FALL 2014

BOP

BENT ON PE

RSONNEL

Ahh, Music to My Ears….The-End of the Dreaded Yearly Performance Review

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Q: My business is in Philadelphia. I know under the Affordable Care Act (ACA) that I must provide breaks for nursing mothers. Did Philadelphia just expand my responsibilities in a new law?

There was a new ordinance signed on September 3, 2014 that went into effect immediately that does mirror the revised Fair Labor Standards Act (FLSA) in all but three ways:

1. Philadelphia’s new ordinance requires that accommodations be made available to all employees expressing milk, regardless of their exempt/nonexempt status, unless an undue hardship can be established. 2. Philadelphia’s ordinance has no time limit. 3. Philadelphia’s ordinance requires that the space provided to express breast milk be “sanitary.”

We recommend that employers operating in Philadelphia immediately examine their relevant policies to confirm that they meet the requirements of Philadelphia’s ordinance.

by Rebecca Boartfield & Tim Twigg

The dreaded yearly perfor-mance review...was there ever a time when any employer enjoyed them? The answer is probably not. Nothing gets a louder groan from an employer than the mere mention of per-formance reviews. Nobody likes them, yet everybody is told to do them, year after year. “Suck it up and get it done” people say; “this is good docu-mentation” and “helps you in the event of a lawsuit or claim.” But, is that really true?

For several years, there has been an ongoing debate in the HR profession about the value of performance reviews today. It has been the focus of Human Resources publications, as well as articles in the Wall Street Journal and Businessweek.

Based on our experience with thousands of clients through-out the United States, we have concluded that the stan-dard, age-old annual perfor-mance review is no longer as effective and carries poten-tial liability. Today requires a new, more relevant, meaning-ful and productive approach.

The argument in favor of per-formance reviews has been that reviews create documentation that can be used to help defend employers if their actions, mostly terminations, are called into question. The fine print on this, however, has always been performance reviews done well. Unfortunately, it’s the “done well” part that becomes the problem.

Let’s look at some recent statistics regarding

performance reviews:

••••• 1 in 5 employees (20%) think their bosses don’t even think about the appraisal until they’re in the room

•••••• 44% don’t think their boss is honest in the appraisal

••••••• 87% of employees found traditional perfor-mance reviews to be ineffec-tive; 94% of chief executives responded in the same way

••• 30% of performance reviews ended up in decreas-ed employee performance

•••••• 58% of bosses said they don’t think it is an effec-tive use of time

If you can’t say some-thing nice… We know how that statement ends, don’t we? Saying something that isn’t nice is really hard to do, par-ticularly when face-to-face with an anxious employee. Nega-tively critiquing an employee, even when justified, feels bad, so supervisors/employers will almost inevitably find them-selves writing reviews in such a way to soften the blow, or try to ensure there is a balance between the good and the bad. This prevents writing a candid, honest review that accurately reflects the performance of that employee.

Fast forward to a lawsuit and the plaintiff’s attorney subpoe-nas all documentation, which includes the performance review. The employer is, of course, contending that the employee was fired for perfor-mance. What will the plaintiff’s attorney do with a performance review in hand that praises the employee for things being done right and minimizes the poor performing aspects? If some recent court cases are evidence, it won’t be good for the defense.

Bent Erickson & Associates

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The BOP Newsletter is published quarterly by Bent Ericksen & Associates, Copyright © 2014, all rights reserved. Printed in the U.S.A.

Editorial & Production Staff: Michelle Allen,, Rebecca Boartfield, Alan Twigg, Hannah Twigg, and Tim Twigg,

BOP “Bent-on-Personnel” Quarterly HR Newsletter This newsletter, which was specifically prepared by the editorial staff of Bent Ericksen & Associates, is not designed to render legal advice or legal opinion. Such advice may only be given by a licensed, practicing attorney, and only when related to actual fact situations.

Bent Ericksen & AssociatesPO Box 10542, Eugene, OR, 97440 (800) 679-2760

BOP NEWS—FALL 2014

In our previous articles on this topic, we’ve cited the following:

Pitfalls to avoid when writing performance

reviews:

• Recency effect • Central tendency • Leniency & strictness error • Halo & horn effects • Contrast error • Rater bias error

For most employers, these are difficult to avoid. The supervi-sor/employer has to be really cognizant of these pitfalls. Too often the performance review is put off until the last minute and then the employer rushes to put something together without thinking about the above being included in the judgment of the employee’s performance. These can then become the very things that get used against employers by plaintiff ’s attorneys.

Additional problems with per-formance reviews are timing (or lack thereof), the inability to remain objective, too much focus on the past, and possible situations that may suggest dis-

crimination or retaliation. The list seems to be getting longer each day.

