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Two unions have filed unfair labor practice charges against Caterpillar Inc. for a smoking ban on company property that went into effect June 1.

The United Auto Workers and the International Association of Machinists and Aerospace Workers both allege that Peoria, Illinois-based Caterpillar violated the terms of their contracts by unilaterally banning smoking on the company’s property. The unions, which filed their charges separately, say employees have had the smoking privilege detailed in their contract for 60 years.

Employers have been increasingly willing to engage with employees—and now unions—in a battle that pits the right to smoke versus the health and financial costs of doing so. A number of employers have already made smoking, on or off the job, an offense that could lead to termination.

Whirlpool Corp. in Evansville, Indiana, recently suspended 39 workers who lied about their smoking habits on health insurance forms to avoid paying more on their health care premiums. Johnson & Johnson faced grumbling employees when the company outlawed smoking on its property more than a year and a half before Caterpillar.

While labor unions are fighting Caterpillar’s anti-smoking policy, the heavy-machine manufacturer may have state law on its side. Caterpillar’s new policy comes six months after Illinois enacted a law that bans smoking in the workplace. The law makes it illegal to smoke inside buildings and within 15 feet of office entrances, exits and ventilation ducts.

Union officials say Caterpillar’s ban goes further than state law. The company has prohibited smoking anywhere on its property regardless of how close a person is to a building. Such a policy change must first be agreed to through collective bargaining, a lawyer representing the UAW says.

“There’s a legal obligation that the union is seeking to uphold and vindicate,” says Stanley Eisenstein of Chicago-based firm Katz, Friedman, Eagle, Eisenstein, Johnson & Bareck.

Caterpillar spokeswoman Rachel Potts would not comment on the charges except to say the company “is committed to creating and maintaining the safest and healthiest work environment.”

Eisenstein says the union filed a second charge June 2 after at least one union worker was suspended indefinitely for violating the company’s no-smoking policy. Eisenstein says the union believes its workers are being unfairly targeted for violating the smoking ban.

Will Vance, an official with the National Labor Relations Board in Peoria, says the agency will determine whether the company implemented the smoking ban to comply with state law or if it constituted a change in work conditions without consulting the union. He expects the board to respond to the charges by the end of June.

—Jeremy Smerd

The House of Representatives last week overwhelmingly approved a revised bill that would expand the scope of the Americans with Disabilities Act, allaying the business community’s concerns about a previous version of the bill.

Major employer groups had opposed the earlier bill, the ADA Restoration Act, fearing it would make ADA protections too broad. But after months of discussions with groups representing the disability community, the U.S. Chamber of Commerce, the National Association of Manufacturers and other business organizations threw their support behind a revised plan.

That revision, renamed the ADA Amendments Act, won House approval on a 402-17 vote.

On the eve of the vote, the Office of Management and Budget issued a statement of administration policy, saying the White House “strongly supports the overall intent” of the bill. While the policy statement raised some concerns about the bill’s language, it did not recommend a presidential veto.

A version of the legislation has been introduced in the Senate, but no vote has been taken.

Under current law, a covered disability is defined as a physical or mental impairment that “substantially limits one or more of the major life activities” of an individual. A person also would be considered disabled if there is “a record of such an impairment” or he or she is “regarded as having such an impairment.”

The earlier bill did not include the already existing requirement that a disability substantially limit a major life activity, leading some employment law experts to fear that the measure would lead to unwarranted claims and litigation.

The ADA Amendments Act, however, restores the requirement that a disability materially restricts one or more major life activities, and it provides a partial list of such activities. Like the earlier bill, the amended measure protects individuals “regarded as having such an impairment,” but makes clear that ADA protections do not apply to minor or transitory conditions. It also prohibits courts from considering mitigating measures in determining whether an impairment is substantially limiting.

Earlier court rulings held that a person whose impairment could be mitigated through the use of devices or medication would not have ADA protections. With the effective narrowing of the law’s protections, employer groups found themselves in agreement with advocates for the disabled that the courts had gone too far.

