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Volume 2 : Issue 6 TM

Highlights from

2012 AR SHRM Conference


Guidelines on Transgenders

Outplacement –

The Hidden Cost of Change

Fitness for Duty:

Can an Employer Exclude a Worker Based on Health or Safety Reasons?

Kelly K. DeStefano

Director of AR SHRM State Council

NWMS SHRM Annual Spring Training Seminar

Do’s & Don’ts for Your Social Media Policy

Bringing Human Resources & Management Expertise to You


of companies without outplacement had lawsuits filed against them. Editor

Cynthia Y. Thompson, MBA, SPHR Publisher

The Thompson HR Firm HR Consulting and Employee Development Art Direction

Park Avenue Design Contributing Writers

Sally Barron Nicole Bermel Craig Cowart John Challenger Latosha Dexter Robbin Hutton Kristin Kaufman Jennifer Kiesewetter James Stock Tanja Thompson Jeff Weintraub Board of Advisors

Austin Baker Jonathan C. Hancock Ross Harris, CFO, CFA Diane M. Heyman, SPHR John E. MegleyIII, PhD Terri Murphy Robert Pipkin Michael R. Ryan, PhD

Features 4 Letter from the Editor 5 Profile: Kelly K. DeStefano 7 Do Trust and Transparency Make or Break Us? 10 Real Outplacement Impact 13 EEOC Guidelines on Transgenders 15 Some Dos and Don’ts for Your Social Media Policy 17 Fitness for Duty: Can an Employer Make a Decision to Exclude a Worker Based on Health or Safety Reasons? 19 Use of Arrest and Conviction Records in Employment 34 The Time Is Now…Section 408(b)(2) Is Finally Here

Departments 24 NLRB: New Election Rules are Short Lived 28 EEOC: Case Study on Unlawful Harassment – When Can a Company Employee Be Held Personally Liable? 30 Leadership: Daymond John, Star of “Shark Tank” 33 HR Scene and Events Calendar



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Read the book review of Kristin Kaufman’s new book, Is This Seat Taken? Click the convenient Buy Now Button to purchase. Learn how to leverage resources and establish online credibility from Marketing Shortcuts for the Self-Employed by Patrick Schwerdtfeger from Book Look on Page 31. Click the convenient Buy Now Button to purchase.

22 SHRM-Memphis Bulletin 23 SHRM-Memphis Who’s Who? 31 Book Look – Marketing Shortcuts for the Unemployed

Industry News 6 13 22 27

2012 AR SHRM Conference Photos NWMS SHRM Annual Spring Training Seminar 2012 TN SHRM Conference & Exposition WT SHRM 2012 Spring Employment Law Conference

Next Issue Sneak Preview 2012 TN SHRM Conference & Exposition Highlights from the 2012 International Personnel Management Association Central and Southern Region Combined Conference in St. Louis 3

a note from the Editor

The 2012 Arkansas SHRM Conference and Expo was held in Springdale on April 25-27 in the beautiful Ozark Mountains. We are bringing you the highlights of this excellent conference that was held at the Holiday Inn Conference Center in Springdale. Hats off to Kelly DeStefano, 2012 Director of the Arkansas SHRM State Council, and her committee for the outstanding job they did! It was an honor to be the media sponsor for this conference, which featured 50 distinguished speakers. Special thanks to Catherine Hoffman and Danielle Wood for all their assistance. Sherry Johnson, SHRM Director for the Southwest Central Region, and Cynthia Thompson at the AR SHRM Expo.

I hope you followed me on Twitter as I brought you up to the minute updates from the outstanding thought leaders who spoke at the conference. Like us on Facebook and see all the great photos from the conference.

We kicked off May with the WT SHRM Employment Law Spring Conference held at the Carl Grant Conference Center on the beautiful campus of Union University in Jackson, TN on May 2. The attorneys of Rainey Kizer Bell & Reviere sponsored this event with up to the minute presentations on the hot topics in employment law. Lisa and Jennifer presented Social Media for HR Professionals. May ended with the Annual NWMS SHRM Training Seminar in Olive Branch, MS. Attorneys with Fisher & Phillips and Jackson Lewis in Memphis facilitated Track 101 sessions for beginning HR professionals and Bonnie Cox with the Power Training Institute, CA, facilitated the 301 Track with How to Think Like a CEO. The Seminar was held at the beautiful Whispering Woods Hotel and Conference Center.


Register today for the 2012 Tennessee SHRM Conference and Exposition. WWW.TNSHRMCONF.ORG

Please join me on June 12 at the University of Memphis Holiday Inn Room 129 from 6 PM to 7 PM for “Trust Travels: The Starbucks Story”. I will facilitate the first of seven series of DVDs created by the SHRM Foundation to provide low cost strategic credits towards HRCI recertification. Register at Also, If you missed our “Strategic Leadership for HR Executives” Seminar on May 3, please mark your calendars and plan to join me on Thursday, July 5, for a complimentary webinar on “What Your CEO Expects HR to Know” presented by Ascentis Webinars from 12 PM to 1 PM. You will also receive HRCI strategic credits for this presentation. Register at

Cynthia Y. Thompson | Editor

Sign up for our RSS News Feed to receive up to the minute HR Alerts on changing legislation affecting our workforce.


Kelly K. DeStefano on the cover

Kelly K. DeStefano, SPHR Director, AR SHRM State Council Human Resources Director Youth Home, Inc., Little Rock, AR

Kelly DeStefano began her career in Human Resources as a Human Resources Assistant (Generalist) at Youth Home, Inc. in Little Rock in 1998 and was promoted to Director of Human Resources in 2001. In addition to her duties in human resources, Kelly supervises the Training Department and chairs the Safety/Personnel Committee and serves as a liaison to the Board of Directors. Kelly joined the Society for Human Resource Management (SHRM) in 2000 and also affiliated with the Central Arkansas Human Resources Association in 2000 where she has been a Board member since 2005, serving as President in 2007. She received the Outstanding Member of the Year Award in 2008. She also became Secretary/Treasurer of the Arkansas SHRM State Council in 2008. She has held several positions since then including State Conference Registration Chair 2009, Chapter Advocate Director 2008-2009, and State Director Elect 2010-2011. Kelly became State Director in 2012. She is also a member of the Arkansas Compensation Association and is a 2006 graduate of the Leadership of Greater Little Rock Class XXI. Kelly received her B.A. in Psychology from the University of Arkansas at Little Rock in 1997 and received an M.A. in Human Resource Development along with an M.A. in Public Administration from Webster University in 2002. She received certification as a Senior Professional in Human Resources (SPHR) in 2003. Kelly resides in Cabot, Arkansas, with her husband. ď Ž


Congratulations Congratulations Kelly! Kelly! 1


2012 AR SHRM Conference & Expo

Kelly DeStefano, SPHR AR SHRM Council Director Kelly State DeStefano, SPHR Human Resources Director AR SHRM State Council Director Youth Home, Director Inc. Human Resources Youth Home, Inc.

Youth Home is proud of Youth is proud youHome for serving as of you for ofserving as Director the 2012 Director of the 2012 Arkansas SHRM Arkansas SHRM State Council State Council

20400 Colonel Glenn Little AR 72210 20400Rock, Colonel Glenn Little Rock, AR 72210









1 AR SHRM State Conference Committee: Front row (L-R) Georgette Ferus, Holley Little, Allison Ramsey, Tara Mauk Arthur Middle row (L-R) Cathleen Hoffman, LaTresa Shavers, Kim Finne, Wanda Williams, Marina Mueller, Robin Evans Danielle Wood. Back row (L-R) Kris Delano, Broderick Daniels, Amy Fisher, Rick Teague. 2 Mary B. Lucas, author of Lunchmeat & Life Lessons: Sharing a Butcher’s Wisdom, was the luncheon keynote speaker on Thursday. Her topic was “Bring Out the Best: How to Inspire Yourself and Those Around You.” Mary is the Chief Resource Officer at Staffmark. Follow her on Twitter @MaryBLucas. 3 Charles Frost, Sr., PHR, presented Tim Orellano, PHR, the Jim Wilkins Lifetime Achievement Award at the Thursday luncheon. Tim was also a speaker at the conference. He spoke Wednesday afternoon on “Strategies for the New OFCCP Affirmative Action Plan Initiatives.” Photo courtesy of Dan Lambert. 4 (L-R) Julia Strickland, Rick Roderick, and Joyce Fowler with Cross, Gunter, Witherspoon & Galchus, PC. Joyce presented “Putting Your Organization on the Map: Benefits of Participating in the Psychologically Healthy Workplace Program.” Rick facilitated “Navigating Through the ADA and FMLA.” 5 Holley Little and Tara Mauk Arthur, PHR, at the Tweet Up Party on Wednesday night. Tara presented, “Going Social: A Twitter How To Lesson”, on Wednesday morning. She is Senior Vice President, Corporate Services, with Selected Funeral & Life Insurance Company in Hot Springs. Tara is a former Director of the AR SHRM State Council and currently handles the social media for AR SHRM. Follow Tara on Twitter @temauk. 6 Calvin Colbert, VP, Challenger Gray & Christmas presented a donation to Executive Steve Shotta with the NWA Children’s Shelter on Friday. 7 Cathleen Hoffman, SPHR, Co-Chair of the AR SHRM Conference and Sponsorship Chair, presented Salome “Sal” Barrientos, IMAGE Program Coordinator, Homeland Security Investigation, Gulfport, MS a "Winchester Air Rifle 1029 S .177 Cal Breakbarrel w/ 3-9x32 air rifle scope" from Daisy Outdoor Products. It was a door prize for the “Operation Destination” Reception honoring at-large attendees. Sal was the winner of the random drawing. 8 Frank Niles, Ph.D., presented “Motivation 4.0: Rethinking Employee Engagement.” Dr. Niles is an award-winning professor at John Brown University in Siloam Springs. He is also founder of The Performance Experttm, an executive coaching and consulting firm.

2012 AR SHRM


Kristin S. Kaufman spoke at the AR SHRM Conference on April 26 on “How to Crack the Code to Stand Out.” She is founder and CEO of Alignment, Inc., formed in 2007 to help individuals, corporations, boards of directors and non-profits find alignment within themselves and their organizations. Read our review of her new book, “Is This Seat Taken?” in our June web exclusives.

