TriNet Ordered to Pay One Million in Back Pay Overtime

TriNet, a well-known publicly traded Professional Employer Organization (PEO) has agreed to pay $1 million in back overtime wages and damages to hundreds of employees for overtime violations.  The U.S. Department of Labor found that TriNet violated the Fair Labor Standards Act by failing to understand federal overtime laws and thereby paying hundreds of employees incorrectly.

TriNet Human Resources Corp. is headquartered in San Leandro and has offices nationwide and in Canada.  The specification filed by the Wage & Hour division of the Department of Labor found that TriNet failed to pay time and a half to 267 employees who worked more than forty hours per week.  TriNet is a publicly traded company reporting $2.7 billion in revenue last year.  The company provides human resources outsourcing under a co-employer arrangement for small to medium-sized businesses.  The damages in back wages amount to more than $13,000 per worker according to the Department of Labor.

In 2012, TriNet paid $326,000 in back wages and damages for similar violations according to the Department of Labor.

Failure to Understand Overtime Laws

Small employers rely on TriNet to maintain compliance as part of the HR outsourcing arrangement.  “TriNet falsely believed that raising an employee’s salary exempted them from receiving overtime pay.  Hopefully the company will now pay better attention to the rules going forward and pay its employees the wages they earned,” stated Susanna Blanco, the Department of Labor’s Wage & Hour Director in San Francisco.  Under the Fair Labor Standard Act, non-exempt employees must be paid at least the federal minimum wage of $7.25 per hour for all hours worked, plus time and a half their regular wages for hours worked beyond 40 hours per week (these limits are changing in December of 2016).  The Department of Labor also stated that employers are responsible for maintaining accurate time and payroll records and are prohibited from retaliating against workers who exercised their rights into the law.

Significance

HR compliance is getting more complicated every year.  There are differences in state minimum wage and overtime laws, as well as significant municipal differences.  Nevertheless, in an outsourcing relationship an employer relies on its professional partner to understand the laws and set up compliant systems.  The fact that there was a fundamental misunderstanding of federal law in the establishment of payroll and timekeeping systems is most troubling to find in such a large and ostensibly professional organization. We recommend carefully questioning any potential outsourcing organization on its compliance model.

Paul Finkle SPHR, CMC – Executive Vice President, Practice Leader

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

An Inaccurate Positive Employment Reference Recommendation Can Bite Back

An anesthesiologist was terminated from a medical practice for drug abuse.  Reference checks from a successor employer resulted in a positive recommendation referring to him as “an excellent anesthesiologist.”  When he was ultimately terminated by the next employer for severely injuring a patient, a lawsuit ensued based on negligent misrepresentation.  The jury awarded $8.2 million against the employer that provided a positive reference.

Background

The employee in question was an Anesthesiologist/Shareholder in a medical practice providing services to a local hospital.  An internal investigation revealed that the employee was abusing the drug “Demerol”.  The anesthesiologist was ultimately terminated by the partners.  The medical practice issued a termination letter which stated, “You have reported to work in an impaired physical, mental and emotional state.  Your impaired condition has prevented you from properly performing your duties and puts our patients at significant risk…”

The physician left the practice and was subsequently hired by another hospital.  As part of its background check, the subsequent employer confirmed that the anesthesiologist had practiced at the stated hospital and received letters from his former medical partners, one of which stated, “We recommend him highly.”

A short time following the onboarding, problems developed and one patient was severely injured while under the care of the Anesthesiologist.

An investigation ensued. Testimony subsequently revealed that the doctor had admitted to staff that he had been “diverting and using Demerol”.  Subsequent lawsuits by the injured patient were settled.

Next, the facility and its insurer, filed suit against the doctor’s former medical practice partners and the hospital, charging “intentional misrepresentation, negligent misrepresentation, strict responsibility misrepresentation and general negligence”.

Ultimately the U.S. Court of Appeals exonerated the hospital facility based on the fact that it simply provided “name, rank, serial number” and identified the period that the physician was employed or engaged at the facility.  The court found that the hospital had no affirmative duty to disclose anything further.  On the other hand, the former medical partners were found liable based on their misleading statements.  The court wrote, “The defendants owe to duty (to a subsequent employer) to avoid affirmative misrepresentation in the referral letters.”

