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ASSOCIATION

1800 READERS: THE MAGAZINE FOR MICHIGAN ASSOCIATION PROFESSIONALS

®

MSAE.ORG |MARCH/APRIL 2017

EXPERIENTIAL LEARNING

LUANN DUNSFORD

KEYS TO CREDITABLE & ACCOUNTABLE LEADERSHIP EMPLOYERS BEWARE

HOW MANY POWERPOINT PRESENTATIONS CAN YOUR MEETING ATTENDEES HANDLE?

POP QUIZ

HOW WELL DO YOU KNOW THE FRESHMAN LEGISLATORS?

TECH SUPPORT

FIVE APPS FOR EFFECTIVE FUN AT WORK

SALES TAX COMPLIANCE QUESTIONS ANSWERED

IS YOUR DISCLOSURE SOLELY A DISCLOSURE?

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TA B L E O F C O N T E N T S

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16

SALES TAX COMPLIANCE QUESTIONS ANSWERED

A BRIEF OVERVIEW OF THE MOST RECENT CHANGES TO MICHIGAN’S SALES TAX RULES.

W H AT ’ S TRENDING

P R E S I D E N T ' S M E S S AG E 4

GOOD WORK Get ready to shine — start your Diamond Award entry now.

# Association employees continue to REFINE THEIR C R E D I B I L I T Y.

A S S O C I AT I O N KNOWLEDGE

6

7

18

makes for strong knowledge transfer.

An introduction to a diverse class of freshman legislators.

# Check your SA L E S TA X

THE IMPORTANCE OF EXPERIENTIAL LEARNING

TECH SUPPORT MSAE has five app suggestions to create an effective and fun environment at work.

I N D U S T R Y U N D E R STA N D I N G EMPLOYERS BEWARE: IS YOUR DISCLOSURE SOLELY A DISCLOSURE? The Ninth Circuit finds that liability waivers in consumer report disclosures willfully violate the FCRA.

collection practices.

Learn how association meeting professionals are incorporating a variety of learning methodologies into their educational offerings.

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# EXPERIENTIAL LEARNING

QUIZ: HOW WELL DO YOU KNOW THE FRESHMAN LEGISLATORS?

# Process for BACKGROUND C H E C K S changes.

10

COVER STORY: KEYS TO CREDITABLE & ACCOUNTABLE LEADERSHIP — AN INTERVIEW WITH LUANN DUNSFORD

The SPARK Interview Series Throughout 2017, Association IMPACT will be interviewing select association leaders about key concepts from the book SPARK: How to Lead Yourself and Others to Greater Success, by entrepreneurs, business consultants, and military veterans Angie Morgan, Courtney Lynch, and Sean Lynch. This issue, Luann Dunsford, CEO, Michigan Works! Association, engaged in a frank discussion about creditability and accountability in association leadership. Association executives should have received a free copy of the book in the mail in early January 2017.

ASSOCIATION IMPACT < ISSUE 2> 2017 3


P R E S I D E N T ' S M E S S AG E

Good Work

Get ready to shine — start your Diamond Award entry now.

A

ssociations do amazing things for their members. I continue to be astounded at the programs, services, advocacy work, and marketing efforts that MSAE members coordinate for their members. MSAE is proud of you. You should be proud of your work, too. You can show your pride by submitting your newest projects and initiatives for consideration to win a 2017 MSAE Diamond Award. Entries must be submitted to MSAE by 5:00pm on Friday, July 28. I urge you to not discount your work. Work in service of members is work worth recognition. There are several categories that will best align with your projects.

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ASSOCIATION IMPACT < VOLUME 34 > 2017

2016 Diamond Award Winner: Michigan Osteopathic Association The entry categories are: ++ e-newsletter ++ diversified revenue program ++ government relations project ++ innovative collaboration ++ magazine ++ member engagement ++ meetings and expositions ++ membership development ++ professional development ++ public relations campaign ++ social media campaign ++ volunteer service ++ website The process has been streamlined, but it will take some investment of your time to put everything together and outline goals, objectives, strategy, and tactics. MSAE has a great chart on the difference between these four terms. I keep this chart beside my computer to remind me. I am pleased to share it with you again: http://bit.ly/2luyOc6. While you’re at it, make sure to mark Thursday, September 14, on your calendar. The 2017 Diamond Awards Banquet will recognize the amazing programs and groups of the year. The entry fee this year includes one ticket to the Awards Banquet at The Henry, an Autograph Collection Hotel, in Dearborn. All winning entries will be featured at the Thanksgiving Brunch on Friday, November 17. The Diamond Award winners will share their success. Seize this opportunity to be recognized and honored by your peers for the most amazing

accomplishments your organization has to show from the past year. We want to share in your pride.

