Author: Site Staff

A stopgap measure will help the Equal Employment Opportunity Commission keep its phones staffed until March after it closes its call center on Wednesday, December 19.

The four-member commission board voted unanimously on December 12 to hire 38 temporary employees and extend the contract on its interactive voice-recognition answering system for three months. The cost will be about $250,000.

But the complex transition to an in-house capability has divided the board and raised concerns about quality at a time when the EEOC is already under fire in a Supreme Court case.

The temporary employees will help the EEOC’s field offices handle a volume of calls that totals about 65,000 each month. The 24-hour answering system can resolve about 35 percent of the queries.

By late March, the EEOC hopes to have hired 61 federal workers permanently. The agency voted in August to close the outsourced facility, the National Contact Center, and establish an internal function. The move was necessary because Congress eliminated funding for the center.

Even though the EEOC is responding to a Capitol Hill action, the process of closing the call center has sparked two recent contentious meetings.

EEOC Chair Naomi Earp and Vice Chair Leslie Silverman supported extending the center’s contract during the transition. Commissioners Stuart Ishimaru and Christine Griffin voted for the December closure.

At the board’s most recent meeting, Ishimaru expressed frustration with the slow pace of the agency’s effort to put an alternative customer service system in place.

“Here we are a week before the phones are turned off and we have a proposal for what to do next,” he said. “We established an atmosphere that this is not urgent.”

Silverman took exception to Ishimaru’s characterization of the board’s attitude. “What we’re trying to do here is provide the best customer service we can under the circumstances,” she said.

Nicholas Inzeo, director of EEOC field programs, said that temporary workers will be trained on customer service “soft skills” and on EEOC procedures. But, he added, “We’re not going to be able to do as much as we could with the contact center.”

If claims are fumbled during the transition, it could amplify questions surrounding the EEOC’s administrative ability.

In a November oral argument involving the definition of an EEOC charge, or the action that the agency takes against an organization for alleged discriminatory conduct, several Supreme Court justices expressed frustration with the agency’s intake practices. A government lawyer at the hearing said the EEOC had improved its process for bringing charges since the case was filed.

Whether the EEOC loses public confidence during the upcoming transition will hinge initially on the performance of the temporary employees.

“It’s going to depend on who ends up answering the phones and their level of experience,” Griffin said after the meeting. “It’s better than not doing anything.”

Ultimately, an internal customer service system will work better than the call center, Ishimaru said in an interview.

“It was another layer that was added that did not add value to our process,” he said. “We should have EEOC employees answer the phones.”

Ishimaru’s term on the commission ends in January. It’s not clear whether his reappointment will be confirmed by the Senate.

—Mark Schoeff Jr.

The Senate Finance Committee has unanimously approved President Bush’s nomination of Charles E.F. Millard to be the next director of the Pension Benefit Guaranty Corp.

Millard, who has been serving as interim PBGC director, most recently was a managing director at Broadway Partners, a New York real estate investment and management firm.

Previously, Millard was managing director and head of wealth management services at Lehman Bros. and was a senior Cabinet official during the administration of former New York Mayor Rudolph Giuliani. He also was twice elected to the New York City Council.

The PBGC’s director post has been vacant since last year, when Bradley Belt resigned to take a position in the private sector.

Following the December 14 committee vote, confirmation by the full Senate is expected soon.

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

Sen. Edward Kennedy did something Thursday, December 13, he had never done before in his 45 years in Congress. He chaired a House hearing.

Kennedy took the gavel at a joint session of the House and Senate labor committees when House members departed for a vote. His brief leadership of the hearing on recent decisions by the National Labor Relations Board was more than a Capitol oddity.

It drove home the point that Democrats are upset with NLRB rulings they believe are curtailing unionization and collective bargaining. Among the witnesses Kennedy and his colleagues grilled was NLRB chairman Robert Battista.

Battista appeared before the committees just two days before his term expires. There is no word yet from the White House whether he or two other board members whose appointments will run out when Congress breaks for the holidays will be nominated again to serve.

But when they or their replacements are selected, they should be fully scrutinized by the Senate rather than slipped onto the NLRB through a recess appointment, said Rep. Robert Andrews, D-New Jersey and chairman of the House labor subcommittee hosting the hearing.

Andrews believes several September NLRB decisions reflected an ideological bent of the quasi-judicial agency’s three-Republican majority to limit unionization.

