ARE YOU READY FOR YEAR-END PAY REVIEWS?, PART 3

In Part 1, we looked at:

  • Pay increase projection for 2018 year-end/2019
  • Pay increase guidelines by performance level
  • Reviewing internal equity
  • The role of the market place

In Part 2, we addressed the importance of pay data related to the market place.

Here is Part 3, we’ll consider the importance of communications with employees about pay.

EMPLOYEE PERCEPTIONS

A recent survey revealed some interesting and problematic findings about employees’ perception about their pay.  Specifically, it focused on how employees perceived how they are paid compared to the market versus how their actual pay compares with market pay.

  • The percentages in red show the percentage of employees whose perception about their pay in comparison to the market is correct.
EMPLOYEE ACTUAL

PAY

% BELIEF PAID ABOVE MARKET % BELIEF PAID

AT MARKET

% PAID

BELOW MARKET

Paid Above Market 21% 44% 35%
Paid At Market 6% 30% 64%
Paid Below Market 3% 14% 83%

Only those employees paid below the market rate had a correct perception (83%)
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  • Of those paid above market, only 21% had the correct perception.
  • Of those paid at market, the correct perception was held by only 30%.

 

  • As a whole, companies are doing an extremely ineffective job of helping employees to correctly understand how their pay stacks up against the market place.
  • Making it even more troublesome, it that those employees companies are paying above market levels have the worse correct awareness!

CAUSES

From Trinity’s perspective, there are several factors contributing to this problem.

  • Many companies are either not letting employees know the basis for how individual pay is determined or are inadequately doing so.
  • Most companies are extremely hesitant to share with employees market data – even when they paying employees at or above what the market calls for.
  • If your company’s pay is at or above the market, why would you not want to let employees see that by sharing data? It’s clear from the survey that employees are filling in the blanks themselves – and filling in lower dollars than the actual ones.
  • If your pay is below the market, you should want employees to understand why that it the case. Or perhaps, evaluate the negative impact (including low morale, unwanted turnover and even potential unionization) of  paying lower than like companies versus the financial impact of getting pay to become competitive

 ACTIONS FOR YOU TO CONSIDER

1) Communicate your company’s pay philosophy to all employees.

  • We at Trinity have some strong views as to the “right” and “wrong” ways of communicating this information. We’ll freely discuss them with you so:

2) Educate your employees as to how the company determines individual pay.

3) Share market data with employees – “seeing is believing”

HOW TRINITY CAN HELP:

  • Trinity’s Team has a high level of expertise in all aspects of compensation design and management, as well as performance management systems.

For more information about trinity, INCLUDING OUR SERVICES:

You have HR challenges…Trinity has solutions!

Posted in Compensation & Performance Management

ARE YOU READY FOR YEAR-END PAY REVIEWS?, PART 2

In Part 1, we looked at:

  • Pay increase projection for 2018 year-end/2019
  • Pay increase guidelines by performance level
  • Reviewing internal equity
  • The role of the market place

Here in part 2, we’ll further unpack the importance of pay data related to the market place.

  • The most important question that has to be answered is this one:  Is your pay on target?
  • Here’s the question in non-word form for those who prefer a picture or image.

The only way to answer this critical question with certainty is for your organization to periodically conduct a market compensation analysis that examines both base pay and variable pay.

  • Without such an analysis you could be either underpaying or overpaying – both of which have unintended consequences.
  • Losing a highly valued employee because of her/him being underpaid is such an example.

Four Features a Market Compensation Study Should Have

1)     Uses data from relevant organizations, which means those:

  • Of comparable size (as measured by revenue and/or number of employees)
  • Within your industry
  • In the geographical area in which you would recruit for a position – locally, regionally or nationally

2)     Data addresses both base pay and incentive pay in order to provide total cash compensation

3)     Creates a position match by taking into account factors such as below, not just by a position’s title that can vary greatly from company to company:

  • Duties and responsibilities
  • Educational level
  • Experience requirements
  • Key skills and competencies

4)     Provides specific recommendations which take into account pertinent position holder factors, such as:

  • Qualifications in comparison to the position’s requirements
  • Level of performance
  • Special value to your organization of certain positions

SPECIAL MARKET PAY ADJUSTMENTS

The Market Study will identify positions and incumbents within positions who are appreciably below your organization’s target relative to the market place.

