“The $15,000 Handbook-Don’t Do This!”

With special guest –Paul Edwards

UNEDITED TRANSCRIPT

David Madow: Welcome to the Madow Brothers audio series. I‘m your host today, Dr. David Madow, and thanks so much to every one of you for being here. It is gonna be a fantastic program today.I’ve got a very special guest I’m going to be introducing in just a couple seconds.Before I do that, I just want to touch on a couple things really, really quickly.One of the things I want to talk about was something we’ve got going; you probably heard of this maybe a million times, Rich and I have got this new patient mail going. I just want to bring it up here before we start the program today.It is just going crazy, our offices, they’re using new patient mail to get patients; their practices are just doing so well with it because really, basically, we are marketing to new residents in your area to get new patients. It just makes so much sense because every single new resident moving into your area is gonna be looking for a dentist, so if you’re not on board yet for new patient mail, just give us a call.Call us up at 888-88MADOW; that’s 888-88MADOW.You probably have that number already if you’ve been a long-time audio series subscriber or member. So give us a call.We can answer any questions.We can help you out.We can tell you roughly how many people are moving into your area every month, but, new patient mail and utilizing the new residents in your area is the way to go to have a steady flow of new patients, into your area, into your practice, I should say.So thanks so much for being with us today; I appreciate it.We’ve got a really special guest who I’m going to be introducing in a second.I will tell you that this program today is not going to be clinical; it’s not gonna be about marketing; it’s not gonna be about how to get new patients into your practice, so let me hear the whining now.“Aw, come on, I want clinical. I wanna know the latest clinical procedures.” Well, let me tell you something, this program today, I feel is so important because if you don’t know this stuff, the potential is there to have some very, very serious problems in your practice; problems that may, well, I don’t wanna say bring your practice down.We’ll letour guest talk about that, but problems that could potentially be so serious, you need to know this.But,no, you’re not going to be learning a clinical procedure; you’re not going to be learning how to get new patients, but having said that, let me introduce our guest.Our guest is Paul Edwards, and Paul Edwards is CEO of a company called CEDR Solutions.It’s capital CEDR, CEDR Solutions. I hope I pronounced that right but…Paul,welcome, and how are you doing today?

Paul Edwards: I’m doing great.Very excited to be on the show with you today.

David Madow: Paul, it’s great to have you, and is it pronounced “cedar”? Is it CEDR, all caps, I know it’s an acronym, but is that how you pronounce it? CEDR Solutions?

Paul Edwards: That’s right, Yep,yep, absolutely correct.

David Madow:Excellent, excellent. Well, Paul, we’re not going to be teaching our listeners today the latest and greatest clinical procedure.We’re not going to be teaching them how to get new patients.We’re not going to be teaching them how to communicate with their patients we’re going to be teaching them something that’s possibly more important than those; they are all important,but I think it’s pretty safe to say, Paul, if our listeners are not doing something that they need to be doing, and you can confirm this; I’m just saying this off the cuff, but I think their practice has the potential of crashing down.This is really important. So what I’m referring to is something we call HR or human resources. Now, if you’re ready to say,“Hey, I’m not interested in this. I’m gonna stop this,” or “I don’t wanna hear this program.We got other things that are more important,” I urge you to listen what Paul has to say because it’s gonna, you’re not gonna believe some of this stuff.So, Paul, am I pretty accurate so far on that?

Paul Edwards:Yeah,yeah, you are. I mean, with everything that they’re, that you guys do, all the clinical stuff, of all the work that you put in, it really boils down to your people. Andyou can get everything right, but if you don’t have your team firing on all eight cylinders, it can be for naught.It can really come down around you.

David Madow:So let’s back up for one second, and we call it, I think back in the old days we called it “hiring and firing” and “personnel” and things like that, but now, you know, there’s this fairly new term, human resources, HR, you know, you heard of companies having HR departments. So what exactly is HR or human resources?

Paul Edwards:Well, as the name implies, it is about the people that work for you.It’s probably one of the most complicated areas, especially for the small to medium businesses, it’s probably the most complicated areas for you to gain knowledge in because it’s such a broadspecialty for us out here for us in human resources.It goes from everything from hiring to solving problems, to keeping yourself and your team running well.We talked about that. But on the other side of it, we have classification for wages, we have wage complaints, we have the EEOC, and in any given state there’s probably about a hundred and fifty laws that affect you.And how they affect you is in human resources.You are creating policies, whether you’re writing them or you’re just creating some de facto policy by the way you do something or handle something.What a lot of folks don’t realize is there’s at least hundred and fifty laws in your state that probably should, you know, you should be aware of and be following and the federal rules as well. So human resources is a really big conversation.It starts from the moment you put the ad out, runs through the course of the life of the employee, and it ends with the relationship, however it ends, whether they quit and go someplace else or they get fired or whatever.

