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Advertising Agency Sells Its Interns on eBay
We may be in a recession, but this year’s batch of interns at advertising agency Crispin Porter & Bogusky will be getting fatter paychecks.
Not that the agency itself will be funding the pay increases for the 40 young talents who will slog away in its Miami and Boulder, Colorado, offices on accounts such as “Guitar Hero” and Burger King.
Rather, Crispin has launched an eBay auction for their services.
On-again, off-again Twitterer and top Crispin creative executive Alex Bogusky (whose real handle is @bogusky, not to be confused with @bogusbogusky and @bogusalex) announced the auction Tuesday, May 19, via a tweet.
The bidding began at $1 and as of this report had already climbed to $1,225, with eight days and 22 hours remaining. (That’s more than $30 for each intern.)
“The interns only make minimum wage, so we thought this would be a great way to augment that,” Bogusky said in an e-mail. “They’re excited about that.”
The winning bidder will receive a “creative presentation” developed by Crispin’s interns in a three-month period, consisting of strategies, recommended brand positioning and concepts.
What the bidder won’t get is production services or any finished advertising materials. Travel and any other out-of-pocket expenses for the interns aren’t included either.
It seems a bit counterintuitive to farm out your own talent, but Bogusky said he doesn’t really see it that way.
Each year, the interns work for Crispin clients, but a portion of their time is carved out to work on special assignments that are typically pro bono. Now they’ll just work on this instead.
“It would be great if the high bidder is a cause-related thing,” Bogusky said.
Who isn’t welcome?
The likes of Pizza Hut and Philip Morris. The fine print on the online auction page states that Crispin, which works for Domino’s, “reserves the right to decline services in the event of a conflict with any of our existing clients or for any other reason (like if you sell cigarettes) in our sole discretion.”
Filed by Rupal Parekh of Advertising Age, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Survey Finds Few Firms Will Drop Mental Health Coverage
Only a few employers are considering dropping mental health coverage in response to new parity rules that take effect for plan years beginning after October 3, according to a survey.
Meanwhile, nearly 38 percent of responding employers plan to increase the promotion and use of employee assistance program services to help them achieve mental health parity, which is required under a 2008 law, concludes the survey conducted by the Partnership for Workplace Mental Health, a program of the American Psychiatric Foundation in Arlington, Virginia.
The Paul Wellstone and Pete Domenici Mental Health Benefits Parity and Addiction Equity Act requires companies with 50 or more employees to provide the same coverage for mental disorders—and in some cases, substance abuse treatment—as they do for medical illnesses. The parity requirement applies to self-funded plans and fully insured plans.
The survey found 7.1 percent of employers are considering dropping mental health benefits and 7.8 percent are thinking about discontinuing coverage for substance abuse treatment.
However, 73.5 percent said they would not drop mental health coverage, while 76.7 percent said they don’t plan to discontinue coverage for substance abuse treatment. Another 19.5 percent said they do not know whether they plan to drop mental health coverage, while 15.5 percent are undecided about whether to discontinue coverage for substance abuse treatment.
In addition to the 38 percent of respondents who plan to step up EAP use and promotion, 26.1 percent plan to increase promotion and disease management to achieve mental health parity.
In addition, 23.9 percent are considering adding or increasing use of case and/or disability management, while 21.7 percent plan to increase utilization management and/or prior authorization for mental health treatment.
A large proportion of respondents—35.7 percent—said they expected their health benefit costs to increase less than 2 percent as a result of instituting mental health parity; 23.8 percent said they anticipate costs will remain the same.
Another 16.7 percent said they expect cost increases exceeding 2 percent, while 21.4 percent said they were uncertain what costs will do. An equal number—1.2 percent—said they expect costs to increase more than 2 percent or decrease less than 2 percent.
The survey results reflect 143 responses primarily from human resource and benefits managers.
For more information about the survey or the Partnership for Workplace Mental Health, visit www.workplacementalhealth.org.
Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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New York City’s IT Job Losses Seen Bottoming Out
Nationwide, people continue to lose jobs. But for New York City’s IT sector, the job market appears to have bottomed out.
That’s the conclusion of the Pace/SkillProof IT Index Report for the first quarter, which Pace University released last week.
The index, which looks at the number of IT job openings in New York relative to a 2005 baseline, fell 4.5 percent during the first quarter. Compared with the 50 percent plunge in the index in the fourth quarter of 2008, a 4.5 percent dip is cause for optimism.
