The Problem with Performance Reviews

A lot of public discourse currently exists regarding performance reviews- whether or not they should be tied to merit increases, if they are worth the effort, if they move the needle, or if they are useful at accelerating performance. Some companies have abandoned the performance review process altogether; feedback suggest managers perceive writing them as a chore to be dreaded, and employees alternatively dread receiving them. Yet, dreading something is not necessarily a reason to stop doing something. The problem isn’t with the meticulous, anxiety laden process; the problem is that they are not done correctly.

Our experience in working with hundreds of organizations on their performance review programs indicates that, if done correctly, performance reviews can move the needle and are indeed extremely useful. We have heard directly from employees that they want and need feedback from their manager. There is an obvious line of communication that needs to be facilitated between employers and employees. Thus, our goal at Essential HR is dedicated to helping companies curate a compelling performance review process that managers and employees alike do not dread, but welcome. These reviews become a tool-set that can be utilized by the company, manager, and employee. 

Re-framing the performance review process to managers as a means to build trust, engage, and champion their direct reports can create a whole new paradigm. After all, this is the most important function as a leader. What better opportunity is there than to sit down with an employee on a regular basis, have honest and open communication about how they are doing, and develop goals with them that they want to achieve. 

Managers have an opportunity to build trust and engage employees during the performance management process by being committed and prepared to provide useful, clear, and helpful feedback. Touching on employee’s strengths, how those strengths are contributing to the organization, and how to continue to develop those strengths provides a clear and empowering path for productivity. Yet, assisting employees on identifying their priorities and limiting interruptions similarly bolsters their performance. The performance review process also allows an ideal setting to champion an employee’s desire to learn and grow by working with them to manifest their values from within.

If your organization is struggling with your performance management process, or are unsure of the ROI on this activity, reach out to us at Essential HR, Inc.We are passionate about creating performance review processes that flip the switch, move the needle and align your employees’ strengths and performance with your organizational goals.

How Do You Find Engaged Candidates?

How Do You Find Engaged Candidates?

Wendi Kroll, SHRM-SCP

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At Essential HR, we are always coaching our clients on the importance of employee engagement.  Focusing on employee engagement has proven to increase customer engagement, which results in increased profitability. 

Studies show that “best in class companies” focus on employee engagement, which is the emotional commitment to the company and it’s goals (2016 Gallop study). With the knowledge that “the average cost of a bad hiring decision can equal 30% of the first years compensation” (The U.S. Department of Labor),  how do organizations find engaged employees?

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We recommend that organizations begin the employee engagement development throughout the recruiting process, by considering the four primary drivers of engagement

• Job fit

•  Manager impact

• Culture

• Team Dynamics

Ensuring that you have the right people in the right job takes intention and effort throughout the recruiting process. Some specific steps that focus on these drivers during the recruiting process include:

• Detailed job descriptions

• Description of what the ideal candidate would like

• Qualifications and experience that would make the employee successful

• Identification of core competencies and use of behavioral questions in the interview process (Top-grading, by Brad Smart is a great resource to implement this process)

• Multiple interviews with the hiring manager to ensure personality fit

• Detailed description of the culture and what a good culture fit would look like

• Team interviews that allow team members to participate in the selection process

Additionally, we recommend that employers focus in on candidates that  have a “want to” rather than “have to” attitude. These are candidates that have demonstrated that they:

• Working for more than just a paycheck

• Go the extra mile

• Care what customers think

• Know that time is money 

• Work more efficiently

Finding out if a candidate is coming from a “want to” paradigm can be uncovered through the recruiting process through the use of the following: 

• Targeted interviewing methods

•  Assessment tools such as the Predictive Index which measures candidate’s drives

• In depth reference conversations with previous managers

• Candidate self-assessments

Additional ways that organizations can create employee engagement through the recruiting process include:

•  Building trust with the candidate

• Having transparency about the organization and the position

• Providing consistent and direct communication with the candidate

• Listening and learning about the whole candidate, not just their education, knowledge, skills and experience, but also their values and interests

• Include the mission of the organization so that they can get excited about being a part of it

• Keeping in contact with the candidate after the offer has been extended

• Sending the candidate a welcome package 

• Providing them with something that makes them feel like part of the organization before they onboard

In our next article, we will discuss how to continue to develop employee engagement with new hires through effective onboarding and training programs. 

California's New #MeToo Inspired Laws

In the wake of the MeToo movement, a string of new bills was signed into law by Governor Jerry Brown aimed at addressing sexual harassment and gender discrimination in the workplace.  Below is a list of some of the key “Me Too” inspired legislation that will take effect in California on January 1, 2019. 

SB 1343 – Sexual Harassment Training:  Currently only employers with 50 or more employees are mandated to provide sexual harassment training.  However, that is all about to change dramatically on January 1, 2019.  Under SB 1343, employers with 5 or more employees will be mandated to provide 2 hours of sexual harassment training to all supervisory employees and 1 hour of training to all non-supervisory employees by January 1, 2020, and once every 2 years thereafter.  
AB 3109 - Disclosure of Sexual Harassment:  This bill makes void and unenforceable any settlement agreement terms that prevent a party to the settlement agreement from testifying about criminal conduct or sexual harassment in an administrative, legislative, or judicial proceeding. 

