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Labor Department Nixes Bush Rule to Let Brokers Advise 401(k) Plans


The Department of Labor is killing a regulation issued in the last days of the Bush administration that would have allowed advisors affiliated with mutual funds, brokerage firms and other companies that sell investments to provide investment advice to 401(k) participants.


“We believe the final investment advice regulation published in the January 21 Federal Register went too far in permitting investment advice arrangements not specifically contemplated by the statutory exemption,” said Phyllis C. Borzi, assistant secretary of the Employee Benefits Security Administration, a unit of the Labor Department.


Borzi made the announcement Monday, September, 14 at a conference in Washington that was sponsored by the American Society of Pension Professionals & Actuaries.


“Today’s workers will benefit from quality investment advice—advice that is both affordable and unbiased,” she said, adding that the Labor Department will now take a fresh look at regulations that govern investment advice and issue new rules.


The Obama administration and House Education and Labor Committee Chairman George Miller, D-California, had objected to the rules issued by the Bush administration on the grounds they would allow advisors who have a conflict of interest to provide advice.


Because of its opposition, the Obama administration had delayed the effective date of the Bush rules. It is not known when the administration will propose new rules.


The Pension Protection Act of 2006 included a provision aimed at making it easier for investment advisors to provide advice to 401(k) participants as long as fees earned by advisors are no different for investment options that are recommended, and as long as disclosures are provided.


The mutual fund industry has fought for allowing advisors affiliated with fund companies to give advice, arguing that the provision would make advice more accessible for 401(k) account holders. Many investment advisors opposed the Bush rule, arguing that fund companies and brokerage firms could exert pressure on advisors to recommend proprietary products.



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


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Cost of Health Benefits Still Accelerating Faster Than Inflation

Health insurance premiums continued to rise faster than inflation last year, though at relatively moderate levels, with employers shifting more costs to workers through higher deductibles, according to an annual survey.


In their 11th annual survey on health benefits, the Kaiser Family Foundation and the Health Research & Educational Trust jointly reported Tuesday, September 15, that premiums for employer-sponsored health insurance rose to $13,375 for family coverage, up 5 percent from last year.


Health care premiums have risen 131 percent in the past 10 years; workers’ contributions to premiums have risen 128 percent—about 10 times faster than inflation, the survey notes. Last year, workers paid 17 percent of the premium for individual coverage and 27 percent for family coverage.


The result has been that health care costs consume a greater percentage of workers’ total compensation, researchers said. Wages, meanwhile, have stagnated. The economic impact of health care costs on families has made health care reform as much about restoring people’s economic health as it is about improving access to health services.


“It is health care as an economic issue that has fueled the health reform debate,” said Drew Altman, president and CEO of the Kaiser Family Foundation in Washington.


The 5 percent increase in family premiums, though much lower than the double-digit growth earlier this decade, has nonetheless been felt by workers who have dealt with layoffs, pay cuts, dwindling savings, home foreclosures and other acute financial pressures that have defined the current recession. In a poll conducted by the group, 19 percent of consumers said the recession has made it more difficult to pay for health care and health insurance.


“Rising health care costs are always much more painful in a bad economy,” Altman says. “The irony is it’s tougher to pay for health reform in a bad economy.”


The rise in health care costs also ran counter to general inflation, which actually dropped 0.7 percent in the past year. In 2008, the rise in the cost of premiums, at 5 percent, was more closely aligned with the overall inflation rate of 3.9 percent.


Altman said the “moderate” increase in family premiums—at 5 percent—is likely due to wariness among insurers to raise premiums during a recession and a tendency to resist major rate increases during times when Congress is considering health reform. Health insurance cost increases have remained steady between 5 and 7 percent for the past few years, but researchers maintain that insurance is likely to grow at higher rates unless significant changes are made to the health care system.