“The worst of the layoffs is over,” said Henning Seip, president of SkillProof Inc., the technology company that compiles the underlying data for the index. “The situation has started to stabilize.”
The index tracks 11 standardized IT sector job categories. Among those, the smallest drop in demand was for IT managers, and the largest was for software engineers. But the report found that the drop in demand for both categories was declining.
“There’s a better feeling among employers,” said Farrokh Hormozi, a Pace University economics professor who contributes analysis to the report.
Hormozi believes the downturn has stabilized enough for some employers to be concerned about having too few employees. He also thinks outsourcing may be losing favor as a money-saving measure, as the cost of doing business rises in India and declines in the U.S.
“Naturally, New York City is more expensive than anywhere else,” he says. “But the trend is that companies feel it’s a lot more reasonable to ‘insource’ rather than outsource.”
Filed by Matthew Flamm of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Senate Panel to Review Controversial Changes to Employer-Provided Health Insurance Tax Deductions
The Senate Finance Committee will discuss controversial options that include curbing the tax-favored status of employer-provided health care coverage, wiping out health care flexible spending accounts and placing new restrictions on health spending accounts when it meets Wednesday, May 20.
The policy options include several potential ways to modify the tax treatment of employer-provided coverage to “eliminate inconsistencies and discourage wasteful health care spending,” according to a committee summary of options being considered to raise revenue to expand coverage.
Several options relate to current tax law in which employees are not taxed on premiums or claims paid by their employers. The tax-free status encourages employers to offer overly generous plans that result in the overuse of services, driving up costs, the summary says.
Options to deal with that issue include capping the cost of coverage that would be excluded from employees’ taxable income or basing the amount of the tax exclusion on employees’ incomes.
Similar proposals were made during the early years of the Reagan administration in the 1980s.
However, employers at the time fiercely opposed the ideas, citing the administrative complexity of trying to value the coverage, while union groups fought the proposals, charging they would be unfair to employees living in areas of the country with high health care costs and would impose new taxes on workers.
Other issues to be discussed at Wednesday’s Senate Finance Committee meeting include limiting contributions to FSAs or wiping them out entirely. Nearly all major employers now offer FSAs, which allow employees to make pretax contributions to pay for uncovered health care-related expenses.
On HSAs, policy options to be discussed include reducing the maximum contributions permitted, doubling to 20 percent from 10 percent the tax penalty imposed on distributions used to pay for nonmedical expenses, and requiring certification from an employer or an independent third party that distributions were used to pay medical expenses.
The House of Representatives several years ago approved requiring certification of distributions, but the Senate took no action.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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DeLauro Says Paid Sick Days Bill Won’t Disrupt PTO Plans
During the recent swine flu outbreak, President Barack Obama told ill workers to stay home so that they wouldn’t infect their colleagues.
Rep. Rosa DeLauro, D-Connecticut, found irony in the warnings. She says that tens of millions of Americans can’t take time off because they don’t have paid sick days.
On Monday, May 18, she introduced the Healthy Families Act, a bill that would enable workers to accrue one hour of paid sick leave for every 30 hours they work up to a total of 56 hours, or seven days.
“Every worker should have paid sick days,” DeLauro said at a Capitol Hill event Monday, May 18, sponsored by the Center for Economic and Policy Research. “It is a matter of right and wrong … [it] is a matter of values. The time for this is now.”
DeLauro said that 57 million American workers do not get paid sick days, including 79 percent of the lowest-wage earners.
Her bill was introduced with 100 co-sponsors in the House—all Democrats. The Senate version is slated for introduction later this week. A hearing of a House Education and Labor subcommittee has been scheduled for June 11.
The measure would allow employees time off to care for themselves or a sick family member or to obtain preventive or diagnostic treatment. Employers could require certification for leave of more than three days in a row. The bill would apply to businesses with 15 or more employees.
Business groups are wary of how the measure might affect paid-time-off plans used by many companies.
“Employers that already provide this leave will not have to change their current policies at all, as long as their existing leave can be used for the same purposes described in the [bill],” says a statement released by DeLauro’s office.
A recent survey of 507 members of the Society for Human Resource Management found that 80 percent of their companies provide some form of sick leave—42 percent through a PTO plan, which allows workers to use the time for illness, vacation or personal reasons.