About the Diamond Awards The Diamond Awards program was created by a group of Detroit association CEOs. The program was designed to honor and celebrate innovation, achievement, and excellence within the association industry. 

By Cheryl Ronk, CAE, CMP Cheryl Ronk, CAE, CMP (cheryl@msae.org) is the president of MSAE. President's Message is a regular feature in Association IMPACT magazine. If you’d like to stay up to date between issues, follow her blog posts on LinkedIn at http://bit.ly/2nrYCGX.


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A S S O C I AT I O N KNOWLEDGE

1. 1 How many freshman

5. 5 Who is the youngest

2. 2 Who are the these

6. 6 How many of the new

legislators were sworn in this past January? A. 44 B. 12 C. 33 D. 75

member of the freshman class and at what age? A. Ben Frederick B. Jewell Jones C. Yousef Rabhi D. Beau LaFave

four legislators?

A. Kim LaSata, Jewell Jones, Tommy Brann, Bettie Scott B. Julie Calley, Brian Elder, Roger Hauck, Sue Allor C. Michele Hoitenga, Ronnie Peterson, Jeff Yaroch, Pamela Hornberger D. Beth Griffin, Gary Howell, Jeff Noble, Daire Rendon

3. 3 How many women

are represented in the new class? A. 13 B. 50 C. 4 D. 28

4. 4 How many freshmen

legislators are serving on the House Appropriations Committee? A. 2 B. 26 C. 18 D. 10

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class were re-elected? A. 11 B. 1 C. 9 D. 0

Quiz: How well do you know the Freshman Legislators? An introduction to a diverse class of freshman legislators.

The new legislators are among the most diverse group ever elected: more women, more ethnic minorities, a younger group, and from a diverse background. “This means that the Michigan Legislature is increasingly looking like the population of the state, and that’s a good thing,” Kelly Rossman of Truscott Rossman was quoted as saying in the Detroit Free Press. This diversity is reflective of the changing demographics of the state. How well do you know this new freshman class? Take the following quiz to test your knowledge of the freshman class and the make-up of the Michigan House of Representatives. Get all 10 correct and you are an expert. Get 8 or 9 and you are savvy. Less than 8 correct? Then we recommend you review all the freshman legislators on Third Thought® by visiting: http://bit.ly/2ntVAV6.

ASSOCIATION IMPACT < VOLUME 34 > 2017

7. 7

The legislative black caucus grew by how many? A. 7 B. 2 C. 3 D. 0

8. 8 How many new

members in the House are of Middle Eastern descent? A. 3 B. 8 C. 0 D. 2

9. 9 How many new members are Hispanic? A. 2 B. 1 C. 5 D. 0

10 How many women

of the freshman legislators chair House Committees? A. 3 B. 1 C. 6 D. 0

ANSWERS ON PAGE 19


A S S O C I AT I O N K N OW L E D G E

The Importance of Experiential Learning

How many PowerPoint presentations can your meeting attendees handle? By Cheryl O. Ronk, CAE, CMP

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ssociation meeting professionals are changing the way they present. They are incorporating a variety of learning methodologies into the educational offerings. More meetings are including a virtual component for pre-materials and follow-up conversations. Mobile apps keep attendees informed and motivated during the event. Topic selections are crowdsourced. TED-style talks or industry insight presentations are offered. PechaKucha — presentations where 20 slides are shown in 20 seconds — are gaining popularity. Fishbowls — the learning strategy where participants are contributors and listeners in discussion — and panel presentations in an Oprah Winfrey-style are more frequent. Obviously, there is a movement to upgrade the member experience during educational offerings. Planners are looking at the meeting experience and working to meet the needs of a variety of different learning styles. The customer needs top consideration, along with the goal of the education or training session. The PowerPoint lecture has been losing favor, and with good reason. The lack of variety leads to boredom. Breakout session after breakout session features a PowerPoint presentation. Some presenters are using Prezi, which does allow more flexibility to follow the audience’s needs but is still a visual presentation. Meeting professionals realize that experiencing something is an effective way to learn. Research indicates that people learn from experience and application far better than they

 ASSOCIATION IMPACT < ISSUE 2> 2017 7


A S S O C I AT I O N KNOWLEDGE

do from lectures. This includes actual hands-on learning, observing others in practice to emulate what is being done, and awards for excellence or a competition to demonstrate skills. Learning by doing has been proven to enhance learning and enhances retention.

