Staffing Management – Page 12

July 29, 2019July 15, 2019

Criminal Past Less a Predictor for Workplace Futures

At Nutrition Solutions, most employees are formerly convicted felons.

Not exactly the type of employee one would expect to find at a trendy lifestyle meal preparation company. But then again, founder and CEO Chris Cavallini was arrested 17 times before he was 18 years old.

Now leading a $10 million company, Cavallini gives others opportunities to move forward despite pasts including felony convictions, homelessness or substance abuses.

Still, Cavallini won’t just hire any convicted felon who applies for a job.

“We look for how has that person has taken responsibility for what has happened in their past and if they are ready to do whatever it is they have to do for it as long as they need to do it to create a better life for themselves and their families,” he said.

With unemployment at historic lows and a large amount of the workforce gravitating toward sharing economy jobs, there are currently more job openings than job seekers, noted Marco Piovesan, CEO of InfoMart, a global background screening company.

That leads employers to consider hiring nontraditional candidates such as ex-offenders, who demonstrate lower turnover rates than their peers, he added.

Some 75 million Americans — about 1 in 3 adults — have a criminal record. According to the Society for Human Resource Management, nearly 700,000 people are released yearly from prison with 75 percent remaining unemployed for a year.

With employers desperately seeking to fill vacant positions, a criminal past may not tarnish a job candidate like it once did. Several initiatives from HR’s leading association as well as the current administration are closing the gap between fulfilling a prison sentence and finding fulfillment in gainful employment.

The Getting Talent Back to Work initiative led by SHRM and Koch Industries to end noninclusive hiring practices rolled out after President Donald Trump signed the First Step Act into law in December 2018.

SHRM’s initiative has led hundreds of individuals and companies to sign a pledge to seriously consider qualified formerly incarcerated people for jobs.

The initiative includes a toolkit providing employers guidance in compliance issues, background checks, interviewing and assessment, screening, risk analysis, insurance, negligent hiring, hiring incentives and understanding criminal background report language.

Nearly 75 million Americans — about 1 in 3 adults — have a criminal record.

While significant uncertainty about hiring workers with criminal records exists among some senior executives, only 14 percent of HR professionals and 26 percent of managers are unwilling to work with or hire someone with a criminal conviction, according to a SHRM and Charles Koch Institute study.

“As employers, we acknowledge people make mistakes in life, come back from it and want to do better. They need to be able to have a livelihood,” said Dale Pazdra, a Barry University adjunct HR professor and Coral Springs, Florida, HR director.

“Be open-minded, but protect yourself and your company by deploying the same mitigation strategies you would with a more traditional hire and weigh the gravity of the offense against the nature of the job,” said Piovesan.

Some ex-offenders commit a repeat offense and are reincarcerated despite immediate employment upon release, noted Tammy Cohen, InfoMart founder and chief visionary officer.

Compliant background checks ensure specific types of ex-offenders are restricted from working in positions catering to vulnerable populations, Cohen added.

It also ensures fairness in hiring decisions, she said, adding, “the EEOC is against the use of bright-line rules such as refusing to hire anyone with a criminal conviction and instead encourages employers to complete individualized assessments.”

EEOC guidelines encourage recency and relevancy related to offenses, Pazdra said. A “whole person” approach includes work history, education, references, and physical requirements to ensure a good hire, he added.

Cavallini said for formerly incarcerated felons to be successful after release, they must reconfigure their belief system, priorities, values and social circle.

His company’s second in command spent time in solitary confinement.

“If they can make it through that, they can make it through any workplace adversity,” Cavallini said.

At Nutrition Solutions, all employees must do two weekly boot camp style workouts with a personal trainer to build discipline and channel aggression, and also write reports on how leadership lessons taught in the book “Extreme Ownership” — written by two U.S. Navy SEAL veterans — apply in their lives.

“We’re paying our team to do things to make them smarter, more efficient, effective, mentally resilient, disciplined, and more valuable to the company,” said Cavallini. “They’re willing to do whatever it takes because they don’t want to go back to that dark place in life.”

June 14, 2019March 17, 2022

Here Are the 4 Must-Know Trends in Gig Hiring

Hailing a ride. Delivering takeout. Tidying up the house.

They all fall under the growing list of services offered in the gig economy. Many of us have made such conveniences staples in our personal lives.