Do Trust and Transparency Make or Break Us? By Kristin S. Kaufman


ary is an up and coming leader in a Fortune 50 company. Over the course of her career, she has managed to zig zag her way into a nice position of great authority and power. However, of late, due to a significant corporate acquisition, she is now maneuvering new executive additions to her organization, and other changing tides within the company. Recently, in several key planning meetings, Mary has been asked specific questions by her direct-reporting leadership team about her perspective of the future for their organization, the strategic direction they may be pursuing, possible headcount changes, and other pressing concerns from her leadership team. Prior to these meetings, Mary was made aware that there were going to be many new and significant career opportunities for people at her level and within her organization. She learned that her particular organization has been tapped as the high potential division, and that her team had the opportunity to steer this particular segment of the company out of what could be a ‘mature and slowing’ market segment and associated slowing revenue stream to one of great promise and career advancement. This introduced tremendous opportunity not only for Mary but for many others within the organization. This information, by the way, was not shared under any confidential instruction from the higher-

ups; however, it was openly shared, as most information of this sort is, over cocktails at the bar between the leaders of the company. With this as the backdrop, what do you think Mary did with this information? • Do you think she openly shared this intelligence with her leadership team? • Did she horde this information, waiting to get her own career plan and strategy in place before sharing this with others who could potentially be ‘competition’ for her in the management hierarchy? • Or did she share just bits and pieces of what she knows, so that she still had the upper hand?

This particular situation is real. The choice Mary made was to be cagey and not forthcoming. She positioned herself as being ‘in the know,’ yet not willing to share all she knew. She relished being seen as the smartest person in the room and certainly the most connected to the ‘higher ups.’ Her approach didn’t pass the sniff test. Her team and her peers were onto her game. By sharing only bits and pieces, she left her team scared and unsure of their direction. Individually and collectively, she 7

fostered a supreme lack of trust on several levels, and most importantly created doubt in the team’s most fundamental relationship with her as their leader. We have all probably known someone in our corporate experiences that has chosen each of these approaches, at one time or another. As recessionary pressures increase and competition builds from many directions, fear will increasingly drive these behaviors. Fear of being passed over, fear of losing power to someone smarter or more experienced, fear of sharing information which someone may use to ‘out maneuver’ you, fear of losing the position you have fought so hard to attain. Hard times can bring out the best, and the worst, in everyone. So how do many behave when they feel at risk or in a competitive situation? They horde information, they steal credit from people they work for/with, they brown nose and ‘push paper’ while others do the heavy lifting, they personally grand stand when someone on their team does a good job, or they focus solely on internal politics. What happens to their teams as a result? Their teams experience dysfunction, lack of trust, lack of collaboration, and development of a team culture of cagey secrecy. They spend too much time playing the internal politics and not enough time with clients are all common results from this type of behavior. Net result: an overall lack of performance. What happens as a result to the leader of the organization? Honestly, many may experience short term rewards, promotions, and increased span of control. However, what I will argue is that the long term success of this style of leadership is short lived. And let’s not forget that life is long and reputations are lifelong. Which brings me to the primary point of this article: there is supreme merit, not to mention power, in working with open transparency, trusting your people, and simply telling the truth. The three T’s – truth, trust, transparency – are the magic to leading strong, bonded teams through challenging periods, as well as flourishing times. A few salient points:

1. Truth and Trust Need Constant Care and Attention. At the end of the day, with any high performing team, trust is at the root of it. If you have been lucky enough to be on such a team you know what I mean. Everyone pulls together, egos aside. Blood, sweat and tears are given in equal measure by every member. It is an energizing experience and one that fuels itself, as the energy is constantly being reborn within the team. This ‘trust alchemy’ does not happen by accident. Leaders foster this. Leaders nurture this. Leaders take continual care of this. Leaders bestow trust easily and freely. How is this done? It’s not really that hard – if we can just get out of our own way. Building real trust starts by truly listening to members of the team. The leaders ultimately will • Value what they hear • Tell the truth, as they see it, openly and transparently, 8

• Treat others the way they would want to be treated, • Ask no one to do what they would not do themselves • Have faith in the team to deliver in a manner each team member would be proud, • Consistently do what they say they are going to do (when they were going to do it), • Give ‘tough love’, which means telling the truth especially when it may be really hard to do so. One last observation on truth and trust, you will know, beyond a shadow of a doubt, when either is not present. You will also know when they are.

2. A leader’s spirit of transparency and authenticity sets the stage for the organization’s culture. Most everyone has worked with individuals operating with varying levels of transparency. How much should strong leaders reveal? How vulnerable can we be to show our true authenticity and yet not appear weak? What is the better ‘style’ of leadership – mysterious and ‘genius-like’ (aka: Steve Jobs) or open and folksy (aka: Herb Kelleher)? Which style breeds successors and which style is almost impossible to follow? Which one enables sustainability within a culture? I believe that the long term success of the leader, and the organization they are building, is tightly coupled to the level of transparency, authenticity, and trust embedded within the person and ultimately throughout the culture. Ultimately, as leaders, we get what we give. If we want to build a team of open, collaborative leaders – then be one. If we want to attract leaders into our organization who buy into our vision and your passion – then share it. If we want to create an organization where risk is valued and intentions are considered pure – then stretch, risk, and exemplify pure intentions ourselves. We need to show our souls. Let folks get to know us - the real person. People can spot a phony a mile away. And those ‘fake leaders’, those that have read every leadership book and are simply going through the motions, do not have sustainability. They will flame out – until their core is anchored in authenticity and revealed with clear transparency and vulnerability. Finally, if we want to build bench strength in our organizations, we must consciously share, teach, and develop leaders through open, honest communication and diligent commitment. Building leaders does not happen accidentally, nor does it happen by making ourselves indispensable and unapproachable; it comes through disciplined time and effort in another’s growth, development, and maturity as a leader. One aspect of a leader’s legacy is how well we have built a sustainable organization of strong leaders, the choice is ultimately ours.

3. Know and Understand the Realities of Trust and Transparency. Many reading this article may fervently disagree, holding onto such beliefs as: “Trust is earned. Until someone has proven they are trustworthy they are not worthy of another’s trust. Others believe that a little ‘capitalistic free enterprise competition’ on the team is great in elevating team performance. And still others may choose to

never go ‘fully transparent’ with their teams; believing they need to be seen as strong and upright, without insecurities to insure others will want to follow them.” Before you decide which side you are on, consider these few questions applied to your own experiences: • How have you felt when your manager has pitted you against a member of your team to ‘prove’ who is worthy for a promotion or more responsibility? • Of the leaders you have admired over the years, have they shared their doubts and questions with you at one time or another? • What makes us think we have to ‘earn trust’ before trust is given? • Of the leaders who have trusted you, have you always had a ‘track record’ with them personally before they have bestowed trust in you? Let’s be clear, as with any situation, there is risk when we introduce the concept of trust and transparency. Whenever anyone extends trust, they also risk being mistaken. That goes with the territory. This is called a judgment call, and as leaders, we make these decisions daily. In addition, we must realize that the person with the most power has the greatest responsibility to bestow trust. If leaders withhold trust, others will do the same. If leaders bestow trust, others will follow that lead, as well. Leaders that freely give trust, breed trust, with and between the team members. We must also realize when we are transparent and authentic, not everyone will embrace who we are and what we believe. We must be prepared for judgment, skepticism, and rejection. This also comes with the territory. We must stand anchored in centered confidence with our personal ‘true north’ as our guidepost. So back to Mary, what was the end of her story? Not surprisingly, in that position, Mary found only marginal success with her team. She plateaued on her rise within the company. Her reputation grew as being ‘out for herself’, and not a team player. Her peers did not want to partner with her on internal initiatives, and her direct reports did not trust her nor want to work for her. Many held steady to ‘keep their job”; yet most sought other positions on teams which fostered growth and community. Thus, the senior leadership of the company sidelined her from the ‘fast track’. This is not to say that Mary cannot turn her career around; though, candidly, she will have to work doubly hard to reinvent her reputation within the company.

So what is the takeaway? Emerson sums it up perfectly: “Trust men and they will be true to you; treat them greatly, and they will show themselves great.” By trusting ourselves and holding ourselves accountable to these same high standards, we will collectively attain the greatness which is within our reach. When we open up, share our souls and our passions, we will attract and nurture the same. When leaders are transparent in their aspirations, as well as their concerns, the team will bond to and with the leader in a way that is undeniable. This will unleash an esprit de corps which is unstoppable and unbreakable……and that is a powerful force.

You Don’t Need Training Wheels. That’s What We’re For. We know HR can be tricky. That’s why Cross, Gunter, Witherspoon & Galchus, P.C. offers employment law training programs specially designed for employers and HR professionals to help you avoid bumps in the road. CGWG’s programs address the most common workplace issues: Employee Leave – ADA, FMLA and Workers’ Compensation Social Media Use in the Workplace Harassment and Retaliation Documentation, Discipline and Termination National Labor Relations Board Updates Fair Labor Standards Act Discrimination Interviewing and Hiring Performance Evaluations I-9s and Employment-related Immigration Health Care Reform

Training programs can also be customized to meet your specific needs. Visit or email to learn more or to schedule training.

CGWG is an HRCI Approved Provider.

Little Rock

Fort Smith

Northwest Arkansas 9

Calvin Colbert is VP of Challenger, Gray & Christmas, Inc. They sponsored the Operation Destination Reception honoring At-Large Attendees on Thursday evening. They also provided centerpieces for the closing luncheon on Friday. Challenger, Gray & Christmas is the nation’s first and premier outplacement consulting firm. They also provide executive and business coaching.

Real Outplacement Impact The Hidden Costs of Change By John Challenger, CEO


rganizational change creates risk. Solely focusing on job reductions can disrupt a company’s stability and compromise employee loyalty. We recognize productivity thrives when high-quality employees are properly trained, technologically sound, and fully engaged. Unfortunately, the long-term costs of change often go unconsidered and can make high productivity unsustainable.

Unaddressed, any of these factors will cost your company money. Quality Outplacement mitigates these risks. Take the time now to consider the value of providing a leading edge, top-flight Outplacement program. Doing these things has the added advantage of being cost effective and providing your company with a Return on Investment.

There are significant factors to consider in releasing your employees, which if left unaddressed, will cost you more than the savings you gained from the reduction. Here are five examples of “hidden change” cost factors:

Shorter Searches = Lower Unemployment Costs

Unemployment Insurance Health Insurance Premiums Absenteeism Turnover Employee Litigation 10

1 Our clients, whose previous salaries averaged $80,000, find work in a median period of 3.2 months. 2 The Department of Labor reports that it takes displaced workers (with a median salary of $26,000) five months to find work. 3 Based on this data, we save you six weeks of unemployment benefits per employee. (On average, the unemployment benefit is 30% of the employee’s weekly base wages.)

2012 AR SHRM

Not only does your workforce gain the benefit of swift reemployment, but your company also saves money on unemployment and minimizes its experience rating. (On average, $1,800 for an employee making $50,000 and $9,000 for an executive making $250,000).

This concern lingers long after the released employees leave. The worse their former coworkers fare, the more inclined they are to blame the employer. Supporting your former employees reassures the survivors that they are valued and will be taken care of in kind.

