How to Avoid Hiring a Bullying Boss

Robert Mueller, J.D., is an expert on labor-management law, a widely recognized workplace conflicts counselor and consultant, and the author of Bullying Bosses:
A Survivor’s Guide. He conducts on-site workplace investigations, coaches employees, and helps employers develop anti-bullying policies. As an attorney for 24-plus years, he has investigated, litigated, and solved legal and political problems in a variety of difficult work situations in California and Nevada.

No one wants to hire a bully as a supervisor to abuse an employer’s human resources. Not when, instead, they could hire a professional who is trustworthy, on point, and leading his or her employees to great productive ends. Making a bully-conscious hiring decision can be the difference between hiring a team leader or being known for initiating an internal war!

Being irascible or demanding is not what defines a bully boss. For good or bad, these bosses are trying to get the job done. Bosses who are merely suffering from stress, or perhaps substance abuse problems, are not what we consider classic bullies. And bullies can’t be found by looking at the extreme ends of a scale measuring apparent aggression and passivity against each other – they can appear to be both or neither.

Instead, bullies are political operatives furthering their own agendas. They exploit their employer’s power over subordinates for their individual purposes. They are institutional renegades who exhibit a pattern of bullying behavior over time – not isolated incidents of bad behavior. Despite the impressions they create, they are not interested in furthering the employer’s mission or its practical applications. They are on their own mission: the conquest of individuals as a matter of personal compulsion. According to Webster’s, a bully is “a person who hurts, frightens, or tyrannizes over those who are smaller or weaker.” At work, a supervisor does not have to be brutish to tyrannize an employee – sometimes quiet micromanaging will have the same effect.

Bullying bosses believe themselves to be special. Fortunately, being different is what makes them identifiable to the rest of us. They fundamentally lack the basic human capacity to connect with others. This is what makes them both dysfunctional and dangerous. As a replacement for real engagement with coworkers, they bully down and charm up. They are very good at what they do.

Special concerns for hiring managers
Hiring managers who want to screen out the bullies have to be vigilant in their inquiry beyond social norms. Workplaces are bully magnets. Bullies are drawn to an employment opportunity for reasons beyond occupational. Businesses give them fuel in the form of institutional power to exploit. The workplace is a place where they officially have legitimized authority to do what bullies do. They get to exercise their malice and enjoy the good feeling of controlling others, while receiving pay and prestige in the process. Once there, the institution customarily protects them.

Being types who define themselves by external markers, the abusers who wiggle their way into workplaces are granted a title and prestige within a hierarchical institutional context. Bullies need workplaces in order to define themselves. Outside the structure of the workplace, bullies are not quite anybody. Once inside the employment world, though, a typical bully might have three supervisory jobs in his or her career, and may supervise fifteen employees in each position over the term of each job. He or she would thus have a significant and negative impact on at least three employers and as many as 45 employees, including five specially targeted employees. No bully or abuser in the community could dream of having that kind of impact. In general, bad hiring decisions create costs beyond normal calculation.

How to “smoke out” a prospective bully
The first thing an interview panel needs to know is that bullies can be female or male. When one knows what to look for, bullies are easy to spot in the workplace. However, it can be tricky to identify a bully before one sees him or her in action. Interviews present multiple opportunities to use a bully’s overconfidence as leverage to discover his or her true self. Here are some tips.

• Don't rely on your “gut” instincts. Hiring decisions based on “gut instincts” provide bullies with their very best forum. Bullies are extremely adept at manipulating authority figures – saying what they think a higher-up wants to hear.
  
  
• Look for spontaneous exchanges. Bullies are not skilled at relating to the people presently in the room with them - the interview panel. Does the candidate participate in the normal back-and-forth of conversation, demonstrating the basics of human exchange? Or does the interviewee have to carefully calculate a response to match what seems to be expected of him or her?
  
  
• Look for empathy. To be a good leader, one should have an above-average capacity for empathy. Empathy makes compassion and understanding possible, and is the difference between a person merely hearing words and a person actually appreciating another person. Ask the candidate to recount a particularly sensitive personnel problem in the past. Does the candidate's answer reflect compassion for a subordinate, or does it have elements of bragging, triumph, or rigid authoritarianism? When bona fide leaders are faced with a difficulty, they stop, look, and listen – and then devise a plan furthering the employer’s interests. Not so with bullies.
  
  
• Turn on your know-it-all meter. Ask a question a candidate will probably not know the answer to – but make it seem as though he or she should. The particularly forthright will admit they don't know. Most will “fudge” it. But bullies will generalize unduly. Bullies may even boldly attempt to steer the entire discussion toward what they calculate to be the most advantageous direction for them.
  
  
• Try the “sweet and sour” routine. Bullies are uncannily good at “reading” people. Their special, sometimes odd, charm is a product of this attribute. Of course, all candidates strive to impress their interviewers, but bullies are a breed apart at picking up even the smallest of clues they observe in body language and voices. As a counter-measure, consider presenting a “sweet and sour” front (a mellower version of “good cop/bad cop”). Assign roles beforehand. A bully will be unable to find workable meaning in a morass of “clues.” He or she will either scramble or assume a grandiose pose. Mentally healthy candidates, on the other hand, will simply be who they are. Bullies don't know how to do this well, because they define themselves in terms of power and in comparison with others.
  
  
• Make intelligent use of background checks. The data employers will have available before interviews will always be thinner than preferred. However, make the best of what you have. Background checks are useful beyond being just pass-fail tests. They are a wellspring of specific evidence that can be used to measure the veracity of a candidate generally. Bullies utterly lack veracity. At no point during an interview should you let the candidate know what pieces of information you actually do and don’t have about him or her. Test the interviewer's truth-telling against what you know to be facts.
  
