Posts filed under ‘HR’
If you are a board member helping select candidates to be your next CEO or you’re an Executive filling a slot on your management team, are you more likely to hire George Bailey or Mr. Potter? Be totally honest. George Bailey is a much nicer guy, but who’s more likely to be running a growing credit union ten years down the line? For that matter, should character even matter when making hiring decisions?
These questions came to mind recently after reading an intriguing bit of research in the most recent Harvard Business Review. According to at least one recent survey, the higher character ratings a CEO is given by his staff the better a company tends to perform.
According to the research, CEOs whose employees gave them high marks for character had an average return on assets of 9.35% over a two-year period. That’s was almost five times higher than the return generated by Executives given the lowest ratings. The cynics might be wrong after all.
The findings are based on research performed by a leadership consultancy. They identified what they considered to be the most universally identified moral principles – integrity, responsibility, forgiveness and compassion. They then sent anonymous surveys to employees at 84 companies and not-for-profits and followed up by interviewing many of the Executives. The highest performing Executives, both based on their character and financial performance, were given high ratings on all four principles. For example, they were described as standing up for what’s right, expressing concern for the common good, letting go of mistakes and showing empathy.
On the flip side, the ten worst performing management teams – euphemistically described as self-focused – were described as warping the truth for personal gain and caring mostly about themselves “no matter what the cost to others.”
Ultimately, it may be impossible to objectively quantify character. After all, we would all have a intriguing enough to ponder next time you start looking for a top executive.
NYS Budget Plan Set
Late last enough, the smoke rose from the State Capitol. It’s been reported that a budget plan has been agreed to for the 2015-2016 State Fiscal Year. It doesn’t look like this will have much of a direct impact on your credit union. More generally, budget negotiations in NYS begin and end with an annual struggle over state aid to education. The “framework agreement” reportedly includes a school aid increase of $1.6 billion and ethics reforms.
On that note, enjoy your Monday. They say Spring will arrive any day now. I am not holding my breath.
As readers of this blog know, last week the Supreme Court unanimously reversed a lower court decision and upheld the U.S. Department of Labor’s authority to issue an opinion letter classifying mortgage loan officers as non-exempt employees for purposes of the Fair Labor Standard Act (Perez v. Mortgage Bankers Ass’n, No. 13-1041, 2015 WL 998535, at *4 (U.S. Mar. 9, 2015). What kind of impact will this have on your credit union? I can’t answer that for you, but the question you should be asking is: What are my employees’ primary duties? If an employee’s job is to act as a mortgage loan officer, then the decision may change the way he is classified and compensated. In contrast, if your supervisors originate the occasional mortgage, but spend most of their day supervising staff, then the decision won’t impact your operations. The key point is that labels don’t matter: it’s what the employee actually does that you and your HR person have to look at in the aftermath of this ruling.
First-with apologies for those of you for whom this is real basic stuff-federal law divides us up into two basic categories of workers: exempt and nonexempt. Nonexempt employees are entitled to overtime whereas exempt employees are not. The distinctions made sense in 1938 when it was obvious who the blue collar factory worker was and who was the white collar boss, but in the information age, the distinction isn’t as easy to figure out. Regulations recognize five categories of exempt employees including professional, administrative, executive, outside sales, and computer-related professions. In 2010, the Obama Administration’s DOL reversed an earlier DOL opinion letter. It ruled that mortgage loan officers were not administrative employees and had to be given overtime. Last week’s decision upheld the DOL’s right to issue this ruling.
The distinction can be tricky for credit unions, particularly smaller ones. For example, since many branch managers wear multiple hats-they not only manage staff but they sign off on most of the mortgage loan originations-does this decision mean that they are now automatically non-exempt employees? No, it comes down to what an employee’s “primary duties” are. Nothing in the Court’s decision changes this erstwhile test. As explained on the DOL’s website, the primary duty “means the principal, main, major or most important duty that the employee performs.”
Remember, the label you give a job doesn’t mean all that much. For example, our small branch manager who helps out with an occasional mortgage loan is considered a Mortgage Loan Originator under other federal regulations; after all she sometimes offers, arranges, or assists a member in obtaining or applying for a mortgage at the credit union. ( 12 CFR 1026.36.) But, while the CFPB doesn’t care what an originator’s primary duty is, the DOL sure does
Here are three things you should know if you want to be one of the cool kids at the water cooler this morning.
