Author: Site Staff

Because of the economy and related problems, stress levels are no doubt higher among workers this summer. Employers can help their people deal with some of their anxiety with information and strategies from the National Headache Foundation, the Wellness Councils of America says. It’s National Headache Awareness Week on June 7-13, but the month also is significant for other observances, including Home Safety Month, Vision Research Month and National Cancer Survivors Day (June 7).

Advertising agency Crispin Porter & Bogusky’s intern auction wrapped Wednesday, May 27, with the winning bid of $17,655 coming from a marketer right up Alex Bogusky’s alley: Ashland, Oregon-based Brammo, a maker of electric motorcycles.

Crispin’s top creative and riding enthusiast launched the auction out of the blue on May 18 via Twitter. Bidding began at $1, and in a matter of nine days, 44 bidders came out of the woodwork hoping to land a package of brand strategy and creative ideas from Crispin’s summer interns.

The bidding really intensified in the final hours; early Wednesday the highest bid was still about $10,000.

Brammo chairman and CEO Craig Bramscher didn’t back get to Advertising Age right away to share why his budding company was eager to entrust a campaign to a group of interns, let alone some found in a deal struck on eBay.

But Brammo—by the looks of its Web site, anyway—appears to embrace the interweb machine more than your average marketer. Its home page features a feed of Brammo blog mentions and Google News mentions, its contact page is a Google Map, and the bios of executive team members are all Diggable.

Like Crispin, which has a bike-sharing venture, Brammo is green-conscious. It purchases energy offsets and encourages employees to bike to work. (For its part, Crispin swears to us the contest wasn’t rigged.)

The outcome of the auction means that once again the agency has broken tradition when it comes to client conflicts. Crispin, which works with two big fast-food chains (Burger King and Domino’s), already has a motorcycle client in Buell Motorcycle Co., a division of Harley-Davidson.

This year’s batch of Crispin interns have got to be stoked: Each of the 38 young talents will take home an extra $465 from the Brammo project to supplement their minimum-wage paychecks from the agency.

Not bad.

UPDATE: While the contest wasn’t rigged, turns out it wasn’t quite as straightforward as it was originally cast, either. From a Crispin spokeswoman, after our story came out: “I have to correct something I told you. I did not realize that Alex [Bogusky] had suggested to a number of our clients and to other companies to bid in support of our interns. Brammo was one.”

Filed by Rupal Parekh of Advertising Age, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

Workforce Management’s online news feed is now available via Twitter

 

A new study suggests that more than 1.3 million U.S. jobs—and up to $68.7 billion in personal incomes—could be lost in the first year if Chrysler and General Motors endure “lengthy and disorderly” bankruptcies.

The Center for Automotive Research says employment and production would fall by 90 percent at Chrysler and GM under such a scenario. It says employment and production would drop 50 percent this year at other automakers operating in the U.S. because of parts shortages or “fire sales” of GM and Chrysler inventories.

The center says the other automakers would resume full production in the second year.

The study defines a successful bankruptcy as one in which both companies would emerge from court protection in less than three months “with capital and ownership structures that allow them to resume vehicle production and continue operations.”

“Our model estimates that a successful bankruptcy process for both GM and Chrysler would have a major impact on the U.S. economy in terms of the maintenance of wages, Social Security receipts, personal income taxes paid, and a reduction in the need for transfer payments,” Sean McAlinden, the center’s chief economist, said in a statement.

Chrysler filed for bankruptcy on April 30. A GM filing is widely expected before a June 1 restructuring deadline set by the U.S. government.

The Center for Automotive Research, which gets 20 percent of its funding from the auto industry, is in Ann Arbor, Michigan.

Filed by Leslie J. Allen of Automotive News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

New York employers are likely to see a spike in health costs courtesy of the new state and federal COBRA extension regulations.

COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act, allows people who lose their jobs to hold on to their health insurance at a lower cost than if they had to buy it themselves on the open market. The federal law applies to employers with 20 or more employees.

But New York state officials have taken several steps to extend COBRA to small businesses. In March, Gov. David Paterson signed into law a “mini-COBRA” bill that would help New Yorkers who lost their jobs at small businesses with fewer than 20 workers take advantage of a new COBRA subsidy made available under the federal stimulus bill. Earlier this month, he introduced another mini-COBRA bill to increase the period for employees who lose their jobs to purchase health insurance under COBRA from 18 to 36 months. The bill is likely to pass soon.

