LME Creative Human Resource Solutions is proud to support the Amazing Ariel Arismendez please help support her journey to the 2016 Olympics.
OUTSOURCE HR OR NOT, THAT IS THE QUESTION…
To Outsource HR or Not is an option that should be considered. Most small-business owners know the frustration of spending more time than they want or should on non-revenue-generating activities. From payroll and human resource management to benefits and compensation, entrepreneurs can spend up to 40 percent of their precious day engaged in these necessary but time-sucking tasks.
The answer for many growing companies may be to outsource HR and hire one of the 700 professional employer organizations (PEOs) in the U.S. These companies become the legal employer of your staff and handle all the payroll, benefits and HR functions.
“Most small businesses are under 25 employees, and that means the owner is the most productive, is critical to the success of the business, and has to get out there and generate sales and products,” says Lydia Mannion-Evanson, president and CEO of LME Creative Human Resource Solutions. When small businesses outsource non-core activities, “they can focus on the business of their business,” says Mannion-Evanson.
But when does it make sense to outsource HR and hire a PEO? While PEOs aren’t for every company, those that do use them can often offer better benefit packages and thus hire better talent, says Mannion-Evanson. “We help them set up a Fortune 500 package of benefits,” she says.
In assessing whether or not you should hire a PEO, there are several questions to consider before you make a decision:
- How big is your company? Expert opinion varies on how large a company should be before it hires a PEO. A general rule of thumb is “when administrative processes begin slowing down the productivity of the firm,” says Mannion-Evanson. While it is different for every company, “this typically occurs when a business reaches 10 to 15 employees a week,” she says. Some PEOs won’t work with companies that have fewer than 10 employees. “Once a company gets very big, then it is easier to have an in-house HR department,” says Mannion-Evanson. The sweet spot for a PEO, she says, is between 16 and 80 people. The composition of your workforce is also important. Companies that only offer insurance to a few key executives wouldn’t benefit from PEOs.
- How much does a PEO cost? Like all professional services, the way a PEO prices services varies depending on the company. Industry experts estimate that the cost ranges from about 2 percent to 11 percent of wages. Another way to look at the expense is per employee. With that measure, it would run between $500 and $1,500 per employee per year. For very small companies with only two to five employees, some PEOs might price their services at a flat fee of $150 per month. On the flip side, it is important to try and estimate the total cost of your HR functions. Truth is, most businesses “have no idea what their true costs are, as they only think of wages but never add up all the other things,” says Mannion-Evanson.
- How much control do you want over your HR functions? A PEO acts as a business partner to the client company. If a business owner wants to control all aspects of a business and is not open to suggestions or following through on recommendations a PEO makes, then a PEO may not make sense. Businesses do lose a bit of flexibility in the coverage they can offer when they use a PEO. Related to the issue of control is the perception of your employees. “Employees are used to seeing [your business name] on the check,” and the PEO becomes the check signer, says Mannion-Evanson.
- What services do you need? “Picking the right PEO is of paramount importance.” Also bear in mind that some PEOs specialize in a Web-based high-tech approach, while others are focused on face-to-face support.
Remember — each PEO is different, and business owners would do well to read the fine print.
Mistake #1. Failure to pay the minimum wage
We’ll pay you $5 an hour until you learn the ropes; then you move up to $7 an hour.
Virtually all employees are entitled to receive at least the minimum wage (the federal minimum wage is $7.25 per hour; many states have higher minimum wages) for all hours worked. Special arrangements may be made for waitstaff (although their tips have to put them above the minimum wage) and for certain training situations. LME Creative Human Resource Solutions can help you work through these issues.
Mistake #2. Failure to pay for all hours worked
Be sure to stay close to your phone tonight in case that customer calls in from the West Coast.
Clock out before you set up for tomorrow, OK?
Employers must pay nonexempt employees for all hours worked, even if the employee has volunteered to do the work without pay and even if you’ve
forbidden the employee to do work. (You can discipline the employee in this situation, but you have to pay for the hours.)