Associations Test Fresh Learning Approaches

The Michigan Lodging and Tourism Association incorporated “EduTours” into its spring meeting. Over six different site visits or field trips with an explanation of how the site relates to the attendees’ needs will allow participants to see how others are incorporating practices that could influence how they work. The Detroit Metro Convention and Visitors Bureau helped arrange the tours. Conversely, the Southeast Michigan Council of Governments is hosting a group of college career counselors when they are in Detroit this summer for their convention to learn more about associations and jobs in associations.

Stage 1: Experience (Kolb’s “Concrete experiences”)

Stage 2: Reflect (Kolb’s “Reflective observation”)

Stage 3: Conceptualize (Kolb’s “Abstract conceptualization”)

Stage 4: Plan (Kolb’s “Active experimentation”)

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ASSOCIATION IMPACT < VOLUME 34 > 2017

Experience Do Something

Plan

Reflect

Bearing in mind your conclusions

Think about what you did

Conceptualize Make generalizations

The Michigan College of Emergency Physicians built their office building about 12 years ago with facilities for demonstrations and hands-on learning. The office regularly becomes an emergency room with emergency physicians sharing practices and vendors

introducing new methodologies. The Arboriculture Society of Michigan has held sessions where tree climbing and trimming practices are shared and demonstrated. Members have an opportunity to emulate the training right there onsite. The Michigan Association for

Life is full of experiences we can learn from. Whether at home, at work, or out and about, there are countless opportunities for us to start the learning cycle. Reflection involves thinking about what we have done and experienced. Some people are naturally good at this. Others train themselves to be more deliberate about reviewing their experiences and recording them.

When we pass from thinking about our experiences to interpreting them, we enter into the realm of what Kolb termed conceptualization. To conceptualize is to generate a hypothesis about the meaning of our experiences. In the active experimentation stage of the learning cycle, we effectively test the hypotheses we have adopted. Our new experiences will either support or challenge these hypotheses.


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Bring Great Examples Home During a visit to the United Brotherhood of Carpenters & Joiners of America training center in Las Vegas, Nevada, this fall, guests saw the variety of training opportunities hosted there. One that was especially impressive was the large room that features scaffolding parts and provided hands-on training for carpenters to assemble the newest scaffolding systems. Crew leaders from all over the country come to learn the latest techniques and then go back to their home cities to train others. This is hands-on learning at its best. “The most important part of using experiential education methodology is the intentionality behind what you are doing. We don’t learn from experience by itself but rather by reflecting on that experience, creating meaning from it, and then using that meaning to influence how we operate in the future,” says Preston Yarbrough, faculty and senior project director for the Center for Creative Leadership, in a recent article for Successful Meetings.

Are You Exploring Experiential Learning? Experiential learning has been studied. David Kolb’s learning cycle is a well-known theory, which espouses that we learn from our experiences of life, even on an everyday basis. It also treats reflection as an integral part of the learning. So, how does your organization foster this reflection? Kolb’s learning cycle was published in 1984 and demonstrated how the process of learning follows a pattern or cycle consisting of four stages, one of which Kolb refers to as reflective observation. The stages are

illustrated in the figures on page 8. He strongly advocated that learning is a continuous process grounded in experience and that learning is the major process of human adaption. To learn from our experiences, it is not sufficient just to have them. This will only take us into Stage 1 of the cycle. Rather, any experience has the potential to yield learning, but only if we pass through all of Kolb’s stages by reflecting on our experiences, interpreting them, and testing our interpretations. Learning from our experiences involves the key element of reflection. Obviously, most people don’t theorize about their learning in this way, but in their learning follow Kolb’s cycle without knowing it. As meeting professionals continue to evaluate what they want to accomplish and how they

are going to offer the experience for that outcome, they will find that consideration of Kolb’s model will help make the experience holistic.  Cheryl Ronk, CAE, CMP (cheryl@ msae.org) is the president of MSAE.