More businesses have started using gig economy services through online labor platforms. Think of the platforms as Uber-style portals that connect companies with on-demand talent. While the gig economy as a whole is not growing as fast as headlines would indicate, the labor platforms that help fuel them are.

Why have these matchmaker platforms gained steam in corporate America?

The reasons vary, though most boil down to the challenges associated with today’s tight labor market. Rising labor costs and a dwindling number of available workers have compelled companies to seek new options when it comes to recruiting.

And as a sign of their growing popularity, the companies that use platforms to tap gig workers extend well beyond small businesses and niche start-ups. Today, large legacy companies count platforms as key tools in their staffing toolkits.

Here are four ways businesses are integrating gig-style platforms into their talent acquisition strategies.

Hiring Blue-Collar Workers

Who would have ever thought? These days, companies have more difficulty recruiting blue-collar workers than white-collar workers.

Young adults are shying away from the trades and manual work and instead are flocking to white-collar work. And at the same time, those who perform much of America’s blue-collar work — baby boomers — continue retiring in droves.

Blue-collar shortages will persist for at least another decade in sectors including hospitality, transportation, manufacturing and retail. Without a sufficient pool of available workers, companies will have to offer higher wages and absorb weakened corporate profits as a result.

Consider Coca-Cola, which uses the platform Wonolo to hire merchandise delivery drivers for restocking shelves in between scheduled deliveries. For fast-moving consumer-goods companies like Coke, hiring drivers on demand can mean avoiding “out of stocks” and salvaging billions of dollars in revenue missed due to empty shelves.

Developing Talent Marketplaces In-House

Rather than rely on outside third-party platforms, some companies are creating their own. Internal freelance platforms can offer many benefits: workers who are a better cultural fit, distilled onboarding so they can hit the ground running, and reduced compliance and IP risks.

PwC has developed its own platform and talent network. While initially focusing on alumni and its current community of contractors, it also accepts external independent professionals to bid on projects. And then there’s The Washington Post. Its internal platform streamlines the process of hiring freelance journalists from anywhere to cover almost any subject, allowing them to more effectively report breaking news.

These in-house labor platforms, with their hand-picked talent pools and direct connections to internal projects and teams, encourage ongoing relationships between companies and independent contractors. As such, both parties benefit.

Hiring On-Demand Teams

The conventional thinking is that online gigs work best for one-off tasks or discrete projects that can be completed by an individual. Think of driving from point A to point B, designing a new company logo or tagging website images.

But rather than focus on individual freelancers, companies can now turn to “flash organizations.” Such groups comprise teams that are assembled on demand and then disband after they finish the project. In much the same way that a Hollywood film is created — by hiring a director, producer, and actors, all with predefined roles — a flash organization fills a predefined hierarchy of temporary roles. But it does so dynamically, using algorithms that source talent from online labor platforms.

IBM and Mastercard have used Gigster’s AI-driven platform to hire on-demand software development teams. Using these teams, the companies designed and created programs in a matter of days or weeks, compared to months of planning and sourcing using legacy hierarchies.

Achieving Innovation Through Crowdsourcing

To accelerate innovation, some companies are leveraging not teams but, rather, the power of the crowd. General Electric uses various crowdsourcing platforms, including its own GeniusLink and Fuse, to find solutions to tough engineering problems and innovate new products. For example, in one crowdsourced competition, an Indonesian engineer solved the company’s challenge to increase airplane fuel efficiency by reducing the weight of a single part by 84 percent.

The scope of services being offered through on-demand workforce platforms is widening. Expect online labor platforms — especially those outside of transportation — to continue innovating on the types and modes of work that independent contractors can complete. As such, labor platforms will intensify their offerings of enterprise solutions so that more businesses can use them for taking their talent efforts up a notch.

June 6, 2019June 29, 2023

An Obituary for Employment At-will

Over at her employee-rights blog, Screw You Guys, I’m Going Home, attorney Donna Ballman asks, “Is is time to terminate at-will employment laws?”

Well Donna, there’s no need to terminate these laws; they are already dead. I hear it all the time from clients. “Aren’t we an at-will employer? We paid you for that handbook that says so. Why can’t we fire this employee. This is *!%#*!”

Yes, your employees are at-will. And that and a hill of beans will get you sued.

