Tuesday, June 27, 2017

6 Months on Capitol Hill in 2017

During the sixth month of the calendar year, we like to reflect on adjustments the Federal Government may have already made, or intends to make, to Human Resources related areas for the rest of 2017 and beyond. With a Republican Administration in place for the next four years, we anticipate possible rollbacks on previous decisions. In addition, certain hot topics such as equal pay, healthcare, and the Family and Medical Leave Act (FMLA) will remain in the spotlight.

Affordable Care Act (ACA), American Health Care Act (AHCA), & Better Care Reconciliation Act (BCRA)
After much discussion, the American Health Care Act of 2017 passed the House of Representatives with a margin of 217 to 213 this past March. On June 22nd, the Senate released an amendment instead of accepting the House version. Highlights from this amended bill, the Better Care Reconciliation Act (BCRA), include:
  • Delaying the “Cadillac tax,”
  • Removing individual & employer mandate penalties and alleviating employee tracking/reporting requirements,
  • Increasing health savings account (HSA) contributions, and
  • Withdrawing the limit on contributions to health flexible spending accounts (FSA)
As of this writing, it remains to be seen what will happen with the state of healthcare in the US.

U.S. Department of Labor
In April, the Senate confirmed Alexander Acosta for Labor Secretary. He shared with Senators that he wishes to put the interests of workers first: “As a former prosecutor, I will always be on the side of the law and not any particular constituency.” Senator Lamar Alexander (R-Tenn.), the Senate’s Health, Education, Labor and Pension Committee Chairman, noted of the new Labor Secretary that “[he] understands how a good-paying job is critical to helping workers realize the American dream for themselves and for their families.” With time and action we will be able to assess future decisions and actions from the U.S. Department of Labor.

One pressing matter is the Final Rule injunction made in November 2016. According to the United States Department of Labor’s website, “On April 19, 2017, the U.S. Court of Appeals for the Fifth Circuit granted a request by the Department of Justice for an extension of time of sixty days, until June 30, 2017, in which to file its reply brief. The additional time was requested on behalf of the Department of Labor ‘to allow incoming leadership personnel adequate time to consider the issues’.”

National Labor Relations Board (NLRB) & Equal Employment Opportunity Commission (EEOC)
The General Counsel seat is vacant for both the National Labor Relations Board (NLRB) and the Equal Employment Opportunity Commission (EEOC). It is expected that the Trump administration will elect Republican members to these positions. With many seats in the EEOC expiring later in 2017, we also should anticipate a Republican majority EEOC board by the end of 2017.

Some anticipate that the current Republican administration will result in more in-house or contracted mediators instead of investigators when charges are filed with the EEOC. The same pattern was seen in a previous Republican administration (Bush I) and, in a later Republican administration, included reconciliation (Bush II).

Equal Pay and LGBT Worker Protections
Equal pay continues to be a hot topic for human resources and Capitol Hill. In March of 2017, President Trump signed an executive order that would revoke the Fair Pay and Safe Workplaces order of 2014. The 2014 order safeguards workers by requiring businesses that receive federal contracts to stay close to labor and civil right laws. It also removed wage transparency rules and barred forced arbitration clauses for sexual harassment cases.

LGBT advocates believe this order rolls back their rights and breaks a previous commitment to the community to not change such existing policies. The executive order President Trump signed revokes the requirement that federal contract seeking companies prove federal compliance with laws banning discrimination based on sexual identity or orientation. It is believed this order will make it difficult for victims to make substantial claims of worker mistreatment.

Occupational Safety & Health Administration (OSHA) and Family & Medical Leave Act (FMLA)
The Senate moved to repeal an Occupational Safety & Health Administration (OSHA) rule that sanctioned employers for “failing to make and maintain injury and illness records beyond the 6 month statute of limitations set by OSHA.” President Trump signed the repeal on a rule stemming from a case involving Volks Constructors.

We look to learn more about the current Republican administration’s plans surrounding the Family & Medical Leave Act (FMLA). Anticipated adjustments include extended time off for new parents and other child care policies.

Your Perspective
Are there other topics or decisions made on Capitol Hill that you think will affect HR policies and practices in 2017 and beyond? Feel free to share your thoughts in the comment section below!