So Andrews invited his Senate colleagues to the hearing to demonstrate that NLRB positions should go through the regular Senate confirmation process.

“This should send a message to the administration—recess appointments are off limits,” Andrews said in an interview after the hearing. “Recess appointments would subvert the role of the Congress.”

The focus of the hearing was several NLRB decisions in September, a month in which the board decided 70 cases. One that drew particularly strong Democratic ire involved Dana Corp.

The board ruled 3-2 that following union certification through a voluntary card-check process, employees have 45 days to file a petition for a vote on decertification. The vote would occur if 30 percent of workers back it.

Union advocates say the decision undermines voluntary recognition of unions and is one of many indications that the board majority is fundamentally anti-union.

“The board is notorious for its seesawing with every change of administration,” said Wilma Liebman, a Democratic member of the board. “But something different is going on—more ‘sea change’ than ‘seesaw.’ ”

She asserted that Republican appointees give more weight to business prerogatives and to the right of workers not to form a union than they do to supporting collective bargaining.

“It’s the first time the NLRB has ranked statutory priorities in that way,” she said. “In some ways, it seems, labor law has been turned inside out.”

Battista rejected the notion that the NLRB undermines unionization. He said that the agency has collected $110.3 million in back pay in the current fiscal year and has reinstated 2,456 employees. Over his five years as chairman, $604 million has been collected in back pay and 13,279 employees have been reinstated.

He also said 2,439 election petitions were filed in the last fiscal year and 1,559 elections conducted, with 93 percent being held within 56 days. Unions won 54 percent of the time.

Battista also said that during the course of his chairmanship, the NLRB backlog has been reduced from 621 to 207 cases. He denied that the September rush was unusual. In fact, the 70 cases decided this fall were the second fewest in the past five years.

He said the board does not take sides between workers and companies, but tries to ensure employees can freely choose or reject a union. If they embrace representation, the board “encourages collective bargaining,” he said.

“The law is neutral and so is this agency,” he said. “We’ve done a good job making the agency more productive and efficient. The vast bulk of our unfair labor disputes are dismissed or settled very early in the game.”

In response to criticism from a House Democrat, he said, “We may not be champions to the unions, but we’re certainly champions to the employee.”

Democrats took sharp exception. “This board has undermined collective bargaining at every turn,” Kennedy said.

He and other Democrats asserted that increasing the number of people in unions will foster higher wages and more generous benefits.

“The decline of the middle class in this country is the result of the decline of unions in this country,” said Sen. Sherrod Brown, D-Ohio. About 12 percent of U.S. workers are part of a union.

Republicans, however, criticized the Democratic majority for holding the hearing because it encroached on the judicial branch of government. They also implied that the meeting served to amplify union attacks on the board.

“Today’s hearing is little more than hollow political theater,” said Rep. John Kline, R-Minnesota.

It’s too early to tell whether Democrats will draft legislation to overturn recent NLRB decisions.

“I would want to reserve judgment on that,” Andrews said.

—Mark Schoeff Jr.

With cries in Congress growing louder for increased transparency on retirement plan fees, the Department of Labor proposed a new disclosure rule on Wednesday, December 12, that would give more insight into fees charged by certain service providers and any potential conflicts of interest that could influence the providers.

The proposed rule is the second of three fee-related regulations the DOL plans to issue. It requires service providers to disclose, in writing, to plan fiduciaries of 401(k) plans and other employee benefit plans all services to be furnished; all direct and indirect compensation to be received; and any potential conflict of interest, such as material third-party relationships, that could affect their objectivity under a service contract or arrangement.

“One of the department’s top priorities is improved disclosure in order to ensure that participants and fiduciaries have the information they need to make informed decisions,” U.S. Secretary of Labor Elaine L. Chao said in a statement. “We are moving quickly to implement regulations that foster fair, competitive and transparent prices for services as well as combat excessive or hidden plan fees.”

Under the Employee Retirement Income Security Act, plan fiduciaries are required to act solely in the interest of participants and beneficiaries and to pay only reasonable plan expenses that are necessary, said Bradford P. Campbell, assistant secretary for the Labor Department’s Employee Benefits Security Administration, in a press call. But because of the increased complexities within the financial services industry, it has become more difficult for plan fiduciaries to understand how service providers are compensated and whether conflicts exist, he said.

“We’re helping define what ‘reasonable’ means so it’s clear when that duty has been met,” he said.

