An Interesting Problem

Crout · October 2002

I just discovered that a change in our union contract in 2001 was never implemented by our fiscal department. In a nutshell, the company agreed to pay out a maximum of 15 sick days to EE's who resigned with two weeks notice. I found out today that the fiscal dept. has been using the old standard of 10 days maximum. I have corrected the problem going forward, however, what should our next course of action be? This discovery was not the result of a Union grievance. In fact, very few people know about this. What are the potential legal liabilities, if any? It seems to me that we actually have very little to worry about, but I want to cover all the bases. If this posting seems disjointed it's because my head is still reeling. I want to throttle those people up in fiscal. Thanks for your consideration.

Don D · October 2002

"I want to throttle those people up in fiscal."

Crout; whose responsibility was it to advise 'fiscal' of the change in the contract so they could implement the new procedure on the effective date? Typically people in fiscal or accounting are not attuned to catching changes in contract language unless we advise them of the changes and implementing instructions. But, as to your question; I think you are obligated to (1) call the union president in and have a sit down discussion with him, presenting him with a list of each affected terminated employee and the amount they are (were) due that was unpaid, (2) construct a generic form letter with fill in the blank spaces, (3) send the letter to each affected person as a full explanation and apology and attach it to the check you owe them.

Not only is it the right thing to do and the legal thing to do; but, would you rather get NLRB notice two years later and wind up paying the same amounts PLUS INTEREST AND PENALTIES?

Crout · October 2002

>would you rather get NLRB notice two years later and wind up paying
>the same amounts PLUS INTEREST AND PENALTIES?

It was my responsibility to outline and communicate the change in procedures, and I can assure you that I fulfilled my duty, hence my extreme annoyance at our fiscal department. What I would like to do is go to our senior management with a proposal to make restitution, but I need a solid rationale. What, exactly, is the worst case scenario for my company if we do nothing? Questions of right vs. wrong aside, (and I certainly agree with you on that point) I need to be able to justify in dollars and cents that it would cost us less in the long run to do the right thing. Thank you all for your help.

Don D · October 2002

I can't give you a figure to carry to the boss; but, I can tell you for damned-sure that two years (even one year) down the road when you get a call or a charge notice from your NLRB District Office, it will certainly advise you of their intent to pursue interest, penalties and other charges. If you ever wind up on the stand and answer honestly that you knew about this early on and the company did not cough up the money, the penalty will automatically increase. NLRB judges don't like this sort of behavior. Principle and legality aside, the company WILL write checks. Its just a matter of how big and when. Think of this as sorta like a DOL Wage Hour investigation into non-payment of overtime. The longer you wait to make it right, and the more evidence there is of your cover-up all along, the larger the checks will be when you write them. Another thing to think about, from your personal perspective, is the 'shot in the kneecap' this will inflict on YOU next time negotiations roll around and the lack of credibility the international rep will suggest you personally have. He'll love that opportunity.

Gillian · October 2002

It seems to me that the best course of action would be for the company to acknowledge the error and pay off those who have not been paid. The alternative leaves you with the prospect that the union will figure it out, as they probably will, then you will have to comply anyway. It will be worse if they figure out that you knew it all along and elected to wait and see.

Pork · October 2002

Crout, Both Dandy Don and Gillian are correct. I, as HR, am the union representive of our employees, we are not unionized and it is because of positive HR actions for the employees which is the right thing to do that will keep a company from becoming unionized. As fast and quietly as possible until you are ready and then go forward with the payoff. You might be able to gain some positive leverage with the unionized employees when you take positive action to provide as recommended by "Dandy Don and Gillian" before the union finds out. When you are ready leap forward with the truth, and the announcement making sure that the company gets the credit for finding this error and taking positive action for the employees, even though they are no longer employed. This is a perfect example of the true character of the company and the leadership as being pro-employee. Please let us know how the senior leadership react to this error and what ya'll end up doing! We await your actions and response. Pork

TinaND · November 2002

Amen Pork - that is how we have won 2 union votes to date in the last 3 years!
Be honest and up front and they don't need a union to "think" for them.

ritaanz · October 2002

We are talking about an additional weeks pay. How many people are involved? Surely the cost of correcting the error has to be less than the possible consequences. There are some things that cannot be measured in dollars and cents i.e. integrity and honor.

