Author: Site Staff

With the election of the next U.S. president and key Senate seats drawing closer, a number of unions are coming together to lay the groundwork for their agenda.

Late last month, the Communication Workers of America, the United Auto Workers, the United Steelworkers and the International Federation of Professional and Technical Engineers announced an alliance “to help elect candidates who support working families and to advocate on public policy issues,” according to a statement.

Topping the alliance’s priority list is making sure the Employee Free Choice Act passes. The act, which failed to gain approval last year, would allow a union to form if a majority of workers signed cards authorizing a bargaining unit, thus making it easier for unions to organize. Under current law, a company can insist on a secret-ballot election conducted by the National Labor Relations Board.

“We want to make sure that this legislation becomes veto-proof,” says Marco Trbovich, a spokesman for the alliance.

The Employee Free Choice Act is crucial for the labor movement as it struggles with a declining membership. Manufacturing-based unions in particular are suffering from dwindling numbers. At the end of 2007, the UAW had 500,000 members, down from 1.5 million at its peak in 1979.

Although union membership is down, the labor movement still has a lot of political clout on Capitol Hill, experts say.

“Unions have gotten weaker, but that weakness is not reflected in the political arena,” says Joshua Freeman, a professor of labor history at the City University of New York Graduate Center. “They are very effective in mobilizing their members and families. It’s now fairly common to have one out of four votes in an election coming from a union household.”

Democratic presidential candidates Sen. Hil¬lary Rodham Clinton and Sen. Barack Obama have said that if they win the election, they will sign the Employee Free Choice Act into law.

That means the union also is focusing on making sure there are enough supporters voted into the Senate this fall to push the bill through Congress to the president’s desk for approval, says Chuck Ro¬cha, national political director of the United Steel¬workers.

The new alliance is going to focus on rallying its members and families to support candidates for the Senate, particularly in battleground states like Pennsylvania and Ohio, Rocha says. There are 33 seats in the Senate up for election this fall.

“We are looking at states where we can change or affect a vote because of an open seat or a retirement or at least cast a friendly EFCA vote against a hostile one,” he says. The UAW, CWA and Steelworkers alone have 320,000 members in Ohio, 240,000 in Pennsylvania and 460,000 in Michigan, Rocha says. “You can assume that it’s at least double that with their families,” he says.

The alliance also will continue to pressure the Democratic presidential nominee—should the Democrats win the White House—to follow through on the promise to enact the Employee Free Choice Act, Rocha says. The alliance hasn’t decided whether it is going to publicly endorse one of the Democratic candidates.

It’s wise for the unions not to assume the Employee Free Choice Act will become law if a Democrat wins the election, observers say.

“The rhetoric on the campaign trail isn’t the same as it is after the candidate is in office,” says Arthur Wheaton, education specialist at the School of Industrial Labor Relations at Cornell University. “And this bill is essential for the labor movement.”

—Jessica Marquez

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A bill that would make it easier for workers to sue employers for pay discrimination stalled in the Senate on Wednesday night, April 23—adding to the list of labor law measures that Democrats will pursue again in the next Congress.

The measure fell three votes short of the 60 required under Senate rules to overcome a filibuster led by the chamber’s Republicans.

Opponents argued that the bill would effectively eliminate the statute of limitations on pay discrimination cases and subject businesses to stale claims. The White House issued a veto threat before the Senate action.

Supporters mounted a fierce campaign to win over the handful of votes they needed to approve a final vote on the measure. They said the bill would bolster women and minorities in the workplace by overturning a Supreme Court ruling last year that held that pay suits had to be filed within 180 days of a discriminatory action, even if that action continues to diminish pay for years.

Under the bill, workers would be allowed to sue within 180 days of any paycheck affected by discrimination.

The bill passed the House last summer. Proponents vowed to continue to fight for Senate approval, although that is not likely to happen this year.

The Senate bill was placed on the calendar without a vote by the Senate Health, Education, Labor and Pensions Committee, which Kennedy chairs. One reason that the level of support can’t be determined is that many senators aren’t yet familiar with the bill.

An advocate for the measure says it was being pushed forward because the number of legislative days remaining in the Senate is limited and because courts are dismissing pay suits based on the Supreme Court ruling.