  
• Prompt the candidate to volunteer corrective information. In the interview, purposefully misstate key facts from the candidate's resume in order to elicit a corrective response or not. You can make customary allowances for normal puffery. But if allowed, a future bullying boss will exceed allowable parameters for ambiguity to slip by unchallenged – when stopping them and correcting them was in fact warranted.
  
  
• Read another interview source, if possible. Before making a final hiring decision, read a transcript of a candidate’s testimony when questioned in a deposition or some other context. This widens the view of a candidate from a narrow one a bully would neatly fit to your interview, into a broader perspective that includes how the candidate operated in a different context with different objectives. There may be no better way to discover a bully among your job candidates.

Best defense against burnout: being with other people
Although taking time to yourself to relax is important in reducing stress, if you are approaching burnout, it’s also crucial that you cultivate relationships with other people and spend time socializing with them. Poor relationships and isolation can contribute to burnout, but positive relationships can help prevent or reduce its onset.

Here are some steps you can take to improve your relationships with others:

• Nurture your closest relationships, such as those with your partner, children or friends. These relationships can help restore energy and alleviate some of the psychological effects of burnout, such as feelings of being underappreciated. Try to put aside what’s burning you out and make the time you spend with loved ones positive and enjoyable.
  
  
• Develop casual social relationships, on and off site, with people at your workplace. “We do all kinds of things, whether it is getting together to play cards or going out to eat. It gives everyone an opportunity to relax and blow off steam,” a teacher wrote to a contributors’ site. Just remember to avoid hanging out with negative-minded people who do nothing but complain.
  
  
• Connect with a cause or a community group that is personally meaningful to you. Joining a religious, social, or support group can give you a place to talk to like-minded people about how to deal with daily stress — and to make new friends. If your line of work has a professional association, you can attend meetings and interact with others coping with the same workplace demands.
  
  
• Practice healthy communication. Express your feelings to others who will listen, understand, and not judge. Burnout involves feelings that fester and grow, so be sure to let your emotions out in healthy, productive ways on a regular basis.

In summary, to prevent or recover from burnout, learn to cultivate methods of personal renewal, self-awareness, and connection with others, and don’t be afraid to acknowledge your own needs and find ways to get your needs met.

(Editor’s note: For more information about Robert Mueller’s book and his services, please go to www.bullyingbosses.com.)

By Tanya Butler, M.S.,
Helpline Consultant

Burnout is a state of emotional and physical exhaustion caused by excessive
and prolonged stress. It can occur when you feel overwhelmed and unable to meet constant demands. As the stress continues, you begin to lose the interest
or motivation that led you to take on a certain role in the first place. Burnout reduces your productivity and saps your energy, leaving you feeling increasingly hopeless, powerless, cynical, and resentful. The unhappiness caused by burnout can eventually threaten your workplace, your relationships, and your health.

How to know you’re burning out?
Burnout does not happen overnight — and it’s difficult to fight once you’re in the middle of it — it’s important to recognize the early signs of burnout and head it off. Burnout usually has its roots in stress, so the earlier you recognize the symptoms of stress and address them, the better chance one has of avoiding burnout.

More mental than physical
The signs can include feelings of:

Differences between stress and burnout
Burnout may be the result of unrelenting stress, but it isn’t the same as too much stress. Stress involves doing too much – too many pressures that demand you both physically and psychologically. Stressed people can still imagine, though, that if they can just get everything under control, they’ll feel better. Burnout, on the other hand, is about not enough. Being burned out means feeling empty, devoid of motivation, and beyond caring. People experiencing burnout often don’t see any hope of positive change in their situations. If excessive stress is like drowning in responsibilities, burnout is like being all dried up.

Scenarios that can lead to burnout

Preventing workplace burnout
The most effective way to head off workplace burnout is to quit doing what you’re doing and do something else, whether that means changing jobs or changing careers. But if that isn’t an option for you, there are still things you can do to improve your situation, or at least your state of mind.

Here are some steps you can take to improve your relationships with others:

Wrangle your Policies

By Mark Nelson, J.D.,
Helpline Consultant

You wear many hats in your company. Make sure at least one of them is a Stetson. Let me explain. You, as the HR professional, are the cattle rancher of policies and procedures: retrieving stray policies, determining which ones must
be separated from the herd, and of course, earmarking which ones will be sent
to slaughter. Okay, the analogy is admittedly strained, if not a little cheesy, but at least it got you attenetion and gives you a visual for the critical role you play.

You develop and manage the company’s policies, but not all of them should be corralled in your handbook. Deciding which policies and procedures belong in a handbook, by themselves, or in a supervisory/procedures manual requires that you understand at least a little of the logic behind it all. For what it’s worth, here’s my take:

Employee handbooks
Because employee handbooks have quasi-contractual-to-contractual significance (regardless of the steps we take to guard against handbooks as contracts), the theory is that less is more. In other words, put only in the handbook what matters most. You want the employees to be responsible for everything you include but if it’s in five volumes, honestly, who would read it, and, more importantly, who could retain the information if they did?

So then, how do you determine what goes in a handbook? The purpose of your handbook is essentially threefold. First, you want to include only those critical policies that spell out the company’s expectations of the employee and work environment - especially those matters that have legal significance (e.g., required meal and rest periods, harassment prevention, etc.). Secondly, you want to include those policies that show your company’s commitment to such principles as equal employment opportunity or a drug-free workplace. And finally, you want to list the benefits that sell your company to the employee and promote retention. If a policy is strictly procedural, it’s probably not critical and belongs elsewhere, as discussed below. And of course, the handbook is for employees only; policies addressing pre-employment matters impact only applicants and have no place in your handbook.