“We certainly did oppose the bill as introduced, and we believe it would have been far too sweeping an amendment to the ADA,” said Michael Eastman, executive director-labor law policy for the U.S. Chamber of Commerce in Washington. “However, we recognized that the disability community has identified some real problems with the court’s interpretations of the ADA. That’s one of the principal reasons we were willing to sit down with them and try to reach a common ground,” he said.

“From our perspective, this was about trying to correct this problem in the courts without opening up the ADA so broadly that every trivial impairment would be covered. I believe the compromise achieves that,” Eastman said.

“We came to a very delicate, negotiated deal,” said Keith Smith, director-employment and labor policy for the Washington-based National Association of Manufacturers, which had opposed the earlier bill. “It revamped the bill as it was introduced. The main aspect of this negotiated compromise legislation is it provides clarity for employers.”

Lawrence Lorber, a partner in the Washington office of Proskauer Rose who specializes in labor law, said the measure “will expand the coverage of the ADA really back to where it was in 1998,” before the series of Supreme Court and lower court decisions reduced coverage from the original ADA drafters’ intent. “The courts said if there were mitigating measures, the person wasn’t disabled. The notion—which I agree with—was that was not what Congress intended.”

If enacted, the ADA Amendments Act will “put a burden again on the human resources people who administer” its application, Lorber said. While it, like any other new law, likely will spawn some litigation initially, he said he doubted the change would significantly increase litigation over the long term.

“With any legislation like this we’ll expect some litigation,” NAM’s Smith said. “But if you look at the overall product of the bill, that’s something we’re proud to be behind.”

“It’s definitely got momentum, and we’re hopeful the Senate will recognize the efforts that have taken place in the House” and move quickly on the House bill, Smith said.

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

A coalition of employers, health insurers and health care providers released a set of policy and technical guidelines June 25 they say will make storing personal health records online easier and more secure.

The group, which includes Dossia, the employer group started by Intel, Wal-Mart, Pitney Bowes, BP and Applied Materials, hopes the guidelines will help gain the trust of consumers and employees concerned that online health records would be vulnerable to theft or misuse by an employer or health insurer.

Participants that included employers and health insurers as well as companies that have developed health care tools for consumers such as WebMD, Microsoft and Google, endorsed a commitment to never use the information in a personal health record to discriminate against an individual who is seeking health insurance or employment. The coalition said it would create policies and controls so that information in a health record cannot be obtained by employers and health insurers without the consent of the individual.

Zoe Baird, president of the Markle Foundation, which organized the effort, said “the information is not to be used for discriminatory purposes. Aetna and others have signed onto this.”

Companies that offer personal health records should, according to the written framework released June 25, “take a strong public and legal stand against third parties seeking to make their own access to consumer data streams and networked PHR information a condition of an individual’s employment, benefits, or other services important to the well-being of individuals.”

Colin Evans, president of the employer group Dossia, said the framework aligned with the understanding among the group’s employer-members that companies will not have access to the personal health records of employees. Dossia has said that employers will not have access to data from the personal health records even if they want to use it anonymously to develop targeted wellness programs.

“Our success depends on our employees to trust the system,” Evans said during a conference call announcing the agreement.

James X. Dempsey, vice president for public policy of the Center for Democracy and Technology, said the policy proposals go further than current laws, like HIPAA, to protect patient privacy.

Steven Findlay, a health care analyst for Consumers Union, the publisher of Consumer Reports, said the framework showed an extraordinary amount of cooperation between different, sometimes competing, interests.

—Jeremy Smerd

Soaring energy costs have prompted Utah to announce it is moving to a four-day workweek, making it the first state in the nation to do so.

With gas prices racing past $4 a gallon creating an unprecedented burden on many workers, on June 26, Gov. Jon Huntsman announced the Working 4 Utah initiative. Beginning in August, state government service hours will be extended from 7 a.m. to 6 p.m. Monday through Thursday. State administrative offices will be closed on Fridays, with the exception of essential public services.

“We live in a dynamic, ever-changing environment and it’s crucial that we take a serious look at how we can adapt and maintain our state’s unparalleled quality of life,” said Huntsman in a statement about the program.

Huntsman’s office estimates that 1,000 of 3,000 state buildings will be closed on Fridays, cutting energy costs by about 20 percent.

