The SESCO Report – September 2012

EEOC Doubles Down on Pay Discrimination

The EEOC is doubling down on pay discrimination. In an effort to combat perceived gender-based pay discrimination, the Commission has launched pilot programs at three (3) of its district offices to figure out the best approach to using its authority to conduct direct investigations – investigations without any prior charge of pay discrimination – to determine whether equal pay violations are occurring.

EEOC senior attorney/advisor Justine Lisser noted that the EEOC is part the National Equal Pay Enforcement Task Force as set up by President Barack Obama to address problems of gender – pay discrimination. The Commission is working with other government agencies with overlapping responsibilities,such as the OFCCP, Wage-Hour Division, and
Women's Bureau of Department of Labor to share best practices and information.

Among a number of tools that the EEOC is implementing, the most concerning is direct investigations. As stated by Lisser, "The EEOC does not need to wait for a charge of discrimination to be filed, and has the authority to conduct directed investigations of employers to assess whether equal pay violations are occurring." Further she stated, "Because discrimination in pay is difficult for individuals to assess since most employers do not make employees' pay public, the EEOC's authority to conduct directed investigations could be an important tool in combating pay discrimination."

Obviously this should be concerning to all employers and as such ask themselves the following questions:

• Do we have a compensation plan in place and further do we adhere to our hiring and promotion practices within our compensation plan?

• Are all performance reviews supported by thorough, written documentation and are pay raises consistent with this documentation?

• Have we terminated any one for performance who received a pay raise for good performance?

• Have we audited our compensation practices to determine whether or not we have any unintentional disparities?

SESCO conducts EEO/compensation audits as part of our annual Human Resource Management Compliance Assessment. Additionally,all organizations should have a formal compensation administration program.

Personnel Records – What to Maintain and When to Shred

With regulations increasing, it seems as if an employee's personnel file is an encyclopedia. While the legal requirements to retain records are complex and growing by the day, you probably are safe in shredding records such as that 1996 vacation day request. Still yet, knowing which records to save or shred can be critical to complying with federal and state employment regulations and even more importantly defending against an EEOC charge, unemployment claim or even a law suit.

For retainer clients, SESCO has published a guide to employee record retention requirements
and this staff recommendation can be provided at no charge by simply calling SESCO – 423-764-4127.

Some general rules, however, include the following:

Fair Labor Standards Act - Under the Fair Labor Standards Act, you must:

-For at least two (2) years, keep basic employment and earning records liketimecards, wage-rate tables, shipping and billing records, and records of additions to or deductions from wages.
-For at least three (3) years, keep payroll records, certificates, agreements, notices, collective bargaining agreements, employee contracts and sales and purchase records.

Equal Pay Act — In addition to the payroll records the Fair Labor Standards Act requires, you need to keep for at least two (2) years the records that show why you may pay different wages to employees of different sexes, such as wage rates, job evaluations, seniority and merit systems, and collective bargaining agreements.

Discrimination - The Equal Employment Opportunity Commission says employers should keep all employment records for at least one (1) year from the employee's date of termination. The federal age- bias law requires that you retain payroll records for three (3) years.

Plus, you must keep files of benefit plans and seniority merit systems while they are in effect and for at least a year thereafter.

• Family and Medical Leave — If your company is covered by the Family and Medical Leave Act, you must retain the following records for three (3) years:

- Basic payroll data

- Dates FMLA leave is taken, including hours of leave for times of less than
a full day

- Copies of written notices to employees as required by the family and medical leave

- Documents describing benefits and policies and practices regarding paid and unpaid leave

- Premium payment records for employee benefits

- Records of disputes over the designation of leave as family and medical leave

- Records relating to medical certifications, recertifications or medical histories created for family and medical leave purposes, kept in separate medical files from the usual personnel files (required by ADA)

• Immigration Forms — Under the Immigration Reform and Control Act, you must keep completed copies of an employee's I-9, employee eligibility verification form, for three (3) years after he or she is hired. If he or she works less than three (3) years, hold on to the form for at least one (1) year after separation.