SB 224 - Sexual Harassment:  This bill amends section 51.9 of the Civil Code to expand the types of relationships that can be subject to a claim for sexual harassment to include lobbyists, elected officials, directors, producers, and investors.  

SB 820 - Settlement of Sexual Harassment Claims:  This new law prohibits provisions in settlement agreements entered into after January 1, 2019 that prevent disclosure of information related to civil or administrative complaints of sexual assault, sexual harassment, gender discrimination or related retaliation.  The new law does not prohibit settlement agreement terms that prevent the parties from disclosing the amount of the settlement.  Also, the settlement agreement may include a provision that limits the disclosure of the claimant’s identity or of facts that would lead to the discovery of the claimant’s identity, so long as it is at the claimant’s request and the opposing party is not a government agency or public official.

SB 1300 - FEHA Amendment:  This bill amends the Fair Employment and Housing Act (“FEHA”) making it unlawful for an employer, in exchange for a raise or bonus or as a condition of employment or continued employment, to require an employee to release a FEHA claim or require an employee to sign a non-disparagement agreement denying the employee the right to disclose unlawful acts in the workplace.  In addition, this bill also makes employers liable for all forms of unlawful harassment by non-employees (not just for sexual harassment per existing law) where the employer knew or should have known of the harassment and failed to take appropriate corrective action. 

AB 1619 - Sexual Assault; Statute of Limitations:  This new law expands the statute of limitations for filing a civil action for sexual assault to 10 years after the alleged assault or 3 years after the plaintiff discovered or reasonably should have discovered injury as a result of the assault, whichever is later.

SB 826 Gender Composition of Boards of Directors:  By the end of 2019, publicly held domestic or foreign corporations with principal executive offices in California must have a minimum of one female director on its board, and the number of female directors must increase again in 2021 depending on the size of the board.  

Shannon Wolf, Esq.
The Law Office of Shannon Wolf
1201 Puerta del Sol, Suite 213
San Clemente, CA 92673
(949) 276-4214 | swolf@swolflegal.com

Why Director's & Officer's Liability Insurance Is Important

The Sarbanes-Oxley Act, which was signed into law in 2002, expanded the responsibilities as well as the potential liabilities of corporate officers and directors. Although this legislation protects share-holders and is expected to improve corporate governance, it also bears the risk of increasing the number of litigations, says Victor Farfan, commercial insurance broker with Spectrum Risk Management. Increased corporate governance has heightened the importance of indemnification of corporations’ directors and officers.

These factors have led to the need and development of more sophisticated Director’s and Officer’s Liability Insurance (D&O). Essential HR spoke with Farfan about the importance of such coverage and how executives can make sure they are properly insured.

What is Director’s and Officer’s Liability Insurance?

In general, insurance policies for directors and officers provide coverage for defense costs and liability payments (both judgments and settlements) for covered wrongful acts if a claim is made against the insured during the policy period. This is often referred to as “Side A” coverage. In addition, most policies afford coverage for the company’s own expenses incurred in indemnifying covered persons pursuant to the corporate indemnity in the company by-laws. This is often referred to as “Side B” coverage. Usually, there is a deductible that applies to claims within “Side B” coverage, and D&O policies typically require that the company advance defense costs and make payment for any judgment or settlement before the insurance company will pay corporate governance has heightened the importance of indemnification of corporations’ directors and officers.

Some D&O policies also contain “Side C” coverage for loss incurred by the company entity. For a publicly traded company, the entity coverage for D&O typically is limited to claims against the company arising under federal or state securities statutes or under SEC rules and regulations.

A number of D&O carriers now offer “Side A” only or “Side A DIC (Difference In Conditions)” D&O policies, with a dedicated limit of liability covering directors and officers when indemnifications and standard D&O may be unavailable. One must also consider that when various state statutes restrict a corporation’s ability to indemnify its directors and officers in connection with shareholder derivative actions, coverage under “Side B” D&O policies may be restricted. Therefore, it is common for directors and officers to rely on “Side A” D&O policies for coverage for shareholder derivative actions.

Why should directors and officers invest in such coverage?

Director’s and Officer’s Insurance is the main line of defense against ruinous jury awards and legal settlements. There is a chance your personal assets may still be at risk as a result of the SEC seeking settlements that specify payments come from personal funds rather than insurance. A good D&O policy can provide important protection for an innocent director or officer from honest mistakes and even fraud committed by others.

Director’s and Officer’s Insurance premiums are falling to incredibly low levels for all buyers, including privately held corporations. With this in mind it, doesn't make any sense to expose one's personal assets and estate to the risk of an uninsured loss. Directors and officers of privately held corporations face the same risk as those of publicly held firms. Avoid the risk of being sued for complaints alleging fraud, unfair competition, interference with prospective economic advantage, infringement of trade secrets and several other alleged wrongful acts and consider how D&O can protect you.

Why aren’t all directors and officers covered?

