Author: Site Staff

Ohio Gov. Ted Strickland said Thursday, August 21, that he would oppose a controversial state ballot initiative that would require businesses to give employees paid sick time off.

The governor made the announcement in a statement e-mailed to news media.

“While we would hope that all Ohio businesses would make paid sick days available to their employees whenever possible, we believe that this initiative is unworkable, unwieldy and would be detrimental to Ohio’s economy, and we will be opposing it and asking Ohioans to oppose it as a result,” read the statement, issued in the name of the governor and Lt. Gov. Lee Fisher.

To avoid a law created by voter initiative, Strickland had hoped to reach a compromise between those who put the issue on the ballot—in particular, the Service Employees International Union—and the business groups that oppose it.

“This reality means that there will be a hard-fought campaign centering on this initiative in the coming months,” the governor said in the statement. “During that campaign, we call upon both sides to avoid portraying Ohio as unfriendly to business and economic development.”

The proposed new law would require employers of 25 people or more to grant seven paid sick days per year to all full-time employees and to provide paid sick days on a prorated basis to part-time workers.

Filed by Jay Miller of Crain’s Cleveland Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Nissan Motor Co. is boosting the number of quality-control inspectors and engineers more than twentyfold to 5,300. The goal is to halve the number of quality complaints on new cars by 2012.

The company’s Infiniti luxury brand ranked slightly above average in the 2008 Vehicle Dependability Study released this month by J.D. Power and Associates. But the Nissan brand came in below average and far behind rivals Toyota Motor Corp. and Honda Motor Co.

“Quality commitment is one of the three commitments in our GT2012 business plan, and Nissan is putting in a lot of focus and effort to meet our commitments,” spokeswoman Pauline Kee said.

As part of the push, Nissan will roll out more quality-control training for workers and boost the number of engineers helping suppliers with quality issues to 1,000 from five. Meanwhile, the ranks of engineers certified as quality inspectors will be increased to 4,300 from 250.

Ten directors also have been tapped as quality control heads responsible for any quality breakdowns, the company said. The goal is to catch parts problems earlier.

Nissan is targeting the number of customer complaints logged within three months of a new model’s release, the ratio of defective components and the need for repairs.

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

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New York health and insurance regulators have scheduled an October 7 hearing to consider concerns about so-called balance billing by out-of-network providers.

The hearing, which is being conducted jointly by the state’s insurance and health departments, was prompted by complaints from consumers who received care from in-network doctors and hospitals and later discovered that related specialty services were provided by out-of-network providers. In such cases, the non-network providers billed patients for any uncovered expenses after insurers either denied their claims or reduced their reimbursements.

The two departments are considering statutory and regulatory changes to address these issues and are seeking input from consumers, health plans, providers and other interested parties.

The hearing will be held at 10 a.m. October 7 in Meeting Room 1 of Empire State Plaza in Albany. Those wishing to testify should contact the New York State Insurance Department’s public affairs bureau at (212) 480-5262. Oral testimony will be limited to 10 minutes per person.

Written comments for the hearing record may be e-mailed to PublicHearingsComments@ins.state.ny.us with the subject line “Coverage of Health Care Services.” Comments will be accepted for up to 15 days after the hearing.

The hearing will be webcast live. More information is available at the department’s Web site at www.ins.state.ny.us.

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

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Abbott Laboratories Inc. plans to lay off 1,000 employees, part of a bid to slash $150 million in costs from its diagnostic test business, the drug and medical device maker said Thursday, August 21.

The plan to “streamline global manufacturing operations” will result in $370 million in pre-tax charges over the next several years, including $140 million in the third quarter of this year, the North Chicago, Illinois-based company said in a U.S. Securities and Exchange Commission filing.

A spokeswoman said about 1,000 workers would be laid off globally, but she wouldn’t say where those cuts would occur. Abbott’s core diagnostics division includes nearly 3,000 workers in Lake County, Illinois. The division makes large equipment and tests that screen specimens for diseases.

Abbott said “employee-related costs” will represent about $110 million of the charges.

Abbott in January 2007 agreed to sell the diagnostics division to General Electric Co. for $8.1 billion, but that deal unraveled several months later when the parties couldn’t finalize terms.