Consider this, in an article titled The Legal Case for Eliminating Performance Reviews by attorney Judith Droz Keyes, she states,

“ In 35 years of practicing employment law, I can count on one hand the number of times a performance review was of signifi-cant help to my employer-client in defending against an employee’s legal challenge. Even in those few cases, the employer’s position would likely have been as strong without it. ” She goes on to say, “In writing this article, I did a simple word search for ‘performance evalua-tion’ or 'performance review’ in published decisions only in the federal and state courts in Cali-fornia and only for a six-month period. There were 40 deci-sions where the performance review was cited by the court as a material fact in the case. In all but one of the cases, the review was cited not by the employer to support its defense but by the plaintiff-employee to provide his or her claim.”

All of this is evidence that the performance evaluation system that has been used for years is not the best approach for today. Yesterday, before we became such a litigious nation, this may have been appropriate. But, this is today, the year 2014, and the times are changing.

What Now?Tossing the annual performance review in the nearest round receptacle does not mean the employer is relieved of manag-ing employees’ performance, giving feedback, and estab-lishing documentation. It just means we need a more effective and relevant way to accomplish it. This new way is a multifac-eted approach that may create less stress, less tension, and less worry and actually build better performance in the long run.

Goal SettingOne of the big problems with performance evaluations, and why they’re difficult to conduct, is that they focus too much on what has already occurred in the previous year. Employers can’t do anything about what hap-pened in the previous 12 months, it’s a done deal. Employers can, however, work towards a better future by setting goals and hold-ing employees accountable to those goals. To that end, what if, for example, we changed the annual performance review to the annual goal setting review? It doesn’t have to be annual – it could be quarterly or monthly, if that’s best for the business.

Importantly, employers must follow up once the goals are established, otherwise, how will employees know if they’re

succeeding? How will they get feedback on how to reach the goals if they aren’t? How will they know what to modify or change to progress towards those goals? Therefore, employ-ers have to monitor employees and meet with them to discuss, on an ongoing basis, what’s going right, or what areas need addressing to progress towards those goals. Good goal setting not only establishes the goals, but also clearly outlines expec-tations on how to get there and then holds employees account-able for achieving them.

An example of this working is Zions First National Bank. They implemented a perfor-mance management system based on WIGs (wildly impor-tant goals) and PIGs (pretty important goals). Each week and each month supervisors meet to discuss progress or lack thereof and create steps for making improvement towards their goals. The focus was future-driven, even as perfor-mance feedback was being pro-vided. The results of the new system are awesome.

In a survey of nearly 1,000 Zion employees:

91% said the process helped develop their job skills and knowledge

85% said it assisted in their career growth

92% said they had their supervisors’ “ongoing support and recognition”

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BOP NEWS—FALL 2014

WHAT’S NEW In Employment Compliance

ALABAMA CERTAIN CRIMINAL RECORDS RESTRICTED FOR ALABAMA EMPLOYERS

Effective July 6, 2014, Alabama joined the growing list of states regulating employer use of criminal record information for employment purposes. Under the new law, job applicants with certain expunged criminal arrests may legally answer “no” in response to employment application questions concerning arrests. The law sets forth the criteria for expungement.

DELAWARE MANDATES PREGNANCY ACCOMMODATIONS

On September 9, 2014, the Pregnant Workers Fairness Act was signed into law and was effective immediately. The new law requires employers to make reasonable accom-modations for employees whose ability to work is limited by pregnancy, childbirth, lactation, and related conditions. Accommodations may include:

• Providing more frequent or longer breaks • Modifying a no-food-or-drink policy • Providing periodic rest • Light-duty assignments • Temporary transfer to alternative position • A modified work schedule or job responsibilities • Appropriate facilities for expressing breast milk

Employers can deny reasonable accommodation if it would cause undue hardship. Factors to consider for undue hardship are: the nature and cost of the accommodation, the size of the employer’s business, and the effect the accommodation would have on business operations.

Employers are prohibited from:

• Denying a job to a pregnant applicant based on the need for workplace accommodations • Forcing a pregnant employee to take paid or unpaid leave when a reasonable accommodation that would allow her to continue working is available • Making changes to a pregnant employee’s work when not necessary

CALIFORNIA ENACTS PAID SICK LEAVE LAW

This is a developing issue with this having just passed. Here are some known key provisions, currently:

• This is effective 07/01/15 • Applicable to all employers, regardless of size • Sick leave can be used to take care of the employee, as well as family members • Employee's must be paid their base rate • Sick leave begins accruing from day one of employment, and the right to use paid sick leave begins at 90 days of employment • Employees earn an hour of sick pay for every 30 hours worked; limits can be 3 days or 24 hours per 12 month period (rolling, calendar, or anniversary year) • Sick leave must carry over to the next year and can be capped at 48 hours or 6 days • The employer can set a minimum increment of 2 hours of sick pay usage • There is no need to provide additional sick pay above what the employer offers already through PTO or sick leave poli cies (assuming the employer's policy meets the minimum requirements) • Terminated employees reinstated less than 12 months from termination gets his/her accrued, unused sick leave restored • Payout at termination not required • The employer must include the accrued balance of sick pay on the wage statement per Lab. Code section 226. Or, the employer can provide a separate document at each pay day. • New poster is required. $100 penalty for violating the poster requirement

Did You Know?