Many directors and officers have never closely examined the D&O policies and many falsely believe they are immune from personal financial liability. The recent exposé of corporate scandals has lead to a crackdown on corporate malfeasance and fraud investigated by government regulators and prosecutors. This threat of criminal fines and civil judgments has caused D&O providers to place many limitations on policies. Some have even attempted to rescind policies altogether.

How can directors and officers select the proper coverage for their industry?

In this era, the issues directors and officers deal with will vary within the industry in which the company operates. To ensure proper and sufficient coverage one must make sure all information provided to the insurer is as accurate as possible. Outright misrepresentations and mistakes could give the insurer all the ammunition it needs to have a policy cancelled.

If heightened regulatory supervision and shareholder unrest, company executives need to take the time to review the precise wording of their policies. Policyholders should review wording before they purchase their policies. By investing the time upfront in scrutinizing the wording, one can be assured the protection intended to be obtained through the purchase of a policy will be there when the insured needs it most.

For more information and to make sure you’re protected, please contact us!

VICTOR FARFAN is a commercial insurance broker with Spectrum Risk Management & Insurance Services LLC. Reach him at (949)655-0120 or victorf@spectrumrisk.com.

Are Your Employee Records Filed Correctly?

Are your employee records filed correctly?

We are all aware that employee records should be kept in a secure, locked cabinet.  But are you aware that not all employment documents should be kept in the employees’ personnel files?  Some employment records contain information that managers should not have access to, such as medical data, protected class information, or Social Security numbers.  

Managers should only have access to the personnel files.  Personnel files should contain only documents that relate to an employee’s job duties, performance, or qualifications, such as:

• Periodic employee performance evaluations and any disciplinary proceedings

• Compensation changes, job transfers, or promotions

• Job descriptions

• Signed acknowledgements of company handbook and policies

• Employment applications 

• Offer letters or any other written agreement between employee and employer

• Separation agreements, resignation letters, and exit interviews

Documents that do not relate to the employee’s job should never be kept in the personnel file.  This includes:

• Anything related to employment eligibility, such as I-9 forms and copies of employment documents presented by employees

• Any health information 

• Other private data, such as Social Security numbers or bank accounts

• Employment verifications

• Any documents containing information about a protected class, such as age, marital status, race, etc.

So where do you keep all of this other information?  

Maintain a separate medical/confidential file. This might contain:

• Hiring records such as drug test results, background/credit checks, and any other hiring documents that may contain protected class information or Social Security numbers

• Any form containing Social Security numbers, such as W-4 and state tax forms or direct deposit forms

• Benefit enrollment and beneficiary forms

• Disability forms

• Wage garnishments

• Doctors’ notes

• FMLA information

Maintain a separate file for all of your I-9 forms. Your payroll department should have their own files, which should include:

• W-4 forms and state tax forms

• Pay information

• Payroll deduction authorizations 

• Direct deposit forms

• Wage garnishments

• Time-keeping records

If needed, maintain a separate investigation file for any harassment or grievance complaints.  As well as a separate file for any workers compensation injuries or investigations.

And as always, please contact us with any questions and to see how we can help you!

Employees May Not Love Their Work, But They Can Still Be Engaged

You will continuously hear us say that employee engagement is what we are all about.  But what exactly does it mean for your employees to be engaged?  Does it mean that they are always in a good mood, whistling while they work, and skipping into work with a smile on their face from 8-5?  There is a difference in being “happy” and being engaged.  The article below does a great job at illustrating the difference between engagement verses employee satisfaction.  For more information on how to increase employee engagement, contact us.  We love to talk about this topic! 

Here is the original article from AppreciationAtWork.com, written by Paul White. You can read the article below:

“Employee engagement differs from employee satisfaction. A Gallup poll found that only 32 percent of U.S. workers are engaged in their jobs, for instance. Yet employees who don’t love their jobs can and should still be engaged.

Custom Insight distinguishes employee engagement from employee satisfaction. Engagement is defined as “the extent to which employees feel passionate about their jobs, are committed to the organization, and put discretionary effort into their work.” Satisfaction relates to “love”—or how happy employees are. 

The Purpose and Nature of Work 

We must remind ourselves that the primary purpose of work is to provide for our needs—food, shelter, clothing. You have to survive to enjoy life, and meeting one’s physical needs precedes being emotionally and physically content.

Additionally, work, by definition, is providing goods and services that people need or want and are willing to pay for. By its very nature, work requires activity and effort that someone else needs someone to do (and to do it in the way that they want). When I coach individuals regarding career direction, we start with what is needed or wanted, not with what they want to do. Virtually everyone’s first job involves doing work that is needed, and it usually has some unpleasant component to it. In fact, I would propose that it is a privilege to enjoy one’s work.

4 Categories of Work Experience 

Most employees will fit into one of these four categories when discussing the level of emotional investment in their job.

Hate. “I hate my job.” Some workplaces are clearly less desirable than others; hence, our research on toxic workplaces and what makes them so unhealthy. Sometimes we truly hate what we do or with whom we work. The work is hard and unrewarding and has little to do with your abilities or interests, and people are treated like dirt.

Even though a lot is written about people hating their work, clearly this doesn’t appear to be the majority of individuals in the workforce. Some initial research we have conducted shows that 18 percent of employees report that they work in a truly toxic or deadly work environment. Conversely, 23 percent indicate that they believe they work in an unhealthy workplace, and 59 percent believe their workplace is a normally stressful environment.