Employment at-will is dead. Do you have the right to fire an employee for no reason? Absolutely. Yet, if that employee is African-American, Other-American, a woman (or a man), pregnant or recently pregnant, suffering from a medical condition (or related to someone with a medical condition, or you think has a medical condition but doesn’t), on a medical leave or returning from a leave, injured, religious, older (i.e., age 40 or above), LGBTQ, serving in the military or a veteran, or a whistleblower or otherwise a complainer, the law protects their employment. Which means that if you fire them, you better have done so for a good reason.

If you look at those categories, most of your employees fall under one of more of them. In other words, while you are an “at-will employer,” that doesn’t really mean anything anymore. Employees just have too many protections.

So, how do I suggest you respond? Follow the Platinum Rule of Employee Relations. Treat your employees as they would want to be treated. If you treat your employees as they would want to be treated (or as you would want your wife, kids, parents, etc. to be treated), most employment cases would never be filed, and most that are filed would end in the employer’s favor. Juries are comprised of many more employees than employers, and if jurors feel that the plaintiff was treated the same way the jurors would expect to be treated, the jury will be much less likely to find in the employee’s favor.

What does this mean for your poor performing employees? Does they understand the performance problems? Were they given sufficient counseling and warnings before termination? And, most importantly, can you prove it via contemporaneous documentation? If so, there is no reason to give poor performance a pass just because of the risk of a lawsuit. Otherwise? I’d think long and hard before firing.

So let’s all raise a glass and toast employment at-will. It had a good ride.

May 20, 2019June 29, 2023

Navigating the Toxic Triangle of People Management

Relationships are complex, particularly so at work since employees have limited control over who they interact with.

While there’s no shortage of advice on how to deal with matters of the heart, working relationships are rarely discussed until it becomes painfully obvious they’re not working. In the wake of the #MeToo movement there has been an increasing focus on fostering more respectful workplace environments.

Yet most managers receive little guidance when it comes to building, maintaining and repairing healthy relationships that often foster toxic workplaces. In many instances they evolve into one of three types of supervisor: the buddy, the boss or the bully.

In a study of what makes a manager effective, the quality of their relationships was found to make the biggest difference to their success. Understand how to do relationships well and everything else becomes easier. Feedback is better received, delegation of duties becomes more straightforward and employees find it easier to cope with change.

Individuals who report good relationships with their managers are healthier, happier and have more fulfilling careers. They perform better, put in more discretionary effort, are more innovative, more resilient and more likely to stay with the organization.

Relationships between team colleagues are also critical. For example, in a study of hospital wards in England, teams who worked well together saw a 3.3 percent drop in mortality rates, the equivalent to saving 40 lives per year.

Destructive relationships wreak havoc for individuals and for organizations. Studies show that for three-quarters of employees, the most stressful part of their job is their boss. A 2015 Gallup survey revealed that half of respondents claimed to have left their most recent job due to a poor relationship with their boss.

As well as the human costs, the financial repercussions of toxic workplace behavior can reach the millions. Considering that managers account for 70 percent of the variance in employee engagement, the disengagement caused by bad bosses costs businesses upward of a half-billion dollars annually.

While this is not a new trend (with research dating back to the 1990s showing “job stress” related to poor management being cited in 75 percent of workers’ compensation claims) the need to address it has become more pressing in the age of #MeToo.

The Buddy, the Boss and the Bully

Psychologists in 2007 identified a “toxic triangle” of factors that foster negative relationships between leaders and followers. The combination of dysfunctional leaders, silent subjects and a permissive environment create a situation where relationships are likely to break down in a detrimental way.

Dysfunctional leaders. Most people have a dark side that comes out, particularly during times of pressure. Without clear guidance on managing the more complex aspects of workers’ personalities, managers often revert to behavioral patterns developed in childhood.

In 1950, psychologist Karen Horney published important research that outlined three patterns of coping behavior that children rely upon in times of stress. Some naturally turn toward people, seeking out closeness in order to feel comforted. Others turn away, preferring to cope independently. The third group actively turn against other people, choosing to fight.

Adults draw on a combination of these coping mechanisms but usually have a preference for one over the other. When taken to its extreme, this preference becomes dysfunctional and can result in some bad behavior.