Supervisory/procedures manuals
Supervisory manuals are not necessarily home to everything else. They can have legal significance as well. If you spell out the steps to take when preparing a performance evaluation, skipping or delaying any of those steps in its execution could spark allegations of disparate treatment, especially if the employee is harmed monetarily (or otherwise) in the process. Policies and procedures that go into supervisory manuals require the same care and attention given to handbook policies. If you’ve published such a resource for your management staff, make sure your supervisors are familiar with it and train them to follow it. Review it regularly and purge those policies and procedures that aren’t followed. You never want to be in the position of saying, “yes, we know we say we do it that way but no one actually does it that way.” Such a declaration makes the company look either dishonest or dysfunctional, and neither position will impress a judge or jury.

If you have procedures that are relevant to only one department or location, consider publishing a procedures manual for that specific department or location. And if you have procedures that are time-sensitive and will soon be irrelevant, do they really require publication in any document? Will a simple e-mail accomplish the same?

Separate policies
In general, the purpose behind separating out some policies and not others is so you can insure that employees read and understand their significance and sign off on the policy stating as much. In other words, so they won’t have the argument that they didn’t know the company did things that way. The classic example is with drug testing. If you tuck a drug testing policy into the middle of a paragraph on page 30 of your handbook, the employee can still argue that they didn’t read every provision and therefore had a reasonable expectation that their privacy wouldn’t be violated in such a way. If you require they sign a three-page, free-standing policy, such an argument is much less likely. Consider a separate policy when you can’t risk that your employees not know what you require of them.

Contracts
Contracts have no place in either an employee handbook or supervisory manual. You never tuck contracts in a document you want to argue is not a contract in the first place. What do you want to consider a contract? Certainly, any restraint you want to place on the employee’s legal activity after the employment relationship ends generally requires that you enter into an agreement with them (i.e., you don’t need contracts to prevent your ex-employee from stealing trade secrets but you do to force them to arbitrate an employment dispute). Clearly, you can’t enforce company rules with ex-employees; you can, however, sue them for breach of contract. Speak with your legal counsel to insure you are adequately protected in this regard.

Understanding why you locate policies and procedures where you do it is particularly relevant when deciding what goes in a handbook and what doesn’t. It also helps to consider what alternative publications you want or whether you want to publish the policy at all. While these big-picture observations give you a great starting point, keep in mind that the process can be complex. Unless you’re a seasoned HR policy-wrangler, make sure you have someone on your team.

(Editor’s Note: Employers Group can help you draft or re-draft an Employee Handbook. Call us at 800.748-8484 and ask for a Client Services Manager.)

Seven Common Myths about
Unemployment Insurance

By Sarah Rios,
Manager Unemployment Insurance Services

From its inception in the 1930’s, the unemployment insurance (UI) system has
been misunderstood. Many workers still have the wrong understanding that
they pay into the UI fund and have an immediate right to benefits whenever
they’re unemployed. Many employers also have a misunderstanding in thinking they have the legal right to control who does and does not receive benefits from their UI account. The following are some of the most common myths and misconceptions about the UI program in California.

Myth #1 - A person who accepts a temporary job, knowing it’s temporary, does not have a right to file a claim for benefits when the job ends.
Wrong. The California Unemployment Insurance Code gives anyone who is out of work, or working less than full time, the right to file a claim for benefits. This is true even if the person knew a job was short term. If the claim is valid, EDD would consider the separation as a lay off and find the former employee eligible for benefits.

Myth #2 - A worker is given the option to quit or be discharged, the employee agrees to quit in lieu of being discharged, on the protest it should state the employee quit.
Wrong. The protest should state the truth that the employee quit in lieu of discharge or that the employee was discharged. Since there was no option for the employee to continue employment EDD will view this as a discharge.

Myth #3 - If an employee gives advance notice to quit and the employer lets the employee go earlier without paying the employee thru the notice date, the reason for separation would remain a quit.
Wrong. Since the employer is now the moving party and sets the last day the employee will work and get paid, the separation turns into a discharge, at which time the employer will have to prove the claimant was let go earlier due to misconduct in order to receive a favorable decision. However, if the employer pays the employee through the last day the employee gave, even though the employee did not have to work through that date, the separation would remain a quit. The reason for quitting will determine if the claimant would be eligible for benefits.

Myth #4 - It’s perfectly acceptable to encourage a former employee who was discharged or voluntarily quit to tell the Employment Development Department (EDD) that he or she was laid off.
Wrong. There are penalties for employers who collude with former employees to wrongfully collect benefits. EDD receives the sole right to determine who does and does not get benefits.

Myth #5 - If an employer does not file a written protest with EDD on a former employee who quit or was discharged that person will receive benefits.
Not necessarily. The standard for UI eligibility is based on a volitional test. Is the claimant unemployed through no fault of his or her own? If a claimant tells EDD he or she was discharged or quit, EDD is charged with the responsibility of determining whether or not the person meets this test. This is true even if the employer chooses not to file a written protest.

Myth #6 - If a person quits or is discharged, applies for benefits, and is disqualified by EDD, he or she can never collect benefits on the current claim.
Wrong. When claimants are disqualified because they were discharged or quit their last job under disqualifying conditions, they can still reopen their claim and receive benefits at a later date. But to lift their disqualification, they must have had subsequent employment and earned a determined amount of wages. If the original employer received a favorable decision, their reserve account will not get charges in the future.

Myth #7 - If a former employee indicates the correct reason for his or her discharge or quit, the employer doesn’t need to respond to the claim to get a favorable decision.
Wrong. The only way to get a decision on a claim is to file a timely protest. In addition, the only way for a tax rated employer to get permanent relief of benefit charges is to receive a favorable decision. Again, a former employee may get disqualified even if the employer does not protest the claim, but that doesn’t mean he or she will never collect benefits that could be charged to the employers reserve account in the future.