David Madow:So, no problem.Let’s see, so we’ve got, so it’s 50 states, we’ve got about 150 laws in each state, so, 50 x 150, this program should last, the program is probably gonna be eight hours. We’re probably gonna talk to you for, no, I’m kidding, 50 times, that’s a lot a laws.But I think we can boil them down to some pretty simple things today.But, Paul, why, back in the old days, you know, it seemed like we just didn’t have to worry about this stuff, and so what’s, why do dentists need to worry about HR so much now?What’s the difference between the workplace as it is now and, let’s say, I’m just gonna make up a year, let’s say, back in 1985 or so.Why are things so different?

Paul Edwards:Well, I mean, we’ve all seen society change, and if you look at the numbers, and of course,I could throw up on the screen, show you some great statistics, but if you look at just the last, beginning about 2000.The climate really changed out there, and we can measure part of the change in simply looking at the complaints that are filed with the EEOC, and that’s the federal arm of the government that receives complaints about things like pregnancy discrimination, race, religion, you know, all the list of things that are on that list; there’s 10 or 12 things on that list.And prior to 2000, they would get a few thousand complaints, but starting in the year that I mentioned, we started to go up, up, up, until we hit about 100,000 complaints on average per year.Out here in the HR community and amongst the attorneys that work for me here, you know, everybody was, like, wondering why is this happening, what’s going on here? And what it really boils down to are two things; attorneys and taxes, and so attorneys need to make an income and what they found was that it was far easier to get a demand letter out to a small to medium employer who has the means to pay the demand; it was far easier to make the money that way than it was to go after the big boys like Walmart.You can imagine if you want to sue Walmart, you better come with a lotta game and be prepared to spend quite a bit of time and money in order to just get Walmart to respond to you. It’s not the same for our dentists out there, medical practices we work with, and we see these demand letters come up all the time about some of the craziest stuff you can’t imagine, just trying to get into a settlement with them.On the other side of that is the internet. People are more well informed, are more, and just like, I would imagine you guys teach everybody and have someone come on and talk about AdWords and how they can use online advertising.Well, attorneys are doing the same thing, and so it’s not unusual for an employee to type something in, like “working interviews,”you know, or “Is a working interview legal?”Something like that, and get back an answer to that question, which may be good or bad answers, but also ads from attorneys targeting them, telling them to call and see if something’s happened.

Then on the tax side, and this goes to what we call misclassification.Generally misclassification is, is that you think because, well, you think that you can pay somebody a fixed rate of pay and not track their time, so you can pay them a salary and you don’t have to pay them overtime.That’s one wage and hour violation, and they have been misclassified as what we call an exemptemployee or an exempt from overtime, or you misclassify them as an independent contractor.In all of these cases, what you’re doing is not paying the taxes;you’re not paying the matching taxes, you’re not paying the Social Security, you’re not paying those amounts, and it amounts to billions of dollars.So much so that they have created an initiative amongst, now I believe there’s 17 states participating in it, where the federal government has created kind of a gamification of a chart compliance; and what they are saying is the states that do the best in ferretting out these misclassifications, going after employers and collecting the back taxes, will actually get more of their tax money back from the federal government overall each year.And so that has brought up quite a bit of compliance enforcement and investigation where we never saw this stuff before. We just didn’t see, even in the mid-2000s, we weren’t seeing this, but now, there’s all sorts of tools and ways for them to get in and ferret out this. So the difference between 1985 and today is, is there’s a business with lawsuits, and for our members and our clients, unfortunately, they’re seen as someone who has the pockets to be able to pay a demand letter between $25,000 and $50,000. Demand letters are, I mean, I don’t want to dwell on this too much, they are a very effective tool.It’s a mass problem, and when you look at it with your local attorney, you gotta say, “You know what?Pay this off and it will be cheaper than fighting and winning.” Fighting the average lawsuit in the employment arena for small businesses is gonna cost you about $70,000 to $75,000 just to, just to defend it.That doesn’t have anything to do with what the outcome may or may not be.

David Madow:That’s pretty scary stuff. So let me ask you now, a lot of our listeners are, you know, typical dental office, let’s say a dentist or a couple dentists, and, you know, a handful of team members, that’s kind of the typical.Of course, we have very large practices listening, let’s say the typical dental office, two dentists,eighteen members.Ok, I’m just kinda making that up; that’s pretty typical. Now probably some of my listeners are thinking, “My team is really good; we’re really close; we have a great relationship, so this stuff is not going to apply to me,” but what are some of the, but first of all, let me back up for one second, because when you said that demand letter, it’s pretty scary.How, are the lawyers somehow getting the word out to employees and say,“Look, if anybody does any of these things to you, come see me.We can sue ’em.We can all make a lot a money.” How is the word getting out to these dental employees about this?

