Posts filed under ‘HR’
If you think you’re having a bad day, you could be thankful that you’re not Yahoo CEO Marissa Mayer, who has to explain to her Board of Directors why she fired her hand-picked Chief Financial Officer a little more than a year after he took the job at a cost of $42 million in severance benefits.
He was reportedly a bad fit with the company from the beginning, clashing with Mayer within months of being hired and failing to deliver advertising revenue.
I know I don’t have to tell you that going through the process of hiring someone only for that person not to work out is one of the most expensive costs of doing business. You may want to pick up this month’s issue of the Harvard Business Review and take a look at what some of the most innovative companies in America are doing to transform HR practices.
Regardless of how big or small your credit union is, there are new approaches you should consider taking. The best written value statements in the world are meaningless unless you can translate them into tangible practices for your credit union.
So, how does your credit union translate its corporate value statement into a tangible HR action plan? The question is particularly important for the credit union industry where so much of our growth and ultimate survival depends on projecting a unique brand of financial services. One approach that has been highlighted recently involves getting a wide variety of your staff involved in the hiring process.
For example, at Amazon, even hires for Junior Executive positions go through numerous interviews. These interviews are conducted by employees, or bar-raisers as they are called within the company, who volunteer for the job. What makes the program unique is that an applicant will be analyzed not only by the department with which he will be working but by an individual who may have little day-to-day contact with him or her once hired. What’s more, these bar-raisers all have the authority to nix a candidate. The result of this approach makes hiring at Amazon a laborious and time consuming process, but it ensures that whoever is hired not only has the skills to get the job done but has the type of personality that will ensure she is a good fit for the company.
A second thing you can do is to follow the example of Netflix and recognize that as your credit union evolves there are some employees who may no longer be a good fit. What Netflix does, to the consternation of many HR attorneys, is minimize the importance of performance reviews and instead empower managers to quickly communicate with employees and let them go when their skills no longer reflect the company’s needs. Netflix has avoided many potential legal pitfalls with this approach by also giving out some of the most generous severance packages within Silicon Valley.
One of the little chestnuts tucked away in the Congressional wish list that is Dodd-Frank is a requirement that financial institutions promulgate guidelines for assessing how good a job financial institutions do at fostering diversity in their workplace. Specifically, section 342 requires each financial agency’s Office of Minority and Women Inclusion to develop standards for “assessing the diversity policies and practices of entities regulated by the agency.” Crucially, the statute stipulates that these assessments should not be construed to mandate any requirement regarding an institution’s lending policies.
While I am tempted to point out that financial institutions are already among the most highly regulated businesses in the country when it comes to issues involving Race and minority advancement, the law is the law, so the question is how can this regulation be shaped in a way that does not needlessly burden credit unions while providing a benefit.
These seem to be the questions still vexing regulators, including the NCUA. Recently the major bank regulators came out with proposed guidance to implement Dodd-Frank’s mandate and they seem more than willing to consider unique approaches to assessing how lending institutions of all shapes and sizes are doing when it comes to hiring minorities. The regulation actually calls on financial institutions to make a “self-assessment” of a range of hiring and contracting practices. The preamble stresses that the “assessment envisioned by the agencies is not one of a traditional examination. . .Agencies will not use the examination or supervision process in connection with these proposed standards.” In addition, institutions would be encouraged but not required to make these assessments available to their regulators and the public through their websites.
Finally, the regulators repeatedly stress that they know many institutions already have to demonstrate how they are fostering diverse workplaces by, for example, requiring institutions with 100 or more employees or who are federal contractors with 50 or more employees, that meet certain conditions, to file reports with the Equal Employment Opportunity Commission.
Assessments could be designed in a way that reflect an individual entity’s “size and characteristics.” So, what exactly is required under this proposed self-assessment guidance? All institutions, regardless of their asset size or number of employees would be required to assess 1) the organizational commitment to diversity and inclusion considerations in employment, promotion and contracting; 2) how policies and procedures allow your institution to evaluate the effectiveness of their efforts at workplace diversity; 3) the extent to which they take a vendor’s record on diversity into account when making contracting decisions; and 4) the extent to which it publicizes its diversity efforts.
