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The CFO’s Complete Guide to Assessing the Health of the HR Function

The CFO’s Complete Guide to Assessing the Health of the HR Function

Chief Financial Officers (CFOs) are now becoming more and more engaged in the HR function, and ensuring that each and every aspect of HR is reviewed carefully and regularly is an important step forward for any organization.

Data from a Robert Half survey shows that HR is the top area where CFOs have expanded their reach over the last three years (39%), largely because CFO involvement in HR allows them to address staffing challenges from a financial perspective.

As CFOs continue to put more time into HR, it’s first crucial to understand the major areas in which CFOs should begin their assessments regarding whether an organization has a sound HR operating structure in place. In this post we will overview the main areas of focus a CFO should assess to ensure a healthy HR function.

HR Areas of Focus for CFO Assessment

Company Culture

Company Culture Audit
Company culture is one of the most important aspects of maintaining a competitive modern workplace. In a study conducted by RippleMatch, company culture was the leading reason that a candidate decided to accept a job or not, with almost three quarters of respondents (who were 700-plus recent graduates) reporting that this consideration was the most important. When it comes to auditing your organization’s cultural health, measuring employee satisfaction is key.

Employee Satisfaction
In HR’s current “war for talent,” with the unemployment rate the lowest it’s been in decades, it’s more important than ever to create a solid recruitment strategy that’s complemented by employee satisfaction as a serious driving force. CFOs looking to assess the current health of the HR department need to put time into assessing employee satisfaction, whether by:
• Implementing regular employee satisfaction surveys
• Inviting employees to join company discussions or meetings
• Gauging interest in benefits like company events, outings, professional development opportunities, and work-life balance benefits
• Ensuring a sound manager-employee review system is in place that happens at least once or twice per year

Addressing Critical Culture Issue Areas
Another aspect of a company culture audit is identifying the most critical issue areas. To really have a complete, successful HR program, any company culture problems must be proactively addressed. Critical issues often include that the company has no clear values that employees can recognize and thus cling to; that leadership isn’t accessible or transparent; or that there are no long-term goals in place.

If these three common issues can be recognized and addressed by CFOs, company culture will be on the path to being revamped and competitive.

Compensation and Rewards

Of course, another important aspect of HR is compensation and benefits. And part of staying relevant is ensuring that you’re offering competitive salaries and benefits packages to employees.

Benchmarking Salaries
Especially with top-level talent and executives, it can be challenging to know if an employee will be tempted by a better offer within a competing organization. One way to ensure you remain competitive and retain this top talent is to benchmark, which means assessing your own compensation structure and comparing it to other companies within your industry. Then, salaries can be updated if necessary (or, benefits can be improved to balance out any salary discrepancies).

Bonuses and Incentives
It’s common knowledge that employee satisfaction increases when employee contributions are overtly recognized and celebrated. This is why bonuses or performance-based incentives can be impactful in HR retention strategies. CFOs should try implementing an incentive that’s based on an employee’s performance, giving them something to work towards and thus improving motivation. Year-end bonuses can also help employees feel recognized and satisfied with their jobs. While a simple “thank you” may work at times to encourage and inspire, HR and CFOs should work together to create an incentive program that the organization can afford and which motivates employees.

Benefits Package
Similar to compensation benchmarking, CFOs should do their research to ensure that the company’s benefits package is competitive and updated regularly. This means knowing what modern top talent is looking for. According to Harvard Business Review survey data, the most desirable employee benefits are:
• Health, dental, and vision insurance
• Flexible hours
• Vacation time/paid time off
• Work-from home options
• Unlimited vacation
• Student loan assistance
• Tuition assistance
• Paid parental leave

One of a business’ largest expenses is the annual dollar amount spent on employee benefits. CFOs should make sure that benefits dollars and being invested wisely into crafting a thoughtful, impactful benefits package.

Technology and Data

Another big consideration for HR departments and CFOs alike is data. With the rise of automation and machine learning, businesses can now streamline processes and analyze large amounts of data to make future plans and projections. And these changes apply to HR efforts, such recruitment and retention, which now depend on sophisticated data and a method in place to analyze it, such as a useable online dashboard.

According to a report from KPMG, 92% of strategic HR functions now see automation as having a significant impact on the HR function, and 66% of organizations are putting a greater focus on the automation conversation within their company.

However, actual strategies are still lacking in HR, KPMG data also shows. While around two thirds of HR executives recently reported to believe that HR is undergoing a big digital transformation, only 40% of these leaders said they have a plan in place at either the enterprise or HR level. So, putting these considerations at the top of the priority list could give your business a significant competitive edge.

Assessing the Existing Technology Stack
First, CFOs should start by assessing their HR department’s current technology utilization. Is there a method in place to not only gather data, but to analyze it and incorporate it into a long-term strategy? What databases and dashboards are being used, and are they successful? And of course, cost is an important factor in implementing new technologies, so CFOs are encouraged to always consider technology ROI in terms of process improvement.

How to Find the Right HR tech for Your Business
Every organization has different needs and trends, so it’s important for you to help your HR department figure out which technologies will best meet your business’ needs. Some important considerations to keep in mind include:
• How automation will impact the need for long-term HR staff
• Training for HR staff to be able to properly use technology to handle and analyze data
• Implementation processes and timelines for new technology

Key Data Metrics to Track Over Time
So what metrics should your HR department care about most? Here are some of the top data metrics for HR to track and use for future planning:
• Cost-benefit analysis: tracking the benefits of a program weighed against the cost (such as a benefits package)
• Revenue per employee/productivity: tracking the total amount of company revenue divided by the number of employees so that efficiency and productivity can be measured via human capital
• Recruitment: tracking how long it takes to fill a position, and how much it costs
• Turnover: tracking how long employees stay at the company and which departments see the highest turnover, in addition to the cost of turnover
• Retention: tracking the company’s actual ability to retain key talent

Hiring and Retention

Next, CFOs should analyze hiring and retention strategies, one of the most important parts of the HR function.