Clarifying Pay Stubs

By Kimberly Nwamanna,
Helpline Consultant

In California, employees must be paid at least semi-monthly or monthly for
exempt employees. Employers are also obligated to keep accurate time and attendance outlined in the Industrial Welfare Commission wage orders and as required in Labor Code Section 226. State law does not permit employers to
simply rely on work schedules posted in advance. Employers must keep a
record in a payroll period.

What to provide to employees?
As of January 1, 2001 employers are required to provide, with respect to every employee, at the time of each payment of wages, either a detachable part of the check (pay stub), draft, or voucher paying the employee’s wages, or separately, an itemized statement in writing to include the following:

• gross wages earned;
  
  
• total hours worked, except salary exempt employees;
  
  
• the number of piece-rate units earned and any applicable piece rate for employees paid on a piece-rate basis;
  
  
• all deductions, provided that all deductions made on written orders of the employee may be totaled and shown as one item;

• net wages earned;
  
  
• the inclusive dates of the period for which the employee is paid;
  
  
• the name of the employee and his or her social security number (effective January 1, 2008 only the last 4 digits may be used);
  
  
• the name and address of the legal entity that is the employer; and
  

• all applicable hourly rates in effect during the pay period and the corresponding number of hours worked at each hourly rate by the employee.

Put it in writing:
The deductions made from payments of wages shall be recorded in ink or other indelible form, properly dated, showing the month, day, and year. A copy of the statement or a record of the deductions shall be kept on file by the employer for at least three years at the place of employment or at a central location within the State of California.

Complying with requests for pay stubs
Employers must allow current and former employees to inspect or copy the records pertaining to that current or former employee. Employers should take reasonable steps to assure the identity of a current or former employee. If the employer provides copies of the records, the actual cost of reproduction may be charged to the current or former employee. Employers should comply with the request within a reasonable amount of time, but no later than 21 calendar days after the request.

Claims of damages
If an employee suffers injury as a result of an employer knowingly and intentionally failing to comply, the employee is entitled to recover the greater of all actual damages, or $50 for the initial pay period in which a violation occurs and $100 for each violation in a subsequent pay period not to exceed a maximum penalty of $4,000. The employee will also be entitled to an award of costs and reasonable attorneys' fees (CLC Section 226).

Failing to permit former employees to inspect their records
If an employer fails to allow a current or former employee to inspect or copy records within 21 calendar days, the employee or the Labor Commissioner may recover a $750 penalty from the employer. Moreover, the employee is entitled to recover reasonable attorney’s fees, and may obtain a court order (injunction) to ensure compliance.

Penalties for violation
Any violation by an employer of the above itemized statement requirements is subject to a civil penalty of $250 per employee for each initial violation, and $1,000 per employee for each subsequent violation. This penalty is in addition to any other penalty provided by law. If the violation was inadvertent, due to a clerical error or mistake, the Labor Commissioner may take this into consideration and may decide not to penalize an employer for a first violation. (CLC Section 226.3).

Itemizing
The Labor Commissioner will impose additional punishment when an employer knowingly and intentionally violates the provisions of Section 226 (or any officer, agent, employee or other person who has the control or pays the wages of any employee) by aiding or participating in the violation of the itemized statement provisions - such as, for example, not itemizing vacation pay. Such person is guilty of a misdemeanor, and upon conviction, shall be fined a maximum of $1,000, be imprisoned up to one year, or both at the court's discretion (CLC Section 226.6). This statute does not apply to the state, or any city, county, city and county, district, or any other governmental entity.

The intent of the provision is to allow for transparency in an employer’s itemization of wages. Essentially, your employees should be able to see and understand why they are being paid the net amount from the pay stub.

By Wendy Taylor,
Communications and
Public Relations Manager

One of my jobs as EG’s Legislative Coordinator is to track the current year’s
slew of employer-related bills under consideration in the California Legislature. Usually this time of year, once the bills remaining in the legislative session are determined, we draw up a list of “EG’s Bills to Watch” - particularly the handful that pose concerns for employers. This article covers these bills, and offers our “best educated predictions” on whether they will be signed into law by Governor Schwarzenegger.

The timing of the legislative process
The Governor and legislative leaders will continue discussions and negotiations over the next several weeks. The Legislature goes on Summer Recess as of July 20 until August 20. When they reconvene there will be four intense weeks until adjournment on September 14th.

During this time, if there is an attempt to overturn some of the Governor’s previous worker’s comp reforms, particularly in the area of permanent partial disability, that’s when it can happen. If a deal is going to come together on health care, that’s when it has to gel. Plus, that’s when the final floor votes take place on all pending bills. The Governor will then have until October 14th to sign or veto this year’s legislation

The Legislature will adjourn on September 14 and reconvene in January for the second half of the 2007-2008 Legislative Session. Quite a number of other the bills were introduced earlier this year - but those that did not pass through the policy committee in time will be back on the legislative agenda for consideration next year.

The following list covers pending 2007 bills that California businesses should keep an eye on as they move through the legislative process.

Health care reform bills
AB 8 - On June 22, Assembly Speaker Fabian Núñez and Senate President pro Tem Don Perata announced they have combined their health care reform bills into a single piece of legislation, AB 8. Thus, Perata’s bill SB 48 is now combined with AB 8 as one bill.

The measure features shared responsibility among employers, individuals, reinvested state dollars and new federal funds. Unlike Governor Schwarzenegger’s proposal, which proposes that everyone in the state obtain health insurance, the new merged measure does not mandate that all individuals have insurance. Furthermore, there is no exemption for small businesses in the new proposal, which instead agrees to apply the business requirement to every enterprise except the self-employed.