For employers, the COBRA expansions bring a snake’s nest of problems.

For openers, the new COBRA benefits make it more likely that former employees will stay on a company’s plan for months to come. In addition, the workers who buy COBRA coverage tend to be the ones who need it the most. Young people tend not to take COBRA, while people with health issues do.

“Typically, they will cost more because of adverse selection,” notes Mary Clark, vice president for health and welfare at Cammack LaRhette Consulting. “The average COBRA participant right now costs 50 percent more than current employees,” she says. “You’ll definitely see a big increase in claims costs.”

Employers will have no way of knowing how COBRA claims will affect their health budgets. They won’t see those filed health claims for at least four or so months after layoffs. And claims from involuntary terminations may show up a year after the employee is fired.

“There is no precedent for this,” Clark says. “No one knows what the claims will look like.”

The recession is making such prediction even harder.

Many employees are putting off elective procedures because of both the cost and staffers’ reluctance to take sick leave if their company has had layoffs. On the other hand, some workers who are afraid of being laid off are using their health benefits while they still can.

As a result, there have been unusual spikes in claims patterns. Based on the rise in health benefits use, insurers could increase their premiums in the near future.

Workforce Management’s online news feed is now available via Twitter.

 

Wal-Mart Stores Inc. was cited by the U.S. Occupational Safety and Health Administration in the death of a temporary worker trampled by a crowd of shoppers at its Valley Stream, New York, store the day after last Thanksgiving. The citation announced Tuesday, May 26, carries a fine of $7,000.

Temporary employee Jdimytai Damour, 34, of Jamaica, New York, had no crowd control experience but was put at the door of the Wal-Mart store when it opened for its post-Thanksgiving sale because he was 6 feet 5 and 270 pounds, the Associated Press reported at the time.

OSHA reported the worker died of asphyxiation after being knocked to the ground and trampled by a crowd of about 2,000 shoppers who were surging into the store on November 28 for its “Blitz Friday” pre-holiday sale.

The $7,000 is the maximum fine in this case, according to OSHA. Wal-Mart has 15 days to contest the citation.

Separately, Nassau County District Attorney Kathleen Rice on May 6 announced a settlement with Wal-Mart that will require the retailer to improve crowd management for its post-Thanksgiving Day sales at its 92 New York stores, set up a $400,000 victims’ compensation and remuneration fund, donate $1.5 million to the community and provide 50 jobs annually to Nassau County teens.

—Staffing Industry Analysts

Workforce Management’s online news feed is now available via Twitter.

David Strauss, former executive director of the Pension Benefit Guaranty Corp. during the Clinton administration, is a leading candidate to be President Barack Obama’s nominee for PBGC director, sources close to the situation said.

If approved by the Senate, Strauss would replace Vince Snowbarger, who has been acting director of the PBGC since the departure of Charles E.F. Millard on January 20.

Strauss, who led the PBGC from 1997 to 2001, is currently chairman of the North Dakota Democratic-NPL Party.

Strauss also served as Vice President Al Gore’s deputy chief of staff. He chaired the 2002 and 2004 re-election campaigns of Rep. Earl Pomeroy, D-North Dakota, according to the North Dakota Democratic-NPL Party’s Web site.

Strauss could not be immediately reached for comment.

Filed by Doug Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter.

As health care costs continue to rise, employers are boosting deductibles and other out-of-pocket payments made by employees, according to a survey released Tuesday, May 26.

The PricewaterhouseCoopers survey of 694 employers found that 20 percent of respondents this year imposed an in-network deductible of $400 to $999, up from 17 percent last year, while 11 percent imposed a deductible of at least $1,000, up from 8 percent.

At the same time, 14 percent of employers this year required employees to pay at least 34 percent of the premium for dependent coverage, up from 10 percent of employers last year.

Those increases came as respondents reported that group health care plan costs rose an average of 6.1 percent this year, a slightly lower increase than the 6.4 percent rise last year.

Boosting employee cost-sharing is a delicate balancing act, noted Michael Thompson, a PwC principal in New York.

On one hand, employees can become more careful consumers of health care services as more costs are shifted to them. On the other hand, health plan enrollees might delay getting needed medical services if their share is boosted too much, he noted.

The survey also found that while less than 40 percent of employees enroll in employer-provided wellness programs, participation rises when employers offer incentives such as cash or gift cards.