First, we have the manager who prefers to turn toward others. These leaders want to be everybody’s friend, seeking approval in order to validate themselves. The manager morphs into the Buddy.

On its face this might seem OK, but this type of relationship can go horribly wrong. Amy Gallo, author of the “HBR Guide to Dealing with Conflict,” warns that these managers can shy away from giving feedback, avoid going to bat for their teams and give in too easily to demands. Their need for approval can create an overly politicized, clique-y organization where personal boundaries are frequently abused.

Then there is the “turn away” manager who doesn’t care what other people think of them so long as the job gets done. They are the stereotypical detached Boss, interested in delivering to deadline at the expense of everything else. They have no interest in building healthy relationships, believe in reinforcing hierarchy and don’t care if they are overburdening people. This focus on results at the expense of relationships means teams are less loyal, less happy and ultimately less likely to give it their all.

The “turn against” manager arguably takes the crown as the worst supervisor. They care about relationships but only so they can twist and manipulate them for their own gain. They are the quintessential Bully. They love relationships for the opportunities they give them to take advantage and get what they want.

Bullying and harassment in the workplace are more common than you’d think; considering that three-quarters of employees report that they’ve experienced it at some point in their career. And the worrying reality is that we’re all at risk of straying into these toxic personas from time to time; it’s not just the extreme characters that cause havoc. As people gain more power in their careers, the skills they need to be successful, such as empathy and collaboration, tend to be less important, and so a vicious cycle ensues.

Silent Subjects. For dysfunctional leaders to flourish to the extent that relationships break down irreparably, they need followers who for a variety of reasons avoid speaking out. This can mean conformers — those who are typically obedient to authority, prone to group-think, don’t feel that it’s safe to speak up or are unwilling to challenge the status quo. Sometimes people don’t even know the behaviors to look out for or what to do when they see it.

It can also be in the form of colluders who see benefit in aligning themselves with a destructive leader. Colluders reinforce the leader’s bad behavior, repress any would-be whistleblowers and help the toxic cycle continue.

Permissive Environment. A permissive workplace environment is one that permits or may even encourage bad relationships to flourish. If the culture is overly politicized and consensus is valued above all else, the inner Buddy will come to the fore. If it’s a results-driven environment in which targets must be met at all costs, the Boss is likely to emerge. And in a dog-eat-dog culture where aggression and intimidation are par for the course the Bully will come to the fore. These are all extremes, of course, but every company’s policies and processes as well as the culture, values and norms will nudge its leaders to behave in a certain way.

There are methods to limit the buddy-boss-bully syndrome and create a workplace atmosphere more conducive to building strong manager-report relationships. Here are five focus areas for making a difference to building a culture of good working relationships.

Limit the abuse of power. As an executive, encourage self-awareness and introspection in leaders. The right balance is being respectful of boundaries while also providing descriptive feedback, precision coaching and stretching but not straining targets. Organizations should consider the strategies they use to select their leaders. Is enough being done to weed out the bad apples or are there entrenched, bias-laden approaches that toxic leaders can take advantage of? Organizations might be better off hiring decent leaders than hyper-talented individuals with an uncontrollable dark side.

Establish norms and boundaries. Working relationships work best when managers strike the right balance. Overly focusing on the relationship could allow for goals to slip out of reach. Ignore your team’s needs though, and commitment to work could falter. Managers need to set standards for their team by role-modeling respectful, inclusionary behavior and being clear on the behaviors that are appropriate and the boundaries that shouldn’t be crossed. This applies in every interaction, from giving feedback and dealing with poor performance to inquiring about a team member’s well-being and sharing personal details.

Contract from the start. In every manager-report relationship there exists a psychological contract about how each should behave, although these rules usually remain unspoken. Managers should be encouraged to have a frank conversation with their reports about what each side expects from the relationship, where you draw the line and any behavioral nonnegotiables. Making these assumptions explicit means there’ll be no room for misunderstanding, and avoids relationship breaking down.

Give permission and voice. The first challenge is helping people see the toxic behavior for what it is. The second is helping them to understand that there’s nothing wrong with calling out disrespectful behavior in a professional way. With many people, their self-identity can get in the way as there is a dissonance between how people see themselves (successful, confident) and not wanting to appear as the victim.