As it stands right now, these regulations are a lamb in sheep’s clothing since regulators could have used their Dodd-Frank mandate to impose much more onerous requirements than they are currently suggesting. Nevertheless, these self-assessments will impose new burdens, particularly on smaller credit unions that may not have formalized their minority hiring and promotion practices and policies. Furthermore, today’s self-assessment could be tomorrow’s public mandate. In the hands of the wrong regulators, section 342 has the potential to become an HR nightmare for credit unions.
A quick note: the links have not been working for the past couple of days so feel free to visit NCUA’s website to look at the proposed regulations. I’m going to God’s Country, aka Long Island, so I will be back on Tuesday.
As an unabashed Luddite who is nonetheless more dependent on technology than anyone I know, I am more than a little envious of the employee who can be on the phone responding to a text message, keep up with the latest news and eat lunch all at the same time. Increasingly, the multi-task ideal is becoming a critical skill to master for career advancement.
But what if the myth of the archetypal multi-tasker is just a bunch of bunk and all those hours spent tethered to our smartphones are actually keeping us from getting enough sleep to be truly productive employees? In 2009, Clifford Nass, who passed away yesterday, set out to research what makes multi-taskers so good at juggling many tasks at once and absorbing so much information. What he found instead was that people aren’t particularly good at multi-tasking, they just think they are. If you really want to do something right, do it one task at a time.
And all this glorification of multitasking, replete with bring your devices to work policies has created a culture glorifying the never ending work day. For instance, a recent report on NPR profiled a credit union CEO who was sending and receiving emails at all hours of the day and night, having convinced herself that she just needed about five hours of sleep. She eventually came to her senses. She stopped checking her email before she went to bed and limited smart phone use to her top executives. The results were that she was healthier and her employees were coming to work having gotten a better night sleep themselves. The allegedly lost hours of productivity were more than made up by being fully prepared to face the day.
It seems to me that we are letting our machines run us, rather than the other way around. Without spending a cent, or even having a staff meeting, you can make your credit union more productive within months by showing your employees that it’s okay to put down the cell phone and get a good night’s sleep.
Well, we’re entering the third day of the health care exchanges set up to allow Americans who don’t have health insurance to purchase it cost effectively. So far the world has not ended, Democracy as we know it has not been overrun by tyrants, and I don’t feel that Big Brother is watching me anymore today than last week.
One of the most unfortunate consequences of the Congressional side show euphemistically described as a government shut down has been that this country has yet to seriously grapple with the profound impact for better and for worse that Obamacare will have on the American workplace. Leaving aside the moral question of the Country’s obligation to provide health insurance to the almost 50 million Americans who do not have it (after all, I’m a lawyer, not a priest), the reality is that the health care changes are going to impact every employer in America. This is particularly true of credit unions, since most of them have 50 or fewer employees but already provide health care.
So let’s say you’re the typical credit union with fewer than 50 employees who work at least 30 hours a week. You already provide health care and theoretically Obamacare doesn’t have to impact what you do in the slightest. But, you also have an eye for the numbers and like many employers, the cost of health care is biting more and more into your bottom line. The result has been that over the last several years, your employees have been asked to pay for a larger share of the health care premium. The 800 pound gorilla in the room for credit unions and their Boards of Directors, is this: at what point do you consider having your employees shop for their own insurance through health care exchanges, rather than the credit union taking on the responsibility?
From a moral standpoint, you don’t want to generate savings at the expense of providing your employees with adequate health care options. Conversely, if the networks perform as envisioned, your employees will still have access to a baseline quality of care, albeit with slightly less choice within a given network. Chances are, your credit union is not too far away from having your employees go out and get health care on their own, and helping them cover the cost either in the form of higher salaries or direct health care subsidies. In many ways, this is already happening for most employees who are paying higher co-pays and/or larger premiums for the same access to care.
Now, let’s say you are one of those credit unions that have 50 or more employees who work at least 30 hours a week. Statistically speaking, your credit union already provides health care so you don’t have to worry about the fine to be imposed on large employers who don’t provide health insurance. Does this mean that health care changes won’t affect you? Of course not. Again, it is possible that if the networks work as envisioned, you may actually find it cheaper to pay the fine and encourage your employees to go out and buy their own health care. Too draconian, you say? The problem is that nothing in the health care law will actually do anything meaningful to keep down health care costs. In fact, the number of employers offering health care dropped dramatically over the last decade. As health care costs continue to rise, your credit union is going to find it impossible to both remain competitive and provide the same level of care to which your employees have grown accustomed.