For example, when employers gave employees some type of financial incentive for employees to complete a health risk questionnaire, about 45 percent did so. By contrast, only about 30 percent of employees underwent the assessment among employers that did not provide such incentives.

Copies of the 2009 Health & Well-Being Touchstone Survey will be available at www.pwc.com.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter

Sonia Sotomayor may not change the politics of the Supreme Court if she is confirmed to replace retiring Justice David Souter. But she likely will broaden its perspective.

Sotomayor, a judge on the 2nd Circuit Court of Appeals, was nominated by President Barack Obama on Tuesday, May 26. If the Senate approves the choice, Sotomayor will become the first Hispanic to serve on the nation’s highest court.

In their initial reactions, Republicans vowed to examine Sotomayor’s record carefully, but they made no overt threats to block her nomination.

In seeking a replacement for Souter, Obama said that he was looking for someone who would understand how court rulings affect people in their day-to-day lives. He said the nominee should demonstrate “empathy.”

He may have found that quality in Sotomayor, 54. She grew up in public housing in the New York City borough the Bronx as the daughter of Puerto Rican parents who came to U.S. during World War II. Her father died when she was 9, leaving her mother to raise her and her brother.

Sotomayor went on to graduate from Princeton University and Yale Law School. Before being appointed to the circuit court, she was a judge on the district court serving the New York City area. Previously, she was a Manhattan assistant district attorney and a partner at a private law firm.

Her upbringing sets her apart from her court colleagues, according to Charles Craver, a professor at the George Washington University Law School.

“She will have a greater appreciation of the economic diversity of the country than most people who make it to the Supreme Court,” Craver said.

She’ll share that perspective with other justices during their case conferences and in less formal meetings. It’s possible that her input could sway a 5-4 decision.

But Craver doesn’t foresee Sotomayor shifting the court’s political makeup. Souter often voted with the four-justice liberal minority.

In employment cases, that may mean that Sotomayor sides with people suing corporations rather than with companies defending themselves.

“In general, she has been perceived to be someone who is sympathetic to a plaintiff’s point of view,” said Betsy Plevan, a partner at Proskauer Rose in New York.

Both Craver and Plevan say that it’s difficult to tell where Sotomayor will come down on employment cases. She did participate on the Second Circuit panel that decided that the city of New Haven, Connecticut, could throw out an employment test because no African American firefighters qualified for promotions. The Supreme Court heard oral arguments in that case in April and is expected to rule by the end of June.

But employment law lends itself to surprises when it comes to forecasting Supreme Court actions. A conservative-leaning court under Chief Justice John Roberts Jr. has ruled in favor of employers in the high-profile Lilly Ledbetter pay discrimination suit but has upheld workers’ arguments in a number of other cases.

Besides, once a judge takes a seat on the court, he or she may not maintain a consistent political approach. Souter, for instance, was appointed by President George H.W. Bush in 1990 but has often disappointed conservatives.

“She could decide to be more conservative or more liberal because she’s persuaded by her colleagues,” Craver said. She’ll have more latitude in her jurisprudence because “she’s now at the top.”

Sotomayor may do more to change the dynamic of the panel than the way it votes, according to Plevan.

“She’s very bright and energetic and will add a lot of vitality to the court,” Plevan said. “She’s someone who speaks her mind. She will express her views candidly and openly with the other judges.”

Both Sotomayor and Souter are praised for their sharp intellects. But Sotomayor may be more colorful than the quiet Souter.

Plevan, a friend of Sotomayor, has seen her in action in court and at bar association meetings.

“She’s outgoing and likes to get to know lawyers,” Plevan said. “Her intelligence shines through in her dealings with people.”

The other two qualities Obama sought in a nominee were “a recognition of the limits of the judicial role,” and an understanding of day-to-day challenges.

Sotomayor has an abundance of the latter, he said when introducing her at the White House on Tuesday.

“It is experience that can give a person a common touch and a sense of compassion, an understanding of how the world works and how ordinary people live,” Obama said. “Along the way [Sotomayor has] faced down barriers, overcome the odds, lived out the American dream that brought her parents here so long ago.”

—Mark Schoeff Jr.

Workforce Management’s online news feed is now available via Twitter.

 

The financial position of the Pension Benefit Guaranty Corp. again is rapidly deteriorating, triggering fears that a taxpayer-funded bailout may be needed to shore up the government’s pension plan insurer.

The PBGC disclosed last week that its deficit hit a record $33.5 billion at the end of its 2009 fiscal first half on March 31, compared with $11.2 billion at the close of fiscal 2008.