The Governor has acknowledged the Democrat leaders’ efforts to address this issue, but continues to reinforce his original theme of mandatory healthcare coverage for all – but he would not sign AB8 in its current form. If an agreement comes together, however, this bill could become the vehicle for the “compromise” language.

AB 343 (Solario) - This bill would require the State Department of Health Care Services, the Healthy Families Program and the Access for Infants and Mothers Program (administered by the Managed Risk Medical Insurance Board) to collaborate to transmit to the Legislature a report identifying all employers who employ 25 or more, who are beneficiaries of these programs, and to make the report available to the public. A similar bill passed last year, but was vetoed by the Governor.

SB 840 (Kuehl) - This bill establishes the California Universal Healthcare System (CUHS), under which all California residents would be eligible for specified health care benefits. The CUHS would, on a single payer basis, negotiate for, or set fees for, health care services provided through the system, and pay claims for those services.

As we reported in last month’s newsletter, similar legislation was passed last year and was vetoed by the Governor. It is likely to again be passed this year if no other health insurance compromise comes together, but will then be vetoed.

Workers’ Comp
Temporary disability
AB 338 (Coto) - This bill would roll back the cost savings established under the workers’ comp reform, specifically as to temporary disability payments for inmates in county or city jails, road camp, industrial farm or an inmate assigned to a county work release program. The payments would be determined either by actual weekly wages lost due to the disability, or qualifying earnings prior to the inmate’s incarceration. In short, it would increase the number of weeks benefits can be paid. This bill will probably pass, but be vetoed by the Governor.

Medical treatment utilization
AB 1073 (Nava) - Existing law is that employees are entitled to no more than 24 chiropractic, 24 occupational therapy and 24 physical therapy visits per industrial injury. This bill would prohibit the limit on the number of these visits from applying to visits for post-surgical physical medicine and rehab services. Another bill that’s likely to pass and then be vetoed.

Permanent disability
AB 1212 (Nunez) - This bill would require the Administrative Director of the Division of Workers’ Compensation to, on or before January 1, 2009, revise the schedule for determination of permanent disability to increase the ratings. The revision is to be based on empirical studies of ratings and wage losses, including the studies produced by the Commission on Health and Safety and Workers’ Compensation. Expect this to pass, and be vetoed.

AB 1212 (Nunez) - This bill would require the Administrative Director of the Division of Workers’ Compensation to, on or before January 1, 2009, revise the schedule for determination of permanent disability to increase the ratings. The revision is to be based on empirical studies of ratings and wage losses, including the studies produced by the Commission on Health and Safety and Workers’ Compensation. Expect this to pass, and be vetoed.

SB 936 (Perata) - Another bill that would roll back the cost savings under the previous reform, specifically by revising the formula for computing permanent disability for injuries that occur after January 1, 2008. In essence, it could double permanent disability costs. The bill is expected to pass, but probably will be vetoed.

Supplemental job displacement
AB 1636 (Mendoza) - This bill requires employers to pay disability benefits (on or after January 1, 2008) no later than 74 days after termination of temporary disability. The bill would require the employer, if the percentage of the permanent disability cannot be determined, to provide a voucher based on the reasonable estimate - and if the percentage is later determined to be higher, to provide an additional voucher amount immediately. Again, this is expected to pass, but be veoted.

Lost wages from failure to accommodate
SB 942 (Migden) - This bill says that an employer who refuses to reinstate an employee who is “willing and available” to return to work to his/her pre-injury job, could face a case for discrimination. The bill expands anti-discrimination laws related to workers’ comp, thus increasing the likelihood of more lawsuits against employers. Again this is a bill that will probably pass, but be vetoed by the Governor.

Wage and Hour
AB 448 (Arambula) - This bill permits employees to recover liquidated damagers in complaints brought before the Labor Commission alleging payment of less than the state minimum wage. This bill will probably pass, and we don’t know what the Governor will do.

Lockouts
AB 504 (Swanson) - This bill expands on the violations of laws related to using strikebreakers and lockouts, requiring in addition to fine or imprisonment, employers would have to make restitution to employees for lost wages and benefits. In short, it creates a new definition of a lockout. The bill will probably pass, but be vetoed.

Employment contracts
AB 1043 (Swanson) - This bill prohibits any choice of law clause, venue-selection clause, or forum-selection clause in binding employment materials that are imposed on an employee as a condition of employment.

Independent contractors
SB 622 (Padilla) - This bill is about misclassification of employees as independent contractors, and would prohibit “willful” misclassification. The bill would authorize the Labor and Workforce Development Agency to assess specified civil penalties from employers violating the bill - and, it would entitle employees who suffer actual harm (or a labor union) to bring actions to recover these civil penalties. Thus, it would increase the likelihood of lawsuits. This is expected to pass, and will probably be vetoed.

(Editor’s note: FYI, you can access a weekly updated status report by clicking the link for “2007 Employer Related Bills” on the EG Website, at the lower left side of our home page. For questions regarding this report, email wtaylor@employersgroup.com.)

Court Finds Arbitration Agreement Unconscionable

By Jim Kuns, J.D.,
Senior Helpline Consultant

The Ninth Circuit recently found that elements of an employer’s arbitration agreement were procedurally, and substantively unconscionable under
California law, see Davis v. O’Melveny & Myers (2007). The original suit
alleged violations by the company of the Fair Labor Standards Act (FLSA), and California wage and hour labor laws. The company had sought to hear the dispute in an arbitration forum in accordance with their newly instituted Dispute Resolution Program (DRP).

This case highlights the importance of reviewing and updating arbitration agreements in order to stay in compliance with current legal opinions.