Rapid Reemployment = Fewer Premiums

When employees observe a quality Outplacement support program and the subsequent, rapid reemployment of their former colleagues, it helps to diminish their job insecurity.

Companies can pay health benefits for up to 18 months for released employees. Our clients find new jobs 1.8 months faster than the national average. Irrespective of when the new employer takes on the burden of health benefits, the sooner they find work, the sooner your obligation ends. • Premiums have risen 49% since 2000 ($8,933 a year for family coverage) • Saving 1.8 months of coverage = $769 per employee released

Improved Morale = Reduced Absenteeism After a staff reduction, the remaining employees are understandably upset. Their lower morale has a measurable impact on productivity. The average absence rate of 3.2% has been shown to increase by as much as 2.3 times following a major downsizing. Surviving employee reactions to downsizing is significantly influenced by how the company treats its exiting workers. To minimize job insecurity and stress, it is imperative to have the Outplacement provider on site the day of notification. Having this service in place as a positive guide to the departing individual will maintain the favorable reputation of the company with its employees.


Quality Outplacement = Reduced Litigation • 26% of those without outplacement had lawsuits filed against them. • 15% of those using outplacement had lawsuits filed against them. • 1.2% of employers who use Challenger, Gray & Christmas experience litigation. For a 1,000+ company facing a significant downsizing (10%): • Average Litigation Risk without Outplacement $1,490,000 • Average Litigation Risk with Challenger, Gray & Christmas, Inc. $92,000 • Average Savings in Litigation Costs $1,400,000 Expert planning is crucial in effectively managing change. Our presence on site during notification lessens the fear, anger, and sense of hopelessness of exiting employees. We provide the outgoing employees with a more favorable impression of your company. We help to calm departing employees and encourage them to look past their initial frustrations and look forward to the process of reemployment.

Quality Outplacement = GC&C = ROI Our comprehensive training and proactive counseling focus the former employees on their searches. Our clients find better jobs significantly faster than the national average, reducing the real costs of downsizing. • We begin by understanding your company’s culture, objectives, and needs. • We support you with pre-release analysis, planning, consulting, and training.

Secure Survivors = Decreased Turnover Turnover multiplies in the employee population that survives a poorly managed reduction. Job insecurity, sagging morale, heightened stress, and declining company loyalty contribute to this phenomenon. Employees identify with their peers and what happens to them.

• Implementation continues through the cycle to train, counsel, and ultimately, reemploy people. For more information, contact Calvin Colbert, Vice PresidentChallenger, Gray & Christmas at 877/207-7035 or calvincolbert@


Fisher & Phillips Value

Many law firms today talk about value as if it’s a new concept. At Fisher & Phillips LLP, we were committed to providing value to our clients long before it became a fashionable topic of conversation. Our commitment to value dates back to the founding of the firm nearly 70 years ago. So how do we provide this value?

Atlanta Boston Charlotte Chicago Cleveland Columbia Dallas

We do only one thing: Represent employers in labor and employment matters. You benefit from our deep and broad expertise in the area of the law we know best, rather than our trying to be all things to a client. Our attorneys will treat your legal problems as business problems, and we will help you avoid legal disputes. We are responsive, we respect our clients’ time, we are economical, and we reward our associates for quality work, not just for billable hours. We are national and local, with attorneys in 27 offices around the U.S. For more on the Fisher &






Denver Fort Lauderdale Houston Irvine Kansas City Las Vegas Los Angeles Louisville

Memphis Renaissance Center 1715 Aaron Brenner Drive Suite 312 Memphis, TN 38120 phone: (901) 526-0431 toll free: (866) 424-2168 fax: (901) 526-8183

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Solutions at Work


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Tampa Washington, DC


SHRM Annual

TRANSGENDERS —The Next Protected Group Under TITLE VII? Training Seminar

Jeff Weintraub presented an overview of the core basics of employment law and principles at the NWMS SHRM Annual Spring Training Seminar as part of the HR101 Learning Track. Jeff is the managing partner of the Memphis office of Fisher & Phillips LLP. Contact him at Sally Barron, also an attorney with the Memphis office of Fisher & Phillips LLP, assisted with this article. Contact her at

EEOC’s New Ruling on Transgendered Individuals in the Workplace


By Jeff Weintraub and Sally Barron

n April 20, 2012 the U.S. Equal Employment Opportunity Commission issued a decision ruling applicable to federal-agency employees that an employee can pursue a complaint of discrimination based on “gender identity, change of sex, and/or transgender status.”

The decision was based on the following facts: Mia Macy was a male police detective in Phoenix, Arizona who applied for a position with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) at a lab in Walnut Creek, California. At the time Macy made her application with the Agency (the ATF), she was physically a man and presented as such. By all accounts, she was well-qualified for the position. After

interviewing Macy by phone, Macy alleged that the Director of the lab had told her that the job was hers (his), absent any problems with Macy’s background check. Before the background check was finalized, Macy informed the lab that she was in the process of changing her name and her gender. A few days after informing the lab of these changes, Macy was informed that, due to federal budget reductions, the position at the lab was no longer available. Macy later discovered that the position had not been cut but that another applicant had been hired in her place. Macy filed a formal complaint with the Agency, noting discrimination based on “sex,” “gender identity,” and “sex stereotyping” as the basis for her complaint. Ultimately, ATF 13

determined that discrimination based on “gender identity stereotyping” was not within the purview of Title VII of the Civil Rights Act and the EEOC (which enforces the requirements of Title VII). Macy appealed the Agency decision, and it was reviewed by the EEOC. The EEOC determined that each of Macy’s claims (“sex stereotyping,” “gender transition/change of sex,” “gender identity,” “gender identity stereotyping,” and “gender, identity, change of sex and/or transgender status”) were merely different ways of stating the same claim of discrimination based on sex, which is clearly actionable under Title VII. In reaching its decision, the EEOC relied on a 1989 Supreme Court case holding that Title VII barred not only discrimination based on sex (male or female), but also genderstereotyping – the expectations surrounding either gender. In that case, a plurality (not a majority) of the Court held that a female accountant passed over for partnership because she was not feminine enough had a valid claim of discrimination based on sex stereotyping. The EEOC used religion as an analogy, quoting from a federal court decision in reasoning:

Courts have long held (including the Sixth Circuit) that, while homosexuals, for example, are not a protected group under Title VII, sex stereotyping is a valid claim under Title VII. Thus, a homosexual wishing to pursue a discrimination claim did an end-run around the lack of protected-group status by claiming that the employer had fired him for failing to conform to a male stereotype. Macy and the EEOC wanted to go further than sex-stereotyping cause of action, so the EEOC held that gender identity is itself a type of sex discrimination actionable under Title VII. The effect of EEOC’s thinking (if it is eventually supported by the courts in the private sector) is that transgenders (and perhaps eventually also homosexuals) will simply achieve protected-group status under Title VII. In other words, they will no longer need to rely on the end-run of sex-stereotyping to be able to sue for discrimination. The trend seems to be heading the way of the EEOC decision, as several states have already enacted legislation prohibiting discrimination based on gender identity, and even sexual orientation, with legislation pending in several more states. This decision by the EEOC will clarify application of Title VII sex-discrimination principles by local EEOC agencies and will likely lead to more consistent decisions among the federal courts.

Imagine that an employee is fired because she converts from Christianity to Judaism. Imagine too that her employer testifies that he harbors no bias toward either Christians or Jews but only “converts.” That would be a clear case of discrimination “because of religion.” No court would take seriously the notion that “converts” are not covered by the statute. Discrimination “because of religion” easily encompasses discrimination because of a change of religion. In the same way, EEOC’s reasoning goes, discrimination “based on sex” would encompass discrimination because of a change of sex. EEOC in its decision applied the holdings of some courts interpreting Title VII as applying to claims of transgender discrimination. While this decision was made with regard to a governmental employer, it is virtually certain that EEOC will apply its thinking to any employer subject to Title VII, private as well.


A Tip for Employers:

Review your handbooks, policies (i.e., dress codes), and procedures to make sure they are neutral in their impact on those who may not fit typical gender stereotypes; consider sensitivity training for all employees, not just managers; and make sure your decisions and discipline are based on work performance, using objective standards. Some employers are supplementing their EEO policies to also bar discrimination against transgenders or on the basis of sexual orientation or sexual preference. Employers should keep an eye on upcoming decisions from the courts to see if they agree with the EEOC and reverse decades of decisions holding that transgenders and homosexuals are not protected groups.


SHRM Annual

Training Seminar



Some and For Your Social Media Policy By Craig A. Cowart

Just take a stroll around the workplace, and you will almost certainly see it happening. One employee makes a quick Facebook post using the company computer. Down the hall, another coworker uses her personal smartphone to tweet about what is going on at work. Do a simple Google search with your company’s name, and you may find blogs or posts of all kinds that have been placed on the internet by employees. Social media is a part of everyday life, including life at work. Employers have legitimate interests that can be addressed through implementing and enforcing a social media policy. Employees’ use of work time and company-owned equipment to post, blog, and tweet is, of course, a concern for employers. But even when employees are on their own time and using their own computers (or smartphones or tablets), it is understandable that employers want some reasonable level of control over what employees are “telling the world” about the organization and its employees in social media. While employers can certainly establish effective social media policies, careful drafting is required in light of the aggressive steps taken by the National Labor Relations Board (NLRB). The NLRB is going to great lengths to challenge the validity of commonly used social media policy provisions. By filing complaints and issuing reports from its Office of General Counsel, the NLRB is taking the position that many social media policy provisions violate the National Labor Relations Act (NLRA). The NLRB asserts that many provisions unlawfully restrict employees from engaging in protected concerted activity, including communicating about terms and conditions of employment through the use of social media. Even with the NLRB’s aggressive stance, employers can still achieve their objectives

through careful drafting (or revision) of social media policies. A social media policy can both protect the company’s interests and withstand a challenge of illegality. Let’s take a look at some “dos and don’ts” that will help accomplish those objectives when writing (or revising) a social media policy: Advise employees that there is no expectation of privacy Do when they use company equipment, including computers or other electronic devices. Employees should be made aware that the company has and reserves the right to monitor and review all use of company-owned equipment without notice, including posts or comments in social media. Use vague, subjective, or undefined terms. Don’t No company wants employees to use obscene or vulgar language about 15