  • For example, you may have set the 50%ile of the market as your pay target.

The Study’s recommendations give you an approach or approach options on how to address these instances.

Points To Keep in Mind

1)     A Market Analysis can be conducted internally if an organization has:
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  • An HR staff with specific expertise in compensation and the availability of the time to accomplish it and
  • Access to relevant market data or the ability to buy such data, with data to include both base pay and incentive compensation
    • market data’s cost can be prohibitive

2)     Most often, unless the organization of a substantial size, it either:

  • Disregards the value of a Market Study
    or
  • Hires an HR consulting firm to conduct the Study on its behalf since the consultant has:
    • Expertise in compensation matters
    • Made the investment to acquire market data specifically for the purpose of conducting Market Studies of total cash compensation

True or false?

1)     To be truly effective, a market compensation study has to include all or almost all of the positions within your organization.

FALSE!

  • A wisely designed study identifies certain benchmark positions that are used to “fill in the blanks” for positions not included in the study.
  • By proper design, the study’s time and expense can be substantially reduced – while still being an extremely valuable and meaningful compensation tool.

2)     A small company can derive benefit from a Market Analysis showing where its pay stands in comparison to other companies competing for the same pool of talent.

TRUE!

  • Organizations of all sizes can benefit from seeing where they are underpaying and overpaying and using that knowledge to be compensation decisions.
  • Trinity’s Team has done Market Analysis for organizations ranging from less than 20 employees to those with thousands of employees, and from those with annual revenue ranging from several million to billion+ size.

3)     The data used should not be just base pay, but also variable pay so as to reflect total cash compensation for positions being compared to the market.

TRUE!

  • Reviewing only base pay provides an incomplete picture and can lead to incorrect conclusions, such as a false sense of confidence in your pay’s competitiveness.

HOW TRINITY CAN HELP:

  • Trinity’s Team has a high level of expertise in all aspects of compensation design and management, as well as performance management systems.

For more information:

  • E-mail Trinity at info@TrintyHR.net
  • Visit our website at www.TrinityHR.net
  • Call us at 856.905.1762 or toll free at 877.228.6310

You have HR challenges…Trinity has solutions!

Posted in Compensation & Performance Management

ARE YOU READY FOR YEAR-END PAY REVIEWS?, PART 1

PAY INCREASE PROJECTIONS

Despite the labor shortage caused by an umployment rate of under 4%, U.S. companies are projecting 2018 year-end/2019 pay increases to remain at about the same level they’ve been since 2014.

  • The overall average points to pay increases being at an average of 3.0%, with various highly reputable sources showing them being as low as 2.8% and as high at 3.2%.
  • This represents an uptick of only 0.1% from the prior year.
  • 3% of companies plan on giving no pay increases—this is the lowest percentage since the 2008 recession.

PAY INCREASE DIFFERENTIATIONS

1)     The pay increase average does not vary by employee classification. It’s the same for employees regardless of their being:

  • Non-exempt (“hourly”) employees
  • Exempt (“salaried”) professionals
  • Managers
  • Executives
  • 2)     Average pay increases do vary somewhat (+/- 0.3% to 0.5%) by industry.  Examples include:

      Higher than average:

  • Construction
  • Insurance

     Lower than average:

  • Education
  • Transportation

3)     The most significant difference in the size of an employee’s pay increase is clearly based on individual performance.

  • Pay increases tied to individual performance (commonly referred to as “pay for performance” or “merit increases”) remain the cornerstone of compensation plans.

