The SESCO Report – June 2013


FMLA Absences Continue to Rise

Family and Medical Leave Act (FMLA) absences are on the rise, and some sectors — call centers, hotels, government entities, manufacturers and health care organizations — far surpass others in terms of absenteeism rates. From 2008 to 2012, FMLASource reports the following trends:

Average length of continuous leave for health care employees jumped 27 percent to 28 days.

Total FMLA time off for manufacturing companies increased by 62 percent to 26.9 days.

Total FMLA time off for call center companies increased by 30 percent to 27.2 days.

According to the report, hospitality providers had the most overall FMLA absences, with 49 percent of employees with an open FMLA leave at any given time while health care employers had the second highest rate of FMLA absences, with 39 percent of their workforce having an open FMLA leave at any given time. By contrast, just 7 percent of professional services employees have an open FMLA leave at any given time.

Hospitality providers also had the highest rate of intermittent leave at 58 percent, with average leave per employee equaling 17 days total. And manufacturing employers had the highest rate of continuous FMLA leave at 76 percent, with average leave per employee equaling 31.4 days.

FMLA is a very difficult law to comply as well as to manage for all employers. SESCO provides FMLA compliance audits, FMLA compliance guide as well as HR and management training. SESCO has also customized forms and policies to help manage FMLA.

Percentage of U.S. Adult Population with a Job

Employment is at 30-Year Low

Percentage of U.S. Adult Population with a Job

Forget the unemployment rate. The employment rate — the percentage of adult Americans who hold a job — has barely budged in the past three years. It's hovering near its lowest level in three decades, and it's unlikely to improve.

About 58.6% of the civilian population over age 16 had a job as of April, according to the U.S. Bureau of Labor Statistics. This rate — officially called the "employment-population ratio" — has been stuck in that range for several years. The last time it was this low was in 1983.

Looking at the job market using that measure paints a stark picture. Sure, companies have been hiring, but they've been creating jobs at a pace that merely keeps up with recent population growth. It's not enough to also make up for the jobs lost in the crisis.

Contrast that with the tale told by the unemployment rate, which fell from 10% in October 2009 to 7.5% in April. The unemployment rate only includes jobless people who have searched for work in the last four weeks. It skips over those who left the labor force entirely because they retired, went back to school, or simply gave up on finding a job.

"The unemployment rate is really not that helpful right now in understanding trends in job opportunities because we've had so many dropouts," said Heidi Shierholz, an economist at the Economic Policy Institute, a liberal research group. The employment-population ratio isn't perfect either.

Overtime, it's expected to decline as the U.S. population ages. Eventually, a wave of Baby Boomer retirements will leave a smaller proportion of the U.S. population participating in the workforce.

But once you strip out the retirement effect to look at the employment rate only for workers ages 25 to 54 — those who should be in the prime of their careers — the story of stagnation remains. The employment rate for that population was 75.9% as of April. It, too, has barely changed over the last three years, and matches levels not seen since 1984.

The point is the economy is stagnet. The recent stock market surge is a reflection of government stimulous (printing money) and not a healthy economy. With this said, it behooves owners, CFO's, managers and those responsible for budgeting to be very cautious.

Further, it's critical that organizations constantly challenge staffing, scheduling, benefits and compensation — all critical costs that can and should be managed to ensure profitability.


SESCO Practice Tip — Risks in Hiring "Independent Contractors"

As the number of independent contractors in the workforce grows, so does the potential for employers that hire them to face liability. Misclassification remains a forefront issue as the Department of Labor and IRS work together to step up enforcement. Liability on other fronts is also expanding as courts grapple with who to blame when a contractor's actions harm others.

Misclassification of Independent Contractors. Whether to classify a worker as an independent contractor or employee is a common issue, complicated by the fact that not all laws use the same definitions. The reality of the work relationship (how much control an employer exercises), rather than a worker's title, usually determines status. The consequences of misclassification can be severe. For example, on May 9, 2013, the DOL announced a consent judgment ordering Bowlin Group LLC and Bowlin Services LLC to pay 196 employees $1,075,000 in back wages and liquidated damages.

