The Zenefits Saga Continues

It appears Zenefits woes are continuing—and if the predictions of one consultant are correct, they aren’t likely to end anytime soon.

Yesterday, Washington State Insurance Commissioner Mike Kreidler ordered Zenefits to “cease free distribution of its employee benefits software, noting the tactic violates Washington state insurance law against inducements,” his office’s statement reads.zenefitslogo

Washington is said to be the first state to take action against the company for violating inducement laws. Under an agreement with Kreidler, Zenefits can challenge the order within 90 days.

The state took issue with the fact that Zenefits required clients to designate it as its broker of record and then collected insurance commissions from the products it sold in order for them to access its free software.

“The inducement law in Washington is clear,” Kreidler said. “Everyone has to play by the same rules.”

Following the announcement, Zenefits’ General Counsel Josh Stein posted the following on the company’s website

“Today, Zenefits has reached a compromise agreement with the Washington Office of the Insurance Commissioner (OIC) on how Zenefits will price its services in Washington State.  Beginning January 1, at the order of OIC, Zenefits may no longer provide free software services in Washington. As a result, Zenefits will charge all Washington state customers $5 per employee per month for our core HR product.”

Stein went on to say …

“The Washington viewpoint is a decidedly minority view. Since its founding, Zenefits has had conversations with regulators about our business model, which includes some free HR apps. Many states have looked into the issue and concluded that free software from Zenefits is not a problem; in fact, it’s in the interest of consumers. Only one state other than Washington has disagreed.  Utah’s department of insurance tried to force Zenefits to raise prices for consumers, and Utah’s state legislature and governor quickly took action, passing a bill to clarify that its rebating statute should not be interpreted to prohibit innovative new business models that deliver value to consumers.”

Earlier today, I spoke with Rhonda Marcucci, partner and consultant in Gruppo Marcucci, a Chicago-based HR and benefits technology consulting firm.

Zenefits has created its own regulatory scrutiny reputation for the rest of its life, Marcucci told me. In this case, she said, “I don’t think it is driven so much by the brokers but by the insurance departments who are extremely angry about the licensing piece—so that now invites more scrutiny in other places. Brokers may have brought it to [the attention of insurance regulators], but the way I look at this, Zenefits is a regulatory penalty box—and they will be, I think, forever.”

Marcucci noted that every state, except for California, has some kind of no rebating or inducement laws for transactions. But that doesn’t necessarily mean that every employer is following the law.

At the end of day, she said, states typically base their decision on enforcing these laws by “who screams the loudest.”

As far as Zenefits is concerned, Marcucci said, it’s realistic to expect that other states might follow Washington’s lead, especially those states with difficult regulatory insurance environments such as New York.

The Gig Economy: Benefits and Drawbacks

More than one in 10 working Americans have joined the so-called gig economy, working as freelancers or independent contractors, according to a survey of 1,008 people from ReportLinker. A third of respondents said they would consider exiting the traditional workplace to work in the gig economy, while nearly half said they would be willing to consider doing so within the next three years.

Why would so many consider giving up the security and benefits of a full-time job for the uncertainties of gig work? Twenty eight percent of survey respondents cited “being your own boss,” while the ability to work flexible hours came in second. Nearly 40 percent of job seekers say they’d consider becoming an independent contractor, as would 59 percent of part-time workers and 33 percent of students, according to the survey.

The lack of benefits is a drawback for those working in the gig economy, however, with one in four of the respondents who work as freelancers citing the lack of retirement benefits as a downside. Indeed, the lack of traditional job benefits such as sick-leave pay and unemployment benefits has led the United Kingdom to appoint a team of four experts to review the impact of “disruptive” businesses such as Uber and Deliveroo on that nation’s workforce, reports the BBC. The panelists include Matthew Taylor, chief executive of the Royal Society for the Arts.

“One of the key issues for the review is ensuring that our system of employment rules are fit for the fast-changing world of work,” Taylor writes in a piece for the Guardian newspaper.

“As well as making specific recommendations, I hope the review will promote a national conversation and explore how we can all contribute to work that provides opportunity, fairness and dignity,” he told the BBC.