the organization in social media posts or comments. However, the NLRB takes issue with the use of vague and subjective terms like “inappropriate conversation,” “disparaging comments,” and “unprofessional communication” when a social media policy is describing disfavored language. Define terms, provide examples, and use approved language. Do By using defined terms and providing examples of prohibited conduct that is not protected by the NLRA, employers can prohibit the use of disfavored language by employees in social media. A report issued by the NLRB General Counsel gives approval to policy language that prohibits “the use of social media to post or display comments about coworkers or supervisors or the Employer that are vulgar, obscene, threatening, intimidating, harassing, or a violation of the Employer’s workplace policies against discrimination, harassment, or hostility on account of age, race, religion, sex, ethnicity, nationality, disability, or other protected class, status, or characteristic.” By using descriptive language explaining the prohibited conduct within the context of other unprotected conduct, compliance with the NLRA can be assured. Protect confidential information and trade secrets. Do Every company needs to protect confidential information and trade secrets. No organization wants employees to post such information on social media sites. However, the NLRB takes the position that some confidentiality provisions in social media policies go too far and violate the NLRA by preventing employees from engaging in protected communications. Use language restricting employees’ rights to discuss Don’t wages and other working conditions. According to a report from the NLRB General Counsel, a confidentiality provision goes too far if it restricts employees from engaging in protected discussions about their wages and working conditions. The NLRB rejected a social media policy provision that prohibited employees from “disclosing or communicating . . . confidential, sensitive, or non-public information concerning the company . . . to anyone outside the company without prior approval of senior 16

management or the law department.” The NLRB asserts that this language is too broad because it prohibits employees from using social media to discuss “non-public” topics, which could include wages and working conditions. Require employees to resolve workplace concerns internally Don’t instead of using social media. It may be tempting to have a policy requiring employees to keep workplace concerns private by discussing them internally instead of posting them on social media. However, a provision that threatens discipline for “going public” can violate the NLRA. For example, in one of the reports issued by the NLRB General Counsel, a policy that “required employees to first discuss with their supervisor or manager any work-related concerns” and provided that “failure to comply could result in corrective action, up to and including termination” violated the NLRA because of the threat of discipline. Encourage internal communications. Although threatening Do discipline if an employee posts a workplace concern on social media instead of communicating about it internally could violate the NLRA, employers should still encourage the use of internal communications and procedures for resolving concerns. A social media policy should still urge (but not require) employees to use available channels within the organization, rather than social media, to resolve disputes. Rely on a boilerplate disclaimer. Many social media policies Don’t include a disclaimer explaining that the company’s policies are not intended to interfere with employees’ rights under the NLRA. The purpose of these disclaimers is, of course, to clarify that nothing in the policy should be read as prohibiting employees from engaging in protected concerted activity. However, the NLRB takes the position that such disclaimers can be ineffective. In an NLRB General Counsel report, a social media policy prohibiting employees from posting “inappropriate” content was examined. The policy included the following disclaimer language: The policy will not be interpreted or applied so as to interfere with employee rights to self-organize,

form, join, or assist labor organizations, to bargain collectively through representatives of their choosing, or to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection, or to refrain from engaging in such activities. The General Counsel concluded that the disclaimer could not “save” the policy provision because the term “inappropriate” was too vague. In the report, the General Counsel stated that “an employee could not reasonably be expected to know” what discussions were deemed “inappropriate.” Even though the disclaimer language was detailed, it was insufficient to overcome the overbroad provisions in the social media policy. Consult with counsel to develop appropriate Do language. While a “boilerplate” disclaimer, even one that includes comprehensive and detailed language, may be insufficient to cure overbroad and vague language in a social media policy, language that complies fully with the NLRA can be crafted. Carefully drafting a list of specific limitations or examples in the language of a social media policy can ensure protection of company interests while also protecting against claims of illegality. Walking the fine lines created by the constantly developing landscape of technology and law in the arena of social media is challenging. However, an effective and lawful policy is possible. Face reality. Now that you have finished reading this article, Do another stroll around the workplace and a quick Google search is still likely to reveal employees posting, blogging, and tweeting. The new reality created by Facebook, Twitter, and a myriad of other social media sites is not going to disappear anytime soon. But that’s okay, because now you know some “dos and don’ts” of dealing with the reality of social media in the workplace.

Craig A. Cowart Partner, Fisher & Phillips, LLP Memphis, TN

Fitness for Duty :


SHRM Annual

Training Seminar

James H. Stock presented “Responding to Administrative Charges – From EEOC, DOL, and NLRB” in the afternoon as part of the HR101 Learning Track. Jim is an attorney with Jackson Lewis LLP in Memphis. Contact him at

Can an Employer Make a Decision to Exclude a Worker Based on


Health or Safety Reasons?

By James H. Stock

here are many times that management suspects an employee is unable to perform because of health related reasons. However, privacy issues or ADA concerns often prevent a thorough evaluation of the issue, and the worker continues in the same job, despite faltering performance and an increase in concerns by management about health and safety. “Accommodation” has been taught, since the fear of an ADA claim has sometimes outweighed best business practice. Now, however, more and more courts are resolving the issue on a practical side, much to the delight of many companies looking for direction.

In one important case decided recently, an employee with a heart condition who posed a direct threat to workplace safety did not have a viable claim of discrimination under the Americans with Disabilities Act, the Sixth Circuit Court of Appeals has ruled. In the case of Wurzel v. Whirlpool Corp., No. 10-3629 (6th Cir. Apr. 27, 2012), the appellate court held that an employer may lawfully restrict the placement of an employee with a disabling medical condition if the employer reasonably concludes the employee cannot perform the duties of his job safely. Under such circumstances, the disabled employee is not “qualified” for a job because the threat posed to the health or safety of the employee or others cannot be resolved through a “reasonable accommodation.”

The Facts of the Case

Brian Wurzel was an Ohio factory worker who joined Whirlpool Corporation in 1983 as a materials handler. He had no significant health issues until 2003, when he began complaining of chest pains. In 2007, Wurzel was diagnosed with Prinzmetal’s angina, a condition characterized by coronary artery spasms that cause chest tightness, shortness of breath, dizziness, and fatigue. Though Wurzel was medically cleared to return to his job as a forklift driver, he began having angina spasms at work in March 2008. By February 2009, he had experienced at least 11 spasm incidents at work, most of which required treatment 17

at the plant’s emergency room. In one incident, according to court records, Wurzel was found doubled-over and “ready to pass out.” When the first heart spasm occurred, the plant physician expressed concerns for the safety of Wurzel and others if Wurzel ever became incapacitated. Despite a clean driving record and assurances from Wurzel’s cardiologists that Wurzel posed no greater threat of sudden incapacitation than any other angina patient, the plant physician prohibited Wurzel from driving a forklift. Wurzel subsequently was reassigned to a temporary position in the plant’s gatekeeper/tollkeeper unit. In October 2008, Wurzel took a permanent job in the plant’s paint department. While free of forklift driving, the job called for rotating through a series of tasks that included working with or around a “low-hanging” overhead conveyor line. When Wurzel experienced another angina spasm, the plant physician referred him for an independent medical examination, which was performed in November 2008. Court records show that, as with his cardiologists, Wurzel was not entirely forthcoming with the independent medical examiner regarding the extent of his condition. Although Wurzel was permitted to return to the paint department in December 2008, he experienced three angina spasms at work in January 2009. Based on these incidents, information from the plant physician, and the fact that Wurzel worked around heavy machinery and occasionally was out of the sight of other employees, the independent medical examiner reversed his opinion and concluded that Wurzel should not be permitted to work either alone or near moving machinery.

The Litigation Wurzel filed suit against the employer in March 2009, claiming disability discrimination and related claims. Given the timing of the events, Wurzel’s lawsuit was potentially subject to analysis under both the ADA and the Americans with Disabilities Act Amendments Act, which became effective on January 1, 2009. Regardless, the district court dismissed the case on summary-judgment grounds, finding no merit to Wurzel’s claims and concluding the employer was entitled to judgment as a matter of law. Wurzel filed an appeal only as to the ADA claims.

ADA The ADA prohibits “covered” entities from discriminating against individuals with a disability in regard to hiring, advancement, discharge, or the terms, conditions, and privileges of employment. An individual may establish a disability by showing the presence of: 1) a physical or mental impairment that substantially limits one or more of the major life activities; 2) a record of such an impairment; or 3) “being regarded” as having such an impairment. The ADA requires employers to “reasonably accommodate” disabled employees. 18

An employer can avoid liability for discrimination if it can establish that the employment of the individual would pose a “direct threat” to the health and safety of others. Federal regulations define a “direct threat” as “a significant risk of substantial harm to the health and safety of the individual or others that cannot be eliminated by reasonable accommodation.” A showing of “direct threat” must be based on “a reasonable medical judgment that relies on the most current medical knowledge and/or on the best available objective evidence.” When considering whether an individual poses a direct threat, factors to be considered include the duration of the risk, the nature and severity of the potential harm, the likelihood that the potential harm will occur, and the imminence of the potential harm.

Appeals Court Decision The appellate court noted that the employer’s plant has 2,500 employees and six operating assembly lines, all of which use moving machinery. Workers operate presses, drills, cutting machinery, and numerous vehicles (including forklifts). Forklifts and pedestrians travel the plant’s shared space, with only painted lines to separate them. In addition to a work environment that calls for extreme care, the Court noted Wurzel’s acknowledgement, in a deposition, that there was no way of knowing when his medical condition might flare up, whether it would cause an angina spasm, or how long it would last. Based on all of the evidence, the Court (which has jurisdiction over the states of Michigan, Ohio, Kentucky, and Tennessee) affirmed summary judgment for the employer. The Court concluded the employer had utilized the most current medical knowledge to reach a reasonable medical judgment that Wurzel posed a direct threat to workplace safety. While the employer was not required to reasonably accommodate Wurzel (since his claims of “being regarded” as disabled did not carry such an obligation), the Court concluded that the employer had engaged in a non-discriminatory process to determine the threat that Wurzel posed and, based on the best data available, had made an objective decision regarding Wurzel’s job-related abilities.

Best Practices For the employer who suspects that a medical condition of an employee is hindering performance and raising the risks of safety concerns for the employee and/or others, do not disregard the implications of a careless accommodation. This is a matter when the best practice is to combine medical advice, with the practicalities of operating the business. Therefore, although Wurzel is welcome news, employers should be cautious when faced with circumstances that might raise considerations under the ADA, the Family and Medical Leave Act, and even workers’ compensation laws. These involve factintensive inquiries, and each case is likely to be different. Thus, a thorough review should be undertaken before considering any employment action.