The bottom line is that Obamacare is taking effect. Health care costs were rising long before the Affordable Care Act and whether you are a Tea Party Conservative or a Move-On.org Liberal, the framework established by the statute and its regulations is one that all credit union managers and directors should be aware of as they grapple with health insurance over the next decade.
This week marked the latest consumer frenzy accompanying the release of what feels like the twentieth version of the iPhone. Whereas many of you may enjoy the sight of adults arriving at work with the eagerness of children going to school the day after their birthday to show off their newest toys, I am unabashedly part of a profession dedicated to protecting people against their over-exhuberance. So, remember that every time your employee brings a new portable device to work, it raises important issues related to data protection that are particularly important for financial institutions to remember.
Surveys indicate that the vast majority of companies authorize employees to bring their own devices into the workplace (so called BYOD policies) as opposed to buying the gadgets for work use only. Let’s be honest, an office that doesn’t have a WiFi hookup, let alone let their employees keep up with their “Facebook friends” during downtimes may be doing the right thing on paper, but isn’t exactly creating the type of environment to attract the best and the brightest, at least if they’re under 40.
But, as Pedro Pavon points out in an excellent article in the September issue of the ABA’s Business Law Today Journal, “BYOD policy presents companies with a myriad of risks and challenges . . .” Lawyers advising clients need to emphasize that “the biggest risk with BYOD is data loss.” I think this is particularly true of financial institutions irrespective of your size. The line between work and home blurs every time an employee responds to an after work email; stores a password on his or her smartphone; or forwards a document to a co-worker while on the way to work. Ask yourself a simple question: if one of your employees misplaces her cell phone today, what information could a hacker have access to tomorrow? If you don’t know the answer, or you do know the answer but think there is nothing you can do about it, then it is time to sit down with your IT people and your policy drafter and get to work.
According to the article, one option is to use technology specifically designed to monitor mobile hardware. The software will, for example, allow you to wipe the data off a smart phone and track a smartphone’s whereabouts. You could also mandate the use of PINS on someone’s personal smartphone. The problem with all of this, of course, is that the company is seeking to take control of someone’s personal device. When you wipe my cell phone clean and I find it in the laundry pile the next day, I am going to be less than amused that I have to reconstruct the contact list from my poker group just because my employer is justifiably paranoid. The best bit of advice from Pavon is that as companies acquire tracking software and develop policies, employees are told exactly what information and capabilities employers want to give themselves in return for allowing employees to bring their own devices.
A second piece of the puzzle is that employers responsible for monitoring smart phone usage know exactly where the company’s legitimate need to monitor employee technology cross the line from legitimate work purposes to voyeurism. This line won’t always be easy to figure out, but having everyone buy in to not only the use of technology in the workplace, but the need for legitimate protections from data breach are the crucial first step that none of you should put off.
Are your loan originators work-a-day Joe’s whose lack of discretion makes them more analogous to assembly line workers who simply put together part of a mortgage or does your typical originator exercise enough discretion that they can be compensated based on commissions? That question has been bouncing around the courts now for more than a decade. Its answer has crucial implications for anyone who employs mortgage loan originators and classifies them as exempt employees under the Fair Labor Standards Act (FLSA). It also has implications for anyone whose responsible for trying to comply with agency interpretations. That’s all of you.
As I have pointed out in previous blogs, the Department of Labor has repeatedly changed its mind about this crucial question. The FLSA generally requires employers to pay minimum wage and overtime to employees who work longer than 40 hours a week. However, there are several exemptions to this requirement, for example, for sales people and administrative employees. In 2006, the DOL concluded in an opinion letter that your typical mortgage loan originator qualified for the administrative exemption. However, four years later with a new administration in place, the DOL reversed itself, declaring that mortgage loan originators do not qualify for the exemption. So, this means that if you are continuing to pay your mortgage loan originators as if wage and hour requirements don’t apply to them (for example, if you are paying them solely based on commission) then you are violating the law.
However, this may no longer be the case. A recent decision by the Court of Appeals for the D.C. Circuit invalidated the DOL’s 2010 interpretation. The Court did not address the merits of the issue, but agreed with the Mortgage Bankers of America, who argued that the DOL violated the Administrative Procedures Act (APA) when it issued the 2010 interpretation. It ruled that when an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has, in effect, amended its rule, which it cannot do without a notice and comment period.
