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Chicago Airport Shuttle Workers Win $1.4 Million Back-Wages Ruling from Government

A Texas-based transportation company has been ordered by the federal government to help pay nearly $1.4 million in back wages and benefits it owes some Chicago-area employees.


Total Enterprise Inc. of Irving, Texas, was found to have been underpaying 140 employees who worked out of its Franklin Park, Illinois, facility for a three-year period that ended in 2009.


Total Enterprise had been hired to shuttle Transportation Security Administration employees between O’Hare International Airport and remote parking lots.


A Total Enterprise representative was not available for comment.


The settlement, to be paid by the TSA and Total Enterprise, represents “wages that [employees] should have been receiving all along,” a Labor Department spokesman said.


It’s not clear what portion of the award Total Enterprise will pay.


The 140 workers—shuttle bus drivers, parking lot attendants and bus dispatchers — will see payouts ranging from $30,000 to $90,000 for money owed to them from Dec. 31, 2005, through Nov. 7, 2009, the spokesman said.


The TSA said in a written statement that it has been “working closely” with the Labor Department to ensure that Total Enterprise employees are paid accordingly. “TSA appreciates the cooperation and assistance of the [Labor Department] in this enforcement action,” the agency said in the statement.


The nearly $1.4-million settlement requires final approval by an administrative law judge.


Wage violations, particularly among low-wage earners, are not uncommon in Cook County, according to a University of Illinois at Chicago study. In the past decade, lawsuits filed in Chicago’s federal court that allege some violation of the Fair Labor Standards Act have jumped 134 percent.  


Filed by Lorene Yue of Crain’s Chicago Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


 


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Courts Ruling on WARN Act Could Benefit Employers

In a decision that could be beneficial to employers, the 7th U.S. Circuit Court of Appeals in Chicago has ruled that DHL Express (USA) Inc. and its German parent company did not violate the federal Worker Adjustment and Retraining Notification Act when it reached severance agreements with hundreds of unionized drivers.


After a period of layoffs at its Chicago-area plants in December 2008, DHL, a subsidiary of Deutsche Post, offered severance packages to several hundred workers as well as to numerous already laid-off employees. Those accepting the severance were required to sign a waiver releasing the company from liability under any federal, state or local employment law.


Because the workers and former employees were given just a few days to either accept or reject the severance offers, two of the laid-off workers filed a lawsuit in U.S. District Court in Chicago alleging that DHL should have provided at least 60 days’ notice prior to the execution of those agreements, as is required under the WARN Act. The WARN Act requires employers with 100 or more employees to provide at least 60 days’ notice to workers of plant closings or mass layoffs.


Although the district court acknowledged that the DHL workers “had to make a tough choice in the face of daunting economic circumstances,” it concluded that “there was no evidence that they signed the severance agreements involuntarily” or in violation of the WARN Act. In granting summary judgment in favor of DHL, the court also granted summary judgment in favor of Deutsche Post and terminated the case.


Having lost the first round at the district court level, the workers appealed to the 7th U.S. Circuit Court of Appeals, which affirmed the lower court’s decision.


“While we recognize the unenviable positions in which DHL’s Chicagoland workers found themselves, we are unpersuaded by these arguments and cannot conclude on the evidence before us that the workers who accepted the union-negotiated severance packages did so involuntarily,” wrote Judge John Daniel Tinder on behalf of the three-judge panel of the 7th Circuit that reviewed the decision. “The severance agreements … were both negotiated by Local 705 with the workers’ interests in mind, and were written unambiguously in plain English.”


The decision should be helpful to employers in the 7th Circuit, which encompasses Illinois, Indiana and Wisconsin, because it is the first time that an appellate court has ruled on a WARN Act claim, according to Joshua Ditelberg, a partner at Seyfarth Shaw in Chicago, who represented the employer. “This is the first 7th Circuit case that confirmed that employers can waive WARN Act claims,” he said.


The lawyer representing the employees, Lee Winston, an employment attorney at Winston Cooks in Birmingham, Alabama, did not return phone calls seeking comment.  


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


 


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Financial Advisers Get More Time to Work Up Bios of Staff

Advisers have an additional four months to prepare “plain English” brochure supplements about their investment personnel thanks to an extension granted by the Securities and Exchange Commission late last month.


The extension for the supplements—known as ADV Part 2B—gives existing investment advisers with a fiscal year ending Dec. 31 until July 31, 2011 to file the ADV Part2B to new and prospective clients. They have until Sept. 30, 2011, to deliver the documents to existing clients.


New investment advisers registering through April 30 have until May 1 to deliver the brochure supplements to new and prospective clients and they have until July 1 to deliver them to existing clients.


The commission estimates 92 percent of SEC-registered advisers operate on a December fiscal year-end.


