Author: Site Staff

An economic stimulus package wasn’t the only topic drawing bipartisan consensus in the House of Representatives.

Republicans and Democrats at a House Education and Labor Committee hearing on Tuesday, January 29, agreed that Carey McClure was wronged by General Motors when it denied him a job, and by a court when it ruled he was not disabled.

But the parties disagreed about whether a bill that would reform the Americans With Disabilities Act was the best way to address the situation McClure and others have faced.

McClure, an electrician who suffers from muscular dystrophy, had a GM job offer rescinded in 2000 after a doctor discovered his ailment during a required examination. The doctor maintained that McClure couldn’t meet the physical requirements of the position he had landed.

Throughout his life and 20-year career, McClure found ways to work around his disability and succeeded in his field. But when he sued GM, the company argued that he wasn’t really disabled. A trial court agreed.

“Basically, the court punished me for making myself a productive member of the workforce for over 20 years,” McClure said in testimony before the committee.

Following Supreme Court rulings in 1999 and 2002, courts have been applying a strict standard for determining whether someone has a disability. They also have held that “mitigating measures” like medication or eyeglasses can disqualify someone from disability protections.

In response, House Majority Leader Steny Hoyer, D-Maryland, introduced a bill, the ADA Restoration Act of 2007, which would redefine a disability as a physical or mental impairment.

It also would prohibit courts from considering “mitigating measures” and require that employers prove an individual is not qualified for a job.

Business advocates criticized the bill, saying it would substantially increase the number of people covered under the law and drive up company costs as they accommodate many different kinds of impairments that could encompass the flu, a sprained ankle, a chipped tooth or hair loss.

The Department of Justice said the measure would modify the definition of disability so that it did not refer to substantially limiting major life activities.

Hoyer asserted that his measure, which has 244 bipartisan co-sponsors, including the ranking Republican on the House Judiciary Committee, simply clarifies the congressional intent of the original disabilities legislation.

“The bill does not seek to expand the rights guaranteed under the landmark Americans With Disabilities Act,” Hoyer testified. “It responds to court decisions that have sharply restricted the class of people who can invoke protection under the law. Simply put, the point of the ADA is not disability; it is the prevention of wrongful and unlawful discrimination.”

Further action on the bill hasn’t been scheduled.

David Fram, director of ADA and EEO services at the National Employment Law Institute, was skeptical of the measure.

It “could lead to a deluge of unintended consequences,” he said. “I don’t think there would be a flood of litigation. I think there would be broad new responsibilities for employers.”

Those burdens would be caused by making workplace accommodations for potentially millions of people or granting their requests for leave.

“Every single one of us has some kind of impairment,” he said. “This would essentially make the Family and Medical Leave Act irrelevant—or half of it anyway.”

The ranking Republican on the committee, Rep. Howard “Buck” McKeon, said he wanted to fix a problem like the one that McClure faced. But he warned that expanding the ADA too much would dilute it.

“Resources could be stretched too thin, leaving those who need help the most without the accommodations they deserve,” he said.

McClure maintained that enlarging the ADA would not foster frivolous lawsuits. “I’ve worked with a sprained ankle,” he said. “Most of us just want to work like everyone else.”

Rep. Robert Andrews, D-New Jersey and chairman of the hearing, said states like his and California, which have broad disability laws, have not seen a spike in litigation. He said the bill would correct erroneous interpretations of federal disability law.

“The courts have confused the question of who has a disability with the question of what should be done in response to that disability,” he said.

He also argued that in the midst of fierce global competition, disability laws will help deepen the labor market.

“We can’t say to any person that we can leave your talent out,” he said.

—Mark Schoeff Jr.

Assets in the biggest corporate retirement plans swelled by 12.4 percent in 2007, with defined-contribution plans growing by 13.6 percent versus an 11.4 percent gain for traditional defined-benefit pensions, according to an annual survey of the 1,000 largest U.S. retirement plans by Workforce Management’s sister publications Financial Week and Pensions & Investments.

These corporate growth rates, however, are less impressive than the average increases seen at public plans, where cumulative retirement assets grew by 14.6 percent. That could have something to do with the risk appetites of corporate versus public plans. The average corporate defined-benefit plan had 29.6 percent of its assets in domestic and foreign fixed-income and cash holdings, while the average public defined-benefit plan’s bond and cash investments totaled just 25.4 percent of assets.