In other words, if the DOL wants to change its regulation to make loan originators subject to wage and hour requirements, it must promulgate regulations to do so. Technically this has already been the law; however, the Court’s opinion clarifies that this procedure must be followed even when a new interpretation has not been substantially relied upon.
Although this ruling most directly affects those in the mortgage industry, it clearly has potential application to other agencies. For example, this ruling underscores that there is a point at which so-called guidances, which are ostensibly designed to clarify existing regulations, are actually nothing less than new regulations that the regulators didn’t feel like putting through the administrative process. If the Court’s opinion stands, it won’t limit the ability of agencies to promulgate regulations, but simply strengthens the idea that before they do so, they have to give impacted parties the ability to weigh in.
This blogger is taking a week off as the Meier family goes on a southern swing to hang out on the beach and celebrate my Aunt’s 80th Birthday. Until I post again, peace out.
The Supreme Court case this term with the greatest impact on credit unions was decided a couple of days ago. While it won’t change much of your day-to-day approach to preventing workplace harassment, it does make it more difficult for employees to successfully sue you.
Under Title 7, which bans discrimination on the basis of race, sex, religion, disability or national origin, no one disputes that employers are vicariously liable for the actions of their supervisors. This means, for example, that where a supervisor gives consistently poor performance reviews out of prejudice against African Americans, for example, the employer can’t escape liability by arguing that it didn’t know what was happening and that such conduct is contrary to company policy.
But when the harassment involves someone who isn’t a supervisor, a different standard applies. In this situation, an employer will be responsible for work place discrimination only to the extent that it acted negligently in not recognizing or responding to the workplace’s hostile environment.
In Vance v. Ball State University, the Supreme Court decided a case involving an African-American food service worker who did preparation work for the University’s catering service. She complained that a woman who acted as her supervisor constantly harassed her because of her race. For example, the putative supervisor would use racial epithets, menacingly stare at her, and occasionally block her entrance into the elevators when she was trying to deliver food.
The University was aware of these concerns, investigated them and even tried to resolve the situation with the alleged victim. In 2006, Miss Vance started a law suit alleging discrimination under Title 7. Two lower courts dismissed the case concluding that the alleged harasser was not a supervisor of the employee in question. Since the University had effective procedures in place and aggressively addressed the complaints, it was not negligent in addressing this workplace situation. And, since the harasser was not a supervisor, the employer could not be held directly responsible for the alleged misconduct.
So, the Supreme Court had to decide who exactly should be considered a supervisor. The answer to this question is going to be easier than its application. In a 5-4 decision, the Supreme Court held that an individual qualifies as a supervisor only if the person has the power to hire, fire, demote, transfer or discipline an employee. If you think this is restrictive, you’re right. It means that someone who has the authority to delegate work assignments to you and generally make your life a living hell if they want still doesn’t qualify as a supervisor, even if they manage your day-to-day work responsibilities. The court’s holding reverses both the Equal Employment Opportunity Commission’s guidance on the issue and the majority of federal circuit court rulings including the Second Circuit, which has jurisdiction over New York.
Under the EEOC’s approach, which is the approach favored by the dissenting opinion in this case, a supervisor is not only an individual who has the authority to make tangible employment decisions, but also includes an individual who has authority to direct an employee’s daily activities.
A few quick thoughts. The decision is a very significant one but it doesn’t mean that Mad Men can break out the Fedoras and the Scotch and start harassing their favorite secretaries. The decision still makes employers responsible for a hostile work environment. However, it is in everyone’s interest to clarify on those employee charts precisely who has responsibility for hiring, firing, promoting and disciplining people in the office.
The majority opinion argues that its rationale will promote clarity in an area of the law that badly needs it. I doubt it. There are plenty of supervisors out there whose opinions as to who should be hired, fired or disciplined carry a tremendous amount of weight, but who don’t make ultimate hiring and firing decisions. The Court’s decision will spawn litigation as to when a person exercises enough day-to-day influence to qualify as a supervisor. These are fact sensitive inquiries and there is no way around it.
Finally, you will be hearing about this case for years to come as both Congress and probably future Presidential candidates will use it to demonstrate their support for women or defend it as an example of a Court properly putting the brakes on regulatory activism. No matter what side you’re on, Congress is free to amend Title VII and states such as New York are free to establish their own standards for supervisor liability under state law. I’ll bet you right now that New York is one of the first states to respond to this decision by doing so.
