Author: Site Staff

The Equal Employment Opportunity Commission can proceed in a case it filed on behalf of two women who claim they were terminated after reduction-in-force assessments at the Boeing Co. because of sex discrimination, says a federal appeals court in a ruling that overturns a lower court’s opinion.

The 9th U.S. Circuit Court of Appeals also held in its decision Tuesday, August 18, in Equal Employment Opportunity Commission v. The Boeing Co. that one of the plaintiffs could proceed with her retaliation claim.

According to the decision, plaintiff Antonia Castron worked in the electrical engineering department at Chicago-based Boeing from 1997 until 2003. Her supervisor “frequently made negative comments about women,” but refused her request to transfer to a particular work group, the opinion says.

Instead, he eventually transferred her to another group that “required substantially different skills” than the ones used at her previous post. Furthermore, the supervisor at her new group referred to her as a “little girl,” according to the opinion.

Two months after her transfer, she was given low scores in a reduction-in-force evaluation and terminated.

Based on the supervisor’s comments, “a jury might reasonably infer that [his] decision to transfer Castron, rather than a male co-worker about whom she complained, to a new position where her job was less secure may have resulted from improper motivations, including discriminatory intent, retaliatory intent or both,” the decision says. The supervisor may have “deliberately set Castron up to fail,” it said.

Similarly, after Boeing substantiated plaintiff Renee Wrede’s complaint of sexual harassment by her direct supervisor, she was transferred to another group. Although several men subsequently received lower evaluations, she was the only one to be terminated in a reduction in force.

A jury also could reasonably conclude in Wrede’s case that her discharge “resulted from discrimination on account of sex,” says the opinion, which remands 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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When Congress returns in September, health care will consume most of the legislative oxygen. But immigration reform will also fight for air.

The first skirmish likely will involve employment verification. House and Senate negotiators in September will have to work out differences in their respective bills to fund the Department of Homeland Security.

The House version contains a two-year extension of a government-run electronic verification system, E-Verify, while the Senate measure contains a three-year extension and an amendment that would permanently reauthorize the program, which is set to expire on September 30.
 
Used voluntarily by more than 137,000 employers, E-Verify checks new-hire information against Social Security and DHS databases. DHS announced in July that it would implement on September 8 a regulation compelling federal contractors to use E-Verify.

The contractor rule is codified in an amendment to the Senate version of the homeland appropriations bill written by Sen. Jeff Sessions, R-Alabama.

The Society for Human Resource Management resists E-Verify expansion, asserting that mistakes in government records could cause hundreds of thousands of legal workers to be declared unauthorized.

The Senate homeland appropriations bill raises a red flag for companies because it would force verification of existing employees as well as new hires working on government projects. Businesses are leery of the potential disruption to operations.

Regardless of how the homeland bill turns out, E-Verify is likely to continue and become a central issue in broader immigration reform.

Sen. Charles Schumer, D-New York and chairman of the Senate Judiciary subcommittee on immigration, intends to outline an immigration proposal after Labor Day that would include work-site and border enforcement, a path to legalization for currently undocumented workers and a system for bringing foreign workers into the U.S. economy.

Schumer seeks an employment verification system based on biometric identifiers such as a thumbprint. His stance bolsters a bill, the New Employee Verification Act, advocated by SHRM that would implement an electronic verification alternative to E-Verify that includes a biometric option.

Despite a likely health care war on Capitol Hill this fall, observers say Congress will rally to address immigration because in recent years it has vetted many of the major issues and voted on proposals that are likely to come up again.

—Mark Schoeff Jr.

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The number of U.S. workplace fatalities in 2008 fell to the lowest level since the Bureau of Labor Statistics began tracking fatal occupation injuries in 1992, according to a preliminary report released Thursday, August 20.

A total of 5,071 fatal work injuries were recorded in the U.S. in 2008, compared with 5,657 a year earlier.

“Based on these preliminary counts, the rate of fatal injury for U.S. workers in 2008 was 3.6 fatal work injuries per 100,000 full-time equivalent workers, down from the final rate of 4.0 in 2007,” the BLS said.