Recruitment Tactics
How is the HR department currently approaching recruitment? This includes considerations like where job advertisements are being posted, whether recruiters are engaged with platforms like LinkedIn or other social media outlets, and whether competitors’ job posts are being assessed and incorporated into the company’s own job ad approach.

Depending on your industry, recruiters should be involved in researching and reaching out to top talent who they find would be great candidates. This could be through networking events or via online platforms.

Hiring Processes
It’s also important to consider the efficiency and effectiveness of hiring procedures, such as:
• How resumes or cover letters are received (email, online application, etc.)
• How long it takes HR to respond
• How the interview process works (i.e., phone interview followed by two in-person interviews)
• How job offers are relayed (email, formal letter)

Onboarding and Training
A good onboarding strategy can make or break recruitment efforts and retention strategies. It’s important to set up a welcoming, informative program that educates new hires and aims to integrate them into company culture by involving multiple departments and individuals. These early connections are important for any new hire to feel like they made the right decision in accepting a job.

Just as important is training and development that new hires will need, so each department should have its own system in place in addition to the overall HR employee training program. These are important considerations: 69% of employees have a higher chance of sticking with a company for three years if they have a great onboarding experience.

Identifying and Addressing Turnover Issues
One of the biggest threats for modern businesses is high turnover. The Center for American Progress says that on average, the cost of turnover is 22% of an employee’s annual salary.

The first step in addressing turnover problems is figuring out when employees leave—if it’s near the start of their tenure at the company, greater focus is needed for onboarding and training, perhaps. If it’s later in the employee’s tenure, the reasons could be related to company culture, benefits, compensation, management, or room for growth within the company. All of these considerations deserve a detailed plan from your HR function.

Compliance Review

CFOs play a major role in HR compliance, since penalties or legal issues could be involved if required policies and procedures aren’t followed. Here are the top areas for CFOs to review regarding compliance.

Employee Handbook
Every HR department should create an employee handbook that lists all policies and procedures. This levels the playing field so that employees don’t think one worker is getting special treatment. The handbook should be updated as the industry changes or as new laws and regulations are put into effect, and it should include things like benefits, leave policies, dress code, flexible working opportunities, tuition reimbursement, and more.

Employee Files
CFOs should take a look at how employee files are currently handled. There are many records that need to be kept confidential, so it’s crucial to ensure that there is a security system in place for these sensitive records.

Benefits Compliance Review
There are important acts and laws for every HR professional and CFO to understand and ensure compliance with. Some of the most important include:
Family and Medical Leave Act (FMLA): related to required time off for new parents, health issues, or family issues
Fair Labor Standards Act: overtime regulations, minimum wage, etc.
• Disability coverage regulations for employees
COBRA: required continued insurance offering after an employee leaves the company

An important aspect of the HR function is ensuring all of these important regulations and policies are followed and applicable requirements are met.

Strategic Alignment Evaluation

Because HR is such a crucial part of company operations, it’s important that the department is aligned with other areas across the organization. HR is often the first point of contact for job candidates, so HR professionals have a unique obligation to reflect company values as well as the positives of working at your business.

Aligning Finance, HR, and Company Goals
Part of the CFO’s involvement in HR is to ensure that practices are aligned with finance and overall company goals. Some of the HR metrics to track that were described earlier will apply here, since they’ll be important in determining cost-benefit ratio, the cost of recruitment/new hires, and other HR finance considerations.

Company goals and values should also align with HR for the reasons previously mentioned: HR is often the face of the company during recruitment and hiring, so it’s crucial that these professionals reflect the organization’s mission, vision, and goals. Leadership from each of these areas within the company should meet regularly and discuss any issues so that key team members are aligned across the board.

Long-Term Workforce Planning
Many of the considerations already discussed are necessary for efficient workforce planning. This means integrating a company’s goals and mission while ensuring that the organization has the human capital it needs to succeed. HR professionals, in conjunction with the CFO, need to evaluate both current and future needs in personnel and departmental structure, and figure out how to make these efforts cost-effective.

Another consideration here is the professional development and training that will keep personnel effective within the given industry. As mentioned, in regards to technology, systems and processes are constantly changing, and companies have to ensure that they keep up by educating employees, ensuring they can operate with the most cost-effective and efficient tools in place.

Key Takeaways

In today’s workforce, CFOs are tasked with ensuring that HR not only functions as it should on the appropriate legal and financial level, but also that it is making successful efforts to integrate technology and implement high-impact recruiting and retention strategies.

When assessing the current state of an HR department, CFOs should remember to look at the following key areas:

  1. Company Culture
  2. Compensation, Benefits, and Incentives
  3. Technology and Data Strategy
  4. Hiring, Onboarding, and Retention
  5. Compliance
  6. Strategic Alignment and Workforce Planning

Only after reviewing these key aspects of HR can CFOs better make decisions about personnel, policies and procedures, cost considerations, and departmental structure that will drive the business forward.

This post is brought to you by Paycor.
How to Make Your Workplace More LGBTQ Friendly (And Why You Should)

How to Make Your Workplace More LGBTQ Friendly (And Why You Should)

The LGBTQ community has yet to have full federal protection in the workplace against discrimination. In May 2019, the House of Representatives passed the Equality Act, which bans discrimination because of an employee’s sex, sexual orientation, or gender identity, but the bill is resting with the Senate, who may decide not to pass it.

Marriage equality is now a federal law, impacting all 50 states, yet there are still 31 states without discrimination protection for this community, according to the Human Rights Campaign Foundation’s report, A Workplace Divided.