Marcia Greenberger, co-president of the National Women’s Law Center, asserts the bill would have made the statute of limitations work in the way Congress intended. She and other supporters say the Supreme Court erred in its decision in the case of Lilly Ledbetter, a former floor manager at a Goodyear Tire & Rubber Co. plant in Gadsden, Alabama.

Ledbetter, who started with Goodyear in 1979, claims the company paid her less than it did male co-workers for the same job over the course of her nearly 20-year tenure. When she retired, Ledbetter was paid $3,727 per month, while the lowest-paid male manager received $4,286.

Ledbetter filed a claim with the Equal Employment Opportunity Commission in March 1998—after she got an anonymous tip about the pay disparity. A jury ruled in favor of Ledbetter, awarding her back pay and $3 million in compensatory and punitive damages.

But the Supreme Court held that Goodyear was not liable because Ledbetter did not take action within 180 days of the first instance of discrimination.

In a scorching dissenting opinion, Justice Ruth Bader Ginsburg said the court majority failed to understand the realities of today’s workplace—where pay information is secret and evidence of discrimination builds up over long periods of time. She challenged Congress to clarify the federal statute of limitations.

Greenberger said the Equal Employment Opportunity Commission and appeals courts had been agreeing on the issue—until the 11th Circuit overturned the Ledbetter trial jury ruling and the Supreme Court concurred.

“This was never a problem that the employer community railed against,” she said.

But at House and Senate hearings, employment lawyers have opposed the bill. Eric Dreiband, a lawyer with Akin Gump, testified that it would force companies to implement “incredibly costly record keeping,” foster “unanticipated and potentially limitless monetary penalties” and create pension liability.

Kennedy, however, says that companies are getting a break on discriminatory behavior thanks to the Supreme Court decision. If they can cover up pay bias for 180 days, they can avoid suits.

“No one should get a free pass to break the law,” Kennedy said. “Civil rights is still America’s unfinished business. We cannot afford to go backwards on civil rights.”

—Mark Schoeff Jr.

Event: NY HR Week

When: April 16-17, 2008

Where: Hilton New York

What: For its second year in a row, NY HR Week was split into three simultaneous conferences—although different ones this year. This year instead of an HR Management Solutions Track, there was an HR in Healthcare. The other two tracks were HRO World, for the outsourcing providers, consultants and buyers; and HR & EEO in the Federal Workplace Conference, for HR managers in the public sector.

Conference info: For information, go towww.nyhrweek.com.

Day 2—Thursday. April 17

RPO for Real? While there has been quite a lot of buzz around recruitment process outsourcing over the past several months, it seems that many buyers at the conference aren’t sure what all the fuss is about.

During the last eight years, recruitment has been the most popular HR process to have been brought back in-house, Mark Hodges, chairman of EquaTerra, a Houston-based sourcing advisor, told attendees Thursday morning. But the reason that this has happened isn’t because companies don’t want to outsource some aspects of their recruiting, Hodges said. What has happened is that many HR BPO buyers initially had RPO within the scope of their contracts, but have since realized that they would prefer an RPO specialist to do the job, he said.

A few years ago many of the HR BPO providers were touting their RPO offerings, but most of them aren’t anymore, said Stan Lepeak, managing director of research with EquaTerra, in an interview.

That’s because providers such as Hewitt Associates have realized that they are better off focusing on their core competencies. “We still offer recruitment administration in some cases, but RPO is a tough business,” said Jay Rising, president of HRO at Hewitt.

The trend toward working with specialized RPO providers hasn’t deterred all employers, however.

Avon, which took RPO out of scope when it signed its HR BPO deal with IBM in 2006, may come back to the provider at some point about adding RPO to contract, said Kathy Kostrzewa, vice president of global HR service delivery.

“We simply don’t have enough supply management expertise to take on another relationship,” she said.
—Jessica Marquez
 

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Day 1—Wednesday, April 16

Set expectations: A lot of HRO buyers and vendors are realizing that executing HR business process outsourcing deals is a lot more difficult than they had anticipated, speakers and attendees said.