Wednesday, June 14, 2017

Profit vs. Non-Profit Infographic

We are sharing with you a new infographic that explores the differences between non profit and for profit compensation:

Tuesday, June 13, 2017

The Challenge of Misclassification in the Gig Economy

According to a 2016 Pew Research survey, some 24% of American adults have used some sort of digital commerce platform to earn money. This approach to earning a living is considered part of the gig employment phenomenon. In a 2016 study conducted by Harvard’s Lawrence Katz and Princeton’s Alan Krueger, 16% of American workers work for a temporary help agency, contract as independent contractors, or hold an on-call position. Current trends anticipate the gig economy to comprise more of the workforce in the future. In this issue of Astronology®, we look into the recent trend of gig employment and a critical challenge surrounding it.

In 2015, the Economic Policy Institute (EPI) reported that workers misclassified as independent contractors had grown considerably. Also stated in the report was that “New ‘sharing economy’ [also known as gig economy] businesses create cause for concern about misclassification because it is unclear how ‘autonomous’ these workers really are.” The report further expresses, “Employers who misclassify avoid paying payroll taxes and workers’ compensation insurance, are not responsible for providing health insurance, and are able to bypass requirements of the Fair Labor Standards Act, as well as the 1986 Immigration Reform and Control Act.”

A direct result of this misclassification is gig workers being forced to pay the full ACA tax or purchase their own health insurance. However, these costs may not be within their gig incomes. These conditions have given rise to lawsuits alongside the rise of gig-like jobs. For instance, Lyft recently settled a $27 million class-action lawsuit brought by drivers seeking to be classified as employees. Currently, Uber is in court for a similar class-action lawsuit. In light of this, the next question to consider is if labor laws will ever catch up to the rise of the gig industry.

Some employers have lobbied state legislatures to assist in legal coverage. In response, 28 states have legalized ride-hailing services, such as Uber and Lyft, labeling their workers as independent contractors. In Arizona, all workers using online labor platforms for work are considered independent contractors. This means that, while workers will find it hard to file successful claims for state-run benefit programs, gig workers still retain the right to sue over benefits and protections owed to employees under federal law. In New York and Washington, portable benefits, an encompassing benefit program designed for independent workers, are being considered.

As the workforce continues to change and more independent workers comprise our labor force, it will be important to see how legislatures continue to react. Do you work for an organization that supports or has some form of independent workers? How large a part of your organization are gig workers? How does your organization support gig workers? Please share your thoughts in our comments section below!

Tuesday, May 30, 2017

The Ongoing War for Talent

As the United States approaches full employment, with the millennial generation a major component of the current workforce, the war for talent continues. In this issue of Astronology®, we will explore a few factors impacting the war for talent, as well as a few suggestions to help bolster an organization’s efforts at attracting, retaining, and growing talent in a tight labor market.

There are various factors to consider with respect to why talent moves. With an increasing full employment market developing here in the United States, employees are finding it easier to leave their current employers for work elsewhere. George Bradt suggests in an article with Forbes online that when employees feel that they are underemployed, or even underperforming, they will leave before they are fired. Disappointing decisions with respect to restructuring and cutbacks in benefits also have played a role in employees leaving. Bradt highlights that the millennial generation in particular has been exposed to such disappointing decisions and, as a result, are more inclined to search for new opportunities. A third, growing factor to consider is the burgeoning self-employment movement including the gig economy.

To combat the concerns raised by these factors, the following are suggested:
  • Competitive Pay: Ensuring you are paying within the market for specific jobs will make it easier to attract and retain talent.
  • Job Perks: Such perks do not have to be elaborate. Designing a flexible schedule option has become a popular perk. In a survey conducted of millennials by MetLife, 43% of respondents said they’d switch jobs if it gave them more flexible hours.
  • Meaningful Story: 60% of the millennials surveyed by MetLife also mentioned that “a sense of purpose” was part of the reason they work for their current employers. To attract talent that are seeking a sense of purpose, organizations will have to craft a more meaningful story of themselves.
  • Encourage Innovation: To further appease talent desiring to work with a sense of purpose, creating a culture of innovation will give employees room to grow and give meaningful contributions.
  • While Hiring, Be Inclusive: Instead of just involving a specific department when hiring, include other organizational members in the hiring of new staff. These employees can help vet and close candidates. This process also sends the message to potential employees that they will be exposed to a network of colleagues in various departments when working at the organization.
Do you have any further suggestions to include on our list? Please share your thoughts with us in our comments section below!

