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Congress Approves COBRA Premium Subsidy Extension

The Senate, in a rare session Saturday, December 19, approved a military spending bill that would extend federal COBRA health insurance premium subsidies for the unemployed.


H.R. 3326, which the House approved this week, cleared the Senate on an 88-10 vote.


President Barack Obama signed the bill Monday, December 21. 


The bill would extend the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010.


Under current law, employees who lose their jobs after December 31 are ineligible for the subsidy.


The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.


In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.


The legislation would require employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.


The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.


The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.


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

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U.S. Limits Pay for Second Tier of GM, GMAC Execs

General Motors Co. and GMAC’s second-highest tier of executives are limited to salaries of $500,000 and are prohibited from receiving bonuses unrelated to performance under Treasury Department guidelines.


The goal of the limits set December 11 by Kenneth Feinberg, the Treasury’s special master for executive compensation, is to focus executives on long-term gains and financial stability rather than short-term growth, it said in a statement.


Feinberg already had set limits for the top 25 executives at GM, GMAC, Chrysler Group and Chrysler Financial. The new limits apply to the next 75 highest-paid executives.


At least 50 percent of each second-tier executive’s total compensation must be held for at least three years.


In most cases executives’ cash salary is to be limited to 45 percent of the total. Any cash incentives are to be delivered over two years, eliminating large lump-sum cash bonuses, the Treasury said.


The four companies’ compensation committees, under rules set by the government, identified about 12 executives who qualified as exceptions to the $500,000 limit.


Chrysler and Chrysler Financial weren’t affected by the limits because few of their lower-ranking executives were paid more than half a million dollars.



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


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Social Media, E-Mail Remain Challenging for Employers

A recent survey is the latest reminder that companies are struggling to balance the benefits and risks of letting workers roam online realms such as Facebook and Twitter.


Half of companies have not set out a specific policy for workers’ online social networking activities, according to the report from two professional groups, the Health Care Compliance Association and the Society of Corporate Compliance and Ethics.


Although many organizations lack social networking policies, one-quarter of the nearly 800 compliance and ethics professionals surveyed said their organization has had to discipline an employee for activities on Facebook, Twitter or LinkedIn.


Social networking sites pose risks such as employee disclosures of confidential information, exposure to computer viruses and postings that can damage a firm’s reputation. On the other hand, some experts say social networking can help firms in ways including viral marketing. And companies can discourage employees from positive social networking activities by the use of draconian policies, said Lisa Guerin, an employment lawyer and author of a book about workplace technologies.


“It seems like we’re trying to find out what the limits are in employer monitoring,” Guerin said.


The social networking field has exploded. Facebook, for example, now claims more than 350 million active users, up from some 150 million in January.


Half of Facebook’s active users log on to the site in any given day, and more than 35 million users update their status daily.


Companies, though, are in the dark about much of this activity, according to the September report from the professional groups. Mirroring the lack of a usage policy, roughly half the respondents reported that their companies do not have an active monitoring system for checking employee activity on social networking sites.


A related but less glamorous topic is the potential for leaks of sensitive data through e-mails. This can include intentional and inadvertent zapping of information such as customer or employee financial data.


More and more companies are trying to stop such leaks with sophisticated software, said Don Harris, president of consulting firm HR Privacy Solutions. These tools, known as data-loss protection applications, can flag suspect messages, such as ones with large attachments or particular key words, Harris said.


“It just makes so much sense,” he said of the applications. “You don’t want to be reacting to things you can prevent.”


Another factor is the economic down¬turn, during which employers have axed many workers. Companies have to be wary of sabotage by disgruntled ex-workers or the prospect of former employees providing intellectual property to competitors.


Employers are taking increased steps to protect their data, said employment attorney Arnie Pedowitz. But they can go too far in their monitoring, he said, by improperly getting passwords to employees’ personal Gmail or Yahoo e-mail accounts and snooping in them.


He recommends that companies set clear policies on Internet use and employee privacy.