In your workplace, diversity and inclusion should be two main priorities, and adequately addressing these matters means that you are both recognizing and encouraging the LGBTQ community to feel open, safe, and normal living and working as they are.

Here are key reasons why you should take action to create a more inclusive and diverse workforce, and the ways to do it.

Impacts on the LGBTQ community when they feel excluded

It’s easy to see why LGBTQ workers would continue to feel excluded in the workplace. They often don’t feel understood or acknowledged, and they may feel like they’re not able to participate in normal discussions or activities because of the fear of being judged or stereotyped.

Many people in this community feel overly sexualized. Essentially what this means is that when it becomes known that they have a certain “nontraditional” sexual orientation, they become their sexual identity, instead of coworkers seeing them for themselves and their work capabilities.

This feeling of exclusion leads to negative feelings and even lack of productivity at work: 25% of LGBTQ workers report feeling distracted from work, as the Human Rights Campaign report shows, 17% report feeling exhausted from having to hide their sexual orientation, and 31% report feeling unhappy or depressed at work.

Why encourage openness and acceptance?

According to the aforementioned report, 46% of workers who identify as LGBTQ remain closeted, and half of those surveyed said that there aren’t any employees at their organization who are open about it.

While it’s of course not always a great idea to have everyone discuss or admit to their sexual experiences in the workplace, the reasons behind staying closeted show how fearful a non-inclusive workplace can be for this community. The top reasons that they stay closeted are:
• The potential to be stereotyped by coworkers
• To avoid making others feel uncomfortable
• To avoid losing connections or relationships
• To avoid coworkers thinking they are attracted to them because they are LGBTQ

Make sure in your efforts to encourage openness that you aren’t forcing LGBTQ workers to disclose things they aren’t comfortable with; the key is to educate staff and have serious discussions about these topics. If they aren’t talked about, LGBTQ workers will feel like they have to remain closeted. And while some topics are “supposed to be” taboo at work, like sex or politics, the truth is, many employees talk about their lives outside of work on a daily basis with their coworkers.

Why educate employees?

It’s also important to keep all employees educated about policies and aware of how best to behave in the workplace. You aren’t telling them what to believe, just how to represent the company and treat others while they’re on your watch.

Many employees may just not be aware of these issues, and so they may not even recognize that their behavior is out of line or could be offensive to their coworkers. It’s your responsibility to thus educate them so that they are more thoughtful and deliberate about how they treat certain topics and talk to each other at work.

The Workplace Divided report revealed an additional alarming statistic in this area: 1 in 5 LGBTQ workers have experienced being told by a coworker that they should dress either more feminine of masculine; only 1 in 24 non-LGBTQ workers reported this having ever happened to them. Additionally, 36% of non-LGBTQ employees said that they would feel uncomfortable if an LGBTQ coworker started talking about their dating life.

So, there is clearly still a bias in place that needs to be addressed in each and every workplace. Part of ensuring you are fostering an inclusive and diverse office is educating everyone to get them thinking about their behavior and the way they treat others.

Benefits of inclusivity for your company

Your LGBTQ workers will not be the only ones who benefit from addressing these issues. Think about the benefits your organization will also experience:
• Less discrimination lawsuits and therefore less in legal fees
• Less turnover, as 1 in 4 LGBTQ workers said they stayed in a job because the workplace was accepting of LGBTQ people
• Health insurance costs may go down because the health of all employees is given more consideration
• Partnerships could increase as your company becomes known as a socially responsible organization

Another big reason to address discrimination and encourage inclusivity and diversity in the workplace is because a more diverse office is a more profitable office. A study from Boston Consulting Group last year found that companies with above-average diversity on management teams earn 19% more in revenue than companies with below-average diversity on these teams.

Why? Because diverse teams create diverse perspectives; gone are the days of the bureaucracy, where one team of older white men makes all the decisions for an organization. For any company to grow and succeed, diversity, and therefore greater inclusivity, are assets.

Additional strategies to foster inclusivity and diversity in the workplace

So where should you begin? Try implementing these strategies to foster inclusivity and better educate the workforce about discrimination and how to create accepting, inclusive workplaces:
• Talk about how detrimental stereotyping can be, in general and also related to someone’s gender or sexuality.
• Share statistics similar to those presented in this article to show employees how important these issues really are for a functioning workplace.
• Engage with learning materials that present workplace scenarios so that employees can learn how to approach certain topics and actually visualize how to behave to encourage inclusivity.
• Always stress the importance of diversity and make sure the executive team shares with the company about efforts they are taking in these areas (for example, those in charge should admit when they become aware of areas they could improve, such as diversifying the board of directors).
• Provide resources for LGBTQ workers if they experience harassment or discrimination from coworkers, or if they just need someone to talk to, like an HR representative or counselor.
• Implement actual company policies that protect workers against discrimination and harassment in the workplace. Make sure these policies are distributed to all employees and are available for reference.

Key takeaways

• Because discrimination rights based on sexuality continue to stall on a federal level, take action in your individual workplace
• If the LGBTQ community feels excluded in the workplace, they’re more likely to leave and are more likely to feel unhappy or depressed at work
• Encourage openness and acceptance at work so that LGBTQ workers don’t feel like they have to remain closeted to be liked
• Educate employees, especially non-LGBTQ workers, so that they are aware of these issues and are better aware of how to behave
• Recognize the financial and productivity benefits that an inclusive and diverse workplace provides
• Create support systems and company policies that address these issues

When you’re able to educate and encourage, and foster diversity and inclusivity—teaching your employees what they mean, why they’re important, and how they help the entire workplace—your company culture will shift toward being more socially aware and responsible.