The regulator did not extend the compliance date for the ADV Part 2A, which contains information about the advisory firm. Those documents still must be prepared by March 31 for advisers with a fiscal year that corresponds to the calendar year.


Large advisers with many supervisory individuals had asked regulators for additional time to prepare these documents, said Paul Edwards, head securities lawyer with Day Ketterer in Canton, Ohio.


Part of their difficulty has been collecting the education, business background and disciplinary information about all the individuals. The other challenge is figuring out how to present it, Edwards said. The SEC rules allow advisers to include up to five personnel profiles in one brochure or individual documents for each person, he said.


The SEC approved rules in July that require advisers to make the brochures that they give to clients more understandable. Previously, advisers didn’t have to file ADV Part 2 documents with the commission. But they will have to file the new ones electronically as soon as the registration system is able to accept them, Edwards said.   


Filed by Liz Skinner of InvestmentNews, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


 


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Workplace Discrimination Charges Set Record

A record 99,922 private-sector workplace discrimination charges were filed with the U.S. Equal Employment Opportunity Commission during fiscal 2010, the agency said on Jan. 11.


The number of charges filed in fiscal 2010, which ended Sept. 30, was more than the 95,402 record set in fiscal 2008 and was 7.1 percent higher than fiscal 2009, the EEOC said.


All major categories of charges increased.


For the first time, retaliation charges filed under all statutes surpassed race as the most frequently filed charge and comprised 36.3 percent of the total. The 36,258 retaliation charges increased 7.9 percent over the previous year.


Some 35,890 race-related charges were filed, which was 35.9 percent of the total and a 6.9 percent increase over the previous year.


Other charge categories, and their percentage of the total filed, were: sex, 29.1 percent; disability, 25.2 percent; age, 23.3 percent; national origin, 11.3 percent; religion 3.8 percent; Equal Pay Act, 2 percent; and Genetic Information Nondiscrimination Act, 0.2 percent.


The EEOC published final regulations to implement Title II of GINA, which prohibits using genetic information in making employment decisions, in the Federal Register in November.


The EEOC said the surge in charges may be because of several factors, including economic conditions, increased diversity and demographic shifts in the labor force, employees’ greater awareness of the law, improvements in the EEOC’s intake practices and consumer service, and greater accessibility to the public.


The EEOC also said it ended fiscal 2010 with 86,338 pending charges, an increase of less than 1 percent over the previous year.  


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


 


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New York Mayor Says Its too Hard to Fire, Punish City Workers

Mayor Michael Bloomberg released a 23-step plan Jan. 7 to overhaul civil service work rules and make it easier for the city to fire and discipline workers—drawing immediate fire from municipal union leaders.


The mayor’s Workforce Reform Task Force said in its report that civil service exams are not suited for the modern work force and called for abolishing state oversight of the city’s hiring. The city has more than 300,000 employees, and the report argues that evolving technology, growing service needs and limited resources require workers with new skills and rules that allow for more flexibility in their deployment.


The task force of 10 administration officials came up with its recommendations without input from the city’s municipal unions. The state’s civil service law is more than 120 years old and was enacted to prevent cronyism in hiring.


“We have the best work force in the world, but the civil service is so antiquated that it prevents them from performing up to their abilities, costs taxpayers millions of dollars in unnecessary expenditures, and prevents us from retaining and promoting our best workers,” Bloomberg said, in a written statement.


Union officials said they did not receive the report until it was released publicly on Jan. 7 and that they were not consulted by the task force. “These proposals, as currently constituted, would not reform but instead destroy key elements that make the current system fair and equitable,” said Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of city unions.


“Civil Service was created to ensure that city workers were appointed and promoted on the basis of merit and fitness, not cronyism and patronage,” said DC 37 executive director Lillian Roberts. “Why would you want to dismantle a system specifically designed to protect the integrity of government and reintroduce a system where appointments and promotions are made based on who you know, not what you know?”


The task force recommended getting rid of seniority in teacher layoffs and suggested major changes to how other city workers are laid off. Michael Mulgrew, president of the United Federation of Teachers, called the task force’s work “predetermined,” and said “it clearly was not an objective thing.”


Deputy Mayor Stephen Goldsmith has been the driving force of the city’s attempts to reconfigure workplace rules, building on his experience as mayor of Indianapolis. In an article on Governing.com in November, he wrote, “When we reward the mediocre, promote the less qualified, restrict problem solving discretion and turn the public’s work into a mechanical production of commodities, we demean public servants, degrade the quality of service and cheat taxpayers.”


Of the 23 proposals in the report, seven can be accomplished administratively by the city, 11 require changes in state law and five need to be negotiated via collective bargaining.
A spokesman for Bloomberg said legislation would soon be introduced in the state Legislature on some of the measures.