Jacquelin Davis worked as a paralegal in the Los Angeles office of the company from 1999 to 2003. In 2002, the company instituted its new mandatory DRP, which would require most disputes ultimately to be heard in arbitration. In 2004, Davis brought suit for alleged violations of the FLSA, and California state labor codes claiming, among other things, that the company failed to pay overtime for work performed during lunch time and rest periods and for work over eight hours in a day, or more than forty hours in a workweek. She also sought reimbursement for the denial of rest and meal periods. She asked the court for a declaration that the DRP was unconscionable.

The court recognized that the FLSA and related claims regarding overtime fell within the scope of the company’s DRP as written. The court, however, had to decide whether the DRP was enforceable, in whole or in part.

First the court determined that the DRP was procedurally unconscionable. In making that determination, the court had to evaluate in part whether the DRP was improperly imposed on employees as a condition of employment, and if the employees had an opportunity to negotiate the terms of the DRP.

The court found that the DRP had no elements of surprise or concealment. “The binding nature of it was in bold and uppercase text. Terms were not buried in fine print. [The company] … not only gave ample notice of the program and its terms, but also made efforts to have employment lawyers and human-resource personnel available to answer questions. There is no evidence … of undue pressure put on employees.”

“Nevertheless, in a very real sense the DRP was ‘take it or leave it.’ The DRP's terms took effect three months after they were announced regardless of whether an employee liked them or not. An employee's option was to leave and work somewhere else. True, for current employees like Davis, three months might have been sufficient time to consider whether the DRP was reason to leave O'Melveny. In that sense, there could have been a meaningful opportunity to ‘opt out’- although to opt out of the entire employment relationship, not to retain the relationship but preserve a judicial forum.”

The court added that in the “…case with Davis as a paralegal in an international law firm – the employee is facing an employer with ‘overwhelming bargaining power’ that ‘drafted the contract, and presented it to [Davis] on a take-it-or-leave-it basis,’ the clause is procedurally unconscionable. …[F]ew employees are in a position to refuse a job because of an arbitration agreement in an employment contract.”

The court next analyzed whether or not the DRP met the substantive unconsionability test. The court recognized that: “Substantive unconsionability relates to the effect of the contract or provision. A ‘lack of mutuality’ is relevant in analyzing this prong. The term focuses on the terms of the agreement and whether those terms are so one-sided as to shock the conscience.”

The court found that according to the DRP, if the claim is not filed within a year of when it should have been discovered, it is lost. “We have previously held that forcing employees to comply with a strict one-year limitation period for employment-related statutory claims is oppressive in a mandatory arbitration context.”

The court found the employer’s DRP contained four void or substantively unconscionable terms, they were: (1) the “notice” provision, (2) an overly-broad privacy or confidentiality provision, (3) an overly-broad “business justification” provision, and (4) the limitation on filing administrative claims with state agencies.

“These provisions,” said the court, “cannot be stricken or excised without gutting the agreement. Despite a ‘liberal federal policy favoring arbitration agreements,’ … a court cannot rewrite the arbitration agreement for the parties. Given the scope of procedural and substantive unconscionability, the DRP is unenforceable.” The court supported prior case law where it was concluded than an arbitration agreement may be indicative of a systematic effort to impose arbitration on an employee “…not simply as an alternative to litigation, but as an inferior forum that works to the employer's advantage.... Because a court is unable to cure this unconscionability through severance or restriction, and is not permitted to cure it through reformation and augmentation, it must void the entire agreement.”

The Top 3 Points to Consider when Selecting an HRIS

Violet Nguyen is the Human Resources Director with People ROA, Inc. People ROA, Inc. is Employers Group’s preferred provider of Abra HRIS solutions. She has 10 years of HR experience from HR Management to HR Consulting with Sage Abra's HRMS Software Solutions. Violet has a B.A. in HR Management.

Before HR professionals can become more strategic, they need to have a grasp on their organization. Managing employee data using a Human Resources Information System (HRIS) serves as the foundation for more strategic activities. An effective HRIS should be able to provide and track all of the information a company needs on current and former employees. The right HRIS helps to reduce the workload of the HR staff, allowing them to be more productive and work more efficiently.

When it comes to their HRIS, complaints are common among HR professionals. “It’s not user friendly.” “The reports are too complicated to access.” “It’s not capable of doing what I need it to do.” So, how do you select the right HRIS for your company to avoid these issues? Here are the top three points to consider:

Know what you need – Assess the desired high-level functions
The system cannot meet your needs if you don’t know what you need the system to be able to do for you. This is the most crucial step in preparing to create the request for proposal (RFP) from HRIS vendors. You must know what you need and what functions you need, or would like, to automate.
Do not assume that you need the top system with the most “bells and whistles.” Keep in mind that such a system will also be the most complicated to install, configure, implement and use. Core HRIS applications are:

• Human Resources - track current and former employee data and changes
  
  
• Benefits - track health, savings and retirement plans
  
  
• Training - track required training programs for specific jobs
  
  
• Recruiting - track applicants and requisition process
  
  
• Attendance - track accrual balance and attendance program
  
  
• Payroll - administer and process paroll
  
  
• Advanced functions - employee self-service, performance evaluation management and online benefits administration
  

Decide which application is most crucial to implement for your organization. If you have the budget available to implement all applications, then by all means purchase everything and use the power of negotiation to get a better deal. However, if your budget is limited, consider purchasing only the most needed application first to get you started. To identify this, many companies will assemble a business case to determine the areas of greatest savings. You can always add on additional applications at a later time.

Determine and prioritize requirements
This is the heart of the system selection process. Be sure to evaluate requirements in a detailed, methodical and complete manner.