SHRM Annual

Training Seminar

Robbin Hutton is an attorney with Jackson Lewis LLP. She spoke at the afternoon HR101 Learning Track on “Document Management Best Practices – From Application to Termination.” Contact her at

Use of Arrest and Conviction Records

in Employment

By Robbin Hutton

A revised Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions under Title VII of the Civil Rights Act of 1964, (hereinafter “Guidance”) has been approved by the Equal Employment Opportunity Commission. The Guidance is effective immediately. Before disqualifying an individual with a criminal record from employment, the Commission emphasizes, employers should engage in an individualized assessment involving a dialogue with that individual. While the Guidance states that employers would not violate Title VII if they disqualify an applicant based on separate federal restrictions on the employment of persons with criminal records, an employer may not defend a decision to disqualify an individual solely on state restrictions on the hiring of persons with criminal records. The EEOC states the new Guidance is intended for employers, individuals who suspect they have been denied employment because of their criminal records, and Commission staff investigating discrimination charges. In the past, the EEOC has cited its enforcement guidances in court as persuasive authority for the interpretation of Title VII, and some courts have deferred to agency guidances seeking to impose obligations beyond those expressed in the laws.

Policy and Guidelines Background The new Guidance replaces a 1987 EEOC Policy Statement regarding Conviction Records and a 1990 Policy Guidance on the Consideration of Arrest Records. Under Title VII, an employer may justify a practice that results in a disparate impact by demonstrating a business necessity for that practice. Under the 1987 Policy, an employer can demonstrate business necessity by showing it considered three factors in making its decision: 1. The nature and gravity of the criminal offense(s); 2. Th  e time that has passed since the conviction and/or completion of the sentence; and 3. The nature of the job held or sought. These three factors are referred to by the EEOC as the “Green factors” (since the factor came from Green v. Missouri Pacific Railroad, 549 F.2d 1158 (8th Cir. 1977), in which the court found a complete bar on employment based on any criminal activity, other than a traffic violation, unlawful under Title VII). In addition to the Green factors, where arrest records show no conviction, the EEOC’s 1990 Guidance requires the employer to evaluate whether the arrest record reflects the applicant’s conduct. The new Guidance still utilizes these Green factors. 19

New Enforcement Guidance The new Guidance provides examples of an applicant’s or employee’s proper or improper disqualification based on his or her criminal record. Most large employers develop an internal policy regarding the types of convictions that will disqualify an individual from employment, thus utilizing business necessity. The Guidance refers to “targeted screens” that are based on the Green factors, i.e., the nature of the crime, the time elapsed, and the nature of the job. The Guidance recognizes that an employer may satisfy its Title VII obligations by using an internal policy if it is “narrowly tailored.” “Narrowly tailored” is explained in the Guidance as a “demonstrably tight nexus to the position in question. Title VII thus does not necessarily require individualized assessment in all circumstances.” The Guidance prefers that a targeted screen be accompanied by notice to the individual receiving scrutiny and an individualized assessment of the individual, the crime, and the position in question. The individualized assessment allows the applicant or employee to explain the circumstances of the conviction and why the conviction should not exclude him or her from employment. A list of eight possible topics of consideration have been identified in the Guidance to assist in an individualized assessment, including three set forth below: • The facts and circumstances surrounding the offense or conduct; • Evidence that the individual performed the same type of work, post-conviction, with the same or a different employer, with no known incidents of criminal conduct; and • Employment or character references and other information regarding the individual’s fitness for the particular position. Under this provision of the Guidance, if the individual does not respond to the employer’s inquiries, the employer may make its decision without the information. Arrest Record Individuals are “presumed innocent unless proven guilty;” thus, the Guidance says, the “arrest record standing alone may not be used to deny an employment opportunity.” However, the Guidance allows an employer to make an employment decision based on the conduct underlying the arrest if the individual would be unfit for the position because of the conduct. As illustration, the Guidance uses the situation in which an elementary school assistant principal is arrested after several young girls reported the assistant principal of inappropriate touching. School policy permits terminating employees who engage in conduct that impacts the health and safety of students. The assistant principal denies committing inappropriate conduct, but the school finds the denial not credible. The school 20

terminates his employment. In this situation, the EEOC would find no violation of Title VII because the school’s policy is linked to conduct relevant to the job, and the decision is based on the underlying conduct. Federal Prohibitions or Restrictions The Guidance notes federal laws and regulations prohibit the employment of persons with records of certain crimes in particular positions, e.g., child care workers in federal agencies, bank employees and port workers. It finds that Title VII does not preempt these federally imposed restrictions. Moreover, although applicable regulations may allow an employer to obtain a waiver from these restrictions, “Title VII does not mandate that an employer seek such waivers,” the Guidance states. State and Local Restrictions However, while recognizing federal law, the Commission refused to allow employers to establish business necessity based on compliance with state or local laws prohibiting the employment of persons with certain criminal convictions. This Guidance requires that an employer who takes adverse action required by state law or local regulations nonetheless must demonstrate that its policy is job-related and consistent with business necessity based on the Green factors. Best Practice As a “best practice,” the Guidance encourages employers not to ask applicants about their criminal records. The timing of a request for criminal records is important because, according to the EEOC, not asking about criminal records early in the application process allows an employer to assess the relevance of an applicant’s criminal records objectively when it already knows about the applicant’s qualifications and experience. Training managers, hiring officials and decision makers on Title VII and the non-discriminatory manner of considering criminal records is another best practice encouraged by the Guidance. The Guidance also reminds employers that the inconsistent application of their policies on criminal convictions may result in accusations of disparate treatment discrimination. The Guidance addresses disparate impact on African-Americans and Hispanics, but does not address disparate impact based on sex. It is clear that from the Guidance that the Commission accepts criminal background checks as a common employment practice and acknowledges that criminal background checks are not prohibited by Title VII. However, employers should evaluate and revise their policies and practices in accordance with the “Best Practices” provided in the Guidance. Jackson Lewis attorneys are available to advise employers on whether they are following best practices for considering criminal conviction records consistent with applicable federal and state law, as well as the new Guidance, and to offer necessary management training.

All we do is work


With over 700 attorneys practicing in 49 cities nationwide, Jackson Lewis provides creative and strategic solutions to employers in every aspect of employment, labor, benefits and immigration law. Our firm has one of the most active employment litigation practices in the U.S., including a current caseload of over 5000 litigation matters and 300+ class actions. To learn more about our services, please visit us online at

James R. Mulroy II • Managing Partner Jackson Lewis LLP • Memphis Office 999 Shady Grove Road, Suite 110 • Memphis, TN 38120 • (901) 462-2600

R. Larry Brown

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James R. Mulroy II

Pamela Renee Irons

O. John Norris, III

David S. Jones

James H. Stock, Jr.

HR Professionals of the Greater Memphis Area, The 2012 Tennessee State Conference team and the SHRM-Memphis Board of Directors welcomes HR Professionals and our Business Resources Partners (i.e. Sponsors and Exhibitors) to be a part of the 20th Annual Tennessee SHRM Conference and Exposition, September 12-14, 2012. This exciting educational event promises opportunities to learn and network with over 500 HR Professionals from across the state, as well as, the Tri-State Region. The theme, "Find the Music in You", is designed to engage everyone's – mind, body and spirit. The agenda is built to offer everyone valuable experiences, take home tools and a lot of fun as well! We have it all - from morning boot camps, teambuilding and harnessing your creativity to the business case of why "Contented Cows Give Better Milk" and being inspired by "The FISH Philosophy". Register NOW and start building your conference schedule! Sponsors and Exhibitors, do not miss your opportunity to participate in all of the networking! We thank our Sponsors for ensuring the Event's Success by allowing us to provide FOUR Keynote Addresses, knock-out Socials, delicious breakfasts and lunches. We look forward to the sharing of ideas with over 100 exhibitors. Check out the different packages offered and secure your position among all of the excitement. We are pleased to be serving as this year's host and happy to bring this exceptional conference and exposition to your doorstep. Once again, REGISTER NOW at Join us for “Trust Travels: The Starbuck’s Story” on June 12th from 6 – 7 p.m. at the University of Memphis Holiday Inn, Rm. 129. The first 40 persons to register get one ‘Strategic’ HRCI credit for $15 (At-Large & Non-Memphis Chapter Members cost, $30). Register at Meanwhile, let us congratulate the 2011 Tennessee SHRM State Council for earning the 2011 Silver EXCEL Award designation from SHRM National. The Council members worked hard to put several new constructs in place, inclusive of a day-long Strategic Leadership Conference worth six ‘Strategic’ HRCI credits. Sincerely, Julieanna Walker 2012 SHRM-Memphis President 901-603-1423


12 SHRM-Memphis Upcoming Events

June 12th


6:00 PM to 7:00 PM Trust Travels: The Starbucks Story Facilitated by Cynthia Y. Thompson Holiday Inn at the University of Memphis Room 129 Cost $15 for SHRM members; $30 for non-members Approved for HRCI Strategic Recertification Credit

June 19th

SHRM-Memphis Social

5:30 PM to 7:00 PM Bahama Breeze Restaurant 2830 North Germantown Parkway, Memphis, TN 38133 Sponsor??

September 12-14

2012 Tennessee SHRM Conference & Exposition “Find the Music in You” Tennessee SHRM Conference and Exposition at The Memphis Cook Convention Center. Register today! Early Bird Registration ends June 15!



WHO’S who


Getting know your Board WHO’Sthe who? “Soaring Heights of to HR Excellence"

Every issue we spotlight Board members, chairpersons and prominent leaders in the HR and business community.


Rolana Bourland – Vice President, Communications WEDNESDAY 4/11

President of Communications for the past two terms and 20th Annual Membership Conference Park Vista Hotel, Gatlinburg, TN & Staffing Career two years as the Co-Leader for the Hiring

•Vallie Collins, New York Hudson River Survivor: "Good Luck, Bad Luck! Whose to Say" hasProgram, been a member of •Michael McIntyre, PhD.,Rolana Director, Bourland Professional MBA University of TN: "Improving Government by Improving the SHRM since 2006 and is currently the Factories?" •Trish Pulley: "I Can’t Get No Motivations: Overcoming the Vice President of Communications for Motivation Myth in Public Sector"

Emphasis Group. Rolana is currently serving on the 2012


SHRM-Memphis. She is also the Payroll

The Tennessee SHRM Conference will be held in Memphis this year.


Manager/HR Generalist at Cummins Edward G. Phillips, atty, Kramer Rayson: "Legal Update"Mid-South, LLC. 10:00-11:15 Session 5

April 9-14

TN SHRM State Conference Committee as the Facility Chair.

Abbie Hudgens, TN Worker’s

Rolana joined Cummins in 2006Change" as the Corporate Recruiter. Compensation Director: "Organization Her 1:15-2:30 career in Session recruitment spanned 14 years with positions at 6 Mark Morgan Sherrill: "Healthcare ReformTechnical Update and TPMA Results' Adecco andSurvey Olsten Staffing.