The report calls for eliminating testing for certain positions and for changing the method of examination for other jobs to account more for experience. It calls for taking job performance into account for provisional employees and not relying solely on their test scores. And it recommends doubling temporary appointments from a maximum of 18 months to three years.


It also calls for changes to disciplinary procedures to allow managers flexibility to impose sanctions without a hearing.


State Sen. Diane Savino, who chaired the New York Senate’s Civil Service and Pensions Committee when Democrats were in the majority, called the city’s proposal to end the State Civil Service Commission’s authority over hiring in the city a “nonstarter.” She said she was not consulted by the task force.


“I think I just heard Teddy Roosevelt roll over in his grave,” she said. She added that she’d be open to changes that modernize some rules, but would fight any attempt “to dismantle a system that protects economic opportunity for every New Yorker.”  


Filed by Daniel Massey of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.


 


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AIG Settles Workers Comp Case with Insurers Except Liberty

In a major development involving long-running workers’ compensation litigation, American International Group Inc. has reached a $450 million settlement with seven of the insurers involved.


However, the settlement does not include units of Boston-based Liberty Mutual Insurance Group, which has sought class-action status and plans to continue pursuing the litigation.


The legal fight began in 2007 when the National Workers Compensation Reinsurance Pool operated by Boca Raton, Florida-based NCCI Holdings Inc. first sued New York-based AIG.


The pool had argued it was excluded from a 2006 settlement with then-New York Attorney General Eliot Spitzer in which AIG agreed to pay states more than $343 million to settle allegations that it underreported workers’ compensation premiums over several decades to avoid paying its full share of residual market assessments to the states.


Since then, U.S. District Court Judge Robert Gettleman, who has been presiding over the case, dismissed the pool as plaintiff based on AIG’s objection, but the litigation continued. AIG also sued competitors, arguing they underreported workers’ compensation premiums.


Under the proposed settlement dated Jan. 5, AIG will pay $450 million, but that would be decreased by the amount put in escrow under the Spitzer settlement plus any interest earned in the meantime.


The proposed settlement stipulates that the agreement would not be affected even if Liberty Mutual units Safeco Insurance Co. of America and Ohio Casualty Insurance Co. opt out.


Court papers state that “it has become clear” that Safeco and Ohio Casualty “cannot adequately represent the absent class members in settling this matter with AIG on fair and reasonable terms at this time due to very different business judgments about the wisdom of continued litigation as opposed to settlement.”


The insurers “therefore respectfully request that they be permitted to intervene … in order to represent their own interests and to serve as settlement class representatives, in order to effectuate a global settlement of these claims with AIG,” according to court documents.


The attorney for Safeco and Ohio Casualty, Gary Elden of Chicago-based Grippo & Elden, said in a written statement that the settlement agreement is an “act of self-interest” by AIG and the settling insurers “and is detrimental to the 600-member class because it fails to consider previously undisclosed documented evidence of underreporting that extends the scope and duration of the classes’ claim.


“The current discovery process, which will be completed in stages within the next 60 and 150 days, should be allowed to proceed uninterrupted so AIG’s held to account for the true extent of its underreporting,” Elden said in the statement.


“Ohio Casualty and Safeco, class representatives, stepped forward 20 months ago to make certain that AIG adequately addresses the systemic practice of underreporting of workers’ compensation premiums when no one else would, and they remain in the best position to adequately represent the class and prosecute” the litigation, he said.


The seven insurers who agreed to the settlement are ACE INA Holdings Inc., Auto-Owners Insurance Co., Companion Property & Casualty Insurance Co., Firstcomp Insurance Co., Hartford Financial Services Group Inc., Technology Insurance Co. and Travelers Indemnity Co. The insurers’ lawyer declined comment.


An AIG spokesman said: “It is unfortunate that Liberty is refusing to participate in this fair and reasonable settlement. As the seven other settling insurers have recognized in seeking to intervene in the action, Liberty’s preference to continue litigating is not in the best interests of the class members.”


In a separate but related development, AIG in December reached a $100 million settlement with state insurance regulators on the same issue.  


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


 


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Employment Discrimination Settlements Surge

The monetary value of settlements of the top 10 private plaintiff employment discrimination class-action lawsuits paid or entered into in 2010 totaled $346.4 million, which is more than four times the amount in 2009, according to an analysis released Jan. 5.

The largest was the $175 million settlement in Velez et al. vs. Novartis Pharmaceuticals Corp., according to the Annual Workplace Class Action Litigation Report by Chicago-based law firm Seyfarth Shaw.


The 664-page report analyzes 848 decisions rendered against employers in state and federal courts, including private plaintiff and government enforcement actions. The $346.4 million total for the top 10 in 2010 compares with $84.4 million for the top 10 during 2009.