Endure. “I just work here because I have to.” Many times, we endure our job. We don’t like the work and we hope to move on to something better relatively soon. We can survive for a while, but the work clearly does not give us a sense of satisfaction or purpose. In fact, the work is draining and takes our energy away from pursuing other things we’d prefer to do.

Like. “Yeah, I generally like what I do—sometimes at least. There clearly are things that bug me, too.” In other words, this is not a bad place to be, and you sort of like the job, sometimes. Many people in their mid and late careers reach this experience. Work is still “work,” but they are able to use at least some of their skills and training, and provide a valuable service to others.

Love. “I love what I’m doing right now. I’m learning a lot and feel like I’m using ‘who I am’ to help others.” If this is where employees find themselves, they should be thankful, because many, many people never experience this in their lifetime.

How Should Businesses Respond? 

We should not confuse “loving a job” (employee satisfaction) with employee engagement. Engagement, which has many positive benefits, is a result of a combination of factors, including involvement in decision-making, opportunity for job development, and sensing that supervisors are concerned about the well-being of employees.

Involvement in Decision Making. Communication is essential when a company is going through change (either big or small), and employees tend to be less resistant to change if they are part of the process. Valuing their opinions as decisions are made communicates respect, and encourages their engagement in future endeavors.

Opportunity for Job Development. People who are enduring their jobs, might only need a job that’s a better fit for them. There could be opportunities for development of new skills (or even expanding their job to use their existing skills) that would lead to higher job satisfaction.

Supervisor Support. I work with managers and supervisors regularly, training them to better support and encourage their employees. One key strategy is for managers to get to know their employees and appreciate them in ways that “hit the mark.”

For some, that means encouraging words. For others, it could be helping them with tasks or giving them a simple gift. When individual appreciation is shown regularly and authentically, employees feel valued and are more likely to engage.

Companies should be investing in helping employees be more engaged and satisfied with their jobs. However, the nature of work means that at times we won’t feel passionate about what we do. Still, the hope is that through implementing a healthy engagement plan, even those who don’t love their job will be engaged—committed to putting forth effort to meet the company’s goals.”

Eight Essentials On Employee Terminations

Termination of employment is often emotional, certainly for the employee and often for the employer.  Because emotion is involved in the termination decision and process, it can cloud judgment.  When judgment is clouded, the termination is not always handled in a manner that protects the business from employee lawsuits.

Employment lawsuits and administrative charges are rampant in California, largely due to the expansive protection that employees receive under California state law.  For example, a 2017 study conducted by Hiscox revealed that California employers have a 46% chance of an employment charge being filed against them compared to the 10.5% national average.  

Based on experience advising employers on terminations and representing employers in disputes with former employees, here are eight essentials I want to share on how to best address terminations:

1. Documentation. It is critical to document performance issues, yet often overlooked.  Conduct annual performance reviews and accurately document how an employee is performing. Make sure not to include just positive feedback, but also identify areas where the employee is not meeting up to expectations. Also, document performance counseling and employee discipline. Good documentation is the employer’s best evidence in the event of a legal dispute with a terminated employee.

2. Consider Timing. Always consider the timing of a termination. Are there any key events that occurred before the termination? For instance, if an employee submits an internal complaint of discrimination or harassment, employers should proceed with caution. Submission of these types of complaints is considered protected activity. Even if the complaint is unfounded, proximity between the complaint and the termination may give rise to a retaliation lawsuit. Another timing issue that can lead to a legal dispute is terminating an employee during or shortly after a leave of absence. It is best to seek legal advice before terminating an employee in these circumstances. 

3. Do Not Delay. A common mistake is when an employer unnecessarily delays a termination decision. The employer knows the employee ought to be terminated, but puts off the inevitable or adopts the approach that maybe the person will get the hint and resign. The employee is usually aware of the situation, and putting off the action only makes it worse. The longer an employee suspects that they are going to be terminated, the more time there is for the employee to manufacture a lawsuit. Do not delay once termination is inevitable and other considerations (see point 2) are out of the way. 

4. Conducting The Termination. Generally, employee terminations are best conducted in-person whenever possible.  Someone who can stay on message, remain objective and unemotional, and minimize any potential damage to the employer should conduct the termination. Utilizing a Human Resources consultant experienced in conducting terminations is invaluable.  

5. Remember Final Pay Requirements. The employer is legally required to provide the terminated employee their final pay on the employee’s last day of employment.  So, have the check cut and ready to hand to the employee on their last day. If the termination is not conducted in-person, the check should be delivered the same day to the employee.  Also, accrued and unused vacation or paid time off is considered wages and must be included in the final paycheck.  There are waiting time penalties for failing to issue all wages in a timely manner. The waiting time penalty is the employee’s daily wage for each day that the final pay is late, for a maximum of 30 calendar days. 

