Author: Site Staff

Chrysler LLC is negotiating with the United Auto Workers to put factory workers on four 10-hour workdays to save energy and travel.

Chrysler manufacturing chief Frank Ewasyshyn said the new schedule would affect most of the company’s plants, except those working lots of overtime such as Belvidere assembly in Illinois and the Sterling Heights, Michigan, assembly plant. The rest would likely qualify, he said.

He said the proposal was similar to what some government entities are doing to reduce energy costs. They are shifting from five eight-hour days per workweek to four 10-hour days.

“It reduces their costs and reduces our operating costs,” Ewasyshyn said.

Belvidere makes the Dodge Caliber small car and the Jeep Patriot and Dodge Compass SUVs. Sterling Heights makes the Chrysler Sebring sedan, its convertible variation and the Dodge Avenger.

Chrysler is piloting the plan in a parts distribution center in Atlanta.

Ewasyshyn said he couldn’t immediately provide specific savings, but said it was less than $10 million annually.

Chrysler is talking with the UAW International and the locals representing affected plants to approve the change, Ewasyshyn said.

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

Laurence G. O’Neil will take over as president and CEO of the Society for Human Resource Management on October 1, giving him a couple of months to settle in before Congress embarks on what likely will be a major health care reform in 2009.

Having served five years as senior vice president and chief human resources officer at Kaiser Permanente, a $40 billion not-for-profit health care organization, O’Neil is well prepared to lead SHRM into the fray.

“His knowledge of the public policy issues surrounding affordable health care for employees is going to be a valuable asset to SHRM,” said Susan Meisinger, O’Neil’s immediate predecessor as SHRM’s top executive. “What he brings is a view from the trenches that is very compelling when you’re offering [congressional] testimony.”

O’Neil was named on Monday, August 11, to replace Meisinger. 

Meisinger announced her retirement in January and departed on June 30, citing the need to care for ill family members. SHRM said it had reviewed a pool of more than 400 candidates for CEO.

Beyond health care, O’Neil brings to the 245,000-member SHRM a deep executive background that could amplify the organization’s emphasis on strategic HR and globalization.

Before his stint at Kaiser Permanente, O’Neil was executive vice president and chief human resources officer for global corporate and investment banking at Bank of America. He also directed HR in Asia and held several other positions for the bank.

Between Kaiser and Bank of America, he was managing partner at Heidrick & Struggles, an executive search firm.

“He’s got very broad HR expertise that he’s gained in a variety of industries,” said Cari Dominguez, former chairwoman of the Equal Employment Opportunity Commission who is now an HR consultant and corporate director at Manpower. “He’s a great choice.”

Dominguez’s strong endorsement of O’Neil, who goes by the name Lon, is based on her experience working with him when they were both at Bank of America.

“Lon is a person of ideas, and he’s a visionary,” Dominguez said. “He’s got leadership skills and is inspiring. He loves HR.”

With his knowledge of Asia, O’Neil will be able to build on SHRM’s foundation in that region, where it has offices in India and China, Dominguez said.

“Lon will be able to provide influence and direction in those markets,” she said.

He also is positioned to help SHRM meet another goal—attracting and engaging senior corporate leaders.

“One of Lon’s great strengths is his ability to work with line executives,” Dominguez said. “He has the ability to look at HR from a business perspective. He’s highly regarded by CEOs.”

O’Neil will have a chance to concentrate on promoting the SHRM brand in the C-suite rather than getting buried in the daily grind of a Washington trade group, Meisinger said.

SHRM is currently being led by COO China Miner Gorman, who became acting CEO on July 1. SHRM generated $105.4 million in revenue in 2007.

“The professional staff is very strong at SHRM,” Meisinger said. “China Gorman is quite an effective COO, and they’ll make a good team. He won’t need to focus his time on running the business side of an association.”

When he interacts with the SHRM staff, he’ll do it in a collegial way, Dominguez said.

“Lon’s style is quite consultative,” she said. “He tries to learn. He tries to probe.”

—Mark Schoeff Jr.

Verizon and the unions that represent 65,000 of its workers reached a new tentative three-year contract agreement Sunday, August 10, that protects union jobs and maintains employer-paid health care while providing cost savings for the company on retirement health care for new hires.

The settlement was announced hours before a union-imposed midnight strike deadline and a little more than a week after the workers agreed to extend negotiations past the August 2 expiration of their last contract.

