EEOC and Pepsi Beverages

EEOC Update:

In August of 2011 The Pepsi Bottling Group, Inc. agreed to pay $120,000 to settle a disability lawsuit filed by the EEOC. According to the lawsuit, Pepsi terminated Eldridge Davis, a driver at its Hayward, CA facility, for "job abandonment and violation of the company attendance policy." Sounded straightforward. Right? Wrong! Davis had followed proper procedure to inform his supervisor and the company that he could not finish his route due to his disability and he needed to take medical leave. Davis, who was 48 at the time, had been with Pepsi since October 1996. Well, Pepsi settled and agreed to implement preventative measures.

Fast forward to January 11, 2012.

Pepsi Beverages (formerly known as Pepsi Bottling Group) has agreed to pay $3.13 million and provide job offers and training to resolve a charge of race discrimination filed in the Minneapolis Area Office of the EEOC.

The EEOC's investigation revealed that more than 300 African Americans were adversely affected when Pepsi applied a criminal background check policy. Such policy disproportionately excluded black applicants from permanent employment. Under this new policy, job applicants who had been "arrested pending prosecution" were not hired for a permanent job even if they had never been convicted of any offense.

“When employers contemplate instituting a background check policy, the EEOC recommends that they take into consideration the nature and gravity of the offense, the time that has passed since the conviction and/or completion of the sentence, and the nature of the job sought in order to be sure that the exclusion is important for the particular position. Such exclusions can create an adverse impact based on race in violation of Title VII,” said Julie Schmid, Acting Director of the EEOC’s Minneapolis Area Office. “We hope that employers with unnecessarily broad criminal background check policies take note of this agreement and reassess their policies to ensure compliance with Title VII."

Pay Compression and Senior Employees

As a follow up to my earlier blog on pay compression, let’s talk about its impact on longer-tenured employees.

One major challenge that many organizations face is attracting new, desired talent. We all know that compensation for new hires is determined by the external job market. Pay compression occurs when new employees entering the organization are paid at similar or higher levels to existing employees. Because current employees have their wages set by an “internal” job market, typically their salaries are not keeping pace with the “external” market.

As new employees are bought in, the question arises: Why aren’t we increasing the compensation of the older employees in line with those of the new employees? The older employees are quite often tasked with providing on-the-job training/mentoring of the new employees. Is a workplace conducive to the spirit of teamwork and harmony when the new employees are taking home more than the old?

Of concern are those employees whose salaries are significantly below the external job market wages (for their skills and experience), and who may begin to seek other job alternatives outside the organization. Sometimes a market starting salary increases so much that the existing employee is punished by not moving. The question then becomes “to get a good raise, do I need to quit?” Employees will be more likely to see opportunities for increasing their salaries outside their present organization.

As an employer, a possible solution is to adjust your “internal job market” salaries based solely on job values and performance (and always ensure that you audit for non-discrimination). Change your terminology from “merit increases” to “adjustments.” If the pay compression is simply one of timing due to changes within the organization, communicate with the employee! Let the employee know that the inequity is only temporary and will disappear shortly.

While we won’t be able to win them all, we may be able to reduce the damage if we take the proper steps.

Pay Compression

Pay compression occurs when you have small differences in pay regarding experience, skills, level or seniority. Most often employers are unaware that pay compression exists until a problem arises.

Some examples of pay compression are:

- Newly hired “green employees” are paid more than existing employee in same position;
- A subordinate is paid more than or equal to his/her boss;
- The salary of an employee in a lower graded job is paid more than employee in higher.

Employees are concerned with how their compensation levels relate to that received by others in an organization. And further, that their pay is a reflection of their performance and abilities. If an employee believes this his/her contribution to an organization is undervalued, this can lead to emotional issues such as resentment, depression or disengagement. Another factor to consider is a subordinate earning more than his/her supervisor may not respect their supervisor if s/he is aware of the salary compression.

While there are other issues such as tenure-based pay, general increases, etc., that create pay compression, oftentimes pay compression is the result of a poorly maintained salary structure. Is there a solution? Yes. Establish a salary structure. Ensure it is updated regularly and use it as a guide when setting compensation levels. Take steps to benchmark your salaries regularly to keep pace with market rates. If your salary program is not in sync with your market, my bet is that your employee salary levels are as well.

In closing, a word of caution. There are potential legal issues associated with pay compression. These may arise when a protected class is at the wrong end of a pay compression issue.