6. Consider A Separation Agreement. If a termination is particularly risky or there is a history of conflict, consider offering a severance payment in exchange for the employee signing a separation agreement releasing all claims.  Most employment claims can be released, with some exceptions, such as unemployment and workers’ compensation claims. A separation agreement provides peace of mind that the terminated employee is not going to come back later with a lawsuit. Also, additional clauses can be included in the separation agreement to address employer concerns relating to confidential information, non-disparagement, and non-solicitation of other employees.  

7. Watch What You Say Post-Termination. Disclose the termination reason to other employees on a need-to-know basis.  Do not discuss the termination reason with everyone, and certainly be very careful about communications with third parties.  If a potential new employer calls for a reference check, limit disclosure to confirming the dates of employment and position.

8. Don’t Handle Any Fall-Out On Your Own. Employers should seek legal advice as soon as they receive a personnel file or payroll record request from the employee or the employee’s attorney.  Records requests are a red flag that a lawsuit is imminent.  Do not respond or provide records without an attorney’s aid. Similarly if the employer receives a demand letter from an attorney, do not ignore it or respond to it without consulting an attorney.  Ignoring the letter may mean a missed opportunity to resolve a situation before it becomes a lawsuit, while responding without representation often leads to unknowingly making damaging statements. It is best to seek legal representation immediately in these situations.

Shannon Wolf, Esq.
The Law Office of Shannon Wolf
1201 Puerta del Sol, Suite 213
San Clemente, CA 92673
(949) 276-4214 | swolf@swolflegal.com

Your Employee Engagement Strategy Needs More Wellness

At Essential HR, we are all about employee engagement!  Why?  Because it makes complete sense. The study of ROI on employee engagement is undeniable.  If you have engaged employees, then you will have engaged customers, which is going to result in higher profits.  It all starts with your employees, and employee engagement starts from day one of the recruiting process.  How you present your job advertisement on the job posting sight is the future employees first glimpse on how well an employer engages their employees.  Does your job posting make employees excited about joining your team?  Does it show how the employee will be cared for as a person?  If not, you may want to revise it.  

Employees these days are looking for companies to work at where they can be their best selves, live their best lives, and work and live in an environment and culture that promotes wellness.  The studies that link employee engagement and employer wellness programs are showing the benefits of incorporating an overall wellness strategy.  

Please read this article by Forbes.com about how wellness programs are increasing employee engagement….which remember….will increase your bottom line.  

For additional information on increasing employee engagement at your organization, contact Essential HR.  That is what we are all about!  

Why Exit Interviews Are Critical

At Essential HR, you will constantly and consistently hear us say we are all about employee engagement.  Unfortunately, all employees are not always engaged and can lead to them leaving the company.  You may think it is too late to think about employee engagement once an employee turns in their resignation letter.  But think again. It is yet another opportunity to gather additional data to understand what the company did well, as well as provide an opening to discover areas where the company can improve in the area of employee engagement.  

An exit interview is a critical tool for several reasons, including:

• Protecting the company from liability. If an employee had a grievance, but failed to file it, the exit interview provides documentation that they were given an opportunity upon their departure.

• Learn of any compensation, benefit or compliance problems that can be resolved prior to the employee seeking legal advice of filing a complaint/claim with the various employment agencies (DOL, DLSE, EEOC, DFHEA, etc.)

• Provides the employee a safe space to vent about any employee relations issues, and provides closure.

• Get feedback about the employee manager, and utilize the information to coach, council or applaud the manager.

How do you conduct an exit interview?

Essential HR recommends that a Human Resources Representative or a designated representative conduct one-on-one interviews because employees may be less candid with their supervisor present.

The  interviewer should:

1. Explain that the purpose of the interview is to help the company improve its processes and retain it’s valuable employees.

2. Encourage employees to share the reasons why they are leaving. There are a number of reasons that may come up that employers can address. Perhaps employees didn't receive sufficient training, didn't think there were opportunities for advancement, felt their work wasn't appreciated, felt they weren't treated fairly or thought tasks weren't distributed appropriately.

3. Ask how the company could be a better place to work.

4. Tell employees that their statements will be kept confidential to the greatest extent possible.

5. The goal of the exit interview is for the employer to obtain and use information they learn and apply it to the workplace to prevent the loss of employees, prevent litigation and improve employee engagement.

For more information on how to conduct effective interviews, obtain an exit interview questionnaire, or implement an exit interview survey, contact Essential HR, your trusted HR partner. 

Californa Pay Stub Requirements: Protect yourself from liability

Many of the clients that we work with are not aware of the need to comply with California’s wage statement provisions.  And when we advise them as such, turns out that it can be more difficult than they thought.  

Under California Labor Code Section 226(a), employers are required to include nine specific items on the pay statement as follows:

• Gross wages earned

• The total hours worked by the employee (unless the employee is exempt from overtime)

• Deductions made from wages

• Net wages

• Beginning date and end date of the pay period

• Employee’s name and ONLY the last four digits of the employee’s Social Security number

• Name and address of the legal entity of the employer

• Hourly rate (separate line for each type of hourly rate, such as overtime, double time, travel time, etc.) and corresponding number of hours worked at each rate.

• Number of sick days available under the Healthy Workplace Family Act

The Department of Labor Standards Enforcement (DLSE) enforces that these items are listed, and failure to do so can create significant per pay period penalties translating to thousands of dollars in liability. 