Yesterday, the Supreme Court issued one of the handful of decisions each year that directly impact your credit union’s operations. Most importantly, if you have employees whose job is to assist prospective borrowers in applying for various mortgage offerings, the Supreme Court upheld a Department of Labor interpretation mandating that such persons be treated as non-exempt employees. This means, for example, that originators are entitled to overtime for the time they work over forty hours.
If you don’t do mortgages, I have some bad news and some good news for you. The bad news is that the Court gave agencies like the NCUA the green light to continue and arguably expand their practice of issuing guidance “reinterpreting” existing regulations. The case decided by the Court yesterday (Perez, Secretary of Labor, et al v. The Mortgage Bankers Association, et al) involved the validly of a legal interpretation issued by the Department of Labor in which it opined that mortgage originators should be treated as non- exempt employees. The mortgage bankers argued that the DOL’s interpretation amounted to a new rule and could only be imposed following a formal rule making process. The Court overturned lower court precedent and concluded in a unanimous decision that a formal rulemaking notice and comment period is only required when an agency amends – i.e. changes the wording – a regulation. It can issue all the interpretations it wants and the only remedy for the regulated is to argue that an interpretation is “arbitrary and capricious.” Don’t be surprised if you see amending the Administrative Procedures Act become a major component of Republican regulatory reform efforts.
The good news? You also have three Justices begging for future challenges to the APA. In the short run, the agencies won a major victory yesterday with the Court giving them expanded powers to interpret their own regulations. But, in the long run, the Court will probably give less deference to agencies drafting their own regulations. In the meantime, your credit union faces the potential of more regulatory oversight. Oh Boy!
Regulatory Relief On The Way?
There was some good news on the regulatory front yesterday. Chairwoman Matz dubbed 2015 “the year of regulatory relief.” (I think she stole that from the Chinese calendar) while outlining an impressive-sounding list of reform proposals. The list Includes expanded use of supplemental capital, authorization for large credit unions to securitize mortgage loans and greater Field of Membership flexibility.
All of this sounds promising, but let’s not get too excited until we see the detail. Let’s not forget that NCUA has already proposed changes to FOM requirements that make it more, not less, difficult for credit unions to expand their associational based memberships. In addition, even with yesterday’s Supreme Court ruling, it’s far from clear how much the use of supplemental capital can be expanded without amendments to the law.
Schneiderman Secures Credit Rating Agency Reform
NY AG Eric Schneiderman continued to raise his profile on consumer protection issues yesterday when he announced what is being described as a national settlement with the three major credit rating agencies: Experian, Equifax, and Transunion. Under the agreement, the CRA’s will, among other things, agree to enhanced dispute resolution procedures and delay the recording of medical debt for 180 days. One passage of the press release really got my attention: the settlement “prohibits the CRAs from including debts from lenders who have been identified by the Attorney General as operating in violation of New York lending laws on New York consumers’ credit reports.”
Although the settlement involves the reporting agencies, furnishers of credit information such as credit unions aren’t completely off the hook: “The Attorney General’s agreement requires the three CRAs to create a National Credit Reporting Working Group (“Working Group”) that will develop a set of best practices and policies to enhance the CRAs’ furnisher monitoring and data accuracy.” Stay tuned.
Greetings from the Land of the Never Ending Winter where the blog time temperature of 12 degrees is a sure sign that Spring is right around the corner.
The US Department of Labor took an important step for same-sex couples on Monday when it released final regulations changing the definition of a spouse under the federal Family and Medical Leave Act (FMLA). The FMLA generally provides employees working in places with more than 50 employees with the right to 12 weeks of unpaid leave to care for a spouse or other dependent. Under existing regulations, the determination of whether or not a person is married is based on the laws of the state in which the employee currently resides. So, for example, an employee’s marriage to a same-sex partner in New York, while perfectly legal in the Empire State, would not qualify that employee for FMLA benefits if he or she is a resident of Michigan, where same-sex marriages have not yet been recognized. Monday’s announcement means that FMLA eligibility will now be based on the laws of the state in which the marriage took place. In other words, the DOL’s new regulation will instead extend spousal recognition to any individual married in a state that recognizes same-sex marriage.