Guerin agrees that policies are needed in an era when so much intellectual property is in electronic form. But she argues that the intersection of data protection, employee freedoms and social media is a gray one.


“These are new areas for everyone,” Guerin said.


—Ed Frauenheim



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Court Says Employer Is Liable in Parking Lot Injury

Union Pacific Railroad Co. is liable under the Federal Employers’ Liability Act for a conductor injured while walking from a company-owned parking lot to an office where he was to report for work, the Nebraska Supreme Court has ruled.


The ruling was handed down December 11 in Glenn T. Holsapple Jr. v. Union Pacific Railroad Co., a case that stemmed from a knee injury Holsapple suffered in 2006 after stepping into a hole while walking through a city-owned alleyway linking the parking lot and the office.


Holsapple sued Union Pacific for damages under the FELA, alleging negligence and that he was injured while performing “a duty necessarily incident to his employment,” court records state.


But a district court granted the railroad’s motion for summary judgment, concluding that Holsapple’s injury occurred before he was to report to work and was outside the scope of his employment.


The Supreme Court overturned the lower court, ruling that Holsapple was injured within close proximity to the office and the injury occurred as a necessary incident of his workday. The high court also said he was exposed to risks not shared by the general public, because Union Pacific strategically placed signs restricting the alleyway’s use to railroad employees.


“And in doing so, Union Pacific has effectively encouraged its employees to use the alleyway,” the court said.


It remanded the case for further proceedings.



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


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Feds Allege Pennsylvania Staffing Firm Stockpiled Visas

A temporary employment agency in West Chester, Pennsylvania, allegedly stockpiled work visas by using fraudulent information and transporting illegal workers into the U.S., according to a court filing by the U.S. Attorney’s Office for the Eastern District of Pennsylvania.


International Personnel Resources Inc. submitted work visas using randomly selected names from a Mexican phone book, according to the federal criminal lawsuit. The firm also requested more immigrants than needed and forged clients’ signatures, the suit said.


“By falsely inflating the number of visas requested, defendants and their co-conspirators were able to create a pool of approved H-2B visas for the benefit of [International Personnel Resources’] clients and to the exclusion of other U.S. companies,” according to the lawsuit.


H-2B visas are designed for companies that cannot find Americans willing to work as temporary seasonal laborers. Given the nation’s cap on H-2B visas, the scheme left fewer available for companies trying to bring in workers lawfully, prosecutors said.


Owner and president Michael Glah is also accused of coaching immigrants to lie to U.S. immigration officials, and the company is accused of chartering buses to bring workers from Mexico to the U.S., according to the U.S. Attorney’s Office.


Also named in the criminal lawsuit are Theresa Klish, International Personnel Resources’ vice president and CFO; and office managers Mary Gillin and Emily Ford.


Approximately 430 illegal immigrants entered the U.S. because of the defendants’ activities, according to the lawsuit. The company also filed more than 1,600 false documents, according to the U.S. Attorney’s Office.


Glah faces a maximum sentence of 95 years in prison and a $2.5 million fine, according to the U.S. Attorney’s Office. Klish faces a maximum of 15 years in prison and a $500,000 fine; Ford faces a maximum of 25 years in prison and a $750,000 fine; and Gillin faces a maximum of 15 years in prison and a $500,000 fine.


The government is seeking the forfeiture of $1 million in this case.


International Personnel Resources represented country clubs, golf courses, construction firms and landscaping companies throughout the U.S. that were interested in employing people from Mexico and other parts of Latin America, according to the lawsuit.



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


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Supreme Court to Review Text Message Privacy Case

The Supreme Court agreed Monday, December 14, to review a California case involving employers’ rights to read the content of employees’ text messages that were obtained from a third-party provider.


The case, City of Ontario et al. v. Jeffrey Quon et al., concerns the privacy rights of a police officer and the recipients of his text messages. According to a June 18, 2008, unanimous decision by a three-judge panel of the 9th U.S. Circuit Court of Appeals in San Francisco, the city of Ontario, California, and its third-party provider, Arch Wireless Operating, had violated the constitutional privacy rights of Quon—a city police officer—and those who received his text messages when it obtained copies of the messages from Arch.