Repair ruptures. Despite our best efforts, relationships will go awry. When that happens, refer to a quick, effective repair kit. This comes in four stages:

• Pause. Step back from the heat of the moment and do whatever needs to be done in order to emotionally reset.

• Contain. Address the conflict in the moment and keep it isolated to that specific incident to prevent toxicity from seeping into the relationship as a whole.

• Play back. Share thoughts and feelings and be open to hearing what others are saying. Play back what’s been said so they feel listened to.

• Reassure. Remind yourself and the other person that conflict is inevitable, and if handled well can strengthen the relationship in the long run.

Nobody said it would be easy but given the impact of relationships on almost every measure of workplace success, it pays to understand how to make our working relationships work.

March 7, 2019July 24, 2024

Mobility Strategies Are Driving Key Talent Management Trends

Fueled by relative economic strength around the world, all signs point to a prolonged talent shortage that will plague global businesses for the coming decade.

As companies of all sizes grapple with how to attract and retain outstanding employees, more organizations are recruiting internationally and expanding opportunities for current employees to pursue a variety of internal roles.

This is good news for job seekers and employees who are looking to grow their careers and seek out fulfilling work/life experiences. But it remains a challenge for employers, many of which are struggling to get up to speed with this “new normal” where a strong mobility program — both internal and external — is now a critical business strategy, not just for expanding to new markets but for addressing both acute and long-term people resourcing challenges.

Mobility, also known as global mobility or talent mobility, refers to the movement of employees across borders for business purposes. This could be employees relocating globally or domestically, taking a temporary assignment outside their home office, or even business travel or cross country or state commuting. Mobility, regardless of its form, requires modern tools and support to tackle everything from tax and immigration complexities to being paid in multiple locations.

Mobility will become a key differentiator in the war for talent, enabling businesses that get it right to overcome staffing challenges. Here are just a few examples of why organizations should prioritize mobility in the coming year:

To retain talent. More than 20 percent of employees say they’ve quit a job after being denied a relocation opportunity, and worse yet, 40 percent say they aren’t even aware of mobility offerings within their company. With global talent shortages, this should be terrifying news! Companies that offer internal mobility must do a better job of communicating and internally publicizing relocation opportunities when these roles become available. Make it clear that if you have the skillset, we’ll get you there through a seamless process that emphasizes employee satisfaction, lifestyle and family needs.
To enable fluid career paths. In previous generations, employees joined an organization and stayed there for their entire career, following a relatively predictable career path from junior level to senior management. But millennials and others are looking for faster progression, which includes lateral moves. When the average tenure at even tech giants like Google is two years or less, employees’ careers are now less tied to the organization and more tied to their personal brand and personal growth. Mobility enables this career fluidity by giving people an opportunity to grow in ways that suit their needs. In fact, a recent study found that more than 70 percent of employees saw mobility as a career growth opportunity, even without a raise or promotion.
To close the gender gap. Diversity and inclusion have become chief priorities, especially when it comes to leveling the gender playing field. Despite the push toward gender equality in the C-suite and boardroom, women still have less opportunity in mobility, despite its key role in leadership growth. The bottom line: if you want more women in senior leadership, you must have gender equality in your mobility population. This can also be solved with better communication and promotion of opportunities. By showcasing women in successful expat roles to demonstrate its transformational benefits for personal and professional growth, companies can entice more women to seek out mobility-based career and leadership opportunities. When they see that it works, and that your company will support them every step of the way, it’s easier to see themselves as eligible candidates.
To utilize data to drive efficiency. Traditional recruiting and HR management systems data have become invaluable when it comes to recruiting and talent optimization. But, as mobility begins to play a larger role in shaping a talent management strategy, it needs to be tied into the fold. The holy grail for success: the ability to identify and predict for whom mobility will be successful. By measuring factors such as how long the assignment lasted, what did the individual’s career path look like after, how long did they stay with the company, etc. we can use mobility data to optimize the process, move more people cost-effectively, foster greater success for the individual and ensure the company gets the most bang for its buck.

The potential is there for mobility to influence talent management in the coming years. While many areas of talent management have gone through a digital transformation, including recruiting, performance management, learning management and recognition and rewards, mobility has been somewhat left behind in most organizations. As a result, employees are often faced with highly fragmented experiences, forced to deal with five or six vendor systems and plagued with redundant data entry.