Misclassification is expected to get even more attention in the future. Indeed, a DOL press release notes that the Obama Administration's FY2014 budget includes nearly $14 million to combat misclassification. It includes provisions permitting the IRS to issue definitive guidance on classification, removing safe harbor, and requiring companies to give notice to independent contractors of the consequences of their classification (e.g., tax, overtime).

Liability for acts of contractors. Possibly the second greatest issue facing businesses that hire independent contractors is potential liability for their actions. Generally speaking, an employer is not liable for the acts of an independent contractor unless the employer exerted sufficient control over the contractor's actions. What is "sufficient" varies depending on the jurisdiction and law involved. Aside from the degree of control, there are some situations where liability is more likely, including inherently dangerous work, work involving a non-delegable duty, and situations where an employer knowingly accepts defective work. There are also situations where courts find that public policy calls for placing responsibility on the employer.

Some types of employers face additional sources of liability. Healthcare employers, for example, have to watch out for Medicaid fraud. In one recent case, a court found that Missouri's Medicaid agency properly sanctioned a healthcare provider by requiring recoupment of more than $53,000 paid to an independent contractor for providing personal care services to her husband in violation of state regulations. The wife's status as an independent contractor had no effect on liability because the provider agreement made the company responsible for all services billed under its provider number. Furthermore, though the wife did not disclose her marital relationship when she contracted with the healthcare provider (which billed Medicaid for her services), knowledge of the falsity of the claim was not necessary to establish liability.

SESCO Recommendations

Employers can take steps to avoid the pitfalls associated with hiring independent contractors. For example, help avoid misclassification issues by hiring only incorporated contractors, keeping files for employees separate from contractors, requiring invoices to pay contractors, and not providing contractors with training or benefits. When implementing computer use policies, account for independent contractors as you would employees and include the same considerations when drafting agreements with independent contractors (e.g., confidential information, inappropriate messages).

SESCO clients can request a staff recommendations on how to properly classify an independent contractor and a suggested contractor agreement.


Telephone Communications vs. Email/Texting

The younger generation's (X — Y) trend of avoiding talking on the phone has spread to employees and managers of all ages. It started with email and now with smartphones. Texting has replaced leaving voicemails and conversations now take place with our phone or fingers. Calling someone is rare in how we communicate in today's workplace.

Certainly, written communication or texting/emailing has its advantages. You can get your message out whether or not the person is available, you can respond without concern for time zones or sleep patterns, you don't have to waste time with unwanted chat and you can be very specific in your communications, getting to the point.
However, traditional phone conversations have been benefits that text and email will never overcome. The use of the telephone is still an important tool and the following are nine scenarios where a phone call greatly outweighs the written communication.

1. When You Need Immediate Response The problem with text or e-mail is you never know when someone will get back to you. You like to think the other person is sitting there waiting for your message, but it's not always true. These days when someone sees your name on the ringing phone, they know you are making an extra effort to speak to them. Of course if they are truly busy, in a meeting, sleeping, or hiding from you, the caller ID will tip them off and you go to voicemail, which they rarely check anyway. At least now you can express yourself with heartfelt emotion.

2. When You Don't Want a Written Record Due to Sensitivity
You never know who will see an e-mail or a text. True, phone calls can be recorded...but not legally in most states without prior notification or a judge's order. Unless you are absolutely comfortable with your message getting into anyone's hands, best to use the phone for conversations that require discretion.

3. When the Emotional Tone is Ambiguous, But Shouldn't Be
Sometimes a smiley face is not enough to convey real emotion. Emoticons help broadly frame emotional context, but when people's feelings are at stake it's best to let them hear exactly where you are coming from. Otherwise they will naturally assume the worst.

4. When There is Consistent Confusion Most people don't like to write long e-mails and most don't like to read them. So when there are lots of details that create confusion, phone calls work efficiently to bring clarity. First of all, you can speak about 150 words per minute, and most people don't type that fast. Second, questions can be answered in context so you don't end up with an endless trail of back and forth question and answers.

