Author: Site Staff

A struggling Citigroup announced Monday the creation of its first-ever chief talent officer position, and on Tuesday, January 15, chief executive Vikram Pandit told employees worried about possible layoffs because of multibillion-dollar losses from mortgage-related securities that changes at the company are meant to move the business forward.

On Monday, the bank announced that Paul McKinnon, formerly senior vice president for human resources at Dell, would become the company’s first head of talent management. The appointment represents a lesson learned for the company since it fired CEO Charles Prince without having a ready successor and reflects the new priorities of Pandit, who was named CEO in December.

In a memo announcing the position, Pandit wrote: “Attracting, developing and retaining people at the most senior levels of our company is one of my top priorities and requires concentrated attention.”

McKinnon will be responsible for recruiting, developing, reviewing and retaining Citigroup’s senior talent, Pandit wrote in the memo.

Striking an upbeat tone in a global town hall meeting for employees Tuesday, Pandit said the company’s global brand remained solid.

“Our brand is extremely strong around the world,” he said. “We’re a global firm; we have the ability to select from 6 billion people.”

The meeting came just after Citigroup announced a fourth-quarter net loss of $9.83 billion attributable to $22.2 billion in write-downs of securities tied to subprime loans as well as credit costs. Pandit told shareholders and employees that Citigroup would divest from businesses that were not aligned with the company’s long-term strategic goals. He did not specify what those businesses were.

The company also announced a $12.5 billion cash infusion from outside investors.

The company had already designed a major cost-cutting strategy that includes laying off as many as 17,000 employees. Reports Tuesday said the company will announce plans to lay off at least 4,000 more employees.

After speaking with shareholders Tuesday morning, Pandit, who in a statement called the fourth-quarter results “clearly unacceptable,” turned his attention to Citigroup employees. He told workers that the losses were specific to a small number of areas.

“The actions we take today are actions that are designed to separate our past from our future,” Pandit told employees, who reacted to his comments with applause.

In reassuring employees, Pandit said more changes were on the horizon.

“I’m very optimistic about where this will lead us, and when we have more to talk about we’ll get together and talk about it,” he said.

Pandit said he will continue to listen to employees as part of a “listening tour” that will begin next month. McKinnon, meanwhile, will start his new job February 1.

McKinnon comes to Citigroup after 10 years with Dell, where he helped implement the company’s “Wining Culture” initiative. Previously, he worked as an HR consultant and was an assistant professor at the Darden Graduate School of Business at the University of Virginia, where he taught organizational behavior. He is on the board of directors of the HR Policy Association in Washington and was inducted as a fellow into the National Academy of Human Resources in 2002.

John Donnelly, who has worked in human resources at Citigroup for 30 years, will remain head of human resources.

—Jeremy Smerd

After a brief slowdown, health care inflation in the U.S. is once again on the rise despite an overall drop in personal health care spending and the lowest rate of growth for private health insurance since 1997.

Health care spending grew by 6.7 percent in 2006 to $2.1 trillion, or $7,026 per person, according to research published in the journal Health Affairs. That growth rate was slightly more than the 6.5 percent seen in 2005, and the dollar figure represents the largest per capita cost in the world.

Health care inflation peaked in 2002 at 9.1 percent and then began trending downward until this year. Still, the 6.7 percent growth seen in 2006 is still nearly half as much as the 13 percent annual growth that was seen in 1980, according to the federal government’s national health expenditures as compiled for the article “National Health Spending in 2006: A Year of Change for Prescription Drugs.”

Researchers believe that the increase in health care cost inflation is due to the sharp rise in prescription drug use, fueled by the enrollment of seniors into Medicare Part D. Investment in drug research and increases in the cost of administering health insurance offset slowdowns in health care spending in other areas.

Personal health care spending, which accounts for things like the cost of health insurance and out-of-pocket costs on medical goods and services, rose 6.6 percent in 2006, slightly less than the 6.8 percent increase seen in 2005. An 18.7 percent increase in Medicare, its largest since 1981 and attributable mainly to the introduction of a prescription drug benefit, was largely offset by reductions in spending in Medicaid and a slowdown in the increase of private insurance.