“Economic factors likely played a role in the fatality decrease,” the BLS said. “Average hours worked at the national level fell by 1 percent in 2008, and some industries that have historically accounted for a significant share of worker fatalities, such as construction, experienced larger declines in employment or hours worked.”

The report also noted that economic conditions may have affected government agencies that provide data to the BLS, which may have delayed receipt of all information.

The agency said it expects to issue its final report on 2008 workplace fatalities in April 2010.

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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In a phone call Wednesday, August 19, with faith leaders and citizens, President Barack Obama asked for their help in advancing the health care reform process, saying the debate “goes to the heart of who we are as a people’ and “boils down between hope and fear.”

Obama addressed concerns on a variety of topics, including cost and coverage.

“If you like your health care plan, you can keep your health care plan,” Obama told listeners on the call.

“Nothing you’re doing obligates you to change,” he added. “We’re not going to interfere with that. I don’t want government bureaucrats meddling in your health care, but I also don’t want insurance bureaucrats meddling in your health care.”

The president also commented on a more sensitive issue, saying that government funding of abortion as part of health care reform is “not true.”

Sponsored by more than 25 faith-based organizations representing various denominations, the call—“40 Minutes for Health Reform”—began with an opening prayer and then featured ministers, priests, rabbis and citizens who shared their personal experiences in the nation’s health care system.

Melody Barnes, the president’s domestic policy advisor and director of the Domestic Policy Council, answered questions from callers and Web users, and said the president is committed to lowering costs, increasing choice and competition, and ending what she called “sweetheart deals” for insurance companies.

She also said Obama thinks a public option is the best way to achieve these goals, but that he is “open to other ideas.”

“I think health care reform will ensure that future generations of Americans will have a better and less wasteful system,” Barnes said in answer to a question about burdening future generations with more debt.

“We are spending more than any industrialized nation, but not always getting quality results,” she added. “We need to address the issue of cost. The president has promised to do this without adding to the deficit.”

Filed by Jessica Zigmond of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The new chief executive of embattled American International Group Inc. stands to collect as much as $10.5 million in annual compensation from his bailed-out employer.

Robert Benmosche, who replaced Edward Liddy, will receive an annual salary of $7 million consisting of $3 million in cash and $4 million in AIG shares.

In addition, the former MetLife CEO is eligible for up to $3.5 million in annual bonuses that would be paid out in stock, according to a filing from AIG on Monday, August 17.

Though Benmosche’s pay package is lavish by most any standard, it illustrates how things may be changing on the CEO pay front now that compensation arrangements must be approved by Kenneth Feinberg, the Obama administration’s “pay czar” who signed off on the AIG agreement. For comparison’s stake, after Vikram Pandit became Citigroup’s CEO in late 2007, he was awarded $38 million in compensation.

In addition, Benmosche, 65, must make do without the perks to which CEOs have grown accustomed, including golden parachute payments or gross-ups, which are extra payments companies make to cover the taxes incurred from awards to executives.

Of course, he can afford it: Benmosche pocketed more than $150 million during his tenure atop MetLife from 1996 to 2008.

Benmosche’s bonus payments are also subject to being clawed back if AIG determines they were awarded based on materially inaccurate financial statements or other performance metrics that later prove bogus.

AIG has received about $180 billion in taxpayer-funded assistance, or double the amount doled out to Citigroup and Bank of America combined.

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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Blue Cross and Blue Shield plans are seeking a buyer for their Blue Healthcare Bank, which opened in 2007 and provides health care banking services, including health savings accounts, to plan members.

A variety of factors contributed to the reason for the sale, said Jeff Smokler, spokesman for the Blue Cross and Blue Shield Association.

“The future marketplace is one of those factors,” he said.

The bank, located in Sandy, Utah, serves the members of 14 Blues plans nationally. About 6,300 members have HSAs through the bank, Smokler said.

Thirty-three Blues plans hold a stake in the bank and are seeking to sell its assets, including the federal charter.

The decision doesn’t reflect a lack of confidence in consumer-driven health plans or HSAs, Smokler said.

Filed by Rebecca Vesely of Modern Healthcare, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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A few early-bird financial advisors are starting to make plans to hire new employees.