• An employer can require medical proof of the employee’s need for accommodation • “Undue hardship” is required to excuse an employer’s refusal to accommodate • Job restoration rights • An applicant or employee’s need for accommodation cannot be the basis for employment decisions • Required policy manual language and notice posting

IllinoisThe Illinois Human Rights Act has been amended to include pregnancy discrimination and accommodation? The effective date of the amendments is January 1, 2015. Following are the key items that Illinois employers need to know:

• Applicable to all Illinois employers and virtually all employees • Imposes an affirmative legal obligation to accommodate pregnancy and childbirth-related conditions. Specific examples of reasonable accommodations are provided in the regulation. Specific examples of what is not required are also provided • A pregnant employee must agree to the specific form of accommodationwww.bentericksen.com

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New payroll card law under Illinois’ Wage Payment and Collection Act (IWPCA)

As of January 1, 2015, Illinois employers will have the option of paying employees through a payroll card. While the new law provides an alter-native to the traditional methods of payment by check or direct deposit, employers who elect this payment method must be aware of specific requirements imposed by the new legislation. Visit the following web-site for more information: http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=2402&ChapterID=68

Virginia to establish misclassification task force

The Inter-agency Taskforce on Worker Misclassification and Payroll Fraud will be made up of staff from the following agencies: Virginia Employment Commission, the Department of Labor and Industry, the Department of Professional and Occupational Regulation, the State Corporation Commission’s Bureau of Insurance, the Department of Taxation, and the Workers’ Compensation Commission. It will be chaired by the Secretary of Commerce and Trade. This group will be developing and implementing a comprehensive plan with measurable goals to reduce worker misclassification and payroll fraud in Virginia. This Executive Order is effective as of August 14, 2014, and remains in force for one year or until superseded or rescinded.

As of September 1, 2014, Hawaii allows pay cards for payment of wages

Before beginning to provide payment of employees’ wages in this manner, please become familiar with the long list of requirements that must be satisfied before implementing this pay plan. Visit the follow-ing website for more information: http://labor.hawaii.gov/wsd/direct-deposits-debit-cards-electronic-pay-statements-2/

Equal Employment Opportunity Commission (EEOC) updates guidance on pregnancy discrimination

On July 14, 2014, the EEOC issued updated enforcement guidance on pregnancy discrimination and related issues, along with a question and answer document about the updated guidance and an employer fact sheet.

The updated enforcement guidance offers insight into how the EEOC will enforce the Pregnancy Discrimination Act (PDA). As expected, the guidance confirms that the EEOC will broadly interpret when pregnancy-related conditions will be considered disabilities under the Americans with Disabilities Act (ADA). Visit the following website for more information: http://www.eeoc.gov/laws/guidance/pregnancy_guidance.cfm

BOP NEWS—FALL 2014

CaliforniaCalifornia employers must reimburse employees for unlimited plan cell phone use?

California Labor Code section 2802 obligates employers to reimburse employees for “all necessary expenditures or losses incurred by the employee in direct consequence of the discharge of his or her duties…” A California Court of Appeal recently issued a short decision in Cochran v. Schwan’s Home Services, Inc., B247160 (Aug. 12, 2014) that took an expansive view of an employer’s obliga-tion under this labor rule.

The Cochran decision posed, and answered, the “threshold question” presented on appeal as follows:Does an employer always have to reimburse an employee for the reasonable expense of the mandatory use of a personal cell phone, or is the reimbursement obligation limited to the situation in which the employee incurred an extra expense that he or she would not have otherwise incurred absent the job? The answer is that reimbursement is always required. Otherwise the employer would receive a windfall because it would be passing its operating expenses onto the employee.

MassachusettsDomestic violence leave is now mandated in Massachusetts?Effective August 8, 2014 employers with 50 or more employees must provide employees up to 15 days of unpaid leave in any 12-month period if the employee or a covered family member of the employee is a victim of abusive behavior. There are numerous unanswered questions in the new law; nonetheless, employers are required to notify employees of their rights and responsibilities under the law.

These goals should focus on what’s most important to the person’s job performance. When done right, this opens up the conversation to being a constructive dialogue about the most important behav-iors that are tied to the com-pany’s most desired results. It will eliminate the burden of wading through overlapping and ambiguous categories and subcategories with a 1-5 scale on a performance review form that doesn’t address the real problems, highlight goals, or create ways to improve in a constructive and effective manner.