Medicaid costs decreased by 0.6 percent in 2006, the first decline since the program’s inception in 1965.

The cost of private health insurance rose at 5.5 percent, its slowest rate since 1997. According to the article by Aaron Catlin and colleagues in Health Affairs, a reduction in prescription drug spending among people with private health insurance largely contributed to the slower growth rate.

Out-of-pocket spending continued its steady decline that began in 1998 when spending on deductibles, co-insurance and payments from health savings accounts totaled about 15 percent of national health spending. In 2006, out-of-pocket costs totaled 12 percent of national health spending, which equaled an annual growth rate of 3.8 percent.

Nonetheless, when out-of-pocket health care costs are combined with premiums, the household burden of financing health care has remained flat as a share of personal income since 2003, according to the authors of the study.

In a companion article in Health Affairs, Paul Ginsburg, president of the Center for Studying Health System Change, argued that the slight slowdown in personal health care spending would not last.

Citing a number of reasons, from the increase in obesity to a quickening of the “medical arms race” to a slowdown in the economy, Ginsburg says that it would be a “stretch to conclude that the corner has been turned in dealing with the long-term gap between growth in health spending and growth in income and the resulting financial pressures.”

The cost-trend data reported in Health Affairs comes amid other reports that signal health care premiums will remain stable in 2008.

A survey of nearly 3,000 employers by Mercer published in December showed that group health plan costs rose 6.1 percent in 2007, the third consecutive year of increase. In 2008, survey respondents expect costs to increase an average of 5.8 percent after taking into account changes they will make in plan designs as well as other factors.

—Jeremy Smerd

—— Forwarded Message
From: “Meisinger, Sue” <Smeisinger@SHRM.org>
Date: Tue, 8 Jan 2008 11:04:24 -0500
To: SHRM STAFF <SHRMSTAFF@SHRM.org>
Conversation: Announcement
Subject: Announcement

It’s 2008, and it’s hard to believe that I’ve been with SHRM for more than 20 years. When I arrived in July of 1987, SHRM had about 44,000 members, and a staff of just 65.

I expected to stay for just a few years before moving on to new challenges. But I soon learned that working for ASPA, and then SHRM, was never boring. It was always interesting, and my job kept changing. And as SHRM grew, I gained new responsibilities, allowing me to continually grow and learn.

Since becoming CEO of SHRM, I’ve been blessed with the opportunity to work with a world-class management team and staff. Since 2002, working together, we have:

•   Grown membership from 170,000 to 233,000 members;
•   Increased retention from 79% to more than 81%;
•   Grown revenue from $70 million to $107 million; and
•   Grown reserves to enable us to invest more in serving and advancing the profession — from $62 million to almost $160 million.

We’ve pursued our mission by:
•   Increasing the depth of information resources provided to our members;
•   Providing a diverse offering of professional development opportunities, from learning systems to conferences and seminars, launching e-learning free web casts, a new Strategy Conference, and new executive education programming.
•   Launching a new brand and logo, which was embraced by our members;
•   Providing an online career assessment tool;
•   Expanding globally, opening offices in China and India, and created the GPHR Learning System and educational program which is  now being offered around the world;
•   Focusing on the HR professionals of the future, developing curriculum templates, teaching tools and cases for use by the academic community while revitalizing our student program, launching regional student conferences and free memberships to recent graduates; and
•   Launching a public affairs campaign to highlight the value of the HR profession, providing recognition for great HR practices, launching the 50 Best Small and Medium Companies to Work for and Human Capital Awards Programs  and beginning sponsorships on public radio, CNN, Fox, and CEO Exchange on PBS.

We’ve also made great progress in supporting the life blood of SHRM, our incredible volunteer leaders.  We:

•   Launched a new volunteer structure to help us be more responsive;
•   Increased our field staff to better serve the volunteers;
•   Began free web hosting services and news feeds for our chapter;
•   Began financial support to our state council partners; and
•   Launched the Volunteer Opportunity Center to increase volunteer opportunities for our members.