SETTING PAY INCREASE GUIDELINES BY PERFORMANCE LEVEL

As just stated, the biggest difference in the size of pay increases to be seen in the upcoming round of pay reviews.  With this in mind, it remains very important for organizations to be able to correctly differentiate individual performance levels.

  • This fact makes having a sound performance management system in place, which includes:
    • A rating scale (by far, the easiest to create)
    • Objectives with measurable results/outcomes
    • A set of competencies

Below is an example of of a very simplistic performance – increase matrix:

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Employee Performance level Pay Increase %
Significantly Exceeds Requirements 5.0% – 6.0%
Exceeds Requirements 4.0% – 5.0%
Meets Requirements 2.0% – 3.0%
Partially Meets Requirements 1.5% – 2.0%
Does Not Meet Requirements 0%

NOTE: This very simplistic matrix example is not representative of what Trinity would recommend to a client.  An actual Trinity matrix would take into account other client specific considerations for establishing differences in pay increases.

INTERNAL EQUITY

The pay review process is a great time to review the internal fairness of employee pay.  Fairness does not always mean equal pay for employees holding the same position.  On the surface, this statement may seem to be “politically incorrect”; however, it is “pay correct” when pay differences are due to one or more of the following bona fide factors:

1)     Performance

2)     Education/Training*

3)     Experience*

4)     Special Skills/Compentencies*

5)     Years of Service*

*Provided the factor causes or contributes meaningfully to better performance by the employee

Certainly, pay differences based on factors such as age, gender and other protected classes of employees are not only unlawful, but also are misguided.

  • They are wrong both for the employee as an individual and for the organization as a whole.

THE ROLE OF THE MARKET PLACE

To be truly effective, the pay review process should take into account what’s going on in the labor market.  The market place provides an important perspective as to the monetary value other organizations place on various positions.

  • Clearly, the value can vary from minor to sizable between industries for the same positions.

In addition, when demand exceeds supply, the market place acts by larger increases being given to those positions.

  • Commonly, the greater the demand to supply gap, the greater is the monetary value (i.e., pay) assigned to such positions.

HOW TRINITY CAN HELP:

  • Trinity’s Team has a high level of expertise in all aspects of compensation design and management, as well as performance management systems.

For more information:

You have HR challenges…Trinity has solutions!

 

Posted in Compensation & Performance Management

Protecting Your Organization from Sexual Harassment Charges & Their Consequences

PROTECTING YOUR ORGANIZATION FROM SEXUAL HARASSMENT CHARGES & THEIR CONSEQUENCES”  

The past year’s news has been filled with sexual harassment headlines, with 200+ Hollywood celebrities, high profile CEOs & politicians being accused.  This has resulted in:

  • The careers of successful celebrities coming to a screeching end & even imprisonment of “America’s Dad”
  • CEOs being fired & their corporations paying out millions in settlements
  • Politicians resigning in disgrace

The sexual harassment cases that don’t make the headlines are those involving a supervisor or manager harassing a subordinate or a non-supervisory employer harassing a co-worker. Yet it is these non-headline cases that make up the vast majority of the more than 12,000 allegations of sexual harassment in the past year—a number that is increasing dramatically.

These instances can have serious (& even potentially fatal) consequences for your organization. These include:

✔  Distraction from Your Mission
✔  Energy & Emotion Drain
✔  Legal Costs
✔  Damage to Your Company’s Reputation & Image

  • Adversely affecting current/potential customers & employment recruiting

✔  Poorer Performance
✔  Lower Morale
✔  Higher Absenteeism
✔  Higher Turnover
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Many experts agree on four actions by employers should take to reduce the potential for sexual harassment and other forms of harassment to occur in the workplace. These include:

  1. Establishing the strong anti-harassment policy
  2. Effectively communicating the organization’s policy & the consequences of a violation
  3. employees  through comprehensive training
    • Especially those in positions of authority as employers are generally presumed to know of unlawful behavior by such individuals.
  4. Enforcing the policy in a consistent manner—regardless of the violator’s “star power”

Another advantage of taking these steps is that they may help lessen the severity of the legal &/or other consequences resulting from an Equal Employment Opportunity charge or from a lawsuit.