DeLauro said she does not want to upset existing leave programs.
“Let’s not reinvent the wheel, if companies don’t have to do that,” she said.
But SHRM is concerned that there could be complications in the details of the bill, which SHRM president and CEO Lon O’Neil characterized in a statement as “an inflexible, one-size-fits-all government mandate.” SHRM contends the bill would “lock in” existing leave benefits and make it impossible for employers to adjust their offerings.
Partly in an attempt to find an alternative to the Healthy Families Act, SHRM released a set of principles for workplace flexibility on May 7 designed to ensure flexibility for employees and certainty for employers.
“SHRM envisions a ‘safe harbor’ standard where employers voluntarily provide a specified number of paid leave days for employees to use for any purpose, consistent with the employer’s policies or collective bargaining agreements,” the SHRM principles state. “In exchange for providing paid leave, employers would satisfy current and future federal, state and local leave requirements.”
But DeLauro and other advocates say that too few companies are offering sick days to their employees. A study for the economic and policy research group released Monday shows that among 22 of the most advanced economies in the world, the U.S. is the only country that does not guarantee some amount of paid sick leave.
“The United States is the odd one out,” DeLauro said.
Advocates for the bill dismissed concerns that granting paid time off would be too costly for businesses fighting the recession. They said that allowing workers to stay home while they are sick would increase productivity, lower turnover and reduce the risk of an outbreak of infection.
“What we can’t afford is not to do anything,” said Jody Heymann, a professor of epidemiology at McGill University in Canada and author of the Center for Economic and Policy Research study.
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Health Care Cost Inflation Appears to Slow, but Statistics Can Be Misleading
Health care actuarial firm Milliman reported Monday, May 18, in its annual medical index that health care costs would increase at 7.4 percent in 2009, marking the third straight year of declines in health care inflation.
Good news, right?
Take a closer look: The percentage growth may be the smallest in three years, but the total dollar increase for a family of four—at $1,162—is the largest in that same period, thanks to the cumulative effects of all these annual health care cost increases. Year after year the cost being measured against grows, even if the percentage increases don’t.
Such is the fuzzy nature of health care costs.
In 2006, health care costs grew at 9.6 percent, the highest since Milliman established its index five years ago. But back then it was 9.6 percent of $12,214—the amount in 2005 a family of four spent on medical care. And the increase was $1,168.
Three years later, inflation may be down but the total dollar increase is just about the same: 7.4 percent of $15,609 (the average amount a family of four spent on medical care last year) totals about $16,770—an increase of $1,161.
Health care inflation may be lower by nearly two percentage points in 2009, but the total year-to-year increase is about the same. That means, next year, even if inflation continues to slow, total cost increases could be larger than a few years back when inflation was near double digits.
That’s particularly bad news for employees, as they are shouldering more and more of the cost.
Three years ago, when costs were increasing by 9.6 percent, employers shouldered most of the burden. Costs went up, but they went up less for employees, who saw the amount coming out of their paycheck to pay for health care costs increase 5.4 percent.
Today, the trend has reversed.
According to Milliman’s data, employer costs in 2009 will rise 5.4 percent; employees, meanwhile, will see nearly a 15 percent increase in the amount of money that comes out of their paycheck to pay for health care. Then add another 5.4 percent increase in the amount employees pay out of pocket (and already taxed) for other health care expenses.
Put it this way: A family of four making $50,000 would spend 8 percent or $4,000 of wages to pay for health care premiums alone. Factor in actually seeing doctors, taking medicines and receiving health care, and the costs continue to rise.
The latest data on health care costs is a reminder of how fuzzy math can be. What’s clear is that in a recession—against a backdrop of layoffs and pay cuts—these increases are hurting more than they used to. And the pain may get worse even if the economy gets better.
As Milliman suggested in its report, it is easier to lay someone off or cut their salary than make broad changes to the design of health benefits, which typically occur only once a year. In other words, Milliman’s report says that employers will likely make changes to reduce the cost they are paying for benefits even after the recession subsides.
The great hope in 2009 is health care reform—a sentiment supported nearly unanimously by employers, health care providers, insurance companies and other constituents. The details of reform, however, are as uncertain as the future. Health reform may bring more health care to people, but, as Milliman suggests, it is likely to cost just the same, no matter how one slices it.