Rolana recently earned her Advanced Leader Bronze as a member of the Pacesetters Toastmasters Club. She has served four years on the Habitat for Humanity’s Tool Box Bash Committee and was awarded the Habitat Hero Award

2:30-3:15 Session 7 Betsy Cunningham: "Assertive Communication"

Rolana received her bachelor’s degree from Baylor University,

in 2010 for her commitment to Habitat for Humanity. Rolana

3:30-4:15 Session 8 Trish Pulley: "A Public Sector Business Waco, in Management and International ModelTX, for Talent Management"

thereher is a limited capacity for this own event, Mid-South we recommend advanced and husband Richard Bunk Beds and Business. Because In registration. Click on the link below to register online and reserve your seat. Lonestar Home Improvement. The Bourlands moved to December 2011, Rolana was awarded her PHR Certification. For further information contact: TN Personnel Management Association



Phone: (615)532-4956 | Email: | 9:00-10:30 9 The Pool: "HR Jeopardy" Memphis from Dallas in 2003. Since joining Session SHRM-Memphis she has served as the Vice

Financial Wellness Program Financial Wellness in the workplace can offer many important, long-term benefits to employees at all levels within the organization. By adding the Waddell & Reed Financial Wellness Program to your benefits package you could potentially: • Decrease turnover • Increase productivity • Enhance company culture • Increase participation in the company retirement plan Financial wellness can potentially pay significant dividends to the health of your company and the quality of your employees. Let us show you how. MEMBER SIPC

JERRY MILLIGAN, MBA 6060 POPLAR AVE MEMPHIS, TN 38119 (901) 685-2700




Election Rules are Short Lived – NLRB Suspends Implementation of “Quickie Election” Rules After District Court Finds Rules Invalid By Tanja L. Thompson and Nicole H. Bermel


n May 14th, a federal District Court found the NLRB’s new election rules invalid because they were adopted without a required quorum of three NLRB Members. New Election Rules Allowed for “Quickie Elections” The new election rules, published by the NLRB on December 22, 2011, were destined to have a significant impact on how NLRB elections are conducted. The rules provided for the following changes: • Establishing that the statutory purpose of pre-election hearings was to determine if a question concerning representation exists. • Clarifying that hearing officers presiding over pre-election hearings had the authority to limit the presentation of evidence. • Giving hearing officers the discretion over filing of post-hearing briefs. • Deferring most requests for review until post-election and narrowing the circumstances under which a request for special permission to appeal would be granted. • Eliminating the recommendation that elections should not be scheduled sooner than 25 days after direction of an election. • Creating a “uniform procedure” for resolving election objections and challenges. • Making review of the regional director’s resolution of election issues discretionary rather than mandatory. The NLRB’s stated purpose was to reduce litigation and alleged delay in the process. The consensus among employers and employer representatives has been, however, that the new rules were intended to stifle an employer’s voice in the election process and generously tip the scales in favor of union representation. NLRB’s Haste to Enact New Rules Results in District Court Invalidation In finding the new election rules invalid, the District Court quoted Woody Allen and explained: Eighty percent of life is just showing up. When it comes to satisfying a quorum requirement, though, showing up is even more important than that. Indeed it is the only thing that matters – even when the quorum is constituted electronically. 24

As explained by the District Court, the NLRA requires that a quorum of three NLRB Members participate for the valid transaction of business. Before an agency can implement new rules, it must undergo a lengthy administrative procedure that requires the proposed rules be published and the public be given an opportunity to comment on them. Thus, in June 2011, the NLRB first proposed the new rules. In response, it received 65,000 written comments, and in July held an open forum during which 66 individuals and organizations opined on the proposed pules. The then-current Members of the NLRB all were present for this forum. Subsequently thenChairman Wilma Liebman’s term expired, leaving the NLRB with only three Members. On November 30, 2011 the NLRB passed a resolution (2-1 vote) to prepare a Final Rule regarding the rules to be published in the Federal Register (a necessary procedural requirement). Member Hayes dissented. Then in December, the NLRB circulated a draft of the Notice of Proposed Rulemaking via email and through the NLRB’s electronic case management system. Although the rule continued to be revised, on December 15, 2011, the remaining three Members voted 2-1 on a procedural Order which directed that the Final Rule be published in the Federal Register “immediately upon approval of a final rule by a majority of the Board.” Then-Member Becker’s recess appointment was set to expire on January 3, 2012, and, as stated by the NLRB, it did not want to delay adoption and publication of the Final Rule for fear that Becker’s term would expire and the NLRB would be reduced to two Members who would be unable to act on the proposed rule. Hayes, again, dissented to the NLRB’s Order. The final version of the new rules was circulated on December 16, 2011. Chairman Pearce and then-Member Becker voted to approve the rule and, that same day, the Final Rule was submitted for publication in the Federal Register. Member Hayes, however, never voted on the new rules. Nevertheless, the rules were published in the Federal Register on December 22, 2011, and became effective on April 30, 2012. The day the new rules became effective, Hayes published dissenting statement. Pursuant to the quorum requirement, three Members had to participate in adoption of the rules for them to be valid. The NLRB argued to the District Court that although Hayes did not vote on the adoption of the Final Rule, he should be considered part of

 HR Department Setup  Employee Handbooks and Policy Development  Compensation and Salary Administration  Benefits Manuals  Job Descriptions

 Employee Training – Sexual Harassment – Diversity Training  Leadership Development and Executive Coaching  Recruiting and Onboarding


HR Consulting and Employee Training and Development


Two members of the Board participated in the decision to adopt the final rule, and two is simply not enough. Member Hayes cannot be counted toward the quorum merely because he held office, and his participation in early decisions relating to the drafting of the rule does not suffice. He need not necessarily have voted, but he had to at least show up. At the end of the day, while


Considering these facts, the District Court found that

the Court’s decision may seem unduly technical, the quorum requirement as the Supreme Court has made clear, is no trifle.


the required quorum because he participated in the November 30th decision to adopt a resolution and the December 15th decision to issue a procedural order. Finding, however, that the November 30th and December 15th decisions were procedural and not a final agency action from which legal consequences would arise, the District Court rejected this argument. The NLRB also argued that Hayes was “present” for the vote on the Final Rule. The basis of this argument was that to constitute a quorum, three Members must participate in the decision. The District Court agreed with the NLRB that this did not require a member to vote and further contemplated whether Hayes was a present, but abstaining, voter where the decision took place “across wires.” The Court found that, in this case, where Hayes was given no more than a few hours to vote before the Final Rule was submitted for publication and the agency never requested that Hayes provide his vote, his alleged “participation” in the decision was based solely on being a Member of the Board at the time the Final Rule was implemented, a proposition the District Court explained was recently rejected by the U.S. Supreme Court in New Process Steel, L.P. v. NLRB. The District Court further opined that Hayes’ post-hoc dissent issued months later did not cure the quorum defect.

The District Court ordered that, for now, elections must be conducted under the old procedures. Board Suspends Election Rules, But Not Before Employers Get a Sneak Peak into Rules’ Potential Impact On May 15, 2012, the NLRB suspended its implementation of the new rules. Of course, the NLRB can appeal the District Court’s decision and/or vote again on the election rules – but it may not be that easy, as there still are other hurdles for the NLRB to consider. For example, more than one of the “current NLRB Members” received highlycontroversial recess appointments, the validity of which is currently being litigated before several U.S. Circuit Courts of Appeals. There is some feeling that the NLRB may wait for a favorable outcome from one or more of the Circuit Courts on the validity of the recess appointments before re-voting on the election rules. And, most recently the Board is down one Member, as Republican Member, Terence Flynn, submitted his resignation to the President on May 26, 2012. Still others say there is no reason for the NLRB to wait and that the NLRB may seek to act quickly before the November elections. Nonetheless, the Board has issued a statement that it “continue[s] to believe the amendments represent a significant improvement in [the NLRB’s] process and serve the public interest by eliminating unnecessary litigation,” and the NLRB is “determined to move forward.” Within the fourteen days that the new election rules were in effect, approximately 150 election petitions were filed. This large number of petitions in a two-week period confirms employers’ fear that the new rules and corresponding “quickie elections” will result in an increase in union organizing. It was reported that, under the new rules, a number of elections were scheduled to be held in less than two weeks from the time the petitions were filed. This stands in stark contrast to the six week timeframe that is typical under the “old rules.” The opportunity for effective discussions with employees on the subject of union representation with only a couple of weeks from the time a petition is first filed will be difficult for most employers and virtually impossible for many. And, while the new election rules are currently on hold, unions’ ability to organize in suspect “micro units” is increasing. When the NLRB overturned over 20 years of precedent in Specialty Healthcare and Rehabilitation Center of Mobile last year, it concluded that as long as a union’s petitioned-for unit consists of a clearly identifiable group of employees, it will be presumed appropriate – thereby paving the way for the proliferation of bargaining units and allowing unions to fragment a facility into separate units, organizing on a piecemeal basis. Thus, even without quickie elections, unions have a big step up right now. If or when the new election rules come back (in their current form or with even greater negative repercussions for employers), companies that are trying to remain union-free will find themselves at an even greater disadvantage.

Tanja L. Thompson Shareholder, Littler Mendelson Cynthia Y. Thompson, MBA, SPHR

James Posner, Ph.D.

For a complimentary consultation, contact, or call 901.598.0123 1779 Kirby Parkway 1-62, Memphis, TN 38138

Nicole H. Bermel Shareholder, Littler Mendelson 25

Littler Mendelson and Kiesewetter Wise Kaplan Prather, PLC join forces to form the largest labor and employment law practice in the Mid-South With more than 900 attorneys and 56 offices, Littler Mendelson is the largest U.S.based law firm exclusively devoted to representing management in employment and labor law matters. As the only U.S. member of the Ius Laboris global alliance, Littler has extensive resources to address the needs of multi-national clients, from navigating international employment laws and labor relations issues to applying corporate policies worldwide. The firm has litigated, mediated and negotiated some of the most influential employment law cases and labor contracts on record for the last 70 years. For more information, visit • Littler Mendelson, P.C. 3725 Champion Hills Drive • Memphis, TN 38125 • 901.795.6695

Certification as a labor and employment specialist is not currently available in Tennessee.