“This takes a lot of time and energy,” said Nicolette Sayward, director of global HR operations at Whirlpool, which signed a global 12-year HR BPO contract with Convergys in 2005.

Sayward admitted that her team underestimated the amount of time it would take to have the HR processes up and running through Convergys. “We thought we could do a big-bang approach with the U.S. and four other countries,” she said in an interview at the conference.

Her advice to companies entering HR BPO agreements: “Never give a date for implementation.”

In her presentation Wednesday morning, consultant Naomi Bloom warned employers not to enter HR BPO agreements unless they have a staff of HR managers who can dedicate a significant amount of time to the deal. “Even if you have an advisor, you need to have someone in-house who is completely involved with this,” she told attendees.

A number of companies, such as Starbucks and UBS, have backed away from HR BPO deals for this very reason, experts said.

“The word is out that this isn’t easy,” said Linda Merritt, who retired last year as director of HR outsourcing at AT&T. “It can be viable, but it takes a lot of work.”
—Jessica Marquez
 

Employee benefits such as pensions and medical, life and disability insurance are gaining more attention in the Middle East as the number of multinational companies and expatriate workers in the region increases, according to a Mercer survey.

Multinational companies with employees in the Middle East are shifting from their traditional focus on high basic salaries and cash allowances to traditional benefits, as well as to lifestyle benefits including company car allowances, leave entitlements and allowances for housing, transportation and education.

According to the survey—the second of its kind by Mercer—greater mobility of expatriates between jobs and changes in legislation in the United Arab Emirates also are driving the trend toward employee benefits.

Multinational companies with operations in Bahrain, Egypt, Israel, Kuwait, Qatar, Saudi Arabia and the UAE participated in the survey.

Currently, few multinational companies surveyed are providing supplemental pension plans. In Qatar, none of the companies provided pension plans. In Saudi Arabia and Egypt, one respondent in each country provided the benefit. Two of the 25 participants in the UAE, three of the five participants in Israel, and two of the five participants in Kuwait provided pension plans.

Still, in the UAE, despite the low number of companies offering benefit plans, 65 percent said they were considering plans, according to the survey, which noted the low number of responses may not provide an accurate picture of the region.

As for medical benefits, 80 percent of multinational companies in the Middle East provide private medical benefits. Saudi Arabia and Egypt require private health care coverage. In Israel, however, only one of the five respondents said it provided supplemental medical benefits. Most companies in the UAE pay the entire cost of medical insurance. This is likely to change, though, as legislation introducing employee cost-sharing has been adopted. The UAE formerly provided a national health service free to all UAE nationals.

Almost all companies offer their expatriate employees in the Middle East additional varying perks and allowances, most of which are tied to housing, schooling and flights home. In fact, all survey participants provide allowances for return flights to expatriates’ home countries.

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

Fidelity Human Resources Services, the HRO division of Fidelity Investments, is launching a new strategy to target midmarket HR business process outsourcing clients.

During the past year, Fidelity has been quiet in the HRO business as it has focused on redefining its strategy, said Arthur Mazor, senior vice president of offering management marketing for Fidelity HR Services, in an interview at the HRO World Conference & Expo, held April 16-17 at the New York Hilton.

But now the company is ready to press ahead in the HR business process outsourcing market and hopes to be among the top players in the small-market, midmarket and large-market HR BPO spaces, said Patrick Goepel, president of Fidelity HR Services, in the interview.

The company wants to tap the midmarket because it is a fast-growing space, Goepel said, estimating that it’s growing at 14 percent per year.

Fidelity believes it can compete in this market against the likes of Ceridian and Automated Data Processing, which have targeting this market for years, because of its strong brand name and network of investor centers, Goepel said.

“If you ask employees who they trust, I’m not sure that some of their names would come up,” he said.

With Fidelity’s offering, employees can go online or walk into an investor center if they have questions about their 401(k)s, Goepel said.

Down the road Fidelity might purchase an HRO provider to make further inroads into this market, although there are no immediate plans to do so, he said. The company expects to sign its first midmarket HR BPO client by year-end.

—Jessica Marquez

In a matter of just months, the largest of the large corporate pension plans have seen the vast majority of their 2007 gains wiped out, according to a new study from actuarial consulting firm Milliman.