“I’m confident we’ll return to more typical rates of increase that we’ve seen in the past,” Altman said. “There’s no reason to believe we’ve done anything meaningful to deal with the fundamental drivers we see in the rates of increase.”


The survey of more than 2,000 non-federal private and public employers tracks the cost of health benefits of the previous year and was conducted earlier this year, when the recession was more pronounced.


The percentage of all firms offering health benefits shrank last year to 60 percent. Though not statistically different from the previous year, when 63 percent of firms offered health benefits, it is significantly less than the 69 percent of firms that offered benefits in 2000.


Not surprisingly, the percentage of firms offering insurance to employees was lower for small employers with three to nine workers—46 percent offered health benefits.


Health reform proposals would generally offer subsidies for small firms to purchase health insurance. New laws would also prohibit insurers from charging small firms higher premiums based exclusively on the health of their employees.


The recession has only hastened the speed at which employers have shifted health care costs to workers as a means to spread the economic pain.


As a result of the economic downturn, 15 percent of surveyed employers have increased workers’ premiums. Twenty-one percent of all employers have reduced the scope of benefits or shifted more costs to employees, for example, by increasing deductibles.
 
The survey showed that in 2009, 22 percent of workers with individual plans paid at least $1,000 out of pocket annually before their plan paid a share of their health care bills, up from 18 percent last year and 12 percent in 2007.


Small employers have been quicker to shift costs to workers, with 40 percent of workers at small firms (three to 199 employees) facing deductibles of at least $1,000—including 16 percent with deductibles of $2,000 or more.


The survey also shows that larger firms are increasingly turning to deductibles of $1,000 or more to keep down their own costs, though workers were not necessarily enrolling in high-deductible health plans with health savings accounts.


Preferred provider organizations, or PPO plans, remain the most popular health plan. Sixty percent of covered workers enroll in them despite having to pay higher out-of-pocket costs.


The percentage of workers enrolled in high-deductible health plans did not change at 8 percent. The lack of growth in high-deductible plan enrollment is likely related to the moderate increase in overall health care costs, said Gary Claxton, vice president of the Kaiser Family Foundation.
 
Wellness benefits are becoming staples of benefits packages. According to the survey, 58 percent of all employers that provide health benefits—and 98 percent of all large firms—offered at least one type of wellness benefit in 2009, such as gym membership discounts, weight-loss programs, on-site exercise facilities, smoking-cessation programs, personal health coaching, classes in nutrition or healthy living, Web-based resources for healthy living or a wellness newsletter.


On-site health clinics, once used to treat work-related injuries, are seeing a comeback as centers for primary care. Among firms with 1,000 or more employees, 20 percent have on-site clinics, of which 79 percent provide treatment for nonwork-related illnesses.


If costs continue to rise at the rate of 6.1 percent—an estimate considered conservative—a family plan will cost $24,180 in 10 years.


—Jeremy Smerd



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Court Cites Ledbetter Law in Reversing Its Prior Decision in Equal Pay Case


An employer’s refusal to respond to an employee’s request for a pay raise can be a violation of the Lilly Ledbetter Fair Pay Act of 2009, a federal appeals court has ruled in reversing its own earlier decision.


In its original March 24 ruling in Mary Lou Mikula v. Allegheny County of Pennsylvania, the 3rd U.S. Circuit Court of Appeals in Philadelphia affirmed a lower court’s ruling that had dismissed a claim filed by Mikula under Title VII of the Civil Rights Act of 1964.


Mikula, a grants coordinator hired in 2001 by the Allegheny County Police Department, had lobbied unsuccessfully for a salary increase, arguing that a man in a comparable position was paid $7,000 more a year. When the pay raise was not granted, she sued under Title VII and the Equal Pay Act of 1963.


In January, President Barack Obama signed into law the Lilly Ledbetter Fair Pay Act of 2009, which eases time limits on age discrimination claims. The law states that an unlawful employment practice occurs when an individual becomes “subject to a discriminatory compensation decision or other practice.”