Significance

It is easy to see why most HR professionals and attorneys recommend no reference at all for previous employees; or, name, rank and serial number.  There is clearly a distinction between disclosing basic job information and negligently misrepresenting the circumstances surrounding separation.  There are many shades of grey in between these two bookmarks, but the message is clear that if one is going to disclose any information about a former employee, a duty to disclose exists, particularly in cases where there is a risk to public or personal safety.  The courts have consistently found any employer who misrepresents fundamental facts in these cases as negligent.

If you have any questions regarding such issues we urge you to contact our office for legal counsel.

Paul Finkle SPHR, CMC – Executive Vice President, Practice Leader

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services

New EEOC Findings – Employers Should Revamp Harassment Training

This month the U.S. Equal Employment Opportunity Commission’s (EEOC’s) Select Task Force on the Study of Harassment in the Workplace reported findings from an 18-month study that were revealing, yet in many ways logical. At the heart of the study’s results was evidence that the past 30 years of corporate training has potentially had little, if any, effect on preventing workplace harassment. The Select Task Force (Task Force) was formed to assess the pervasiveness of harassment. Of 90,000 EEOC charges filed against private-sector employers, one-third were related to claims of harassment. The Task Force found that rather than company required or suggested training minimizing behaviors and actions that lead to harassment, training has more often focused on issues of liability.

Despite findings that suggest training minimally decreases harassment in the workplace, the Task Force emphasizes that training not be discarded. Instead, it is recommended that HR and employers understand that training alone is not a panacea, but rather should be part of a holistic approach to addressing harassing conduct.

Recommended Actions to Reducing Harassment

To ensure this holistic approach, it’s important to begin with essential buy-in of senior leaders. “For [training] to matter, employees have to feel their leaders are being authentic,” said EEOC Task Force Co-Chair Chai R. Feldblum. “They have to believe that leaders mean what they say” when they claim to want to stop harassment.

Also key to removing harassment in the workplace is addressing culture and values which promote a culture of respect and reverence. “We’re trying to change behaviors,” Feldblum said. “The best way to do that is to create a culture where it’s just not cool to sexually harass someone or racially harass someone.”

As well, employers should examine customized and in-person training as opposed to online harassment prevention training which has become too common. Employees may likely be desensitized to the impersonal online training session and to ensure the learning aligns with company culture, it is important that the trainings be live and tailored by someone who understands the workplace and company values and norms.

The Select Task Force also recommends two new forms of training intended to cultivate harassment-free workplaces:

  1. The first is a skills-based training called “workplace civility training”. This form of training would focus on teaching employees how to be respectful and how to avoid harassment on the basis of protected characteristics.
  2. The second is a training the Task Force calls “bystander intervention training,” in which employees are taught to recognize and report problematic behavior among others when they see it. According to EEOC Commissioner Feldblum, “Bystander intervention training can create a sense of collective responsibility on the part of workers and empower them to be engaged bystanders in preventing harassment.

The intent of both suggested trainings is to increase learning and awareness of beliefs and behaviors that lead to harassment, beyond the threat of liability.

The EEOC Task Force report also includes detailed recommendations for harassment prevention, including a chart of risk factors that may permit harassment to occur; effective policies and procedures to reduce and eliminate harassment; recommendations for future research and funding; and targeted outreach. In addition, it offers a toolkit of compliance assistance measures for employers and other stakeholders.

Significance

As companies reflect on these recent study results, employers might assess the effectiveness of current training and the realities of company culture that may lead to behaviors which could result in harassment. Employers are encouraged to work with ABD SharedHR to assist in the design and development of more comprehensive trainings that will build on these suggested factors.

Brandi Gordon, SPHR – Senior HR Consultant

Disclaimer: Some information contained herein has been abridged from numerous sources and may be protected by various copyright laws. Such information should not be construed as consulting or legal advice. Please contact our office for specific advice and/or referrals.

Bay Area Human Resources Services