2011’s Top HR Challenges

All involved in the home care industry are very familiar with CMS, OIG and the Stark law. We keep current with issues around ZPIC, RAC and DME MAC audits. We have heard horror stories of the financial impact these audits have had on some providers.

We hire consultants and have experts in-house to dig through the mountains of regulations related to every aspect of industry compliance in the HME business. Add to all this new requirements and potential changes to health care in the Patient Protection and Affordable Care Act, and it sometimes makes those of us in the business want to open a hotdog stand on the corner and just take cash.

But how familiar are you with the DOL (Department of Labor), ICE (Immigration and Customs Enforcement) or the EEOC (Equal Employment Opportunity Commission)? How well do you know the provisions contained in the FLSA (Fair Labor Standards Act), the IRCA (Immigration Reform and Control Act) or whether the FMLA (Family and Medical Leave Act) pertains to your business?

Your company faces significant human resources challenges in 2011 that could have a big impact on your business. With constant changes in employment law, health care reform and other federal and state legislative initiatives, it is more important than ever to know your risks as an employer. Employee-related lawsuits can bankrupt a company.

Many experts agree that the top HR challenges this year are related to wage and hour, closer scrutiny by the Department of Labor, increasing employee engagement, retaining top performers and dismissing bottom performers. The actions you take today can protect your business from the first two, and effective programs can impact the rest.

The FLSA

The Department of Labor enforces the Fair Labor Standards Act. The FLSA, also referred to as the Wages and Hours Bill, was passed in 1938 and established a minimum wage, guaranteed overtime pay for certain jobs and placed restrictions on the employment of minors. The original provisions of the law remain the mainstays of its enforcement today.

A business is still required to pay the established minimum wage to applicable employees, and some states have a minimum wage in excess of the federal minimum wage. A business is still required to pay an overtime rate of at least 1½ times the base hourly rate after 40 hours in a week. Some states require overtime payments after eight or 12 hours in a day, regardless of the total for the week.

California is the most employee-friendly state by requiring overtime payment after eight hours in a day and “double time” for hours over 12. It comes as a surprise to many managers to know that the FLSA does not require a company to provide lunch breaks, periodic breaks, sick leave or vacation time.

The House of Representatives has attempted several times to pass the Family Leave Insurance Act, which would require certain employers in all states to provide paid sick leave for certain employees. Some municipalities have passed laws requiring paid sick leave, and several states are discussing similar legislation. Rest assured, this will continue to be a hot topic to watch.

One important piece of information about leave comes from the Family and Medical Leave Act . The FMLA is federally mandated and applies to companies with 50 or more employees. The law provides protection for employees to take unpaid leave without the threat of losing their jobs for qualifying circumstances. If your company falls under this requirement of the FMLA, you better have a policy in place that is updated with the latest provisions of the law.

Wage-and-Hour Enforcement

Over the past year, the DOL has hired an additional 350 inspectors in its Wage and Hour Division to conduct audits on businesses. The two main areas of exposure for most companies are job classifications and payment of wages.

For job classifications, employees are placed in one of only two categories, either “exempt” or “non-exempt.” In simple terms, an exempt employee is a salaried employee, and a non-exempt employee is paid hourly.

An exempt employee is exempt from the overtime rules of the FLSA as long as he or she meets certain criteria. First, an exempt employee must be paid at least $455 per week. Second, the employee must perform the duties of an exempt employee.

These job categories fall into executive, administrative and professional. Improper job classifications found by a Wage and Hour inspector could translate into huge fines, for some companies having a six- or seven-figure impact. One executive I met at Medtrade last year told me an inspector found numerous violations in his company, which had to stroke a check for over $100,000.

In addition to the job classification challenge, employers must ensure that employees are paid for all hours worked. Companies get in trouble with Wage and Hour when they have employees work “off the clock” to reduce overtime, or require employees to be at their desks during lunch or eat while driving between deliveries without taking a break.

Another big area of exposure is setting up automatic deductions for lunch for employees who are out of the office. In our industry, it is impossible to guarantee that an employee will be off the clock at the same time every day. If they work, they have to be paid.

Still another issue with Wage and Hour deals with workday start and stop times. The workday is generally defined as “the period between the commencement and completion of the same work day of an employee’s principal activity or activities.” This is easy for office staff who start at a given time, come to the same location and leave at the same time. Travel time between worksites is also compensable.

The challenge is managing the commuting or travel time. Without getting too complicated, the commuting time to and from work is not compensable unless the workday has commenced and has not ended. Courts have ruled recently that employees who are expected to answer emails or phone calls they receive at home are technically still working and must be paid.

Additional rulings have even interpreted that if an employee has a smart phone, the employer is inferring that reading and answering emails is expected outside of the normal business workday. I suggest that you develop a policy around what is expected of hourly employees regarding emails after your established workday.

A serious wage-and-hour issue in this industry is the treatment of “on-call.” The question is whether the employee is considered on duty or off duty. To be off duty, the employee must be completely relieved from duty, and the period must be long enough to enable the employee to use the time effectively for his or her own purposes and not hours worked. If the employee must remain on premises or the time is so limited that he or she cannot use the time effectively for the his or her purposes, then the time must be paid.

The DOL has levied heavy fines with back pay for failure to compensate employees properly for all hours worked.

Employee Engagement

Employee “engagement” is a huge challenge for all companies in every industry. Studies show that, on average, only about 30 percent of a workforce is fully engaged. That means the other 70 percent are moderately engaged or not engaged at all in helping the business succeed — your business.

Studies further show that engaged employees are 40 percent more productive. You probably know who these employees are in your organization. Can you identify the one who is always looking for some other task or asking if he or she can help? That is a sign of an engaged employee. Can you identify the one whose work is substandard and has to be guided in almost every facet of his or her job? That is a sign of a disengaged employee.

The truth is the engaged employee knows that disengaged employee, and if no action is taken, you may lose the top performer. The best employees are usually the ones who leave while the substandard remain.

Retaining Top Performers

For a business to grow, top performers have to be identified, and every step should be taken to keep these people active in the business. Think about that awesome sales rep who killed it every month. What happened to your business when she left?

It takes time to make up for losing a top performer, but simple steps can help to ensure retention of these valuable resources. First, you must pay a competitive wage — not necessarily the highest, but competitive with the market.

Managers must also conduct consistent, periodic reviews. I believe in a monthly review; then the annual review is just a summary of all the monthly reviews. The review provides the opportunity to communicate goals and expectations, the good things the employee is doing and areas that can be improved. Even the best can get better.

Remember, the most important thing a manager can do is to communicate constantly with employees.

Dismissing Bottom Performers

Donald Trump is good at saying “You’re fired,” but that is not so easy for many HME managers. The easiest way to dismiss bottom performers is to be consistent in using a progressive discipline system.

The manager has to establish clearly the expectations of performance and the consequences of failing to meet those expectations. Managers must document all disciplinary activities to have a paper trail and to ensure the process is fair and objective.

In the progressive discipline process, the manager must ensure he or she is basing decisions on performance and behavior, not on personality or other subjective issues. Having a bad attitude is a subjective perspective, but being unwilling to work with the team is a behavior that can be measured.

All managers must practice consistency in any discipline process. Deviations from such a process can lead to charges of discrimination, and that financial exposure can dwarf anything else mentioned in this article.

2011’s human resource challenges are not limited by business size, business mix or geographic location. Understanding these challenges and being proactive will significantly reduce your exposure, both financially and operationally.

Richard Davis, SPHR, is vice president of customer satisfaction and human resources for Barnes Healthcare Services, Valdosta, Ga. You can reach him at 800/422-5059 or [email protected].

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