On top of this, SHRM was recognized by the ASAE as a remarkable and visionary association in its book 7 Measures of Success: What Remarkable Associations Do That Others Don’t.

I’ve had the opportunity to travel and represent SHRM around the world.  I’ve served on the boards of HRCI, the World Federation for Human Resource Management and the North American Human Resource Management Association, and served as spokesperson before Congress and for all of the major media outlets. 

I’ve had a great 20 years at SHRM, with six years as CEO. Working with all of you, we’ve accomplished more than I ever could have dreamed.

As we began our planning for 2008 and the strategic review planned for this year, I took the opportunity to reflect on my own situation, and the need to balance the demands of my role at SHRM, the demands that will come with this strategic review, and my desire to attend to some family member health matters.  I’ve concluded that this would be a good time to step back, before SHRM undertakes its strategic review, to take some time for myself and my family — to take a sabbatical. To that end, I will be retiring from SHRM.

The Board is now aware of this, and will be launching a search for a new CEO shortly, considering both internal and external candidates. I will remain at SHRM until a new CEO is selected to ensure a smooth transition.

While leaving SHRM won’t be easy for me, I know it’s the right thing for me, and I’m excited about the future. I suspect that at some point I may rejoin the world of work for the next phase of my life. If so, I hope it’s to do something as challenging and rewarding as my experience has been at SHRM.

Thank you all for allowing me to have had this wonderful career experience.  It couldn’t have happened without you.

Sue

Susan R. Meisinger, SPHR
President and CEO
Society for Human Resource Management
1800 Duke Street
Alexandria, VA 22314-3499
Phone: 703-535-6002

Toll Free: 800-283-7476 USA
TTY/TDD: 703-548-6999
E-mail: smeisinger@shrm.org
www.shrm.org <http://www.shrm.org>

Leading People. Leading Organizations.

The Society for Human Resource Management (SHRM) is the world’s largest association devoted to human resource management. The Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 225,000 members in over 125 countries, and more than 575 affiliated chapters. Visit www.shrm.org <http://www.shrm.org/> .

Employers contemplating cutting back on medical benefits might want to mull this: A new survey shows that workers place an extremely high value on health care coverage.

In fact, according to a survey of 1,200 adults sponsored by the Center for State and Local Government Excellence, 84 percent of the respondents said that health insurance has become a “very important” characteristic when choosing a new job.

In fact, medical insurance outranked all other 14 benefits and offerings in the survey. Remarkably, pay ranked 10th on the survey—right below “being creative and intellectually stimulated.”

Another benefit—the corporate pension plan—ranked fourth, cited by 76 percent of respondents as being most important when evaluating a potential job.

“Increasingly, people are becoming aware of the severe consequences of not having either health care or retirement benefits,” says Elizabeth Kellar, executive director for the center. “The responses likely speak to people’s growing insecurities, to the point where many people now say that they won’t even consider a job that doesn’t offer health insurance.”

The cost of providing health care has risen dramatically in recent years. During the past five years, the price of offering medical insurance to workers has increased by 63 percent, according to a study of corporate health care costs conducted by consulting firm Towers Perrin.

That rise, the report notes, has created an “affordability burden” for many employers. As a result, many companies are reducing fixed health-care costs and are shifting more of these expenses to employees through larger deductibles, more sizable employee contributions, and a greater reliance on consumer-driven health plans.

On the retirement side, Kellar points out that as corporations cut back on traditional defined-benefit pension plans to better manage expenses, employees are increasingly becoming dependent on defined-contribution plans, such as 401(k)s. This has prompted workers to place more emphasis on specific defined-contribution features—such as company matches in 401(k)s—when considering new job opportunities.