In its original ruling, the court “acknowledged the passage of the Act and explained that it did not change the result because it required the adoption of a discriminatory compensating decision rather than, as in this case, a request for a raise that was never answered,” according to the opinion.


However, in seeking a rehearing, “for the first time, Mikula defines her claim as a ‘classic paycheck accrual’ case, which, she asserts, is exactly the type of claim that the act was passed to protect. She claims that the county’s lack of response to her raise requests qualify as discriminatory pay decisions or ‘other practices.’ … Under this rationale, each paycheck that Mikula has received is discriminatory and constitutes a new violation that renews the statutes of limitation,” the court said in its revised ruling September 10.


“Despite our earlier decision, we now hold that the failure to answer a request for a raise qualifies as a compensation decision because the result is the same as if the request had been explicitly denied,” the appeals court said in the ruling that sets a precedent.


The court also reinstated its March decision upholding Mikula’s Equal Pay Act claim and remanded the case for further proceedings.



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


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Ex-Convicts in Workforce Pose Liability Problems


California employers would be wise to take another look at their criminal background check policies in light of the possibility the state may be forced to release many prisoners early because of jail overcrowding, some observers say.


Many employers, particularly large corporations, already have such policies in place. Nationally, all employers must contend with myriad state laws limiting how they may use this information as well as concern by the Equal Employment Opportunity Commission that these checks have a disparate impact on minorities.


In California, a three-judge federal panel has refused to delay a plan to release more than 40,000 inmates from the state’s overcrowded prison system. Gov. Arnold Schwarzenegger’s administration is appealing the decision to the U.S. Supreme Court, and the Legislature is considering the issue, but its ultimate resolution remains uncertain.


In light of the possible releases, “I think it’s a good idea to review company policies and decide what’s appropriate under the circumstances if it hasn’t already been done,” said Christopher W. Olmsted, an attorney with Barker Olmsted & Barnier in San Diego, who said he does not expect violent felons to be released.


Anthony J. Oncidi, a partner with law firm Proskauer Rose in Los Angeles, said that “the more reasonable employer should be more vigilant than ever about doing employment screening and background checks on applicants, because there’s going to be a number of unemployed, former convicted criminals dumped on the street who presumably will, among other things, be looking for a job.”


But firms should take care when constructing or amending background check policies, experts say.


One concern of the EEOC is criminal background checks’ disparate impact on minorities, experts note. According to the Department of Justice’s Bureau of Justice Statistics, as of June 2008, with more than 2.3 million inmates held in prison or jails, black males were incarcerated at 6.6 times the rate of white males.


“Studies reveal that some employers make selection decisions based on names, arrest and conviction records … all of which may disparately impact people of color,” says the EEOC in discussing its E-RACE initiative, which is intended to “identify issues, criteria and barriers that contribute to race and color discrimination.”


Employers must also comply with the federal Fair Credit Reporting Act and parallel state laws, which require firms to first get applicants’ approval of background checks and to notify applicants if the information uncovered can result in a negative employment decision.


Meanwhile, each state has its own laws with regard to how criminal background checks may be used. In Pennsylvania, applicants can generally be denied a position only when the job is related to their crime, said Carrie B. Rosen, a member of law firm Cozen O’Connor in Philadelphia. An employer is “going to have a hard time arguing” a secretarial job applicant should be rejected because of a drunken driving conviction, she said.


Other states, such as New York, have a multifactor test, Rosen said.


New York’s law, which took effect in February, generally prohibits discrimination on the basis of criminal offenses and says factors including job responsibilities, the time elapsed since the crime was committed, the applicant’s age at the time, and the seriousness of the offense must be taken into account.


In California, an employer cannot take adverse action against an applicant if a person is arrested, but not convicted; if the criminal offense is more than 7 years old; or if the person was put into a community service-type program, Ashe said. The state also forbids employers from even asking about marijuana-related convictions that are more than 2 years old.


