Author: Site Staff

Nonprofit health insurer Kaiser Permanente announced this week that its 159,000 employees would be the first employees to participate in Microsoft’s online health record, Healthvault.

Healthvault, which launched in October, built its online health record so that companies could easily integrate it with other software that is currently used to store medical records.

Kaiser, which made the announcement Monday, June 9, will allow employees to transfer prescription information, test results and other health data from the company’s own online personal health record, My Health Manager, to Microsoft’s Health Vault.

If the pilot program for employees is successful, Kaiser said it will make the service available to its 8 million members nationwide, according to news reports.

The announcement came a month after Google announced the launch of a similar site, Google Health. Other employers, most notably the employer group Dossia, have been busy designing similar Web sites that securely store online medical records.

Dossia, an employer coalition led by Wal-Mart, Intel, Pitney Bowes, BP and Applied Materials, relaunched its efforts last fall after switching technology developers for the creation of a personal electronic health record for employees of member companies.

—Jeremy Smerd

A computer technician struck by a car while crossing a street to purchase cigarettes and snacks is entitled to medical and temporary disability workers’ compensation benefits, a New Jersey appeals court ruled last week.

In 2003, the technician, Carlos Cruz, was driving a company van en route to a client when he parked across the street from a delicatessen to take his “usual morning break,” according to court records in the case of Carlos Cruz v. Micros Retail Systems Inc.

The deli was about five blocks off the direct route from his employer’s office, where Cruz began his trip, to the client’s site. While crossing the street to the deli, a car struck Cruz and he suffered severe injuries, court records state.

Micros denied that the injuries arose while Cruz was within the scope of his employment, and a witness testified that company policy required employees to go directly to their work sites.

A workers’ comp judge, however, ruled that off-premises employees enjoy the same ability to deal with basic needs, such as lunch and coffee breaks, as do on-premises employees. Cruz’s stop for snacks was a minor deviation from his mission on his employer’s behalf, the judge found.

Micros appealed the judge’s decision, but the Superior Court of New Jersey, Appellate Division, agreed with the reasoning of the workers’ comp judge.

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

Chief information officers attending the Midwest Technology Leaders Conference at the MGM Grand Detroit last week were told that they and their departments have become the No. 1 target of plaintiff attorneys in lawsuits.

“Today, the CIO is generally the first witness, the subject of the first deposition request,” said Brian Ziff of the Detroit law firm of Clark Hill.

“That’s a sea change from the way litigation has been run. You used to be transparent, but no longer,” said Tom Hathaway, also of Clark Hill.

They were part of a panel discussion titled “CIOs as First Responders in E-Discovery.”

Federal guidelines on the gathering of evidence by attorneys were amended in 2006 to account for the explosion of electronically stored information, or ESI. But, Hathaway said, many companies have been slow to change their internal policies accordingly.

He said that according to one poll, one-third of executives said their company didn’t have a policy on ESI. Twenty percent didn’t know if their company had a policy or not.

Companies regulated by the U.S. Securities and Exchange Commission need to keep electronic data such as e-mails for three years. Other companies can establish policies of their choosing.

Ziff said companies need to track and access all their ESI, a process that has become much more complicated in recent years. Data can be stored on employees’ home computers, office desktops, laptops, PDAs, BlackBerrys, memory sticks and other devices.

“You need a road map for where all the IT is,” he said.

Ziff said data must be purged as part of a regular policy, not in response to a suit or fear of a suit. A company must also have a policy that keeps data from being purged as soon as it finds out a lawsuit is filed, or even if there is reasonable knowledge by company executives that one might be filed.

Heidi Maher, an attorney who practices e-discovery and compliance for Hopkinton, Massachusetts-based EMC Corp., said the average cost of sorting through e-mails to determine such things as their relevance to a case or if they might be protected by attorney-client privilege is $2 per e-mail, so the first thing a company should do is to establish an e-mail retention and destruction policy and abide by it.

She gave an example involving DuPont, which in one case had to sort through about 75 million documents, at a cost of $25 million. The company had a retention policy, and discovered that half of the documents involved should have been destroyed under the policy, but had not.

If the policy had been followed, it would have saved $12.5 million.

Matt Roush of the Great Lakes IT Report, the panel moderator, finished the one-hour session by saying, to much laughter, “I’m amazed we got through an hour on the topic of e-discovery and didn’t hear the words ‘Kwame Kilpatrick.’ ”

Filed by Tom Henderson of Crain’s Detroit Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

In another sign of consolidation in the background-checking field, US Investigations Services is snapping up HireRight in a deal worth about $195 million.