Overall, the 1,000 largest retirement plans’ assets increased by 13.5 percent during the 12 months ended September 30, 2007. That’s the largest one-year increase for P&I’s top 1,000 since a 21 percent increase recorded in 1997.

Still, the record isn’t much to brag about: Over the same 12 months, the S&P 500 returned more than 16.4 percent. Bonds also turned in decent returns, with the Lehman Bros. aggregate index up 5.1 percent.

Through the end of September, “you had all the markets performing well, real estate hadn’t gotten hammered yet, and the emerging markets did very well,” says Joseph E. Finn, principal and managing director at Punter Southall & Co.

Since the end of the third quarter, of course, U.S. stocks have tanked: The S&P 500 was down more than 12 percent as of late last week.

“None of my clients are sitting and patting themselves on the back,” says Steve Holmes, president of pension consulting firm Summit Strategies Group. “Now the theme is, ‘What can we do to protect these gains of the past three to five years.’ ”

Corporate plans are 65 percent bigger now than they were five years ago. With an annualized 11.2 percent increase, companies’ defined-contribution plans have grown at a faster clip than their defined-benefit brethren, which increased by an average 9.9 percent a year since 2002. From September 2002 through September 30, 2007, the S&P 500’s cumulative growth rate topped 15.5 percent a year, and the Lehman aggregate was up by an annual average of 4.5 percent.

“You’re in a five-year, major financial market increase,” Holmes says. “But I get the sense that everything that is going on is going to come to a halt. Many people are saying if we wind up flat [in 2008], we’d be happy.”

Not every corporate plan had a great showing in 2007.

Of the 599 companies for which year-over-year growth data are available, 71 had retirement plans whose total assets declined over the 12-month period. And 11 of those companies, including Halliburton (assets down 27.8 percent) and New York Life Insurance (down 16.4 percent), saw double-digit drops. The clear loser: Tyco, with a 56 percent asset decline.

The number of defined-benefit losers totaled 77, including Delta Air Lines (-21.5 percent), Hewlett-Packard (-19.9 percent) and Fortune Brands (-18 percent). Eighty-seven DC plans declined in size, including NCR (-18.4 percent), Pitney Bowes (-12.1 percent) and Macy’s (-11.9 percent).

On the flip side, many plans saw assets balloon last year. Total assets grew by more than 20 percent at 106 companies, including Burlington Northern Santa Fe (up 86.6 percent), Costco Wholesale Corp. (72.8 percent) and Cisco Systems (64.5 percent).

Defined-benefit plans at 36 companies expanded by more than a third, including those at Schlumberger (75.8 percent), FMR Corp. (58.4 percent) and Exxon Mobil (42.4 percent). And 50 defined-contribution plans surged by more than a third, including NYSE Group (129.2 percent), Ernst & Young (47.2 percent) and Pfizer (43.9 percent).

By Tara Kalwarsk of Financial Week and Jay Cooper of Pensions & Investments, sister publications of Workforce Management. To comment, e-mail editors@workforce.com.

California regulators have assessed a record $3.5 million fine and are seeking up to $1.3 billion in penalties against a UnitedHealth Group Inc. unit for allegedly violating state regulations governing claims payments.

California Insurance Commissioner Steve Poizner has launched an enforcement action against UnitedHealth’s PacifiCare unit in response to market conduct examinations that identified 130,000 alleged violations in the company’s handling of claims and provider data.

Each violation has a statutory penalty up to $5,000 for a non-willful violation and up to $10,000 for a willful violation—meaning that if all the violations are shown to be willful, the penalty could be as high as $1.3 billion.

The California Department of Managed Health Care assessed a $3.5 million fine, which it said is a state record, and outlined steps PacifiCare must take to correct the claims payment problems, including an independent monitor to oversee changes and additional staff.

PacifiCare is accused of numerous violations, including: wrongful denial of covered claims, incorrect payment of claims, lost documents including certificates of creditable coverage and medical records, failure to timely acknowledge receipt of claims, multiple requests for documentation that was previously provided, failure to address all issues and respond timely to member appeals and provider disputes, and failure to manage provider network contracts and resolve provider disputes.

The two regulatory organizations launched a joint investigation last year after receiving hundreds of consumer and provider complaints about claims payment problems by PacifiCare, particularly after its December 2005 acquisition by Minnetonka, Minnesota-based UnitedHealth.