Observers note there are certain sectors where criminal background checks may be required, such as hospitals and schools.


There is no blanket rule on conducting background checks, Olmsted said. “The employer needs to exercise good judgment.”


“An employer, in most instances, is going to be safe in excluding those convicted of a felony, even if not specifically related to the job in question,” Oncidi said. “If the employer says, ‘I just don’t want a convicted felon working for me,’ there’s no law that says the employer must hire that person. It’s that simple.”


However, Paul E. Starkman, a partner with law firm Arnstein & Lehr in Chicago, said, “You don’t want to have a blanket written policy that says felons will not be hired.”


But firms could face legal challenges if they do not guard against hiring certain former prisoners.


Although “alleged quite frequently,” negligent hiring is “a fairly difficult theory to prove,” Oncidi said. “Very few of them even actually get to trial.”


Still, Starkman said, although these cases “don’t come about very often,” when they do, “they can be a big number” in damages awarded.



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


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Risk Dominates Conversations Around Retirement Plan Investing


As it appears the economy may be rebounding, employers and retirement plan providers are challenging long-held beliefs about the proper diversification and asset allocation of their retirement plan investments.


Employers with both 401(k) and defined-benefit plans are taking a closer look at those plans’ investments and questioning whether they should be doing more to mitigate risks, experts say.


“The whole philosophy of using diversification to manage risk has been called into question,” said Mark Ruloff, director of asset allocation at Watson Wyatt Worldwide. “Simply putting your money into many different risky assets generally failed in 2008.”


Employers with defined-benefit plans are coming to terms with the reality that while diversification can help control risk, it doesn’t always help. As a result, many employers are talking more about how they can reduce the risk within their plans, Ruloff said.


For defined-contribution plan sponsors, the conversation around diversification has become more specific, experts say. Instead of having bond funds to represent conservative investments, plan sponsors are questioning what kind of fixed-income products they should include and whether they have any associated risk, said Lori Lucas, executive vice president and defined contributions practice leader for Callan Associates, a San Francisco-based institutional investment consultant.


“For example, some plan sponsors are asking whether they need a money-market fund in addition to a stable-value fund as the conservative options in their plans,” she said.


As a result, defined-contribution plan sponsors are increasingly reviewing the funds in their plans. A February survey by Callan Associates found that fund due diligence is the top priority for plan sponsors in 2009.


Defined-contribution plan sponsors are also taking a closer look at the target-date funds and questioning whether they are too aggressive in their exposure to equities, said Bob McAree, retirement practice leader at Sibson Consulting.


“The conversation that’s emerging is whether the asset allocation strategy that many thought was appropriate historically now needs to be reconsidered,” he said. “For example, many individuals found themselves in 2010 target-date funds that were still 60 percent invested in equity.”


In an effort to increase the diversification of their offerings, many employers are adding “funds of funds” overseen by a number of managers, said John Sturiale, director of Charles Schwab’s retirement investment services group. In the past six months, Schwab has seen its fund-of-funds sales to defined-contribution plans jump 25 percent from normal levels, Sturiale said.


But what the right level of diversification and what the right asset allocation is remains a big question mark for most companies.


“I am not sure anyone has the magic answer,” said Carol Klusek, head of retirement and financial services at Aetna. “It’s almost like there is a feeling out there that the dynamics have shifted, but there is no new baseline.”


—Jessica Marquez


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Employers Seek to Limit 2010 Health Cost Increases, Survey Finds


Employers are expecting a nearly 9 percent increase in the cost of their group health care plans in 2010 but plan to trim that increase to 5.9 percent through a variety of cost-cutting actions, early responses to an annual survey by Mercer indicate.


Although employers try to reduce their projected cost increases every year, survey respondents say they are cutting their health care benefit budgets more than usual for 2010 because of the recession.