Keep Learning in Third Thought® Want to know more about this topic? Search for the articles and podcasts listed below in MSAE’s digital library on www.thirdthought.msae.org. "How to Apply the Five-Stage Model of Adult Skill Acquisition"

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ASSOCIATION IMPACT < ISSUE 2> 2017 9


C O V E R STO R Y

LUANN DUNSFORD

KEYS TO CREDITABLE & ACCOUNTABLE LEADERSHIP By Carla Kalogeridis

C

ontinuing its 2017 article series on the key concepts from the book SPARK: How to Lead Yourself and Others to Greater Success, Association IMPACT caught up with Luann Dunsford, CEO of Michigan Works! Association, and engaged in a frank discussion about creditability and accountability in association leadership. Written by entrepreneurs, business consultants, and military veterans Angie Morgan, Courtney Lynch, and Sean Lynch, the book explores how anyone can become an extraordinary leader by embracing certain key behaviors. Michigan Works! Association was established in 1987 to provide services and support to Michigan’s workforce development system through timely and relevant professional development opportunities and programs. Dunsford joined Michigan Works! Association in 1999 as controller, served as COO, and was named CEO in 2007. Here, she reflects on the correct role of a leader and how that leader can support their team’s ongoing accountability and credibility development.

Spark talks about four keys to credibility: (1) understanding and meeting the standards of others; (2) having a narrow “saydo” gap; (3) communicating your intent and expectations; and (4) holding others accountable when they fail to meet standards. What else would you add to that list? DUNSFORD: Everything that I can think of related to credibility falls into one of those four categories. They cover a lot of territory.

Among these four keys to credibility, which one is most important? DUNSFORD: If you don’t pay attention to all four, then you’re putting a lid on your leadership capabilities. You may be stronger in one area than another, but one is not more important than the other. Remember that one flat tire on a car will bring it to a halt. Same goes for a strong, effective leader — you must keep an eye on all four keys to credibility.

Which one do you think people struggle with the most? DUNSFORD: Probably communicating intent and expectations. Effective

10

ASSOCIATION IMPACT < VOLUME 34 > 2017

communication is tough work. My favorite communication tool is reflective listening. When someone finishes speaking, I say something like, “OK, what I’m hearing you say is…” and then you can add at the end: “Is there more?” Then you can continue the loop until everyone is on the same page. When communication isn’t clear, you will see frustration emerge and missed opportunities.

Which one of these four keys is hardest for you personally? DUNSFORD: Holding others accountable is the hardest for me because sometimes I let my own accountability get in the way of having tough conversations. I always start with “What did I do? What could I have done?” But that can’t be a barrier to holding others accountable for what they did or didn’t do. Tough conversations are exactly that — tough. People know when things aren’t going well, and it is a relief to talk about it. You want to be the person on your team who respects others enough to tell the truth. I like to use sports analogies. In


COVERSTORY

 Luann Dunsford, CEO, Michigan Works! Association Photo credit: Dave Trumpie

ASSOCIATION IMPACT < ISSUE 2> 2017 11


C O V E R STO R Y

Luann Dunsford, CEO, Michigan Works! Association pictured with Edythe Hatter-Williams, CEO, Capital Area Michigan Works! Photo credit: Dave Trumpie

basketball, if your free-throw doesn’t go in, you make adjustments and shoot again. When a leader talks about not meeting performance standards, you have the opportunity to make an adjustment and try again.

How do you counteract complacency related to the upholding of your organization’s standards? What’s the best guard against complacency? DUNSFORD: You have to build and maintain a team of high performers, then set the standard, be clear, and hold to the organization’s principles. When your team is focused on excellence, they may get anxious when something isn’t going well.

As a leader, you need to hold your team accountable, and that may include exiting low performers. It’s not always convenient or pleasant, but it is critical to the health of the organization. Another way to keep your team engaged is to support professional development. Time spent at conferences, workshops, or professional organization meetings is a great way to network and learn new ideas.

Do you have a say-do gap principle for yourself? And for staff? DUNSFORD: A say-do gap principle is simple but can be hard to implement. As an association CEO, everyone

“As an association CEO, everyone wants my time, but time is a nonrenewable resource and must be carefully managed. I’ve learned to put do-not-schedule blocks on my calendar, so I can follow up on action items or promises I’ve made. When you don’t deliver, you hurt everything that you are trying to help.”

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ASSOCIATION IMPACT < VOLUME 34 > 2017

wants my time, but time is a nonrenewable resource and must be carefully managed. I’ve learned to put do-not-schedule blocks on my calendar, so I can follow up on action items or promises I’ve made. When you don’t deliver, you hurt everything that you are trying to help. This is also true for your team. Sometimes tasks will take more time than your staff anticipated, and it takes courage for your staff to ask for help or to say, “I can’t do everything I said I could do.” Your staff must know that you are available to help them, that you will prioritize deadlines or give them more resources. It’s a trust issue. Credibility is hard won and easily lost.

