June 14, 2021
From plumber to president, an independent pharmacy owner might play a dozen different roles in any given week. With so many roles to juggle, some can fall by the wayside. One commonly neglected role is human resources, which can have consequences as far-ranging as losing a good employee to losing your whole business.
“Human resources may not put food on the table, but it can sure take it off the table,” said Brian Huston, an employment law attorney and CEO and founder of OutrightHR, a human resources consulting firm. “If you get bound up in compliance or legal disputes it can devastate a company, especially a small- or medium-sized company.”
Whether from the government or an upset employee, fines and lawsuits can add up to tens of thousands of dollars. Huston recently witnessed a wrongful termination claim from an employee who was fired after failing to come up with a work-from-home plan as she was asked—because the employer didn’t use the proper protocols, the employee was able to negotiate a settlement of $60,000. “I think the company had about 10 employees. That can just about break a business owner and that’s kind of on the smaller end,” Huston said.
Another employer failed to pay an employee overtime for working more than 40 hours between two separate restaurants that the employer owned, a mistake that ultimately led to a Department of Labor audit costing the company more than $300,000 in back pay and penalties.
Government fines stack up for various omissions or errors in certain forms, too. Failing to properly fill out an I-9 form, for example, can cost nearly $2,000 per form per employee. “One of my first clients out of law school had about ten I-9 forms and 500 employees, so they were looking at close to $1 million in fines.”
Huston sees these mistakes occur time after time because the small business owner simply doesn’t know any better. “In businesses with under 50 employees, almost nobody understands employment laws,” Huston said. “If you have HR at all, it’s generally someone who’s also handling payroll and birthdays, and when harassment claims come up or things like that, that’s probably not who you want to handle those issues.”
To help owners fend off the most common errors, Huston breaks down several areas of HR where pharmacies should show due diligence and save themselves from costly problems.
I-9 forms verify that an employee is authorized to work in the United States. The forms are simple, but small businesses routinely fail to fill them out correctly. “This is something almost every company I go into needs to work on,” Huston said. “Nine out of ten companies I audit make grievous mistakes, and the other one is still making at least a few mistakes.”
When Huston audits his clients, he consistently comes across errors on form after form, even when the owner is confident that everything is accounted for and correct. They might have forgotten to put the employee’s name on page two, for instance, or neglected to check the box that asks whether or not they used a translator. “The form isn’t that complicated, but it’s really easy to miss things,” Huston said.
The business receives fines based on mistakes made on the form, such as forgetting to check a box or failing to fill in the date next to the signature. Though small, the errors trigger fines that accumulate into large sums. “It is actually a revenue generator for the government, and fines have been increasing in the last decade,” Huston said. The fines scale based on how much of the document is filled out incorrectly, from $230 to $1948 for the first offense.
Huston routinely encounters a lack of effective onboarding processes in small businesses, which ultimately affects a new employee’s perception, productivity, and retention. “First impressions matter. You put a lot of weight on your first day of the job,” Huston said. “A thing called imprinting occurs, it forms your opinion of the business. An uneasy first day is going linger with you, especially if you’re not clear on your role.”
Huston referred to a well-known internal study in the ’80s by Texas Instruments comparing two different groups of new hires. One group had a two-hour onboarding orientation and filled out paperwork; the other group had a full-day orientation that included shadowing other employees and getting to know their colleagues over lunch. In the second group, turnover fell by 50 percent and productivity increased by 40 percent.
Huston recommends hosting a full day of orientation for every new hire and structuring it so they leave the day with everything they will need to know for their job. Have them start a little later in the day after the other employees’ shifts have started. Be fully prepared. “It’s not going require a ton of resources and time from the organization, but it is going to really help people feel welcomed and a part of the team,” he said. “It’s going to make them feel like they made a good choice by coming here. It can be a really powerful tool for minimum effort or investment.”
Every year, pharmacies are required to submit OSHA (Occupational Safety and Health Administration) forms 300, 300A, and 301. These documents record the number of work-related injuries and illnesses that occurred in the calendar year. This simple task is frequently forgotten by small business owners. “I routinely find companies unaware that this requirement even exists, or that there’s any obligation to do it,” Huston said.
The records must be maintained at the pharmacy for at least five years. Each February through April, employers must post a summary of the injuries and illnesses recorded the previous year. Copies of the records must be provided to employees who request them.