Tuesday, May 16, 2017

Freelance isn't Free Act

New York City Mayor Bill De Blasio signed the Freelance Isn’t Free Act (FIFA) back in November 2016. The law goes into effect May 15th, 2017. With an estimated four million freelancers in the New York City Metro area, the new law looks to rectify the payment challenges freelancers sometimes encounter. For instance, in 2014, the Freelancers Union discovered that 50% of reported freelancers had trouble collecting payments owed for their work. 81% of these freelancers experienced being paid late for their services, and 34% were not paid at all for some projects. Perhaps your organization currently employs freelance workers for various functions. If so, organizations that hire freelancers from the New York area, as well as organizations that function in the New York area, should take special note of this new law.

Temporary workers, contract workers, independent contractors, and freelance workers all fall into the growing category considered the “gig economy.” FIFA is considered one of the first attempts to deal with this segment of work, employment that covered just 10% of early 2005’s workforce. Ten years later, in late 2015, the gig economy encompassed 16% of the workforce. It is anticipated that this field will continue to grow and have a significant impact on employment in the coming years. To protect these freelance workers, FIFA creates a formal means for enforcement of freelancers’ labor rights. Highlighted features of the non-retroactive law include the following:
  • A contract must be written if a business hires a freelancer for $800 or more worth of labor over a period of 120 days. The contract must include:
    • The name and address of both parties
    • Itemized list of all services provided with the value of each service
    • Freelancer’s rate and method of compensation
    • Specific date when the freelancer must be paid
    • An understanding that the freelancer must be paid no later than 30 days from the completion of the work if no date is provided on the contract
  • The hiring party is prohibited from “threatening, intimidating, disciplining, harassing, denying a work opportunity to, or discriminating against a freelance worker, or taking any other action that penalizes a freelance worker for, or is reasonably likely to deter a freelancer worker from, exercising or attempting to exercise any right guaranteed under the new law, or from obtaining future work opportunity because the freelance worker has done so.”
  • If a freelancer succeeds in court with a claim, it is possible for the freelancer to recover
    • Contracted value of the services,
    • Double damages,
    • Reasonable Attorney’s fees and costs,
    • Injunctive relief,
    • Statutory damages, and
    • Other “such remedies as may be appropriate.”
  • The city can take additional civil action against a hiring party that demonstrates “a pattern or practice of violations of the new law and seek up to $25,000 in civil penalties.”
An Entrepreneur online article written by Carol Roth suggests that organizations review current contracts and practices with respect to hiring independent contractors / freelancers, and to consult a lawyer with any concerns. The New York City Office of Labor Standards website also should be referenced for more details on FIFA and sample contracts for both freelancer workers & hiring organizations. Roth also noted that even if FIFA currently does not cover your organization, pay close attention that local, state, and / or federal definitions, such as in the Fair Labor Standards Act, do not define a hire you consider to be a freelance worker as an employee.

What has your organization done to prepare for the newly enacted Freelance Isn’t Free Act? If you’re not in the New York City area, what actions might you take in advance of potential future state or local legislation? We’d love to hear your thoughts in our comments section below!

Tuesday, May 02, 2017

Forgoing Annual Performance Reviews: What Are the Alternatives?

A 2014 survey report from the Society for Human Resource Management (SHRM) finds that 70% of organizations use annual performance reviews and 16% use semi-annual performance reviews. However, only 32% of surveyed organizations believe that managers are able differentiate between poor, average, and strong performers. Such stats can help us understand why there are mixed feelings when the topic of performance reviews is mentioned. In this Astronology®, we discuss the current trend of replacing or enhancing the annual performance review with regular communication.

Why are performance reviews conducted? Performance assessment became popular in part due to labor union contracts requiring annual reviews to grant merit raises. Over the years, performance reviews became the go-to method to help organizations formally set goals for their employees, make employees feel valued, and keep employees focused on the organizations’ visions. Performance reviews also served as a critical source document – proof of legitimate grounds for terminating an employee.

Times have changed, however. Depending on the nature of the work and organizational culture, performance reviews can be viewed as time consuming and / or too complicated to properly conduct. As a result, confidence can wane on whether the assessment not only is accurate…but also if the feedback and goals are worthy of consideration.

In some cases, the nature of work can change so frequently that a yearly assessment may not be sufficient to engage employees. In response, The GAP INC conducts regular coaching sessions between employees and management, replacing the need for yearly feedback. Rob Ollander-Krane, the Director of Talent and Performance at GAP INC, explains in a Forbes online article that “We call it GPS. If a GPS waited until you got to the destination to tell you that you took the wrong turn, you would never get where you wanted to go. This is how individuals benefit from regular feedback; there is an alignment and re-calculation that helps them get to their goal. From a company perspective, there are parts of our company that are doing well and some less so. I am more of the mindset that we should use performance management to help individuals achieve their goals.”