Updates to What Employers Can Ask about Wage History in Illinois

The Illinois Equal Pay Act of 2003 has been amended, effective September 29, 2019, with updated guidelines on what employers can and cannot base hiring decisions on. Particularly, employers cannot make hiring decisions based on salary history of candidates. So, what does this mean, exactly, and what else did the amendment change?

No More Asking About Wage or Salary History

The amendment has prohibited Illinois employers from doing the following when going through the hiring process:
• They cannot screen candidates or applicants based on their prior wage or salary history, or their current compensation. This includes benefits. They cannot require this information to be disclosed or have minimum and maximum criteria for hiring.
• They cannot request wage or salary history as a condition for employment consideration while an applicant is being interviewed.
• They cannot seek out a candidate’s wage or salary history from their current or former employers. But, if this information is a matter of public record, or if the employee is currently working for the employer in a different job, this rule does not apply.
• They cannot have an employee sign a contract that prohibits the employee from disclosing their salary, wage, benefits, or other compensation.
• They cannot discharge an employee who fails to comply with an inquiry into wage or salary history.

It’s important to note that if an employee voluntarily discloses salary or wage information during the interview or hiring process, employers are not in violation of the new law. The employer is just not allowed to consider this disclosure when making a decision about whether to hire the candidate, the salary to offer them, or future compensation.

What are employers still allowed to do?

While there are several new things that employers cannot do under the amendment, they can still engage in the following activities:
• Ask the candidate about their compensation expectations, but without trying to get any information about the candidate’s current or previous salary
• Offer information about compensation for the position the candidate is interviewing for, but without trying to solicit information about the candidate’s compensation history

Equal Pay Claim Threshold Lowered

Another change the amendment is bringing is a lowering of the threshold for establishing an equal pay claim. This means that employers who have at least four employees are prohibited from paying unequal wages to men and women if they are:
• Doing the same or substantially similar work,
• Doing jobs requiring substantially similar skills, effort, and responsibility, and
• Doing work performed under similar working conditions.

This means that it may be easier for workers to make an equal pay claim.

The numbers: What are the penalties?

Under the new law, an individual can bring a civil action related to the above matters within five years of the occurrence and recover damages incurred and special damages up to $10,000, injunctive relief, and costs and attorney’s fees. Employers are now subject to civil penalties of up to $5,000 for each violation of the new law and each employee impacted by the violation.

How to Prepare

Because there could be serious consequences if employers go over the line with trying to solicit compensation information from candidates, they should take the following steps to revamp their hiring process:
• Go over current applications and ensure there are no past or current salary- or wage-related questions.
• Implement a training process so that employees are aware of these restrictions and they are trained on how to discuss compensation during the interview process.
• Review all employee documents, such as handbooks that list policies and procedures, to make sure they don’t forbid employees from taking about compensation with other employees.

Important Key Takeaways:


• Employers cannot ask or solicit information about a candidate’s previous or current wage or salary, including benefits and other compensation.
• Employers cannot prohibit employees from discussing their compensation with other employees.
• Hiring decisions cannot be made based on salary history.
• The threshold for individuals to make an equal pay claim has been lowered, so employers need to pay more attention to how they approach compensation decisions.

High-Deductible Plans Are Better Than Ever, Thanks to New IRS Rules

Amid legislation that pushes consumerism in healthcare while putting greater burdens on healthcare consumers, employers and employees alike have turned to high-deductible health plans (HDHPs) to minimize their healthcare costs. As premiums continue to rise, these plans offer an opportunity to keep upfront costs low for companies and their employees. At the same time, the IRS permits the creation of tax-exempt health savings accounts or HSAs for people with HDHPs to cover the costs of the higher deductibles when expenses do come up.

This system works great for everyone involved – so long as people stay healthy. Which makes preventive care an integral part of any successful HDHP based healthcare strategy. By allowing patients to head off health issues before they become significant expenses, preventive care keeps everyone’s expenses down and maximizes health outcomes for the insured. Recognizing this, the IRS has allowed insurance plans to cover preventive care such as check-ups, screenings, immunizations, and tobacco cessation or weight-loss programs with a low or non-existent deductible while keeping their HDHP status.

However, the IRS has not generally extended the same low-deductible permissions to treatments for existing illnesses or conditions. Since 2004, certain on-the-spot treatments for conditions discovered during screenings (such as removing polyps discovered during colonoscopies) and medications to prevent recurrence of heart attacks or to reduce cholesterol to prevent heart disease have fallen under the umbrella of preventive care, but that’s about it.

Which means that people with chronic conditions have generally been left out. They have had to choose between paying out high-deductibles for treatments that prevent their conditions from worsening, or giving up their HSAs and adopting high-premium plans. Until now, that is.

The IRS’ New Rule

On July 17, 2019, the IRS issued Notice 2019-45, which significantly broadened the definition of preventive care to extend it to many treatments for chronic conditions. To qualify as preventive care, the treatments must be likely to prevent the worsening of a chronic condition or the development of a secondary condition which would incur greater healthcare costs. It must also meet several other criteria, which we have outlined in this handy chart for easy reference:

The Impact for Companies and Their Employees

So what does this policy change mean for employers and employees? Simply put, it provides enormous opportunities for both to take greater control over their costs, minimizing their expenses while maximizing employee health and wellness. It makes the already appealing HDHP and HSA healthcare option a win for employees who want to increase their welfare and for employers who are looking to reduce their expenses.

The expanded definition of preventive care provides a new opportunity for employers to educate their employees so that they can become more intelligent consumers amid government policies which force consumerism in the healthcare market. Employees can use HDHPs to control their costs without fear of compromising their health, especially by neglecting chronic conditions to avoid paying high deductibles. Instead, they can get the treatment that they need at low costs while keeping their tax-exempt health savings.