The lack of benefits typical in most gig economy jobs has resonated Stateside as well, of course, with a number of gig workers filing suit alleging that they’re actually employees, not independent contractors, and are thus eligible for benefits such as unemployment compensation. In response, companies that employ freelancers are pushing for bills that promote “portable” benefits that workers would be able to take from job to job. Online home-cleaning company Handy, for example, is circulating a draft bill in the New York State legislature that would establish guidelines for portable benefits for workers in that state’s gig-economy companies, reports Reuters. The bill would classify workers at companies choosing to participate in the program as independent contractors rather than employees under state law, as long as the companies’ dealings with their workers “meet certain criteria.”

Not all are pleased with the bill. Larry Engelstein, executive vice president of 32BJ Service Employees International Union, criticized it as offering workers too little.

“The amount of money that’s supposed to be put into these portable benefit funds seems so meager,” Engelstein told Reuters. “The actual benefit a worker is getting hardly warrants what the worker is giving up.”

A Bad-Behavior Hiring Predictor

Assessing job candidates for honesty and integrity is nothing new in hiring and HR. Employers have been concerned about who exactly is 103579486-executive-in-handcuffsworking for them — their moral fiber, if you will — long before the Bernie Madoff and Enron scandals rocked corporate America. A quick rundown of a search on HREOnline for “honesty” proves the topic has been around for quite some time.

But this release about a new tool that can help employers in the financial sector and their hiring managers predict whether a prospective hire might compromise a company’s reputation by engaging in fraud, deceit or some other type of errant behavior seemed new and different enough to catch my eye.

Veris Benchmarks created the tool and claims in its release that, by applying it to all job candidates, a company can “improve its hiring process in 15 minutes and help to protect its image and reputation.”

To develop the test, Veris sent its chief scientist, George Paajanen, an expert in the area of psychometrics, into the American prison system to build a tool that identifies the character traits manifested in currently incarcerated white-collar felons. David Shulman, Veris’ CEO and founder, and a Wall Street veteran who’s spent more than 30 years in the institutional-financial-services industry, describes his motivation behind creating the tool:

“Veris Benchmarks was really inspired by the Madoff scandal. After family members and friends were directly impacted by the corrupt scheme, I became consumed with trying to determine precisely what firms were doing to better understand those being hired to act in a fiduciary capacity.

“Executives now have the responsibility to take advantage of new methods to help protect their companies, their shareholders and, even more importantly, their customers. What are companies doing to better understand how their employee would respond when faced with situations of moral gray?”

Of course, fraud and theft are not isolated to the financial industry. Cheating and moral breakdowns happen everywhere. As the release states, “from embezzlement at the dentist’s office, to the PTA, to the retail space and beyond, employee theft amounts to billions of dollars of losses annually.”

As Shulman muses:

“Issues of impropriety have burdened industries and businesses for centuries. What if companies could detect potential malice and the likelihood of theft before the key players were ever hired?”

“What if,” indeed.

Of course, this is but one tool out there. My hunch is there will be more like this to come — tools specific to predicting bad behavior before it ever enters your doors.

Landmark Ruling on the Horizon?

A new landmark ruling affecting how employers view sexuality when considering applicants could soon be in the offing, according to Reuters.

The 7th U.S. Circuit Court of Appeals will hear arguments tomorrow in Hively v. Ivy Tech Community College, in which a former Ivy Tech adjunct professor, Kimberly Hively, claims the college refused to allow her to interview for a full-time job and ultimately did not renew her contract because she is a lesbian.

The case , Reuters notes, gives the 7th Circuit a historic opportunity to fix what three of its own judges have called “a jumble of inconsistent precedents” and a “confused hodge-podge of cases.” If the full appellate court sides with Hively and her lawyers from the Lambda Legal Defense and Education Fund, gays and lesbians will finally receive protection under federal law from workplace discrimination.

Lambda Legal lawyer Kenneth Upton told Reuters:

“Sexual orientation doesn’t have anything to do with employees’ ability to do their job,” Upton said. “It shouldn’t be a determiner of whether you should continue to be employed.”