For more information ABOUT HOW TRINITY CAN HELP YOU:

You have HR questions…Trinity has answers!

Posted in HR Legal & Compliance

RECRUITING AND HIRING BETTER, PART 2

In Part 1, we talked about each of the five steps in the typical recruitment process. In Part 2, we’ll be talking about the selection step in the process.

It’s important to be successful in finding candidates who are “interview worthy”. However, unless an organization is really good at selecting the “best” candidate, the hiring process fails to achieve its mission:

  • Provide the culturally compatible talent the organization needs to remain successful or to become successful.

From Trinity’s experience, an organization’s candidate interview & selection process too often has one or more of the following flaws:

1)   Over-reliance on resumes

  • A resume should be viewed as a candidate’s “marketing brochure”, & therefore should not be over-valued in the selection process.
  • It’s an important source of education, experience, competencies, accomplishments, etc., but each of these needs to be deeply delved into during the interview process.
    • It takes a really talented, very experienced interviewer to do so in a highly effective manner.

2)   Too much weight on how well the candidate “performs” during the interview

  • Approach the interview as the candidate’s “job audition”.
  • There can often be a big difference in terms of how well a candidate interviews & how well she/he performs in the job.

3)   Dependence on one opinion

  • Interviewers vary in their skill at interviewing, and can have built-in, subconscious biases (either positive or negative ones).
  • These may color their assessment of a candidate.

4)   Absence of a formal tool to assess the candidate in terms of:

  • Behavioral style, including compatibility with the position & the company
  • Skills, competencies & attributes needed to be successful in the role

5)   Lack on an appropriate method for an evaluation of candidate
This would include leading and purchase generic cialis try content open ended statements that could get the individual to be more trusting in what the hypnotherapist said.

  • With this, not only can your evaluation method be improved, but this set of evaluations can be useful to defend a selection decision.

MANAGEMENT TIPS

Following the 5 tips below can make the difference between a great selection and one that you’ll come to regret:

1)     Ensure those involved in the interview & selection process know/have been trained on:

  • What to look for in a resume beyond what is written
  • The do’s & don’ts of lawful, effective interviews
  • How to really probe during the interview

2)   Have candidates interviewed by more than one interviewer, including someone outside the hiring function (in addition to an HR representative)

3)     Utilize one or more assessment tools in order to arm you with additional insights & information about the candidate

4)   Have a standardized evaluation form that each interviewer completes for each candidate

5)     Hold a selection discussion with all of the internal participants/stakeholders

  • This does not have to be lengthy if done properly.

For more information about how trinity can help you IMPROVE YOUR RECRUITING AND HIRING:

You have HR challenges…Trinity has solutions

 

Posted in Talent Acquisition, Executive Search, Employment & Employee Retention

EMPLOYEE SATISFACTION REPORT

A just issued report by the Conference Board (a highly respected business research organization) asked employees to rate their satisfaction with 23 different aspects of their employment.

  • Only 51% of respondents expressed overall satisfaction
ISSUE SATISFACTION LEVEL
Pay 43%
Retirement Benefits 43%
Healthcare benefits 44%
Sick Leave 49%
Vacation Time 54%

However, there were multiple matters that are not financial that were rated even lower in satisfaction than pay & benefits:

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ISSUE SATISFACTION LEVEL
Promotion Practices 26%
Training/Development 33%
Performance Review Process 33%
Recognition 37%
Communications 38%

Here’s a quote from Rebecca Ray (Ph.D.), the report’s author:

“To attract and retain the most productive employees in today’s labor market, companies must make a bigger commitment to addressing the factors within their control. Among other steps, that entails addressing the job components with which employees are least satisfied, including job training, the performance review process, and promotion policy. As workers continue to voluntarily leave their jobs at a record rate, the need to prioritize components relating to their professional development could not come at a more pressing time.”