Another company that uses continuous communication in performance assessment is General Electric Co. (GE). Last year, GE introduced a phone app called “PD@GE” that employees use to assess both employees and managers, replacing the once-a- year performance assessment conversation with rolling feedback. The new system is being tested on the company’s 185,000 white-collar employees. This frequent communication method also allows for immediate adjustment if a goal or method to complete a task is working – or not – for an employee.

Back in 2012, Adobe made waves by revealing it was replacing the annual performance assessment with a program called “Check-In.” Donna Morris, in a 2014 Business Insider interview, explains “The check-in is far more informal. While the check-in process is regular and on-going, it starts at the beginning of the year, since it’s tied to people having yearly expectations.” After that initial meeting, an employee has established the year’s expectations. With regular on-going feedback, employees can perform better with the understanding of where they stand. Adobe boasts that within the first year of using the “Check-In” approach to performance, they saved 80,000 manager hours (equivalent to 40 full-time employees).

Astron National Director Jennifer Loftus notes that she regularly encounters the “should I eliminate performance reviews in my organization?” question when meeting with HR professionals across the country. “That question doesn’t necessarily have an easy answer,” explains Loftus. “The most effective advice I can provide is this: if your organization’s culture is supportive of honest, open, and regular weekly communication between managers and employees, then eliminating annual performance appraisals might be the right move. If, however, this switch will lead to even less communication between employees and managers, stay where you are. Strong communication systems are essential to making a performance review-free environment successful.”

While it looks appealing to completely scrap your performance assessment method, it’s important to think of how such changes could affect your organization. In some cases, perhaps adopting a hybrid method of constant communication included with an annual overview maybe more suitable. We here at Astronology® would love to hear your insights on the trend of changing annual performance reviews. Feel free to share in our comments section below!

Tuesday, April 18, 2017

To Ask or Not to Ask: The Salary History Question in Today’s Hiring Process

With increasing interest in the issue of gender-based pay gaps, legislation continues to make small movements to meet the challenge of eliminating pay inequity. One such movement has been recent legislation in a number of jurisdictions that bans asking job applicants / new hires about their salary histories. In this issue of Astronology®, we explore this new trend and what it means for employers.

It is heavily thought that asking an applicant his / her salary history continues the spiral of the gender-based pay gap and pay discrimination. For starters, if you begin your career with low pay at an early job, that pay rate could naturally affect the salary earned at the next job if hiring managers base their salary offers off your previous salary. In addition, historically, women tend to be offered lower salaries than men, even if the women negotiate with their employers.

This past summer, Massachusetts unanimously became the first state to enact a law that bans employers from requiring job candidates to reveal salary information, information that would be considered the basis for future pay. The law becomes effective on July 1, 2018. Jim Rooney, President and Chief Executive of the Boston Chamber of Commerce, mentions that the law does allow for candidates to be asked about salary expectations, thus providing hiring managers with an opening point for negotiations.

Another jurisdiction following Massachusetts’ lead is New York City. On April 5th, the New York City Council approved a similar law that prohibits employers from inquiring about, relying on, and verifying a job applicant’s salary history. According to a SHRM newsletter article, the new law, to be effective in six months’ time, will not apply to:
  •  New York City employers acting pursuant to any federal, state or local law authorizing the disclosure or verification of salary history or requiring knowledge of salary history for employment purposes.
  •  Current employees applying for an internal promotion or transfer.
  • Public employee positions for which salary, benefits or other compensation are determined pursuant to procedures established in collective bargaining.
A Business Insider online article mentions that this new law amends the New York City Human Rights Law. This means that there will be two ways in which individuals can bring action against employers who violate the rule. After filing a complaint, if the City or court rules in favor of the plaintiff, damages could be awarded to the plaintiff. In addition, the City could choose to issue civil penalties to the employer. These penalties and fines can reach up to $250,000. The article also notes that since New York City houses not only national but also international organizations, there is speculation that this law could have a far reaching impact on many well beyond the five boroughs.

