For Nonprofits - IRS Released Results of its Governance Study

IRS Governance Study—Preliminary Results

The Internal Revenue Service Exempt Organizations Division ("EO") completed its analysis of 1,300 checksheets from 501(c)(3) organizations, and has produced preliminary findings. According to EO, this analysis included only public charities that already had been selected for examination, so the results are not statistically representative of the overall 501(c)(3) population. Nonetheless, this analysis offers some insight into which governance practices might be useful indicators to the IRS of tax compliance.

The presence of the following factors was associated with compliance for the group that were reviewed:
 Have a written mission statement
 Always use comparability data when making compensation decisions
 Have controls in place to ensure the proper use of charitable assets
 Provide for Form 990 review by the entire board of directors before filing

So what is associated with non-compliance?  According to the IRS, having control of the organization concentrated in one individual, or in a small, select group of individuals.  That's a red flag and will invite greater scrutiny.  Read the entire IRS EO 2012 Annual Report and FY 2013 Work Plan here.

Bottom Line
A few factors indicate compliance to the IRS.  If these factors are pretty straightforward and if in place, further inquiries or examinations might be avoided.

If you have any questions, contact me or visit my website.

Yahoo Says No to Telecommuting!

On Friday, Yahoo informed its workforce that effective June 2013, all employees would have to report to the office to work.  No more work from home – its work from work at Yahoo from now on.  Initial reactions ranged from anger and outrage to confusion: how/why does a tech company that presumably knows how to utilize its own superior resources and technology no longer allow employees to utilize that technology to be productive from other locations?

According to the memo from Human Resources to the Yahoo workforce, the reason for this policy change is that in order “to become the absolute best place to work, communication and collaboration will be important, so we need to be working side-by-side . . . that is why it is critical that we are all present in our offices."  Read the memo here.

The reality is that at its core, and irrespective of industry, Yahoo is a company just like any company and struggles with issues of productivity and workforce management just like the millions of much smaller businesses in the US.  In general, employers are not legally required to allow employees to telecommute.  Therefore question for employers seems to be whether the ability to work from home leads to greater productivity or inhibits collaboration (which can affect productivity).

Keeping in mind that not all jobs lend themselves to telecommuting (neuro-surgeon leaps to mind), what are some advantages and disadvantages to employers for allowing employees to telecommute?

Advantages

• Higher productivity from employees due to fewer interruptions 
• Improved employee morale
• Improved retention and lower need to recruit and train new employees.
• Reduced need for actual square footage 
• Reduced relocation costs 

Disadvantages

• Need to have the appropriate technology (and related security) in place to handle telecommuters 
• Need to change methods of management 
• Managers have to find innovative ways to create a productive team environment that includes the physically absent employee(s)
• Tracking time worked, which is important an important FLSA issuer if the employee is non-exempt 

Bottom Line
Allowing employees to telecommute can affect your bottom line in direct and indirect ways.  If you're interested in providing a telecommuting option for your employees, you need to do a few things first:

• Decide which jobs are appropriate for telecommuting 
• Draft and communicate a telecommuting policy that outlines eligibility and terms of telecommuting in addition to performance expectations and how performance will be evaluated
• Be prepared to train supervisors on how to manage telecommuting employees

If you have any questions about telecommuting or other flexible work arrangements, contact me or visit my website.

Merrill Lynch Pays $12 Million to Settle OT Case

Merrill Lynch has agreed to settle with more than 5,000 broker assistants who filed a class action alleging that the brokerage firm failed to pay them overtime in violation of the Fair Labor Standards Act (FLSA).  The lawsuit alleged that the firm required associates, who assist brokers/financial advisors, to work more than 40 hours a week but failed to pay overtime.  Merrill Lynch did pay base salaries to these assistant and the assistants also earned commissions from their assigned brokers.

Merrill Lynch will create a $12 million fund to be used to pay wages, overtime, and attorney fees to the broker assistants.  The settlement is not final and must be approved by the court.

Bottom Line for Employers
This is another example of the costly consequence of failing to pay overtime.  The good news is that this liability can be avoided.  Here's how to start:

• Take time to review the job descriptions and exempt/non-exempt classification of each job category. 
• Make sure that the duties and responsibilities in the job description match the job functions that are being performed.
• Correct any classification errors

If you're not sure which job functions are exempt from overtime, check out the Department of Labor Fact Sheet here.  If you need assistance with any of these steps,  contact me or visit my website.

New FMLA Benefits For Military Effective March 8

On February 6, 2013, the Department of Labor ("DOL") issued its final regulations on Family and Medical Leave Act ("FMLA") relating to military leave.  These regulations will go into effect March 8, 2013.

