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CURBING EMPLOYEE THEFT

By Risk Management Bulletin

According to the U.S. Commerce Department, employee crime costs American businesses as much as $40 billion a year — that’s “billion with a ‘B’.”

To help prevent a fox from getting into your henhouse, a leading risk management group recommends these guidelines:

  • Screen job candidates. You might discover that a potential employee was fired from another job for stealing. A thorough background check can give you hard evidence when doing an interview. Look for discrepancies between what the candidate says and what’s on paper; too many differences will point to a problem.
  • Reduce the temptation to steal. Be careful when making operational changes. The thief might become quite familiar with the change and believe that they have specialized and private information to use to their advantage. To avoid this danger, let everyone know about new procedures. Also, lock and bar all windows in warehouses or storerooms, create employee sign-ins in these areas, and never leave anything lying around to be picked up easily.
  • Protect monetary assets. Thieves sometimes write checks to ghost employees or vendors and use the money for their own finances. Separating accounts payable from accounts receivable will reduce the chances of such a fiasco. Also, if Jim in sales never, ever takes a vacation, something might be amiss; he could be snooping around or doing something besides genuine hard work.
  • Schedule periodic audits. If this isn’t possible, have an outside party review accounting and bookkeeping practices.
  • Create a zero-tolerance policy. Potential in-house thieves won’t be as inclined to steal if they know they’re risking their job.
  • Investigate suspected fraud. The Association of Certified Fraud Examiners (www.acfe.org) offers expertise in this field.

For an in-depth review and analysis of your in-house security systems, please feel fee to contact our risk management specialists.

IS YOUR BUSINESS INSURED AGAINST DISASTER?

By Risk Management Bulletin

In the aftermath of storms, flooding, or wildfires , thousands of small-business owners are being hit with the bills for salvaging their building or the business itself, because they didn’t carry enough (or the right type of) coverage. In some cases, the culprit was ignorance; the owners might not have realized that a policy didn’t cover certain hazards. In others, a difficult economic climate created cash flow problems that led businesses to forgo the cost of insurance.

For example, you might not think your business needs insurance against flood damage. However, no matter where you’re located, if a small stream near your business swells up after an unusually long period of rain and water pours in, coverage through the federal National Flood Insurance Program will pick up the tab. For more information, visit the program’s Web site, www.Floodsmart.gov.

Similarly, a standard policy probably won’t cover earthquake damage – and quakes are by no means limited to California. The largest temblor in U.S. history was centered near New Madrid, Missouri in 1812, causing damage in half a dozen states, ringing church bells on the East Coast, and re-routing a section of the Mississippi River.

You buy Property insurance to protect your business against losses from such perils as wind, rain, and hail. But do you have Business Owners Policy (BOP), which combines Property coverage, together with Business Interruption insurance – which will pick up the tab for operating expenses and lost profit if your business is shut down for an extended period. That can include salaries and employee benefits, rent and line-of-credit payments. It doesn’t have to be a natural disaster that shuts down the business; even losses stemming from a power outage can be covered.

Some small companies should carry special policies because of the kind of business they’re in. For example, a heavily damaged bed and breakfast that would need to restore its quaint ambience by purchasing antiques would probably need additional “guaranteed replacement” coverage.

Our risk management professionals would be happy to help you develop a comprehensive program to protect your business. Just call or e-mail us.

THE 10 COMMANDMENTS OF CELL PHONE SAFETY

By Risk Management Bulletin

Cell phones and navigation devices allow drivers to stay connected and find their destinations, making them indispensable – especially for salespeople, repair personnel, and other employees who drive on the job.

However, using cell phones behind the wheel also creates liabilities – and the toll can be heavy. “Distracted driving” is the fourth most serious vehicle safety issue, according to the Network of Employers for Traffic Safety. With motor vehicle accidents the leading cause of work-related injuries, the use of cell phones and other high-tech devices by employees driving on the job leaves your business wide open to workers compensation exposures, lawsuits for deaths and injuries, and other third-party claims.

To lessen liability and help reduce accidents, it makes sense to adopt a policy on driver use of cell phones that includes these guidelines:

  1. Use a headset while driving or pull over to use a hand-held cell phone.
  2. Keep the phone where it’s easy to see and easy to reach.
  3. Plan any calls you’ll need to make before you begin to drive; enter numbers into your speed-dialing feature.
  4. Do manual dialing only when the vehicle is stopped.
  5. If possible, make your calls when stopped at a stop sign, red light, or when you are otherwise stationary.
  6. If possible, ask a passenger to make the call or at least dial the number for you.
  7. Never take notes or look up phone numbers while driving.
  8. Suspend a conversation during hazardous circumstances — for example, in heavy traffic, when maneuvering around a hazard, or in severe weather conditions.
  9. While talking, keep your head up and your eyes on the road and check the side and rearview mirrors. frequently.
  10. Let voice mail pick up your calls when it’s inconvenient or unsafe to answer the cell phone.