The 100 largest corporate plan sponsors—ranging from General Motors, with its $117 billion pension, to Ingersoll-Rand’s $2.5 billion plan—collectively improved their funded status by $85 billion last year, going from a roughly $15 billion deficit at the end of 2006 to a $70 billion surplus at the end of 2007.

However, Milliman estimates that these pension plans experienced a $62 billion decrease in their funded status in the first quarter of this year, erasing almost three-quarters of their gains for 2007. Declines in the equity markets, coupled with lower interest rates in January, prompted the reversal, according to Milliman, which also estimates that the collective funded status of the 100 largest pension plans now teeters at slightly below 100 percent.

To put this in context, these corporations—which have a combined $1.3 trillion in total assets—experienced the most significant drop in funded status for a single quarter in more than two years, noted John Ehrhardt, principal and consulting actuary at Milliman. He added that since the end of the third quarter of last year, the 100 largest pension plans have lost almost $100 billion of their surplus assets.

Copies of the Milliman 2008 Pension Study are available at www.milliman.com

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

The legal tussle between business software titans Oracle and SAP has intensified, with Oracle accusing its archrival of stealing copies of Oracle’s actual software applications.

In a court document filed April 17, Oracle says it has discovered a pattern of unlawful conduct on SAP’s part that is even more serious than the mass downloading of support materials initially at the heart of the dispute.

“Defendants have approximately 3,000 copies of Oracle software applications on their systems, each one of which may additionally have included within it illegally downloaded Software and Support Materials,” Oracle said in the court filing, known as a joint case management conference statement.

SAP responded in the court filing that Oracle is using hyperbole in the case, which centers on the actions of SAP subsidiary TomorrowNow.

“TomorrowNow’s customers are entitled to use their Oracle-licensed software and materials properly obtained from Oracle’s Web site to maintain that software. TomorrowNow performs that maintenance service for its customers, allowing them to focus their personnel on their core business,” SAP said. “It should be no surprise to anyone, including Oracle, that TomorrowNow has accessed Oracle software in providing support to users of that software.”

SAP also fired its own salvo at Oracle in the filing, saying Oracle has failed to produce complete customer licenses more than a year after claiming those licenses were violated.

The dispute between the biggest makers of human resource software dates to March 2007. Redwood Shores, California-based Oracle sued Germany-based SAP in U.S. District Court in the Northern District of California, alleging SAP had “stolen thousands of proprietary, copyrighted software products and other confidential materials that Oracle developed to service its own support customers.”

SAP said TomorrowNow was authorized to download materials from Oracle’s Web site on behalf of TomorrowNow customers, but acknowledged “some inappropriate downloads.”

Late last year, SAP said that several senior managers of TomorrowNow, including the unit’s CEO, had resigned. SAP also said it is considering several options for the future of the TomorrowNow business, including a possible sale.

The legal bickering between the two companies could go on for some time. According to the court filing Thursday, the two sides agree that the trial date for the case should be postponed from February 2009 to February 2010.

—Ed Frauenheim

The bitter labor stalemate between American Axle and Manufacturing Holdings Inc. and the United Auto Workers appears to be over, with significant progress taking place at the bargaining table.

A tentative contract agreement could be reached by this weekend, a source familiar with the discussions told Automotive News on Wednesday, April 16.

“They are very close,” the source said. “They could reach an agreement by this weekend. Both sides have finally come to their senses.”

As with any protracted labor negotiation, there is no guarantee a deal can be reached, but this is the first sign of real progress in the dispute that has all but halted General Motors Corp.’s SUV production in the United States.

“Negotiations are continuing, progressing,” said Renee Rogers, an American Axle spokeswoman. “The process is moving along.”

Because of the progress, the UAW called off a large protest rally scheduled for downtown Detroit, said Wendy Thompson, the retired former president of UAW Local 235 in Detroit.

UAW spokesman Roger Kerson could not be reached for comment.

Last week, UAW president Ron Gettelfinger and American Axle CEO Richard E. Dauch met. Following that, top representatives from both sides began meeting on a regular basis.

