HR headaches

Experts weigh in on how today’s labor market is driving HR trends.

From the pages of In Business magazine.

Having trouble finding qualified employees? If not, consider your company among the fortunate, although it’s probably in the minority.

Since January 2010, the unemployment rate in Wisconsin plunged from 9.3 percent to a low of 2.8 percent, then rose slightly to 3.1 percent in August, according to the state Department of Workforce Development.

With employee turnover at high levels, qualified workers in short supply (or unable to pass drug tests), and state or federal policies that can make their heads spin, human resources managers often get sandwiched between the demands of their bosses to meet bottom lines and the pressure to hire and retain qualified employees.

It’s a two-aspirin problem, especially when the departments themselves are often understaffed.

Many companies never returned to their pre-Great Recession staffing levels or training programs, stretching HR departments even further, notes attorney Tom Godar, a partner in the labor and employment practice area of Husch Blackwell.

In addition to Godar, we asked Jill Hall, an attorney with von Briesen & Roper S.C. about avoiding common HR mistakes, while Angie Heim, owner/president of The Employer Group in Verona, offered an HR perspective. [Note: IB reached out to several HR directors but did get a response.]

Headache No. 1: Employee churn

Godar has spoken to HR personnel who have enormous pressure to fill jobs, and he says they are trying to hire people. They fully understand the value of orientation and helping new employees during their first six months, but many simply don’t have the time to get it done.

The danger is the cycle of trouble that job churn creates, especially in the service industries, Godar explains. “If a business doesn’t have enough people, those they do have could be overworked. They might become unhappy and leave, and then an employee who may not be ready to be a supervisor gets promoted. It’s a terrible cycle of retention, training problems, and brand loyalty,” he warns. And it seems to be happening more and more.

Even worse, it could lead to a lawsuit from a disgruntled former employee claiming discrimination when, in fact, they were unhappy because they weren’t trained properly. Perhaps the employer didn’t have the resources necessary to give the employee the best training, or an employer hired someone without fully vetting their qualifications.

“Often, that $15 dollar-an-hour supervisor hired to manage a $10/hour employee does not have all the training necessary,” Godar states.

If a poorly trained employee gets a tongue lashing by the boss through no fault of their own, they could feel wronged and mistreated by something they believe is protected under the National Labor Relations Act, “and suddenly it morphs into a wage-and-hour complaint under state or federal law,” he suggests. “That’s the kind of thing that can happen when the laws become just a trampoline for unhappiness, and it can cost both sides financially and detract from the core business.”

Knowledge reduces risk, and the more an employee knows and the more they feel connected, the better the chance they’ll stick around.

Godar advises employers to practice balance and consistency. “An organization with the proper balance will expose their employees to ombudsmen or an appeal process so they can work through their complaints,” he counsels.

He also advises them to provide employees with opportunities for internal training to develop better relationships. “Most of the time, people don’t leave their companies, they leave bosses.”

To gauge culpability, he suggests a stop-sign analogy. “If I run a stop sign, or a police officer tells me I have, I feel pretty bad if I realize I never saw the sign and blew right through it. On the other hand, if I knew the stop sign was there, was in a hurry, and ignored it, I’ll know why I’m being pulled over. It’s no surprise.”

In part, that’s why HR departments and employees need to work together — so people have a clear view of what to expect in the workplace — but consistency is key.

Godar says it all boils down to doing the right thing, and intent.

If an employee feels they’ve been wronged, the onus is on their legal team to prove, using a fairly rigorous test, that not only were they treated badly, they were treated differently than others, and that isn’t always easy. “In the meantime, the employer is distracted by unplanned litigation and costs,” he says.

It’s not uncommon to find HR managers feeling wedged between a rock and a hard place and working very hard under difficult circumstances.

That’s why it’s important that employers have a process that everyone agrees upon.

“A decent process simply feels fairer,” he adds. “Due process is not just a pain in the neck. Due process means — going back to the stop-sign theory — that someone feels their concerns have been heard.”

HR departments are often armed with anti-discrimination/anti-harassment tools, but do they have the necessary time, energy, resources, or incentives to develop and promote a culture of inclusion and diversity, and the training and resources that would go with that? Even if they do, it’s often difficult given the pressures they are under.

Headache No. 2: A change of form

Angie Heim, owner and president of The Employer Group, a professional employer organization, acknowledges the stressors.

“It’s hard on HR departments to get it right,” she says. “Mistakes are not tolerated, and compliance issues can get very complex, especially with just a one- or two- person department.”

Besides that, government is not typically known for simplifying things.

“Have you seen the new W-4?” Heim asks, her voice rising.

The W-4, or the new Employee’s Withholding Allowance Certificate, allows employees to direct how much federal income tax they want withheld from their paycheck.