In what the Communications Workers of America and the International Brotherhood of Electrical Workers are hailing as a major leap forward, Verizon will extend union recognition by the end of the year to 600 former MCI technicians at Verizon Business—including many in New York City— who perform the same jobs as the union workforce. The deal also includes new opportunities for union workers to provide customer support and service at Verizon Business.

“This is a breakthrough agreement in many ways,” said   Communications Workers of America President Larry Cohen. “This settlement provides a framework for growth at Verizon and a good standard of living with careers for our members.”

The two sides had tangled over job protection issues, which were the most difficult issues to resolve, CWA officials said.

“We approached the bargaining tables with an interest in solving problems, and the result is an agreement that will keep us focused on delivering to our customers the best in broadband, communications and entertainment,” said Marc C. Reed, executive vice president for human resources, Verizon Communications.

The tentative agreement eliminates subcontracting of work in a number of job areas, converts 900 temporary jobs to permanent ones and brings additional positions associated with Verizon’s FiOS technology into the union bargaining units. Overall, the settlement should create 2,500 new union jobs, the unions said.

Health care had also been a focus of the talks, as Verizon looked to get workers to contribute to help offset increased costs.

The settlement preserves fully paid health care premiums for all active and retired employees. Verizon was able to get the unions to budge on future hires, who will now have to contribute to their retirement health care plans.

Verizon and the unions agreed to work together effort to achieve national health care reform. The company will provide $2 million per year to the effort.

Wages will increase nearly 11 percent over the three-year contract term. The workers, including 15,000 in the New York City area, will vote on whether to ratify the deal over the next several weeks.

“The money was where we wanted it to be, and the benefits were where we wanted them to be,” said Jerome Paredes, a Bronx field technician. “We’re not walking, which is good news.”

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Blue Cross and Blue Shield of Illinois won’t pay for hospital-based preventable medical errors, the health insurer announced this week.

Instead, the Chicago-based health insurer said it will work with network providers to stop medical errors before they happen.

“Blue Cross’s goal for years has been to work to prevent medical errors, which often go undetected,” Dr. Scott Sarran, the Illinois’ Blues chief medical officer, said in a statement announcing the move.

The medical errors covered by the initiative include “serious hospital acquired conditions,” such as preventable infections, and “never events,” which are errors in patient care that can and should be prevented—such as operating on the wrong body part or transfusion errors.

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

California law prohibits employee noncompete agreements unless the agreement involves the sale of a business, the California Supreme Court said Thursday, August 7.

The opinion in Edwards v. Arthur Andersen L.L.P. involved certified public accountant Raymond Edwards, who was employed by Arthur Andersen in its Los Angeles office. Edwards signed a noncompete agreement when he was hired in 1997, according to court papers.

After the Enron scandal, New York-based HSBC USA Inc. agreed to purchase Edwards’ practice group. As part of the purchase, employees in Edwards’ group were to resign from Andersen and would be offered a job at HSBC.

But they first needed to sign a “termination of noncompete agreement,” which was a general release of claims against Andersen. Edwards, who was concerned about potential liability in connection with Andersen’s marketing of disallowed tax shelters, refused to sign. Andersen then terminated him and HSBC withdrew its employment offer.

Edwards sued, claiming intentional interference with his prospective economic interests, among other things.

The court said in its decision, which partially overturned a lower court ruling, that “to the extent Andersen demanded Edwards execute the [termination of noncompete agreement] as consideration for release of the invalid provisions of the noncompetition agreement, it could be considered a wrongful act for purposes of his claim of interference with prospective economic advantage.”

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

The clock on a possible Verizon strike is ticking once again.

Two unions representing 65,000 of the telecom company’s workers said extended negotiations have failed to produce significant progress on job protection issues and have set a deadline of Monday, August 11, for reaching a contract agreement with the company.

The Communications Workers of America and International Brotherhood of Electrical Workers had agreed to stop the clock on the August 2 expiration of the current contract, but with the bargaining process slowing down, the unions decided to establish a new deadline. A strike is possible if a deal can’t be reached by 12:01 a.m. Monday, August 11.

“The central issue is the issue of good jobs,” said Bob Master, political director of the CWA, which represents 15,000 Verizon workers in the New York City area. “That’s what we’ve been tangling over for much of the time over the last week.”

Negotiators had made progress on health care and wage issues before the initial deadline, but movement on outsourcing, subcontracting and union recognition issues has been slow, the unions said.