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

Changing Engagement Challenges   *HRCI Recertification Credit: 1 hour Expert Speaker:  Ilene Gochman, Towers Watson Regardless of an organization’s place on the economic recovery curve, there is a strong need to maintain or even increase productivity. A significant body of research has shown strong links between engagement and both individual and organizational performance. While this connection is clear, organizations still struggle with the specifics— what can they do to translate engagement into better performance? In this webcast Towers Watson consultant Ilene Gochman will present ideas about how to turn engagement into tangible results. She will: Define engagement and explain the actions that enhance it Look at the roles that senior leaders, managers and people-programs play in driving engagement Provide examples about how these engagement drivers affect performance You will gain specific ideas about what your organization’s leaders, managers, HR teams and communications professionals can do to translate engagement into performance. Event fee: Free to Members Available until May 13, 2011 Sponsored by:   Learning & Development Spending and Staffing Trends: Are There Signs of a Turnaround for Corporate Training?   *HRCI Recertification Credit: 1 hour Expert Speaker:  Karen O’Leonard, Bersin & Associates After two straight years of spending and staffing cuts, U.S. training organizations are wondering if the worst is behind them. Find out in our latest study on L&D spending, staffing, and programs. The webinar is presented by Karen O’Leonard, principal analyst and author of Bersin & Associates annual Corporate Learning Factbook. O’Leonard’s presentation is filled with statistics on spending, staffing, and programs that can be used for benchmarking your organization against its peers. All attendees will receive a complimentary executive summary of the 2011 Corporate Learning Factbook.  Event fee: Free to Members Available until Jan 25, 2012

Lockheed Martin has agreed to pay $2.5 million to end a racial discrimination suit brought by an electrician who says he was subject to harassment and threats to his life during the two years he worked for the giant military contractor.

The settlement, announced Wednesday, January 2, is the biggest award ever obtained by the Equal Employment Opportunity Commission on behalf of an individual in a racial discrimination case. The consent decree reached with Lockheed has been filed in the U.S. Court for the District of Hawaii and is subject to the court’s approval.

In addition to the payment to Charles Daniels, an African-American avionics electrician who worked for the company from September 1999 to August 2001, Lockheed fired or barred from rehiring the team leader and four co-workers who verbally abused him. The company also agreed to establish a special anti-discrimination training program at its aircraft logistics centers.

The investigation and litigation took six years. But the long journey resulted in an outcome that likely will grab the attention of the corporate world.

“The EEOC hopes the settlement will send a message that racial harassment and discrimination will not be tolerated,” said William Tamayo, EEOC regional attorney for San Francisco. “We hope that Lockheed Martin will set a new tone in the industry.”

The company, however, accuses the EEOC of distorting the facts of the case. Daniels and the agency said his co-workers told him, “We should do to blacks what Hitler did to the Jews” and threatened to lynch him.

Those incidences didn’t come up in internal investigations.

“We couldn’t find any reference to those words being used,” said Joe Stout, director of communications for Lockheed Martin Aeronautics Co.

In a statement, the company stressed that the alleged conduct “involved a small number of first-line employees in a small, single operating unit of the company.”

Stout said that the consent decree is not an admission of guilt.

“We did not settle because we felt we had liability,” Stout said. “If this had proceeded to trial the facts would have substantiated that the company took the matter seriously, investigated and implemented appropriate remedial actions given the facts that had been reported.”

The case arose despite Lockheed’s no-tolerance policy on racial discrimination. The trouble started when one of Daniels’ colleagues lashed out against him following a decision by South Carolina to remove the Confederate flag from the Statehouse. Daniels, a Navy veteran, was part of a team that serviced military aircraft in Florida, Washington state and Hawaii.

“He decided to take it out on the first black person he saw, which was me,” Daniels said in a conference call with the media.

The situation escalated as the team moved from location to location. “It was pretty humiliating,” he said. “I was probably one of the highest-paid and top electricians at Lockheed at the time.”

The bullying became more sinister on Whidbey Island, Washington. While the team worked there, Daniels’ colleagues hinted that they could easily kill and dispose of him.

They said that “they could put my body 10 feet away from the road and I never would be found,” according to Daniels.