According to the DOL, “providing job-protected leave for caregivers of covered veterans under the military caregiver provision is expected to increase family involvement in the veteran’s recovery, improve self-reliance and access to resources for caregivers, and reduce negative outcomes for covered veterans and their families.”

The Department of Labor estimates that as many as 381,000 employers and government agencies could be affected by new regulations.

Military Leave Under the FMLA

There are two categories of job-protected leave under the FMLA for eligible employees with military family members: (1) caregiver leave of up to 26 weeks for those employees who provide care for covered service members with a serious injury or illness; and (2) exigency leave of up to 12 weeks for qualifying exigencies arising out of the fact that a covered military member is on active duty or has been notified of an impending call or order to active duty in support of a contingency operation.  Click here to see a side-by-side comparison of of the current and final regulations.

Summary of Changes to the Military Family Leave
Effective March 8, 2013, FMLA regulations will:

• Expand exigency leave to include eligible employees with family members serving in the Regular Armed Forces, and further require that the military family member be deployed to a foreign country;
• Increase exigency leave for rest and recuperation from five days under previous regulations to a maximum of 15 days;
• Extend exigency leave to cover parental care;
• Expand the definition of serious injury or illness for caregiver leave to include pre-existing injuries or illnesses of current service members that were aggravated in the line of duty;
• Extend caregiver leave to include care for a covered veteran, defined as an individual who is undergoing medical treatment, recuperation or therapy for a serious injury or illness, and who was discharged or released under conditions other than dishonorable at any time during the five-year period prior to the first date the eligible employee takes FMLA leave to care for the covered veteran;
• Expand the definition of serious injury or illness of a covered veteran to include, among other things, a continuation of a serious injury or illness that was incurred or aggravated when the covered veteran was a member of the Armed Forces;
• Expand the list of authorized health care providers from whom an employee may obtain a certification to include those outside the military, and permit employees to request a second and third opinion from health care providers who are not affiliated with the military.

Bottom Line for Employers

• You have a few weeks to before these revisions take effect.  Use this time to become familiar with the revisions and their implications and to:
• Revise FMLA policies to reflect the expanded categories of caregiver and exigency leave reflected in the final regulations.
• Continue to train supervisors and human resource professionals on FMLA leave to insure that the requests are addressed and that necessary certification processes are followed.
• Replace your current FMLA posters with the revised poster (available on the DOL website). 

If you have any questions about these regulations or FMLA in general, contact me or visit my website.

Keep Cupid Under Control - Office Romance 911!

It's almost Valentine’s Day and love is in the air.  While co-workers might be struck by Cupid’s arrow, employers have to be mindful of the potential for those lovely unions to spark not just fireworks, but also possible harassment claims in the workplace.  Valentine’s Day may present an opportunity to re-educate employees about how to behave if they find themselves becoming involved in an office romance.  This should be part of the EEO/anti-harassment training that employees regularly receive.  Office hook-ups are rife with liability risks for employers.  Here’s how employers can manage them.

Be Proactive  – Continue to communicate workplace policies against sexual harassment.  These policies should also explain procedures for reporting a complaint and the consequences of prohibited behavior.

Problems can also arise when one employee’s affection is not returned. Employees should understand that it’s probably permissible to ask a co-worker on a date, but if the co-worker declines, leave him/her alone.  One person’s view of ardent courtship could be another person’s definition of stalking, i.e., harassment.  Training should address this scenario as well.

Be Aware of Relationships Between Supervisors and Subordinates - These relationships expose employers to great liability.  They can lead to resentment among co-workers who feel that the employee dating the manager gets favorable treatment.  If the relationship doesn’t end well, there may be claims from the subordinate that he or she was coerced or pressured into the relationship or otherwise sexually harassed.

Consider creating a policy that either prohibits these relationships or will modify reporting relationship between the supervisor and employee. If you can’t change the reporting structure, the employer should consider a “love contract” where the supervisor agrees not to be a part of any employment decisions affecting the subordinate.

Be Sensitive to What's Going on in Your Workplace – Even though you might not want to interfere with a personal issue, don’t hesitate to address that "personal issue" if it interferes with the professional environment.  If the effects of the relationship can be felt in the workplace, the relationship may no longer be a "personal issue." Even if the romance is going well, your employees should remain mindful to maintain standards of professional conduct at all times.

Bottom Line

You might be tempted to try to prevent potential problems arising from office romances by prohibiting office romances, but that won’t keep these relationships from happening.  You’ll just be stuck with having to enforce or ignore an unmanageable workplace policy. Also, you really don't want to be the Love Police!!  Remember these takeaways instead:

• Review your EEO/anti-harassment policies to insure that they are up to date.  
• Continue to train and educate your employees on appropriate workplace conduct and anti-harassment policies.  
• Make sure that you have informed your employees what to do if they or a co-worker feels harassed or if they have been subjected to or witnessed inappropriate behavior at work. 