It’s only a matter of time before other state governments follow in Utah’s footsteps, says Susan Seitel, president of WFC Resources, a Minnetonka, Minnesota-based consulting firm.

“Minnesota is looking at this too,” she says. “This is absolutely the beginning of a trend.” 

Many state governments, as well as companies, recognize that moving to a four-day workweek not only helps save energy costs but also appeals to younger workers, she says.

“It solves so many problems—it reduces the carbon footprint, saves on commuting costs, makes companies look more responsible and gives people more flexibility,” Seitel says.

Utah will evaluate the initiative for a year to allow for adjustments in the future.

—Jessica Marquez

Despite employer efforts to educate workers, many pre-retirees remain pretty clueless about their future financial security—or lack of it.

Insurer MetLife found that nearly seven in 10 retirees overestimate how much they can draw down from their savings each year while still preserving their principal. In fact, 43 percent of pre-retirees said they believe they can withdraw 10 percent or more from savings each year while still maintaining their nest egg. Most retirement experts suggest withdrawing no more than 4 percent annually.

MetLife surveyed 1,216 workers ages 56 to 65. Surprisingly, six out of 10 respondents underestimated their own life expectancy. About half low-balled the amount of income they’ll need after they retire.

Those are troubling results.

In many cases, retirees will simply outlive their savings. Sandra Timmermann, director of the MetLife Mature Market Institute, which helped compile the survey, said the fact that so many pre-retirees overestimate how much they can spend down from their retirement savings annually “should serve as a wake-up call for pre-retirees and advisors alike.”

One encouraging sign: About 60 percent of those who took the survey said they were seeking financial advice on such products as 401(k)s, retirement accounts and long-term-care insurance.

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

A new energy report from CIBC World Markets predicts gas prices will approach $7 a gallon by the summer of 2010, the same year oil prices will likely reach $200 per barrel.

Not surprisingly, CIBC sees wrenching problems for automakers in a $7-a-gallon world. Owning and driving a car will become too expensive for millions of lower-income Americans, forcing them to look for cheaper means of transport.

As a result, car sales will plummet. That trend has already started to play out as gas prices have risen. Sales of automobiles, which averaged close to 17 million units per year over the first half of the decade, have dropped to 14 million units a year.

CIBC expects sales to drop to as low as 11 million units a year by 2012, the lowest level since the early 1980s.

“The market share of light trucks, SUVs and vans will be literally halved, reversing the trend of the last 15 years,” said Jeff Rubin, chief economist and chief strategist at CIBC World Markets.

Auto manufacturers have already begun offering cash-back incentives and zero-percent financing as light trucks and SUVs pile up in auto showrooms. Last week, Ford cut truck production and delayed the launch of its redesigned best-selling F-150 pickup truck in anticipation of lower sales this year.

Rubin said higher gas prices will cause Americans to cut back on driving and turn to more fuel-efficient vehicles. The report predicts that about 10 million vehicles will be forced off the road because of the high cost of driving.

“About half of the number of cars coming off the road in the next four years will be from low-income households who have access to public transit,” he said.

Americans are indeed driving less this year.

Rubin said average miles driven will likely fall by 15 percent this year. He added that gasoline consumption in the U.S. has declined sharply since the start of this year and should show the first annual decrease in 17 years.

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

Internal Revenue Service guidance released Wednesday, June 25, provides answers to many health savings account-related questions raised by employers and consultants.

In particular, Notice 2008-59 makes clear that employees who receive free or employer-subsidized health care services from an employer’s on-site medical clinic generally will be eligible to participate in a high-deductible health insurance plan linked to an HSA so long as the clinic does not provide significant medical services.

In an IRS-provided example, a clinic operated by a manufacturer that provides such free services as physicals, immunizations, allergy injections, nonprescription painkillers and treatment of plant accidents would not be considered as providing significant medical services, so employees would eligible for HSAs.

The guidance also makes clear that employers who erroneously make contributions to an HSA on behalf of employees not eligible for HSAs can request that the financial institution holding the money return it. If the money is not recovered by the end of the tax year, then the amounts must be included as wages on an employee’s W-2 form for the year in which the contributions were made.