Some violations are blatant, like “clock out and continue working,” but some are not so obvious. For example, expecting nonexempt workers to take customer calls off hours, or insisting that they answer the phones during an unpaid lunch break. Be careful with non-exempt employees that have blackberries and smartphones and answer emails after hours.
Mistake #3. Misclassifying as exempt
Your title is Assistant Manager; you’re exempt.
You get a salary—so you’re obviously exempt.
Organizations may wish to classify workers as exempt to avoid paying overtime and/or to avoid paying for extra hours worked. Unfortunately, an employee’s title doesn’t mean anything, and the fact that the person is paid on a salary basis doesn’t mean anything—it’s the job duties that determine whether a worker is exempt. There are very specific guidelines from the Department of Labor for the main types of exemptions—administrative, executive, creative, and outside sales. LME Creative Human Resource Solutions can help you make sure your employees are classified correctly.
Mistake #4. Misclassifying as independent contractors
You’ll be working alongside our regular employees but you’ll be an independent contractor.
Of course he’s an independent contractor—we signed an agreement.
Many employers are tempted to classify workers as independent contractors because it avoids many of the payments that have to be made to employees and on their behalf (e.g., Social Security). But many so-called independent contractors are really employees. In particular, the more control the employer has over how the person does the job (giving explicit instructions, providing materials and tools, dictating hours, being the only customer), the more
likely that worker is not an independent contractor. For sure, if the person is sitting right with the regular employees, doing the same work, the person is likely an employee.
Detailed sets of criteria from the DOL and the IRS help you make the determination of employee versus independent contractor.
Mistake #5. Failure to properly calculate and pay overtime
We don’t pay overtime. If you don’t want the extra hours, just say so.
I need you to work 50 hours this week; you can take some comp time next week instead of claiming the overtime.
Employers can’t avoid their obligation to pay overtime. Under federal law,
except in very limited circumstances, overtime at the rate of 11⁄2 times the regular rate is due for all hours worked over 40 in a workweek. Private employers may not use a “comp time” system.
Another very common violation is failure to pay overtime based on the “regular rate” of pay, which includes any nondiscretionary bonuses. So, for example, if at the end of the month workers get a production bonus, you have to go back and recalculate their overtime premium.
Mistake #6. Inappropriate deductions
Just because you’re a manager, it doesn’t mean you can come in late. I‘m docking you a half-day’s pay.
Sorry to hear that you are leaving. The amount due on the loan the company made to you is coming right out of your final paycheck.
There are a number of restrictions on deductions from pay. For example, for exempt employees, partial-day deductions are generally prohibited. Such deductions would be treating the exempt employee like an hourly employee, and the exemption could be lost. Detailed rules exist regarding deductions for meals and lodging, clothing and protective gear, donning and doffing time, shortages and damage, and so on.
Finally, many states have specific rules governing final paychecks.
Mistake #7. Forgetting state law
Here we are in California, and we pay overtime just like the federal law requires.
Many states have their own laws regarding wage and hour. For example, in California:
• All travel time is paid time (whereas under federal law, only travel time that coincides with the normal work day is compensable).
• Overtime at 11/2 times the employee’s regular rate is owed for hours worked in excess of 8 hours a day, or for the first 8 hours worked on the seventh consecutive day worked in a workweek. (These payments are not owed under federal law.)
• Double-time must be paid for hours worked in excess of 12 in a workday or worked in excess of 8 on the seventh consecutive day worked in any workweek. (These payments are not owed under federal law.)
Mistake #8. Making “side agreements”
I’m out of overtime this month. Work off the clock this week and I’ll make it up to you next month.
Agreements like this likely violate the FLSA. Employees can’t waive their right to overtime or pay for hours worked—even if they agree, even if they are eager to help out by doing a little work on the side without pay.