Frequent mistakes that we see by our clients include:

• Relying on third party payroll services to ensure that they are compliant with California law

• Failing to list the total hours worked in the pay period

• Failing to include the start or end date of the pay period

• Not having the employer's complete legal name listed or listing the DBA

• Not including the employer's address on the pay stub

• Failing to break down different hourly rates, commissions, bonuses, etc.

Additional requirements must be followed for paperless pay stubs. 

Essential HR recommends that you regularly audit your pay stubs to ensure that they are compliant.  Contact us to assist with the process and to ensure that your organization is protected from liability. 

Marijuana & Hiring: To Test or Not To Test?

Currently, California employers are facing two troubling issues: 

1. The probability of increased marijuana usage amongst the workforce since the legalization of recreational marijuana

AND

2. An incredibly low unemployment rate of 4.3% creating a very shallow labor pool of that workforce

    Over the last 32 years, marijuana in California has evolved, first in 1996 with the legalization for medicinal use and now recently this year, marijuana has become legal for recreational use. With the decriminalization of marijuana, the negative stigma attached to the “drug” has dramatically declined, creating an increase in users and tolerance in the workforce. 
    Pre-employment drug screening has been a long-standing best practice when hiring to promote a safe workplace and reduce employers’ liability. However, with an increased proportion of the workforce using legalized marijuana, employers are starting to ask themselves if it’s realistic to continue to reject viable candidates for using marijuana. 
    Currently, California is at a record low unemployment rate of 4.3%, which is great news for our economy, but bad news for employers looking to hire talent. This shallow labor pool makes it extremely difficult to find qualified applicants. Now, the idea of eliminating an otherwise qualified candidate due to pre-employment drug testing is troubling many hiring managers. 
    Presently, employers in California are forced to find a balance between maintaining a safe work environment and the need to hire a good employee. But does it have to be one or the other? Before considering whether are not to throw out your company’s pre-employment drug screen policy, consider the following:

   According to the National Council on Alcoholism and Drug Dependence, out of the 14.8 million Americans who abuse drugs, 70% of them are employed. When employees are under the influence at work, there is an increased chance of an incident resulting in an injury or damages, increasing the employer's risk for liability due to negligent hiring or vicarious liability. This is an important concept for hiring managers and employers to thoroughly understand. 
   Negligent Liability is a claim made by an injured party against an employer based on the theory that the employer knew or should have known about the employee’s background which, if known, indicates a dangerous or untrustworthy character. 
   For example, imagine a company hired a warehouse worker with a substance abuse issue and did not conduct a background check or drug screen, then that worker while operating a forklift or any heavy machinery under the influence, seriously injured or killed another employee due to impairment. Under negligent liability, the company could be liable for not properly vetting this warehouse worker and a claim could be made that the employer should have known about this substance abuse issue had they done a drug screen. 
    The U.S. Department of Justice reported U.S. business owners to spend $140 billion dollars per year on drug abuse (including turnover). Not marijuana, but cocaine, heroin, ecstasy, methamphetamines and non-medical prescription drugs are the leading causes for concern. 
    According to the National Safety Council, employees who abuse prescription drugs are 2-5 times more likely to be late, take unexcused absences, be injured at work, file workers’ compensation claims, show violence at work, and be fired or quit within the first year of employment. 
   Most pre-employment drug panels can account for these drugs. So then does it make sense to cease pre-employment drug screens just to avoid losing a candidate to testing positive for marijuana? Which choice has less risk for employers? In an attempt to circumvent this conundrum, some companies are choosing to continue with pre-employment drug tests, but remove marijuana from their testing panel. And much like any business decision, there is still risk. Employers should carefully consider all factors and seek guidance from their HR Consultant and/or legal counsel before eliminating their pre-employment drug testing. 

Here is a short list of Pro and Cons of Pre-employment Drug Testing

Cons:

• Narrow down an already slim labor pool by eliminating possible competent candidates

• Opiates are a real problem and can hide in prescription drugs, which may not show up as a fail

• There is no current test for marijuana inebriation – a candidate may test positive even if their usage was days prior

Pros:

• Promote safer workforce

• Promote a more productive workforce

• Help decrease turnover

• Help decrease absenteeism

• Reduce employer risk

  • Negligent hiring

  • Vicarious liability

• Lower WC incident rates

• Construction and manufacturing industries

• Drug testing today is highly accurate

• Some states offer reduced insurance costs and WC discounts

Essential questions to consider:

• What industry are you in?

• Are workers in your industry more inclined than others to use marijuana?

• What are the state marijuana laws where you operate?

• Does your business have safety-sensitive positions?

• Does your company have difficulty recruiting candidates?

• Has employee impairment at work been a problem?

How Can HR Handle Intentional I-9 Immigration Violations?

Employers need to be aware that the current administration has dramatically increased the budget for ICE (Immigration Control Enforcement) officers to conduct official worksite audits of I-9 Forms (Employment Eligibility Forms).   Incomplete or improperly completed forms can result in over $1000 of fines for each document.  It is imperative that employers conduct an I-9 audit to ensure that I-9 forms have been completed for each employee on the date of hire.  