The form changed as a result of the 2017 Tax Cuts and Jobs Act (TCJA) and was promoted as an easier way for employees to accurately determine how much income tax should be held from each paycheck.

It misses the mark, according to Heim.

“The new W-4 is so complicated,” she exclaims, “and it goes into effect Jan. 1!”

Although still in draft form, the new W-4 is now four pages long and requires tax withholding to be based on income. “Gone are the days of single-zero,” Heim adds, referring to a common withholding status.

An IRS calculator is available for assistance, but it can be confusing, she adds.

“I could barely figure it out and I’ve been in HR all my life!” Heim asserts. “I think it will be hard on small businesses, and maybe even manufacturers.”

In addition, the new form applies only to employees hired after Jan. 1, 2020, forcing employers to use two systems — one for existing employees, and one for new hires.

While this change should not come as a surprise to employers if the payroll firms are doing their jobs, Heim reports The Employer Group had to completely upgrade its systems just to accommodate the new form.

“I’m guessing many small HR departments could be overwhelmed.”

(Continued)

 

Asked for a small-business remedy, Heim pauses. “Outsourcing is a logical choice,” she says, “but I’m biased. I just think we all need to ride it out. Something’s got to change, and I believe it will.”

Jill Hall, an employment law attorney at von Briesen & Roper, doesn’t sense widespread panic among HR professionals. “Instead,” she says, “I see people doing the best they can do and acknowledging that they can always do better.”

That said, she always cautions businesses to be thoughtful in their policies because they need to understand their risk exposure. “Liability is liability,” Hall says. “Government agencies will come in for audit, and if you’re not aware of what you need to do, you’ll learn quickly from audits how to correct things.”

If a business is audited, it would expose any lack of knowledge of wage-and-hour laws, which falls under the Department of Labor (DOL).

“For example,” Hall explains, “if a wage-and-hour investigator comes in and identifies that a business hasn’t paid its workers travel time, the investigator will calculate the amount of backpay you owe. However, if the lapse is found to be purposeful, you could be fined.”

Knowing whom to go to is also important. In Wisconsin, businesses would deal with the Equal Rights Division, Hall says, but on the federal level, it could be both the DOL and the Equal Employment Opportunity Commission (EEOC), because the DOL enforces the Family Medical Leave Act and the EEOC enforces the Americans with Disabilities Act.

“The DOL enforces wage-and-hour laws, and in my opinion, there are plenty of small businesses under 50 employees that don’t understand the consequences much less the first step.” In very small businesses, the “HR manager” may be an office manager or assistant handling the HR duties and reporting to the CEO.

The problem with that? “Human resources is much more complicated than it used to be,” Hall notes, “but the message hasn’t gotten everywhere.

“A healthy and well-staffed HR department can drive recruitment and retention, culture, and diversity to make a business a welcoming place with a culture that people want to be a part of.”

Headache No. 3: Backtracking for EEO-1

The EEO-1 form, for businesses with 100 or more employees or government contractors, has been around forever, Hall explains. It categorizes employees by nine employment levels — executive, manager, skilled worker, etc. Within that framework, an employer sets up limited demographics.

The EEOC wanted to collect wage information with the belief that it would flag wage disparities, but the issue has been batted back and forth.

“Right now, employers that were supposed to file EEO-1s were supposed to report W-2 wages for employees in a snapshot period — 2017 and 2018 — but it’s very difficult for employers to comply with that.”

The EEOC relented, saying it will ask for that information this year only. “There may be appeals, too,” Hall warns.

Best remedy? The employee handbook!

Godar, Heim, and Hall agree that the employee handbook is the best way to set company policies in writing and identify potential HR headaches from the beginning of employment.

Says Hall: “The employee handbook is critical, in my opinion, and it’s more for [the company] than the employee. Also, there’s more attention to culture these days because we know that with a respectful culture and structure, an employer’s risk goes down dramatically. That’s not a compliance issue, that’s a culture issue.”

Heim agrees, adding that handbooks should be well crafted and not simply pulled off the internet because every company is different. She’s observed some companies with one or two office assistants acting as HR managers and reporting to CEOs, but warns of possible misunderstandings of HR policies and the law.

Godar reminds that handbooks shouldn’t be just a list of do’s, don’ts, and vacation time.

“A good handbook should serve as a guide for developing great employees. It should inform them of company policies, perhaps provide a brief company history, and clearly explain how the company will respectfully handle employee concerns.

“There is an enormous amount of pressure on organizations now to try to attract and retain employees … and hiring right, versus right under the law, doesn’t get as much attention as it once did,” he adds.

Employees may not be getting vetted as carefully as they once did, either.

“We know that employees who develop internally are much more likely to stay because they understand how they fit into the larger organization, they are clear on their role, and people who trust their employer are very unlikely to leave or sue or question if they’re getting paid fairly under the Fair Labor Standards Act.”

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