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High Court Rejects AT&T Pregnancy Bias Ruling
An employer does not necessarily violate the Pregnancy Discrimination Act by paying pension benefits calculated using an accrual rule before the law took effect, even if women on maternity leave at the time received less credited service time, the U.S. Supreme Court ruled Monday, May 18.
The ruling in AT&T Corp. v. Noreen Hulteen et al. applies only to women who became pregnant before the Pregnancy Discrimination Act took effect in 1979.
Hulteen and several other AT&T employees each took partially uncredited pregnancy leave before the Pregnancy Discrimination Act became law.
According to the Supreme Court, AT&T replaced its old pension plan with a new one on the day the act took effect, providing the same service for pregnancy as it did for disabilities on a prospective basis, but not providing retroactive adjustments. The group sued, alleging discrimination under Title VII of the Civil Rights Act of 1964.
The 9th U.S Circuit Court of Appeals, sitting en banc, ruled 11-4 in 2007 that the plaintiffs were entitled to regain the lost time retroactively.
The Supreme Court, however, reversed the appeals court in Monday’s 7-2 decision. The majority held that AT&T’s pension payments are in accord with a bona fide seniority system’s terms.
Therefore, the plan is not subject to challenge under Title VII, Associate Justice David Souter wrote for the court majority.
Filed by Mark Hofmann of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Maximum Health Savings Account Contribution to Rise in 2010
The maximum contributions that can be made to health savings accounts in 2010 will increase, as will the minimum deductible imposed by health insurance plans linked to HSAs and the maximum out-of-pocket expenses that employees can be required to pay, the Internal Revenue Service said last week.
The maximum contribution that can be made to an HSA in 2010 for employees with single coverage will be $3,050, up from $3,000 in 2009. The maximum HSA contribution for those with family coverage will rise to $6,150, up from $5,950.
Additionally, the maximum out-of-pocket expense, including deductibles, that employees can be required to pay next year will rise to $5,950 for single coverage, up from $5,800 this year, and $11,900 for family coverage, up from $11,600.
The minimum deductible of the high-deductible health insurance plan to which HSAs must be linked will increase next year to $1,200 for single coverage and $2,400 for family coverage. The current minimum deductibles are $1,150 for single coverage and $2,300 for family coverage.
The new limits that the IRS announced Thursday, May 14, reflect increases in the cost of living.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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Ex-PBGC Chief Ordered to Testify Before Senate Panel
Former Pension Benefit Guaranty Corp. director Charles E.F. Millard was subpoenaed to testify Wednesday, May 20, before the Senate Special Committee on Aging, which said it has been investigating the agency’s manager hiring process over the past month.
The move Friday, May 15, follows the release Thursday of a draft report by Rebecca Anne Batts, PBGC inspector general, which alleges Millard made “inappropriate” contacts last year with BlackRock, JPMorgan and Goldman Sachs before they were hired as strategic partners to run a combined $2.5 billion for the PBGC in real estate and private equity.
The contracts of the managers could be canceled if the PBGC’s board agrees that Millard’s contacts with the firms during the procurement process gave them an unfair advantage.
Ashley Glacel, a Senate committee spokeswoman, said that at least one member of the PBGC board—Labor Secretary Hilda Solis, Treasury Secretary Timothy Geithner or Commerce Secretary Gary Locke—has been asked to testify along with Batts.
Glacel said the results of the committee investigation into the PBGC are expected to be released at the May 20 hearing.
The investigation has also been looking into whether the PBGC “will be able to continue fulfilling its mission as we weather the financial crisis,” Glacel said.
The committee’s chairman, Sen. Herb Kohl, D-Wisconsin, was concerned in particular about the PBGC’s ability to continue meeting its financial obligations to plans it takes over because the agency, under Millard’s leadership, shifted to a less conservative investment allocation policy.
Vince Snowbarger, the PBGC’s acting director, said in a statement that no assets have yet to be transferred to BlackRock, JPMorgan and Goldman Sachs.
“We will work with our board to decide whether these contracts should be terminated and whether strategic partnerships fit into the board’s investment approach going forward,” Snowbarger said in the statement.
Also, agency staff would work with the board to implement Batts’ recommendation that future agency directors stay out of the procurement process, Snowbarger said in the statement.
Filed by Douglas Halonen of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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