For further questions or assistance in completing an I-9 audit, contact Essential HR. 

The article below is a current article from SHRM on the ramifications for retaining undocumented employees.

"HR professionals are sometimes placed in sticky situations when it comes to workplace compliance. Now that the federal government has ramped up its immigration-enforcement efforts, it is critical that HR practitioners ensure that their companies are following proper employment-verification procedures. So what can HR do if an employer ignores immigration rules? What happens if workers provide false documents? Here's what immigration attorneys told SHRM Online.

President Donald Trump's administration has promised to quadruple workplace enforcement actions, and in the last six months, immigration officials have made good on that promise, said Becki Young, an attorney with Hammond Young Immigration Law in Silver Spring, Md. 

Enforcement efforts include criminal arrests of undocumented workers and employers who knowingly hire or continue to employ undocumented workers. Therefore, HR professionals who are asked to participate in—or urged to ignore—these violations are advised to bring their concerns to management, she said. "If those concerns are not addressed, they should consider whether they love their job so much that they are willing to go to jail for it."

If intentional violations are discovered, HR should engage with the company's general counsel, if there is one, or with a senior executive if there is no general counsel, said Mitch Wexler, an attorney with Fragomen in Los Angeles and Irvine, Calif. In addition to jail time, potential consequences of knowingly violating immigration laws include fines, debarment from certain immigration programs and negative PR for the company.

"No job duties should include such risks or actions," said Kathleen Campbell Walker, an attorney with Dickinson Wright in El Paso, Texas. "Document your concerns to management in writing, if possible," she added.

False Documents

As part of the employment-verification process, employers must review certain documents listed on Form I-9 that establish identity and work authorization. Form I-9 lists documents in column A that establish both identity and work authorization, in column B that establish identity and in column C that establish work authorization. Employers may ask for either one document from column A or one document each from column B and column C. 

The employer's obligation under the law is to examine the documents presented by the individual and ensure that the documents appear to be genuine and relate to that specific individual, Young explained. "The employer is not expected to be a document expert or a forensic scientist." 

Employers must accept documents that appear to be genuine. However, if a document is clearly questionable, further investigation is required, Wexler noted. "Also, if an employer has actual knowledge of the fraudulent nature of a document or of the fact that an individual lacks employment authorization, it cannot ignore that."

It is possible to think that a permanent-resident card or Social Security card, for example, are legitimate when they may not be, Walker said. An employer may not know a document is fraudulent until Immigration and Customs Enforcement agents audit the I-9 forms.

"In addition, it is often hard to spot someone who is assuming someone else's identity," she said. "Certainly, technology advances improve the quality of fake documents."

If the employer can show that it made a good-faith effort and that a reasonable person could have believed that the documents in question were genuine and related to the individual, then that employer has an affirmative defense under the law for accepting those identification documents, Young said. She recommends that employers:

Provide regular training to HR employees who complete I-9 forms.Create a written I-9 compliance manual.Perform an internal I-9 audit every two to three years.Maintain a good track record for filling out I-9s completely and on time.

You can read the original article online here. 

Mental Health In The Workplace - Breaking The Stigma

Mental health in the workplace is one of the leading topics currently being discussed in the Human Resources field. Mental health is one of the most significant issues facing organizations today.  Statistics and research reveal that:

• Depression is the #1 reason for employee absenteeism according to the World Health Organization

• Major depression is now the illness causing the most disability worldwide

• Employers lose an average of 27.3 days of productivity in the workplace per employee, between sick days and “presentism” due to lack of wellbeing

• Over 26% of employed adults have substance abuse or addiction in their family (NCADD)

• 1 – of those employed say they have experienced symptoms of mental health disorder in the previous 30 days (Harvard Medical School)

As an HR Professional who has also studied for a Masters in Clinical Psychology, I have a particularly increased interest in this area.  Through my work with clients, I have known many CEO’s, Executives, Physicians, managers, and employees that battle significant symptoms of mental illness, caused either by genetics, stress or life circumstances. 

Just last week I had the owner of a client reach out to me and let me know that he was experiencing post-traumatic stress.  He felt like he couldn’t continue to work.  We spoke about self-care strategies, resources, and a game plan for him to get the support and help he needed.  

There have been many other countless times in which managers or employees have reached out to me because of my psychology background, asking for resources and help in how to deal with their mental health, whether it be a diagnosis, a difficult marriage, challenges with their kids, crises or traumas.  Each time an employee confides in me, I am honored and humbled to be of any assistance for connecting them with resources including counseling, medication evaluations, mediations, flexible work schedules, etc., which have made a difference in them feeling cared for and enabled them to continue to work while addressing their issues.  Knowing that they have a resource in their employer made a huge difference to these employees. 

Unfortunately, not all employees feel like they have a resource of the support of their employer to address mental health.  We are still in a fight to shatter the mental health stigma. We are learning that there are serious implications for employers that do not have a training and systems in place, that it can be detrimental to the company. 

HR Professionals are starting to be able to make the case to employers about the need to accommodate and create programs and policies that will help their employees.  Employers put themselves at risk of liability of legal implications and the bottom line by failing to address the issue.  