In a statement, UnitedHealthcare said the issues were largely administrative- and provider-related and that most have no direct effect on PacifiCare members. The company also attributed some of the issues to a provider network transition that had to be completed six months earlier than anticipated due to the acquisition.

In addition, the company said it has largely resolved processing errors involving point-of-service claims, which were the primary focus on the DMHC examination, and is making good progress on ensuring the timely and accurate resolution of provider disputes.

The company also said it has resolved the majority of the claims payment issues identified by the California Department of Insurance and made systemic changes to help avoid them in the future. It also said it has hired additional staff, including a newly appointed vice president of transactions oversight, to oversee its performance.

Meanwhile, the CDI is considering similar broad reviews of other health insurers, although a spokesman declined to identify any insurers.

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

A California Senate panel voted 10-1 late Monday, January 28, to reject comprehensive health care reform crafted by Republican Gov. Arnold Schwarzenegger and Democratic Assembly Speaker Fabian Núñez. The panel action came just over a month after the Assembly approved a compromise bill hammered out by Schwarzenegger and Núñez.

Monday’s vote’s also canceled a companion ballot initiative that would have provided the funding for the reforms, including employer health care coverage spending requirements and an increase in the cigarette tax and fees paid by hospitals to support increases in provider reimbursement from the state’s Medicaid program.

Provisions in the compromise bill—aimed at bringing health insurance coverage to most of the state’s nearly 7 million uninsured—would require most state residents to obtain health insurance, while the state would subsidize premiums for lower-income state residents.

Employers would have to spend a specific percentage of payroll on health care for employees or pay into a pool that would be created to provide coverage for the uninsured.

The cost of the reforms was projected at more than $14 billion, roughly the size of the deficit the state faces this year. Before Monday’s vote on the bill, Núñez challenged the committee to come up with a better reform measure.

“I would challenge the members of the Senate to come up with a plan that’s doable, and that can withstand the same type of scrutiny [the proposal] was put through in this committee, the same kind of analysis by the Legislative Analyst, that is going to respond to the needs of those poor families who have absolutely no health care today,” Núñez said in testimony at the panel hearing Monday.

Meanwhile, Gov. Schwarzenegger is evaluating his next move, according to a spokeswoman.

“The fact that the Senate missed a golden opportunity to pass health care reform doesn’t change the governor’s commitment to fixing California’s health care system,” the spokeswoman said. “Keep in mind that in Massachusetts, it took Gov. Romney three years to push the concept of individual responsibility across the finish line.”

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

Corporate executives are poised to start making substantial cutbacks in their staffing, according to a new forecast by employment consulting and legal firm Career Protection.

In fact, the firm is predicting a 37 percent increase in layoffs this year compared with last year, based on a survey of more than 1,300 corporate executives and senior-level officials that was conducted earlier this month.

The layoff forecast is the worst in the past five years, according to Career Protection officials. They also indicated that the firm has already been “inundated” with inquiries from employees at a number of companies that announced layoffs earlier this month, including Bear Stearns, Chrysler, Citigroup, Ford, Covidien, General Motors, IndyMac and Sprint Nextel.

If there is a silver lining, it’s that the executives surveyed say that they do intend to provide severance packages to employees whose positions are eliminated. Broadly speaking, however, these severance packages will not be as generous as those that have been paid out in recent years, according to the Career Protection survey.

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

Employment-based pensions received by men typically are much higher than pensions received by women, but the gap is likely to narrow somewhat in the future, according to a study released Thursday.

The study by the Employee Benefit Research Institute in Washington found that 44.6 percent of men age 65 and older received an employment-based pension during 2006, with a median benefit of $17,200 annually. By contrast, only 28.4 percent of women received a pension, with a median benefit of $11,142 a year.

The reason for this gender disparity is that older women tend to spend less time in the workforce than their male counterparts, as well as have lower-paying jobs, according to the EBRI study. Those circumstances directly affect the size of their pension, since the benefit is largely based on income and years of service. Additionally, defined-benefit plans typically require employees to work five years before they are fully vested in a benefit.

While younger women still, on average, spend less time in the labor force than younger men and tend to earn less, today’s younger women on average will work longer than women who were 50 or older in 2006, according to the study.

As a result, younger women will be more likely to earn a pension and the amount they earn will increase over time as younger generations of women retire, the study found.

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

It appears more employers are willing to dig deeper to lure skilled young talent, according to the National Association of Colleges and Employers’ Job Outlook 2008 survey.

