Thursday, August 13, 2015

HR and Management

Too often business views HR and management as separate and sometimes, contentious, functions. As HR pros we are too familiar with management who perceives us as a necessary evil that creates roadblocks and interferes with their ability to run the business. While there are certainly some HR folk who unfortunately contribute to this perception, on the whole, this is not what we intend, and in fact is not the case at all. The proper and most advantageous way to view HR is as part of management, in concert with the business as a whole and supportive of the business’s overall goals.

However, too often it is clear that the function of HR is not seen this way. Too often it is seen as not "mission critical" to the organization. Or perhaps, the mission of HR is seen as providing the warm and fuzzy, party-planning function rather than anything that may be essential to the operation of the business.

HR has many functions – interpreting and implementing applicable federal, state and local employment laws and regulations; helping to define and maintain an ethical and professional environment for all employees; as well as utilizing effective hiring, performance management and benefit systems. The end result of the proper application of good HR policies and procedures is a company that treats its employees consistently and fairly (and legally). And that goes a long way to significantly contributing to a productive and engaged workforce – which in turn contributes to the success of the business. Something we’re all interested in, right?

At the risk of using the sledge hammer approach (and really, sometimes this is just necessary!), let’s look at this from a different perspective. Most, if not all, businesses operate under various industry standards as well as laws and regulations around the product or service they provide. Do you have to comply with EPA regulations (and/or state equivalents), FDA, DOT, SEC? How about JCAHO, or OHCQ (Office of Health Care Quality in some states)? What licensing standards does your industry need to maintain? Accreditation requirements?

Now, what happens to your business if you fail to comply with any one of the laws or regulations covering your industry? What happens if you simply just fail to file required reports (even if you don’t actually otherwise violate a law)? Are you subject to fines and penalties? Could you possibly face losing your license or otherwise the ability to operate your business? What would be the PR fallout if you’re found to be in violation of some regulation or law? Could be pretty serious. In fact, you probably have a whole department, or at least one person, whose job it is to keep you on the straight and narrow in these areas. Maybe it’s your Quality Assurance function, or some other compliance related activity. That person or department is your first line of defense in these matters and you most likely take their work and their advice pretty seriously. Could your business afford (financially or from a public standpoint) the consequences of not doing so?

So, here comes the sledge hammer. You need to view HR and the proper execution of the function in the same way. Violating, even unintentionally, employment laws and regulations could cost you tens of thousands (or more) just in fines and penalties or lawsuit settlements. The damage to the business’s reputation and corporate citizenship could cost you even more in lost customers, lost potential employees, etc. And make no mistake, there are people out there whose job it is to monitor court filings and actions in the employment-related area and then to report on them publically, just as there are those who do so for health or safety or financial violations. And the major regulatory agencies also distribute press releases and maintain public websites to report on these things as well. (EEOC Newsroom, DOL News Releases and Briefs)

What can failing to comply with employment laws cost you? As an example:
  • From 2001 to 2012, there was a more than 500% increase in the number of multiple-plaintiff wage-hour lawsuits filed in U.S. federal court (Littler Mendelson, 2012)
  • Employers paid out a total of $2.7 billion in wage-hour settlements between 2007 and 2012, with settlements totaling $467 million in 2012 alone (NERA Economic Consulting)
  • In 2014, LinkedIn paid $3.4 million in back wages and $2.5 million in liquidated damages for violating the overtime and record-keeping provisions of the Fair Labor Standards Act (FLSA)

    Take a peek at some recent lawsuits and settlements just from the DOL and the EEOC:

    Celadon Trucking Services, Inc. to Pay $200,000 to Settle Lawsuit

    Hillshire Brands Company Sued by EEOC for Racial Harassment at Sara Lee Plant

    Local Office of Enterprise Rent-A-Car to Pay $425,000 to Settle EEOC Age Discrimination Charges

    Appeals Court Affirms Jury Verdict of over $1.5 Million in EEOC Sexual Harassment and Retaliation Suit Against New Breed Logistics

    United Airlines to Pay over $1 Million to Settle EEOC Disability Lawsuit

    Magnolia Health Sued by EEOC for Widespread Disability Discrimination

    Savannah River Nuclear Solutions to pay nearly $235K to 72 employees
    More than 160 direct mail and printing workers will receive $1.4M in back wages

    Baltimore staffing agency allegedly harassed, discriminated against Hispanic employees

    Staples to pay fired employee $275K in wages, benefits and damages

    Could your business afford the financial and PR consequences of any of these actions?

    Here’s the deal: HR is your first line of defense in the employment arena. We are there to help you interact with, manage and develop your workforce in the most efficient, productive – and legally compliant way possible. It is vitally important that management knows when they should include or defer to HR, and that they have a clear understanding of the consequences to the business when they don’t. HR should be at the front, guiding management through the maze of legal responsibilities and risks. No, we’re not above occasionally being involved in the warm, fuzzy, party-planning activities – that’s just not our main purpose. Our purpose is to partner with you so your business can grow, prosper and succeed and that includes helping you to avoid having to deal with unnecessary roadblocks like expensive lawsuits and fines.

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