The bargaining unit has been shrinking as Verizon moves call centers abroad and shifts traditional union work to lower-wage, lower-benefit employees at Verizon Business and Verizon Wireless, the unions said. The percentage of Verizon’s revenue that comes from union operations has shrunk to 30 percent this year, compared with 70 percent in 2002, according to the CWA.

“With $5.5 billion in profits, Verizon can afford to stop outsourcing the high-quality, family-supporting jobs that our communities need,” said Chris Shelton, vice president of CWA District 1, which includes New York City.

A spokesman for Verizon said the company was surprised at the union’s characterization of the talks.

“We are making good progress in the bargaining,” he said. “A lot of issues have been resolved. There are other issues we’re close on.”

The threat of a strike comes as Verizon is in the midst of an aggressive push to roll out its high-tech fiber optic service known as FIOS. The company recently received permission in New York to compete with cable companies for television customers and is relying on FIOS to bolster its struggling landline business.

Workers will hold “Ready to Walk” rallies throughout the day at locations across the five boroughs, including Verizon’s Lower Manhattan headquarters. They last went on strike in 2000, staying out 18 days. In 2003, the union extended the deadline and reached an agreement, averting a work stoppage.

Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

FACTORS IN RELOCATION—1
Company growth led the list of internal factors cited. The top external factor that companies cite is a lack of qualified people locally. Large companies particularly noted that the weak real estate market affected relocation values in 2007.
What internal company conditions had the most significant impact on the number of your employee relocations in 2007? ( ) indicates results from previous year
Internal conditions had no impact		4% (6%)
Growth of company		46%  (59%)
Promotions/resignations		37% (36%)
Knowledge/skills transfers		30% (30%)
Corporate reorganization		24% (22%)
Expansion into new territories		22% (22%)
Acquisitions/mergers		15% (19%)
Budget constraints		13% (9%)
Expansion of facility		11% (19%)
Use of short-term assignments		11% (not listed as an option in 2007)
International expansion		11% (10%)
Increased production		10% (15%)
Closing of facility		% (12%)
Decreased production		4% (2%)
Expansion of telecommuting/virtual teams		3% (1%)
Security issues		1% (1%)
Other		5% (5%)
What external factors had the most significant impact on the number of your employee relocations in 2007? ( ) indicates results from previous year
External conditions had no impact		19% (26%)
Lack of qualified people locally		52% (52%)
Economic conditions		24% (25%)
Real estate market		22% (not listed as an option in 2007)
Growth of domestic competition		14% (13%)
Growth of international competition		10% (13%)
Destination country regulations		3% (3%)
War in Iraq/Afghanistan		2% (1%)
Domestic natural disasters (wildfires, floods, etc.)		2% (3%)
International natural disasters (typhoons, etc.)		1% (1%)
Terrorism/political violence		1% (1%)
Other		4% (4%)
Source: Atlas World Group’s 41st Annual Corporate Relocation Survey
FACTORS IN RELOCATION—II
The use of lump-sum payments grew last year, and employees who declined relocations cited family issues most often as their reason for turning down a move.
To what extent does your company reimburse relocation expenses? ( ) indicates results from previous year
	Transferees		New hires
Full reimbursement of relocation expenses	63% (55%)		54% (42%)
Lump-sum payment	44% 32%)		49% (31%)
Partial reimbursement based on salary, position, etc.	37% (30)		41% (43%)
No reimbursement of relocation expenses	6% (5%)		5% (8%)
What reasons did employees give for declining relocation? ( ) indicates results from previous year
Family issues/ties	62% (84%)
Housing/mortgage concerns	50% (30%)
Cost of living in new location	49% (49%)
Spouse/partner’s employment	48% (49%)
No desire to relocate	45% (43%)
Personal reasons	41% (33%)
Could hurt career	2% (3%)
Other	2% (4%)
Source: Atlas World Group’s 41st Annual Corporate Relocation Survey

Workforce Management, August 11, 2008, p. 31, 32 — Subscribe Now!

The age at which workers can receive full Social Security benefits should be increased to help reduce the looming insolvency of the system, according to the American Academy of Actuaries.

“The sooner policymakers act, the more options they will have,” Thomas Terry, vice president of the Washington-based academy and chairman of its Pension Practice Council, said at a press conference Monday, August 4.

He is also chief executive of JPMorgan Compensation and Benefit Strategies, a unit of JPMorgan Chase & Co. of New York.