In the past few weeks, 50 to 75 percent of the financial advisors talking to Mark Palmer, managing director of business consulting at The Charles Schwab Corp. of San Francisco, have expressed an interest in hiring new employees, he said.

“A lot of plans are being made, and I think we’ll start to see something happen, although it’s likely to be spotty at first,” he said.

Ken Robinson, an owner of Practical Financial Planning in Cleveland, wants to hire an employee dedicated to screening the three prospects who contact the firm each week.

“At the moment, I talk to every potential client, and it’s not the best use of my time,” said Robinson, whose firm manages about $25 million in assets. “At some point, I want someone else to do the screening.”

John Burns, founder of Burns Advisory Group, which manages $300 million in assets in Oklahoma City, wants to add a junior advisor before the end of the year to free up the firm’s principals to work more closely with key clients. He also wants to hire someone in operations to work with the firm’s chief compliance officer.

“I don’t want to say we prepared for the downturn, but we’ve definitely prepared for building scale and capabilities, so our margins were in good shape,” Burns said.

Kevin Reardon, president of Shakespeare Wealth Management Inc. of Brookfield, Wisconsin, which manages $50 million in assets, is looking to hire another employee in the next few months. The addition will be a paraplanner who will help him prepare for follow-up meetings with clients.

But before financial advisors start searching for help, they should create a hiring strategy and think through what the new hires would do to increase revenue or boost efficiency, practice management experts said.

Too often, financial advisors don’t give new hires clear instructions, said Joni Youngwirth, managing principal of practice management at Commonwealth Financial Network in Waltham, Massachusetts.

Before hiring a marketing executive, for example, a firm should outline the attributes of the target prospects that the executive will be responsible for bringing in.

“The game plan is critical,” Youngwirth said. “Unless it’s articulated, a firm is being really unfair to the person they’re hiring.”

Even with a plan, the current business environment may not be right for hiring, said Art Grant, chief executive of Cadaret Grant & Co. of Syracuse, New York, a broker-dealer and investment advisory firm with more than 900 affiliated financial advisors.

“It may be too early. A lot of reps have realized they don’t need to pay someone to come in and water the plants—they’ve realized that unless an expense produces a return on the investment, they shouldn’t do it,” Grant said.

An advisor should expect revenue of $2 to $3 for each dollar spent on a new employee, Grant said. If an advisor pays an administrative assistant $50,000, revenue of $100,000 to $150,000 should be generated.

Another way to determine the potential return on the investment is for financial advisors to calculate how long it will take them to break even on the cost of a new hire.

If financial advisors can reach that point in a matter of months, then it might be something to consider, said Mark Matson, founder and chief executive of Abundance Technologies Inc., a Cincinnati-based investment advisory firm managing more than $2.1 billion.

However, before they even consider hiring, firms should have $1 million to $3 million in cash reserves, he said.

“Advisors as a whole are very stingy about hiring,” Matson said. “They’re so dramatically understaffed. Most financial advisors look at employees as expenses rather than investments.”

Many financial advisors aren’t preparing for growth, because they have ruled out adding employees, said Mary Dunlap, whose eponymous Pottstown, Pennsylvania-based consulting firm works with about 50 financial advisors.

“They’re just saying they can’t afford it,” she said.

Lou Stanasolovich, president of Legend Financial Advisors Inc. of Pittsburgh, said he believes it is important to invest in strong staff members. While his firm is under a hiring freeze, its revenue is up, and he would like to add two administrative positions.

“We’re hoping we can afford [to bring them on],” said Stanasolovich, whose firm manages $360 million in assets. “We won’t rush into it. If we find the right candidate, we’ll hire them. If we don’t, we won’t.”

Filed by Lisa Shidler of Investment News, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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The percentage of involuntarily terminated employees opting for COBRA continuing health insurance coverage has doubled since a federal subsidy program began, according to an analysis released Tuesday, August 18.

An economic stimulus measure Congress passed in February includes the federal government paying 65 percent of the COBRA premium for up to nine months for workers terminated involuntarily through year-end.