The proposed regulation affects only certain providers: fiduciary service providers; providers of banking, consulting, custodial, insurance, investment advisory or management, record keeping, securities brokerage or third-party administration services; or providers that receive indirect compensation for accounting, actuarial, appraisal, auditing, legal or valuation services.

The Labor Department estimates that the cost of the proposed regulation, which falls on the service providers, will be about $52 million in the first year of implementation and about $36 million the second year. The benefits—which may include lower fees, increased efficiencies and some reduced costs—will outweigh the costs of compliance, the Department of Labor said.

Under the proposed rule, which will be published in the Federal Register on Thursday, December 13, plan fiduciaries are provided an exemption if they enter into contracts that are not “reasonable” because, unbeknownst to them, the service provider failed to comply with its disclosure obligations.

The new rule is the second of three fee-related regulations the Department of Labor will issue, Campbell said. The first regulation governs disclosure by plans to the public and government, while the last regulation, which will be issued “in the next couple of months,” will govern disclosure by plans to plan participants.

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

Congress should seriously consider changing retirement savings plan law to eliminate waiting periods so employees can enroll immediately in 401(k) and other defined-contribution plans, two lawmakers said Tuesday, December 11.

“Long waiting periods don’t make any sense,” Rep. Rob Andrews, D-New Jersey, said during a briefing.

Rep. Andrews and Rep. George Miller, D-California, who chairs the House Education and Labor Committee, said other changes legislators should consider include requiring employers to offer automatic enrollment programs. Currently, about one-third of large employers offer such programs in which employees are automatically enrolled, with a stipulated percentage of their salaries contributed to the 401(k) plan unless they specifically opt out.

“We have to get people into the system,” Andrews said in referring to the need for both immediate and automatic enrollment.

Additionally, the lawmakers said consideration should be given to the federal government matching lower-income employees’ 401(k) contributions. They also said plan participants should have access to independent and unbiased investment advice, and that 401(k) plan investment fees be reasonable and clearly disclosed.

Andrews also said that tighter rules may be needed to make it more difficult for employees to withdraw 401(k) plan account balances prior to retirement, such as requiring that a pre-retirement distribution automatically be rolled over into a savings plan sponsored by an employee’s new employer.

Such distributions are costly to participants, Andrews says. Taxes and penalties are assessed when such funds are withdrawn.

The legislators’ suggestions, which they may turn into legislation, coincided with the release of a Government Accountability Office report which found that many employees eligible for 401(k) plans don’t enroll; of those that do enroll, many don’t put in enough to ensure that they will have adequate savings when they retire.

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

Alaska’s attorney general has filed suit against Mercer seeking to recover the more than $1.8 billion the state says was lost because of Mercer’s misconduct as an actuary for its Public Employees’ Retirement System and Teachers’ Retirement System pension plans.

The suit, which was filed in state court in Juneau on Thursday, December 6, by Alaska Attorney General Talis Colberg, charges that the work of Mercer as an actuary for the plans was “riddled with significant errors.”

The suit says Mercer, which was the plans’ actuary from the 1970s until 2006, “made fundamental errors in methodology and even in basic calculations, and failed to assign competent, experienced personnel to work for the plans.”

The pension plans, which cover more than 80,000 retired and active participants, have unfunded liability of about $8.4 billion as of June 30, 2006, according to a statement issued by the office of Alaska Gov. Sarah Palin.

Responding to the suit, Mercer said in a statement: “To the extent the state has funding issues, they are caused by a number of economic factors, including skyrocketing medical costs, a downturn in the capital markets and the fact that retirees are retiring earlier and living longer than anticipated. Accordingly, beginning in 2002, Mercer advised the state to significantly increase its contributions to the retirement system. The state is now attempting to hold Mercer accountable for these economic trends, over which our firm has no control.”

Mark Iwry, senior fellow at the Washington-based Brookings Institution and a former Treasury official in charge of pension policy, says lawsuits by pension plans against actuarial consulting firms or consulting firms are uncommon, but not unprecedented.

Comparable lawsuits include a lawsuit filed by Paris-based investment bank Credit Lyonnais against a London-based unit of Watson Wyatt Worldwide over work that the pension consultant conducted for its group pension plan.

The bank claimed that Watson Wyatt overstated the funding position of the plan and, as a result, the bank granted richer benefits to employees than it otherwise would have. The claim was dismissed in 2005, with Watson Wyatt stating the two parties had agreed to the dismissal subject to certain confidential terms.