How can you repair your credibility if it is lost? DUNSFORD: A true apology is about accountability and a pledge to change behavior — not just an “I’m sorry.” It might sound like: “I know I wasted your time by being late to this meeting, and I will work hard not to do that to you again. I’m sorry.” Only your actions can raise your credibility, so build habits into your day that will help. When trust has been broken, it takes time and action to repair.

When leading your team, how do you make sure that your intent is correctly communicated? DUNSFORD: I use prompts and cues to keep conversation rolling until everyone is clear. I may ask them to restate what they think they heard, or ask them to tell me what steps they plan to take. “OK, now that we’ve discussed this, what is your action plan?” You can’t micro-manage, and you don’t have time for miscommunication. So, I prompt the feedback. “How are you going to move forward?” If I sense that I’m not being clearly understood, I might say, “I’m not sure I explained myself well. Can I restate what I said?”


COVERSTORY

“I create a culture of process improvement. Making adjustments to achieve desired goals is the spirit that drives my team. We are never satisfied, and we live and breathe continuous improvement.”

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The most important thing is that you work hard to make sure everyone is clear, and then you can own it and move on.

How do you help your association perform as an accountabilitybased organization? DUNSFORD: I create a culture of process improvement. Making adjustments to achieve desired goals is the spirit that drives my team. We are never satisfied, and we live and breathe continuous improvement. One example is our approach to hosting events. We all keep a running “process improvement” list prior to, and during, an event to log ideas that we might implement the next time or to note areas where we can make changes. This is especially helpful during the event, when something doesn’t go right — maybe someone has or has not done something that negatively

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everyone pulls out their list, and we discuss each comment. It’s not about egos or blame. It’s about creating excellence. We are completely focused on the goal, and what we want to do or make happen at the next event.

ASSOCIATION IMPACT < ISSUE 2> 2017 13


C O V E R STO R Y

DID YOU KNOW?

Michigan Works! Association is a non-profit membership organization that provides services and support to Michigan’s talent development system. Capital Area Michigan Works! is a member and one of 16 regional agencies that the Association serves as part of the Michigan Works! system.

Associations are often comprised of small, intimate teams of people. Does it require courage to give performance-based feedback to individuals on a small team? DUNSFORD: Yes, but understanding

 14

that candid, performance-based feedback is one of the greatest forms of respect and love that you can show a person makes it easier. Over the years, I’ve had some tremendously difficult conversations.

ASSOCIATION IMPACT < VOLUME 34 > 2017

It can be overwhelming, but you have to address issues head-on with respect, whether it is with staff or even dues-paying members. It helps me to ask: Am I living in accordance with my guideposts of integrity and truth? If so, I move forward.

What special accountability challenges do leaders face in this age of social media? DUNSFORD: Social media is an important tool, but harnessing its power can be a challenge. You have to work very hard to make sure your message is delivered through the right channel to the right audience. And, then of course, you can’t please everyone, and social media seems to be an avenue that some are taking to blast out negativity. You need to have a plan in place

to handle any negative comments, and always take the high road. If you’re not willing to say something to someone’s face, then you shouldn’t be saying it on social media. #accountability!

What processes of selfevaluation work best for you? DUNSFORD: I am constantly analyzing my performance. What can I do better? How fast was my response? What was the quality of my response? I have trusted mentors who I talk to regularly that I can depend on to give me candid feedback. They help me to remember to treat myself with compassion and give me encouragement to achieve more. I’m brave enough to listen, process, and practice. Once you look at the world


COVERSTORY

Carla Kalogeridis (carlak@msae.org) is editor of Association IMPACT. All chief staff executive members received SPARK in January. If you need a copy, MSAE has a limited number available. Request a copy from Kim Gools at gools@msae.org.

Luann Dunsford, CEO, Michigan Works! Association speaking with Capital Area Michigan Works! clients. Photo credit: Dave Trumpie through the lens of a leader, you will never see the world the same again.

Do you agree that accountability is somewhat rare? DUNSFORD: Not rare, but lacking. It’s easy to blame, but it’s better to just square your shoulders, accept accountability, and move on.

What affect does individual accountability have on team accountability? DUNSFORD: Without individual accountability and integrity, the team is at risk. When low performers are allowed to stay, high performers may become mediocre or even leave, and problems escalate. High accountability builds credibility and is critical to success. On a small team, sometimes everyone touches a piece of a project; we operate like a relay team. So, when someone drops the baton, the product suffers. Often, a person who is called on to fix a problem isn’t the one accountable. That’s fine once or twice, but you have to improve the process and make sure the one responsible is held accountable.