Mistake #9. Assuming that interns do not have to be paid
You’ll be working for us as an intern, so you won’t be paid, but you will learn a lot.
Many managers and supervisors think that if someone is an “intern” that means they don’t have to be paid. Actually, DOL’s Wage/Hour Division has detailed and strict guidelines for when an internship can be unpaid, and most internships don’t pass their test.
Briefly, unpaid interns can’t do regular company work; they have to be in a learning capacity. Certain circumstances, like getting college credit, may alter the situation. Check the guidelines before establishing an unpaid intern program.
Mistake #10. Failure to observe rules regarding youth employment
Jimmie, I know it’s a school day, but can you stay a few more hours?
Tracy, hop on the fork lift, take this load of cardboard out back, and run it through the crusher, will you?
There are very clearly-spelled-out rules governing the work hours and type of work for younger workers. Make sure to review them with supervisors when you hire young workers.
Bonus Mistake—Failure to keep accurate records
In most of the judgments against employers for wage and hour failures, there’s an additional charge—failure to keep accurate records. Besides being a violation itself, it also leads to an unpleasant situation: In the absence of records, courts tend to take the employee’s word for how many hours were worked.
OK, that’s our top 10 Mistakes—plus one—of managing wage and hour. LME Creative Human Resource Solutions can help your organization avoid them and stay hassle and lawsuit free.
The Buckeye Woman’s Club is ready to kick ass with our latest fundraising effort. We are pleased to announce we are partnering with Southwest Speciality Foods and LME Creative Human Resources.
Please visit Southwest Speciality Foods at their Ass Kickin store at 700 North Bullard Avenue – exit 127 off the I-10 and go south with this ad or order on line at http://www.asskickin.com/ and enter BWC2014 under special instructions when you checkout and 10% of Southwest Speciality Foods will donate 10% your total purchase to the Buckeye Woman’s Club and LME Creative Human Resources will match that 10%.
Davis Bacon Audits Completed by Lydia Evanson
LME Creative Human Resource Solutions is proud to announce that the US Department of Labor and the US Department of Energy have completed their Davis Bacon audits of the 280 MW Solar Power Plant outside Phoenix, Arizona and found no violations of the Davis Bacon Act. Lydia Mannion Evanson, Prinicpal of LME Creative Human Resource Solutions managed all aspects of Davis Bacon compliance for the multi billion dollar project which was partially funded with a $1.8 billion dollar federal loan guarantee.
Lydia also authored a conformance request which ultimately save the company over $12 million dollars on the project.
LMECHR’s compliance monitoring services ensured correct payment of prevailing wages on the project. The experts at LMECHR understand the complex system of federal regulations related to Davis Bacon and Related Acts. We work closely with our clients to proactively manage projects. We offer creative solutions to challenges of managing the DB act on large construction projects. We have worked with LCP Tracker to develop reporting that ensure compliance.
We work with contracting officers, contractors labor unions and the US Department of Labor Monitors projects and job sites.
If you need the very best in Davis Bacon Consulting in the Phoenix area and beyond, please call us for a free consultation at 1-800-928-4785 or visit our website at www.lmechr.com
Enforcement of Employee Classifications
The DOL has stepped up their enforcement of employee classification. The following are 10 great strategies to prevent or handle a wage and hour investigation.
- Avoid unfair compensation practices. Make sure employees are compensated in a consistent manner. If an employer’s pay practices are consistent, complaints are less likely to arise, and the employer will be in a better situation if the DOL does launch an investigation.
- Understand the regulations. It is important that employers take the time and make a concerted effort to understand and familiarize themselves with the FLSA. It is the law, and if employers fail to follow the law they may face litigation or a DOL audit.
- Train managers. Train managers so they are fluent in the language of the FLSA.
- Analyze state vs. federal law. Determine whether the state’s wage and hour laws conflict with federal law; then follow the law that is most beneficial to the employee.