In 2006, the city of San Diego announced a $4.5 million settlement against San Francisco-based pension consulting firm Callan Associates Inc. that charged the firm had engaged in professional negligence, breach of fiduciary duty and breach of contract in connection with its work for the San Diego City Employees’ Retirements System.

A Callan spokeswoman said the suit had originally sought $50 million and that the retirement system remains a Callan client.

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

The number of Massachusetts residents who lack health insurance continues to fall as the deadline set by the state’s landmark 2006 health reform law for obtaining coverage nears.

Massachusetts officials said Wednesday, December 5, that they expect more than 300,000 people—nearly all who were previously uninsured—to have coverage by January 1, 2008, the date penalties kick in for those who lack coverage.

Since programs created by the reform law began, 293,000 state residents have obtained coverage. Of that number, 160,000 have enrolled in Commonwealth Care, in which the state subsidizes—many times completely—health insurance premiums of low-income state residents.

An additional 70,000 residents have obtained coverage through an expansion of the state’s Medicaid program, while 63,000 residents have obtained coverage through Commonwealth Choice, a program that provides non-state subsidized coverage, or coverage through private insurers.

Those figures show that the state has made a huge dent in reducing the number of uninsured over the past year. Prior to the enactment of the law, state officials estimated that roughly 400,000 people lacked coverage.

“We are making remarkable progress in an effort that no other state was bold enough to tackle. Health care reform is working in Massachusetts,” said Lt. Gov. Tim Murray in a statement.

The latest enrollment figures come as a deadline to obtain coverage draws closer. State residents who cannot show they have health insurance by December 31, 2007, will lose their personal exemption on their 2007 taxes, worth $219, and a much greater penalty in future years.

However, state officials estimate that about 60,000 uninsured residents will receive waivers from the health coverage mandate, principally because they can prove affordable coverage is not available.

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

A major business organization is as intent on killing immigration reform in the states as it is in resurrecting it on Capitol Hill.

The U.S. Chamber of Commerce is promising to fight in court recently passed state laws that crack down on illegal employment because it says they are unconstitutional.

Those measures are filling the void created by the failure of immigration legislation on Capitol Hill, according to a new study by the National Conference of State Legislatures.

The report says that 1,600 immigration bills have been introduced in statehouses nationwide, with 244 enacted, since the beginning of 2007. Many states are responding to the increasing costs of public services associated with illegal populations.

The report was released Friday, December 7, at a conference hosted by the Chamber of Commerce and the NCSL designed to enhance cooperation between the business community and the states.

Currently, there’s tension over the new immigration laws, which the chamber says hamstring companies that have to comply with different rules in different jurisdictions.

The chamber also asserts that state measures encroach on an area that is the responsibility of the federal government.

“Almost all of them are unconstitutional,” chamber president and CEO Thomas Donohue said at the conference.

His organization will be making that point in court. It already has joined an action against an Arizona measure that imposes stiff penalties, including the shutdown of operations, against businesses that knowingly hire illegal workers.

A U.S. District Court judge dismissed the action December 7 on procedural grounds because it was brought against Arizona’s attorney general and governor instead of county attorneys. The business groups have indicated that they will refile the suit.

The law, which will go into effect on January 1, also mandates that all companies in the state use an electronic government employment verification system. Businesses have denounced that device, formerly known as Basic Pilot and renamed E-Verify, as being inefficient and ineffective.

The suit in Arizona and a brief opposing a local ordinance in Pennsylvania are just the start of the chamber’s legal effort to halt state freelancing on immigration, according to Donohue.

“We’re going to file a hell of a lot of them,” he said.

The proliferation of state immigration laws is a reaction to the stalemate in Congress. A bill that would have strengthened border security and work-site enforcement while creating a guest worker program and a path to legalization for undocumented workers failed in the Senate last spring.

Since then, Congress has not revisited immigration even on a piecemeal basis because political tensions are so high between those who focus on enforcement and those who back a broader approach.

An aide to a senior House Democrat, who wasn’t authorized to speak on the record, called the atmosphere “poisonous” and unlikely to improve anytime soon.

Meanwhile, the states are forging ahead—and moving into dimensions of immigration policy that go beyond health care, education and other benefits that they’ve concentrated on in the past.