Filed by Mike Colias of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Joining four other appeals courts, the 9th U.S. Circuit Court of Appeals ruled Wednesday, August 20, that cash-balance pension plans do not violate federal age discrimination law.

In a unanimous decision, the San Francisco-based appeals court affirmed a lower court ruling that a cash-balance plan sponsored by Southern California Gas Co., a subsidiary of Sempra Energy in San Diego, does not discriminate against the big utility’s older employees.

Closely following other appellate rulings on the issue, the 9th Circuit said that while the benefits provided to younger employees are worth more—expressed as a retirement annuity—than the same benefits provided to older employees, that difference is the result of the time value of money, not age discrimination.

“Although a younger worker’s total accrued benefit at retirement age will be greater under the cash balance formula than an older worker’s if both started working at the same time, the difference is due to the time value of money rather than age discrimination,” stated the opinion, which was written by Judge N. Randy Smith.

Starting with a 2006 ruling by the 7th U.S. Circuit Court of Appeals involving IBM Corp.’s cash-balance plan, all the appeals courts that have taken up the issue have reached the same conclusion. They have rejected the argument by plaintiffs’ attorneys that the plans are age discriminatory because the same earned benefit will produce a smaller retirement-age annuity for older employees than younger employees.

“Plaintiffs’ argument ignores the realities of the time value of money,” Judge Smith wrote, adding that the 9th Circuit concurred with the 7th Circuit that nothing in federal age discrimination law suggests that federal legislators were opposed to younger workers having more time left before retirement and thus a greater opportunity to earn interest on each year of retirement savings.

With five appeals courts all affirming that cash-balance plans are not age discriminatory, litigation on the issue—which intensified after a district court judge in southern Illinois ruled in 2003 that cash-balance plans in general and IBM’s plan in particular discriminated against older employees—should be coming to an end, legal experts say.

“Given the universal conclusion reached by all courts of appeal, notwithstanding their diverse political leanings, this challenge should now be buried once and for all,” said Nancy Ross, a partner with McDermott, Will & Emery in Chicago.

“The fear of litigation should be gone. The courts have spoken very clearly on the issue,” said Jeffrey Huvelle, a partner with Covington & Burling in Washington.

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

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The number of workplace fatalities in the U.S. fell in 2007, but workplace homicides increased, the Bureau of Labor Statistics said Wednesday, August 20.

Some 5,488 people, or 3.7 out of every 100,000 workers, died from injuries on the job last year, according to the Washington-based bureau’s “National Census of Fatal Occupational Injuries in 2007.” The figure represents the lowest number of worker deaths since the department began keeping track in 1992, and a 6 percent decrease from 2006.

Still the government found significant increases in some types of fatal injuries: Workplace homicides increased 13 percent from 2006, and a record 835 workers died from fatal falls in 2007.

Fishing was the most dangerous occupation for the third year in a row, with a rate of 111.8 fatalities per 100,000 workers. Other dangerous jobs included logging, aircraft pilots, flight engineers, and structural iron and steel workers.

Construction continued to have the most deaths of any private-sector industry, with 1,178 fatalities reported in 2007, down from 1,239 in 2006.

The numbers are preliminary, with a final report due in April 2009. The BLS report on workplace deaths can be accessed at www.bls.gov.

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

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You’ve heard this story all year long: Scores of workers are struggling to meet payments on mortgages or maxed-out credit cards—or both—and are now tapping into their 401(k) savings as a last resort.

But it turns out that this couldn’t be further from the truth.

Credit-crunched consumers aren’t raiding their employer-sponsored nest eggs any more than usual, with the percentage of workers with outstanding 401(k) loans increasing by less than 1 percent so far this year, according to data provided by Hewitt Associates to Financial Week, a sister publication of Workforce Management. Specifically, the benefits consulting firm estimates that about 22 percent of workers are now borrowing from their 401(k) plans.

“It could be that some of the early attention given to the downsides of borrowing from your 401(k) has scared workers from actually doing it,” said Alison Borland, head of the defined-contribution practice at Hewitt.

Borland said that many employers have focused on educating their workers about how 401(k) loans could potentially erode a considerable part of their savings.