According to the source, the two sides are making progress on three fronts: wages, health care legacy costs and job classifications. Dauch has been seeking fewer classifications to win more flexibility for his U.S. plants. He has also been pushing for lower wage rates, which the UAW has resisted.

To make wage cuts palatable to employees, the two sides have been discussing a round of buyouts and buydowns for existing UAW workers.

The strike by 3,650 UAW members began at five American Axle plants on February 26 and has since idled or slowed as many as 30 GM domestic operations. By Saturday, GM will have lost 142,782 production units since the strike began, according to the Automotive News data center. Most of the lost production has been SUVs and pickups—and GM has months of inventory to sell in those vehicle lines.

The strike also has begun to stall GM’s production of sedans, including the Cadillac DTS and Buick Lucerne at the Detroit-Hamtramck car assembly plant. Other GM car production is now threatened.

Despite those threats, GM has not intervened in the American Axle negotiations.

GM, meanwhile, is slowing production of the HHR crossover at its assembly plant in Ramos Arizpe, Mexico, because of a shortage of parts made by American Axle.

Similar action affecting the plant’s Saturn Vue line could be taken soon afterward, a GM source in Mexico said.

The HHR and Saturn Vue, sold as the Chevrolet Captiva in Mexico, are both exported to the United States.

“This [American Axle] strike has affected us,” the source said. He said that if the dispute at American Axle continued, GM’s production of Kodiak trucks in Silao, Mexico, might also be hit soon.

“The idea is to continue working with our current inventory [of parts and components] but at a slower pace,” he said.

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

Under a bill approved along party lines by the House Education and Labor Committee on April 16, retirement plans would have to provide greater transparency on the fees that they charge participants.

A vote on the House floor later this year may be the end of the road for the bill until 2009. Yet, the House Ways and Means Committee also could offer its own version of the bill. Very little is happening in the Senate on this issue. A similar Senate measure only has one co-sponsor, as the legislative days in the congressional session dwindle.

The House labor panel bill would require 401(k) sponsors to list fees in four categories—administrative, investment management, transaction and other areas. The bill also would require 401(k) plans to provide information on the historical risk, returns and fees on each investment option.

Unlike its predecessor, the bill does not mandate that plans include at least one low-cost index fund. But an amendment adopted by the committee would make liability protection for plans contingent upon their offering an index fund.

Republicans and most industry groups oppose the bill because they say that it would force plans to break out separate fees for services that are bundled under one price. They assert it could encourage workers to make bad investment choices by focusing on fees rather than returns.

Rep. George Miller, D-California and chairman of the labor committee, said the bill will help workers better understand hidden fees that drain their retirement nest egg. He cited a Government Accountability Office study showing that a 1 percent increase in fees would decrease retirement income by 20 percent over 20 years.

“The purpose of this legislation is to take these hard-earned savings away from the special interests and return them to their rightful place—the retirement accounts of American workers,” Miller said. “We’re trying to give people more confidence in their 401(k) plans.”

Although Miller has streamlined the fee reporting categories since the bill was first introduced last year, the changes weren’t enough to satisfy critics.

“This bill may focus more on information quantity than quality,” said Rep. Howard “Buck” McKeon, R-California and the committee’s highest-ranking Republican. “If that is the case, we may be doing more harm than good by overwhelming workers with cumbersome or incomprehensible information.”

Industry lobbyists maintained that for all practical purposes the revised bill still contained an index-fund mandate that limits flexibility.

“The marketplace is continuously evolving, our members are continuously innovating and developing new products,” said Daniel Crowley, chief government affairs officer at the Investment Company Institute, a Washington organization representing financial services. “It would be inappropriate to freeze in statute any particular investment option. There is no single investment that is right for all investors all the time.”

Analogies infused the debate. McKeon compared the fee disclosure requirement to forcing car manufacturers to list separately the prices for a transmission and brakes.

Rep. Robert Andrews, D-New Jersey and author of the liability amendment, likened the fee disclosures to the difference between buying a soda, hamburger and fries individually or in a package.

Opponents turned that parallel back on Andrews. “The Happy Meal is the epitome of the bundled product,” Crowley said

—Mark Schoeff Jr.