Paul Edwards:Well, this has been about three years ago. I have reason to be in the Fort Lauderdale area periodically a couple times a year.And driving along, I believe it was Highway 95, there was a billboard, and it was up for about a year, and the billboard was whocanIsue.com.If you go to that URL, you’ll still find it there. And it had four categories, subcategories.It was, you know, my landlord; you know, it had all these things, and it said my employer.So, you know, you guys are graduating about 7,000 dentists a year.They’re still graduating about at a rate about 40,000 attorneys per year, so you’re outnumbered and they’re getting the same emails that you get about “Are you using AdWords?Are you advertising here?”So the word is out.And there’s something called, and I’ll share this with you guys, it’s something outrageous, it’s something called the Bridge toJustice.It’s inside of the Department of Labor and it is a direct connection between people who file complaints, and it would be typically a complaint against the practice with two to fifteen, two to twenty employees.They don’t see a lot of money there, so the Department of Labor doesn’t want to go after the business per se.They’ll investigate, but they’ll not, they will issue a right to sue letter; but they don’t want to be the ones to go after it. They will connect the complainant to, through the Bridge toJustice to private attorneys who, there’s a whole group of ’em that are waiting for these referrals from the Department of Labor.So let me just, let me just shorten that, an employee that files a complaint with the Department of Labor now will be encouraged through the Department of Labor to a private attorney to create a relationship where they can bring a lawsuit.

David Madow: It’s funny.As you’re saying this, in my mind, I’m just picturing this image of these hungry lawyers that are, like, in line, almost like at adeli counter, taking a number, and who’s got the next, who’s got the next case.This is unbelievable.Paul, so getting back to the demand letter again, what are some of the most common reasons a dentist would get a demand letter? What does a dentist have to do to be honored to receive one of these things?

Paul Edwards:To receive one of these,well, first of all, he has to be a dentist and be perceived as having money, and in the letters, they range, everything from sexual harassment, which is pretty easy to make that accusation; it’s hard to defend.That’s common.One of the leading complaints is pregnancy discrimination.I can’t tell you how many times I get an email from a doctor and I think everybody listening is gonna probably be able to relate to this story, where the note to us says, “Look, Becky has been on maternity leave now for eight weeks and it’s been really nice around here, and after speaking to my staff, they let me know a lot of things were going on with Becky that I didn’t realize, that she wasn’t, she had problems, she wasn’t doing her job, you know, all these complaints, and so we’d like to know how can we not bring her back from maternity leave; what do we need to do?” Of course, this is something that’s not legal, and if you were to do that on your own, you would be a gift to an attorney, to her attorney.You would definitely end up having to settle on an issue like that.So we got pregnancy discrimination; we used to get age discrimination.One of the worst suits I saw in the beginning, back in 2008, was around an age discrimination suit.But just for everybody’s benefit, you still need to be very careful; it’s still a protected class, but there has been some legislation and some court cases over the last three or four years that have really given us all relief in that area.So if you just handle that well, you’ll probably stay out from in front of that train.We see a lot of wage-an-hour complaints.We see, in California, we see wrongful termination and hostile work environment; those are all things they bring into play.In all of these instances, one of the big trends is try to tack on that retaliation occurred in tandem with what is going on.So the employee complained and told you about a problem in the practice, maybe a safety issue, or complained about overtime or not being paid properly for seminar time or travel or something like that.And in some close proximity to telling you that, within a day, a month,six weeks or so, you terminated that employee, and so the connection is made at first that they were protected by their activity, which they are, in that example, and then, once brought to your attention, instead of dealing with it, you retaliated against them and you terminated them for doing that.Even though you may have had some other reasons, that is another very common thing, and what makes this important in the retaliation part is understanding that if you did owe that employee some wage due to the Department of Labor in most states, all you have to do is correct your mistake and you might get a slap on the hand and you might even pay some small penalty for what you’ve done.You may or may not. But if you’ve retaliated, in that instance, now we can get into, or they can get it into the EEOC or some court and they can seek damages, and those damages can be unlimited.So you may owe the employee $1,200 but lose a retaliation case and have to pay an additional tens of thousands if not hundreds of thousands of dollars.So they are very common.We have, I mean, I’ll just, you know, we’ve got more than, we’ve been doing this a while now so we have more than 800 offices working with, and those offices have anywhere from one employee, you know,one or two all the way up to, like you were talking about, we have more than 200 people working with us.And I have not, in this last year there are two things that I’ve seen beyond anything I’ve ever saw before, and that is the number of demand letters that are coming in from attorneys where clearly, if we had good documentation, we’ve been filing good policies,our client’s in a good position, our member’s in a really good position. And the other one is, I’m not gonna take this on this tangent, is embezzlement.We’re seeing, I’m getting almost once a week a call from one of our members saying, “You know, we fired someone.We found some accounting problems.What do we do now?”So that’s where we are.