In fact, employers most strongly affected by the recession reported both a higher underlying cost trend, 9 percent, and a lower targeted cost increase, 5.4 percent, on average than unaffected employers, which anticipate an 8.5 percent growth rate that they plan to trim to 6.3 percent.


Linda Havlin, a worldwide partner at Mercer based in Chicago, attributed the higher costs among recession-affected employers to a surge in stress-related illnesses among employees and layoffs.


“Actual or feared loss of employer-subsidized coverage makes people think about filling their medications, getting their preventive care and taking care of any elective procedures that they have postponed,” she explained.


Among the most popular measures employers are using to lower their 2010 health care cost trend are eliminating higher-cost or more generous health plan options as a way to move employees into lower-cost options, such as high-deductible consumer-directed health plans; auditing plans to ensure that all covered dependents are actually eligible for coverage; and adding or renegotiating performance guarantees with plan vendors.


These preliminary findings are based on responses from 1,562 employers. The survey is still being conducted, and complete results, including the actual rate of increases employers experienced in 2009, will be released by year’s end.



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


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Senate Committee’s Health Care Bill May Be Palatable to Business

Hours before President Barack Obama urged Congress to act on health care reform, the Senate Finance Committee moved toward offering the fifth legislative proposal on the issue and the one that could draw the most support from business.
 
On Wednesday, September 9, Sen. Max Baucus, D-Montana and chair of the panel, said he will introduce a bill next week and then begin the committee mark-up the week of September 21. Baucus has been working with three Democrats and three Republicans on his committee, giving the proposal the best chance of any offered so far to garner bipartisan backing.


Baucus has released an outline of what is likely to be in the bill, which would require individuals to purchase insurance but would not include an employer mandate to provide coverage.
 
“There’s much to be encouraged about with the framework that Sen. Baucus has laid out,” said Paul Dennett, senior vice president for health care reform at the American Benefits Council in Washington.


Under the committee’s proposal, people who fail to buy coverage would be penalized, but low-income individuals would be given tax credits to buy insurance on a national exchange. Companies employing more than 50 people that do not offer health care would have to pay as much as $400 per employee who receives the tax credits. The mechanism is called a “free-rider” provision.


If a company provides health care, a worker is not eligible to buy insurance on the exchange unless the employer’s plan costs more than 13 percent of the employee’s income.
 
The four other health care bills floating around Capitol Hill—three in the House and one in the Senate—all have employer mandates.


Under the House bills, for instance, a company would have to offer a plan that meets federal requirements or pay an 8 percent payroll tax to fund an insurance exchange. In addition, companies would have to contribute 65 percent of premium costs and their plans would be subject to regulatory review to determine whether they meet federal standards.


The Senate Finance bill isn’t prescriptive when it comes to the employer obligations, according to Dennett.


“It doesn’t attempt to micromanage the benefit the employer must provide,” he said.


Unlike the House bill, the Senate Finance measure does not have a provision allowing states to set up their own single-payer systems, which would require that benefits be delivered through that mechanism. Such an arrangement would undermine federal regulation of self-insured plans and potentially prevent companies from offering uniform benefits to workers in multiple locations.


“That’s very important to large employers,” Dennett said.


But there are big companies that oppose some of the ideas that are likely to be part of the Senate Finance bill. Wal-Mart backs an employer mandate rather than the free-rider policy.


“An employer mandate fairly distributed is a more appropriate way to have shared responsibility,” said Leslie Dach, Wal-Mart executive vice president of corporate affairs and government relations, at a September 9 forum sponsored by the Bipartisan Policy Center and Better Health Care Together at the Newseum in Washington.


Dach said the free-rider approach “has some inherent difficulties,” such as discouraging companies from hiring low-income individuals. But most business groups argue that an employer mandate would raise costs and could cause companies to drop their health care plans.


Business and labor have concerns about one of the funding mechanisms for the Senate Finance plan. It calls for an excise tax of 35 percent on insurance companies for any plan above $8,000 for individuals and $21,000 for families.