If you had 10 or fewer employees at all times during the last calendar year, you are exempt from these requirements unless OSHA or the Bureau of Labor Statistics informs you in writing that you must keep records. However, you still need to report any work-related incident that results in a fatality, the in-patient hospitalization of one or more employees, an amputation, or a loss of an eye.
At some point in every manager’s job, there comes a time for a crucial conversation with an employee. “Whether it’s performance reviews or just daily gripes, being upfront and addressing difficult topics early and often will make your life so much easier,” Huston said. “It’s hard to tell someone they aren’t doing a good job, but it’s only by having that difficult conversation that you have the ability for change to occur. One of my former clients, an HR manager for a large company, had a sign above her desk that read ‘Put up with it and you’ll get more of it.’ That was in response to managers who kept coming into her office with complaints about employees. When she asked if they’d talked with the employee about it, they almost always would say no, so she’d point to the sign.”
The best way to handle difficult conversations is to create a formal policy requiring routine meetings and reviews between managers and their employees. That forces management to have the hard conversations and provides a natural opportunity for those conversations to occur. “I think the more formal and routine you can make it the better,” Huston said. “I am a big fan of performance reviews and having regular meetings with employees.”
Although performance reviews are important, they can backfire if the evaluations aren’t accurate and honest. Many reviews use a rating scale of 0 to 10, and companies will usually keep their rating within the 7 to 10 range, even for the worst employees whose performance is poor enough to get them fired. “We tend to overinflate because people don’t want to have those hard conversations or they don’t want to address the problems,” Huston said. When that happens, the plaintiff can point to their rating and make a case for discrimination or some other cause for the firing besides poor performance.
When employees have a complaint or grievance, they should have access to confidential channels within the pharmacy to voice their concerns. Giving them an outlet helps you get ahead of the problem—otherwise, the employee could report it directly to the Equal Employment Opportunity Commission (EEOC). By providing a secure, private channel for employees to voice concerns, you can address the issues internally. The EEOC requires employees to exhaust all administrative channels within the company before filing a claim, unless the complaint is against someone who’s on top of that grievance channel.
Huston recommends hiring an independent organization to run a 24/7 hotline for these concerns rather than assigning a person in-house. There is always the risk that an employee will be hesitant to report a higher-up for fear of retaliation or will go straight to the EEOC. “That’s the worst case for an employer because we don’t even get a chance to address it internally first,” Huston said. Write out a policy explaining what employees should do if they have a complaint. Ideally, employees should start with the supervisor or the HR department, if you have one. If those avenues aren’t safe for the employee, or if the employee feels uncomfortable, then they should be directed to use the hotline.
It’s important to make sure managers know to report all complaints they receive. If you fail to act on a grievance, that’s going to come back to bite you. Always investigate the issue, sometimes bringing in a third party to ensure impartiality. “Then even in the worst case you can say you did try to address it and had an expert come in,” Huston said. “Those are all things that help you versus the worst thing you can do is nothing or dismiss it.”
Employment law ultimately comes down to story, Huston said. “What story does the employer have and what story does the employee have? The stronger your story, the safer your organization will be.” If you want to make your case convincing, you need a trail of documentation from start to finish. If you’re telling the story that the employee you fired was not up to snuff, you need performance reviews that support that. If an employee claims you mishandled their harassment complaint, you need to show that you addressed the issue and followed your policies.
To be on the right side of the story, you need to handle issues correctly in the first place. That means creating consistent policies, providing safe channels for complaints, following through on performance correction, and following federal protocols.
“Some of those issues are compliance-related, and it’s as simple as having processes and following them,” Huston said. “Others are much more complicated. I’d say the best approach is to be upfront and purposeful, and to double check with experts that the way you are doing it won’t get you in trouble.”
This article was published in our quarterly print magazine, which covers relevant topics in greater depth featuring leading experts in the industry. Subscribe to receive the quarterly print issue in your mailbox. All registered independent pharmacies in the U.S. are eligible to receive a free subscription.
More articles from the June 2021 issue:
PBA Health is dedicated to helping independent pharmacies reach their full potential on the buy side of their business. The member-owned company serves independent pharmacies with group purchasing services, expert contract negotiations, proprietary purchasing tools, distribution services, and more.
An HDA member, PBA Health operates its own NABP-accredited (formerly VAWD) warehouse with more than 6,000 SKUs, including brands, generics, narcotics CII-CV, cold-storage products, and over-the-counter (OTC) products.
Want more pharmacy business tips and advice? Sign up for our e-newsletter.