Spring 2012 Employment Law Conference

WT SHRM 2012 Board of Directors Front Row (L-R): Casey Smith, At Large-Conference Coor., and HR Administrator for Rainey Kizer Reviere & Bell; Sherry Owens, Chapter Treasurer, and HR Manager for Leroy Somer-North America; Amy West, VP Membership and HR Manager for Jackson State University. Back Row (L-R): Lisa Kinkade, VP/President Elect, and Coordinator II for DRS Corporate Connections; Janice Shipman, Past President, and HR Generalist for WTH; John Carbonell, Chapter President, and AVP of HR for Union University; Jennifer Howell, At Large-Communications Coor., and HR Manager at Union University; Lindsey Pullen, Chapter Secretary, and SR HR Analyst for Perseus Distribution. The WT SHRM Chapter of Jackson, TN, presented their Annual Spring Employment Law Conference on May 2 at the Carl Grant Center at Union University in Jackson, TN. The conference, “HR: An Employee Focus – Managing Workplace and Performance Issues”, began at 7:45 AM with registration and breakfast and ended at 3:15 PM. Rainey, Kizer, Bell, & Reviere PLC sponsored the conference. Topics covered included “Performance Management” by Gregory D. Jordan, Latosha Dexter, John D. Burleson, and Robert O. Binkley. “Case Studies: Harassment in the Workplace”, was presented by Geoffrey A. Lindley and Latosha Dexter. It was followed by “Employment Law Update”, facilitated by R. Dale Thomas. Geoffrey A. Lindley concluded the conference with his presentation on “Social Media- Legal Concerns.” Kate O’Neill, Founder and CEO of [meta] marketer; and Jennifer Way, Founder and Hiring Strategist for Way Solutions, presented “Social Media – A Tool for HR.”





1 Latosha Dexter, attorney with Rainey Kizer Bell Reviere Memphis office. 2 Rainey Kizer Bell Reviere attorneys with 2012 WT SHRM President, John Carbonell, who is also Director of HR for Union University in Jackson. (front row left). Latosha Dexter, Memphis office (front row right). The back row (L-R) R. Dale Thomas, Jackson office; Robert O. Binkley, Jr., Jackson office; John D. Burleson, Jackson office; and Geoffrey A. Lindley, Jackson office. 3 WT SHRM members anxiously await announcements of the door prizes from the vendors. 4 (L-R) Kate O’Neill, Founder and CEO of [meta] marketer and Jennifer Way, Founder and Hiring Strategist for Way Solutions; presented “Social Media – A Tool for HR”.


A Case Study on Unlawful Harassment –

When Can a Company Employee be Held Personally Liable? By Latosha Dexter


ulie loves her job. She is a public relations representative for a major company. She works for the company at its Tennessee location. Everything is going great until she hears that John, Vice President of Finance, has been telling people that Julie is having an affair with her immediate supervisor, Blake. It is not true but everyone starts to believe it. Now when she walks into a room people giggle and talk in whispers. One of her co-workers remarks “Now I know why you get to do all the press confer-

ences.” Other male superiors start asking her out or making smart, sexually charged comments such as “If you do for me what you did for Blake I can help your career.” Julie complains to Blake who tells her his hands are tied. She then files a complaint with her human resources representative who interviews John. John denies the allegations and claims that Julie is a habitual liar. After interviewing John, the HR representative concludes the investigation finding no truth to Julie’s allegations. Feeling that she has no other recourse, Julie files a charge of discrimination with the EEOC. When the EEOC charge is received at corporate headquarters, the CEO’s executive assistant calls John and tells him about it. After assuring her that the matter will be handled, John tells her to send him the charge and to not discuss it with anyone. John puts the charge in his desk drawer, and the company never responds to the EEOC charge. 28

Unfortunately, Julie’s situation is not unique or uncommon. Should Julie file a lawsuit, she will allege that she was subjected to unlawful harassment on the basis of her gender - in other words, she was sexually harassed. A careful employment attorney representing Julie will file suit under both federal and Tennessee state law. However, what is sometimes overlooked is that under Tennessee law her claim is not just limited to a claim against the company, but she may also have a claim against John, possibly Blake, and others. Unlawful harassment is defined as unwelcome conduct that is based on race, color, sex, religion, national origin, disability, and/or age. Such unlawful harassment can implicate Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act, or the Americans with Disabilities Act. The Tennessee Human Rights Act (THRA) can also be implicated; however, claims brought under the THRA, whether for harassment or discrimination, may have a unique twist. Unlike federal law which does not extend liability to individual supervisors or co-workers, the THRA allows individuals to be sued personally.

knowledge of the harassment is not enough. Reagan v. City of Knoxville, 2010 WL 2639933 (E.D. Tenn. June 28, 2010) (citing Carr, 955 S.W.2d at 835-36)). Therefore, while Blake, the HR representative, and the CEO’s assistant may be on safer ground than John, a clever attorney will argue on Julie’s behalf that their affirmative actions, although perhaps unintentionally, still obstructed the investigation. If they are found individually liable, Julie would be able to collect damages from them just like she could from the company, which could include lost wages and pain and suffering. This case study is based on a real life occurrence, and, fortunately for the individual employees involved, the company was concerned enough that it reached an out of court settlement with Julie on everyone’s behalf. OC


Given the potential for individual liability for unlawful harassment and discrimination claims under Tennessee law, what steps can HR professionals take to prevent their company’s supervisors, employees, and themselves from being found individually liable? First, never take the denial of the alleged harasser/discriminator at face value. Always conduct a thorough investigation, interviewing as many people and collecting as much evidence as possible. Second, if the alleged harasser/discriminator is a supervisor or management level employee, keep that employee out of any employment decisions concerning the complaining employee. Third, determine the necessary remedial action and follow up to make sure that it is taken. Lastly, follow up to make sure that the company investigates and responds to any EEOC charges or any other administrative charges of discrimination.

John’s potential for individual liability is clear. However, could Blake also be in trouble for failing to initiate an investigation? Could the HR representative be individually liable for not investigating beyond John’s denial? Is the CEO’s executive assistant safe from liability under the THRA? Should she have followed up with John to make sure that the EEOC charge was adequately investigated? Did any of them intend to prevent or obstruct any investigation or were they just negligent? Because Tennessee courts have held that a denial of the alleged behavior is enough to aid and abet under the law, then, arguably, an employee would not have to clearly intend to obstruct the employer’s investigation and prevent remedial action to be found individually liable. However, the courts have also noted that individual liability requires some sort of affirmative conduct to either encourage the harassment or to impede the investigation. Mere presence during the harassment or 29


In Julie’s case, John was a harasser because of his lie that Julie was having an affair with Blake. Her co-workers who giggled, whispered, and made any disparaging comments toward her may be harassers depending on the severity. The other male superiors who propositioned her are also harassers. However, all of this harassing behavior does not create individual liability. The individual liability is created by John’s lie during the investigation of Julie’s internal complaint and his actions in preventing the company from even investigating and responding to the EEOC charge. The Tennessee Court of Appeals has allowed the imposition of individual liability on such a supervisor who denied engaging in sexually offensive behavior, which in turn deterred the employer from taking the appropriate remedial action. See Steele v. Superior Home Health Care of Chattanooga, Inc., 1998 WL 783348 (Tenn. Ct. App. Nov. 10, 1998); See also Harris v. Dalton, 2001 WL 422964 (Tenn. Ct. App. April 16, 2001).


Therefore, should Julie include a claim under the Tennessee Human Rights Act, she may also choose to bring a cause of action personally against John, Blake, the HR representative, the CEO’s executive assistant, and others. Unlike its federal counterparts, the THRA makes it a discriminatory practice for any person to “[a] id, abet, incite, compel or command a person to engage in any of the acts or practices declared discriminatory by this chapter[.]” In interpreting this statute, with regard to harassment, the Tennessee Supreme Court has held that individual liability is imposed when a court finds that (1) unlawful harassment has occurred; (2) the individual employee acted affirmatively to aid, abet, incite, compel, or command an employer not to take remedial action in response to the harassment; and (3) that the employer failed to take adequate remedial action. See Carr v. United Parcel Service, Inc., 955 S.W.2d 832 (Tenn. 1997). Therefore, in addition to the company's liability for the unlawful harassment, individual employees of the company may also be liable for aiding, abetting, inciting, compelling, or commanding the harasser to engage in the unlawful conduct. Further, while the harasser will not incur personal liability for the actual harassment, individual liability may lie if he takes affirmative steps to prevent the company from taking remedial action. (The Tennessee Court of Appeals has held that individual liability does not exist under the THRA on claims of disability discrimination. Satterfield v. Bluhm, 2004 WL 833291 (Tenn. Ct. App. April 16, 2004)).


“Just because you’ve got a good idea doesn’t mean that you’ll be successful.” DAYMOND JOHN Star of “Shark Tank”


aymond John is an American entrepreneur, investor, television personality, author and motivational speaker. He is best known as the founder, president and CEO of FUBU (For Us By Us), and appears as an investor on the ABC reality television series “Shark Tank.”

Daymond grew up in the community of Hollis, Queens, the birthplace of the genre of music called Hip-Hop, with acts like RUN DMC and Salt-N-Peppa rapidly making names for themselves. Being surrounded in this influential neighborhood and exposed to the lifestyle these music pioneers were creating helped spur the inspiration for his clothing line, which ultimately changed the fashion world. His global business empire has grossed more than $7 billion in sales to date. John was the keynote speaker for the Lipscomb & Pitts Breakfast Club on Thursday, May 17, where he encouraged a crowd of several hundred business and community leaders to embrace our diversity, spotlight the “everyday heroes,” and work hard to follow our dreams. “Memphis has a great culture,” John said. He praised EmergeMemphis, LaunchYourCity, Memphis Bioworks Foundation and the Mid-South Minority Business Council Continuum for supporting the local entrepreneurial ecosytem. Noting the life-changing affect of seeing a successful businessman living in his neighborhood, who had a professional job, John spotlighted the importance of having role models and mentors for our inner-city youth. Kids need to see the “everyday 30

heroes” that we have in our community, who go to work, work hard, and come home to spend time with their families. It will help open their eyes to what success really means and allow them to see new opportunities and directions for their lives. He also offered five “SHARK” points to ‘up and coming” entrepreneurs and business leaders alike:

• Set goals • Homework (Know your company and your competition backward and forward.) • Amore (Do what you love.) • Remember you are the brand • Keep moving, always working to get better On Wednesday night he participated in a mini-shark tank presentation before a couple hundred guests at the Littler Law Firm. John stressed the importance of delivery over design, and stated, “…Just because you’ve got a good idea doesn’t mean that you’ll be successful. Find what it is about your company that sets you apart.”