Do You Bully Your HR?

In late 2011 a workplace survey was conducted by the Kentucky chapter of SHRM (Society for Human Resource Management). The results of this survey indicated that some HR professionals (31.4% of the respondents) have been "bullied" simply because they worked in HR!


Here's some results:
- 42.4% subjected to work interference or sabotage;
- 33.3% suffered verbal abuse; and,
- 24.2% experienced offensive conduct (threats, humiliation and intimidation).

The survey participants felt such conduct may be a result that HR:
- Must often tell managers "no"
- Role is misunderstood and/or not appreciated
- Is perceived as lacking business acumen
- May be perceived as a threat by insecure managers
- May sometimes lack professional credentials/education, or
- May be perceived as lacking "organizational fit."

Only one minute of self-pity is allowed.

EEOC Update: No Diploma Necessary

On December 2, 2011 the EEOC posted a letter on their website stating that under the ADA, an employer’s requirement that an applicant have a high school diploma must be job related and consistent with business necessity.

What?

The letter states: “ . . . . if an employer adopts a high school diploma requirement for a job, and that requirement “screens out” an individual who is unable to graduate because of a learning disability that meets the ADA’s definition of “disability,” the employer may not apply the standard unless it can demonstrate that the diploma requirement is job related and consistent with business necessity. The employer will not be able to make this showing, for example, if the functions in question can easily be performed by someone who does not have a diploma.

Even if the diploma requirement is job related and consistent with business necessity, the employer may still have to determine whether a particular applicant whose learning disability prevents him from meeting it can perform the essential functions of the job, with or without a reasonable accommodation. It may do so, for example, by considering relevant work history and/or by allowing the applicant to demonstrate an ability to do the job’s essential functions during the application process. If the individual can perform the job’s essential functions, with or without a reasonable accommodation, despite the inability to meet the standard, the employer may not use the high school diploma requirement to exclude the applicant. However, the employer is not required to prefer the applicant with a learning disability over other applicants who are better qualified.

We hope this information is helpful. This letter is an informal discussion of the issues you raised and should not be considered an official opinion of the EEOC.”

The concept here is that the students inability to graduate from high school may be a symptom of a learning disability. Let’s be realistic. Isn’t this an insult to individuals with true learning disabilities? Are we sending a message that you don’t have to stay in school to get a job? That a high school dropout has an entitlement to my job, or your job?

As an employer, do you feel that than increase in EEOC claims against employers will occur? Will there be unfortunate repercussions? Even though the letter does not constitute an official opinion, it raises some concerns for me. A long standard criteria for screening many employees is the high school diploma. Can I say “high school diploma preferred?” Please?

For students, where is the incentive to go to school? To get a higher education? Will this create an educational backlash by creating a diminished incentive for some high school students to finish school?

A comment I read “So if we carry this to its logical conclusion, hospitals will have no right to require doctors to be board-certified or have graduated from an accredited med school.” Hey, I didn’t have the grades to make it to medical school. I didn’t have the mental “capability.” I always wanted to play doctor!

To read the full letter, here’s the link:
http://www.eeoc.gov/eeoc/foia/letters/2011/ada_qualification_standards.html

Terminations and Employee Dignity

Terminations are a minefield, emotionally and legally. Unfortunately they are a necessary task. But whether you are downsizing or terminating an employee due to poor performance, as an employer your terminations should be conducted in a professional manner. So, I have a few pointers for you to consider that may make the process a bit easier on everyone.

Timing? At one time I worked with an organization whose policy it was to never terminate an employee from the first of November through the end of the year. This holiday avoidance "practice" was one of the most employee friendly policies I had ever seen. And, it's a practice that I encourage all employers to use. We all know that the holidays are extremely stressful for any person. Compound the stress of the holidays with the emotional impact of losing a job and it can be devastating to the employee. (The loss of a job has an equal and similar impact on an employee's emotion as a death or divorce.)

While there is no good day for a termination, I recommend that you never terminate an employee on a Friday. I always recommend a Monday or Tuesday. Terminating an employee early in the week allows the employee to be proactive in terms of filing for unemployment benefits and looking for another job. Encourage the employee to begin their search early, additionally help them by providing the instructions necessary to file for unemployment benefits (if eligible).

Why not terminate on a Friday? The former employee is just sitting there doing nothing but thinking about how you fired them! Do you want that employee building hostility towards you over the weekend?