Annie Hill, executive vice president of the Communications Workers of America, says the idea is too complicated. “What is a Cadillac plan? Who decides that?” she asked at the Newseum forum.


Organized labor also is a strong proponent of a government-run insurance option being part of the national exchange. The Senate Finance Committee outline doesn’t include the so-called public option. Rather, it calls for nonprofit co-ops to be the alternative to private insurance.


Andy Stern, president of the Service Employees International Union, dismissed the notion that co-ops could compete with the private market.


“It’s a wonderful idea,” he told the Newseum audience. “It’s just not going to work.”


In his September 9 address to a joint session of Congress, Obama included many parts of the Senate Finance Committee outline in the plan he presented. He also included ideas that have been in each of the legislative proposals, such as prohibiting health insurance exclusions for pre-existing conditions. Both Obama’s and the committee’s proposals are expected to cost about $900 billion.


Obama reiterated his support for a public option but indicated he’s open to other ideas on all aspects of his plan. He’s not wavering, though, in his demand that Congress approve a bill this year.


“Now is the season for action,” Obama said.


—Mark Schoeff Jr.


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Health Plan Taxes, Cap on FSAs Under Discussion in Health Care Reform Plan


Commercial health insurance companies and administrators of self-funded health care plans would have to pay an excise tax of 35 percent on health care plans whose costs exceed a certain level under a draft health care reform proposal by Senate Finance Committee Chairman Max Baucus, D-Montana.


Under the proposal that Sen. Baucus described Monday, September 7, as a “framework” for discussion and not a final product, the 35 percent excise tax would apply to health care premiums that exceed $8,000 for individual coverage and $21,000 for family coverage.


In addition, the proposal would place a $2,000 annual cap on money that could be contributed to flexible spending accounts. There is no legal cap today and many employers allow employees to make up to $5,000 a year in pretax contributions to their health care FSAs.


The proposal also would tax the value of a federal subsidy now provided to employers whose retiree prescription drug plans are actuarially equal to the Medicare Part D benefit, as well as increase to 20 percent from 10 percent the tax on health savings account withdrawals prior to age 65 that are not used for reimbursement of medical expenses.


Revenue generated from the proposals would be used to help fund federal health insurance premium subsidies of the low-income uninsured.



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


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Recruiting Blog Cheezhead Acquired by Jobing.com


Jobing.com said Wednesday, September 9, that it acquired popular HR blogger Joel Cheesman’s company and made him a senior vice president responsible for the job board’s interactive marketing and community activities.


Terms of the deal weren’t disclosed. However, it includes Cheesman’s sometimes-snarky Cheezhead.com blog as well as his other companies.


Cheesman has run a business, HRSEO, focused on search engine optimization. Recruitment search engine optimization involves helping organizations improve the way their job listings appear in the organic search results at search engines such as Google.


A more recent Cheesman business is HirePPC. That has involved helping clients to have their paid advertisements appear more prominently on job aggregation sites such as Indeed.com.


Cheesman will move from Cleveland to Jobing.com’s headquarters in Phoenix by late October or early November. All of Cheesman’s “handful” of employees will be offered jobs within Jobing.com, according to Aaron Matos, the company’s CEO.


The deal comes as blogs such as Cheesman’s have gained increasing clout in human resources, but also have come under scrutiny for issues including proper disclosure of conflicts of interest.


The acquisition explains the lack of Jobing.com posts on Cheezhead over the past three months, the time it took the parties to negotiate the deal, Cheesman said.


In a move that appears aimed to head off conflict-of-interest concerns under the new ownership, Cheesman said he will alter his blog’s content.


“As an independent third party, covering industry news was an important part of the Web site,” Cheesman said in a statement. “However, as part of Jobing.com, we will be evolving the content of the site for our employers, providing content relative to local recruitment.