• Functional Requirements - To determine the right system for your organization you need to answer the following questions:
  
  • Who will use this system?
  • What is their skill level?
  • What is the main purpose of the sys tem?
  • What are the critical features that you need?
  • What features would you like to have, but could live without?
  • Can it produce the reports you need?
  • Can it integrate with your other HRIS, payroll or finance system?
  • Does it provide benefits administration?
  • Can it track applicants?
  • Can it track employee training?
  
  
• Technical Requirements - There are many HRIS packages to choose from that are deployed through different technologies. Some packages are desktop applications that share a single database. This is great for an office environment that is generally in one location. If you need to share information across a number of geographic locations, a web-based system or client server option may be a better solution. Different types of HRIS packages are:
  
  Application Service Provider (ASP) - The vendor hosts the software and you rent access to your data, which is stored on the vendors’ server. This option is preferred when IT resources and support are limited. Using an ASP will be lower in cost initially; however, you will be committed to pay for the system monthly, and over time it may cost more.
  
  Client Server based - You purchase an HRIS license and the software is hosted on your server. With this option, you will mostly likely only have to pay a one time purchase fee, plus an annual support fee.
  
  Web-based - This is similar to the Client Server option, but the applications is deployed and accessed completely though a browser.
  
  
• Other Requirements - Customer support can be one of the most important procurement considerations, especially for companies that have been burned in the past by lack of support. Another consideration is if the company will likely still be in business long enough to provide upgrades to meet the latest operating system.

Prepare for future changes
One of the most important points in selecting the proper HRIS for your company is that the system can accommodate changes within your organization. Determine how much growth you will realistically have in three to five years. For example, with 300 employees, you don’t want to waste time and energy looking at tier 1 systems built for enterprise level organizations. Instead, consider a system built for the mid-market, which can accommodate up to 5,000 employees. It is better to have a quick ROI and accomplish business objectives than a complex ‘system’ that you may not grow into and will present a long-term financial and resource drain on the company.

After considering the three areas above, the search for the right HRIS will be much simpler. This analysis will also set the foundation for vendors to determine if they have a solution to fit your requirements. In the end, knowing your needs, determining and prioritizing your requirements and being prepared for future changes will save you time in your search for the ideal HRIS system.

A “Primer” on State-Funded Training

By Jeff Hull,
Director of Learning Services

Employers Group has offered state-funded training programs to its members for the past seven years; however, many members ask “what is state-funded
training and how can it work for my company?” This brief introduction will
provide guidance on the how’s and why’s of state-funded training.

Why does state-funded training exist?
During the recessionary years of the early 80’s the California’s State Assembly voted to create the Employment Training Panel (ETP) funded by a portion .01% of Unemployment Insurance Tax funds (capped at $7 per employee per year).

The rationale behind creating this state agency was to provide training and development opportunities to businesses that paid a satisfactory wage to its employees. In turn, these businesses would become more productive and competitive in the global economy and thus would reduce the number of unemployment insurance claims and ultimately boost tax revenue.

Today, ETP is true to its initial mission; however, the program has become the state’s premier economic development tool and is the deciding factor for companies to locate or expand in California.

Has state-funded training fulfilled its mission?
Yes. The program and agency was only to have a 20-year life; however, given the extraordinary results of the program, the assembly adopted to make the program permanent. Independent studies have found a return on investment of $5 for every $1 in ETP fund spent. Very few, if any, state agencies can claim this result.

Annual tax collections bring in approximately $80M in funding; however, because of state budget issues, ETP is only awarded $53M of its total allocation. The balance is siphoned off to fund social service programs (CalWORKS). Employers Group continues to fight this seemingly illegal siphoning of employer tax dollars.

Why is ETP different than federal training programs? Why is ETP different than federal training programs?
ETP-funded training programs are unlike many other state and federal programs that focus on preparing dislocated workers for a new career or transitioning into work. Instead, ETP prepares current employees to meet the demands of changing business and industry needs. Further ETP provides training opportunities to businesses that lack training funds and primarily to those receiving the least amount of training within companies – frontline employees.

Which companies qualify?
If a company pays into the ET Tax Fund and generally has a turnover rate of less than 20% for the last calendar year, it will qualify as an eligible employer. While almost all for-profit employers will qualify, there are limitations as to who can be trained:

• Companies that face out-of-state competition by, among other things, deriving over 25% of their revenue from outside California, being a manufacturer or competing directly against other firms that have no California employees. These companies can train an employee who is not a senior manager who earns 45% of the county’s average wage ($12.38 to $13.51).
  
  
• All other companies are able to train just frontline employees who earn the state’s average hourly wage ($22.51).

What training qualifies?
As stated earlier, the primary focus of ETP is to provide training that will increase productivity and competitiveness. To this end, those types of training topics are permitted. Topics dealing with safety, compliance, job orientation, regulatory or mandated training that the company would ordinarily need to provide, are not eligible. Further, since the program is meant to increase productivity, a minimum of 24 and typically a maximum of 200 hours of training can be planned per individual trainee.

How is training reimbursed?
Training is reimbursed to contractors on a per-hour, per trainee basis and the amounts vary according to business type, training type and employer size. The state has considerably changed the way it handles its unique “pay for performance” contracting. Now, individual trainees who have received at least 24 hours of training, qualify for reimbursement for the actual hours of training they received during a 21-month training period. Trainees receiving less than 24 hours are not eligible for any state reimbursement. Trainees remaining employed full-time for 90-days (3 months) after training ends are considered complete and all training hours are paid in full.

How is the Employers Group program different?
All of the requirements above primarily deal with companies wanting their own individual 2-year training contract with the state. Employers Group’s program differs in that it allows an opportunity for employers to select one or a few groups of employees to participate in a subsidized training program.