When he approached the Lockheed HR department, he was rebuffed, Daniels said. Officials waved off the discrimination, saying “boys will be boys,” and warned Daniels not to prosecute the company. They also continued assigning Daniels to the same team and eventually laid him off.

“They really just want to see if they can chase you away,” Daniels said. “I really didn’t expect [justice] after Lockheed Martin told me, ‘We never lose.’ ”

So, on his second-to-last day of work at Kaneohe Marine Corps Air Station in Hawaii, he filed a discrimination charge with the EEOC office in Honolulu.

“It takes an act of courage to stand up to the largest military contractor in the world and say that I have rights as a human being,” said Raymond Cheung, an EEOC attorney who led the government’s case.

This kind of case is becoming more prevalent at the EEOC. The number of racial harassment charges filed with the agency has risen from 3,075 in fiscal year 1991 to about 7,000 last year. In February 2007, the agency launched a national education and enforcement campaign to eliminate racial bias.

“We hope that this settlement bolsters the [EEOC] chairwoman’s initiative to deal with racial discrimination in the workplace,” Tamayo said.

Daniels’ attorney Carl Verady urged people who are suffering from discrimination to turn to the EEOC rather than their company for help.

“EEO internal processes turn out to be a cover-up … or a vehicle for the human resources people to expose the complainant,” Verady said. “Go to the EEOC. That is where your protection lies.”

Stout asserts that Lockheed embraces diversity.

“It is one of our core values,” he said. “We spend a great deal of time educating our workforce about it.”

—Mark Schoeff Jr.

Many of today’s corporate executives want more than promises that wellness and preventive health-care programs will lower medical insurance premiums and other costs related to workplace illnesses.

C-suite executives want hard data, say corporate health experts touting a new tool that helps make clearer the connection between wellness and savings.

The more information, the better, is the thought behind Blueprint for Health, a free online tool now being used by companies small and large to estimate how illnesses among workers affect medical costs, employee absences and productivity.

Developed by several organizations, the tool—essentially an online calculator—takes into account an array of information specific to a company, including gender, age, geographic location, salary and marital status, to produce estimates on the number of absences per employee, per-employee doctor visits and prescription costs, and percentage of employees who will be impaired during the workday.

According to John Riedel, president of the Denver-based Riedel & Associates Consultants, who also helped build the Blueprint for Health, the estimates are based on more than 1 million data points from several large employers.

“We loaded input variables, looking at absence data, [employee] impairment data and… we created estimators on these large company data points,” he says. “In essence, we created algorithms in that database to gather estimates, creating a very robust tool for estimates.”

In addition to work by Riedel & Associates, a health and productivity management consulting firm, other organizations involved in building the tool include the Health as Human Capital Foundation, the American College of Occupational and Environmental Medicine and the National Business Coalition on Health. In addition, Bridgewater, New Jersey-based pharmaceutical maker Sanofi-Aventis U.S. supported the effort with a grant and a national advisory committee of corporate medical directors and benefits experts also helped steer the project.

Riedel says the tool is an easy way for employers to learn about their employees and the costs related to keeping a healthy workforce.

Once an employer fills in the online questionnaire, reports are generated providing estimates of costs for all employees, including those likely to have chronic conditions such as diabetes, high blood pressure, high cholesterol, hypertension, insomnia, as well as obesity and heart-related conditions, among others. A summary, charts and bar graphs provide employers with total estimates.

Riedel says more than 700 companies have used the free estimator since its inception in early 2006.

“The tool is pretty good if you are going to be using it for estimates specific to your organization,” says Laurel Pickering, executive director of the New York Business Group on Health. “When [statistics] say, ‘Diabetes costs the workplace X amount of dollars a year,’ it’s really not specific to one organization. [Companies] really need the specifics for their organization and the Blueprint for Health allows them to do that.”

Pickering, whose organization provides guidance for companies in the arena of health and welfare, says some employers have used the tool to justify their wellness programs, including everything from exercise incentives to smoking cessation program.