“We’ve really seen an expansion of the types of legislation states are entering into because of the lack of federal action,” says state Rep. Sharon Tomiko Santos of Washington, co-chair of the NCSL task force on immigration.

Not only has the scope of the laws increased—so has their distribution. In the past only states like California, Arizona, Texas, Illinois, New York and New Jersey got deeply involved in immigration.

That situation has changed dramatically. “Every state is dealing with immigration policy,” Santos says.

The reason for the changing political landscape is that there is strong popular sentiment to crimp illegal immigration, says Mark Krikorian, executive director of the Center for Immigration Studies.

It’s a reality that the chamber doesn’t grasp, Krikorian asserted at the conference.

“It’s going to get worse and worse,” he said. “Instead of riding the train, [business] is going to be tied to the tracks.”

Krikorian favors measures that crack down on illegal immigration, whether they come from Washington or the states.

“Anything that makes it difficult to live here is necessary to bring about the attrition of the illegal population,” he said.

While Donohue and others emphasized that they want to improve the immigration system and ensure that workers are legal, they also stressed that increasing the country’s international population is an economic imperative.

Donohue maintained that sectors like agriculture, construction, hospitality and high tech are craving more employees. Low unemployment and an aging workforce are exacerbating the problem.

“There is a real serious need in this country for those workers,” Donohue says. “We don’t have the American workers to take those jobs.”

Even whole states are facing severe workforce shortages. Mee Moua, a Minnesota state senator, said her state will need to fill 25 percent of its labor force with people from other states or countries in the next few years.

“This is the community that’s going to save us as a state,” she said.

But Krikorian criticized what he called a push for “subsidized low-skill labor” that helps companies avoid raising wages and innovating.

“It’s just irrational,” he said.

One point on which everyone agreed is that Washington can’t afford to ignore immigration reform.

“We have got to get the Congress of the United States off the dime,” Donohue said.

—Mark Schoeff Jr.

The U.S. Labor Department’s watchdog has sounded an alarm about the way the Department’s Employment and Training Administration handed out grants for a key training program.

In a recently published report, the Labor Department’s Office of Inspector General found that ETA did not adequately justify decisions to give out non-competitive awards for the High Growth Job Training Initiative.

“ETA could not demonstrate that it made the best decisions in awarding grants to carry out HGJTI,” the report says.

The initiative is a program to prepare workers for jobs in high-growth, high-demand and economically vital industries, such as health care and advanced manufacturing. From July 2001 through March 2007, ETA gave out 157 grants for the initiative totaling $271 million. Of those, 133 grants totaling $235 million were awarded through non-competitive procurement methods. One grant for $7 million was awarded to a specific entity based on congressional direction, according to the report.

The Office of Inspector General examined 39 non-competitive awards and concluded that “ETA could not demonstrate that it followed proper procurement procedures” in 35 of them. Those 35 awards totaled $57 million.

“Specifically,” the report says, “decisions to award 10 non-competitive grants were not adequately justified, reviews of unsolicited proposals were not consistently documented, and matching requirements of $34 million were not carried forward in grant modifications.”

The report says Emily DeRocco, who heads ETA, “strongly disagreed” with findings related to the procurement practices used for non-competitive grants. “The Assistant Secretary further stated that sufficient documentation had been provided to support that the awards met departmental policy regarding non-competitive procurement,” the report states.

Among the problematic awards, according to the report, were a grant of $5,935,402 to the State of Arkansas Department of Workforce Service in March 2006, a grant of $5,065,000 to the National Retail Federation Foundation in May 2003, and a grant of $4,268,454 to the Home Builders Institute in December 2004.

The report came in response to a request from Sen. Tom Harkin, D-Iowa. Harkin’s office did not immediately respond to a request for comment.

In a recent essay published by the Center for American Progress think tank, author Scott Lilly asked about the extent to which non-competitive grants have been given by ETA. “[I]t should be noted that the ‘High Growth Job Training Initiative’ represents less than one percent of the almost $10 billion a year budget under DeRocco’s control, and appears to represent only a small portion of the total non-competitive grant activity in which DeRocco has been engaged,” Lilly wrote. The center is headed by John Podesta, former chief of staff to President Bill Clinton.

The November Inspector General report isn’t the only time DeRocco has landed in hot water. A 2005 Inspector General report about the award of National Emergency Grant funds found that ETA was inconsistent in applying federal procurement rules and regulations with which the department was responsible for ensuring compliance. (Link opens an Acrobat document in a new window.)