Form of the Month:

By Your Employee Matters

WHY I DESERVE A RAISE (PDF)

Many employers ask us how to deal with an employee who asks for a raise in. We tell them to make good use of this form! Before an employee requests a raise, they should be able to show how they have increased their value by filling out this form. If they can articulate how they have added, new value then they should get a raise. If not, a CPI increase is the most they deserve.

(HR That Works Users can access this form in Word format by logging on to the site).

PRESIDENT OBAMA IMPLEMENTS NEW FMLA MILITARY LEAVE AMENDMENTS

By Your Employee Matters

On October 27, 2009, President Obama signed the 2010 National Defense Authorization Act, which contained new amendments to the Family and Medical Leave Act (FMLA). By way of background, the 2008 National Defense Authorization Act created a new leave right under the FMLA for families of service members. The new Act further expands FMLA coverage and available leave for military families in the following ways:

  • Leave For a “Qualifying Exigency.” Previously, leave for a qualifying exigency in connection with a deployment for a contingency operation was not available to members of the regular Armed Forces, but only members of Reserves and National Guard units. The new amendments permit families of regular armed forces personnel who are deployed to foreign countries to qualify for such leave.
  • Leave to Care For a Covered Service Member with a Serious Illness. So-called “military caregiver leave” provides up to 26 weeks of leave to employees caring for a current member of the armed forces, National Guard or Reserves. The new legislation permits leave to be taken for retired military service members as well, so long as it is within five years of the date on which the service member first receives treatment, recuperation, or therapy for the injury.
  • Leave For Aggravation of Existing or Preexisting Injuries. The 2008 regulations specified that a later aggravation or complication of the same injury would not constitute a “subsequent injury” triggering another 26 weeks of leave. The new legislation, however, provides that an aggravation or complication of a prior injury will trigger a right to another 26 week leave period, although it will remain the case that the 26 weeks of leave will have to be taken in a single 12-month period for a single injury (and any leave not taken in that year forfeited).

Lessons Learned: The new amendments direct the U.S. Department of Labor (DOL) to work with the Secretaries of Defense and the Veterans Administration to draft regulations implementing the amendments. The legislation does not make clear whether the law goes into effect immediately or whether it will become effective after the new regulations are issued. It would be prudent, however, to proceed as if the law were in effect if faced with a request by an employee seeking leave to care for an eligible service member under the expanded law.

DEFINING PRE-HIRE PHYSICALS VS PHYSICAL AGILITY EXAMS

By Your Employee Matters

We recommend that employers conduct pre-hire and return to work “fit for duty” exams. To balance the employers’ need to know with the employee’s right to privacy and disability protection, the EEOC issues guidance in Enforcement Guidance on Disability-Related Inquiries and Medical Examinations. In the case of Indergard v. Georgia-Pacific Corp. the 9th circuit helped clarify the distinction with physical agility exams which are not subject to the guidelines.

Determining whether a test is a medical examination depends on these factors:

  • Whether the test is administered by a health care professional * Whether it is interpreted by a health care professional
  • Whether it is designed to reveal an impairment of physical or mental health
  • Whether it is invasive
  • Whether it measures an employee’s performance of a task or their physiological responses to performing the task
  • Whether it is normally given in a medical setting
  • Whether medical equipment is used

The EEOC Enforcement Guidance states that, although in some cases a combination of factors might be relevant in determining whether a test is a medical examination, in “other cases, one factor may be enough to determine that a test or procedure is medical.” It then provides a list of tests that are considered medical examinations, including “blood pressure screening and cholesterol testing” and “range-of-motion tests that measure muscle strength and motor function.”

The EEOC Enforcement Guidance states that certain employer-required tests are generally not medical examinations – including physical agility tests, which measure an employee’s ability to perform actual or simulated job tasks, and physical fitness tests, which measure an employee’s performance of physical tasks, such as running or lifting – as long as these tests do not include examinations that could be considered medical (e.g., measuring heart rate or blood pressure).

In the Indergard case, the court ruled that the employer did have to comply with Medical Examination guidelines. Click here to read the case.

WHAT YOU CAN AND CAN’T DO TO AVOID OVERTIME PAYMENTS

By Your Employee Matters

In the recent case of Perth v. Pomona Valley Hospital, the Federal 9th Circuit gave an excellent summary of what employers can and can’t do to avoid overtime payments under the FLSA. In this case, a nurses union bargained for a 12-hour shift option at reduced pay. After knowingly accepting the arrangement, the claimant woke up to the fact two years later that employees who work eight-hour shifts are more likely to get paid overtime – so she filed a class-action suit. The court ruled on behalf of the employer, stating that: “Though our Circuit has never been asked to determine whether an employer subject to the FLSA may alter the ‘regular rate’ of pay in order to provide employees a schedule they desire, we conclude that such an arrangement does not contravene the FLSA’s purpose.”