This proposed change will probably have its most practical benefits for credit unions that have employees in multiple states. Incidentally, a case is currently pending before the Supreme Court in which the Court will directly address whether state law bans on same-sex marriage violate the federal constitution (DeBoer v. Snyder, No. 14-571, 2015). The changes announced Monday take effect 30 days after publication in the Federal Register. As I’ve explained in this blog in the past, I am not an HR expert and this is particularly true when aspects of employee benefits are being discussed. If you think the DOL changes could impact your credit union’s operations, please follow up with your HR attorney or expert.
By the way, I have never seen such a radical shift in public attitude toward a divisive social issue than I have with regard to same-sex marriage. Think of it: as late as October of 2008, President Obama would not come out in favor of same-sex marriage and only three states, Connecticut, California and Massachusetts, recognized these unions. According to the preamble of the regulation, as of February 13, 2015, 32 states and the District of Columbia have extended the right to marry to both same-sex and opposite sex couples.
Your email policy probably isn’t legal; It may have been perfectly appropriate last week but there is a good chance it is a hopelessly outdated relic of labor law today.
Is this just a pathetic attempt to get your attention as my blog competes with your overloaded Inbox? Kind of but it also reflects the fact that late last week the NLRB fundamentally changed the legal rights of employees to use email on company time, At the very least you should grab your email\electronic communications policy and see if a call to your HR attorney may be in order. If you don’t have a policy then get to work creating one.
Our story begins with a company in California that provides interpreting services for the hard of hearing, The employees spend most of the day at their desks and are given a company email account. The employees decided to unionize but argued that their right to vote for representation was illegally inhibited by a company email policy that I bet reads a lot like yours it explained that:
Employees are strictly prohibited from using the computer, internet, voicemail and email systems, and other Company equipment in connection with any of the following activities:
- Engaging in activities on behalf of organizations or persons with no professional or business affiliation with the Company.
. . . .
- Sending uninvited email of a personal nature.
As recently as 2007 the NLRB and a federal court in the District of Columbia reviewed a similar policy and upheld a straightforward rule: Employers can limit the use of employer owned equipment to work related activities. Email service is an investment in company property and as such is subject to a company’s rules prohibiting its use for non-work related activities,( In Re the Guard Publ’g Co., 351 NLRB 1110 (2007))
In last week’s decision the NLRB overturned this earlier ruling and created a new legal framework for analyzing what limits can be placed on the use of company email by employees. Now there is “a presumption that employees who have been given access to the employer’s email system in the course of their work are entitled to use the system to engage in statutorily protected discussions about their terms and conditions of employment while on nonworking time, absent a showing by the employer of special circumstances that justify specific restrictions.”Purple Commc’ns, Inc. & Commc’ns Workers of Am., Afl-Cio, 361 NLRB No. 126 (Dec. 11, 2014)
What does this mean?
First, as I have explained in previous blogs an employee has a right to engage in concerted activity to discuss workplace conditions with their fellow employees irrespective of whether or not they belong to a union. This ruling could impact your credit union. For instance employees exchanging emails critical of a new marketing initiative that they think is bad for the credit union might be legally protected.
Second the fact that you might allow your employees to bring their tablets and iPhones to work doesn’t alter your obligation to allow the use of email. A dissenting opinion to the Board’s decision argued that employees have more than enough ways of communicating with work- mates irrespective of their access to a company’s email system. To the NLRB majority this doesn’t matter.
Third, the decision doesn’t mean you can’t regulate email use. It just applies to email use during non- work time such as a lunch hour. The majority made clear that you can still monitor email. And remember most communication is not concerted activity. For example, employees still don’t have the right to sexually harass each other over the internet Furthermore companies that can prove that their workplace has unique attributes that require it to adopt more restrictive email policies will be allowed to impose restrictions. But this is going to be an extremely difficult argument to make.
Fourth, this is not the last word on this case. The NLRB’s In Re the Guard Publ’g Co decision on this issue ended up in court and I would bet you that this decision ends up before the courts in the not so distant future.
Now for a personal observation: The NLRB is pushing for employee email protections precisely when we have a real life example of just how detrimental email can be to a company’s reputation courtesy of hackers who have published embarrassing emails from executives at Sony. For example one Email from an executive had the audacity to question the talent of Angelina Jolie! Now in “LA LA land this is big news since you don’t want stars to pass on making your studio’s next movie. The point is there are some conversations businesses should be allowed to keep in-house or comments that simply shouldn’t be made by an employee in the first place. Now some of those comments might be legally protected.
Here is a link to the decision and an earlier blog I did on this case.