Falls Church, Virginia-based USIS on Monday, June 9, agreed to pay stockholders of Irvine, California-based HireRight $15.60 per share in cash, a 54 percent premium over HireRight’s closing share price of $10.12 on Friday, June 6.

“The addition of HireRight, with its highly respected leadership and team, industry-leading technology and culture of innovation, transforms our strategic efforts to build a pre-eminent global employment and drug screening business that is uniquely positioned to deliver enhanced products and customer value,” USIS chief executive Randy Dobbs said in a statement.

USIS has specialized in providing background investigations to the federal government. It also offers background screenings such as criminal history checks to private sector clients. HireRight’s focus has been online employment screening tools. HireRight also provides integrated screening through recruiting software from vendors including Oracle and Taleo.

USIS and HireRight billed the deal as a merger that will serve more than 27,000 customers of various sizes. It comes on the heels of plans for another major tie-up in the background checking arena. In February, publishing and information firm Reed Elsevier said it planned to acquire data broker ChoicePoint for $4.1 billion. That proposed acquisition has come under scrutiny by government officials. In April, ChoicePoint said it and Reed Elsevier received a request for additional information from the Federal Trade Commission regarding the proposed merger, and that the firms have been notified of parallel reviews by the attorneys general of certain states.

The economic slowdown and job-cutting of recent months has raised concerns about the health of the background checking business. HireRight’s shares, for example, dropped from more than $14 in early September to below $10 for much of 2008.

But a recent survey by consulting firm Rocket-Hire found growing use of online background investigations. The percentage of organizations using online background investigations rose from 31 percent in 2002 to 35 percent in 2007, according to the study.

—Ed Frauenheim

A Teamsters strike against the nation’s second-largest vehicle hauler won’t immediately affect deliveries to dealers of General Motors and Ford Motor Co. vehicles, say spokespeople for the two automakers.

Teamsters drivers went on strike against Performance Transportation Services on Monday, June 9. Performance Transportation, of suburban Detroit, hauls light vehicles for almost all of the major automakers that sell vehicles in the U.S., according to the company’s Web site.

GM spokeswoman Deborah Silverman said GM has a plan to make sure cars get to dealerships but declined to give details.

Ford spokesman Todd Nissen said the automaker also had a plan to move vehicles from plants to dealers.

“At this point, we’re not affected by it in terms of having vehicles on their way to dealerships,” he said. Nissen also said there were reports of Teamsters pickets at some Ford plants, including Michigan Truck and Wayne Assembly, both in suburban Detroit.

PTS is responsible for just over a quarter of Toyota’s car hauling business that isn’t handled by Southeast Toyota Distributors or Gulf States Toyota, according to Toyota spokesman Xavier Dominicis. He said Toyota also has a contingency plan in place, but it’s not yet clear how a long work stoppage at PTS would affect the company’s distribution.

“Today’s the first day, so it’s a little early to tell,” Dominicis said.

The strike comes after a U.S. bankruptcy court judge gave the vehicle hauler permission to cut the pay of its union drivers by 15 percent. Performance Transportation CEO Jeff Cornish said in a letter to employees that the pay cut was temporary and that it would let the company meet its “ongoing operational obligations” while it bargained with the Teamsters.

In an affidavit filed Saturday, June 7, supporting a motion asking a judge for a temporary injunction to stop the strike, Cornish said even a one-day strike could cause the vehicle hauler to lose customers and push it to liquidate its businesses. Performance Transportation is under bankruptcy protection. A bankruptcy court judge in Buffalo declined to rule on the motion Sunday, June 8, citing lack of jurisdiction, according to his clerk.

Cornish said customers will likely fall behind in deliveries and those customers already are looking for alternatives.

“I think customers are not going to wait a long time,” he said. “They’re going to do what they have to do.”

Cornish said the hauler, with a fleet of 1,800 trucks, delivers about 2.7 million vehicles each year and brings in about $250 million in sales.

Fred Zuckerman, head of the Teamsters Union’s car-haul division, said PTS management and other workers at the company aren’t being asked to make the same level of sacrifice as the Teamsters. He also slammed the company’s management.

“PTS has been continually declining, and we think that it’s just continuing mismanagement,” he said. “Management has got to change.”

Performance Transportation Services has operated under Chapter 11 bankruptcy protection twice since 2006, last filing in November 2007. The vehicle-hauling business has been hurt by declining shipments in North America and rising fuel prices.

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

Despite the dramatic increase in the U.S. unemployment rate announced Friday, June 6, some employers may not find their toughest talent hunts getting any easier.

Jim Walker, an author and speaker on workforce issues, says the jump in the jobless rate from 5 percent in April to 5.5 percent in May primarily reflects workers with less-desirable skills.