Most important, the court shared these reminders about paying overtime:

  • There is no Supreme Court or Ninth Circuit case that says whether an employer can or cannot reduce an hourly rate, so that when paid overtime the employee earns as much as they did in a 40-hour week while subject to the FLSA. “Courts around the country have dealt with similar matters, with conflicting results. Compare, e.g., Conner v. Celanese, Ltd., 428 F. Supp. 2d 628, 637 (S.D. Tex. 2006) (holding that an employer can comply with the FLSA by reducing the ‘regular’ wage paid to its employees and pay overtime at one and one-half times the reduced regular rate such that the total pay to the employees remains the same’), with Rhodes v. Bedford County, Tenn., 734 F. Supp. 289, 292 (E.D. Tenn. 1990) (‘The court is of the opinion that defendant’s implementation of [a revised pay plan similar to the one in this case] constitutes a scheme intended to avoid the overtime requirements of § 7. [Even though it] result[ed] in the workers being paid the same amount for the same number of hours worked both before and after the changeover. This was accomplished by artificially altering plaintiffs’ ‘regular rate’).”
  • This opinion is limited to unique facts. In the case at hand, the reduced rate was agreed to, which is a significant factor in terms of “fairness.” In a sense, it was used as a way to prevent an overtime windfall to workers who asked for and received the flexibility of 12-hour days. For example, California allows the four day per week schedule with no payment of overtime so long as it is agreed to.
  • “Employers cannot lawfully avoid the FLSA’s overtime provisions ‘by setting an artificially low hourly rate upon which overtime pay is to be based and making up the additional compensation due to employees by other means.’29 C.F.R. § 778.500(a). The FLSA also prohibits employers from adopting ‘split-day’ plans, in which the employee’s hours are arbitrarily divided in such a way as to avoid overtime payments. Walling v. Helmerich & Payne, Inc., 323 U.S. 37, 40 (1944); 29 C.F.R. § 778.501. Both types of plans work in a manner so that employees do not earn overtime compensation, regardless of how many hours they worked.”
  • “The Department of Labor has provided regulations to guide employers who wish to ensure their regular rates are not deemed artificial or unrealistic. See 29 C.F.R. § 778.500(a) (‘[T]he overtime provisions of the act cannot be avoided by setting an artificially low hourly rate upon which overtime pay is to be based and making up the additional compensation due to employees by other means.’).”
  • The claimant also argued that the pay plan is unlawful, because nurses working both the 8-hour and 12-hour shifts perform the same work, but are paid at different rates. “We find no authority that suggests employees cannot be paid different rates for different shifts, and Parth fails to present any authority to the contrary. We do, however, find ample authority from other circuits that supports PVHMC’s argument that workers working different shifts may be paid different rates.”

WHEN LEAVE DOESN’T QUALIFY FOR FMLA, THINK ADA

By Your Employee Matters

Employers generally understand that eligible employees are entitled to 12 weeks of job-protected leave for serious health conditions under the Family and Medical Leave Act. Too often, however, when this statutory leave right has been exhausted (or an employee is FMLA ineligible) employers believe that they have an absolute right to terminate the employee. However, if the Americans with Disabilities Act applies, summary termination might result in an expensive legal claim.

Under the FMLA, an eligible employee with a serious health condition is entitled to 12 weeks of leave. Employees who are ineligible (because they haven’t worked for the company for a year or lack 1,250 hours of service), or who have exhausted their 12 weeks, lose their right to job-protected leave under FMLA. Some serious health conditions might also be covered ADA-disabilities (indeed, this will be the case more often than before under recent amendments to the ADA).

If an employee’s condition is a disability and they don’t have the right to FMLA leave, consider these steps:

  • Provide additional leave as a reasonable accommodation without an undue hardship. If the doctor can’t identify any time period by which the employee can return, courts would usually not require additional leave. If the doctor identifies a time frame, consider whether additional leave will be workable from a financial, operational, and logistical perspective.
  • Consider offering an alternative open position or providing an accommodation to the employee’s own position that will permit a return to work Although return to work under FMLA contemplates an employee’s complete fitness for duty for their job if they have an ADA disability, you might want to provide an accommodation (such as elimination or redistribution of marginal functions, modifications to the workspace, scheduling accommodations, and the like). However, you’re not required to create a new job position or bump another employee from their job.
  • If return to work is not possible in the near term, retain the individual on the employee rolls without pay or benefits. The EEOC has ruled that this might be an appropriate accommodation if holding the job for the amount of leave still needed would be an undue hardship. Whether valid or not, the EEOC believes that it’s easier to qualify for future openings as an internal applicant rather than as a former or outside one.
  • Consult with counsel when in doubt. Recent EEOC press releases publicizing money paid by employers in settling EEOC lawsuits show that the agency is interested in pursuing these “follow-on” ADA claims.