How do you seek out the problems in your organization? DUNSFORD: In a small organization, problems don’t stay hidden for long. It’s more about addressing problems clearly, quickly, and

in a non-dramatic way. If it is a system issue, you ask questions like: How is this working? Why are five people touching this one piece of paper? Then, be prepared to make some changes, assess the outcomes, and make some more changes! Process improvement never ends.

What are some of the more common accountability problems in associations that can hold back the organization? DUNSFORD: Accountability comes down to empowerment versus micromanagement. You must allow the staff to do their job. If they can’t make decisions, then why should they be accountable? Give them support when things go wrong, and praise when things go right. It’s easy to fall into the trap of just doing it yourself. If you want to create a team of high-performing leaders, you must hold yourself accountable for staying at 30,000 feet, touching down when needed, but then getting back to big vision and strategy. You have to trust the staff to make decisions. When the result isn’t exactly what you want, then work together to ensure the intent is clearer next time and make adjustments to improve the process. Every person on my team is a leader. I just happen to be the CEO. 

Keep Learning in Third Thought® Want to know more about this topic? Search for the resources listed below on MSAE’s knowledge management platform: www.thirdthought.msae.org.

"The World is Flat: Trust" The Leadership Challenge: Enable Others To Act

 ASSOCIATION IMPACT < ISSUE 2> 2017 15


F E A T U R E STO R Y

SALES TAX COMPLIANCE QUESTIONS ANSWERED Michigan’s sales tax rules were modified, resulting in associations questioning their compliance. Here is a brief overview of the most recent changes and how they impact your organization.

By Cheryl Ronk, CAE, and Lauren Edgley, CPA

T

he Main Street Fairness Act, a two-bill package that went into effect in Michigan on January 15, 2015, likely does not change your sales tax collection process. Under federal law, out-of-state merchants are not required to collect a state’s sales tax on goods they sell to residents unless the remote sellers have a physical presence such as a store or warehouse in that state.

The new state law emulates other state’s initiatives that refine physical presence to include certain practices such as selling through subsidiaries, affiliate networks, or other persons with substantial nexus in the state. For Michigan-based associations, this likely does not change the sales collection process. You collect the 6 percent sales tax on all tangible items sold in

JAN

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F E AT U R E STO RY

Michigan, and based on your level of activity, submit the tax on an annual (< $750 tax due), quarterly ($750 -$3,600 tax due), or monthly (> $3,600 tax due) basis to the Michigan Department of Treasury. The Michigan Retailers Association worked on this issue for decades to ensure a more level playing field for Michigan retailers. The legislation created a new definition of physical presence to include companies such as Amazon or online and catalog companies that operate in Michigan through partners. Consumers were using brick-and-mortar retailers as showrooms and avoided paying sales tax by purchasing products online from out-of-state companies. Even though consumers are required to calculate and report the 6 percent on purchases where the sales tax is not charged at the

point of sale on their state income tax returns, this often isn’t done. A recurring question is if my organization sells and ships products to other states, would the legislation require the association to collect and remit sales tax for other states? The answer is no. The legislation only deals with Michigan sales tax on items sold in Michigan. Twenty-four states have passed similar legislation; however, you would not be required to collect and remit sales tax in any of those states unless you have a physical presence in that state.  Cheryl Ronk, CAE, is the president of MSAE. Lauren Edgley, CPA, is a tax adviser and business consultant at Yeo & Yeo CPAs & Business Consultants.

MSAE thanks the Michigan Retailers Association for its assistance in gathering this information.

Keep Learning in Third Thought® Want to know more about this topic? Search for the articles listed below on MSAE’s digital library on www.thirdthought.msae.org.

“Ask an Expert: Sales Tax

Update for Associations”

“The Application of the

Michigan Sales and Use Tax to Nonprofit Organizations”

“Preparing a Tax Check-Off List”

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ASSOCIATION IMPACT < ISSUE 2> 2017 17


A S S O C I AT I O N KNOWLEDGE

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If you like working on paper, you will like this app. With a stylus, you can use this app to take notes, maintain a planner, annotate photos, and build a presentation.

Denise Amburgey, CFO at MSAE, to sign up. You will receive an additional 25 percent off the non-profit rate.

If This, Then That This helps with reminders about routine tasks.

Clicktime Need to know how much time staff spent on an event? Using ClickTime gives you lots of information on how much staff time is spent where and how much it costs your association. Try ClickTime for free to see if it works for you. Contact David Klein, director of marketing at ClickTime, or

Share Your Apps

Submit any apps or software programs you like to use for work to info@msae.org, and we will share them here.