Fifty-five percent of the 276 employers participating in the annual poll plan to offer signing bonuses to new college grads—almost a double-digit increase from 2007, when 47 percent of respondents said they would offer bonuses.

“More companies believe that offering signing bonuses gives them an edge in this competitive field,” says Andrea Koncz, employment information manager at NACE. The Bethlehem, Pennsylvania-based association published the report January 25.

Not only is the number of employers offering signing bonuses on the rise, the dollar amount also is climbing. Signing bonuses will average $4,450, according to survey respondents, up from last year’s average of $3,568.

The trend doesn’t mean employers are indiscriminately offering signing bonuses, Koncz says. Two-thirds of survey participants expect to be selective when assigning bonuses. Factors such as college major and a candidate’s degree level will play a role.

Koncz says employers in IT and computers are most likely to provide signing bonuses. “There is a shortage of graduates in math, engineering and sciences,” she says. “They’re going to have to make themselves as attractive as possible to this audience.”

Signing bonuses may be particularly important for companies that are not in the business of technology and innovation but still need IT talent.

“Science and engineering majors are going to naturally gravitate to the employers they consider cool and hip, like Google and Apple,” says Carol Barber, executive vice president at Bernard Hodes in Inverness, Florida. “Financial incentives could help the less cutting-edge employers make a compelling case for themselves.”

Increased signing bonuses don’t surprise Heidi Hanisko, director of client services at CollgeGrad.com, an online job search service for college students and recent grads in State College, Pennsylvania.

“Companies are constantly telling us how difficult it is to attract and retain young talent,” she says. “Candidates are responsive to financial rewards.”

Koncz says there’s a likelihood that the number of employers offering signing bonuses this year is greater than what the Job Outlook 2008 survey is projecting.

In 2007, 47 percent of respondents planned to offer signing bonuses; ultimately, 54 percent used them. The year before, 44 percent of survey participants predicted they would offer bonuses, and 47 percent wound up doing so, she recalls.

The spate of signing bonuses looks strong now, but that could change if a recession hits, says Steven Rothberg, CEO of CollegeRecruiter.com, a Minneapolis-based job board.

Employers could pull back, particularly because college graduates tend to be recruited for entry-level positions.

“Entry-level employees are the first to get hit during a recession and the last to rebound,” Rothberg says. “We’ll see what happens in the coming months.”

—Gina Ruiz

Legislation given final congressional approval Tuesday, January 22, would expand the federal Family and Medical Leave Act to allow employees to take up to 12 weeks of unpaid, job-protected leave when a spouse, son, daughter or parent is on active duty in the military or is called up for active duty.

Under a provision tucked into a broader Defense Department authorization measure, H.R. 4986, leave for close relatives of employees on active duty or called up for military service in support of a contingency operation could be taken for any “exigency,” as defined by regulations.

That expansion would be the first since Congress passed the FMLA 15 years ago this month. The act requires employers to offer employees up to 12 weeks of annual leave after the birth or adoption of a child, to care for a child, parent or spouse who has a serious health condition, or when an employee has a serious illness.

Additionally, the legislation, which the Senate passed Tuesday on a 91-3 vote after the House cleared the measure in December, would allow employees to take up to 26 weeks of leave under the FMLA—up from the current 12-week annual maximum—to take care of a child, parent or spouse who incurred an injury during military service when that injury results in the service member being unable to perform his or her duties.

The FMLA expansion would go into effect as soon as President Bush signs the legislation, which is expected. That will mean affected employers will have to change their FMLA policies immediately and communicate the changes to employees.

“This is a rather big deal. You have to be ready to deal with this,” says Fran Bruno, an attorney with Mercer LLC in Washington.

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

Capitol Hill attention is focused on cobbling together an economic stimulus package that Congress hopes will help stave off a recession.

Following that bill, Sen. Edward Kennedy, D-Massachusetts, wants to move to the top of the Senate agenda a pay discrimination measure designed to overturn a recent Supreme Court ruling.

Kennedy’s bill, the Fair Pay Restoration Act, would allow workers to file pay discrimination cases within 180 days of any paycheck they receive that has allegedly been reduced because of bias.

Last spring, a 5-4 Supreme Court majority ruled that the federal statute of limitations requires workers to take action within 180 days of the original discriminatory decision.