BOOK LOOK Marketing Shortcuts

for the Self-Employed By Cynthia Y. Thompson

Are you currently self-employed but not as successful as you would like to be? Then this book is for you. Are you unhappy in your current position and are thinking about making a change? Then this book is for you. Perhaps you are an HR professional seeking to increase your online credibility. This book is definitely for you! If you would just like to learn more about Twitter, LinkedIn, and Facebook, and You Tube, this book definitely is for you! But if you are in transition and seeking a new position, this book is a must read!! Patrick Schwerdtfeger, author of Marketing Shortcuts for the Self-Employed, spoke at the 2012 AR SHRM Conference on Thursday afternoon. He enlightened and inspired HR professionals with his presentation called “Social Media Victories”. The book analyzes specific tactics used by actual companies in real life situations and is full of actual case studies that attest to the power of the Internet and how it can help you crush your competition. It is an exciting and quick read with very short chapters that offer an actionable to-do list at the end. If you are unemployed or in transition, you must read this book! It is no longer enough to post your resume on job boards. This book will get you to work immediately identifying your value proposition, developing your elevator pitch, and establishing your online presence. Patrick shows you how to hone in on your area of expertise and crush your competition. In today’s world of online recruiting and social media, you must learn how to master the tools of the Internet to get noticed and increase your exposure. Patrick is the founder of the Entrepreneur and Small Business Academy, one of the nation’s largest entrepreneur communities. He delivers keynotes, and facilitates workshops and seminars all over the world. Patrick has over 75,000 followers on Twitter and 100,000 views on You Tube, and he is a regular speaker on Bloomberg TV. I highly recommend that you purchase this book. For your convenience, go to our website,, and click WEB on the Buy Now button. You can reach Patrick on Twitter @ schwerdtfger, and his website is




May 3rd at the Crescent Club




4 1 Scott King, representing one of the largest independent actuarial and consulting firms in the nation was the keynote speaker. He discussed the value of benchmarking your benefits and how this data can be used to form an effective health care strategy. 2 Jennifer Kiesewetter, Kiesewetter Law Firm, which focuses primarily on employee benefits law spoke on “The Changing Environment of Fiduciary Duty and Liability.” 3 Attendees enjoying the speakers at the Strategic Leadership for HR Executives Seminar. 4 Attendees enjoying the wine and cheese reception at the Crescent Club following the seminar. 5 Cynthia Y. Thompson, Consultant with The Thompson HR Firm, spoke on “What




Your CEO Expects You to Know About HR.” 6 Craig Wright with Lipscomb & Pitts introduced the keynote speaker, Scott King.





June 12 SHRM-Memphis Trust Travels: The Starbucks Story 6:00 PM to 7:00 PM Facilitated by Cynthia Y. Thompson Holiday Inn at the University of Memphis Room 129 Cost $15 for SHRM members; $30 for non-members



1 Jennifer Kiesewetter, Kiesewetter Law Firm, spoke on 408(b)(2) Disclosures and Plan Participant Disclosures at the SHRM-Memphis Comp & Benefits Career Emphasis Group Meeting, Breakfast with Benefits sponsored by Morgan Keegan, on May 9 at the University of Memphis. 2 Brooks Monypeny, Raymond James | Morgan Keegan, spoke on Establishing Standards of Conduct for Plan Fiduciaries at the SHRM-Memphis Comp & Benefits Breakfast Meeting. 3 David A. Lail, Alliance Bernstein, presented Making Defined Contribution Plans More Effective at the SHRM-Memphis Comp & Benefits Breakfast Meeting. 4 David Allen, PhD, Management Department University of Memphis presented “Attracting, Engaging, and Retaining” at the HR for Executives Lunch Seminar held May 10th at Lipscomb & Pitts. Patty Cherry, HRO-Partners, spoke on New Laws for 2012 and How They Will Affect You.” 5 Dr. Bob Nelson, CEO of Nelson Motivation, and author of 1501 Ways to Reward Employees and leading authority on employee recognition, was the guest speaker at the SHRM-Memphis Breakfast Meeting on May 15 at the Holiday Inn at the University of Memphis. SHRMMemphis members all received a copy of the book. His topic was “Five Trends Shaping the Future of Work”. 6 Bonnie Cox, Founder of Power Training Institute led the HR301 Learning Track at the NW MS SHRM Annual Training Seminar on May 23 at the Whispering Woods Hotel and Conference Center in Olive Branch, MS. 7 Jamila Webb, Extreme Dreams; and Calvin Brown, Assistant to Memphis Police Director Toney Armstrong also attended the Lipscomb & Pitts Breakfast Club Meeting at the Botanic Garden on May 17. 8 Pam Weakley, Solar Tech; and Luke Yancey, Mid-South Minority Business Council; were at the Lipscomb & Pitts Breakfast Club Meeting at the Botanic Garden on May 17. 9 Board of Directors of the Tennessee Society for Healthcare Human Resource Administration. Membership consists of professional healthcare personnel, college students pursuing a degree in human resources, and consultants working in the human resources field. Pictured are the 2012 Board of Directors of the Memphis Chapter (front row L-R) Donna Robinson, Vice President; Stacey Schwarzmann, President; Jameika Ward, Director of Finance. (back L-R) Beth Lara, Director of Communications; Rachel Booker, Director of Sponsorships; Damita Beck, Director of Programs. Not pictured are Courtney Love, Past President; Rebecca Bush, Director of Membership; and Rosalie Gibson, Director of Professional Development.


Approved for HRCI Strategic Recertification Credit

June 12 NEA SHRM 11:30 AM to 1:00 PM ASU Technical Center Special SHRM Presentation “The Future of HR: What’s Next for the Profession?” Speaker: Sherry Johnson, SHRM Director Southwest Central Region Approved for HRCI Strategic Recertification Credit


June 19 WT SHRM Top 10 Mistakes Employers Make Handling Employee Leave Issues

11:30 AM to 1:00 PM Carl S. Grant Event Center at Union University, Jackson, TN Speaker: Brent Siler with Baker Donelson Approved for HRCI Recertification Credit


June 21 SHRM-Memphis Social at Bahama Breeze Restaurant 2930 N. Germantown Parkway Bartlett, TN 38133

6:00 PM to 8:00 PM

June 24-27 SHRM 2012 Annual Conference & Exposition Atlanta, GA

July 5 What Your CEO Expects HR to Know Complimentary Webinar by Ascentis Speaker: Cynthia Y. Thompson

12:00 PM to 1:00 PM


Approved for HRCI Strategic Recertification Credit Register at


The Time Is By Jennifer Kiesewetter

Now… Section 408(b)(2) Is Finally Here

After much regulatory back and forth, the Department of Labor (“DOL”) issued the Section 408(b)(2) final regulations on February 3, 2012, with an effective date of July 1, 2012. From the proposed regulations through these recently issued final regulations, the DOL has had one primary concern: to ensure that plan fiduciaries “obtain comprehensive information about the services that are provided to employee benefit plans, and the cost of those services.” DOL Final Regulations, 72 Federal Register 5632, at Preamble, A. 1. The Employee Retirement Income Security Act of 1974 (“ERISA”) requires plan fiduciaries, when selecting and monitoring service providers and plan investments, to act prudently and solely in the interest of the plan’s participants and beneficiaries. Fundamental to the ability of plan fiduciaries to discharge these fiduciary obligations is obtaining information sufficient to enable the plan fiduciaries to make informed decisions about an employee benefit plan’s service providers, the services provided by such service providers and the costs of such services. In short, plan fiduciaries must ensure that (1) arrangements with their service providers are “reasonable,” (2) services provided by the service providers are “necessary,” and (3) only “reasonable” compensation is paid for these services. To help plan fiduciaries obtain this comprehensive information, the DOL issued these final regulations which require certain “covered service providers” to make written disclosures to the plan fiduciaries about (1) the services the service providers provide to the plan, (2) the fiduciary and/or registered investment advisor (“RIA”) status of the service providers, and (3) the compensation the service providers will be receiving for these services.

So let’s break down these final regulations. To which plans do these final regulations apply? The final regulations generally apply to most ERISA plans, including pension, profit sharing, 401(k) and 403(b) plans. These regulations do not apply to simplified employee pension plans (SEPs), SIMPLE retirement accounts, individual retirement accounts (IRAs), health savings accounts, individual 401(k)s, and certain frozen 403(b) plans. The final regulations also do not apply to health or welfare plans; however, then DOL has stated that it intends to publish rules for covered service providers with respect to disclosures for welfare benefit plans in the future. Who is a covered service provider? The final regulations apply to the following service providers: (1) certain plan fiduciaries or RIAs providing services to the plan; (2) certain recordkeeping or brokerage service providers if the plan is an individual account plan that permits participants or beneficiaries to direct the investment of their account; or (3) certain service providers, such as those providing accounting, auditing, actuarial, banking, recordkeeping, third-party administration or brokerage services, to name a few, that reasonably expect to receive indirect compensation for their services. Moreover, to be considered a “covered service provider” the provider 34

must reasonably expect to receive $1,000 or more in compensation, direct or indirect, during the term of the contract or agreement.

The Disclosures: Description of Services: Covered service providers must provide a description of its services to the applicable plan fiduciary. The description of services should be clear and understandable. If the plan fiduciary needs assistance in understanding any information furnished by the covered service provider, as a matter of prudence, the plan fiduciary must request assistance, either from the service provider or elsewhere. Description of Fiduciary/RIA Status: The covered service provider must provide a description of its fiduciary status (which includes the level of fiduciary capacity, e.g., a Section 3(21) fiduciary or a Section 3(38) fiduciary) to the plan fiduciary. The covered service provider must also disclose whether it is acting as or “reasonably expects” to act as an RIA. Description of Compensation: The covered service provider must disclose all direct and indirect compensation to be received by itself, its affiliates and/or its subcontractors. “Direct compensation” is compensation received directly from the plan. “Indirect compensation” generally is compensation received from any source other than the plan. To assess potential conflicts of interest, covered service providers who disclose indirect compensation also must disclose both the sources for the indirect compensation plus the services to which the compensation relates. What Happens if Section 408(b)(2) Is Not Followed? If the requirements of Section 408(b)(2) are not satisfied, the expenses associated with the covered service provider contract or service agreement will be considered a prohibited transaction under ERISA and may be subject to excise taxes. This puts the burden on the plan fiduciary to determine whether the information disclosed by the covered service provider is of sufficient scope and quality to satisfy the final regulations of Section 408(b)(2). If a prohibited transaction occurs, that is if the service provider agreements do not satisfy the final regulations, the plan fiduciary may be exempted from the prohibited transaction if certain requirements are met. These requirements include, in part, requesting the covered service provider to furnish the missing or corrected information, reporting the covered service provider to the DOL if such information is not furnished within ninety (90) days of the request, and mandatorily terminating such covered service provider “as expeditiously” as possible consistent with the duty of prudence if such information not provided relates to future services. This exemption only provides relief for the plan fiduciary. It does not provide relief from the prohibited transaction rules for the covered service provider. Thus, a disclosure failure will nonetheless result in a prohibited transaction, which will need to be reported on the Form 5500, and will result in excise taxes on the part of the covered service provider. Thus, the Section 408(b)(2) regulations become effective on July 1, 2012, and all agreements between plan fiduciaries and covered service providers must satisfy these regulations by that date. If not, a prohibited transaction will have occurred. Thus, plan fiduciaries must review these agreements carefully, in the spirit and requirement of prudence.

Smart Screening.You Smart Hiring. Information Trust.

Hrp june 2012  
Hrp june 2012