Essential HR, along with our partners, is working with clients to assist them in creating employee well-being programs that are transforming their company’s cultures, increasing employee retention, and enhancing employee engagement.  Reach out to us for further information in creating a customized plan for your organization.   

Harassment In The Workplace and The #Metoo Movement

The #metoo movement has brought forth many emotions in the workplace, and is creating inspiration and hope around the globe. 

As an HR Professional, I have been training on prevention of sexual harassment and hostile work environment in the workplace since the passing of  California AB1825 in 2007.  I have taken the approach of teaching others how to be aware of their own behaviors, as well as how different people perceive behaviors differently.  For instance, some co-workers might see off-color joking as welcome in the workplace and part of their culture.  In other cases, this type of joking may be completely offensive and create a hostile work environment to other employees (what is termed “unwelcome” behavior).  My hope is that by making employees aware of the consequences of their behaviors and by an understanding of the personal liability that could ensue if perceived as harassment, that these types of actions might diminish.  Unfortunately, we continue to see harassment persist.  

In my own journey as a female in the workplace, I have been repeatedly exposed to inappropriate sexual harassment.  To get even more personal, I experienced a traumatic sexual assault that forced me to take a leave of absence.   And when I ask my female friends and colleagues, my three successful sisters, my mother and my 20-year-old daughter, they too indicated that they have all experienced some sort of harassment or another. 

Harassment is real.  It is an epidemic.  It effects people’s lives.  And it damages companies.  I am not sure if all of the laws or training requirements will ever completely elevate this long-standing issue.  However, the #metoo movement has created awareness, hope, and a voice against this endemic concern. 

My hope is that someday, all employees, both women and men, will be able to be fully engaged in their work environment where there is an atmosphere of mutual respect, no matter what gender, gender preference, race or religion.  I also hope that employers, managers, coworkers, and vendors will become cognizant and aware of the high cost caused by allowing harassing behavior in the workplace, through settlement cost, decreased productivity of affected employees, and disengaged employees.  I hope that there is a greater understanding on the toll that harassment takes on individuals lives through depression, lack of self-esteem, and a diminished sense of control of their lives.

At Essential HR, Inc., we are committed to developing harassment prevention training programs for our clients that are customized to their culture.  Our trainings incorporate:

• Honest, open and transparent conversation

• Discussions regarding the issues and aspects of their organization that can potentially create harassment, that are relevant to their industry and may already be occurring in the workplace

• Empowerment of employees to bring their concerns forward

• Commitment from ownership and management to immediately address and elevate each and every concern.

• Creating a culture that does not allow employers to brush harassment concerns under the carpet

• Creating a culture where retaliation is never permitted

• Awareness and perception of behaviors that can be interpreted as offensive

Our goal is to help every organization that we work with to create an environment where every individual can come to work and do their best each and every day, for the good of everyone and the health of every organization. 

To learn more about the #metoo movement and about a new bill that was introduced to congress, I recommend reading this article.  

Marijuana In The Workplace - What CA Employers Need To Know

Now that California has legalized marijuana for recreational use, there is a high probability that the number of Californians who use marijuana have amplified since January 1, 2018. Currently, only 4.3% of those Californians are unemployed. There is no doubt this new legislation affects the composition of the workforce while generating problematic concerns for employers in California. 

What does this mean for employers’ liability? How does this affect their ability to enforce their drug policies and testing protocols? 

The Good News: Although marijuana is legal, much like alcohol, employers can still prohibit its use in the workplace. Regardless of whether it’s legal, an employee under the influence of any substance can cause impairment and create a safety hazard for themselves, their co-workers, vendors, and customers. Because employers still have the strict obligation to maintain a safe working environment; rest assured, they can continue to enforce drug-free workplace policies.

Additionally, as the law is currently written, there is no requirement for employers to provide reasonable accommodations for marijuana users, for both medicinal and recreational purposes. This should provide some anxiety relief to employers in California.

Businesses should examine their current drug and alcohol policy to make sure that at a minimum it:

• Prohibits employees from being under the influence while at work

• Forbids the use, sale, possession, distribution or manufacturing of drugs and paraphernalia at work

• Upon reasonable suspicion, reserves the right to conduct workspace searches

• Complies with all applicable federal and state laws

The Bad News: Under reasonable suspicion, employers will continue to be able to test their employees for impairment. Unfortunately, there is a lack of methodologies for judging the impairment of marijuana. Clinically, no drug test exists for marijuana inebriation. The current tests can only show marijuana in the system, however, this could be from usage days prior. A positive drug test may not be solid evidence of whether an employee is impaired on the job. This poses a serious problem for employers who want to take disciplinary action against an employee that is suspected to be impaired while working. Before taking any definitive steps, employers should seek counsel to avoid potential legal backlash.

Here are some Essentials to remember:

• Employers are currently not required to make accommodations for marijuana use (medical or recreational) and can still enforce a drug-free workplace policy.

• Whatever your policy, be consistent when testing and disciplining.

• Train your supervisors on how to spot problematic situations and what the procedures are for handling the suspected impairment.

• Consult your HR Consultant and/or legal counsel before taking disciplinary action against an employee