Key Takeaways

We’ve thrown a lot of information your way in this article, so here are some key takeaways that you should remember:

• IRS Notice 2019-45 opened up serious opportunities for employers to cut their costs and for employees to reduce their expenses and maximize their healthcare outcomes
• Chronic conditions will no longer force consumers to take on significant healthcare costs to receive the treatment they need to maintain their health and avoid future expenses
• That means that high-deductible health plans, which already provided the best solution for consumers in the current healthcare market, are now better than ever

To make the most of the rule change as an employer, you should partner with a proactive benefits broker who will help you craft a healthcare strategy which maximizes the impact for your employees while minimizing your costs. Benefits are an important tool to attract, retain, and engage the talent that you need to grow your business. The well-being of your company and its employees ultimately depends on the effectiveness of your benefits strategy. So it is more important than ever to work with the right benefits broker.

Interested in making the switch to a broker who is invested in your growth and your employees’ well-being? Start the conversation today.

New Laws In Illinois Will Impact Your Business: Find Out How

Several new laws have been passed in the Illinois General Assembly recently that will impact both employers and employees across Illinois. The last step before enactment is for Governor Pritzker to sign off on these bills.

The new laws bring several changes to the table, including:

  • Creating limitations on contract terms and employee handbooks
  • Amending three acts: the Illinois Human Rights Act, the Illinois Equal Pay Act, and the Victims’ Economic Security and Safety Act
  • Requiring more anti-harassment trainings for employers
  • Legalizing recreational cannabis use

These changes will impact employer policies. For example, employers will need to update discrimination policies and procedures, or if recreational cannabis is legalized, this could create concerns if an employer still prohibits drug use.

The Workplace Transparency Act (Effective January 1, 2020)

The Workplace Transparency Act (IWTA) aims to prevent workplace harassment and discrimination by improving the security of employees’ rights. Within employer contracts and policies, the IWTA prohibits specific aspects of confidentiality, non-disparagement, and arbitration clauses, unless other statutory requirements are first met.

The IWTA requires Illinois employers to both review and update their contracts, particularly their noncompete, non-solicitation, and confidentiality terms, in addition to separation or severance and arbitration agreements and employee handbooks and policies.

It’s important to note, however, that these new terms don’t apply to collective bargaining agreements, which applies to both private and public employers that have unionized workforces.

All contracts and policies:

The IWTA requires that, without exception, no contracts or agreements can contain language that prohibits employees from reporting “unlawful conduct” to officials, whether local, state, or federal, for investigation. This law is relevant to prospective, current, or former employees, and applies to all types of policy document or employment agreement (formal employment agreements; executive compensation agreements; noncompete, non-solicitation, or confidentiality agreements; or separation agreements).

“Unlawful conduct” can include criminal conduct or unlawful employment practices—for example, behavior that would violate the anti-harassment and discrimination laws outlined by the Illinois Department for Human Rights (IDHR) and the Equal Employment Opportunity Commission (EEOC).

The IWTA also prohibits, without exception, any provisions that would prevent an employee to testify in the event of a subpoena, court order, or other written request regarding criminal conduct, discrimination, harassment, or other unlawful employment practice.

Unilateral employment contracts and policies:

Employment contracts and policies—specifically those that are non-negotiated or that must be signed as a condition of employment—are not allowed to prohibit any employee, whether prospective, current, or former, from making disclosures or truthful statements regarding alleged discrimination and harassment or unlawful employment practices.

An example of what this means is that if any provision or clause could be read to indicate that it prevents an employee from truthfully stating or disclosing discrimination or harassment, regardless of how a contract provision was enforced, the clause would then be unenforceable.

If employers wish to keep this kind of provision, they could be required to negotiate agreements that contain confidentiality clauses with employees and include bargained-for consideration and a clear acknowledgment of employees’ right to do the following:

  1. Inform a local, state, or federal agency that enforces discrimination laws of good-faith allegations of unlawful practices
  2. Inform local, state, or federal officials of good-faith allegations of criminal conduct
  3. Contribute to proceedings with any local, state, or federal government agency that enforces discrimination laws
  4. State or disclose any truthful information that is required by law, regulation, or legal process
  5. Seek out or receive legal advice that is confidential

Unilateral arbitration agreements:

Certain agreements may not be enforceable that meet the following criteria: agreements that are non-negotiated and require arbitration of discrimination and harassment claims (as opposed to wage and hour claims) as a condition of employment. Similar to confidentiality agreements, however, arbitration agreements could still be enforceable under the new law if they are negotiated with the employee and include bargained-for consideration and acknowledge the five employee rights listed above.

Under the potentially amended Illinois Uniform Arbitration Act, arbitration agreements may be non-compliant with the IWTA and thus they may be void. It is still unclear whether Illinois arbitration agreement law will be preempted by federal law in some cases. Thus, these agreements must be drafted carefully to ensure that they are enforceable.

Settlement and termination agreements:

Termination agreements (also known as separation or severance agreements) and settlement agreements could include confidentiality promises that relate to discrimination and harassment if these statutory requirements are met:

  1. The employee has documented confidentiality as a preference, and the obligation is mutual under the contract.
  2. It is told to the employee in writing that he or she has a right to an attorney or representative (of his or her choosing) to review the contract before it is signed.
  3. In exchange for the confidentiality, there is a bargained-for consideration that is valid (for example, a severance payment instead of just the payout of final earned compensation).
  4. No claims of discrimination or harassment are waived in the agreement that ensue after the agreement execution date.
  5. The employee has 21 days to consider the agreement before signing it, in addition to 7 days to withdraw acceptance of the agreement. (This is similar to the drafting of waivers of age-related claims at the federal level, with people who are over 40.)

The employee would in no way be precluded from releasing discrimination and harassment claims by the IWTA, except prospective claims.