Adopting robust global mobility management solutions will transform the relocation process, giving companies the comprehensive tools they need to operate efficient, successful and growth-oriented programs, while also making relocation an exciting, exhilarating and life-changing experience for employees.

February 20, 2019June 29, 2023

The 6th Nominee for Worst Employer of 2019 Is … the Diverse Discriminator

How many different ways can one employer discriminate? How about eight?

The EEOC recently settled a national origin and disability discrimination lawsuit against a staffing agency, brought on behalf of a group of Latino employees working at an Alabama poultry plant.

The eight different acts of discrimination alleged by the workers?

1. They were harassed, which included ethnic slurs, threats, verbal abuse and other abusive working conditions.
2. They were paid less than they were promised.
3. They were placed in more hazardous conditions.
4. They were denied bathroom and lunch breaks.
5. They received fewer hours of work than their non-Latino co-workers.
6. They had exorbitant relocation, housing and transportation fees deducted from their pay.
7. They were denied medical treatment and other accommodations (such as breaks or time off from work to recuperate) after suffering repetitive motion injuries to their hands, forearms and shoulders.
8. And, when they complained about all of the above, they were ignored.

According to Marsha L. Rucker, regional attorney for the EEOC’s Birmingham District Office, “We cannot allow any employer to prey on vulnerable workers by recruiting them and then subjecting them to such gross mistreatment.” Adds Bradley Anderson, the EEOC’s Birmingham district director, “The EEOC has made combating discrimination against vulnerable workers a strategic priority so that employers cannot profit from victimizing them.”

All of the above cost this employer $475,000 to settle the EEOC’s claims.

It also earned this employer its nomination as the Worst Employer of 2019.

Previous nominees:

The 1st Nominee for the Worst Employer of 2019 Is … the Philandering Pharmacist

The 2nd Nominee for the Worst Employer of 2019 Is … the Little Rascal Racist

The 3rd Nominee for the Worst Employer of 2019 is … the Barbarous Boss

The 4th Nominee for the Worst Employer of 2019 is… the Flagrant Farmer

The 5th Nominee for the Worst Employer of 2019 is… the Fishy Fishery

February 13, 2019June 29, 2023

How We Work Might Be Changing But Independent Contractor Risks Remain the Same

The way we work in America is changing. The relationships between companies and their workers are more fluid and varied than in decades past. Our task in this appeal is to apply traditional legal protections to one such relationship.

So starts the 6th Circuit’s opinion in Acosta v. Off Duty Police Servs., which applies the traditional “economic realities” test to determine whether private security and traffic control officers are employees or independent contractors.

One would think that with such a pronouncement at the head of the 6th Circuit’s opinion, the court would be making a startling pronouncement broadening the landscape of who qualifies as an independent contractor.

Those making that assumption, however, are sorely mistaken.

The “economic realities” test balances six factors:

The permanency of the relationship between the parties
The degree of skill required for the rendering of the services
The worker’s investment in equipment or materials for the task
The worker’s opportunity for profit or loss, depending upon his skill
The degree of the alleged employer’s right to control the manner in which the work is performed
Whether the service rendered is an integral part of the alleged employer’s business

In balancing the factors, the court determined that all of ODPS’s private officers were employees, and none qualified as independent contractors.

1. Permanency of the Relationship

This factor examines the length and regularity of the working relationship between the parties. While some ODPS workers accepts jobs intermittently and for short terms, many worked for ODPS long-term, and some for decades without interruption. In addition to length, many ODPS workers did so with regularity (e.g., 20 – 25 hours per week, or even up to 50 hours per week). These facts mitigated against the fact that many ODPS was not many workers’ primary job or their primary source of income. Yet, according to the court, multiple sources of income is not dispositive, and using such a fact to deny employment status would ignore the “economic reality” that many workers need two (or more) sources of income just to make ends meet. Thus, the court concluded that this factor weighed in favor of employment status.

2. Degree of Skill

The evidence showed that the workers required little skill to render services. Workers only need four hours of training, and many have no background in law enforcement whatsoever. The workers described the jobs as either sitting in their cars with their lights flashing, or patrolling a parking lot spotting potential problems. Thus, this factor weighed heavily in favor of employee status.