Ongoing FeedbackEven if employers move to an annual goal setting review, that doesn’t mean waiting until the next review period (whether that’s annually, quar-terly, monthly, or weekly) to address problems that may arise between now and then. Nothing should be saved up and nothing should be a sur-prise. What is noticed about an employee’s performance today, good or bad, should be

expressed today, if at all pos-sible.

Holding off until the next review could result in having to unload a bunch of problems onto the employee at one time, which won’t make the supervi-sor/employer feel good when doing it, and certainly won’t make the employee feel great once it’s been done. Besides, if it’s a problem, it will just contin-ue unless addressed, which will only create more problems and make things worse. Honest, real time feedback is likely to have more of an impact on the employee and create behavioral changes sooner (ideally) rather than later or never.

Disciplinary DocumentationWhen ongoing feedback and communication fail to impact behavioral changes with the employee, then sometimes employers must move towards a more formal system of docu-menting and addressing prob-lems. Using our Employee Counseling Memorandum, employers can address prob-lems at the same time as estab-

recommended as an appropri-ate approach all along. The dif-ference now is, with the perfor-mance evaluation form gone, there is less of a chance that the employer also has other contra-dictory documentation on file to negate the effectiveness of this documentation.

ConclusionEliminating the tired, age old, annual performance review process from an employer’s plate may feel strange because conducting them has been recommended for years. But it’s time to let go and move on. This is not an argument for doing nothing. This is about replacing the old with some-thing newer, better, and more in line with the business as a whole. This simple action can free up time to work on more value-added activities and projects – things that drive business and create a more motivated, healthy workforce. The bonus is that it may also put employers in a stronger position should they find them-selves having to defend their actions.

lishing documentation. This type of communication and documentation should be on record prior to reaching ter-mination.

Disciplinary Documentation

should:

State the reason for the counseling in specific, factual, scrupulously honest, concise terms.

Outline the specific nature of the discipline.

Describe the corrective action expected of the employee in specific, measurable terms.

Warn of potential consequences if the employee fails to improve. Include signatures and dates from all parties involved.

Incorporating this kind of doc-umentation process into the performance management pic-ture is not new. This has been

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BOP NEWS—FALL 2014

Did You Know?

TRAINING THAT MEETS YOUR NEEDS AND SCHEDULE

We offer a variety of training webinars to sharpen your HR skills, improve your knowledge and gain more confidence for handling HR related issues.

• Job Descriptions• Continuing Education• Social Media• Successful Recruiting • "At-Will" Employment• Record Retention• Anti-Harassment• Leave of Absence Laws• Common Wage & Hour Problems• Taking Corrective Action

Visit our website for complete webinar descriptions

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LEARN HOW TO MINIMIZE LIABILITY & MAXIMIZE PROFITABILITY!

Q: How do the new laws in California about unpaid interns and bullying affect me? I have 16 employees.

I commend you for knowing about these two recently passed laws that flew under the radar for most. With only 16 employees, only the unpaid intern’s regulation will apply, if you have interns. Here is some general information:

Unpaid Intern Harassment: this bill prohibits harassment against unpaid interns if they do not otherwise qualify as employees with those protections already established. It is an amendment to the Fair Employment and Housing Act (FEHA), which is applicable to all employers with 5+ employees.

Anti-bullying training: Under current law (AB 1825), employers with 40+ employees must provide anti-harassment, discrimination and retaliation training to all supervisors every two years. The recently passed legislation (AB 2053) expands that training requirement to include information about “abusive conduct.” “Abusive conduct” means conduct of an employer or employee in the workplace, with malice, that a reasonable person would find hostile, offensive, and unrelated to an employer’s legitimate business interests. Abusive conduct may include repeated infliction of verbal abuse, such as the use of derogatory remarks, insults, and epithets, verbal or physical conduct that a reasonable person would find threatening, intimidating, or humiliating, or the gratuitous sabotage or undermining of a person’s work performance. A single act shall not constitute abusive conduct, unless especially severe and egregious. This new law kicks in January 1, 2015.

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Q: Can you please help me understand the recent change to New York’s Wage Theft law?

Back in 2011, the Wage Theft Prevention Act (WTPA) went into effect. Among other requirements, this law mandated that employers provide the Annual Pay Rate/Pay Day Notice to all employees at the time of hire as well as on or before February 1 of each subsequent year of employment. This has been a great frustration to employers since.

The recent change that you reference is basically the fact that the New York legislature finally eliminated this requirement. That is to say, employers are no longer required to provide the annual notice to em-ployees. They are still required to provide Annual Pay Rate/Pay Day Notice at the time hire.

A:

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