Velez, which received final approval Nov. 30, 2010, involved allegations that Basel, Switzerland-based Novartis discriminated against 5,600 current and former female sales representatives in pay and promotions.


Seyfarth Shaw Partner Gerald Maatman Jr., who authored the report, said employment discrimination lawsuits “were in the headlines more than any other type of workplace challenge for a company” during 2010, unlike previous years when wage and hour settlements broke records.


The issue is on employees’ minds, “and so the manner with which you comply with the law, your internal systems and the way in which you react in the workplace to complaints of discrimination are very important,” he said.


Meanwhile, wage and hour class actions were the most frequently filed type of workplace class action, according to the report. “This trend also was manifest in more wage and hour class action and collective action decisions by federal and state court judges than any other area of workplace litigation,” according to the report.


“That’s the No. 1 exposure area in corporate America as far as the plaintiffs class action bar is concerned,” Maatman said. Employees who visit plaintiff lawyers are “more likely than not” to be asked what they are paid and probed for potential wage and hour claims, he said.


The top 10 private wage and hour settlements during 2010 totaled $336.5 million, a 7.4 percent decline from 2009.  


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


 


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Companies not Sure How to Measure Say on Pay Success

Some 49 percent of companies don’t know what level of shareholder support of executive compensation in say-on-pay votes will be considered a successful outcome by their boards of directors, according to a Towers Watson & Co. survey released Jan. 5.


Of the 51 percent of companies that have defined how they will evaluate success, 19.6 percent say they believe that a favorable shareholder vote of at least 90 percent would be considered successful, while 37.2 percent say they believe a vote of at least 80 percent would be considered successful, 27.5 percent say they believe it needs to be a vote of at least 70 percent, 13.7 percent say they believe a vote of at least 60 percent, and 2 percent say they believe a vote of at least 50 percent, according to a Towers Watson written statement about the results.


Only 8 percent of companies surveyed have a process in place for “developing appropriate action plans in response to potential shareholder concerns” on executive compensation, the statement said.


Fifty-one percent of companies expect to hold annual shareholder advisory votes on executive compensation, while 39 percent prefer to hold the vote every three years and 10 percent every two years.


Some 48 percent of respondents “are making some adjustments to their executive pay-setting process in preparing for the upcoming proxy season,” the statement said. Those adjustments include more detailed explanations of compensation programs in SEC filings and changes in severance programs and high-profile perquisites.


Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted last year, companies have to conduct say-on-pay votes at least every three years but are allowed discretion on whether to hold annual, biennial or triennial votes, according to a Tower Watson statement on the survey results. The law requires companies to put the say-on-pay frequency question to a nonbinding shareholder vote at least every six years.


“The survey responses suggest that companies are struggling to understand the implications of say-on-pay votes, and many are taking a wait-and-see approach to measuring success,” said James Kroll, a Towers Watson senior consultant, in the statement.


Towers Watson surveyed 135 U.S. publicly traded companies in mid-December.  


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


 


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Penalties Rise for Uninsured Massachusetts Residents

Massachusetts residents who do not have health insurance coverage face higher financial penalties this year under final rules adopted last week by the state Revenue Department.


The maximum penalty this year for those with incomes that exceed 300 percent of the federal poverty level will be $101 for each month an individual has no health insurance, or $1,212 a year.


Last year, the maximum penalty for noncompliance was $93 a month up to a maximum of $1,116 a year.


Penalties for people with incomes up to 300 percent of the federal poverty level would remain the same. Depending on income, they range from $19 to $58 a month.


Penalties do not apply for individuals with incomes that are less than 150 percent of the federal poverty level, or $16,248 for an individual and $33,084 for a family of four. Those people are eligible for free health insurance coverage, with premiums paid by the state.


Imposing penalties on those without health insurance is a key part of Massachusetts’ 2006 health care reform law, with the goal of moving the state very close to universal coverage.


Last month, a state report said more than 98 percent of state residents had health insurance. The U.S. Census Bureau put the Massachusetts uninsured rate—averaged over 2008 and 2009—at 5 percent.  


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


 


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PEO Firm Administaff Buys Software Line

Administaff Inc., the largest professional employer organization in terms of 2009 net revenue, acquired the OrgPlus software product line from HumanConcepts for an undisclosed sum.


OrgPlus software assists in the creation of detailed organization charts that can help companies better understand their organization structure, increase productivity and more easily plan for change, according to Administaff. The software is aimed as small and medium-size firms.


Although the price was not disclosed, Administaff said the acquisition costs and first-year operations are not material to its 2011 results.  


Filed by Staffing Industry Analysts, a sister company of Workforce Management. To comment, e-mail editors@workforce.com.


 


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