3. Investment in Equipment and Materials

This factor compares the worker’s total investment to the company’s total investment. While the officers needed to buy their own equipment and provide their own vehicles, each only invested between $3,000 and $5,000 of their own money, compared to the hundreds of thousands of dollars ODPS spent to operate the business. Thus, this factor weighed in favor of employee status.

4. Opportunity for Profit and Loss

Courts evaluate this factor by asking if workers “could exercise or hone their managerial skill to increase their pay.” ODPS argued that workers could do so, because they had the discretion to reject assignment, thereby limiting their ability to increase their pay. The court, however, was not persuaded. That discretion, according to the court, is not managerial skill. Moreover, because the workers worked a set shift when they accepted work, they had no control over how much they earned based on how long they worked. They could not earn more by completing the job more quickly and moving on another assignment. Their skill did not increase their ability to complete their jobs and accept more, it merely gave them discretion to say yes or no to jobs when offered. Thus, this factor weighed in favor of employee status.

5. Alleged Employer’s Degree of Control

This factor asks whether the company “retains the right to dictate the manner” of the worker’s performance.” ODPS maintained policies and procedures, which addressed: (1) the type and color of uniform that may be worn, (2) vehicle and light requirements, (3) rules for exchanging job assignments with other ODPS workers, and (4) general rules on workplace presentation and conduct. ODPS also represented to its customers that it would inspect the work sites and supervise its workers.Workers testified that ODPS disciplined them for violating work rules, such as declining jobs. ODPS set the rate at which the workers were paid, would tell the workers where to go for the job, when to arrive, and whom they should contact when they got there, and had supervisors to whom they reported. Workers were also required to sign non-compete agreements, and ODPS had sued former workers to prevent them from working for competitors. Thus, for the majority of ODPS’s workers, this factor weighed in favor of employee status.

6. Integral Part of the Alleged Employer’s Business

ODPS built its business around the security and traffic control services provided by its workers. It could not function or service its customers without them. Therefore, this factor weighed heavily in favor of employee status.

Balancing the evidence, the 6th Circuit had little difficulty concluding that ODPS’s workers were its employees, and not independent contractors: “Taking all these factors into consideration with an eye on the ultimate question of economic dependence, ODPS’s workers … were employees entitled to overtime wages under the FLSA.”

Off Duty Police Servs. serves as a stark reminder for employers that in all but the clearest of cases, businesses take a huge wage-and-hour risk by classifying workers as anything other than employees. The way we work might be changing, but the risk you take by misclassifying employees as independent contractors is staying exactly the same.

Also read: Identifying Independent Contractors Vs. Employees

January 29, 2019January 29, 2019

Public Sector Employers and Age Discrimination

When Mount Lemmon (Arizona) Fire District faced a budget crisis, it laid off its two oldest (and highest paid) full-time firefighters.

They sued under the Age Discrimination in Employment Act. The district argued that it did not violate any laws because it is too small to be considered an “employer” under the ADEA. Section 630(b) of the ADEA defines the term “employer” to mean any individual or company who has 20 or more employees. It states the term employer “also means a State or political subdivision of a State.”

The district argued that the two sentences should be read together to excuse any state or local government employer with fewer than 20 employees from complying with the ADEA. The district urged the court to adopt this interpretation because it is consistent with court decisions applying the minimum employee requirement to public employers under Title VII of the Civil Rights Act of 1964. The court disagreed with each of the district’s arguments. It held that by using the terms “also means,” Congress intended to add a second definition of the term “employer,” not clarify the prior definition. The court also noted that the ADEA is sometimes broader than Title VII due to the different language used in each statute. Mount Lemmon Fire Dist. v. John Guido, No. 17-587 (Nov. 6, 2018).

IMPACT: Public sector employers are subject to the ADEA and prohibited from discriminating against employees over age 40 based on age.

January 25, 2019June 29, 2023

Labor Issues a Costly Concern During Acquisitions

When a company is considering a merger or weighing the idea of an acquisition, it is crucial to assess the impact on operations and, specifically, on labor and employment issues.

Deal attorneys and bankers focus on the underlying value analysis and purchase documents, which clearly are important.

However, liability for labor and employment issues can be created by acts or omissions and rarely is avoided solely by virtue of indemnification clauses or seller warranties in deal documents.