Arch, a unit of Westborough, Massachusetts-based Arch Wireless Inc., provided two-way alphanumeric pages under contract with the city. The text messages were sent from Quon’s city-provided pager.


According to the appellate decision, Quon exceeded his monthly allotted characters in his text messages several times. He was told the police department would audit his messages unless he paid an overage fee, which he did. But the city still asked Arch Wireless to send it transcripts of his messages to ascertain whether they were work-related.


Quon and the recipients of his messages subsequently sued, claiming violations of the Stored Communications Act and the Fourth Amendment, which protects against unlawful seizure.


In a ruling that partially overturned a lower court’s decision, the appellate court said Arch is an “electronic communications service,” which, according to the 1986 Stored Communications Act, is prohibited from “knowingly [divulging] to any person or entity the contents of a communication while in electronic storage by that service” except to the intended recipient.


The appellate court also held that the plaintiffs’ Fourth Amendment rights were violated.


After the appeals court declined earlier this year to review the case en banc, the city appealed to the U.S. Supreme Court, which agreed to review the case.



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


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Goldman Blinks on Cash Bonuses to Top Execs

Days after British authorities unfurled a 50 percent tax on most banker bonuses and French and German officials threatened to follow suit, Goldman Sachs tried to defuse rising public anger over big Wall Street payouts by saying its top 30 executives wouldn’t receive cash bonuses this year.


But since the move leaves Goldman ample room to shower its remaining 31,000 employees with an estimated $20 billion in bonus cash, it’s unclear whether the announcement will succeed in defusing tensions surrounding Wall Street pay in general and Goldman in particular.


The moves, however, figure to be widely imitated throughout Wall Street, where Goldman is the undisputed leader in pay—and profits.


Instead of awarding cash, Goldman said bonuses to the Top 30 would be made in the form of shares that can’t be sold for five years. Yet since shares have long since constituted the lion’s share of bonus pay for the higher-ups at Goldman, this change is less dramatic than it might initially seem.


Goldman also took a step toward addressing the problem that bankers don’t suffer financially for mistakes that become apparent only long after a deal or trade is struck.


The firm created what it called an “enhanced recapture provision” that would allow it to claw back previously granted compensation if it’s determined that the pay was based on “materially improper risk analysis” or if the employee “failed sufficiently to raise concern about risks.”


Goldman also said it would allow shareholders to vote on whether they approve of the company’s compensation practices. While such a move may sound like a significant concession, the vote in fact would be nonbinding.


None of Goldman’s five highest-paid employees received cash bonuses last year. In 2007, chief executive Lloyd Blankfein and co-presidents Gary Cohn and Jon Winkelried each reached about $27 million in cash bonuses. Generous as those payouts were, they were a minority of their total compensation of more than $70 million each.



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


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More Than 80 Percent of Large Companies to Increase Their Pension Contributions

Eighty-three percent of 153 large U.S. companies with defined-benefit plans surveyed by Hewitt Associates say they expect to make additional contributions to their pension plans, with 11 percent of those contributing saying those contributions will have “a significant impact on their business,” according to a news release.


However, 31 percent of respondents said they are more likely to consider closing their plans today than they were 18 months ago, up from 11 percent in 2008. Similarly, 50 percent said they are more likely to consider freezing their plans to existing participants, surging from just 17 percent in 2008.


Twenty percent of the companies surveyed were more likely than last year to consider delegating their entire investment policy to professional advisors, up sharply from 4 percent the year before.


Almost 40 percent reduced their equity exposure over the past year and 37 percent increased their holdings of corporate bonds.


Also, 15 percent implemented “dynamic investment policies,” rebalancing their asset allocation policies as their plans’ funding status improves.


The survey was conducted in September and October.