Questions?? Contact me or visit my website.

Happy 20th Birthday FMLA!!

In 1993, President Bill Clinton signed the Family Medical Leave Act ("FMLA" or "the Act") into law. FMLA allows workers to take up to 12 weeks of unpaid leave to bond with a newborn, newly adopted or newly placed child; care for a seriously ill child, spouse or parent; or care for their own serious health condition without fear of losing their jobs.  With this legislation came the acknowledgement that the workforce was changing and therefore the needs of this changing workforce needed to be addressed.  In many ways, FMLA transformed the workplace and had a significant impact on families by helping millions of workers take job-protected leave to recuperate from a serious illness or take care of an ill family member, or give birth or adopt a new child.

Here are some key findings from the Department of Labor's 2012 FMLA Survey.

• Most Worksites Aren’t Covered By The FMLA -  but more than half of all employees are eligible. To be covered by the FMLA, a worksite must be part of a firm with at least 50 employees. Only about one in six worksites reports that it is covered by the FMLA (17%); another 30 percent are unsure. These uncovered and unsure worksites tend to be small; covered worksites tend to be larger.
• Not All Employees At Covered Worksites Are Eligible. To be eligible an employee must: (i) work for a firm with 50 employees within 75 miles of the worksite; (ii) have 12 months of tenure with this firm; and (iii) have worked 1,250 hours in the past year (about 24 hours per week). Only slightly more than half of all employees report meeting all three of these conditions to be eligible for the protections of the FMLA (59%).  
• Leave Is Not Uncommon.  Most leave taken is for the employee’s own illness (57%). Leave for pregnancy or a new child and illness of qualifying relative (spouse, child, or parent) is less common (22% and 19% respectively). Leave for other qualifying reasons, including military reasons is quite rare (2%).  Most leave is short. Nearly half of all leave events last 10 days or less (42%); less than a fifth (17%) last more than 60 days. 
• Most Employees Receive Some Pay While On Leave.  While the Act includes no requirement that employers provide any pay during the leave. Nevertheless, most employees receive some pay while on leave: 48 percent report receiving full pay and another 17 percent receive partial pay, usually, but not exclusively, through regular paid vacation leave, sick leave, or other “paid time off” hours. 
• Most Employers Report Little Negative Impact From The FMLA.   Most covered worksites that are large enough to have eligible employees (that is, 50 employees within 75 miles) report little difficulty complying with the FMLA (only 14% report “somewhat difficult”; only 1% report “very difficult; weighting by worksite). However, larger worksites are more likely to report difficulty complying, such that when weighting by employees, these figures increase to 3 percent for “very difficult” and 29 percent for “somewhat difficult”. In addition, 30 percent report that the cost of administering the FMLA is rising (50% when weighting by employees). Few worksites (less than 10 percent) perceive negative effects of complying with the FMLA on “employee productivity, absenteeism, turnover, career advancement, and morale...business profitability”. However, these negative reports are more common among large firms (29% when weighting by employees).

Want to Reduce Workplace Liability (And Be A Better Manager)? 5 Easy Steps

 EEOC released its year-end statistics for claims filed.  The bad news for employers is that claims have increased (surprise!!).  The good news is that avoiding claims and minimizing internal and external employee complaints is relatively simple and pretty straight-forward.  So let’s get started!  Here are my Fast Five:

1. Keep informed of relevant federal, state and local workplace laws and regulations (including regulations on harassment and retaliation, discrimination, and compensation); 
2. Maintain, update and distribute written policies on hiring, workplace behavior, time off, benefits, and termination;
3. Establish and communicate a confidential complaint procedure including designating an HR rep or other trained designee to assist with this procedure;
4. Conduct periodic training sessions for both managers and employees so that they are aware of workplace discrimination issues as well as conduct and language that might be considered inappropriate/unlawful;
5. Maintain up-to-date records for all employees, documenting performance evaluations, discipline, changes in compensation, attendance and other workplace events or changes.

This list is not exhaustive - but this fast five is a start.  If you're doing these things, you're in pretty good shape and have a solid foundation.  If you're doing some of the five - you're moving in the right direction, just keep going.  You'll notice that there are common threads with these steps - Document and Communicate.  In my experience, the best managers, not just the managers that avoid lawsuits, are managers that engage their workforce.  Communication is key: when employees know what is expected of them, they tend to work more effectively.  Having written policies, documents not only what the laws are, but also reinforces the communicated expectations.

If you have any questions or need help with any of these or other workplace issues, contact me or visit my website.