The Hively case spotlights a weird legal paradox, according to the Reuters piece.

Title VII of the Civil Rights Act forbids employers from treating workers unequally on the basis of race, color, religion, sex or national origin. A plurality of justices on the U.S. Supreme Court said in 1989’s Price Waterhouse v. Hopkins that employers cannot discriminate against workers who don’t conform to sex stereotypes.

Yet as a three-judge panel at the 7th Circuit explained last summer in its since-vacated Hively opinion, every federal appellate court to have considered the question of whether employers can discriminate based on workers’ sexual orientation has concluded that Title VII’s bar on sex discrimination doesn’t give redress to gays and lesbians.

Upton added that three-judge panels at the 5th and 2nd Circuits are also facing the question, so ultimately, it will probably be up to the Supreme Court to provide an answer.

 

Undervaluing the Human Element

If you’ve heard it from one CHRO, you’ve heard it from a hundred: Our people are our greatest asset.

A new Korn Ferry Institute study suggests that most CEOs also appreciate the hard-working employees within the organizations they lead—just maybe not quite as much as they value technology.

More specifically, the recent survey saw 63 percent of 800 business leaders from multimillion-dollar global organizations saying that technology will be their greatest source of competitive advantage in five years. In addition, 67 percent said they believe technology will create greater future value than human capital will within their firms, and 44 percent said the prevalence of robotics, automation and artificial intelligence figure to make people “largely irrelevant in the future of work.”

As if that wasn’t hard enough for employees to hear, consider that people didn’t crack the top five in terms of assets that CEOs predict will be most critical half a decade from now. Technology ranked No. 1, followed by research and development, products/services, brand and real estate (offices, factories and land, for example.)

“CEOs have a significant blind spot in the way they perceive people,” according to the Korn Ferry Institute study, “tending to undervalue human capital.”

These “distorted perceptions” demonstrate the extent to which the individual is being pushed to the periphery of tomorrow’s workplace—and the danger in failing to recognize the potential of employees to generate value, the report continues.

In placing a greater emphasis on technology and tangible assets, chief executives “may be demonstrating, in a big way, what experts call tangibility bias. Facing uncertainty, they are putting a priority in their thinking, planning and execution on the tangible—what they can see, touch and measure.”

In the report, Korn Ferry Search Vice Chairman, CEO and Board Services Alan Guarino cautions against taking that approach while overlooking human capital.

“Leaders are placing a high emphasis on technical skills, technological prowess and the ability to drive innovation in their new senior recruits—elements critical for modern organizations,” says Guarino. “However, the financial reality proven by this study—that the value of people outstrips that of machines by a considerable distance—must give CEOs pause for thought.”

The ability to lead and manage culture—”so-called ‘soft skills,’ ” says Guarino—will become “critical factors of success for companies in the future of work, as they seek to maximize their value through their people.”

Who knows the organization’s people better than the HR executive? And, if what Guarino says is true, one could look at this study’s findings as a tremendous opportunity for the HR leader to help the CEO see the tremendous worth of human capital, and to help make the organization’s workers an irreplaceable, invaluable part of tomorrow’s workforce.

The EEOC Enforcement Agenda

Earlier this week, the Equal Employment Opportunity Commission issued its updated enforcement guidance on national origin discrimination.

(The EEOC also issued two resource documents to accompany the guidance: a Q & A publication on the guidance document and a small business fact sheet designed to illustrate the guidance’s chief points in plain language, according to the organization.)

The new guidance defines national origin discrimination as “discrimination because an individual (or his or her ancestors) is from a certain place or has the physical, cultural or linguistic characteristics of a particular national origin group.”

The documents also address Title VII’s prohibition on national origin discrimination as applied to a broad range of employment situations and highlight practices for employers to prevent discrimination, as well as discussing legal developments since 2002, when the EEOC issued the national origin discrimination compliance manual section that these new guidelines are intended to replace.

“EEOC is dedicated to advancing opportunity for all workers and ensuring freedom from discrimination based on ethnicity or country of origin,” says EEOC Chair Jenny R. Yang, in a statement.