These report’s results, along with Dr. Ray’s comments, provide some important insights, which in turn we as employers can turn into actions in order to improve employee satisfaction – with no or minimal additional expenses.  By improving employee job satisfaction, some examples of what companies can derive from doing so are shown below:

  • Higher morale
  • Lower turnover
  • Greater attractiveness to candidates
  • Increased productivity
  • Reduced abstenteeism & presenteeism

ALL OF WHICH = GREATER PROFITABILLITY

TRINITY HAS A VARIETY OF WAYS TO HELP YOU TO IMPROVE YOUR ORGANIZATION’S PERFORMANCE THROUGH IMPROVED EMPLOYEE SATISFACTION.  TO FIND OUT MORE:

You have HR opportunities…Trinity has paths forward!

Posted in HR Management

RECRUITING AND HIRING BETTER, PART 1

 

Finding and hiring the right talent is time consuming and expensive.  This is especially true when you’re hiring someone into a supervisory, management or executive role.  Yet this is a vital activity for the success of all organizations—regardless of size, industry or other factor.

  • This is especially true in today’s job market where jobs are more plentiful that talented individuals.

That’s why it’s so important for an organization to be highly proficient in:

  • Finding great candidates
  • Making really smart hiring decisions

Step #1: Recruiting

Finding candidates who have the appropriate skills and experience, while also being culturally compatible requires:

  • Knowing where and how to look
    • This entails a specialized set of skills that not all internal HR staff members possess.
    • Too often the approach is to post a position on one or more job boards in hopes that: 1) some viable candidate resumes are received and 2) the number of resumes from individuals who have absolutely none of the stated requirements in less than 100.
    • What this approach fails to do is to tap into the pool of talented individuals who are not actively looking for a new opportunity, but are open to the right one.  These represent hidden treasure that needs to be unearthed!

STEP #2: SCREENING AND INTERVIEWING

  • Identifying individuals culled from the pool of candidates and determined to be “interview worthy”
    • Based on a review of resumes and phone screening
  • In-depth interviews—by more than one person in addition to an HR representative
    • Getting well beyond the superficial interview questions that candidates report they are typically asked by hiring managers and even many HR professionals
    • Posing second and third level questions that probe beyond an initial response so as to gain important insights
  • Determining which candidates will proceed to a second round of interviews
    • Using standardized candidate evaluations by the interviewers
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STEP #3: SELECTING THE BEST CANDIDATE

Trinity’s Team has been involved in many hundreds of talent searches. Experience shows that many hiring decision makers rely far too much on three bases for making their choice:

1.      A Candidate’s Resume

  • A resume is a candidate’s “marketing brochure”, and not a completely objective portrayal of her/his experiences and accomplishments.
  • In addition, exaggeration (I’m being polite) and omissions are both too common.
  • Research reveals that nearly 50% of all resumes contain some type and level of false information.  This oftentimes includes title inflation, embellishing achievements and extending employment dates to reduce or eliminate gaps in employment.

2.   Interview Performance

  • Hiring managers often place too much emphasis on how well candidates interview.
  • Having conducted thousands of interviews, we at Trinity know that some people simply interview better than others.
  • There is a much lower positive correlation between how well a candidate interviews and how well that candidate performs once hired than most hiring decision makers realize.

➡ Have you ever seen a job description or a set of position specifications that lists   “must be highly skilled at being interviewed”?

3.   Short-sightedness

  • Anybody is better than nobody mentality.
  • Don’t be so naive as to think this isn’t what sometimes happens.

In Part 2, we’ll discuss how to improve your “batting average” in making the right hiring choices.

For more information:

  • E mail Trinity at info@TrintyHR.net
  • Visit our website at www.TrinityHR.net
  • Call us at 856.905.1762 or Toll Free at 1.877.228.6310

You have HR challenges…Trinity has solutions

 

Posted in Talent Acquisition, Executive Search, Employment & Employee Retention

THE IMPORTANCE OF AN EMPLOYEE HANDBOOK

What is an Employee Handbook?