The beauty of the program is that Employers Group handles everything from soup to nuts, meaning the company will not be burdened with state visits, paying trainers, administering the program or handling the paperwork. Employers Group’s 2-year program began in June this year, and most employers select a 10-week (one 4 hour session per week), 10-module training program for a group of 15-20 employees.

Where can I go to for assistance?
Employers Group can answer many state-funded training questions and provide guidance on what direction would best work for your company and training objectives. For more information, please contact Jeffrey Hull, Director of Learning Services, at 213.999.3941.

Is it time to Benchmark your Compensation Plan?

By Juan Garcia,
Director of Research Services

As summer looms ahead, a healthy economy and a vibrant labor market unfortunately lead to staffing concerns for employers. A recent poll by a
national staffing agency found that job postings on the internet have steadily increased by 30 percent over the last 12 months. The same poll found that three out of five companies have strong concerns that their benefits and compensation strategy may not be aggressive enough to support the retention or recruitment of key personnel.

Have you updated your comp plan?
The companies that reported being challenged by their compensations strategies generally fall into two groups: The first group includes those companies who have plans but may not have had the opportunity to maintain and upgrade their compensation plan. Perhaps they did not have a chance to audit their plan, which should include spot market analysis of critical positions, realignment of new jobs, recommendations for an upward adjustment of the salary ranges, and determination of an employees’ position to the market via compensation ratios.

So why are compensation plans not maintained? Part of the challenge is that symptoms from an under-maintained compensation plan are not evident – that is, the issues do not show up until the problem becomes almost unmanageable. The results include high-turnover, longer recruitment time for key positions, shortage of skilled production positions; misalignment of employees in critical positions; high customer complaints, high training costs, lower productivity and quality control, and most important, lower employee moral.

Even more disturbing to management is that when these problems do arise, there is no gauge as to how competitive their compensation package is. Frequently, these companies are at the mercy of employees citing online comp data, which is often irrelevant to the position or the job in question. A quick search of online comp site shows that these sites are setup to attract traffic, rather than to accommodate the compensation needs of most employers. Sure, there are a group of companies that specialize in providing online support to employers, but generally these sites are cost prohibitive for most employees. Ultimately, the employee will rely on data that has little relevance to the job in question.

Informal vs. formal comp plans
The second group of companies challenged by compensation issues are the ones that don’t have formal plans but rather have various “unofficial” plans for departments or employees. At the same time, they have a cohesive strategy covering all parts of the organization (almost 50 percent of all companies fall into this group).

Companies finding themselves steamrolled by a poorly designed or maintained compensation plan can take a number of steps to fix the issues. The first step, however, should always be to determine the compensation philosophy. This process should be as exhaustive as possible, and many times, a third-party may be necessary to bring consensus within the organization. Taking the time to consider and answer these questions will make the both the process of developing and administering a compensation plan much easier and will result in the development of a compensation plan that more closely matches the organization's goals and objectives.

Steps to stay current
Once a company has defined its compensation strategy, the steps that follow should address the following key objectives of the pay program:

• Achieving internal equity - Is the ranking of positions within the organization aligned to other jobs with comparable value?
  
  
• Determine external equity (or competitiveness) - How are the wages and salaries compared to other companies?
  
  
• Individual equity contributions - Does the plan recognize employee-driven performance?
  
  
• Performance or productivity incentives - Can the company benefit from implementing a bonus/incentive system that rewards either individuals or groups based on meeting specific targets or goals?
  
  
• Financial resources - Is the plan and its financial impact in line with the organization’s budget?
  
  
• Compliance laws and regulations - Does the plan meet basic wage and hour guidelines, overtime, meals and rest periods, etc?
  
  
• Administrative and training - What steps has HR taken to implement the program and to train line supervisors on the proper execution of the plan?

By addressing the above issues, the objectives and goals of the organization can begin to take shape. This is critical, as many compensation experts agree that the major flaw in any compensation strategy is having a plan that is misaligned with the overall mission of the organization. The life-span of such plans is much shorter, and management will quickly begin to notice increased labor costs with lower-than-expected productivity or financial growth.

Surveys can help
As the strategic and planning phase evolves, the next major challenge for the successful plan revolves around the identification of reliable and valid data sources that can help you determine the market and the proper use and application of such information. The most popular method is to use published survey reports. Generally these reports provide a reliable and economical method to compare salaries against the market. Inexpensive, published reports often are based on large numbers of organizations and jobs, providing a more accurate analysis. The presentation and the access to the data are far superior to that of custom surveys or surveys conducted by the organization itself.

In deciding what surveys to use, a company can base its decision on a self-evaluation: Does the survey represent the organization’s region, industry type, and size? Generally, companies will likely find that not one survey fits all their needs – many times companies will use two to five surveys in the process of defining their market. For most companies, this process may seem costly; however, the cost of securing this information is minimal compared to the cost a company can experience by the improper alignment of their compensation strategy based on a limited number of resurveys.

Bottom line – audits help!
Once deployed, the best way to maximize the worth of your plan is to audit it at least every other year. This audit should include spot market checks to determine market movements; comp rations, i.e., position of wages and salaries to the ranges midpoint; i.e., if the wages / salaries are consistently above the midpoint, this is a sign that you may need to adjust the ranges as they have started to lose their alignment to the ranges and possibly to the external market.

The audit should also examine how well new jobs have been ranked against more well-established positions. This would help you monitor your internal alignment as new jobs should be evaluated according to their own value and how that value compares to their jobs. Ultimately, by observing these basic principles, you will increase the chances of having a compensation plan that serves the staffing and management needs of your organization.

For more information about EG’s compensation surveys, email surveys@employersgroup.com. Your questions about this article are welcome! You can contact Juan Garcia directly at jgarcia@employersgroup.com or call him at 800.748.8484.