How? Well, never by telephone, text or email. There is no law addressing exactly how an employee should be terminated and there are pros and cons to every situation. And sometimes the manager has no choice but to terminate an employee by phone (such as employees that have abandoned their job, remote employees, or those situations of gross misbehavior, etc.).

I believe that terminations should be face to face. Show the employee respect and they’ll have respect for the company in return. Remember, terminated employees talk among their family and friends. Handling the employee with respect may lead the employee to recommending your organization as a good place to work. Consider the employee a potential goodwill ambassador. Another point to consider is the attitude of your remaining employees. If you terminate an employee in a professional and respectful manner, the remaining employees will be assured that they will receive the same treatment. And, they'll respect you for it!

Be prepared for emotions, don’t try to remove them from the process. Stand in the employees' shoes for a moment and understand his/her range of emotions. Terminations are a sad chapter in anyones life. *I once observed an HR Generalist who during a termination process, broke down into tears. She was handling the termination! While I always have a box of tissues handy in HR for employees (for any reason), having to hand one to the HR Generalist and her lack of professionalism left me close to speechless. Please don't do this!* If you have an EAP (Employee Assistance Program), ensure you provide the contact information to the employee. As a manager, I doubt that you are trained in counseling. My recommendation is that you show concern, but recognize your professional and personal limitations.

Ensure the employee's privacy during a termination. I recommend holding terminations in a conference room or other area away from prying eyes. In addition to providing a level of privacy during the termination, the area may allow the employee a “decompression period" after the termination. The individual may need some time to compose him/herself prior to leaving the room.

Allow the terminated employee some control over how they leave and allow them to leave with dignity. Timing, again is everything. Consider how/if the employee is to be escorted from the building. Can the employee say goodbye to his/her co-workers? Does the employee need to pack up their desk? Did the employee car-pool? As an employer try to make the process as painless and seamless as possible.

In closing, I have to throw the following quote in: “Firing employees is the riskiest thing you can do at work with your clothes on,” says Jay Shepherd, author of Firing at Will, A Managers Guide. Read his book – there’s some good advice in there!

EEOC / DOL

In a prior post I discussed the increase in EEOC cases and recent settlements. It is quite apparent that EEOC is taking a more aggressive posture with cases. One such step is the mandatory public press release regarding settlements. We’ve recently seen that with the publicity surrounding cases such as Texas Roadhouse and Bass Pro. If you go to the EEOC website, the settlement for these two cases is prominently displayed on the EEOC home page ("Texas Roadhouse Litigation" and "Bass Pro Litigation").

During my participation in a webinar recently for an Employment Law Update, some interesting questions were put to the participants. Below are the two that I feel are most significant.

Has your organization seen an increase in employee lawsuit claims this year? The response was 42% Yes, 30% No and 28% Unknown.

Do you consider Wage & Hour to be the number one employment law risk facing your organization this year? 48% Yes, 52% No.

As employers we are going to see heightened enforcement by the DOL in FY 2012. DOL has requested a budget of $240 million for the wage and hour division in 2012. That is an increase of $13.3M and 95 investigators over 2010 and 2011 levels. Two interesting items from the DOL FY 2012 Budget in Brief:

1. To ensure equal opportunity for people who work for organizations that have federal contracts, the Office of Federal Contract Compliance Programs (OFCCP) will ensure compliance with affirmative action requirements, target systemic discrimination, and prioritize the elimination of discrimination against veterans and individuals with disabilities.

2. In FY 2012, the Department will redouble its efforts to combat worker misclassification by investing $46 million for a multi-agency initiative of OFFCP, the Wage and Hour Division, OSHA, the Office of the Solicitor, and the Employment and Training Administration, which will fund state grants that address worker misclassification within the context of the unemployment insurance program.This initiative will help level the playing field for employers who abide by the law and provide employees with their rightful pay and benefits.

Misclassification of employees continues to be a hotbed of litigation and the 2012 legal changes reflected in federal law will continue to fuel concerns with employers. Keep your eyes on legislation introduced into the U.S. Senate in November. This legislation could update FLSA treatment of computer employee exemptions (see Section 13(a)(17) of the FLSA).

Looking for more information on the Wage and Hour 2012 budget? Go here:
http://www.dol.gov/dol/budget/2012/PDF/CBJ-2012-V2-03.pdf