- Pay past overtime due. If it is determined that an employee is wrongly classified as exempt, the employer should determine how many overtime hours the employee has worked in the past 2 years, then pay the employee the overtime due. The employer should also have the employee sign a release to free the employer from further liability. Paying past overtime due to employees now will be far less expensive than paying them in a DOL settlement.
- Respond to internal complaints expeditiously. If an employee files a wage and hour complaint internally, the employer should take it seriously. Since many investigations are prompted by an employee’s complaint, employers might be able to prevent an investigation by addressing an employee’s initial internal complaint. Desk audits are a great way to make sure employees are classified correctly.
- Seek compliance assistance from the DOL. Various compliance tools and information are available on DOL’s website.
- Conduct a self-audit. Employers can hire attorneys or consultants to audit their companies–or they can do it themselves before the DOL initiates an investigation. Conducting a self-audit helps ensure compliance with federal and state laws.
- Cooperate. Employers should demonstrate their willingness to cooperate with DOL investigators and to adjust their procedures and policies as necessary to avoid violations in the future.
- Keep accurate records. Employers are required to make, keep, and preserve employees’ records, including wages earned and hours worked, for a specified period of time. Although there is no particular form for the records, they must include certain identifying information about each employee and accurate data about the hours worked and wages earned.
LME Creative Human Resources is here to help you with all of your HR Compliance needs.
HR Management Key Skills #1 Organization
HR management requires key skills plus an orderly approach. Organized files, strong time management skills, and personal efficiency are key to HR effectiveness. You’re dealing with people’s lives and careers here, and when a manager requests help with a termination or a compensation recommendation or recognition program, it won’t do to say, “I’ll try to get to that if I have time.”
The CFO and Human Resources
CFOs are often reclusive and cautious, and HR avoids them in general and knows little about them. But HR isn’t going to be successful without being able to sell ideas to the CFO.
Why is the relationship with the CFO so important?
CFOs often have the final approval of HR projects.
They are a trusted advisor to the president.
They are often directly responsible for Human Resources and related areas like training.
C-Suite lines up like this:
CEO does “the vision thing.”
COO makes it happen.
CIO runs the metrics.
CFO is “Dr. No.”
Who Is the CFO?
Here are three examples to help HR understand CFOs:
The CFO is the only person in the C-Suite who brings lunch because it’s efficient.
If you ask the CFO whether the glass is half full or half empty, the CFO says, “It’s twice as big as needed.”
If you ask the CFO where he or she is going on vacation, the CFO will say “305.” (That’s the efficient way to say Disney; it’s Central Florida’s area code.)
On the job 4 to 6 years
Fired from last job—personality conflict with the CEO—and will probably be fired from their current job
Under pressure from every angle—new regulations, slow economy, tight banking
Embarrassed by Enron, Worldcom, Conseco, etc.
Today … CFOs Are Feeling the Heat
Before Sarbanes-Oxley, CFOs were generalist business partners, but new regulations are forcing CFOs to spend more time on compliance issues, leaving little time for strategy and new ideas.
In addition, new external pressures are forcing accountability on the organization.
Here are seven reasons it stinks to be a CFO in 2013:
New accounting rules—FASB, stock options.
Healthcare costs are out of control.
Every action is scrutinized for ethical lapses.
Managing technology dollars is tough.
Forecasting cash flow is tougher.
Data “stovepipes” are slowing commerce.
Frustration with people issues.
What the CEO Thinks About the CFO
“In which skills and qualities does your CFO excel?”
“Which skills and qualities does your CFO lack?”
People development skills
(from a CFO Magazine Survey of 500 CEOs)
Key Point: HR Can Help
All of the CEO’s gripes about CFOs are about issues that are part of HR’s core competencies,
The following is a list of characteristics of CFOs:
Very high learning index
Refine your picture of your CEO with two questions:
How much information does he or she want?
How much of a relationship does he or she want?
How much do you want me to keep you up to date on details?