“This guidance addresses important legal developments over the past 14 years on issues ranging from human trafficking to workplace harassment. The examples and promising practices included in the guidance will promote compliance with federal anti-discrimination laws and help employers and employees better understand their legal rights and responsibilities.”

This announcement comes just weeks after the EEOC unveiled its Strategic Enforcement Plan for fiscal years 2017 through 2021. One pillar of this plan is the agency’s expanding focus on protecting immigrant and migrant workers, such as those who are Muslim or Sikh or persons of Arab, Middle Eastern or South Asian descent, as well as those perceived to be members of these groups, as HRE’s Julie Cook-Ramirez noted earlier this month.

Of course, the EEOC’s new guidelines and its stated strategy for the next five years arrive almost exactly two months before the scheduled inauguration of President-Elect Donald Trump, who stands to significantly shake up the agency’s agenda.

In a recent blog post at www.law360.com, law professor Michael LeRoy explains how the incoming president could very well upend the EEOC’s enforcement agenda with regard to national origin (and other forms of) discrimination.

“Trump’s popularity derives in no small measure from people who are tired of ‘political correctedness,’ ” writes LeRoy, a professor in the School of Labor and Employment Relations and College of Law at the University of Illinois at Urbana-Champaign. “This concept is generally found in Equal Employment Opportunity Commission regulations that prohibit employers from creating a ‘hostile work environment.’ ”

That term applies to sexual harassment, but racial, religious and national origin harassment as well, adds LeRoy.

“A Trump EEOC could redline ‘hostile work environment,’ thereby signaling that no federal employment policy prohibits the type of degrading language that Trump has used against women, Mexican, Muslims and other groups.”

For that matter, President Trump will have the opportunity to appoint high-ranking personnel that could in turn impact staffing decisions throughout the EEOC, potentially shifting the agency’s enforcement priorities, as Seyfarth Shaw attorneys recently pointed out.

In addition to the possibility that President Trump could designate a new EEOC chair, the agency will see General Counsel David Lopez leave at the end of 2016.

“[Lopez’s] impending departure means that President Trump will have an early opportunity to appoint his successor,” Seyfarth attorneys wrote. “These leadership changes at the highest levels of the EEOC will undoubtedly impact the direction the agency takes in the future.”

A Trump administration could also signal budgetary constraints for the EEOC, which may alter the way the agency approaches enforcement of discrimination guidelines.

“Historically, the EEOC adapted by focusing its enforcement efforts on systemic litigation, meaning targeting high-impact cases that address policies or patterns or practices that have a broad impact on a region, industry or entire class of employees or job applicants,” Seyfarth attorneys note. “The theory was that large, high-profile cases, settlements and judgments would have a greater deterrent effect, and would therefore affect a larger number of workers and industries.”

Faced with the possibility of fewer resources and new personnel, however, the EEOC of the near future could be forced to find “new and creative ways to adapt its enforcement program (and its own political viability) to the new reality.”

 

Thanksgiving with Co-workers

In advance of the upcoming feast day known as Thanksgiving, CareerBuilder has released a survey detailing how employees will be spending the holiday.

“Employees appear to be growing closer to those at work, or find it more difficult to break away from the office for Thanksgiving,” according to the press release announcing the annual survey, which was conducted nationally online by Harris Poll from August 11 to September 7, 2016 and included more than 3,300 workers across industries and company sizes.

More than one in four workers (28 percent) say they celebrate Thanksgiving with co-workers either in or out of the office – a substantial increase over 20 percent in 2015 and 19 percent in 2014. (Houston, Dallas and Miami continue to lead other major cities in percentage of workers that spend the holiday with co-workers.)

And more than 1 in 5 employees (22 percent) have to work on Thanksgiving (on par with last year) according the survey.

Below are the demographic breakouts of the survey.