Kennedy chaired a Senate Health, Education, Labor and Pensions Committee hearing about the bill on Thursday, January 24. The next step will be either a committee or Senate floor vote after the Presidents Day recess. The bill is on the Senate calendar, according to Kennedy.

“We’re going to get action on it, one way or another,” Kennedy said after the hearing.

It’s too early to tell whether Senate Republicans will filibuster the bill, as they did last year with a measure that would make it easier for workers to organize a union.

Republicans “wouldn’t be opposed to alternatives” to Kennedy’s bill, according to a GOP committee staffer who requested anonymity because he’s not authorized to speak on the record.
Kennedy’s measure is a response to the controversial Supreme Court ruling in a case involving 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 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 that 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.

On July 31, the House passed a bill similar to Kennedy’s in a 225-199 vote. President Bush has vowed to veto the bill.

“Ledbetter was a textbook case of pay discrimination,” Kennedy said at the January 24 hearing. “The court’s decision gives employers free rein to continue such discrimination, and it leaves workers powerless to stop it. The result defies both justice and common sense.”

Corporate advocates warned that the bill would make companies liable for stale cases that stretch back decades, making it difficult to gather evidence and mount a defense. In Ledbetter’s case, one of the potential witnesses, her supervisor, died before the trial.

Eric Dreiband, a lawyer with Akin Gump, testified that the bill would force companies to implement “incredibly costly record keeping,” foster “unanticipated and potentially limitless monetary penalties,” and create pension liability.

“Everybody here is opposed to discrimination in any form,” Sen. Johnny Isakson, R-Georgia, said after the hearing. “I’m also opposed to opening the door in perpetuity to frivolous lawsuits.”

Opponents of the bill assert that Ledbetter dallied after her first inkling about pay discrepancies in the early 1990s.

In her Senate testimony, Ledbetter said she had suspected that she was making less than her male counterparts but couldn’t make a case until she received the anonymous note about company pay scales in 1998.

“There is no way I would have waited,” if she had known sooner, she said. “I would have wanted that time-and-a-half and overtime pay.”

As Ledbetter visits Washington to promote the bill inspired by her Supreme Court case, she knows that it won’t directly benefit her.

“Goodyear may never have to pay me what it cheated me out of,” she said. “But if this bill passes, I’ll have an even richer reward because I’ll know that my daughters and granddaughters, and all workers, will get a better deal.”

—Mark Schoeff Jr.

The 5th U.S. Circuit Court of Appeals has ruled that the Employee Retirement Income Security Act does not pre-empt state law claims regarding unsafe workplaces.

Le Ann McAteer, a former employee for Silverleaf Resorts Inc., worked as a landscaper at the Holly Lake Ranch in Texas, about 100 miles east of Dallas. Silverleaf, which is based in Dallas, does not subscribe to Texas workers’ compensation insurance, but does provide benefits to its employees through the Silverleaf Club Employee Injury Benefit Plan, which is governed by ERISA.

The plan provides no-fault benefits to employees in the event of a job-related injury and requires arbitration of any disputes regarding its benefits.

According to court documents, McAteer claimed she suffered a job-related injury when she tripped over a cement parking block while using a string weed trimmer in July 2005. She fell on her back and was later diagnosed with a herniated disc that required surgery.

McAteer did not report the injury to Silverleaf and left the company in August 2005. She notified Silverleaf of the injury in September 2005.

McAteer’s claim was denied by Silverleaf because she did not report it in a timely manner, did not she seek advance approval for her medical treatment and did not use a plan-approved physician, according to court documents.

In January 2006, she filed a lawsuit against Silverleaf in the U.S. District Court for the Eastern District of Texas, alleging that Silverleaf was negligent by failing to provide her with a safe place to work when it assigned her to work in a parking lot when the company knew parking stops were hazardous; failing to warn her of the potential hazards; and failing to inform her of employee safety measures to help prevent the accident.

The district court ruled that ERISA barred her injury claims and dismissed her case.

U.S. Circuit Judge Edward C. Prado’s ruled on January 15 that in similar cases previously, state law negligence claims for failing to maintain a safe workplace are independent of ERISA.

In his opinion, Judge Prado said that McAteer’s claim under state law was preserved even though she added an ERISA claim to her action after it was dismissed by the district court. Prado ruled that McAteer’s “state law negligence claims in this case are not pre-empted by ERISA and must be remanded,” and that “she did not make her argument moot by adding an ERISA claim,” thus reversing and remanding the district court decision.

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