System · October 2002

You might want to talk to a lawyer to find out the worst-case scenario and potential pitfalls in trying to solve it yourself.
[url]http://www.hrhero.com/findanattorney.shtml[/url]

James Sokolowski
Senior Editor
M. Lee Smith Publishers

Don D · October 2002

James: I infer (hopefully incorrectly) from your post that if an attorney suggests that the worst case scenario is not that bad, one might opt to not correct the problem, or to pretend one is not aware of the contract violation. Contractual monetary obligations are not the types of things whose importance should be minimized. There's no better solution to a problem than the prompt, honest and ethical resolution of it. This violation is not a 'grey area'. Although unintended, it's blatant. Why do you suggest that the company seek out and pay somebody to tell them to do the right thing? Any attorney who would recommend otherwise should be a candidate for disbarment.

Gillian · October 2002

[font size="1" color="#FF0000"]LAST EDITED ON 10-30-02 AT 12:03PM (CST)[/font][p]I will also make the same inference, and hope that I am wrong. There are times when an attorney is necessary and times when they are not. This is a not. Asking legal advice on things that are obvious is expensive and it looks like HR can't decide the best course of action, which is, as everyone has noted, to own up to it and take any lumps, the quantity of which will be less than not owning up to it. On the off chance that an attorney would advise otherwise, then HR is faced with choosing between the right choice and a bad one. Management may decide to go with the attorney rather than HR and then the situation is headed down the wrong road. Since the highly probable legal advice is to pay up, there is no purpose in contacting an attorney.

Paul in Cannon Beach · October 2002

A possible rationale (if you need one to do what is right and fair) is that you are establishing a history of addressing errors and correcting them on your own initiative without bring pressured by an outside agency or by legal action.

Paul

Don D · October 2002

Really Paul! Who needs a 'rationale' or canned apology for doing what's right, not to mention legal? We're getting a bit anal over the simple correction of a legitimate mistake. Write the checks, offer the apologies and write up the people who dropped the ball in 'fiscal'.

Paul in Cannon Beach · October 2002

>Really Paul! Who needs a 'rationale' or canned apology for doing
>what's right, not to mention legal?

Well, Crout, actually. He stated he needs a "solid rationale" to take to his boss. You and I agree that there is only one course of action and no rationale is needed.

Paul

Crout · October 2002

What Don and Gillian bring up is very interesting and something that I've dealt with more than a few times. LOTS of attorneys do a cost/benefit analysis when dispensing advice, and sometimes what is right and legal gets lost in that process. A quick story: When my father-in-law came here from Cuba he sought out an attorney to help ease the process of bringing my future mother-in-law over. The attorney had a sign in his office that read: "Tell Me The Truth, And I'll Make Up The Lies." My company does not have an in-house attorney, but we do have someone on retainer whom we consult with, and I anticipate that his advice may very well be to not take any action UNLESS a complaint is made. If we do nothing now it will cost us nothing now. These are former employees, after all, who are not aware that they may have been shortchanged when they terminated. I say "may" because I am still in the process of putting a list together, and do not yet have all the data. However, I would not agree with the advice of doing nothing, and want to present a plan with the strongest rationale possible. Now, it may come to pass that our attorney agrees with me. That would be great, but I'm not sure that's going to happen, and I like to be proactive with these things.

Gillian · October 2002

This does illustrate the difference in roles between HR and the labor attorneys. Our role is to make or recommend decisions based upon what is best for the company AND its employees. The attorney will evaluate a proposed action based upon the least risk of litigation or upon what is a legally defensible position. The legal advice may lead to the best decision and sometimes it won't. The problem is that management, and some in HR, think that we MUST follow legal advice. Legal advice is just that, advice, and it should be evaluated no differently than advice from any business advisor. We know the effect of a business decision a lot better than an attorney does because our decision is based upon the entire context, not just the legal one.