5. When There is Bad New
s This should be obvious, but sadly many people will take a cowardly approach to sharing difficult news. Don't be one of those callous people. Make it about the other person and not you. Humanize the situation with empathy they can hear.

6. When There is Very Important News Good or bad, if there is significance to information, the receiver needs to understand the importance beyond a double exclamation point. Most likely they will have immediate questions and you should be ready to provide context to prevent unwanted conclusions.

7. When Scheduling is Difficult
After going back and forth multiple times with a colleague's assistant trying to find an available date and time, I finally just called her. Now I didn't have to worry that the time slot would be filled by the time she read my e-mail. We just spoke with calendars in hand and completed in five minutes what had exasperated us over three days. Later that day I watched one of my foodie friends spend 20 frustrated minutes using Open Table and finally suggested he simply call the restaurant. In three minutes he had a reservation and a slightly embarrassed smile.

8. When There is a Hint of Anger, Offense, or Conflict in the Exchange
Written messages can often be taken the wrong way. If you see a message that suggests any kind of problem, don't let it fester — or worse try and repair it — with more unemotional communication. Pick up the phone and resolve the issue before it spirals out of control.

9. When a Personal Touch Will Benefit Anytime you want to connect emotionally with someone and face-to-face is not possible, use the phone. Let them hear the care in your voice and the appreciation in your heart.

SESCO provides communication, customer service and leadership training for managers and employees at all levels.


Special Thanks to New SESCO Clients!

Bankers Insurance, LLC
Glen Allen, VA

Meineke Car Care Center
Forest, VA

Dulles Motorcars
Leesburg, VA

U.S. EXPO & Convention Services

Tuscon, AZ

Virginia Diner, Inc.

Wakefield, VA

SESCO Client Feedback

"Bill, for many years while serving as the President/CEO at GlenWood Park, Incorporated, it was a pleasure to have worked with the consultants of SESCO. I found your team's advice to be very helpful in designing effective human resource programs for our organization. Now that I'm retired, I further appreciate your continuing to include me to receive The SESCO Report. To me it is one of the leading resources I rely on in enabling me to continue to stay informed on important matters." ~ Daniel W. Farley, PhD, President Emeritus — GlenWood Park Incorporated

"We look forward to working with Joel Cullum on this important position analysis project. Everyone is very communicable, responsive, and most helpful! SESCO is knowledgeable, professional and responsive." ~ Judy C. Hall — Town of Big Stone Gap


SESCO Client Inquiry — Staff Response

Question: What behaviors may be warning signs for workplace violence?

Answer: An employee exhibiting the following indicators is not necessarily an individual prone to violence; however, violence is always a possibility when these warning signs are evident:

Strained workplace relationships
Inability to concentrate
Violation of safety procedures
Changes in health or hygiene
Unusual behavior
Fascination with weapons
Substance abuse
Stress
Excuses and blaming
Depression

SESCO conducts workplace violence training and urges employers to do so annually.

SESCO Expands Service Agreement

SESCO is pleased to announce that their exclusive HR Service Agreement has been expanded. SESCO's service agreement provides clients the following services at no additional charge:

Annual Consulting Visit This visit will include:

-Compliance assessment to all federal and state employment laws with follow-up report
-Required harassment training for managers
-HR update/roundtable for HR staff and managers

Hotline No maximum time limit to discuss day-to-day HR questions, provide HR support and research.

Federal and State Posters Program SESCO will monitor federal and state poster requirements and revisions and provide clients with updates as to posting requirements. Further, SESCO will provide updated/revised posters at reduced fees.

The SESCO Report, a monthly management newsletter, to be provided to all management personnel as so selected.

Annual Review of Employee Handbook and Policies to ensure they remain legally-attentive and people-sensitive.

This expanded service program is provided to all current clients. Any organization/business that is not taking advantage of SESCO's exclusive service agreement should contact:

Bill Ford, 423-764-4127 or bill@sescomgt.com