With the Legislature entering its last couple of days, bills are now passing with the conveyor belt rapidity that typically marks the end of New York’s Legislative Sessions. Here are some of the issues to keep an eye on as the session winds down.
S. 2089/A.3510 would allow state charters to serve multiple common bonds within a credit union’s field of membership. For instance, Acne Credit Union has a Select Employee Group of employees who work for the ABC manufacturing company in the Village of Pleasantville. If this bill passes, it could seek the Department of Financial Service’s approval to add the residents of Pleasantville to its field of membership. Contrary to some of the information that has been floated in opposition to the bill, no one could be served under this bill who isn’t already eligible to be a credit union member: it simply increases the number of credit unions a member is eligible to join.
Another bill of interest to credit unions -S.5145/A.7341 – was already passed by the Legislature earlier this week. It authorizes financial institutions to raffle off prizes to members who agree to open up savings accounts or buy certificates of deposit. As I’ve mentioned in a previous post, this bill is a great way to encourage people to save their money rather than just throwing it away for the joy of tearing up losing lottery tickets.
One bill that your HR person should keep an eye on is S.5872. While existing state and federal law already outlaws pay discrimination based on an employee’s sex, state law does permit pay differentials to be based on any other lawful factor other than sex. Legislation advocated for by the Governor since his State-of-the-State Address in January would narrow this exception, permitting pay differentials between employees of different sexes to exist only on the basis of “a bona fide factor other than sex, such as education, training, or experience.” Under the bill whatever factor used by the employer would have “to be job-related with respect to the position in question” and “consistent with business necessity.” Finally, not even this exception would apply when the employee “demonstrates (A) that an employer uses a particular employment practice that causes a disparate impact on the basis of sex, (B) that an alternative employment practice exists that would serve the same business purpose and not produce such differential, and (C) that the employer has refused to adopt such alternative practice.”
Although much of this language mirrors existing federal requirements, by seeking to clarify the parameters of an employer’s discretion regarding pay issues the bill would present new challenges. In addition, by authorizing a successful plaintiff to collect damages up to three times an employee’s lost wages for “willful violations,” the bill is designed to make sure that there is no shortage of legal aid for employees who may not be able to afford an attorney.
By tomorrow morning we should know if the Legislature acted on most of these bills, so stay tuned and remember although it can be pretty gruesome watching sausage being made, if it’s made properly it tastes great.
With the announcement that it is suing two companies for policies that discriminate against the hiring of felons, the Equal Employment Opportunity Commission (EEOC) is sending a message loud and clear that it is dead serious about putting teeth into its guidance released last April stressing that employers can not categorically refuse to hire someone simply because a criminal background check reveals they have been convicted of a crime.
The EEOC’s stance poses unique challenges for credit unions. On the one hand, the EEOC is signaling that it is taking a hard line on employment policies that cast too wide a net in excluding individuals convicted of crimes from employment, at least in those cases where the job they are seeking is not impacted by their past criminal conduct. On the other hand, 12 U.S.C. 1785 (d) prohibits credit unions from hiring any person “who has been convicted of any criminal offense involving dishonesty or breach of trust” or who has entered a “pre-trial diversion program” in connection with a prosecution of such an offense. This categorical ban lasts for 10 years; however, credit unions may apply to the NCUA for a waiver. It also does not apply to “deminimous” offenses. In its guidance the EEOC concedes that employers complying with federal mandates in refusing to hire an individual or keep her employed are not violating discrimination law. However, it is also quick to point out that policies that go beyond what is mandated by federal law could run afoul of discrimination prohibitions. For example, your credit union could not categorically ban an applicant convicted of a crime in the last 20 years.
So what is a credit union to do? The best way of trying to meet these employment demands is to establish policies and procedures where each individual applicant will be judged on the specific facts of his or her circumstances. So, for example, before simply refusing to hire someone who has been convicted of a bannable crime, you should give the applicant an opportunity to explain the facts and circumstances surrounding the offense and determine whether this is someone for whom the credit union should apply for an NCUA waiver.
If this sounds complicated, it is. So, take the time to call in your HR Director and put a call in to your attorney responsible for handling HR issues. Now I am going to get on my soapbox for a second. If anyone from NCUA should happen to read this blog post, it would be extremely helpful if the agency would issue an updated guidance explaining how NCUA’s interpretation of its employment prohibition can best be implemented in light of the EEOC’s policy guidance.
On that note, get to work!