Consulting with employees and considering options can help you avoid ADA claims or, at the very least, provide helpful evidence demonstrating your good faith in the event of a lawsuit. Be sure to document your efforts to make an accommodation.

Compliments of Worklaw® Network firm Shawe Rosenthal (www.shawe.com).

DO YOUR COMPANY’S LEAVE AND LIGHT DUTY POLICIES RUN AFOUL OF THE ADA?

By Your Employee Matters

Many employers have had to decide when to terminate an employee on extended leave; some have adopted policies that mandate termination after an employee has been on leave for a certain lengthy period, such as a year.

Another typical policy is that light duty positions will be provided only to employees who are injured on the job. However, employers should be aware that the EEOC deems such policies to be a violation of the Americans with Disabilities Act.

The EEOC is suing Jewel-Osco, a unit of the major grocery chain Supervalu, Inc., for violating the ADA. The agency challenges company policies that refuse to allow qualified employees with disabilities to return to work from authorized disability leave if they have any work restrictions, and that automatically terminate employees after they have been on leave for one year.

The EEOC also challenges the company’s refusal to provide light duty for qualified employees with disabilities other than those injured on the job.

This case, in conjunction with the newly-released proposed ADA regulations, demonstrates the EEOC’s focus on disability issues.

Given this context, employers would be wise to review policies affecting employees with disabilities. Although you can certainly implement such policies as those described above, be careful not to apply them in a blanket fashion, particularly with regard to employees with disabilities.

Instead, carefully consider each case to determine if such policies should be suspended in a particular situation as a reasonable accommodation for the disabled employee.

Compliments of Worklaw® Network firm Shawe Rosenthal (www.shawe.com).

COMMON SENSE AND H1N1

By Your Employee Matters

The HR That Works Hotline has been getting inquiries about managing H1N1, especially from health care providers. The answer to this question should help all employers:

Hi Don, I have a unique situation. I don’t want to implement a policy that requires flu shots for all employees. We have contracts with hospitals that are requiring all employees to have a flu shot and/or wear a mask. I’m looking for advice on writing a policy for those specific employees.

Answer: There are no hard and fast answers on this issue because it’s so new, with lawsuits being filed, legislation enacted, etc. especially in the health care field. For example, here’s a thread on a discussion board for nurses. The NIOSH discusses the issue here. In general, employers can order employees to obtain flu shots or reasonable alternatives if they are medical or health care providers (nursing homes, child care workers, home health care providers, and so forth). There might be exceptions if such procedures are contrary to a person’s religious or cultural beliefs or would present a unique risk to the individual’s health.

The CDC has published excellent information for employers. So has the World Health Organization. However, these two sites don’t see eye to eye – in general, the CDC is more pro-vaccine.

Many states have also issued H1N1 Guidelines. For California, go to H1N1 (Swine Flu) Guidance for Employers and Employees, Cal/OSHA Interim Enforcement Policy on H1N1, Section 5199 (Aerosol Transmissible Diseases), and Appendix A: Respiratory Supply Documentation. For New York, please click here.

Unions and employees have been filing lawsuits to both mandate and prevent flu shots – which means there are risks on both sides of the issue. Not requiring vaccination might also expose you to the risk of losing a contract. Requiring it may result in fighting an employment lawsuit for wrongful termination. Suppose an employee has a negative reaction to the vaccine and gets sick or dies. You can expect a work comp claim, request for ADA or FMLA leave or worse. In fact, even state legislatures aren’t sure what to do about the issue.

So what to do?

  • Educate yourself and your employees about the virus by referring them to the CDC and WHO sites. Take the disease seriously: Experience suggests that it might be even more deadly than originally predicted.
  • Get a comprehensive legal opinion if you’re concerned about how to manage employees who refuse the vaccine (remember in your situation they can still wear a mask as an alternative). There’s no “generic” policy I could suggest. Please contact the Worklaw.com firm in your area so they can help tailor a policy to your specific needs.
  • Refer to the NIOSH site and incorporate the best practices discussed there. Be sure to include provisions for any possible exceptions (religious, health, etc.).
  • Look for the least intrusive alternatives. If workers won’t take a shot or wear a mask for a legitimate reason, perhaps they can be reassigned to accommodate their concerns. Get employees involved in this thought process because it affects them.
  • Work with vendors and regulators to establish reasonable guidelines and commitments.
  • Follow common sense prevention strategies, such as washing hands frequently, or gargling with salt water or Listerine regularly. Stress a “hands-off-the-face” approach: Resist all temptations to touch any part of the face (unless you want to eat or bathe). Don’t come to work sick, etc.
  • Create a plan for managing employees concerned about being infected – for example, recommending that they contact a doctor.