Enforcement:

If employees are successful when they challenge a violating contract’s enforceability under the IWTA (but not an employment policy), they will have the right to recover attorney fees and costs.

Other exceptions:

However, employers could require the following individuals to maintain confidentiality of discrimination and harassment allegations:

  • Employees who, as part of their job duties (e.g., human resources professionals) receive complaints, investigate allegations, or have access to confidential information regarding personnel
  • A third party or employee who is asked to participate in an open and ongoing investigation (e.g., a witness)
  • A third party or employee who gets attorney work product or communications that are attorney-client privileged, or who is subject to a recognized privilege
  • Any third party that investigates complaints, hired by the employer

Illinois Equal Pay Act Amendments (Effective 60 Days After Signed)

The following amendments would apply to the Illinois Equal Pay Act.

Wage and salary history of job applicants:

The amendments would prohibit employment agencies and employers from requesting the following information or requiring job applicants to disclose it: prior wage, salary, benefit, or other compensation history information as a condition of the application process or of employment. They are also prohibited from otherwise screening job applicants by requiring they meet minimum or maximum compensation criteria.

Both employers and employment agencies will be prohibited from seeking the above information about job applicants from current or prior employers. However, they are not prohibited from talking with applicants about wage, salary, benefits, or other compensation expectations.

If prior compensation history is disclosed voluntarily by the applicant, the information cannot be considered when the employer is deciding whether or not to make a job offer, nor in determining the terms of the job offer. To comply with these amendments, employers will likely need to update their job boards, interviewing processes, recruitment practices, and job applications.

Wage differentials:

Employers could also be subject to increased burdens in order to justify imbalances in pay among their employees. This especially applies to employees who have similar jobs but receive different pay rates, and employers could be required to show that the difference in pay is because of job-related reasons that are: 1) consistent with the needs of the business and 2) accounts for the difference in compensation, if there have been allegations against the employer that they underpay certain employees based on their sex or for being African American.

Wage and salary information of employees:

The amendments state that employees cannot be prohibited from being able to disclose or discuss compensation information, including that regarding wage, salary, or benefits. But, if certain positions require access to this information, such as human resources employees, they can be told to keep this information confidential. To be in accordance with these changes, handbooks, policies, and confidentiality agreements may need to be updated.

Penalties:

To enforce these amendments, State court lawsuits may be filed by employees who are seeking “special damages” of a maximum of $10,000, or actual damages more than $10,000, injunctive relief, and costs and reasonable attorney’s fees. If an employee can prove that he or she was underpaid based on their sex could receive the underpayment amount, punitive damages, and injunctive relief, in addition to uncapped compensatory damages if it is also proven that the employer behaved with malice or reckless indifference. Penalties up to $5,000 could also be sought by enforcement actions from the Illinois Department of Labor for each employee that was impacted and for each violation.

Illinois Human Rights Act Amendments (Effective January 1, 2020)

To address the security of employees’ rights to protection from harassment and discrimination, the Illinois Human Rights Act (IHRA) would be amended in the following ways.

Expanded coverage:

The IHRA would be applicable to Illinois employers with one or more employees during 20 or more calendar weeks during the current year or within the year before the alleged violation took place. This amendment is significant because as the IHRA stands now, this applies only to employers with 15 or more employees. The expanded coverage would go into effect on July 1, 2020.

Expanded protected classes:

Discrimination and harassment prohibitions would be expanded so that all actual and perceived protected classes, which include race, sex, age, religion, or sexual orientation, among others, would be covered. Additionally, the amendment further defines harassment as any “unwelcome conduct” with “the purpose or effect of substantially interfering with the individual’s work performance or creating an intimidating, hostile, or offensive working environment.” This definition is more broad than federal law.

Clarified work environment:

Regarding the prohibition of discrimination and harassment, the work environment will no longer be limited to an employee’s assigned physical location.

Employer liability:

The IHRA amendment would also update harassment responsibility for the employer. They may be responsible for harassment by employees who are non-managerial and non-supervisory if the employer is made aware of the behavior and does not take appropriate action. In addition, employers would be responsible for harassment of non-employees who are in the workplace to provide services for the employer. This could apply to consultants or contractors, for instance.

Annual training:

Sexual harassment training for all employees would be required from employers, at least once a year. The training materials used will be developed by the IDHR or an equivalent body.

Restaurants, bars, and coffee shops:

A written sexual harassment policy must be made and given to all employees within their first week of employment. This policy has to meet certain statutory requirements, including that the employee must be given notice about the procedures to file a charge with the IDHR and EEOC. Mandatory training programs specific to the bar and restaurant industry will be designed by the IDHR, and this will be in addition to the training program for all employers. These policies and trainings are required to be available in both English and Spanish.

Disclosure requirements:

Every employer that had an adverse judgment or ruling against it that is related to discrimination or harassment must report information about the judgments or rulings to the IDHR, starting July 1, 2020, and recurring by each July 1 thereafter. When charges of discrimination are investigated, the IDHR could request that employers disclose information about settlements that involve discrimination and harassment allegations, though this excludes the names of the alleged victims.

New penalties:

Penalties will apply to employers that do not meet these training and disclosure requirements. The penalties are not to exceed:

  • $500 for the first offense
  • $1,000 for the second offense
  • $3,000 for the third and any following offenses

Union employees:

If the same union represents the victim and the perpetrator of alleged sexual harassment, different representatives from the union must be delegated to represent them in proceedings.

Procedural changes:

Procedures for filing charges and investigation would be included in the amendments. The changes include that either party would now be allowed to ask the IDHR for a pending charge dismissal if a lawsuit at the state or federal level is filed because of the same issues that were raised in the charge. Another update is greater clarity regarding prior amendments in 2018, which allowed the charging party to bypass investigation procedures and go directly to the state court.