• OSHA - Under the Occupational Safety and Health Act, you need to keep records of job-related injuries and illnesses for five (5) years. Some records, like those covering toxic substance exposure, have to be kept for thirty (30) years.

• ERISA - For benefit plans under the Employment Retirement and Social Security Act, you must retain summary descriptions and annual reports for six (6) years.

Frankly, this is a very short list and the laws again are extremely complex and growing. If your organization has not undergone a complete personnel record compliance audit in the past two (2) years, then it is strongly recom- mended that you contact SESCO to conduct such an audit. Further, you may want to con- tact SESCO to discuss establishing a person- nel file/employee document policy to ensure compliance and ongoing effective maintenance of your records.

Finally request a free copy of SESCO's product catalog containing file folders,
forms and related systems ensuring compliance.

Why Performance Management?

SESCO receives feedback from both managers and employees regarding performance management issues. One of the more common complaints that we receive, from both sides, is that the performance management process isn't meaningful, is an annual exercise that is a waste of time and that the process has very little consequences. The process does not address excellent performers because of tight compensation budgets or address poor performance due to an over cautious human resources department or a manager who doesn't want to address and confront those realities. The performance management process, on a daily, weekly, monthly and annual basis, is the critical human resource management system because it directly impacts:

•Employee retention, engagement and commitment

•Employee productivity and efficiencies

•Quality of service

•Bottom line financial results

In this article, we will not explore performance management systems or how to conduct effective performance management appraisals or even effective management of human resources on a daily basis. We are going to focus on the need to immediately address mediocre or poor behavior and the importance thereof.

First, allowing mediocre or poor behavior to "hang around" the workforce is one of the worst "sins" managers make. Allowing this type of behavior to hang around is not only costly but also directly affects employee morale and subsequent quality and efficiency. Employers cannot afford either in compensation or in establishing and maintaining an effective culture to allow mediocre behavior to exist. Managers either need to address this behavior through coaching, counseling and performance management and provide the support to allow the employee to improve or remove the behavior before it seriously affects the organization and its culture. Remember:

•Employees are the most valued internal asset and an employer's greatest investment

•Effective delivery of all organizational goals and mission depends on engaged employees (owners, managers and leaders can't do it all)

In addition to the issues that mediocre behavior creates, accountability is absolutely critical in managing an organization's bottom line. Questions that need to be explored include:

•Can we do more with less? If we had a high level of engagement from all employees, do we need as many employees as we have? If we address and remove the poor performers, could we be as or more efficient?

•Lean staffing means a higher wage rate/employee and/or a more profitable bottom line.

Some interesting quotes to support these basic thoughts and understandings include:

"My main job was developing talent, I was a gardener providing water and other nourishment to our top 750 people. Of course, I had to pull out some weeds, too." – Jack Welch

"Endeavors succeed or fail because of the people involved." – Colin Powell

"Executives owe it to the organization and to their fellow workers not to tolerate non-performing individuals in important jobs." – Peter Drucker

"Never try to teach a pig to sing; it wastes your time and it annoys the pig." – Paul Dickson

"I feel that there is no greater disrespect that you can do to a person than to let them hang out in a job where they are not respected by their peers, not viewed as successful, and probably losing their self-esteem. To do that under the guise of respect for people, is to me ridiculous." – VP Strategies/Corporate Relations Hewlett Packard

"It's incredibly demoralizing to the rest of the team if you don't move poor performers out – and the leader looks blind and out of touch." – Senior Executive Arrow Air

Addressing mediocre or poor behavior and/or terminating an employee is difficult for most. If it ever becomes easy, then we must question if we are in the right job. In our opinion, most managers have a more difficult time in managing poor behavior because they are not equipped with the necessary tools and training to effectively manage. We must ask ourselves do we have:

•Up to date, effective employee handbook?