How important is it that I help you gather, synthesize, and understand data?
To what extent do you want me to inform you about trends and new technologies?
To what extent do you want me to advise you?
How important are a mutually beneficial relationship and joint long-term goals?
You’ll find that most CFOs are either transaction-oriented or information-oriented.
Transaction-oriented CFOs are low information, low relationship. Most CFOs are this type. They think:
Price, Price, Price
Speed, Speed, Speed
Accuracy, Accuracy, Accuracy
“I just want good, fast, and cheap.” “We need it tomorrow by 4 p.m.” “The specs are.…” “I want to go out for competitive bid.” “I faxed you my order.”
Information-oriented CFOS are high information, low relationship. They:
Want you to keep them informed
Don’t necessarily want to be your friend
Love info on trends, big picture issues
“Here’s my e-mail. Keep me posted.”“I need to stay up-to-date.” “What’s the latest….?” “Give me the information; I’ll make the decision.” “My e-mail address is….”
Treat CFOs as they want to be treated. Most never want to be a partner. You do have a valuable, free gift for them—not wasting their time.
With workplace harassment we tend to focus on sexual harassment, but all your managers need to know that there are many other types of harassment. For example, employees might be protected because of the following:
- Civil union/domestic partners
- Disability/handicap (physical or mental)
- Family status*
- Gender Identity*
- Genetic information
- Marital status*
- National origin/ancestry
- Protected complaints/activity
- Protected leave
- Sexual orientation*
- Veteran’s status/military status
* Protection in these categories is not guaranteed by federal law; it depends on state or local laws.
Managers and Supervisors May Be Liable as Individuals
To get supervisors’ and managers’ attention, remind them that they may be personally liable for harassment under state law.
How Does Harassment Hurt the Company?
Lawsuits aren’t the only threat that harassment can cause. Harassment potentially causes damage in all these ways:
- Threat of legal liability. Remember, under federal law there are limits to certain damages, but often not under state law. Consider the possibility of:
- Economic damages
- Pain and suffering
- In some cases, punitive damages
- Cost of litigation. Litigation is expensive. (A typical basic case may cost $100,000 in legal fees, and that’s to say nothing of potential costs if the company loses the case.) And litigation is not easy, because you are trying to prove the negative, that is, that whatever was alleged either didn’t happen or it wasn’t pervasive enough to be actionable.
- Lost time. Your managers will spend time in meetings, fact-finding, depositions, and in court.
- Adverse career consequences. There are almost certainly going to be adverse consequences for managers and supervisors whoengage in harassment or who tolerate it.
- Productivity losses. There are bound to be direct productivity losses caused by the lost time mentioned above.
- Employee relations. There’s also a morale issue. The atmosphere generated by the harassment claim may well drive awaytalented workers or applicants.
- Public relations. Negative publicity iscertainly not going to help the company.
- Erosion of stock value. The poor publicity may cause stock price or company value to plunge.
- Erosion of core values. Finally, Segal says, there is likely to be an erosion of the company’s core values.
Don’t struggle with creating compliant HR policies! LME already has them written for you.
The Top 25 Behaviors That May Be Harassment
Some supervisors and managers need very specific guidance, Segal says, so he offers 25 specific examples of harassing behavior:
Linking any employment decision or benefit to asubordinate’s submission or refusal to submit to sexual advances. (Always illegal.)
Asking for sex and other sexual advances or propositions, even if there is no demand or threat attached.
Sexual flirtations, bantering, etc.
Engaging in sex while at work.
Repeated requests for dates. Even the initial request is risky if it involves a supervisory-subordinate relationship, Segal says.
Sexually explicit or suggestive conversations, comments, questions, stories, etc., whether they are mixed gender or same gender.
Questions or comments about an employee’s actual or perceived sexual orientation.
Comments with regard to appearance of a sexual or suggestive nature or at inappropriate times or frequency.
Sexual or physical assault. (Always illegal.)