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


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Sodexo IOptimas Award-i Winner for Vision

Sodexo has leaped into the social media world of Twitter, Facebook and the like. But that doesn’t mean the supplier of food and facilities management services has abandoned traditional ways of reaching out to job candidates and employees.


Job openings for the international firm still can be found on job boards like Monster.com, and it continues to attend job fairs, says Arie Ball, vice president of sourcing and talent acquisition for Sodexo’s North American operations. She says that by having a comprehensive plan of attack, the company can connect with the four generations in the workforce typically labeled as Gen Y, Gen X, baby boomers and matures.


“You really need to have it all,” Ball says. Several years ago, Sodexo’s 120,000-employee North American division looked at growth goals through 2015 and saw potential talent trouble ahead—it had ambitious plans to expand in areas where it faced a weak pool of talent. To best attract, develop and retain employees, it decided to target various age groups differently. Building a diverse workforce also was a priority for the firm, which is based in Paris and employs 380,000 people worldwide.


To connect with Gen Y’ers, Sodexo launched a new internship program for college students. It also established a social media presence. Its recruiters tweet on Twitter, interact with candidates on Facebook and maintain a careers blog. In addition, Sodexo has sought out military veterans, in part through a project to translate military experience and skills into civilian competencies. And it has reached out to older workers partly through its Alumni Reconnexions program. So far, Sodexo’s multigenerational recruiting efforts have concentrated on exempt employees.


Thanks to the social media strategy and an updated careers Web site, traffic to the firm’s careers page tripled in less than a year, to as many as 150,000 unique visitors a month by August 2008.


The company was able to improve hiring speed and quality even as it cut its annual recruiting advertising budget in North America by $300,000. What’s more, management hires of former military personnel increased 28 percent for the year ended in August 2008, and the Alumni Reconnexions program led to 102 rehires in the year following its launch in October 2008.


The multigeneration talent effort also has corresponded with better business outcomes. Customer satisfaction ratings have risen 0.3 points to 4.5 on a five-point scale since the strategy’s inception. The firm’s global revenue rose 7.9 percent for the year ended in August, and its net income increased 4.5 percent.


Among the happy Gen X’ers at Sodexo is Beverly Thompson. Thompson, 44, spent about 4½ years at Sodexo in food service earlier this decade before taking a job at a nonprofit group serving elderly citizens in the Boston area.


But she missed the career opportunities and professional resources she had at Sodexo. By keeping an eye on the company’s careers page, she spotted a food service management opening at Sodexo and returned two years ago.


Although her boomerang back to Sodexo preceded the alumni program, Thompson believes the outreach to former employees will keep paying dividends.


Sodexo workers who didn’t look closely before they left are likely to be interested in a chance to return, Thompson says. That, at least, was her experience.


“In hindsight, I wish I never left,” she says.


For creating a comprehensive program to connect to workers of multiple generations, Sodexo wins the 2009 Optimas Award for Vision.


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Texas Raising Unemployment Taxes

Texas state unemployment insurance rates will jump in 2010, the Texas Workforce Commission announced Tuesday, December 8. Texas joins a number of other states in increasing rates.


Texas’ increase raises the minimum state unemployment tax to 0.72 percent of the first $9,000 of an employee’s wages in 2010 from 0.26 percent in 2009.


That means the minimum tax rate will go to $64.80 for an employee who makes $9,000 or more in 2010 from $23.40 in 2009.


State unemployment taxes are experience-rated based on the number of unemployment claims filed against an employer. The more claims, the more an employer must pay.


The maximum state unemployment tax in Texas will rise to 8.6 percent of the first $9,000 in wages in 2010 from 6.26 percent in 2009.


For a worker earning more than $9,000, the tax under the maximum rate will go to $774 in 2010 from $563.40 in 2009.


The Texas Workforce Commission said the increase comes because of the amount of unemployment insurance benefits paid.


Approximately 67 percent of Texas employers pay the minimum rate, according to the Texas Workforce Commission. Only 3.3 percent of Texas employers pay the maximum rate.


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


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