In addition, according to the guidance, while an HSA account holder can take a distribution to pay for Medicare Part D prescription drug premiums, if the account holder is not age 65, distributions would not be allowed to pay for Medicare premiums for a spouse who is age 65 or older.

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

In selecting a new chief executive, the Society for Human Resource Management will not promote from within its own ranks.

China Miner Gorman, SHRM chief operating officer, will become acting CEO when Susan Meisinger steps down on June 30. In an interview with Workforce Management at the SHRM Annual Conference & Exposition in Chicago on Tuesday, June 24, Gorman indicated she is not a candidate for the top position.

“The board was going in a direction that took them outside of the SHRM organization,” she said. The board is expected to make a decision by August 1.

Gorman was appointed COO in August 2007. She was previously president of DBM North America, a human resource management consulting firm. Before that, Gorman was president of Lee Hecht Harrison, a national human resources and outplacement company.

There is precedent for SHRM elevating its COO to the top position. Meisinger served as COO before she was named president and CEO in 2002.

Meisinger, who has served in various SHRM roles for more than 20 years, announced her retirement in January, saying she needed to spend time with ill family members.

The COO role was left open until Gorman arrived. Gorman said she is not disappointed to be staying where she is.

“I’ve got the best job I’ve ever had,” she said.

She has plenty on her agenda. Membership services, professional and business development, professional knowledge, publishing and new media, and external affairs report to Gorman.

“The number of moving parts at SHRM has really, really grown,” Gorman said. SHRM, the world’s largest HR organization, has 245,000 members. In 2007, it generated $105.4 million in revenue.

In the six weeks or so that she will be acting CEO, Gorman says she will not make any changes.

“I’m a caretaker,” she said. “We won’t be starting any new initiatives. Sue has built a world-class organization.”

As SHRM looks for a new leader, the challenge will be to find someone with a wide and deep knowledge of the field who also has executive ability.

Mike Losey, Meisinger’s predecessor as SHRM chief, said many HR professionals have made contributions in the C-suite of large businesses, but they didn’t make the final decisions.

“They may have been in the room, but they’ve never run a $100 million organization,” he said.

The new executive also will have to cope with the vagaries of governing a professional association, where board turnover is high.

“The CEO is the link of continuity,” Losey said. SHRM’s effectiveness “requires a strategic plan that is not subject to whimsical changes.”

Losey praised the job Meisinger has done and said her influence will endure.

“The strategic plan is Sue’s plan,” he said. “The fact you hire a new CEO doesn’t mean that you throw the old plan out.”

—Mark Schoeff Jr.

Click here for complete SHRM 2008 coverage
 

House and Senate negotiators have resolved the remaining differences in the benefit-related provisions in mental health care benefits parity legislation, moving the bill closer to final passage, business lobbyists say.

“We have an accord on policy language. We’re now at the 1-yard line,” said Neil Trautwein, vice president and employee benefits counsel with the National Retail Federation in Washington.

The most significant breakthrough came last month when House negotiators agreed to drop a provision in the parity bill passed by the House last year that would have required group health care plans to cover all mental health care conditions included in the most recent edition of a diagnostic treatment manual of the American Psychiatric Association. The parity bill earlier approved by the Senate lacked such a requirement.

Negotiators now have also set the date for plans to comply with the new parity requirements at January 1 of the first calendar year after the date of enactment.

Yet to be resolved is a provision not directly related to mental health care parity. A provision in the House bill that is strongly opposed by the Bush administration would impose new restrictions on physician-owned hospitals, which the administration believes could restrict patient choice of providers.

“We are very hopeful that difference can be worked out,” Trautwein said.

If a final agreement can be reached, it still would have to be approved by the House and Senate.

At the legislation’s core is a requirement that group health care plans provide the same coverage for mental health care disorders as they do for other medical conditions.

That would be a big change from current law, which was enacted in 1996 and bars discriminatory annual and lifetime dollar limits on coverage of mental disorders. Other kinds of discrimination are permitted, though, such as health plans limiting the number of outpatient visits for treatment of mental disorders they will cover while imposing no comparable limit on other medical conditions.

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