Employers' Checklist

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Employers face new hurdles each day. Here are “Top Ten” thoughts on current issues facing employers, and how to deal with them.

1. Get a social media policy. Do not even think about hacking into a worker’s Facebook account. And, if someone comes to you complaining about inappropriate content on a worker’s website, ask for a copy and respond accordingly.

2. Install a firewall when searching the Internet for employee candidates. Employers review social networking sites for information on potential hires and use that information in making hiring decisions. When you browse a social website, there is a strong risk you will be exposed to too much information. Imagine your search came up with the candidate’s Facebook page, which reveals the candidate’s religion, sexual orientation or a disability. The Equal Employment Opportunity Commission has taken the position that an employer who knows some fact about an individual that implicates a protected status may be presumed to have considered that fact in the employment decision. This could result in a discrimination lawsuit. So, have a plan on who conducts your Internet searches and how the online information is used. Have someone other than the person making the hiring decision perform the Internet search and screen results so that only relevant information is considered.

3. Prevent wage/hour lawsuits. The Department of Labor handled 32,000 wage and hour complaints last year, up 33 percent from 2009. There is also an increased focus on independent contractor misclassifications. Review your independent contractor relationships before the government does.

4. Get the new Family Medical Leave Act poster. The government has form WH380/381. Put these up and remove the old ones.

5. The NLRB and non-union businesses. Even if you are a non-union shop, the National Labor Relations Board (NLRB) will sue you over company policies banning employees from talking about pay or benefits—a “protected concerted activity.”

6. Performance reviews: Grade inflation hurts. Accurate performance reviews will “save your bacon” in a lawsuit, but unduly rosy reviews of average workers can hurt. Have Human Resources review performance reviews.

7. Record-keeping and “litigation holds.” If you think litigation is coming, make sure all standard document destruction policies are suspended. Lost or “unsaved” documents can lead to a presumption against you. Work with your IT department to construct a process to make sure documents are preserved.

8. What to do with Charlie Sheen. We all have seen the implosion of Charlie Sheen. What if you had an employee who engaged in poor or illegal behavior that could embarrass your organization? How should you deal with it? First, work on damage control. Do not spend lots of effort protecting the bad employee, because this links you to the employee’s bad acts. Second, eliminate the employee’s visibility and access to the company’s top people. Consider a paid leave with clear rules about acceptable behavior, setting out clear consequences for violation of the rules. Third, assess the chances for rehabilitating the employee’s reputation and weigh the value of the employee with the effort required to rehabilitate him or her. In the end, if you are working harder at the employee’s success than the success of the company, it might be time to cut and run.

9. Watch out for retaliation. Retaliation cases are the most common type of lawsuit now, and the most expensive. “Getting even” will cost you. Consider independent internal reviews of employment decisions affecting complaining employees.

10. Install a conflict resolution plan. Companies are avoiding lawsuits by having an established conflict resolution plan that gives the employee an opportunity to vent. Consider establishing one in your workplace.

D. Michael Reilly, a shareholder at Lane Powell and director of the firm’s Labor and Employment and Employee Benefits Practice Group, represents small and large employers in all facets of employment-related issues and litigation. He can be reached at reillym@lanepowell.com or 206.223.7051.

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Legal Briefs: Women in the C-Suite

Legal Briefs: Women in the C-Suite

It's good business.
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The underrepresentation of women on boards of directors and in the C-suite is astounding in a world driven by analytics aimed at increasing the bottom line. Of the nearly 22,000 companies examined in a 2014 study conducted by the Peterson Institute for International Economics, approximately 60 percent had no female board members, more than half had no women holding executive-level positions and fewer than 5 percent had a female CEO. Aside from the imbalance posed by these statistics, a growing body of literature posits that the business community has yet to fully embrace the financial impact associated with increased female representation within the highest levels of company management.

One crucial metric — the proportion of women represented in upper-level management, particularly with regard to representation in the C-suite — is positively correlated with improved financial performance. The Peterson study suggests that once a company reaches a minimum threshold of female representation in executive-level management positions — at least 30 percent of all such positions — that company could expect an increase of 1 percent to net margin compared to companies with no female representation. While that number appears small, given that companies in the data set produced an average profit margin of 6.4 percent, a 1 percent increase in net margin results in a 15 percent jump in profitability.

First Round Capital, a national venture capital fund, found that of its 300 series seed investments made between 2005 and 2015, portfolio companies with at least one female founder performed 63 percent better than their all-male counterparts when measuring the value at exit against First Round’s initial investment. The Diana Project, an analysis conducted by Babson College and Ernst & Young, found that companies with female entrepreneurs on the executive team experience higher valuations than those lacking such representation — 64 percent higher at the first round of funding and 49 percent higher at the last round of funding.

Given the above, the unanswered question is why is female representation at the highest levels of company management positively correlated with enhanced financial performance? One theory rests in data suggesting that men and women — whether due to experiential or genetic differences — approach and resolve certain business issues in different ways. Men, for example, are more prone to risk than women. According to the Ratio Institute, companies run by male executives have been shown to take on greater amounts of debt and are more likely to undertake risky acquisitions as compared to their female-led counterparts.

These varying approaches to the resolution of crucial issues facing any board or executive team highlight the value proposition of executive-level management represented by female leadership. The purpose of a board of directors is to collectively oversee and direct the most crucial decisions facing a company.

Highly functioning boards and executive teams are those that take the time and effort to analyze critical issues from every conceivable angle — angles which, according to the above, are analyzed differently by women and men. 

To be clear, a shift in hiring practices will not, in itself, result in any guaranteed financial return on a company by company basis. What has been, and will continue to be, a crucial indicator of success is company leadership’s ability to hire the best and brightest to manage the business’ affairs. Bluntly speaking, it is our belief that the best and brightest are often women, and companies paving the way to equal gender representation are currently reaping the rewards of their forward-looking hiring practices.