The Victims’ Economic Security and Safety Act (Effective January 1, 2020)

Another amendment applies to the Victims’ Economic Security and Safety Act (VESSA), which would expand protections for victims of domestic and sexual violence, sexual assault, and stalking to those victims of gender violence.

Gender violence is an act or acts of violence or aggression that would be considered a crime under state law and is committed (at least partially) based on someone’s actual or perceived sex or gender, or based on physical instruction or invasion that is a crime, whether or not criminal charges are brought. The threat of any of these actions would also be included.

If an employee is a victim of domestic, sexual, or gender violence, or has family members who are victims, employers are now required to give them up to 12 weeks of leave within a year, with job protection, or a similar accommodation that could be determined by how large the employer is. The employee victim can take this leave for counseling, legal help, medical services, safety planning, and the like.

Hotel and Casino Employee Safety Act (Effective July 1, 2020)

Hotel and casino workers in Illinois will be protected from sexual assault and harassment under the Hotel and Casino Employee Safety Act, which requires employers within these industries to give employees assistance in the event of an ongoing crime, sexual harassment or assault, or other emergency. Employers would be required to give them safety devices or other notification tools.

This act also requires relevant employers to incorporate anti-harassment policies that meet statutory requirements. These requirements include things like temporary work assignments, reporting procedures for complaints, or paid leave to testify or file a police report. The act states that lawsuits can be filed by employees in state court and they could recover attorneys’ fees and economic damages of $350 per day and per violation.

Cannabis Regulation and Tax Act (Effective January 1, 2020)

Cannabis Act employer obligations:

Recreational cannabis is on the horizon for Illinois if the bill is signed, which would make it the eleventh state to legalize recreational cannabis. The Cannabis Regulation and Tax Act (also known as the Cannabis Act) will begin on January 1, 2020. This act will allow Illinois adults to both possess and consume cannabis, but it may create issues for Illinois employers. The Cannabis Act does allow employers to implement reasonable and nondiscriminatory policies that support zero-tolerance, drug-free workplaces, which could include drug testing and workplace-use prohibition policies.

The Cannabis Act permits employers to ban cannabis use to meet contract obligations or to comply with state or federal funding or legal requirements. However, employers generally cannot take an adverse action against an employee or an applicant because of their marijuana use outside of the workplace. The Illinois Right to Privacy in the Workplace Act is also amended so that marijuana products are legal and must be treated similarly to tobacco and alcohol. Employment decisions cannot be made based on whether an applicant or employee uses cannabis off-site, during nonworking hours (or non-call hours), whether medically or recreationally, as long as the use is lawful.

Employers should then assess whether or not an employee is actually impaired or under the influence of cannabis during working hours if they are considering disciplinary action against an employee, since they are not allowed to consider the lawful use of cannabis outside of work. Disciplinary action would be allowed if an employer has a “good faith belief” that their employee is under the influence in a situation that is similar to “reasonable suspicion” standards.

If an employer decides to act on this disciplining, they are required to give the employee an opportunity to contest the decision, and drug testing could be used in this case. However, legal challenges could arise because cannabis-related impairment is more difficult to discern when compared to alcohol impairment testing, for example. In addition, employee victims could recover actual damages, costs, attorneys’ fees, and fines, so employers need to make sure that they are taking these new laws into consideration before acting. Practices and procedures should be updated accordingly.

Labor peace agreements:

Labor peace agreements aim to give labor organizations the ability to access and organize the workforce of a business that is licensed to dispense cannabis. Organizations that are applying for a cannabis-dispensing license should thus note that the state government will consider whether they have entered into a labor peace agreement with a labor organization. Because these agreements can be complicated, it’s important to work with an attorney experienced in labor law.

Conclusion

Illinois’ pending legislation means that employers need to update their documents and policies accordingly. This includes reviewing and revising employment agreements, employee handbooks, and non-disclosure and separation agreements. Any other policies or agreements related to employment will also need to be revised accordingly so that employers are in compliance with these amendments.

In many cases, employers struggle to keep up with constantly-changing state legislation. Even one compliance infraction could cost your business hundreds of thousands of dollars in fines. Consider working with a compliance partner like Launchways to ensure all your compliance concerns are taken care of proactively.

Should you hire a head of HR? How to Know It’s the Right Time

If your business is like most, in the early stages it was all-hands-on-deck with everyone doing whatever it took to keep the organization afloat. You likely pieced together a human resources process with several people taking on various duties.

Managing HR may be something you can’t – or shouldn’t– use your valuable time to do, depending on the scale of your organization. If the leadership team of your small to medium sized business has been handling the HR tasks it may be time to hire an HR pro. However, how do you evaluate when is the right time to make that decision – and who you should hire to do which HR tasks?

In this post, we’ll discuss

  • Growing pains that indicate it’s time to add HR to your team
  • Tactical and strategic HR tasks
  • Types of HR employees
  • HR technology and outsourcing

Growing Pains

You’ve pieced together an HR process that seems to be working. Recruiting and hiring are handled by the business founder who’s been tasked with building a team from scratch. Your CFO manages payroll and compensation and handles benefits issues. Meanwhile, your admin or office manager processes new hire forms and requests for time off.

Then you hit a snag.

  • You’re not attracting the best candidates
  • An overburdened key employee quits
  • You face legal and compliance issues
  • You don’t have a process to make essential hires quickly and effectively

With so many competing priorities, you may find it challenging to prioritize HR. Perhaps your top pick for a critical role turned you down because you haven’t had the time to research what’s in a competitive benefits package, let alone put one together. You missed out on another candidate when they lost interest because you spent your time screening candidates for a different role instead of getting back to them. Then your admin quit because she couldn’t keep up with her “other duties as assigned” HR tasks while also assisting customers and supporting your sales team.