Simply stated, an employee handbook is a document that contains important information about your expectations from your employees and what your employees can expect from your organization.

  • If you don’t have one, it may seem like a daunting task or an action that does not have a direct payback.
  • If that’s your initial reaction, please take 60 seconds to continue reading—doing so hopefully will enlighten you to reach a different conclusion.

Reasons To Have an Employee Handbook

1. Introduces and reinforces your culture, mission and values

  • Their introduction to new employees to your provides a basic level of understanding and serves to help to foster a sense of pride and belonging.
    • ü  Studies show this will help new employees become more productive in a shorter period of time.
  • For existing employees, it serves to reinforce these important subjects.

2. Communicates to employees what is expected of them

  • A well-written handbook provides employees with a clear understanding of what is expected of them in terms of behavior, performance, and other important aspects of being a valuable member of your organization.

3. Educates employees about what they can expect from management and leadership

  • It provides important information about the organization’s approach to the employee – employer relationships.
  • It sets the stage for fostering a positive, professional and production work environment. foster healthy management-employee relationships.
  • It outlines what is in place to ensure this type of environment is created and maintained, including what employees should do if they have concerns or issues that require being addressed.

4. Helps ensure key organization policies and processes are clearly and consistently communicated

  • We all remember the grammar school exercise that demonstrated how easily even a very simple message or fact can be drastically changed as it  is “whispered down the lane”.
  • This same effect is true of communications within organizations—and with real consequences.

5. Showcases the rewards (in the form of pay and benefits) you provide to employees

  • It explains your philosophy related to pay and benefits, as well as helping to build employees understanding of and appreciation for these.

6. Helps to demonstrate compliance with federal, state and local laws and regulations

  • To both employees and government enforcement agencies.

7. Helps defend against employee claims

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  • Unfortunately, it today’s business climate, employers should consider it a matter of when, and not if, they will face a lawsuit, an investigation by a government administrative agency or some form of allegation from a current or former employee.
  • One of the most useful documents you can provide in your defense is a copy of the relevant part of your Employee Handbook.

8. Serves as a valuable reference source

  • To employees and to those who oversee employees

Questions you should ask yourself

1.      Do we have an Employee Handbook?

2.      If your answer is “YES”, when is the last time it was updated to reflect changes in the law and new/revised company policies and practices?

3.      If your answer is “NO”, ask why you don’t have one?

HOW CAN TRINITY HELP YOU?

Our Team of highly skilled HR Consultants can:

  1. Review and revise an existing Handbook to ensure it is:
    • Up-to-date
    • Includes appropriate content, including:
      • Removing or re-writing what’s inappropriate
      • Adding what’s missing
  2. Create a customized Handbook for you

For more information:

You have HR challenges…Trinity has solutions!

Posted in HR Management

VARIABLE COMPENSATION: PART 2

In Part 1, we introduced the idea of thinking about incentive compensation in a different way.

  • Organizations with high performance cultures are recognizing that the most effective approach to variable compensation approach is one that embraces VALUE SHARING. These companies are replacing the idea of “incentive compensation” with “value-sharing compensation.”
  • Under this shift in thinking, the company’s philosophy regarding pay is:
    • “We share value with those who help create value,  And the  more value you create, THE MORE we’re willing to share.”

Here in Part 2, we’ll provide additional information about a Value Sharing approach to variable compensation.

Some key questions for you to ask about value sharing approach

  1. How should we balance our short and long-term value-sharing?
  2. Should all employees participate in both long and short-term value sharing?
  3. Should that balance differ from one employee “tier” or “family” (e.g., manager, supervisor, technical, etc.) to another?
  4. What form should our long-term value-sharing take—stock, phantom equity, profit pool, strategic deferred compensation or something else?