Unwelcome and/or inappropriate touch, such as patting, pinching, or brushing against someone.
Sexual or suggestive “jokes.”
Racial, ethnic, or religious “jokes” or “jokes” that make fun of, belittle, or stereotype any other protected group.
Mimicking or making fun of someone’s accent, disability, diction, gestures, or manner of speech, or religious, racial, or ethnic attire or dress.
“Joking” about or making fun of historical tragedies (e.g., slavery) or violent crimes (e.g., rape).
Obscene, sexual, or suggestive materials, cartoons, objects, photos, etc., including calendars and other pin-ups.
Racist, sexist, or other hate-based graffiti.
Hate symbols, such as a noose, a swastika, or a KKK symbol.
Hate slurs/epithets that relate to any protected group, such as the “N” word and the “C” word.
Nicknames that relate to any protected group, such as “Grandma.”
Stereotypic comments or “compliments,” such as “You don’t sound Black; you don’t look Jewish; you don’t act gay.”
Derogatory/unwelcoming messages, such as a “Speak English or Go Home” sticker.
Cursing and other foul language.
Verbal or nonverbal innuendo of a sexual, suggestive, or threatening nature.
Hostile behavior targeted at an employee because of his or her membership in a protected group.
Other inappropriate or unprofessional conduct that relates to or is directed at a protected group.
‘But It Didn’t Happen at Work’
Some people think that if behavior happens after work, it’s outside the purview of the company, remember the prohibitions against sexual harassment apply beyond the workplace, specifically:
The prohibitions apply off-site at social and other events.
The prohibitions apply to written, oral, electronic, and all other forms of communication (including social networking).
The prohibitions apply to nonemployees, such ascustomers/clients/patients, contractors, and vendors and suppliers.
Supervisors and managers have to set an example by refraining from:
Unlawful discrimination, harassment, and retaliation against members of any protected group
Other unacceptable conduct, even if not unlawful
Managers and supervisors must report to HR all complaints by an employee of unlawful discrimination, harassment, or retaliation or other inappropriate conduct, even if the employee:
Requests that nothing be done
Asks for absolute confidentiality
Does not use legal buzz words
And even if you do not believe that the complaint has merit
Supervisors and managers must respond proactively to possible unlawful discrimination, harassment, or retaliation (or other inappropriate conduct), even if there has not been a formal complaint. Remember:
Silence suggests that you condone the behavior.
You cannot tolerate unacceptable conduct even if there is no complaint.
Consult with your HR function about appropriatecorrective action.
Managers and supervisors must take steps to remedy unlawful discrimination, harassment, and retaliation and other inappropriate conduct (even if not unlawful).
Focus on inappropriateness, not illegality. Generally, says Segal, behavior will be inappropriate before it’s illegal, and the time to act is when it is inappropriate.
Again, consult with HR about appropriate corrective action.
R#5. (Don’t) Retaliate
Finally, managers and supervisors must avoid retaliation or the appearance of retaliation.
The prohibition against retaliation applies not only to the person making the complaint but also to:
Others who participate in the investigatory process
Others who are associated with the complainant, for example, you can’t retaliate against a spouse of a complainant.
The prohibition covers not only tangible employment actions but also:
Other material terms and conditions of employment
Retaliation independent of the workplace
Exclusion or ignoring
The fact that the complaint lacks legal merit is not a defense to unlawful retaliation.
Finally, although we tend to focus on sexual harassment, remember that these supervisory responsibilities apply equally to unlawful discrimination and retaliation on any basis.
Harassment—a critical concern, no doubt. What’s the status of your policy on harassment? And, what about all those other policies that you need? For most companies there are 50 or so policies that need regular updating (or maybe need to be written). It’s easy to let policies slide, but you can’t afford to—your policies are your only hope for consistent and compliant management that avoids lawsuits
LME Creative Human Resources Solutions can help you update and/or draft any policies you need