For example, Peoria, Illinois-based Caterpillar used Blueprint for Health to help executive officers better understand the need for a wellness program now in development, says Dr. Steve Goldman, Caterpillar’s medical director, who also served on the Blueprint for Health’s advisory committee.

“This tool helps us see the cost of medical care and realize why employees’ health is a lot more affordable when you take care of them before they get sick,” he says.

Dr. Goldman says the Blueprint for Health is the first tool he’s seen that looks at the relationship between sickness and productivity. “We see that [the cost of] medical care is only the tip of the iceberg. A lot of [the productivity] costs are hidden and difficult to get to.”

The Blueprint for Health is available at blueprint.hhcfoundation.org and features five applications: How to estimate total health-related costs including absences and presenteeism; understanding the skewed distribution of health-care cost, absence and presenteeism; estimating the cost of various health conditions; understanding salary level and salary equivalence on productivity loss; and understanding the dynamics of the migration of employees from year to year between the various cost levels.

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

Continually selling crack cocaine amounts to employment and thus is sufficient cause to terminate permanent total disability compensation, Ohio’s Supreme Court has ruled.

The high court’s decision December 21 in State ex rel. Lynch vs. Industrial Commission of Ohio upheld a March 1998 finding by Ohio’s Industrial Commission that Henry Lynch’s ongoing crack-cocaine enterprise constituted “sustained remunerative employment.”

The Industrial Commission terminated Lynch’s benefits, and an appeals court earlier this year upheld the termination of benefits.

Court records show that Lynch suffered an industrial accident injury in 1967. In 1997 he was indicted for possession, sale and distribution of crack that was earning him $300 to $500 per week, the court records state.

After pleading guilty, Lynch was incarcerated and Ohio’s Bureau of Workers’ Compensation moved to terminate his permanent total disability compensation. The case eventually reached the state Supreme Court, where Lynch argued, among other points, that his activities cannot be considered sustained employment because they are illegal.

The Ohio Supreme Court disagreed and found that Lynch “cannot use the illegality of his pursuits as a shield,” and he “exchanged labor for pay on a sustained basis.”

The ruling upheld an appeals court decision on the matter.

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

The passage of the Pension Protection Act in 2006 has led to higher participation in 401(k) plans, in large part due to increased implementation of automatic plan features such as automatic enrollment, according to a survey by Diversified Investment Advisors Inc.

The survey of 223 companies with 1,000 or more employees found that 62 percent have implemented or are implementing automatic enrollment, a 7 percent increase from the previous year. Another 33 percent say they were considering automatic enrollment.

The 2007 report was based on the 2006 plan year. This is the fourth year the Purchase, New York-based firm has conducted the survey. The data were collected in the third quarter.

The number of companies with 1,000 to 4,999 employees that reported a 90 percent or better participation rate in their company 401(k) plan doubled from the year before. The survey also determined that plans continued to grow, with 92 percent of the companies reporting defined-contribution assets of $25 million or more, a 9 percent increase from the year before.

“This is a landmark time for retirement plans,” Laura White, vice president of marketing at Diversified, said in an interview. “They’ve truly been redefined by the PPA. What’s surprising is how quickly the companies are responding to the legislation.”

Twice as many companies have or are implementing automatic deferral increases (30 percent in 2006 versus 15 percent in 2005). There have also been increases in the number of plan sponsors offering automatic rebalancing (31 percent versus 24 percent in 2005) and managed accounts (37 percent versus 32 percent in 2005).

The increase in automatic services has not taken away from the plan executives’ desire to improve employee education, however. According to the survey, improving employee education (47 percent), adding investment options (43 percent), offering investment advice (28 percent), offering financial planning (27 percent) and allowing Roth 401(k) contributions (27 percent) were the top five actions plan executives said they expected to consider within the next 12 months.

“I’m glad to see that plan sponsors didn’t look at automatic services as the silver bullet,” White says. “They’re not seeing automatic services as a replacement for employee education.”