Such education initiatives appear to be working, as other studies have also found that 401(k) loans are barely on the rise—if they’re even increasing at all. Fidelity, for example, found that 19.2 percent of workers had outstanding 401(k) loans at the end of June, down from 19.4 percent in June 2007 and 19.9 percent in 2006.

While these numbers could be trending downward because workers are paying off their 401(k) loans, Fidelity actually found that the number of workers now initiating loans from their 401(k) plans has declined as well: 2.8 percent of workers took 401(k) loans in the second quarter, compared with 3.1 percent of participants who did so during the same period last year.

Filed by Mark Bruno of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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Troubled auto parts supplier Delphi Corp. said Monday, August 18, that it will lay off 600 of the 3,200 salaried workers in its electronics and safety division by the end of this year.

Delphi, which has been operating under Chapter 11 bankruptcy protection since October 2005, plans to cut its electronics and safety division costs by 25 percent.

The division accounted for $5.03 billion, or about 22 percent, of Delphi’s total global sales in 2007.

In a statement, Jeff Owens, the division’s president, said Delphi is “aligning its resources with the dramatic shifts that have occurred in the North American vehicle market.”

“Consumer trends and market conditions have caused fundamental shifts in consumer preferences, impacting both the volume and mix of vehicles produced by our North American customers.”

The affected salaried workers will be notified by August 29, said Delphi spokesman Milton Beach.

Most of the cuts will occur at Delphi’s operations in Kokomo, Indiana, where 2,500 of the 3,200 white-collar employees in the division work. Beach said the company will not disclose a target number of layoffs for each location.

The rest of the workers in the electronics and safety division are in Vandalia, Ohio; Milwaukee; and Michigan.

The layoffs affect about 6 percent of Delphi’s 10,200 salaried workers.

Delphi this month reported a $551 million second-quarter loss on a 13.3 percent decline in revenue. Delphi, a former General Motors subsidiary, relies on GM for most of its business.

Delphi, of suburban Detroit, supplies steering, chassis, electrical and other components and in-vehicle entertainment systems.

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

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They will relearn how to pick up screws. They will study safety practices. They will take classes on workplace diversity and ethics, study corporate history, clean up the mess of urban vandals and probably even plant flowers.

But one thing Toyota’s 4,500 idle North American workers will not do is get laid off.

As the U.S. auto industry sheds workers, and even Nissan offers buyouts, Toyota is sticking by its proud—and expensive—tradition of no layoffs during hard times.

“This was the first chance we’ve really had to live out our values,” says Latondra Newton, general manager of Toyota’s Team Member Development Center in Erlanger, Kentucky. “We’re not just keeping people on the payroll because we’re nice. At the end of all this, our hope is that we’ll end up with a more skilled North American workforce.”

On August 8, Toyota halted production of Tundra pickups and Sequoia SUVs at plants in San Antonio and Princeton, Indiana, for three months, idling 4,500 workers.

It’s an expensive proposition. Toyota won’t estimate the financial hit. But keeping 4,500 of its workers on the clock at full pay and benefits for 14 weeks, even at a conservative estimate of $20 an hour, would represent at least $50 million. The shutdown also means a production loss of 30,000 to 40,000 big-ticket pickups and SUVs. At an estimated wholesale value of even $25,000 per vehicle, that translates into as much as $1 billion in lost revenue.

Other complications are developing. Toyota’s assembly plants that still are producing are leery of others getting an advantage in intra-company competition for future work. So they are vying to take part in the retraining programs.

It was Newton who first received word of Toyota’s decision last month that assembly lines in San Antonio and Princeton would stop making Tundras and Sequoias. Her instructions were clear: All affected workers would remain on the clock at full pay until assembly resumes in November.

No one had developed a contingency plan, so that left Newton and her Kentucky staff with about two weeks of late-night meetings and weekend scrambling to create a plan of action.

Their solution: Move the affected workforce through a nonstop schedule of classes and training exercises aimed at improving their assembly skill levels.

Among the classes they are rotating through: safety drills, productivity improvement exercises, presentations on material handling and workplace hazards, diversity and ethics classes, maintenance education and a stream of online tests to measure and record their skill improvements.

But just as the plan got under way, things became more complicated.

In Toyota’s manufacturing system, its plants compete for each new vehicle program based on their achievements. If one plant gets a leg up on worker skill levels or safety achievements, it could sway a future decision on where a new vehicle gets manufactured.