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ASSOCIATION IMPACT < VOLUME 34 > 2017

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A S S O C I AT I O N K N OW L E D G E

Answers: How well do you know the Freshman Legislators Quiz? 1. A – 44 2. C – Michele Hoitenga, Ronnie Peterson, Jeff Yaroch, Pamela Hornberger 3. A – 13: Representatives Julie Alexander, Sue Allor, Julie Calley, Cara Clemente, 4. 5. 6. 7. 8. 9. 10.

Diana Farrington, Beth Griffin, Michele Hoitenga, Pamela Hornberger, Bronna Kahle, Kim LaSata, Donna Lasinski, Daire Rendon, Bettie Scott D – 10: Representatives Sue Allor, Tommy Brann, Shane Hernandez, Kim LaSata, Steve Marino, Scott VanSingel, Jeff Yaroch, David LaGrand, Ronnie Peterson, Yousef Rabhi B – Jewell Jones at 21 B – One: Bettie Scott C – Three: Representatives Ronnie Peterson, Bettie Scott, and Jewell Jones D – Two: Representatives Abdullah Hammoud and Yousef Rabhi B – One: Representative Shane Hernandez A – Three: Representatives Michele Hoitenga, Daire Rendon, and Diana Farrington

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ASSOCIATION IMPACT < ISSUE 2> 2017 19


I N D U S T R Y U N D E R STA N D I N G

EMPLOYERS BEWARE: IS YOUR DISCLOSURE SOLELY A DISCLOSURE?

The Ninth Circuit finds that liability waivers in consumer report disclosures willfully violate the FCRA. By Kimberly K. Forrester

O

 20

n January 20, 2017, the Ninth Circuit Court of Appeals issued an opinion with far-reaching consequences for employers’ liability under the Fair Credit Reporting Act (FCRA) (15 U.S.C. § 1681b(b)(2) (A)), which could impact insurance coverage for such liability. In Syed v. M-I, LLC, et al., 2017 WL 242559 (9th Cir. Jan. 20, 2017), the court held that a prospective employer willfully violates the FCRA when it procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure. Plaintiff Syed applied for a job with M-I in 2011. As part of the application process, M-I provided Syed with a document labeled “Pre-employment Disclosure Release.” The disclosure release informed Syed that his credit history and other information could be collected and used as a basis for the employment decision, authorized M-I to procure Syed’s consumer report, and stipulated that by signing the document, Syed was waiving his rights to sue M-I for violation of the FCRA. Syed filed a class action lawsuit on behalf of himself and all others that had received the same disclosure document, arguing that M-I had violated the FCRA, which requires that the disclosures given to job applicants before obtaining their consumer reports consist “solely” of the disclosure. The United States

ASSOCIATION IMPACT < VOLUME 34 > 2017

District Court for the Eastern District of California dismissed the class action complaint, concluding that Syed had not sufficiently pled willful violation of the FCRA. Syed appealed. In a matter of first impression, the Ninth Circuit reversed the district court’s dismissal, holding that M-I’s inclusion of a liability waiver in the same document as the disclosure willfully violated the FCRA as a matter of law. In reaching its holding, the court emphasized that the FCRA requires that the disclosures given to job applicants consist solely of the disclosure that the report may be obtained for employment purposes. Therefore, the court concluded that an employer’s inclusion of any terms in addition to that disclosure language, including a liability waiver, constitute a willful violation of the statute. The court explained that “solely” unambiguously means alone, singly, entirely, or exclusively such that M-I’s inclusion of a liability

waiver on the same document was a plain violation of the express terms of the statute. The court further elaborated that the inclusion of a waiver “does not comport with the FCRA’s basic purpose… (and) to the contrary, it would frustrate Congress’s goal of guarding a job applicant’s right to control the dissemination of sensitive personal information.” The Syed case could have a significant effect — opening the door to claims under the FCRA — because employers routinely use consumer reports as part of their job application process. Under the statute, plaintiffs are limited to their actual damages unless they can prove the employer “willfully fail(ed) to comply” with the statute. In such instances, plaintiffs can recover statutory damages ranging from $100 to $1,000, punitive damages, attorney’s fees, and costs of suit. In light of these exposures, employers often look to their liability policies to pick up the