Workers Who Celebrate Thanksgiving with Co-workers By:
 
U.S. Markets with the Largest Economies:

  • Houston: 44 percent
  • Dallas: 36 percent
  • Miami: 35 percent
  • Atlanta: 32 percent
  • New York: 27 percent
  • Los Angeles: 26 percent
  • Washington DC: 22 percent
  • Chicago: 20 percent
  • Boston: 19 percent
  • Philadelphia: 18 percent

Region

  • South: 37 percent
  • West: 27 percent
  • Midwest: 23 percent
  • Northeast: 22 percent

Industry

  • Healthcare: 33 percent
  • Retail: 32 percent
  • Sales: 32 percent
  • Transportation: 30 percent
  • Manufacturing: 26 percent

Diverse Groups

  • Hispanic workers: 35 percent
  • LGBT workers: 35 percent
  • African American workers: 33 percent
  • Asian workers: 31 percent
  • Disabled workers: 27 percent

This compares to 29 percent of non-diverse workers (defined as white, straight, non-disabled male under 50) vs. 19 percent in 2015.

Age 

  • 18-24: 36 percent
  • 25-34: 35 percent
  • 35-44: 27 percent
  • 45-54: 25 percent
  • 55+: 20 percent

If, like many of my colleagues, your holiday weekend begins when today’s work day ends, then I wish you a happy and healthy holiday.

Trump Win Good for Biz Women??

Not one for post-election posting here, but this LinkedIn piece by Sallie Krawcheck caught my eye. As a woman watching and dv496065aweathering the campaign, and now the transition to a Trump presidency, I wanted to make sure as many women — and men — as possible saw it too.

Her premise that “Donald Trump as president of the United States could just be the best thing that has happened to professional women in a long time … huh? what?” is right in Krawcheck’s wheelhouse. She’s the CEO of Ellevest, a digital investment platform for women; chair of Ellevate Network, a global professional women’s network; and author of Own It: The Power of Women at Work, to be released in January. As she puts it,

“We’re awake now. That’s because it’s all out in the open: the Billy Bush conversation, the recent New York Times OpEd on “bro talk on Wall Street,” even the light sentence for Brock Turner.  And while as a mother and an aunt, I hate it, I hate it, I hate it that we haven’t made more progress for younger women, this does represent an odd form of forward motion: We can’t really deal with an issue until we fully understand the issue.”

It’s a compelling piece and worth the read, whatever your gender or persuasion, political or otherwise. This new Trump era, ushered in by stepped-up conversations about the treatment of women, comes with “some proof that we can’t rely on others to fight this battle for us, and so we must redouble our efforts,” Krawcheck says. “… I’m hearing from more and more women that we must ‘put on our big-girl pants’ and do this ourselves..”

And it’s not like women don’t have the resources, she adds. “[W]e control $5 trillion of investable assets, we direct 80 percent of consumer spending, we’re more than half of the workforce. We’ve got a lot of power.”

Krawcheck’s list of what to do to claim and use that power is impressively detailed, and long. Just some of her many suggestions — some we’ve heard and written about, some we haven’t — include mentoring and sponsoring other women, amplifying what other women say in meetings, pointing out to others when they interrupt other women or ignore them in meetings, pointing out when the words they use to compliment men (“aggressive” or “go-getter”) are used to put down women and refusing to work at the company that doesn’t “get it” on making the work environment one in which you can be successful.

She also bangs the political drum some, post-election, suggesting women start donating to female candidates whose views line up with theirs, and start running for office and encourage other women to run for office.

And the financial-independence drum:

“[D]oing all that we can to be in financial control feels more important today than it did [before the election]. It’s important that we break the old gender norms of ‘the man manages the money; I manage the household.’ That leaves us retiring with two-thirds the money of men … but living five-plus years longer than they do. …

“[P]lease get yourself a financial plan and invest.”

All politics and election furor aside, Krawcheck gave me some serious things to think about. If any of this gets you thinking about new approaches to help the women in your organization claim their power and succeed, then all the better.

‘Persuader’ Ruling Helps Employers

Barack Obama hasn’t yet turned the Oval Office over to Donald Trump, but already one of his administration’s signature pro-labor rules has been scrapped. Not by the new president, but by a federal court.