Balloonman · November 2002

I have worked in a number of union environments, and in each one trust was always an issue. Every honest mistake was twisted to be the company intentionally trying to screw the union employees.

Think how this will look to the union when you correct an honest administrative oversight without having it "found" by the union, and then crammed down your throat.

I always look at situations like this and ask, if they find out, what am I going to have to do? Answer: Pay the extra week. You can bet someone will discover this eventually, regardless of how slow you stewards are, one of them might have actually read and remembered the contract.

You may find this does not involve high dollars, but by correcting it on your own, doing it quietly, then informing the union in a matter of fact way will get you more than you moneys worth.

Once again, there is my 2 cents worth.

Dennis

hrqueen · November 2002

>I have
>corrected the problem going forward,

When this information comes to light in the future (and it surely will) along with the knowledge that you have "corrected the problem going forward", the next question posed by the union will surely be "what did the Company do about employees paid the incorrect amount?" It will be impossible to hide the fact that the Company was aware of this error, corrected it mid-stream, and intentionally chose ignore those employees shortchanged.

Bite the bullet and cough up the cash.

Margaret Morford · November 2002

I think Crout agrees with all of you, but is looking for a way to sell this to Senior Management. First, as was suggested, find out what the total dollars owed are because it may not be as big as you think and it will be the first question Senior Management asks. Second, sell Senior Management on the fact that the company will get a lot of good will out of this and earn the current employees' respect if they believe that when the company makes a mistake, it will correct it, regardless of whether it's to the company's detriment. This will probably get you easier negotiations next time if the employees on the negotiating committee trust you and may in the future make the employees realize that they really don't need a union to look out after their interests when they can trust the company to do so. This kind of ethical credit is an invaluable thing for a company to have in its backpocket. Opportunities don't come along very often for companies to send this type of message. Urge your Senior Executives not to squander it and to consider it to be the cheapest money they will ever pay for good morale and employee relations. Third, and here is where Don D and I disagree. (Sorry about that, Don!) Do not call the union. You don't call the union about every payroll error and I wouldn't call them about this one. I'd certainly not give them the opportunity to spin this one and claim that they went back and got backpay for former members! Send everyone a letter and a check explaining that you caught this error and wanted to "make it right, regardless of the fact that they have left the company." If the union calls, explain that you caught an error and went back and refunded what was due. Use the payroll error analogy if they give you a hard ime. Hope that helps!

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

Don D · November 2002

Margaret makes a perfectly logical and totally credible point re advising the Union up front (as I earlier suggested). And her points on the Union mentality process are right on. They will gladly proceed to grab credit for your correction and use it to their advantage in horn-tooting. Therefore, I change my opinion about that piece of the solution. But, I won't budge on the necessity to immediately (if not sooner) correct the problem.

Crout · November 2002

>Do not call the union. You don't call the union about every payroll error and I wouldn't call them about this one.

Margaret, you are one smart lady. This will help me very much to sell the idea to the CEO, who truly dislikes the Union. I appreciate everyone's input. I will let you all know how it goes. Thanks again.

Crout · November 2002

Just wanted to give folks an update. As it turned out, there were only 12 EE's who were shortchanged after they left the company, so making restitution was not a big deal. Thanks again for all your help.

Paul in Cannon Beach · November 2002

So we will never really know what would have happened had the restitution been a big, big number?

Paul

Crout · November 2002

It depends on what you mean by REALLY, REALLY BIG. Innuendoes aside (snort), had it been in the 50K range or above, I don't think upper management would have gone for it. That's a shame, but that's also the way business is sometimes conducted.

Don D · November 2002

Crout: I understand what you're saying and understand management's reluctance to write checks that would so drastically effect the bottom line; however, I'm sitting here wondering if your management team would have considered how much more it would have cost (given the worst scenario) to have been taken to the woodshed by an arbitrator. x:-)

Crout · November 2002

Man, I wish, but I don't think so, primarily because our attorney consistently downplays any wage and hour impact. He does not seem to have much of a respect for the PA DOL in terms of enforcement. I consistently argue otherwise and sometimes win those battles, however in this case had the price tag been higher I don't think we would have done the right thing.

An Interesting Problem

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