The survey also found an increase in the number of 401(a) plans offered. Forty percent of the companies said they offered the plans, versus 36 percent for the previous year and 11 percent in 2004. The increase is largely because of a decline in defined-benefit plans, as 401(a) plans are often used to replace terminated or frozen pension plans, White says.

Despite that increase, the 2007 report seemed to indicate a slowing of the defined-benefit decline. The percentage of plan executives who said they were planning to terminate their defined-benefit plans was 14 percent. That’s down from 25 percent in 2005 and 23 percent in 2006.

Another survey finding that White said she found surprising was the six vendors a company used on average to administer a defined-benefit plan because so many vendors offer a bundled service that is often cheaper than using several different vendors. The survey also found that the number of plans using multiple vendors has increased over time.

The low number of plans that outsource all administrative functions associated with defined-contribution and defined-benefit plans was also surprising, according to White. Only 13 percent of firms said they had implemented or were in the process of implementing outsourcing, while 29 percent said they were considering it, 26 percent said they had considered it but decided against it, and 33 percent said outsourcing was never seriously considered.

Of the companies that went to outsourcing, 75 percent were satisfied or very satisfied, while 18 percent said it was too soon to determine and 7 percent were dissatisfied.

“I was a little surprised plan sponsors hadn’t sought out relief for all the work they’re doing themselves,” White says.

Filed by Jennifer Byrd of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

Employer frustrations with a federal employee leave law may be exacerbated as it expands for the first time since its enactment in 1993.

The expansion is included in a defense authorization bill that President Bush is declining to sign until Congress changes the wording of a provision related to the Iraq war. The FMLA expansion would enable spouses, children, parents or next of kin to wounded military service personnel to take 26 weeks of unpaid leave to care for their loved one.

That’s more than double the 12 weeks of time off for the birth or adoption of a child or the sickness of a close relative provided currently under the Family and Medical Leave Act.

The expansion idea drew bipartisan congressional support because it targets a politically popular constituency—military families—and emanated from a national commission chaired by former Sen. Bob Dole and former Health and Human Services secretary Donna Shalala.

Companies won’t have a problem with the straightforward mandate related to relatives of wounded soldiers, but other provisions are murky, according to attorney Margaret Hart Edwards of Littler Mendelson’s San Francisco office.

For instance, language in the bill allows 12 weeks of unpaid leave for “any qualifying exigency” that arises from a spouse, son, daughter or parent being on active duty or called to active duty.

The appropriate circumstances would have to be determined by Department of Labor regulations. Whether companies can require that an employee certify a relative’s active duty status also is subject to the regulatory process.

Until rules are promulgated, the situation will be ambiguous. “That puts a big burden on employers,” Edwards says. “The opportunities for abuse are substantial.”

Relatively few people would qualify for leave to care for an injured service member.

Department of Defense statistics show that 28,661 soldiers have been wounded in Iraq and 1,840 in Afghanistan. But those who are affected by a relative being called up for duty could total hundreds of thousands.

Employers voiced concerns about such FMLA growth at a congressional hearing this fall. Business advocates didn’t oppose extending FMLA for military families but they urged Congress to reform the law first.

A Department of Labor survey about FMLA earlier this year generated 15,000 comments, many from employers complaining about unscheduled intermittent leave and the definition of a serious health condition.

Resistance from corporate America made passage of the extension provision difficult, adding a further frustration for families who already face sometimes horrific recovery journeys, according to an advocate for broader leave laws.

“This was significant and historic,” says Kate Kahan, director of work and family programs at the National Partnership for Women and Families. “On the other hand, it’s only an extra three months of leave. This is just a small step in the right direction.”

After claiming a majority in Congress, Democratic leaders have introduced a number of FMLA expansion bills, including some for paid leave.

“We’re optimistic that all of them are going to be moving in a more significant way (in 2008),” Kahan says.

Edwards says that FMLA expansion is “inevitable” because “that is what American workers want.” She cautioned lawmakers to ensure that new rules are easy for employers to implement.

—Mark Schoeff Jr.