March, 2015

LIFE’s LESSONS* Spring 2015, Real Issues…Reconstituted Facts


We are deviating from the usual hypothetical situation here, in recognition of spring cleaning season, to focus on four of my top HR audit list items, and why I would encourage every employer to make them a priority:

1. Review Your Employee Handbook

Many of the local and state laws creating new leaves of absence and protected classifications also require employers to notify employees of their legally protected rights.  Employee handbook policies may satisfy these notice obligations and, even where that is not the case, the policies may need to be updated for consistency with current legal requirements.

A handbook review is an opportunity to look beyond satisfying the legal minimum.  In a service economy, often our greatest business asset is our people.  The employee handbook can be a platform to set the tone for the organization.  To do so, consider:

  • Is it written in the first or third person?
  • Does it incorporate a sincere welcoming statement from the head of the organization?
  • Are the policies presented in a logical order?
  • Is the handbook readily accessible?
  • Have policies on leaves and benefits been benchmarked against other organizations?
  • Are the written policies consistent with actual practice, and do they accurately reflect the culture of the organization?

Think of your employee handbook as an internal marketing piece – a resource for employees and an opportunity to make them feel respected and supported by the organization.  For optimal results, customize your policies and give due consideration to the message conveyed by the tone, content and format.

2. Consider Whether Your Staff Are Appropriately Classified

Freelancers reportedly now comprise 30% or more of the U.S. workforce.  This trend has not gone unnoticed by the Department of Labor on the federal or state levels, and they have increased their enforcement activities with regard to inappropriate classification of workers as independent contractors.  Further, new laws in New York and elsewhere, as well as recent court decisions have increasingly narrowed the definition of independent contractor and established that all workers, at least in certain industries, are presumptively employees.  Misclassification can be costly, as it may require refiling quarterly reports and making retroactive payments (with interest and penalties) for unemployment insurance, payroll taxes, Social Security, Medicare and now the Affordable Care Act.  Don’t wait for a complaint to be filed or a government audit; now is the time for you to conduct an assessment of how you have structured your workforce to determine whether workers are appropriately classified.

3. Update Your Employment Application

If you ask job applicants to complete an employment application, make sure that it complies with current law in all applicable jurisdictions.  In particular, note any local ban-the-box laws and understand whether they apply to all or portions of your organization.

4. Be Sure Your Staff Comply with FCRA

If you conduct background checks on job applicants or employees, then you need to be mindful of the federal Fair Credit Reporting Act (FCRA) and any equivalent state laws.  FCRA imposes unique disclosure and notice obligations on employers both prior to conducting a background check and prior to acting on adverse information disclosed in the background check process.  Note that the model disclosure forms provided by background check vendors are not always compliant with employers’ FCRA obligations.  While FCRA is not a new law, we are seeing a significant increase in the filing of class action lawsuits for employers’ alleged violation of FCRA – all the more reason for you to use this time to ensure your organization is compliant.

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