“With the blog now becoming part of a competitor in the industry, we think it’s important to change the editorial direction of the Web site to no longer comment on specific industry players and will be modifying the current site’s content to be in alignment with this new vision.”


Matos adds that Cheezhead will be recast as a resource for employers and recruiters.


“We won’t be commenting on any of our competitors, positive or negative,” he said.


By adding a recognized community-builder like Cheesman, Jobing.com is following a course recommended by industry analysts and consultants for job boards to transform themselves into full-bodied career portals with services, content and message boards in addition to job postings—all the better to battle social networks like Facebook and Twitter that employers and recruiters are using more for hiring and other personnel needs.


“If you can do that, you can attract the passive talent most employers think” is more desirable, says Peter Weddle, a recruiting industry consultant based in Stamford, Connecticut.


Phoenix-based Jobing.com provides a locally focused job search Web site of the same name. It also offers job fairs and other career services. Jobing.com is a privately held, employee-owned company.


Matos worked in HR before starting Jobing.com in 1999 and since then has sought to distinguish it from larger competitors such as Monster and CareerBuilder by building a network of local job boards. In all, Jobing.com operates under 70 Jobing.com-affiliated names in about 30 cities, predominately in the Southwest but also in Florida and other parts of the country. The company has raised at least $50 million in venture financing from JMI Equity and Great Hill Partners.


“There’s no question that Joel is one of the strongest thought leaders in our industry, and he likes to challenge the status quo,” Matos said in a statement. “His experience in online marketing and his extensive involvement with multiple job boards and recruitment-related ventures makes him a huge asset to the Jobing.com team.”


A personal connection was behind the deal, according to Cheesman.


“I met Aaron in 2003. I think we’ve always had a great appreciation for each other and what we were doing, and kind of realized one day we’d do something together,” he said.


Jobing.com made a big splash in 2006 buying the naming rights to the sports arena used by the National Hockey League’s Phoenix Coyotes in a 10-year, $30 million deal, according to local news reports. The company has made a number of acquisitions from 2004 to 2008 to expand into new markets and spent lavishly at national HR trade shows.


But the start of the recession last year put a crimp on spending across the job board business. In late 2008, Jobing.com laid off some employees, though Matos wouldn’t say how many, and the company was noticeably absent from the exhibit floor at this year’s SHRM annual convention.


—Michelle V. Rafter and Ed Frauenheim
 
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Recruitment Process Outsourcing Firm RightThing Acquires Capital H Unit

Recruitment process outsourcing provider The RightThing is acquiring the RPO business of Capital H Group, a Chicago-based HR consulting shop.


Under the acquisition, Findlay, Ohio-based The RightThing will absorb Capital H’s 20 employees in its RPO division, which is based in Milwaukee. Financial terms of the acquisition were not disclosed.


The RightThing had been in talks to purchase the division for the past two and a half months, company president Jamie Minier said.


“They had an RPO division that they had tried to build up over the past couple of years but it was just the wrong time, so they have decided to focus on their core offering,” she said.


Neil McEwen, managing consultant at PA Consulting, said it makes sense for Capital H to sell off its RPO business and focus on what it does best—human capital consulting, a business that has been difficult for many players given the economy.


“Capital H Group has not been doing brilliantly like so many other consulting firms in the country, so I am sure that the infusion of cash would be helpful for them to focus on their core area, which is really human capital advisory services,” he said.


Shannon Litzell, a spokeswoman at Capital H, wasn’t immediately available for comment.


The announcement marks The RightThing’s first acquisition in almost two years. In February 2008, the company acquired recruitment training and sourcing technology vendor AIRS.


The Capital H RPO acquisition expands The RightThing’s geographic presence, McEwen said.


“This helps us be national in scope and helps us gain market share,” Minier said.


The company wouldn’t comment on what clients it is inheriting through the purchase.


“We also think that this announcement shows the industry that we are stable and are really striving to be the No. 1 leader in this market,” Minier said.


—Jessica Marquez


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