•Up to date, effective job descriptions?

•Up to date, effective performance management system?

•Compensation program that effectively holds poor performers accountable and rewards good and excellent performance?

•Are we providing ongoing training and development to our leaders?

Some of the excuses that we hear from leadership regarding addressing poor performers include:

-I don't want to be perceived as a "micromanager".

-I have other responsibilities that are more important.

-I'm busy putting out fires.

-I have a difficult time in confronting others (emotional barriers).

-I'm not able to delegate – it's easier just to do it rather than to delegate and manage it.

-I really need that person. That would be punishing that employee; I just can't bring myself to terminating.

I feel sorry for him/her.

Let's face it. We have all experienced these same kinds of "poor" excuses or concerns. But we must remember that if we are realistic, poor performers, regardless of their unique skills or talents never justify their cost. Anyone can and should be able to be replaced with other talented people who won't be problem employees.

Avoiding Risk in Terminations

Managers and supervisors should not confuse discipline with punishment. If you as a manager have given the employee appropriate training, coaching, feedback and support throughout their tenure, you've done all you could have done to salvage that employee. You cannot be responsible for the employee – only to the employee. Rather than feeling sorry for an employee, you should console and coach the employee. They simply may just be in the wrong organization and/or wrong position. It would not be fair to allow the employee to linger and eventually suffer in a job long-term. Also, remember that no matter how much you feel sorry for or don't want to hurt an employee, think of all those other employees within your organization as well as those who you serve that are being damaged by allowing mediocre behavior to hang around.

To help avoid overcoming any "risk" associated with employee termination ask yourself:

•Did the employee receive a job description and adequate training?

•Do we have verbal and written counseling documented in the employee's file?

•Has the employee performed or acted in such a way that you know that it's not a good fit?

Further, some technical questions that should be discussed with human resources and your SESCO consultant include:

•Is the employee over 40?

•Is the employee disabled?

•Has the employee been injured on the job?

•Is the employee a minority or a woman with any potential discrimination claim?

•Is the employee able to claim any discrimination based upon religion, national origin, sex, or other protected categories?

Although these latter questions should be considered, they should never be an "excuse" for not addressing poor or mediocre behavior. An organization or manager cannot be held hostage just because someone is protected. If you've done your homework and conducted your coaching, counseling and performance management responsibilities, then there is no reason why you should not separate an employee.

Special Thanks to New SESCO Clients!

Henline-Hughes Funeral Home
Bakersville, NC

Banker Steel
Lynchburg, VA

Stuart Powell Ford-Mazda
Danville, KY

SESCO Product of the Month

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SESCO Client Feedback

"Joel, just wanted to thank you again for all you are doing for the school. I know getting to all meetings is a challenge for all of you. I hope we soon can take over the bulk of the planning so you can pull out more because I know it's taking valuable time away from your life. In the meantime, please know that I personally appreciate it so very much (and all others do as well!) and I strongly believe that some mighty good things are going to come from all the effort and time given. It's very exciting!!" ~ Sharon Morrison, Morrison School

SESCO Client Inquiry — Staff Response

Question: "Are we required to offer benefits to part-time employees?"

Answer: Certain benefits such as unemployment and workers' compensation are mandated by state law and apply to all
employees. Eligibility for voluntary benefits such as vacation, sick leave, medical insurance, life insurance, etc. is at the discretion of the employer. Eligibility for benefits is often tied to employees' normal work schedules. For example, persons working less than 32 hours in the workweek might not be eligible for benefits, or they might be eligible for certain prorated benefits. Employers should be certain that their policy is clear on what benefits are offered to full-time and part-time employees and the eligibility requirements for these benefits.

One exception is under the Employee Retirement Income Security Act (ERISA) with the "1,000 hour rule." Employees who have completed 1,000 hours service in a period of 12 consecutive months are eligible to participate in any company pension or profit-sharing plan that is offered to other employees. This requirement applies to both full-time and part-time employees.