From March 1—when the subsidy generally became available—through June 30, monthly enrollment rates for laid-off employees averaged 38 percent, according to the Hewitt Associates Inc. analysis of COBRA enrollments among 200 large employers.

By contrast, from September 1, 2008, through February, an average 19 percent of involuntarily terminated employees were enrolled in COBRA.

“We expected the numbers to jump. The coverage becomes much more affordable” because of the federal subsidy, said Karen Frost, a health and welfare outsourcing leader for Hewitt in Lincolnshire, Illinois.

The rise in COBRA enrollment also means higher costs for employers, though how much is not yet known.

COBRA premiums often are about $400 a month for individual coverage and $1,200 a month for family coverage. Those opting for COBRA typically make extensive use of medical services, often resulting in employers paying about $1.50 in claims for every $1 in COBRA premiums they collect.

With the government picking up 65 percent of the COBRA premium tab, the COBRA risk pool is likely improving, though premiums collected by employers still are not likely to equal claims, Frost said.

The Hewitt analysis found significant enrollment variations by industry. For example, monthly COBRA enrollment from March through the end of June averaged 71 percent for laid-off employees in the aerospace and defense industries, compared with 30 percent from September through February. In the electronics industry, enrollment rose to 62 percent from 55 percent in the same time periods.

On the other hand, only 12 percent of those employees in the health care industry eligible for the subsidy opted for coverage, up from 10 percent; 20 percent of eligible chemical industry employees enrolled in COBRA, compared with 9 percent before the subsidy.

Factors influencing industry variations include economic conditions in the markets where the employers are located and percentage of beneficiaries who are married with access to spousal coverage, Frost said.

Individuals who can enroll in another group plan are ineligible for the COBRA subsidy.

The Hewitt survey is available at www.hewitt.com.

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

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Citigroup Inc. has been hit with a lawsuit from a former broker who is trying to stop the New York-based banking behemoth from clawing back the remainder of a signing bonus he owes for leaving the firm in 2006.

Thomas Banus, who filed the suit on Wednesday, August 12, began working at Citigroup Global Markets as a securities broker in its Cleveland office in 2004, according to a copy of the complaint, which was provided to Investment News, a sister publication of Workforce Management, by Banus attorney Leon Greenberg of Las Vegas.

As part of Banus’ employment contract, he received a signing bonus, which was structured as a forgivable loan to be paid out over a term of seven years, the complaint states.

If Banus left Citigroup within that period, the unforgiven prorated share of the remaining principle—with interest—would be due immediately, according to the court filing.

However, Banus argues in his suit that because Citi “may terminate the employment and accelerate the note at will, with no loss to itself, with or without prior notice, this is an illusory contract.”

Citigroup has demanded repayment of the unforgiven portion of the note with interest in the amount of $39,150.31, the filing says.

According to a Bloomberg report, Banus now plans to seek class status for the suit on behalf of roughly 500 other Citigroup brokers who have had similar issues with these agreements in recent years.

“We believe the suit to be without merit and will defend ourselves against these claims,” Citigroup spokesman Alexander Samuelson wrote in an e-mail.

Banus now works for Walnut Street Securities in Cleveland, Bloomberg reported. He filed the suit in the U.S. District Court for the Southern District of New York in Manhattan.

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

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The Workers’ Compensation Insurance Rating Bureau of California said Wednesday, August 12, that it will recommend a 22.8 percent pure premium rate increase that, if approved, would be effective January 1.

The recommendation is driven by rising medical expenses, along with anticipated cost increases that stem from recent California Workers’ Compensation Appeals Board decisions in what are known as the “Almaraz/Guzman” and “Ogilvie” cases, the WCIRB said in a statement.

It is up to Insurance Commissioner Steve Poizner to decide whether he will pass the recommendation on to insurers, who are free to set their own rates in California.

The commissioner last month rejected the WCIRB’s previous rate recommendation. He said he rejected that requested rate increase because he found insurers were inefficient and not applying available tools to control costs.

Given that finding, the commissioner said he will closely scrutinize the WCIRB’s new request.

If the full 22.8 percent increase is approved by the commissioner, pure premium rates in January still would be 55 percent lower on average than in 2003, the WCIRB said.

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

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