“Our other North American plants that were not affected didn’t want to get left behind by the skill improvements, so they have asked if they could also participate in the programs,” Newton says.

Rotating the unaffected workers through skill programs will create manpower issues on Toyota’s busier assembly lines. That likely will mean that Toyota will use San Antonio and Princeton workers to relieve employees on lines elsewhere.

The automaker also is considering ways to shift Texas and Indiana workers temporarily to Toyota plants in which assembly lines are moving at full speed, such as the Camry assembly plant in Georgetown, Kentucky.

Despite Toyota’s contingencies, it is unclear that the large-scale retraining will be enough to see the San Antonio and Indiana workers through until production resumes.

The automaker says it has not decided what employees will do after completing their classes, but they probably will work in community service programs around San Antonio and southern Indiana.

That would put Toyota employees to work cleaning public parks and scrubbing graffiti from buildings around San Antonio, a company spokesman says.

And if executives can resolve logistics and safety issues, they may authorize a weeklong employee assignment to clean up the shoreline of a Texas lake.

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

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General Motors’ decision last month to eliminate retiree health benefits highlights the growing role that outside advisors will play as employers divest themselves of retiree health care obligations

Stepping into the employer’s role as health care advisors are companies like Extend Health, which GM hired last month to help retirees purchase health coverage on their own.

Beginning January 1, salaried GM retirees or their dependents 65 and older will no longer receive health benefits. Like Ford Motor Co. and Chrysler before it, GM will be involved in retirees’ health care via a monthly contribution meant to help cover the cost of health insurance. GM will contribute an additional $300 a month to retirees’ pensions to help defray the cost of health plans that supplement Medicare.

Ford, which dropped group coverage in favor of an annual $1,800 per-employee contribution into a health reimbursement arrangement, also hired Salt Lake City-based Extend Health.The company, which is charging GM a one-time $8 fee per member, advises retirees on finding a health plan that suits their needs and budget.

Extend Health says it can compare the prices of 40 health insurance carriers. The company receives a commission from the health insurance company whose insurance product is chosen by a retiree, but Brian Tenner, senior vice president of sales at Extend Health, says agents provide unbiased advice because they are not told about the value of each plan’s commission.

“It’s truly about being an objective advocate for each one of these participants,” Tenner says.Extend Health will work with GM retirees beginning in mid-October, when carriers announce their prices. GM’s announcement has already sent retirees looking for insurance in the individual health care market.

For 27 years as a parts designer at GM and then in the years since he retired in 1993, Stanley G. Howey never had to worry about the cost of health insurance.

Over the years, premiums increased along with co-pays. But even with a triple bypass this year and a planned hip replacement this fall, the monthly medical bill for Howey and his wife totaled $152—including prescription, dental and eye care.

Having spoken with several health benefits advisors, he expects to pay more than $500 a month, not including dental or hearing coverage.

“I’m 72 years old,” says Howey, who lives in Mount Pleasant, Michigan. “I don’t need this stress in my life.”

One company providing advice to Howey is Washington, D.C.-based Lon¬gevity Alliance, which helps people purchase health coverage and plan their retirement finances.

“One way or another, people are moving from the group market to the individual market,” says chief executive Steve Zaleznick. “People need to work through the decisions they need to make now that they’ve suddenly become the purchaser of the product.”

GM spokeswoman Michelle Bunker says Extend Health will help clear up common misunderstandings. She says GM has received numerous calls from retirees worried that pre-existing medical conditions won’t be covered. Such conditions will be included, she says.

“It’s a huge change,” Bunker says. “We understand that.”

The change and its added cost aren’t a surprise to some.

Gustave Joly, whose wife, Helen, worked as a data processor at the Cadillac division in Detroit for 29 years, says the couple “lost their shirt in the stock market,” first when parts maker Delphi filed for bankruptcy and now with their GM stock at record lows.

Joly, 72, has been speaking with brokers to get a sense of how much his health care costs will increase. He understands that as a retiree, he’s a vulnerable cost target for a company trying to stay afloat.

“They took care of us all this time,” he says. “You can’t just say they’re rotten at the core.”

—Jeremy Smerd

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