If that wasn’t bad enough, your legal fees are starting to add up. An employee filed a sexual harassment claim against your company. Then, because you misclassified a team member as exempt to avoid paying overtime, you’ve got a wage dispute on your hands.

But bad news isn’t the only reason to add HR to your team. Perhaps you landed a big contract and you need to add 20 people to your service team – yesterday. An important client wants you to add a second team to support another of their facilities. An online marketing campaign is bringing in three times the orders your staff can handle, and you’re starting to get backed up. HR issues can arise as your company grows because your existing team is just too busy to do it all. Other times, it’s because you “don’t know what you don’t know” when it comes to HR.

HR Duties

Low unemployment, new technology, and increasing employee expectations have caused basic HR processes to become much more involved. Putting thought into what your organization really needs in terms of HR support can help determine your long-term HR strategy. There are tactical and strategic aspects of modern HR teams. You can hire someone to prioritize tactical or strategic HR tasks: however, it’s difficult and impractical to hire someone to handle both these types of HR tasks.

Tactical HR

A tactical HR team member focuses on the manual administrative and technical tasks of HR.

Tactical duties:

  • Post job openings
  • Track and screen candidates
  • New employee orientation
  • Prepare and update employee records
  • Organizing and storing employee data
  • Ensuring state and federal compliance regulations are met
  • Processing payroll
  • Benefits administration
  • Time-off requests
  • Track mandatory compliance training

Strategic HR

Strategic HR focuses on your organization’s growth and long-term HR planning. A strategic HR staff person is more likely to be part of your leadership team than tactical HR staff. In today’s competition to recruit and retain the best talent, adding an HR strategist to your team often makes good business sense.

Strategic duties:

  • Company culture development
  • Employee engagement planning and implementation
  • Professional development and training
  • Job description creation and updates
  • Hiring to develop future leaders
  • Employee retention plan

Types of HR Employees

You can learn more about various HR positions through the Society for Human Resources Management (SHRM) or other sites such as Human Resources Education. We’ll give you examples of a tactical HR position and a strategic HR position typical in small to medium-sized businesses.

Human Resources Specialist (Tactical)

A Human Resources Specialist typically has a bachelor’s degree and is early in their HR career. They are a generalist more focused on tactical HR tasks rather than strategic HR tasks.

Duties

  • Recruiting: Coordinate job postings, process resumes, and applications, screen job candidates, perform background checks and conduct initial interviews
  • Records: Prepare and update employment records related to hiring, compliance, promotions, and terminations
  • Onboarding: Conduct new employee orientation by explaining employment policies, procedures, job duties, schedules, and benefits
  • Discipline and complaints: Address work complaints and harassment allegations, tracks employee discipline

The U.S. Bureau of Labor Statistics notes that the median pay for an HR Specialist in 2018 was $60,880 or $29.27/hour.

Head of People (Strategic)

You can count on a strategic HR hire to handle the overall administration, coordination, and evaluation of your HR plans, programs, and goals. This person typically has five or more years’ experience in HR and a bachelor’s degree. The strategic HR hire is your organization’s link between employees and your leadership team.

Duties

  • Management: Develop and administer your HR records, plans, procedures, programs, and budget and manage other HR staff or personnel tasked with HR duties
  • Programs: Develop and manage compensation program, personnel policies and procedures, employee handbook, employee evaluation process and benefits, and wellness programs
  • Recruiting: Develop staffing plan; create and revise job descriptions and employment ads; oversee all recruitment; develop interview process; and conduct new employee orientation
  • Retention: Develop employee recognition program and professional development plans; manage employee relations counseling, and conduct exit interviews
  • Planning: Develop corporate culture with the leadership team and recommend new policies, programs, and procedures based on long-term goals and current HR best practices

Although the paygrade for this position will vary greatly commensurate of the candidate’s experience level, the salary for an HR Manager can be used as a point of comparison. The U.S. Bureau of Labor Statistics notes that the median pay for an HR Manager in 2018 was $113,300 or $54.47/hour.

You may save on salary costs initially by hiring a less experienced HR team member, but someone who has been keeping up on HR trends and technology may save you money in the long run. Rather than focus on hiring when employee count reaches a specific number, think about who’s handing HR now and whether that time could be put to better use generating revenue or innovating new products.

HR Outsourcing & Technology

Now that you have a better idea of what an HR team member can do for you and what they’ll cost, you may be thinking hiring another full-time person just doesn’t make sense at this time. Utilizing HR technology and outsourcing HR tasks may be a more cost-effective solution for your business.

Outsourcing can help you to adapt to your changing HR needs as your business grows. Working with an HR partners also ensures your HR technology will meet the expectations of today’s tech-savvy millennial workforce. Your outsourced HR partner will track and provide data to help you better manage all aspects of HR as you grow your business and your team.

HR Technology

Launchways offers the top HR technology and can advise and customize based on your business needs. Launchways HR technology solutions ensure your business can effectively handle tactical HR duties such as:

  • Payroll
  • Compliance
  • Recruiting and application portal
  • Time scheduling and tracking
  • Online benefits portal
  • Online performance reviews

Outsourcing
Launchways offers fully-outsourced solutions for payroll, benefits administration, and compliance. Working with the Launchways team ensures all these important aspects of your business are handled correctly, while freeing up the time of your leadership team for more important duties.

Key takeaways

When your organization is experiencing growing pains – and ideally before you run into compliance and other legal issues – it’s time to add to your HR capabilities. HR duties are many and varied, from time-consuming tactical administrative tasks to strategic HR planning to help your organization be more attractive to top talent.

In many cases, outsourced HR help can be the most cost-effective option for growing businesses. Learn more about Launchways’ custom HR solutions.