• gary@thevirtualhrdirector.com