I N D U S T R Y U N D E R S TA N D I N G

defense costs and indemnity exposure associated with these claims. The Ninth Circuit’s holding that the employer willfully violated the FCRA is likely to create coverage defenses to these claims, as many states have public policy limitations prohibiting insurance coverage for an insured’s willful acts. Thus, in situations like Syed, where employers have not followed the express requirement of the statute to have disclosures in a standalone document, they will now be facing increased exposure for claims arising under the FCRA without the assured safeguard of insurance coverage to help pick up the tab. The Syed case is an important reminder for employers to take a fresh look at their application forms — and specifically, their consumer report disclosures under the FCRA — to ensure they comport with the express requirements of the statute. As appropriate, they should also seek the advice of counsel. Otherwise, employers may face much more than they bargained for with their liability waivers. Rather than escaping liability under the FCRA, they may face exposure for additional remedies resulting from the willful violation of the statute and risk the loss of insurance coverage as a consequence. Kimberly K. Forrester, pictured below, is an associate at Sedgwick LLP. Republished with permission. This article first appeared on the C-Suite Risk Report blog on January 31, 2017.

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Keep Learning in Third Thought® Want to know more about this topic? Search for the articles and podcasts listed below in MSAE’s digital library on www.thirdthought.msae.org. ;;“Hiring Practices An Association “Association Annual Risk “Employee or Should Follow” Assessment – Procedures Independent & Practices” Contractor”

ASSOCIATION IMPACT < ISSUE 2> 2017 21


BOARD OF DIRECTORS MSAE STAFF Mike Wenkel, CAE, Chairman Executive Director Michigan Potato Industry Commission Barry Cargill, CAE, Chairman-Elect Executive Director Michigan HomeCare & Hospice Association

Cheryl O. Ronk, CAE, CMP President Denise E. Amburgey Chief Financial Officer Stephanie Wohlfert, CMP Meetings Coordinator Shawnna Henderson Marketing & Communications Manager

Denise McGinn, CAE Kimberly Gools, CAE Secretary Membership Director President Edward Woods III Association Guidance

®

Director of Learning &

Lorraine Goodrich Leadership Experiences Treasurer Angela DeVries CFO Executive Assistant Automotive Industry Action Group

Kelly Chase, CMP

Amy Smith, CAE, AAP, Past Chairman Meetings Assistant Vice President and Kristy Carlson, CMP Executive Director Virtual Meetings Coordinator The Clearing House Payments Authority ASSOCIATION IMPACT® Rochelle Black Carla Kalogeridis VP for Government Relations Editor Oakland University

Shawnna Henderson

Steve Carey, CAE Graphic Design Executive Director National Truck Equipment Mark Stiles Association Advertising Sales Paul A. Long BRD Printing President & CEO Printing Michigan Catholic Conference Cynthia H. Maher, CAE Executive Director Michigan Plumbing & Mechanical Contractors Association Steve Mitchell Chairman Mitchell Research & Communications , Inc Dave Moulton Member Services Manager SME Andi Osters Assistant Director Michigan High School Athletic Association Jack Schripsema, CTA President & CEO Greater Lansing Convention & Visitors Bureau Jared Burkhart Executive Director Michigan Council of Charter School Authorizers Kimberly R Pontius, CAE Executive Vice President Traverse Area Association of REALTORS® Richard P. Seely, CAE Account Executive Member Insurance Solutions, Michigan Dental Association

Association IMPACT® is published bimonthly by the Michigan Society of Association Executives, 1350 Haslett Road, East Lansing, MI 48823, (517) 332-6723. Subscribers should direct all inquiries, address changes, and subscription orders to that address. Articles written by outside authors do not necessarily reflect the view or position of the Michigan Society of Association Executives (MSAE). MSAE’s position on key issues will be clearly stated. Manuscripts are accepted at the approval of MSAE, which reserves the right to reject or edit. Appearance in Association IMPACT® does not constitute endorsement of the advertiser, its products or services, nor does Association IMPACT® make any claims or guarantees as to the accuracy or validity of the advertiser’s offer and reserves the right to reject any advertising deemed unsuitable. Advertising rates available at www.msae.org.

CONNECT WITH NEW PEOPLE THROUGH ASSOCIATION IMPACT MAGAZINE Did you know associations represent most industries, from homebuilders to healthcare? Take a second to think of an industry and I bet there’s an association for that! There’s even an association for associations — MSAE is proud to be Michigan’s. Our publications represent the most effective, inexpensive way to market to the association sector in Michigan. Contact stiles@msae.org for a personalized quote or complete marketing plan.


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Association IMPACT Magazine: An Interview with Luann Dunsford  

Luann Dunsford, CEO, Michigan Works! Association, engaged in a frank discussion about credibility and accountability in association leadersh...

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