Some key concepts of the value sharing approach

  1. There should be both a short-term value sharing plan and a long-term one—two separate plans, but working in concert with one another.
    • Without both, your organization runs the risk of over emphasizing either short or long-term priorities.
  2. The company establishes a threshold amount of added value that must be achieved before any value created is shared with employees.
    • This is sometimes referred to as “productivity profits”.
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  4. The plans should be self-financed.
    • This means that value is paid out of the value that has been created above the threshold.
    • A decision that is company-specific is whether the amount of dollars to be shared with employees is before or after deducting the related expenses.

CLOSING THOUGHTS

  1. We live in a business age when many previous norms and paradigms are being challenged and re-thought.
    • This certainly includes those that apply to compensation generally and incentive plans specifically.
  2.  Organizations with high growth ambitions will need to adopt a pay philosophy that demonstrates the business’s commitment to turning their employees into growth partners.
    • This means that all stakeholders benefit from the wealth multiple they help drive.
  3. The sooner you make the shift to value creation based rewards, the better off you will be.

For more information:

You have HR opportunities…Trinity has paths forward!

Posted in Compensation & Performance Management

U.S. SUPREME COURT DECISION

DISCLAIMER

This document has been prepared by Trinity HR Consulting, Inc. (“Trinity”) solely for use as a general source of information.  As such, it is not intended to take the place of obtaining advice from legal and/or tax counsel.  Trinity strongly urges seeking legal and/or tax counsel on this subject matter prior to taking any related actions or making any related decisions.

U.S. Supreme Court Upholds Individual Arbitration Agreements

BACKGROUND

In 2012, the National Labor Relations Board (NLRB) held these types of agreements were prohibited and unenforceable. Since then, courts have either agreed with or deferred to the Board and struck down the enforceability of these individual arbitration provisions.

  • The case involved the Court’s ruling on whether employment disputes could be resolved in individual arbitrations rather than in court.

THE ISSUE

The issue before the Court was whether an agreement that requires an employer and an employee to resolve employment-related disputes through individual arbitration, and waive class and collective proceedings, is enforceable under the Federal Arbitration Act (FAA) (notwithstanding the provisions of the National Labor Relations Act [NLRA] and under the Fair Labor Standards Act [FLSA].

  • Arbitration clauses in employment contracts are a relatively recent innovation, but they have become quite common.  It’s estimated that there are more than 25 million employment agreements in existence.
  • Today 54 percent of non-unionized employers utilize arbitration clauses. It is estimated that there

DECISION

Yesterday (May 21st, 2018), the Supreme Court of the United States (SCOTUS) issued a decision granting significant rights to employers seeking to limit liability in class action cases. In a 5-4 decision, the Court upheld the use of class action waivers in individual employment agreements. This means employees who sign agreements binding them to bring individual arbitration actions cannot bring or be a party to class actions in litigation, including in class action wage claims under the Fair Labor Standards Act (FLSA).

  • In issuing its ruling, the SCOTUS  reversed the Board’s mandate and rendered the  individual arbitration provisions enforceable.
  • The decision also underscored the importance of the 2016 presidential election’s impact on the judiciary. The Obama administration and the National Labor Relations Board had backed workers in the cases, but after President Trump was elected, the Justice Department threw its support to the employers.

WHAT THE DECISION MEANS FOR EMPLOYERS

This means employers are now free to place a provision in an employment and/or severance agreement waiving the right of the employee to engage in any class-action against the employer and requiring the employee instead to engage in individual arbitration to resolve any claims against the employer.
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  • This decision is a huge win for employers who utilize individual arbitration agreements with their employees and clears the way for continued use of said agreements.

HOW TRINITY CAN HELP YOU

Trinity can:

  • Review your existing:
    • Employment Agreements
    • Employee Handbook and Policies
  • Conduct management and executive searches to find individuals with the specific experience and expertise you need, as well as their being compatible with your culture.
  • Create employment agreements protecting your company’s interest by containing:
    • Restrictive Covenants (such as a Non-Compete)
    • An arbitration clause in line with this new Supreme Court ruling

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