The deficit eclipses the prior highest deficit of $23.5 billion from 2004. Losses from completed and probable terminations, lower interest rates used to value the PBGC liabilities, and investment losses were key factors contributing to the deficit.

And the worst may be yet to come.

According to PBGC estimates, auto sector pension plans alone are underfunded by about $77 billion, $42 billion of which would be guaranteed by the PBGC if those plans failed.

But it isn’t just ailing auto companies and their massively underfunded pension plans that pose a threat to the PBGC, whose insurance programs are funded by premiums paid by employers with defined-benefit plans.

At a Senate Aging Committee hearing last week, an official of the Government Accountability Office said large pension plan terminations from employers in a variety of industries could hit the PBGC.

“While the events surrounding the automakers and their plans are clearly an area of concern for the PBGC, the recession has likely affected many industry sectors,” said Barbara D. Bovbjerg, GAO director of education, workforce and income security.

While past big claims were concentrated in industries such as steel and airlines, “there is cause for concern that future claims will come from a much broader array of industries.”

The PBGC “will be challenged as never before” due to a declining economy, Bovbjerg said.

Taxpayer bailout a possibility
Some legislators and others warn that a taxpayer-funded bailout is a potential scenario.

“We must get the PBGC back on track” or face a bailout, said Senate Aging Committee Chairman Herb Kohl, D-Wisconsin.

Bovbjerg noted that if the PBGC’s accumulated deficit continues to rise and liquidity declines, pressure could build for the federal government to provide the agency with financial assistance to prevent benefit reductions or “unsustainable increases” in PBGC premiums paid by employers with ongoing plans.

The current base annual premium of $34 per plan participant is indexed to increases in national average wages. Sponsors of underfunded plans pay an additional premium.

At the moment, there is little interest in Congress in raising employer premiums, which legislators last significantly increased in 2005 as part of a broader measure, Washington observers say.

Lawmakers understand that a premium increase would be “counterproductive” as it would accelerate the move of employers away from defined-benefit plans, said James Klein, president of the American Benefits Council in Washington.

It isn’t just the big liabilities that the PBGC takes on when companies fold underfunded pension plans that pose a threat. The PBGC also faces declining premiums as more companies freeze their plans and the number of participants declines.

Yet another threat to the agency’s premium income, which in fiscal 2008 was more than $1.4 billion, is that when interest rates rise, employers with fully funded plans might find it financially attractive to terminate the plans and purchase annuities from commercial insurers that would then provide the benefits.

The issue in the long term is whether other defined-benefit plans will exist from which the PBGC would collect premium income needed to pay benefits to participants in plans the agency has taken over, said Dallas Salisbury, president and CEO of the Employee Benefit Research Institute in Washington.

“The real problem is when the [PBGC’s] assets run out,” said Salisbury, who also testified at the hearing.

Others, though, say worries about the PBGC’s finances are overstated.

The current size of the PBGC’s deficit is not a cause for alarm, said Mark Warshawsky, former assistant secretary of tax policy at the Treasury Department and now director of retirement research at Watson Wyatt Worldwide in Arlington, Virginia.

Interest rates are cyclical, and if rates shoot up from their current low levels, the size of the PBGC’s deficit would decline significantly, he said.

The deficit figure is just “a snapshot” in time and can give a skewed perspective of the agency’s financial condition, Klein said.

In addition, the PBGC’s deficit includes losses from plan terminations that the PBGC considers “probable,” and that is based on the PBGC’s judgment, Warshawsky said.

From 1987 to 2007, 80 percent of pension plans the PBGC initially classified as probable eventually were taken over by the agency.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter.

The Pension Benefit Guaranty Corp. has taken over the defined-benefit pension plan of Foamex, a Media, Pennsylvania-based foam products producer.

Foamex is under Chapter 11 bankruptcy protection and is preparing to sell its assets in a deal that would not include the pension plan, according to the PBGC.

The Foamex plan, which has about 5,500 participants, is about 48 percent funded, with $74 million in assets to cover about $153 million in liabilities. The PBGC expects to cover $76 million of the $79 million shortfall.

The Foamex plan was frozen as of March 16, 2005, for all participants except some hourly workers at company plants in Eddystone, Pennsylvania, and Tupelo, Mississippi, according to the PBGC.

Filed by Doug Halonen of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Workforce Management’s online news feed is now available via Twitter