“They aren’t necessarily the ones that companies are scrambling to compete for,” he says.

Employers in the growing fields of health care and technology, Walker argues, may still have a hard time finding the right candidates. International trade is another such industry, he says.

On Friday, the Labor Department released its latest employment situation figures, which showed a drop of 49,000 nonfarm payroll jobs.

The news fueled fears that a recession is under way. The U.S. economy grew at an annual rate of 0.9 percent in the first quarter of the year.

But in the wake of the housing market meltdown, soaring oil prices and trouble in the financial markets, typical Americans are feeling pain in their pocketbooks. According to a USA Today/Gallup Poll published this week, 55 percent of Americans surveyed said their families are worse off financially than they were a year ago.

That’s the highest number since Gallup first asked the question in 1976 and an increase of 11 percentage points since February.

According to the June 6 Labor Department report, payroll employment has declined by 324,000 so far in 2008. In May, job losses continued in construction, manufacturing, retail trade and temporary help services.

By contrast, the health care sector added 34,000 positions in May. Health care job growth in the last 12 months has totaled 383,000.

The field of management and technical consulting services added 5,300 jobs in May.

In the face of the economic slowdown, some employers have been seeking to avoid sweeping layoffs and looking to take counter-cyclical steps such as poaching talent from rivals.

Even so, the financial pain felt by many Americans is thrusting economic policy and concern about the country’s relatively skimpy safety net to the fore and into the November presidential election.

For employers, a silver lining to the rise in the unemployment rate is that high-skilled workers are easier to retain, Walker says. In other words, a weak labor market strengthens the employer’s hand.

“People don’t jump around and quit on the spot quite as much,” Walker says.

—Ed Frauenheim

Employers in Massachusetts have formed a new lobby group with most of the state’s health insurers to fight possible increases in the fees they must pay to fund the state’s underfinanced universal health care law.

The Coalition for Affordable Health Care, which met for the first time Wednesday, June 4 in Boston, said it will focus on ways to reduce health care costs. The group said costs for commercial health plans have risen 10 percent in each of the past seven years, and it fears that cost overruns for the state’s universal health care law will translate into increased payments to the state’s health care fund.

The group opposes efforts by health care advocates, such as the Greater Boston Interfaith Organization, to get businesses to contribute more for employees’ health care.

Since Massachusetts’ law requiring all residents to purchase health insurance went into effect last year, roughly half of the state’s estimated 700,000 uninsured residents have obtained health insurance.

However, the coverage has come at a steep cost to state coffers. The state’s top budget official recently told the Boston Globe that it expects to spend much more than the $869 million proposed in the governor’s budget.

Even subsidized premiums have not been cheap enough for many residents to afford health insurance. The state has waived the mandate for about 20,000 residents even as the program has cost more than anticipated.

As the state looks to other funding sources, including a cigarette tax increase, pressure is mounting on employers to contribute more. The Coalition for Affordable Health Care says the solution rests in finding ways to reduce health care spending rather than on taxing businesses and spending more.

The coalition includes major health insurance companies, hospital associations and employer groups such as the U.S. Chamber of Commerce and the International Franchise Association.

The group’s effort to find more affordable ways to provide health care will also help companies struggling to recruit and retain employees because they lack competitive health benefits.

—Jeremy Smerd

HR software vendor Softscape sued rival SuccessFactors on Thursday, June 5, adding a twist to the companies’ legal spat and effectively stealing some of the thunder from SuccessFactors’ user conference this week.

Wayland, Massachusetts-based Softscape accused San Mateo, California-based SuccessFactors of “deceptive and unlawful conduct” to gain detailed proprietary information on Softscape’s software products. The suit, filed in the Middlesex Superior Court in Massachusetts, alleges misappropriation of trade secrets, “tortious interference with contractual relations” and unfair competition. It seeks unspecified damages.

Softscape says it has information showing that SuccessFactors accessed Softscape’s confidential and secure computer systems from an address it alleges is registered to SuccessFactors.

That claim echoes charges from SuccessFactors in a suit filed earlier this year that Softscape illegally accessed SuccessFactors’ computer networks.

In a statement Thursday, SuccessFactors called Softscape’s suit a diversion.

“Softscape’s recent complaint is a transparent and groundless attempt to muddy the waters to divert attention from their own well-documented illegal and reprehensible conduct,” SuccessFactors said in the statement. “Their claims are vague and unsupported by facts, which suggests to us they have no legitimate basis.”

In March, SuccessFactors sued Softscape, accusing it of false advertising, unfair competition and other misdeeds associated with the circulation of a PowerPoint presentation highly critical of SuccessFactors. Softscape has said it authored the document, but it was only for internal use.