Put simply, our legal system operates in large part to protect the “little guy,” which in the employment context, means the employee, not the company. This means that, despite the iron-clad separation of entities from a financial perspective, if operations continue following deal closure, an acquiring entity may be held liable for workplace obligations agreed to by the seller-predecessor or for acts or omissions creating liability prior to the close of the purchase.

The Employee’s Right

How can this be, you ask? Remember the little guy. If they felt like they were wronged before the deal closed, they will chase both companies (especially if the selling entity was in financial distress). From a legal standpoint if, from our employee’s perspective, nothing changed after the deal closed — same physical office, same managers, same processes — it is possible the buyer may be found liable for the wrongdoings of the predecessor entity.

The idea is that a company should not be able to escape liability to its employees solely by changing its corporate name and closing a deal. Someone needs to make sure the little guy’s wrongs are righted. The way the courts often do it is by extending that liability to the “new” entity. The question is, how does “NewCo” avoid this? Ensure labor and employment are key components of due diligence, including the following:

Wage and hour. If you are the seller, conduct internal policy and practice audits on wage and hour issues as part of due diligence. These audits can reveal existing procedural violations that could mushroom into “bet the company” class actions if not cured (or expressly carved out of the purchase price!). Some examples of such issues are pay stub compliance, meal/rest break issues, and employee or contractor misclassification. One of the most frequently overlooked areas of exposure is unpaid vacation or paid time off for employees of the selling entity — all of whom would technically be terminated (and thus owed these monies) in an asset purchase. Even if the buyer hires every one of them.

Employment agreements. Know your obligations to employees, no matter the role. High-level executives who are key to the transition often have change in control or severance provisions in employment agreements that trigger significant payouts in an asset deal. If the buyer wants to retain these folks, the terms of new employment should be agreed-upon before closing. The buyer also should be conscious of any restrictive covenants — if key personnel are departing as part of the deal, make sure you are protecting your assets by limiting their ability to go across the street and start a competing concern. Even in California, noncompetition arrangements are available for limited purposes in the context of a purchase or sale of a business.

Turnover/hiring practices. Prepare yourself for WARN Act obligations, which require extended notice/payout periods, even if employees are not going to miss a day of work because they are being hired by NewCo. Diligence should include a discussion of which entity will be handling WARN and COBRA notices. And once NewCo takes over, to help avoid the type of pass-through liability described above in the context of an asset deal, it should follow standard hiring practices for each of the “old” employees. Assess them like any other new hire, and ensure all paperwork is completed to establish the new business relationship.

Labor union issues. Make sure you know about the seller’s union agreements or activity. Ask whether there have been organizing drives or union activity. If there is any organized labor, ask to see all collective bargaining agreements and review all grievances. The CBAs may contain clauses obligating the buyer to assume the terms contained therein and the seller to expressly disclose the potential of a deal. If you are not planning to transition the organized operations to NewCo post-close, you may be responsible for posting a bond to cover the withdrawal liability for the multi-employer pension plan into which the seller previously contributed. This can be hundreds of thousands (or even millions) of dollars, and it is held in escrow for five years.

Immigration. Understand your employee base. Does the selling entity have employees for whom it has sponsored work visas? If so, there needs to be an assessment of transferability and a discussion regarding that process. Does the deal involve international payments or taxes or transfers of operations that will necessitate analysis of non-U.S. issues?

Any company considering a merger or acquisition is acutely focused on the potential effect on its balance sheet from a pure numbers standpoint. It is axiomatic that a business’s largest asset (or liability) can be its workforce. Remember that effectively transitioning operations requires careful planning and educated decision-making as to how, or if, NewCo will be adopting the prior workforce and the policies and practices that applied to it. In order to make responsible decisions regarding the value of any prospective transaction, and the risks associated with it, both sides should look beyond the balance sheet to the people on the ground.

As these issues highlight, diligence regarding matters of potential exposure stemming from the labor and employment function is crucial when assessing the true net impact of a potential deal on your company’s bottom line. The little guys can have a huge impact; don’t overlook that in your focus on the paperwork.

January 23, 2019June 29, 2023

The Latest Statistics on Public Sector Employees

Workforce‘s January issue focuses on human resources challenges within the public sector, from appealing to younger talent as older employers retire, to brokering labor deals, to finally embracing HR technology. With that in mind, Editorial Director Rick Bell compiled a list of statistics to gauge the state of the public sector and its employees.

public sector employees