Tax increases could be phased in more gradually, and reductions in benefit growth could be spread across a much larger population, Terry said.

The academy suggested three proposals for increasing the retirement age.

In one plan, the age at which full benefits could be received would be raised to 67 for all workers born in 1949 or later, which would reduce the expected deficit by 10 percent.

The second plan would increase the full-benefits age to 67 and increase it by a month every two years until it hit 70, thus eliminating 35 percent of the expected long-range deficit.

The third option would increase the schedule for full benefits by two months every year until age 70, eliminating half of the long-range deficit, the academy said.

The system is expected to have cash flow problems beginning in 2017, and the Social Security trust fund will be exhausted by 2041 at the current rate, the academy said.

Filed by Sara Hansard of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

A lawsuit that 401(k) participants filed against Home Depot and former executives—including Robert Nardelli and Ken Langone—has been given new life.

The suit, which was dismissed in district court, has now been revived by an appeals court ruling that asserted participants may sue the company to recover losses that were sustained from holding Home Depot stock in their 401(k) plans.

“It looks like we’ll have our day in court now,” said Robert Harwood, attorney for the plaintiffs in the class-action suit, which was led by former employee Raymond Lanfear, a Colorado resident. “We think the appeals court made the right decision.”

But before the suit can go back to the district court, the workers have to file an administrative appeal with the retirement committee at Home Depot, noted Ron DeFeo, a spokesman for the company.

“We’re pleased with this decision,” he said.

The district court had stated that the former employees leading the suit did not qualify as plan participants and dismissed the case, in part, for lack of subject-matter jurisdiction as a result. Technically, the district court argued, the former employees were suing to recover damages, not benefits—a ruling the appeals court stated was erroneous.

In the original complaint, the suit alleged that Home Depot and several of its executives breached their fiduciary duties to 401(k) participants by “failing to prudently and loyally manage the Plan’s investment in Home Depot Stock.” Specifically, the plaintiffs argued that the company’s stock was an imprudent investment option for plan participants after Home Depot’s share price began to decline in June 2001.

The former employees also contended that company contributions to the 401(k) should not have been made with Home Depot stock after this time, when shares of Home Depot were trading at roughly $50. By January 2003, the company’s stock had dipped below $21.

The former employees also argued that the decline began and occurred throughout a period when several of Home Depot’s top executives were improperly backdating their stock option grants—a charge that the company admitted to in 2006. The litigants claim the backdating played a role in further deflating the value of the company’s stock.

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

An appeals court panel has upheld a lower court’s ruling that a so-called mass action can be moved to a federal court from a state court under the federal Class Action Fairness Act, even if a group of plaintiffs deny that their action is a mass action.

In the Chicago-based 7th U.S. Circuit Court of Appeals on Friday, August 1, opinion in Bullard et al. v. Burlington Northern Santa Fe Railway Co. et al., Chief Judge Frank Easterbrook noted that under the Class Action Fairness Act, a mass action can be sent to federal court if the plaintiffs propose a trial involving the claims of at least 100 litigants, if at least one plaintiff seeks at least $75,000, if the stakes as a whole are more than $5 million and if the parties involved are from different states.

The plaintiffs in the case—144 people seeking damages from Burlington Northern and three other defendants that allegedly allowed dangerous chemicals to escape from a wood-processing plant—sought to have the case tried in Cook County, Illinois, circuit court. The defendants, citing the Class Action Fairness Act, sought to have the case heard in the U.S. District Court for the Northern District of Illinois. The plaintiffs said the case should be moved back to state court because their suit was not a mass action.

The plaintiffs “insist that a complaint never proposes a trial,” wrote Easterbrook. “According to the plaintiffs, defendants may remove a ‘mass action’ only on the eve of a trial, once a final pretrial order or equivalent document identifies the number of parties to a trial.”

The district court denied the plaintiffs’ motion, and the appeals court affirmed that ruling, with Easterbrook noting that the appeals court took the case because the legal issue had never been addressed in any federal circuit court. He wrote that the lower court’s “conclusion is the only sensible reading” of the statute.

The plaintiffs argued that “no mass action could ever be a class action, for a suit cannot be identified as a ‘mass action’ until close to trial, while a suit is a class action or not,” under the relevant section of CAFA, “on the date of filing,” wrote Easterbrook. “Courts do not read statutes to make entire subsections vanish into the night.”

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