In late March the court issued a preliminary injunction that, among other things, bars Softscape from disseminating or “affirming the purported truth or accuracy of” the presentation.

SuccessFactors and Softscape are competitors in the fast-growing field of talent management software—tools for key HR tasks such as recruiting and employee performance management.

SuccessFactors is the more prominent of the two firms. It raised more than $100 million in an initial public offering last year and is led by Lars Dalgaard, the brash Denmark-born chief executive who speaks about his firm’s vision of transforming the workplace in grand terms.

“This is a revolution,” he told attendees at the close of the SuccessConnect conference Thursday in San Francisco.

At last year’s company conference in New York, SuccessFactors featured business icon Jack Welch as a speaker. This year’s event, held at the upscale Westin St. Francis hotel, also featured industry luminaries. Robert Sutton, a Stanford University professor and author of the acclaimed book The No Asshole Rule, gave one keynote address, as did University of Pennsylvania professor and author Peter Cappelli.

SuccessFactors customer and conference attendee Daniel Miller had not heard of the new Softscape suit. But Miller, who is vice president of HR systems and technology at media giant News Corp., said legal disputes among vendors don’t do customers any good.

“Nobody wants to be around that drama,” he said.

The “drama” between Softscape and SuccessFactors dates to before the litigation this year. Softscape sued SuccessFactors in 2005 in connection with a former Softscape employee joining SuccessFactors.

According to Softscape’s newly filed complaint, that earlier suit resulted in a settlement in which both companies agreed not to solicit each other’s employees for a six-month period that began in June 2007. But SuccessFactors continued to “target Softscape employees” within that period, the Softscape suit alleges.

—Ed Frauenheim

Continental told its employees Thursday, June 5, that it will cut its workforce by 3,000 workers and trim its flights by 8.3 percent by the end of the year to reduce expenses in the face of rising fuel costs.

The company said it would not be more specific about the cuts until it has talked to its employees over the next week.

In a bulletin to employees Thursday, company chairman Lawrence Kellner and president Jeff Smisek said several recent fare increases have not covered the rising cost of fuel, which, the executives said, was 75 percent higher than a year ago, raising 2008 fuel expense by $2.3 billion compared with last year.

“These record fuel costs have fundamentally shifted the economics of our business,” the executives said in the bulletin. “At these fuel prices, a large number of our flights are losing money, and Continental needs to react to this changed marketplace.”

Cleveland airports director Ricky Smith said the city-run airport will be examining its operations to reduce costs. Continental, as the largest carrier at Hopkins, ultimately pays a large portion of the airport’s operating costs. Smith said Continental carries 60 percent to 65 percent of the passengers who move through Cleveland Hopkins Airport.

Continental has more than 5,000 employees in the Cleveland area, Smith said.

Because the airline has not offered any airport-specific details, Smith said he could not be more precise about how Continental’s plans will affect Cleveland operations.

However, Smith suggested that if Continental maintains its strategy of shifting flights out of its busy hub at Newark Liberty International Airport in New Jersey, the impact on Cleveland Hopkins could be mitigated.

Last September, Continental announced that it would spend $70 million to expand its operations at Cleveland Hopkins by 40 percent, creating 700 jobs and adding 70 new flights during 2008.

While Smith said at the news conference that he would be surprised if there is no local impact on their expansion, he later told Crain’s Cleveland Business that the strategy behind the expansion plan was to move passengers out of the Newark airport to Cleveland, where delays are shorter. That’s important, because airplanes burn increasingly expensive fuel needlessly waiting to take off and land at the congested Newark hub.

Another factor in Cleveland’s favor is that the largest portion of Continental’s cuts will come from its so-called mainline business—the large jets that fly between the airline’s hubs in Newark, Cleveland and Houston and to other major cities. However, the majority of Continental passengers through Cleveland travel on smaller regional jets that connect with cities such as Indianapolis and Albany, New York.

According to the Continental bulletin to employees, mainline domestic flights will be cut by 16 percent, while regional traffic is planned to be cut only 4.1 percent.

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

Is Gevity HR the next takeover target?

That was one of the rumors making the rounds this week after General Atlantic, one of Gevity’s investors, hinted the company could benefit from a merger with TriNet Group Inc., a San Francisco-based human resources company.

In a May 27 filing with the U.S. Securities and Exchange Commission, Greenwich, Connecticut-based General Atlantic says “there there may be benefits to exploring a potential strategic transaction” between the two firms, though no offer is believed to have been made.

General Atlantic own 9.5 of Gevity, or 2.2 million shares that were obtained for “investment purposes.” That makes it the second-largest investor in Gevity, a professional employer organization headquartered near Bradenton, Florida.

—Garry Kranz