Gavel banging
Gavel banging

U.S. District Judge Sam Cummings  in Lubbock, Texas, on Nov. 16 made permanent an earlier temporary injunction halting the Department of  Labor’s controversial “persuader rule.” That rule, announced in April, expanded an existing requirement for employers  to disclose in government filings when they hire legal counsel to combat unionization drives. Under the new rule, disclosure was necessary even if those lawyers only provided advice on how companies should persuade workers to oppose representation. It was one of several pro-labor rules or standards set recently by Obama-administration agencies, including the DOL, EEOC and NLRB.

“It’s a good result,” says Jeff Londa, a Houston-based labor and employment attorney with Ogletree Deakins who led the legal effort to set aside the rule.  As a result, “We’re back where we were.”

Business groups that joined several states in seeking the order included the National Federation of Independent Business, whose members are generally small employers.

But larger companies also will benefit from Wednesday’s ruling, Londa says. Though more likely than small firms to  have their own attorneys on staff,  larger employers still “typically go to outside counsel” for training and advice on company policies  “when there’s a lot on the line” in a major union organizing campaign, Londa says.

The “persuader”rule had  stirred widespread objections not only from employers, but also from lawyers, who said it breached the attorney- client privilege.

The Labor Department had filed an appeal with the Fifth Circuit after Cummings issued a preliminary injunction on June 27. That appeal is now mooted b this week’s permanent injunction, Londa says. That means “it would clearly be on the shoulders of a new administration” to appeal again  — unlikely, given Trump’s position on the Obama administration’s labor regulations. And given the GOP’s strong showing in Senate and House races on Election Day, Congress is not likely to intervene to revive the “persuader” rule, he notes.

“The inclination of the new Congress would probably be against the new rule,” Londa says. “I’m not sure they would get involved.”

 

 

 

Don’t Forget the Personal Touch

The 2016 Recruiting Trends Conference and the inaugural Talent Acquisition Technology Conference, held concurrently this Tuesday and Wednesday at the Hilton Austin in Texas, featured an expo hall with more than 50 vendors, many of them displaying the latest tech tools for finding and recruiting the best people. However, as speaker Rodney Smoczyk told the attendees at the Talent Tech session “How McLane Co. Has Navigated Over a Century of Recruitment Challenges with Technology,” technology can’t make up for the importance of actual conversations between recruiters and job seekers.

“When I started out in recruiting, I got a newspaper and a phone book to find my candidates. We had to talk to people. Now, I have to get through 250 applicants just to find the 10 I want to talk to,” said Smoczyk, director of recruitment at Temple, Texas-based McLane Co., one of the largest wholesale food distribution companies in the United States.

“I consider technology to be a tool, not the answer,” he said. “We actually have to talk to people as recruiters. At some point, we lost that human factor. We’re just people recruiting people, and if we’re leaving it all to technology, then we can probably answer our own question when we ask why turnover is so high.”

Job candidates for positions at McLane Co. can speak to a live recruiter if they choose, he said.

Another important point is to “keep [the application process] simple,” he said. McLane Co. has approximately 24,000 employees, many of them truck drivers. Asking truck-driver candidates to fill out lengthy applications simply won’t work when most are spending 14 hours per day on the road. “If you ask truck drivers to spend a lot of time applying for a job, then they’re not going to apply, period,” said Smoczyk.

This is a critical factor in the midst of a driver shortage that has left trucking firms competing fiercely with each other over talent, he said. “Finding truck drivers is one of my biggest challenges.”

Smoczyk urged attendees to try applying for jobs at their own companies to experience for themselves what candidates often go through. “Feel how frustrating it is to have to fill out the same information over and over again if you want to apply to more than one position,” he said. “If you haven’t [done this], then you’re doing yourself a real disservice.”

At McLane, the company has tried to make applying for a job as easy as possible, said Smoczyk. Candidates don’t have to enter information more than once even if they’re applying for multiple positions. The company made its jobs site mobile-friendly after determining that 72 percent of truck-driver candidates apply via their smartphone. Smoczyk’s recruitment-marketing manager “drives our tech staff crazy insisting that no piece of information on our website be more than two clicks away,” he said.

Never forget the importance of using data, especially when determining where it makes sense to advertise job openings, said Smoczyk. “It’s up to you to help hiring managers determine where it makes sense to advertise and where it doesn’t, and if you don’t have the data then you’re just guessing.”