HR compliance is an important process, but one so rigid and bureaucratic that companies sometimes ironically lose sight of the human element when fulfilling their human resources responsibilities. One of the most challenging aspects of being an HR professional is knowing when to exercise discretion in a difficult decision, rather than simply go by the book.
Former employment attorney and author Jathan Janove has provided multiple examples of such tricky situations to the Society for Human Resource Management, presenting varied solutions for difficult conundrums in the field of HR.
Weighing whether to make a compensation plan compliant
One example Janove highlighted was the story of an HR director who attended an employment law conference on wage and hour issues, where the presenting attorneys described how companies that failed to properly classify and compensate their employees were at risk of class-action lawsuits. The attorneys concluded by recommending that, in light of an increase in wage and hour litigation, companies conduct wage and hour audits to confirm that their pay practices were in compliance with the law.
The HR director did so, and was unnerved to discover that the company had been misclassifying a group of salaried senior customer service specialists as exempt, and allowing them to work long hours without overtime pay.
Current government regulations required the company to reclassify the group of employees and pay them overtime from that point on, and estimate the amount of overtime hours each employee worked over the past two years and pay them back accordingly.
The HR director estimated the back pay would total $250,000, which would be a significant amount to give to a group of employees who were already highly paid and seemingly satisfied with their compensation. On the other hand, if an employee discovered the error and sued the company, even more money would likely need to be paid out as part of a settlement.
The HR director went to the CEO with the issue and presented three options: pay the $250,000, continue their current payment practices and hope to never be sued, or transition to a new compensation plan that includes overtime going forward, but never acknowledges the back pay already owed.
The company opted for the third choice, which Janove praises as the right one, noting it represents a sound cost-benefit analysis. While it does not eliminate the possibility of a lawsuit, it does mitigate the risk going forward, while also saving the company the $250,000.
Questioning the costs of consistency
Another area in which rigid adherence to the rules may prove unwise is the question of consistency.
When presented with a difficult situation, most HR professionals will defer to previous precedent, citing a need to be consistent with policy and past practice. There is some good reason for this, too, as lawsuits often rest on whether a company can prove that it acted consistently in a certain matter, rather than providing an employee with special treatment or targeted abuse.
"Yet, in my experience, employers who do the right thing based on fairness and values instead of relying on the most consistent thing based on fear of claims have nothing to dread about the legal system," Janove noted.
Janove also shared the story of an HR director who was presented with just such a predicament. A valued employee who had been with the company for seven years requested an unpaid, three-month sabbatical to pursue a personal interest. The company had no sabbatical policy in place and the HR director didn't want to set a new precedent, yet he was also worried about losing one of the company's top workers if he refused the request.
To work around the issue, the company exercised discretion in granting the request under the general personal leave of absence policy, and internally noting their unique reasons for approving the unusual request, without ever using the word sabbatical.
These and other elegant solutions to common human resources problems simply require HR professionals to play it by ear a bit more, and do it by the book a bit less.