While we expect other cities and states to adopt similar laws, there also are cases where similar legislation is being disputed. Recently, the Chamber of Commerce for Greater Philadelphia filed a federal lawsuit to block the City’s signed wage equity law, a month before its May 23rd effective date. The lawsuit hinges on the argument that the law violates businesses’ freedom of speech and that the new law won’t do much to close gender pay gap issues. The lawsuit also suggests that the new law would deprive employers of information they could use to make effective decisions in the hiring process. We will have to keep a close watch on what happens in the “city of brotherly love” to see how this impending lawsuit affects other cities and states considering their own salary question ban laws. In the meantime, what can you do?

Organizations not subject to such a law can prepare now. Besides keeping a close eye on jurisdictions that have already passed such a law, pay attention to organizational reaction and changes that employers make in response. Proactively, review your organization’s job application to see if such a question is listed. Consider other options to the question that are in compliance with legal trends. Organizations also should consider training HR staff, line managers, and anyone involved in the hiring process on how to handle interviews after the implementation of new laws.

An additional step proactive employers should take is to ensure that their base pay compensation systems are market sensitive, up to date, and free from discrimination. As National Director Jennifer Loftus explains, “organizations should focus new hire salary offers on the value of the position, not the person’s last salary. While of course there will be natural variations in salary due to years of experience, education, or other factors deemed acceptable under the Equal Pay Act, using the job as the basis for salaries addresses the gender-based pay gap in an equitable fashion.”

Tuesday, April 04, 2017

Essential Success Tips for and Possible Disadvantages of Gainsharing Plans

         In our previous Astronology®, we discussed how to increase organizational success by combining gainsharing and the “Balanced Scorecard” strategic performance method. At the end of the article, two questions remained for exploration:

  • “What are some critical tips in developing a strategically aligned gainshare program?” and
  • “Are there any negative impacts to using such a program?”

        In this Astronology® we answer these questions, and open the floor for your insights on gainsharing plans!

The following four tips are essential for developing a strategically aligned gainshare program linked to a balanced scorecard performance document.
  1. The program should be organization-wide in terms of funding and accomplishing key balanced scorecard objectives. The funding can be an increase in net income, or a decrease in operating expenses or some other quantifiable savings. A single organization-wide objective focusing on a quality, customer, or growth objective should be set as a circuit breaker. Failure to meet these objectives results in total forfeiture of any monies gained.
  2. The program should be an annual one based on the realities of today's complex financial reporting systems and the need for employees to work towards objectives over a realistic period of time. While this may add some pressure in terms of Fair Labor Standards Act (FLSA) overtime calculations for non-exempt employees, this approach tends to be more successful in allowing employees time to correct early failures.
  3. Place no less than a 25% share of the gain in the employee pool. Less than 25% sends a message that the employees' efforts were not considered valuable by organization management.
  4. Have a direct linkage to the performance process. Since this process focuses primarily on contributions to strategic objectives and essential functions, base employee payout shares on this contribution. At the end of the gainshare calculation cycle, managers recommend to senior management three levels of share for employees:
    • a full share for high contributors,
    • a three-quarter share for contributors, and
    • a quarter share for those in need of improvement.
Senior management then can make the final assessment for reward distribution.

Gainshare plans aren’t without their potential downsides, however.  Disadvantages to using gainshare plans aligned with performance processes can include the following:

  • Leadership Challenges: in many cases, in order to maintain a successful gainsharing plan, leaders may need to have prior experience on how to lead a gainsharing plan.
  • Time: It is suggested that it could take a company with over 100 employees close to a year to implement a gainshare plan.  Successful plans aren’t developed and implemented overnight.
  • Confidential Information Sharing Concerns: For gainsharing plans to work successfully, communication is key. As employees have an even more vested interest in the success of the organization, information such as expenses, profits, projections, and employee bonuses have to be disclosed to people in senior level positions who may not have had access to this information under other circumstances.
  • Employees Can Begin to Focus on the Wrong Details: A sense of entitlement, instead of motivation, can develop with the exposure to information mentioned above. Compound this with regular payments of profit sharing money in favorable times, and employees can begin to feel self-important and negatively impact the organization’s culture, ruining motivation for others.

Since the ultimate goal of using a gainshare plan in performance assessment is to increase motivation, it is prudent for leaders to review the organization’s culture prior to investing in implementing such a plan. A review will allow for proper planning, to avoid some of the potential program downsides, and to address any underlying issues the organization may already be facing.

Has your organization considered or implemented a gainsharing performance assessment program? We would love to hear your experiences! You can share your thoughts by commenting in our comments section at the end of our article, or by emailing us at: astronInfo@astronsolutions.com.

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