DeRocco also came under fire for ETA’s move earlier this year to shutter America’s Job Bank, a public online job board. The Labor Department cited outdated technology and claimed that America’s Job Bank duplicated what was already available in the private sector. But the department declined to make public any comprehensive study weighing the pros and cons of America’s Job Bank and justifying the decision to close it, despite the fact there was a good deal of evidence that argued for the site’s preservation.

–Ed Frauenheim

A federal jury convicted Stephanie Jensen, the former head of human resources at Brocade Communications, of two counts of criminal fraud on Thursday, December 6, for her role in the backdating scheme.

Prosecutors were able to win their convictions based on testimony and evidence that showed Jensen knowingly committed wrongful acts, even though she might not have known what specific laws she was breaking.

By this standard, officers of publicly traded companies don’t need to know or understand securities law to break it—they just have to know, or expect that reasonable people would believe, their behavior to be wrong.

“It wasn’t easy—you’re talking about someone’s life,” said juror Iris Hoffman, 61, after the convictions were declared. “All I can say is that we discussed each issue thoroughly; we really looked at both sides. I would have been happy to have found a way, legally, not to have had to come to [this] particular decision, but we had to follow the law.”

“It’s very scary,” said one observer in the courtroom last week. He asked not be identified because of his relationship to some defendants in other, pending backdating cases. “It opens the door to criminalizing a lot of behavior that might only be human error: ‘Oh, I didn’t know that was against the law. Now I won’t do it,’ ” he added.

In cases where a company remains intact, the observer added, “shouldn’t these cases be handled [as] civil matters? This isn’t Enron.”

The government views such comments as armchair pundits splitting hairs. In a contradiction of the public debate over backdating, this case always was “a simple fraud,” said Assistant U.S. Attorney Adam A. Reeves, who, along with Assistant U.S. Attorney Timothy P. Crudo, successfully prosecuted both Jensen and former Brocade CEO (and Jensen’s former boss) Gregory L. Reyes. “Falsifying records is always wrong, and in this case [the dates] came from the bottom up.”

Originally charged with eight felonies, Jensen was ultimately tried and convicted on two counts—criminal conspiracy to commit securities fraud and the act of falsifying Brocade’s books and records—for her role in an illegal employee compensation scheme that took place at the company between 2000 and 2004. In August, Reyes, the first executive ever to be criminally tried for these offenses, was convicted of 10 felonies for his role in the same matter.

Until now, stock option grants, and the complexities of recording and accounting for them appropriately to regulators, have been assumed to be the domain of a company’s finance, accounting or legal departments. (Reyes’ own defense team made this argument in its effort to absolve the CEO of responsibility for what his lawyers dubbed stock option “administrivia.”) Certainly few people ever thought that an HR officer could be deemed responsible for it.

But compensation paperwork, including employee offer letters and stock option grant forms, were originated and administered by Brocade’s human resources department—as they are at most public companies.

In a streamlined case that began November 26 and lasted only six days, the government successfully convinced the jury that it was Jensen, as the head of HR, who directed and supervised her staff as they doctored stock option grant forms and meeting minutes of a special compensation committee of the board of directors (made up only of Reyes), thus creating records of events that, in fact, never took place.

Here especially, Crudo argued in his closing, blaming the scheme on Reyes, or anyone else higher on the organizational chart, didn’t hold water because it was Jensen who actually determined the dates on which Brocade’s shares were trading at periodic lows—and it was Jensen who recommended to Reyes which of the dates ought to be falsely applied to Brocade’s stock option grant minutes.

Perhaps in deference to the novelty of these trials, the judge in the case delayed Reyes’ sentencing until the conclusion of Jensen’s trial. Last week, Judge Stephen R. Breyer set Reyes’ sentencing hearing for December 19. He faces up to 20 years each for nine of his convictions and five years for his own conspiracy charge. The judge is widely expected to order a much shorter sentence.

Jensen faces five years for conspiracy, but she may be able to avoid any incarceration for the books and records violation. In a quirk of the law, while she can be convicted merely for wrongful acts, a person may not be incarcerated under Title 15 of the U.S. Code, Section 78, unless they have knowledge of the law they are actually violating. Her lawyers were not available for comment after the trial.

A sentencing hearing for Jensen has not been set.

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